--------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
-------------------
RJR NABISCO HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-10215 13-3490602
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
RJR NABISCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-6388 56-0950247
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6013
(212) 258-5600
(Address, including zip code, and telephone number, including area code,
of the principal executive offices of RJR Nabisco Holdings Corp. and RJR
Nabisco, Inc.)
-------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANTS WERE REQUIRED TO FILE SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X, NO __.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTANTS' CLASSES
OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE: JUNE 30, 1995:
RJR NABISCO HOLDINGS CORP.: 272,475,574 SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE
RJR NABISCO, INC.: 3,021.86513 SHARES OF COMMON STOCK, PAR VALUE $1,000 PER
SHARE
-------------------
RJR NABISCO, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
H(1)(A) AND (B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
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<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income--Three Months Ended
June 30, 1995 and 1994................................................... 1
Consolidated Condensed Statements of Income--Six Months Ended
June 30, 1995 and 1994................................................... 2
Consolidated Condensed Statements of Cash Flows--Six Months Ended
June 30, 1995 and 1994................................................... 3
Consolidated Condensed Balance Sheets--June 30, 1995 and
December 31, 1994........................................................ 4
Notes to Consolidated Condensed Financial Statements....................... 5-14
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 15-24
PART II-- OTHER INFORMATION
Item 1. Legal Proceedings.......................................................... 25
Item 6. Exhibits and Reports on Form 8-K........................................... 26
Signature............................................................................ 27
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1994
------------------ ------------------
<S> <C> <C> <C> <C>
RJRN RJRN
HOLDINGS RJRN HOLDINGS RJRN
-------- -------- -------- --------
NET SALES*.............................................. $ 4,081 $ 4,081 $ 3,784 $ 3,784
-------- -------- -------- --------
Costs and expenses (Note 1)*:
Cost of products sold................................. 1,871 1,871 1,692 1,692
Selling, advertising, administrative and general
expenses................................................ 1,407 1,401 1,261 1,260
Amortization of trademarks and goodwill............... 159 159 156 156
-------- -------- -------- --------
OPERATING INCOME.................................. 644 650 675 676
Interest and debt expense (Note 6)...................... (222) (222) (297) (297)
Other income (expense), net (Notes 1 and 6)............. (119) (123) (31) (36)
-------- -------- -------- --------
Income before income taxes........................ 303 305 347 343
Provision for income taxes.............................. 134 137 155 154
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST IN INCOME OF
NABISCO................................................. 169 168 192 189
Minority interest in income of Nabisco.................. 16 16 -- --
-------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM.................. 153 152 192 189
Extraordinary item--loss on early extinguishments of
debt, net of income taxes (Note 4).................... -- -- (146) (146)
-------- -------- -------- --------
NET INCOME........................................ 153 152 46 43
Less preferred stock dividends.......................... 32 -- 32 --
-------- -------- -------- --------
NET INCOME APPLICABLE TO COMMON STOCK............. $ 121 $ 152 $ 14 $ 43
-------- -------- -------- --------
-------- -------- -------- --------
Net income per common and common equivalent share (Notes
1 and 2):
Income before extraordinary item...................... $ .37 $ .53
Extraordinary item.................................... -- (.48)
-------- --------
NET INCOME........................................ $ .37 $ .05
-------- --------
-------- --------
Dividends per share of Series A Preferred Stock......... $ -- $ 0.835
-------- --------
-------- --------
Dividends per share of Series C Preferred Stock......... $ 1.503 $ 0.935
-------- --------
-------- --------
Dividends per share of common stock (Notes 1 and 9)..... $ 0.375 $ --
-------- --------
-------- --------
Average number of common and common equivalent shares
outstanding (in thousands) (Notes 1 and 2)............ 326,232 303,891
-------- --------
-------- --------
</TABLE>
-------------------
* Excludes excise taxes of $984 million and $888 million for the three months
ended June 30, 1995 and 1994, respectively.
See Notes to Consolidated Condensed Financial Statements.
1
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1994
------------------ ------------------
<S> <C> <C> <C> <C>
RJRN RJRN
HOLDINGS RJRN HOLDINGS RJRN
-------- -------- -------- --------
NET SALES*.............................................. $ 7,621 $ 7,621 $ 7,356 $ 7,356
-------- -------- -------- --------
Costs and expenses (Note 1)*:
Cost of products sold................................. 3,496 3,496 3,264 3,264
Selling, advertising, administrative and general
expenses................................................ 2,543 2,536 2,473 2,467
Amortization of trademarks and goodwill............... 318 318 312 312
-------- -------- -------- --------
OPERATING INCOME.................................. 1,264 1,271 1,307 1,313
Interest and debt expense (Note 6)...................... (442) (442) (588) (588)
Other income (expense), net (Notes 1 and 6)............. (155) (157) (43) (53)
-------- -------- -------- --------
Income before income taxes........................ 667 672 676 672
Provision for income taxes.............................. 293 296 290 289
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST IN INCOME OF
NABISCO................................................. 374 376 386 383
Minority interest in income of Nabisco.................. 23 23 -- --
-------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM.................. 351 353 386 383
Extraordinary item--loss on early extinguishments of
debt, net of income taxes (Note 4).................... -- -- (145) (145)
-------- -------- -------- --------
NET INCOME........................................ 351 353 241 238
Less preferred stock dividends.......................... 65 -- 65 --
-------- -------- -------- --------
NET INCOME APPLICABLE TO COMMON STOCK............. $ 286 $ 353 $ 176 $ 238
-------- -------- -------- --------
-------- -------- -------- --------
Net income per common and common equivalent share (Notes
1 and 2):
Income before extraordinary item...................... $ .88 $ 1.11
Extraordinary item.................................... -- (.48)
-------- --------
NET INCOME........................................ $ .88 $ .63
-------- --------
-------- --------
Dividends per share of Series A Preferred Stock......... $ -- $ 1.670
-------- --------
-------- --------
Dividends per share of Series C Preferred Stock......... $ 3.006 $ 0.935
-------- --------
-------- --------
Dividends per share of common stock (Notes 1 and 9)..... $ 0.750 $ --
-------- --------
-------- --------
Average number of common and common equivalent shares
outstanding (in thousands) (Notes 1 and 2).............. 326,317 288,492
-------- --------
-------- --------
</TABLE>
-------------------
* Excludes excise taxes of $1.803 billion and $1.738 billion for the six months
ended June 30, 1995 and 1994, respectively.
See Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1994
------------------ ------------------
<S> <C> <C> <C> <C>
RJRN RJRN
HOLDINGS RJRN HOLDINGS RJRN
-------- ------- -------- -------
NET CASH FLOWS FROM OPERATING ACTIVITIES.................... $ 389 $ 457 $ 641 $ 729
-------- ------- -------- -------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures...................................... (294) (294) (270) (270)
Acquisition of businesses................................. (55) (55) (390) (390)
Net proceeds from issuance of subsidiary common stock..... 1,201 1,201 -- --
Other, net................................................ 47 47 8 8
-------- ------- -------- -------
Net cash flows from (used in) investing activities...... 899 899 (652) (652)
-------- ------- -------- -------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net borrowings (repayments) under the credit agreements... (1,132) (1,132) 1,478 1,478
Net repayments of commercial paper........................ (59) (59) (199) (199)
Proceeds from issuance of other long-term debt............ 3,906 3,906 14 14
Repayments of other long-term debt........................ (3,240) (3,240) (2,523) (2,523)
Financing and advisory fees paid.......................... (88) (88) (55) (1)
Increase (decrease) in notes payable...................... (109) (109) 69 69
Proceeds from issuance of Common Stock.................... 5 -- 20 --
Proceeds from issuance of Series C Preferred Stock........ -- -- 1,734 --
Issuance of common stock to parent........................ -- -- -- 1,680
Dividends paid on Series A Preferred Stock................ -- -- (88) --
Dividends paid on Series B Preferred Stock................ (58) -- (57) --
Dividends paid on Series C Preferred Stock................ (80) -- -- --
Other preferred stock dividends paid...................... (10) -- (10) --
Dividends paid to parent.................................. -- (18) -- (20)
Dividends paid on Common Stock............................ (102) -- -- --
Other, net................................................ 15 (266) 15 (200)
-------- ------- -------- -------
Net cash flows from (used in) financing activities...... (952) (1,006) 398 298
-------- ------- -------- -------
Effect of exchange rate changes on cash and cash
equivalents................................................. 13 13 (4) (4)
-------- ------- -------- -------
Net change in cash and cash equivalents................. 349 363 383 371
Cash and cash equivalents at beginning of period............ 423 409 215 205
-------- ------- -------- -------
Cash and cash equivalents at end of period.................. $ 772 $ 772 $ 598 $ 576
-------- ------- -------- -------
-------- ------- -------- -------
</TABLE>
See Notes to Consolidated Condensed Financial Statements
3
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
------------------ ------------------
<S> <C> <C> <C> <C>
RJRN RJRN
HOLDINGS RJRN HOLDINGS RJRN
-------- ---- -------- ----
ASSETS
Current assets:
Cash and cash equivalents........................ $ 772 $ 772 $ 423 $ 409
Accounts and notes receivable, net............... 1,245 1,245 934 934
Inventories (Note 3)............................. 2,579 2,579 2,580 2,580
Prepaid expenses and excise taxes................ 414 414 426 426
------- ------- ------- -------
TOTAL CURRENT ASSETS......................... 5,010 5,010 4,363 4,349
------- ------- ------- -------
Property, plant and equipment--at cost............. 8,097 8,097 7,767 7,767
Less accumulated depreciation...................... (2,565) (2,565) (2,333) (2,333)
------- ------- ------- -------
Net property, plant and equipment................ 5,532 5,532 5,434 5,434
------- ------- ------- -------
Trademarks, net.................................... 8,383 8,383 8,506 8,506
Goodwill, net...................................... 12,560 12,560 12,681 12,681
Other assets and deferred charges.................. 409 407 424 423
------- ------- ------- -------
$ 31,894 $31,892 $ 31,408 $31,393
------- ------- ------- -------
------- ------- ------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable.................................... $ 207 $ 207 $ 296 $ 296
Accounts payable................................. 507 507 548 548
Accrued liabilities.............................. 2,412 2,269 2,532 2,488
Current maturities of long-term debt (Notes 6 and
10)................................................ 568 568 1,970 1,970
Income taxes accrued............................. 176 176 248 248
------- ------- ------- -------
TOTAL CURRENT LIABILITIES.................... 3,870 3,727 5,594 5,550
------- ------- ------- -------
Long-term debt (less current maturities) (Notes 6
and 10)............................................ 9,867 9,867 8,883 8,883
Other noncurrent liabilities....................... 3,077 2,696 2,235 1,836
Deferred income taxes.............................. 3,750 3,676 3,788 3,714
Commitments and contingencies (Note 8)
Stockholders' equity (Notes 9 and 10):.............
ESOP convertible preferred stock (15,182,336
shares issued and outstanding at June 30,
1995).............................................. 243 -- 245 --
Series B preferred stock (50,000 shares issued
and outstanding at June 30, 1995).............. 1,250 -- 1,250 --
Series C convertible preferred stock (26,675,000
shares issued and outstanding at June 30,
1995).............................................. 3 -- 3 --
Common stock (272,475,574 shares issued and
outstanding at June 30, 1995)...................... 3 -- 3 --
Paid-in capital.................................. 10,218 11,969 10,157 11,558
Retained earnings (accumulated deficit).......... (13) 126 (364) 16
Receivable from ESOP............................. (176) -- (186) --
Other stockholders' equity....................... (198) (169) (200) (164)
------- ------- ------- -------
TOTAL STOCKHOLDERS' EQUITY................... 11,330 11,926 10,908 11,410
------- ------- ------- -------
$ 31,894 $31,892 $ 31,408 $31,393
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See Notes to Consolidated Condensed Financial Statements
4
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS
For interim reporting purposes, certain costs and expenses are charged to
operations in proportion to the estimated total annual amount expected to be
incurred.
Certain prior year amounts have been reclassified to conform to the 1995
presentation. In addition, financial data of the prior year has been restated
and financial data of the current year presented to give effect to the
one-for-five reverse stock split discussed in Note 2 to the unaudited
consolidated condensed financial statements (the "Consolidated Condensed
Financial Statements") of RJR Nabisco Holdings Corp. ("RJRN Holdings") and RJR
Nabisco, Inc. ("RJRN" and collectively with RJRN Holdings, the "Registrants").
In management's opinion, the accompanying Consolidated Condensed Financial
Statements of RJRN Holdings and RJRN contain all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
the interim periods presented.
During the second quarter of 1995, RJRN recognized a pre-tax charge of
approximately $103 million for fees and expenses incurred in connection with
certain debt refinancings by RJRN, Nabisco Holdings Corp. ("Nabisco Holdings")
and Nabisco, Inc. ("Nabisco"). Such amount has been reflected in "Other Income
(Expense), Net". See Note 6 to the Consolidated Condensed Financial Statements.
NOTE 2--EARNINGS PER SHARE
Earnings per share is based on income applicable to the consolidated group,
including the portion of Nabisco Holdings' income applicable to the consolidated
group based on RJRN's approximately 80.5% economic ownership interest in Nabisco
Holdings and Nabisco Holdings' primary earnings per share. Earnings per share is
also based on the weighted average number of shares of RJRN Holdings' common
stock, par value $.01 per share ("Common Stock"), and RJRN Holdings' depositary
shares outstanding during the period and Common Stock assumed to be outstanding
to reflect the effect of dilutive options. RJRN Holdings' other potentially
dilutive securities are not included in the earnings per share calculation
because the effect of excluding dividends on such securities for the period
would exceed the earnings allocable to the Common Stock into which such
securities would be converted. Accordingly, RJRN Holdings' earnings per share
and fully diluted earnings per share are the same.
Net income per common and common equivalent share, including the average
number of common and common equivalent shares outstanding, reflects a
one-for-five reverse stock split approved by RJRN Holdings' stockholders on
April 12, 1995.
NOTE 3--INVENTORIES
The major classes of inventory are shown in the table below:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
<S> <C> <C>
Finished products........................................... $ 789 $ 771
Leaf tobacco................................................ 1,219 1,299
Raw materials............................................... 227 206
Other....................................................... 344 304
-------- ------------
$ 2,579 $2,580
-------- ------------
-------- ------------
</TABLE>
5
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--EXTRAORDINARY ITEM
The early extinguishments of debt resulted in the following extraordinary
losses:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1994 JUNE 30, 1994
------------- -------------
<S> <C> <C>
Cash paid in excess of net carrying amount (book value) of debt
extinguished.................................................... $ 207 $ 206
Write-off of debt issuance costs.................................. 17 17
----- -----
Extraordinary item--loss on early extinguishments of debt before
income taxes.................................................... 224 223
Benefit for income taxes.......................................... (78) (78)
----- -----
Extraordinary item--loss on early extinguishments of debt, net of
income taxes.................................................... $ 146 $ 145
----- -----
----- -----
</TABLE>
NOTE 5--RESTRUCTURING AND REALIGNMENT RESERVE BALANCES
The major components of the 1993 restructuring and 1994 headquarters
realignment reserves and the related aggregate balances are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
<S> <C> <C>
Severance pay and benefits............................................. $123 $187
Manufacturing/sales facilities......................................... 12 26
Abandonment of leases.................................................. 36 40
Reassessment of sourcing/product arrangements.......................... 36 38
-------- -----
$207 $291
-------- -----
-------- -----
</TABLE>
NOTE 6--LONG-TERM DEBT AND INTEREST AND DEBT EXPENSE
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
<S> <C> <C>
8.625-9.25% debentures with annual sinking fund payments............... $ 835 $1,034
5.09-9.25% Notes....................................................... 5,853 5,132
5.375-10% foreign currency debt........................................ 556 500
1991 RJRN Credit Agreement............................................. -- 1,750
1994 Nabisco Credit Agreement.......................................... -- 1,350
1995 RJRN Credit Agreement............................................. 575 --
1995 Nabisco Credit Agreement.......................................... 1,275 --
Commercial paper....................................................... 805 864
Other indebtedness..................................................... 536 223
Less current maturities................................................ (568) (1,970)
-------- ------------
$9,867 $8,883
-------- ------------
-------- ------------
</TABLE>
6
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--LONG-TERM DEBT AND INTEREST AND DEBT EXPENSE--(CONTINUED)
Consolidated interest and debt expense for RJRN Holdings consisted of the
following:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash interest.................................................... $217 $260 $432 $482
Non-cash interest and debt expense............................... 5 37 10 106
---- ---- ---- ----
$222 $297 $442 $588
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
On January 26, 1995, Nabisco Holdings completed the initial public offering
of 51,750,000 shares of its Class A Common Stock, par value $.01 per share
("Class A Common Stock"), at an initial offering price of $24.50 per share. (See
Note 9 to the Consolidated Condensed Financial Statements.) Nabisco used all of
the approximately $1.2 billion of net proceeds from the initial public offering
to repay a portion of its borrowings under the credit agreement dated as of
December 6, 1994 between Nabisco and various financial institutions (the "1994
Nabisco Credit Agreement").
On April 28, 1995, the Registrants entered into (a) a new $2.75 billion
three year revolving credit agreement with various financial institutions (the
"1995 RJRN Credit Agreement") and (b) a new $750 million 364 day credit
agreement to support RJRN commercial paper (the "RJRN Commercial Paper
Facility," and together with the 1995 RJRN Credit Agreement, the "New RJRN
Credit Agreements"). Among other things, the New RJRN Credit Agreements were
designed to remove restrictions on the ability of Nabisco Holdings and its
subsidiaries to incur or prepay debt and to allow RJRN to reduce the aggregate
amount of commitments under its banking facilities from $6 billion to $3.5
billion by replacing its $5.0 billion revolving credit facility dated December
1, 1991, as amended (the "1991 RJRN Credit Agreement"), and its $1.0 billion
commercial paper facility dated as of April 5, 1993, as amended (together with
the 1991 RJRN Credit Agreement, the "Old RJRN Credit Agreements").
On April 28, 1995, Nabisco Holdings and Nabisco entered into a credit
agreement with various financial institutions (the "1995 Nabisco Credit
Agreement") to replace the 1994 Nabisco Credit Agreement. Among other things,
the 1995 Nabisco Credit Agreement was designed to permit Nabisco to prepay
intercompany debt and incur long-term debt, to increase Nabisco's committed
facility from $1.5 billion to $3.5 billion and to extend its term from 364 days
to five years.
During the second quarter of 1995, RJRN repaid $300 million aggregate
principal amount of its outstanding 9.25% Notes which matured on May 1, 1995 and
redeemed $200 million aggregate principal amount of its outstanding 8.875% Notes
due 1998 with proceeds from borrowings under the 1991 RJRN Credit Agreement.
On June 5, 1995, RJRN and Nabisco consummated offers to exchange
approximately $1.8 billion aggregate principal amount of newly issued notes and
debentures (the "New Notes") of Nabisco for the same amount of notes and
debentures (the "Old Notes") issued by RJRN (the "Exchange Offers"). As part of
the transaction, RJRN returned to Nabisco approximately $1.8 billion of
intercompany notes that had been issued by Nabisco and were held by a
non-Nabisco affiliate of RJRN. The New Notes issued by Nabisco in the Exchange
Offers have interest rates, principal amounts, maturities and redemption
provisions identical to the corresponding Old Notes issued by RJRN. Nabisco
subsequently borrowed approximately $2.4 billion under the 1995 Nabisco Credit
Agreement to (a) repay or repurchase an additional $2.1 billion of intercompany
notes of Nabisco and its subsidiaries; (b) repay
7
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--LONG-TERM DEBT AND INTEREST AND DEBT EXPENSE--(CONTINUED)
approximately $125 million of outstanding borrowings under the 1994 Nabisco
Credit Agreement; (c) repay approximately $89 million of an intercompany note
from Nabisco to Nabisco Holdings; and (d) pay a $79 million dividend to Nabisco
Holdings. Nabisco Holdings used the payments it received to repay the balance of
a $168 million intercompany note to RJRN.
Concurrently with the Exchange Offers, RJRN also obtained consents to
certain indenture modifications from holders of the Old Notes and holders of
approximately $3.58 billion of its other outstanding debt securities (the
"Consent Solicitations"). The Exchange Offers, the Consent Solicitations and
certain related transactions were designed, among other things, to enable
Nabisco to obtain long-term debt financing independent of RJRN and to repay its
intercompany debt to RJRN.
On June 5, 1995, RJRN applied the approximately $2.3 billion that it
received from Nabisco and Nabisco Holdings in repayment of the intercompany
notes to repay a portion of its borrowings under the 1991 RJRN Credit Agreement.
RJRN used an additional approximately $330 million of borrowings under the 1995
RJRN Credit Agreement to repay the balance of its obligations under the Old RJRN
Credit Agreements and to pay certain expenses associated with the Exchange
Offers, the Consent Solicitations and the related transactions.
On June 28, 1995, Nabisco issued $400 million principal amount of 6.70%
Notes Due 2002, $400 million principal amount of 6.85% Notes Due 2005 and $400
million principal amount of 7.55% Debentures Due 2015. The net proceeds from the
issuance of such debt securities were used to repay borrowings under the 1995
Nabisco Credit Agreement.
On June 30, 1995, RJRN filed a registration statement with the Securities
and Exchange Commission to register the offering from time to time of its debt
securities in one or more series with an aggregate initial public offering price
of up to approximately $1.0 billion.
See Note 10 to the Consolidated Condensed Financial Statements for a
discussion of certain additional transactions.
Based on RJRN's intention and ability to continue to refinance, for more
than one year, the amount of its domestic commercial paper borrowings
outstanding either in the commercial paper market or with additional borrowings
under the 1995 RJRN Credit Agreement, domestic commercial paper borrowings have
been included under "Long-term debt".
At June 30, 1995, Nabisco had outstanding fixed interest rate swaps with an
aggregate notional principal amount of $1.0 billion and caps covering an
aggregate notional principal amount of $100 million, all with expiration dates
within one year. The estimated fair value of these arrangements as of June 30,
1995 was unfavorable by approximately $2 million, based on calculations from
independent third parties for similar arrangements. Nabisco entered into such
agreements to effectively fix a portion of its interest rate exposure on its
floating rate debt.
NOTE 7--SUPPLEMENTAL CASH FLOWS INFORMATION
For information regarding non-cash components of certain debt transactions
that occurred during 1995, see Note 6 to the Consolidated Condensed Financial
Statements.
8
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--CONTINGENCIES
TOBACCO-RELATED LITIGATION
Various legal actions, proceedings and claims are pending or may be
instituted against R. J. Reynolds Tobacco Company ("RJRT") or its affiliates or
indemnitees, including those claiming that lung cancer and other diseases have
resulted from the use of or exposure to RJRT's tobacco products. A total of 54
such actions in the United States and one against RJRT's Canadian subsidiary
were pending on December 31, 1994. As of July 25, 1995, 68 active cases were
pending against RJRT and/or its affiliates or indemnitees, 66 in the United
States and two in Canada. Five of the 66 active cases in the United States
involve alleged non-smokers claiming injuries resulting from exposure to
environmental tobacco smoke. Six cases, which are described more specifically
below, purport to be class actions on behalf of many thousands of individuals.
Purported classes include individuals claiming to be addicted to cigarettes and
flight attendants alleging personal injury from exposure to environmental
tobacco smoke in their workplace.
The plaintiffs in these actions seek recovery on a variety of legal
theories, including strict liability in tort, design defect, negligence, breach
of warranty, failure to warn, fraud, misrepresentation, unfair trade practices,
conspiracy, unjust enrichment, indemnity and common law public nuisance.
Punitive damages, often in amounts ranging into the hundreds of millions of
dollars, are specifically pleaded in 22 cases in addition to compensatory and
other damages. The defenses raised by RJRT and/or its affiliates, where
applicable, include preemption by the Federal Cigarette Labeling and Advertising
Act, as amended (the "Cigarette Act"), of some or all such claims arising after
1969; the lack of any defect in the product; assumption of the risk; comparative
fault; lack of proximate cause; and statutes of limitations or repose. Juries
have found for plaintiffs in two smoking and health cases in which RJRT was not
a defendant, but in one such case, which has been appealed by both parties, no
damages were awarded. The jury awarded plaintiffs $400,000 in the other such
case, Cipollone v. Liggett Group, Inc., et al., which award was overturned on
appeal and the case was subsequently dismissed.
On June 24, 1992, the United States Supreme Court in Cipollone held that
claims that tobacco companies failed to adequately warn of the risks of smoking
after 1969 and claims that their advertising and promotional practices
undermined the effect of warnings after that date were preempted by the
Cigarette Act. The Court also held that claims of breach of express warranty,
fraud, misrepresentation and conspiracy were not preempted. The Supreme Court's
decision was announced through a plurality opinion, and further definition of
how Cipollone will apply to other cases must await rulings in those cases.
Certain legislation proposed in recent years in Congress, among other
things, would eliminate any such preemptive effect on common law damage actions
for personal injuries. RJRT is unable to predict whether such legislation will
be enacted and, if so, in what form, or whether such legislation would be
intended by Congress to apply retroactively. The passage of such legislation
could increase the number of cases filed against cigarette manufacturers,
including RJRT.
Set forth below are descriptions of (i) the class action lawsuits, (ii) a
suit in which plaintiffs seek to act as private attorneys general, (iii) actions
brought by state attorneys general in Minnesota, Mississippi and West Virginia,
(iv) an action brought by the State of Florida and (v) certain pending
investigations relating to RJRT's tobacco business.
In 1991, in Broin v. Philip Morris Company, Inc. et al., a purported class
action against certain tobacco industry defendants, including RJRT, was brought
by flight attendants who claim to represent a class of 60,000 individuals and
allege personal injury caused by exposure to environmental tobacco
9
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--CONTINGENCIES--(CONTINUED)
smoke in their workplace. In December 1994, the Florida state court certified a
class consisting of "all non-smoking flight attendants who are or have been
employed by airlines based in the United States and are suffering from diseases
and disorders caused by their exposure to secondhand cigarette smoke in airline
cabins." The defendants have appealed the ruling to the Florida Third District
Court of Appeal.
In March 1994, Castano v. The American Tobacco Company, et al., a purported
class action, was filed in the United States District Court for the Eastern
District of Louisiana against tobacco industry defendants, including RJRT,
seeking certification of a class action on behalf of all United States residents
who allegedly are or claim to be addicted, or are the legal survivors of persons
who allegedly were addicted, to tobacco products manufactured by defendants. The
complaint alleges that cigarette manufacturers manipulated the levels of
nicotine in their tobacco products to induce addiction in smokers. Plaintiffs'
motion for certification of the class was granted in part in February 1995. The
district court certified core liability issues (fraud, negligence, breach of
warranty, both express and implied, intentional tort, strict liability and
consumer protection statutes), and punitive damages. Not certified were issues
of injury-in-fact, proximate cause, reliance, affirmative defenses, and
compensatory damages. In May 1995, the district court judge allowed the
defendants to appeal the class action determination to the Fifth Circuit Court
of Appeals which, on July 26, 1995, agreed to hear this appeal.
In March 1994, Lacey v. Lorillard Tobacco Company, Inc., et al. a purported
class action, was filed in Circuit Court, Fayette County, Alabama against three
cigarette manufacturers, including RJRT. Plaintiff, who claims to represent all
smokers who have smoked or are smoking cigarettes manufactured and sold by
defendants in the state of Alabama, seeks compensatory and punitive damages not
to exceed $48,500 per class member and injunctive relief arising from
defendants' alleged failure to disclose additives used in their cigarettes. In
April 1994, defendants removed the case to the United States District Court for
the Northern District of Alabama.
In April 1994, Sparks v. R.J. Reynolds Tobacco Company, et al. was brought
in Washington state court on behalf of a purported class of "parents with a
conscience" alleging that an RJRT advertising campaign targets minors and
constitutes an unfair trade practice under Washington state law. In 1994, the
case was removed to the United States District Court for the Western District of
Washington. Defendants' motion to dismiss the case on preemption grounds was
granted on December 9, 1994. Plantiff's motion to appeal was subsequently
dismissed and the case is now closed.
In May 1994, Engle v. R.J. Reynolds Tobacco Company, et al., was filed in
Circuit Court, Eleventh Judicial District, Dade County, Florida against tobacco
manufacturers, including RJRT, and other members of the industry, by plaintiffs
who allege injury and purport to represent a class of all United States citizens
and residents who claim to be addicted, or who claim to be legal survivors of
persons who allegedly were addicted, to tobacco products and who allegedly have
suffered death or disease as a result of use of the product. On October 28,
1994, a state court judge in Miami granted plaintiffs' motion to certify the
class. The defendants have appealed that ruling to the Florida Third District
Court of Appeal.
In September 1994, Granier v. American Tobacco Company, et al., a purported
class action apparently patterned after the Castano case, was filed in the
United States District Court for the Eastern District of Louisiana against
tobacco industry defendants, including RJRT. Plaintiffs seek certification of a
class action on behalf of all residents of the United States who have used and
purportedly became addicted to tobacco products manufactured by defendants. The
complaint alleges that cigarette manufacturers manipulated the levels of
nicotine in tobacco products for the purpose of
10
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--CONTINGENCIES--(CONTINUED)
addicting consumers. By agreement of the parties, all action in this case was
stayed pending determination of the motion for class certification in the
Castano case; however, there has been no activity in this case since the
district court certification in Castano.
In January 1995, a purported class action was filed in the Ontario Canada
Court of Justice against RJR-MacDonald, Inc. and two other Canadian cigarette
manufacturers. The lawsuit, Le Tourneau, et al. v. Imperial Tobacco Company,
Ltd., et al., seeks certification of a class of persons who have allegedly
become addicted to the nicotine in cigarettes or who had such alleged addiction
heightened or maintained through the use of cigarettes, and who have allegedly
suffered loss, injury, and damage in consequence, together with persons with
Family Law Act claims in respect to the claims of such allegedly addicted
persons, and the estates of such allegedly addicted persons. Theories of
recovery pleaded include negligence, strict liability, failure to warn, deceit,
negligent misrepresentation, implied warranty, and conspiracy. The relief sought
consists of damages of three million dollars, punitive damages, funding of
nicotine addiction rehabilitation centers, interest and costs.
In June 1994, in Mangini v. R.J. Reynolds Tobacco Company, et al., the
California Supreme Court ruled that the plaintiffs' claim that an RJRT
advertising campaign constitutes an unfair business practice under the
California Business and Professions Code was not preempted by the Cigarette Act.
The suit is similar to the Sparks case, recently dismissed in Washington, except
that the plaintiffs here are acting as private attorneys general rather than on
behalf of a purported class. This opinion allows plaintiffs to pursue their
lawsuit which had been dismissed at the trial court level. In September 1994,
the defendants filed a Petition for Certiorari to the United States Supreme
Court, which was denied in December 1994. The case has been remanded to the
trial court.
In June 1994, in Moore v. The American Tobacco Company, et al., RJRN and
RJRT were named along with other industry members as defendants in an action
brought by the Mississippi state attorney general on behalf of the state to
recover state funds paid for health care and medical and other assistance to
state citizens suffering from diseases and conditions allegedly related to
tobacco use. This suit, which was brought in Chancery (non-jury) Court, Jackson
County, Mississippi also seeks an injunction from "promoting" or "aiding and
abetting" the sale of cigarettes to minors. Both actual and punitive damages are
sought in unspecified amounts. Motions by the defendants to dismiss the case or
to transfer it to circuit (jury) court were denied in February 1995 and the case
is proceeding in Chancery Court. RJRN and other industry holding companies have
been dismissed from the case.
In August 1994, RJRT and other U.S. cigarette manufacturers were named as
defendants in an action instituted on behalf of the state of Minnesota on behalf
of Blue Cross and Blue Shield of Minnesota to recover the costs of medical
expenses paid by the state and by Blue Cross/Blue Shield that were incurred in
the treatment of diseases allegedly caused by cigarette smoking. The suit,
Minnesota v. Philip Morris, et al., alleges consumer fraud, unlawful and
deceptive trade practices, false advertising and restraint of trade, and it
seeks injunctive relief and money damages, trebled for violations of the state
antitrust law. Motions by the defendants to dismiss all claims of Blue
Cross/Blue Shield and certain substantive claims of the State of Minnesota, and
by plaintiffs to strike certain industry defenses were denied on May 19, 1995.
In September 1994, the Attorney General of West Virginia filed suit against
RJRT, RJRN and twenty-one additional defendants in state court in West Virginia.
The lawsuit, McGraw v. American Tobacco Company, et al., is similar to those
previously filed in Mississippi and Minnesota. It seeks recovery for medical
expenses incurred by the state in the treatment of diseases statistically
associated with cigarette smoking and requests an injunction against the
promotion and sale of cigarettes and
11
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--CONTINGENCIES--(CONTINUED)
tobacco products to minors. The lawsuit also seeks a declaration that the state
of West Virginia, as plaintiff, is not subject to the defenses of statute of
repose, statute of limitations, contributory negligence, comparative negligence,
or assumption of the risk. On May 3, 1995, the judge granted defendants' motion
to dismiss eight of the ten causes of action pleaded. The defendants have filed
motions to dismiss the remaining two counts.
On February 21, 1995, the state of Florida filed a suit against RJRT and
RJRN, along with other industry members, their holding companies and other
entities. The state is seeking Medicaid reimbursement under various theories of
liability and injunctive relief to: prevent the defendants from engaging in
consumer fraud; disclose and publish all research conducted directly or
indirectly by the industry; fund a corrective public education campaign on the
issues of smoking and health in Florida; prevent the distribution and sale of
cigarettes to minors under the age of eighteen; fund clinical smoking cessation
programs in the state of Florida; dissolve the Council for Tobacco Research and
the Tobacco Institute or divest ownership, sponsorship, or membership in both;
and disgorge all profits from sales of cigarettes in Florida. On defendants'
motion, the case was stayed until July 7, 1995 and that stay has been extended
pending appeals by the plaintiffs and the defendants in connection with the
constitutional challenge to the Florida statute discussed below.
The suit by the state of Florida was brought under a statute which was
amended effective July 1994 to allow the state to bring an action in its own
name against the tobacco industry to recover amounts paid by the state under its
Medicaid program to treat illnesses statistically associated with cigarette
smoking. The amended statute does not require the state to identify the
individual who received medical care, permits a lawsuit to be filed as a class
action and eliminates the comparative negligence and assumption of risk
defenses. The Florida statute was challenged on state and federal constitutional
grounds in a lawsuit brought by Philip Morris Companies Inc., Associated
Industries of Florida, Publix Supermarkets and National Association of
Convenience Stores in June 1994 and on June 26, 1995 the trial court judge
granted in part the plaintiffs' motion for summary judgment finding portions of
the Act unconstitutional. Both plaintiffs and defendants have filed notices of
appeal of this decision. The Florida House and Senate passed a bill that would
repeal the Florida statute retroactively which was vetoed by the Governor. The
Florida House and Senate have indicated that they are considering action to
override that veto. On February 20, 1995, RJRT and Philip Morris Incorporated
filed a petition with the Supreme Court of Florida to prohibit Florida's Agency
for Health Care Administration and the Department of Business and Professional
Regulation from filing and maintaining a lawsuit against the tobacco industry
under this statute. That petition was denied by the Florida Supreme Court on
April 18, 1995. Similar legislation, without Florida's elimination of defenses,
has been introduced in the Massachusetts and New Jersey legislatures. RJRT is
unable to predict whether other states will enact similar legislation and
whether lawsuits will be filed under these statutes or their outcome, if filed.
RJRT understands that a grand jury investigation being conducted in the
Eastern District of New York is examining possible violations of criminal law in
connection with activities relating to the Council for Tobacco Research--USA,
Inc., of which RJRT is a sponsor. RJRT is unable to predict the outcome of this
investigation.
RJRT received a civil investigative demand dated January 11, 1994 from the
U.S. Department of Justice requesting broad documentary information from RJRT.
Although the request appears to focus on tobacco industry activities in
connection with product development efforts, it also requests general
information concerning contacts with competitors. RJRT is unable to predict the
outcome of this investigation.
-------------------
12
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--CONTINGENCIES--(CONTINUED)
Litigation is subject to many uncertainties, and it is possible that some of
the tobacco-related legal actions, proceedings or claims could be decided
against RJRT or its affiliates or indemnitees. Determinations of liability or
adverse rulings against other cigarette manufacturers that are defendants in
similar actions, even if such rulings are not final, could adversely affect the
litigation against RJRT or its affiliates or indemnitees and increase the number
of such claims. Although it is impossible to predict the outcome of such events
or their effect on RJRT, a significant increase in litigation activities could
have an adverse effect on RJRT. RJRT believes that it has a number of valid
defenses to any such actions, including but not limited to those defenses based
on preemption under the Cipollone decision, and RJRT intends to defend
vigorously all such actions.
The Registrants believe that the ultimate outcome of all pending litigation
matters should not have a material adverse effect on the financial position of
either of the Registrants; however, it is possible that the results of
operations or cash flows of the Registrants in any particular quarterly or
annual periods or the financial condition of the Registrants could be materially
affected by the ultimate outcome of certain pending litigation matters.
Management is unable to derive a meaningful estimate of the amount or range of
any possible loss in any particular quarterly or annual period or in the
aggregate.
-------------------
EPA PROCEEDINGS
In April 1995, RJRN Holdings was named a "potentially responsible party"
with certain third parties under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) with respect to a "superfund" site at
which a former subsidiary of RJRN had operations. The Registrants currently
cannot reasonably estimate the investigative or remedial costs, if any, for
which they may be liable in connection with this matter.
NOTE 9--STOCKHOLDERS' EQUITY
Retained earnings (accumulated deficit) at June 30, 1995 includes non-cash
expenses related to accumulated trademark and goodwill amortization of
approximately $4.0 billion.
The completion on January 26, 1995 of Nabisco Holdings' initial public
offering of 51,750,000 shares of its Class A Common Stock and the corresponding
reduction in RJRN's proportionate economic interest in Nabisco Holdings from
100% to approximately 80.5% resulted in an adjustment of approximately $412
million to the carrying amount of RJRN's investment in Nabisco Holdings. Such
adjustment was reflected as additional paid-in capital by RJRN and RJRN
Holdings.
On April 1, 1995, RJRN Holdings paid an initial quarterly dividend on the
Common Stock of $.375 per share. In May 1995, the Board of Directors of RJRN
Holdings declared a quarterly dividend on the Common Stock of $.375 per share,
which was paid on July 1, 1995 to stockholders of record on June 9, 1995. RJRN
Holdings expects to continue to pay a quarterly cash dividend on the Common
Stock equal to $.375 per share or $1.50 per share on an annualized basis.
On April 12, 1995, the stockholders of RJRN Holdings approved a one-for-five
reverse stock split and the corresponding reduction in the number of authorized
shares of Common Stock from 2,200,000,000 to 440,000,000. Accordingly, the rates
at which shares of ESOP Convertible Preferred Stock, par value $.01 per share,
and Series C Conversion Preferred Stock, par value $.01 per share, convert into
shares of Common Stock were proportionately adjusted.
13
<PAGE>
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9--STOCKHOLDERS' EQUITY--(CONTINUED)
See Note 10 to the Consolidated Condensed Financial Statements for a
discussion of a preferred stock exchange offer.
NOTE 10--SUBSEQUENT EVENTS
The Board of Directors of Nabisco Holdings declared an initial quarterly
dividend of $.1375 per share which was paid on July 1, 1995 to stockholders of
record on June 15, 1995. Nabisco Holdings expects to continue to pay a quarterly
cash dividend on its common stock equal to $.1375 per share or $.55 per share on
an annualized basis (approximately $146 million annually in the aggregate). On
an annualized basis, RJRN would receive approximately $117 million of the
aggregate Nabisco Holdings' dividend.
On July 14, 1995, Nabisco issued $400 million principal amount of 7.05%
Notes Due 2007. The net proceeds from the issuance of such debt securities were
used to repay borrowings under the 1995 Nabisco Credit Agreement. On July 17,
1995, Nabisco redeemed its outstanding 8 5/8% Sinking Fund Debentures Due 2017
at a price of $1,051.75 for each $1,000 principal amount of debentures, plus
accrued and unpaid interest thereon. The aggregate redemption price and accrued
interest on these debentures was approximately $442 million.
On July 24, 1995, RJRN issued $400 million aggregate principal amount of 8%
Notes Due 2001 and $250 million aggregate principal amount of 8 3/4% Notes Due
2007. The net proceeds from the issuance of these securities were or will be
used to repay borrowings under the 1995 RJRN Credit Agreement, to retire
commercial paper and for general corporate purposes.
RJRN Holdings has filed a registration statement with the Securities and
Exchange Commission to exchange preferred securities issued by a newly-formed
controlled affiliate for up to 49,000,000 of the outstanding Series B Depositary
Shares ("Series B Depositary Shares"), each representing 1/1000 of a share of
its Series B Cumulative Preferred Stock ("Series B Preferred Stock"). The
affiliate's principal asset would consist of junior subordinated debentures
issued by RJRN Holdings in an amount and with terms sufficient to make payments
on the preferred securities. No assurance can be given that this exchange offer
will be completed.
RJRT and Tobacco International are exploring ways to increase efficiency and
productivity and to reduce the cost structures of their respective businesses.
-------------------
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of RJRN Holdings' financial condition
and results of operations should be read in conjunction with the historical
financial information included in the Consolidated Condensed Financial
Statements.
Results of Operations
Summarized financial data for RJRN Holdings is as follows:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
----------------------------- ----------------------------
1995 1994 % CHANGE 1995 1994 % CHANGE
------ ------- -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
NET SALES:
RJRT............................... $1,203 $ 1,182 2% $2,199 $2,316 (5)%
Tobacco International.............. 821 712 15 1,522 1,439 6
------ ------- ------ ------
Total Tobacco...................... 2,024 1,894 7 3,721 3,755 (1)
------ ------- ------ ------
Domestic Food Group................ 1,502 1,426 5 2,866 2,771 3
International Food Group........... 555 464 20 1,034 830 25
------ ------- ------ ------
Total Food......................... 2,057 1,890 9 3,900 3,601 8
------ ------- ------ ------
$4,081 $ 3,784 8 $7,621 $7,356 4
------ ------- ------ ------
------ ------- ------ ------
OPERATING COMPANY CONTRIBUTION*:
RJRT............................... $ 386 $ 394 (2)% $ 756 $ 781 (3)%
Tobacco International.............. 147 173 (15) 326 352 (7)
------ ------- ------ ------
Total Tobacco...................... 533 567 (6) 1,082 1,133 (5)
------ ------- ------ ------
Domestic Food Group................ 230 230 -- 431 417 3
International Food Group........... 57 41 39 101 73 38
------ ------- ------ ------
Total Food......................... 287 271 6 532 490 9
------ ------- ------ ------
Corporate.......................... (17) (7) -- (32) (4) --
------ ------- ------ ------
$ 803 $ 831 (3) $1,582 $1,619 (2)
------ ------- ------ ------
------ ------- ------ ------
OPERATING INCOME:
RJRT............................... $ 295 $ 303 (3)% $ 573 $ 599 (4)%
Tobacco International.............. 135 164 (18) 304 333 (9)
------ ------- ------ ------
Total Tobacco...................... 430 467 (8) 877 932 (6)
------ ------- ------ ------
Domestic Food Group................ 180 179 1 329 314 5
International Food Group........... 51 36 42 90 65 38
------ ------- ------ ------
Total Food......................... 231 215 7 419 379 11
------ ------- ------ ------
Corporate.......................... (17) (7) -- (32) (4) --
------ ------- ------ ------
$ 644 $ 675 (5) $1,264 $1,307 (3)
------ ------- ------ ------
------ ------- ------ ------
</TABLE>
------------
* Operating income before amortization of trademarks and goodwill.
TOBACCO
The tobacco line of business is conducted by RJRT and R.J. Reynolds Tobacco
International, Inc. ("Tobacco International").
15
<PAGE>
The worldwide tobacco business reported net sales of $2.02 billion in the
second quarter of 1995, an increase of 7% from the second quarter of 1994 level
of $1.89 billion, and $3.72 billion in the first six months of 1995, a decline
of 1% from the first six months of 1994 level of $3.76 billion. The net sales
increase in the second quarter of 1995 resulted primarily from favorable foreign
currency developments and increased volume in the international tobacco business
and a higher proportion of sales from full price brands and higher selling
prices in the domestic tobacco business. The net sales decline in the first six
months of 1995 resulted primarily from overall volume losses in the domestic
tobacco business partially offset by favorable foreign currency developments,
higher pricing and favorable product mix in the international business. Overall
worldwide tobacco volume for the second quarter of 1995 increased 5% while
overall worldwide tobacco volume for the first six months decreased 3% from the
corresponding periods of the prior year. Operating company contribution for the
worldwide tobacco business of $533 million in the second quarter of 1995
declined 6% from the second quarter of 1994 level of $567 million and operating
company contribution for the worldwide tobacco business of $1.08 billion in the
first six months of 1995 declined 5% from the first six months of 1994 level of
$1.13 billion, reflecting lower operating company contributions in both the
domestic and international businesses. Operating income for the worldwide
tobacco business in the second quarter of 1995 of $430 million declined 8% from
the second quarter of 1994 level of $467 million, and operating income for the
worldwide tobacco business in the first six months of 1995 of $877 million
declined 6% from the first six months of 1994 level of $932 million, reflecting
the lower operating company contribution.
Net sales for RJRT amounted to $1.20 billion in the second quarter of 1995,
an increase of 2% from the second quarter of 1994 level of $1.18 billion, and
$2.20 billion in the first six months of 1995, a decline of 5% from the first
six months of 1994 level of $2.32 billion. The increase in net sales in the
second quarter of 1995 resulted primarily from the effect of volume gains of 2%
in the full price segment (approximately $19 million) and higher selling prices
in both the full price and savings segments (approximately $15 million) that
more than offset the effect of volume losses of 7% in the savings segment
(approximately $22 million). The decline in net sales in the first six months of
1995 resulted primarily from the effect of volume losses of 3% in the full price
segment (approximately $124 million) and volume losses of 14% in the saving
segment (approximately $53 million), partially offset by a higher proportion of
full price sales (approximately $33 million) and higher selling prices in both
the full price and savings segments (approximately $18 million). RJRT's 2%
volume gain in the full price segment during the second quarter of 1995 was less
than the industry average increase of approximately 3% because of the erosion of
market shares of certain brands. RJRT's 3% volume loss in the full price segment
during the first six months of 1995 was less than the industry average increase
of approximately 1% because of the pattern of wholesale purchases and the
erosion of market share of certain brands. The 7% and 14% volume losses in the
savings segment during the second quarter of 1995 and the first six months of
1995, respectively, also exceeded industry averages and reflected an erosion of
market share of certain brands in that segment due to RJRT's decision to be more
selective in its participation in that segment. RJRT's full price volume as a
percentage of total volume amounted to 62% in both the second quarter and the
first six months of 1995 compared to 60% in the second quarter of 1994 and 59%
in the first six months of 1994. Overall RJRT tobacco volume declined 2% in the
second quarter of 1995 and 8% in the first six months of 1995 compared to the
corresponding periods of the prior year. RJRT's operating company contribution
was $386 million in the second quarter of 1995, a 2% decline from the second
quarter of 1994 level of $394 million, as higher pricing (approximately $15
million), the higher proportion of full price sales (approximately $13 million)
and reduced merchandising expenses (approximately $9 million) were more than
offset by the impact of an increase in marketing expenses (approximately $55
million). RJRT's operating company contribution was $756 million in the first
six months of 1995, a 3% decline from the first six months of 1994 level of $781
million, as lower manufacturing costs (approximately $52 million), the higher
proportion of full price sales (approximately $32 million), reduced
merchandising and administrative expenses (approximately $30 million) and higher
selling prices (approximately $18 million) were more than offset by the decline
in overall volume (approximately $147 million) and an increase in marketing
expense (approximately $25
16
<PAGE>
million). RJRT's operating income was $295 million in the second quarter of
1995, a decline of 3% from $303 million in the second quarter of 1994, and $573
million in the first six months of 1995, a decline of 4% from the first six
months of 1994 level of $599 million. The decline in operating income for both
the second quarter of 1995 and the first six months of 1995 reflected the lower
RJRT operating company contribution.
During the second quarter and first six months of 1995, the pricing
stability that began in the fourth quarter of 1993 continued. In addition,
profit margins during each of the first two quarters of 1995 showed a slight
improvement compared to the fourth quarter of 1994. On May 4, 1995, RJRT
announced increases in the list price of all of its brands by 3 cents per pack.
RJRT's major U.S. competitors thereafter announced similar price increases. RJRT
is unable to predict the impact of this price increase or whether the resulting
profit margins and pricing are sustainable.
In February 1994, the Commissioner of the U.S. Food and Drug Administration
(the "FDA"), which historically has asserted that it has no jurisdiction over
cigarette products, stated that he intended to cause the FDA to work with the
U.S. Congress to resolve the regulatory status of cigarettes under the Food,
Drug and Cosmetic Act. During the second quarter of 1994, hearings were held in
this regard and RJRT and other members of the U.S. cigarette industry were asked
to provide voluntarily certain documents and other information to Congress and
the FDA. In July and early August 1995, it was reported in the press that the
Commissioner of the FDA believes that nicotine is a drug and should be regulated
and that the FDA has recommended to the Clinton Administration that further
steps be taken to limit access to cigarettes by minors in addition to those
mandated by existing federal, state and local laws or voluntarily implemented
by RJRT and other tobacco companies. It is not possible to predict what
actions, if any, will result from the Congressional deliberations or the
reported FDA findings and recommendations or the effect thereof, if any, on
RJRT or the cigarette industry generally.
In March 1994, the U.S. Occupational Safety and Health Administration
("OSHA") announced proposed regulations that would restrict smoking in the
workplace to designated smoking rooms that are separately exhausted to the
outside. Although RJRT cannot predict the form of any regulations that may be
finally adopted by OSHA, if the proposed regulations are adopted, RJRT expects
that many employers who have not already done so would prohibit smoking in the
workplace rather than make expenditures necessary to establish designated
smoking areas to accommodate smokers. Because many employers currently do not
permit smoking in the workplace, RJRT cannot predict the effect of any
regulations that may be adopted, but incremental restrictions on smokers could
have an adverse effect on cigarette sales and RJRT.
Various states and local jurisdictions have enacted legislation imposing
restrictions on public smoking, increasing excise taxes and designating a
portion of the increased cigarette excise taxes to fund anti-smoking programs,
health care programs or cancer research. Many employers have also initiated
programs restricting or eliminating smoking in the workplace.
It is not possible to determine what additional federal, state or local
legislation or regulations relating to smoking or cigarettes will be enacted or
to predict any resulting effect thereof on RJRT, Tobacco International or the
cigarette industry generally, but such legislation or regulations could have an
adverse effect on RJRT, Tobacco International or the cigarette industry
generally.
For a description of certain litigation affecting RJRT and its affiliates,
see Note 8 to the Consolidated Condensed Financial Statements.
Tobacco International recorded net sales of $821 million in the second
quarter of 1995, an increase of 15% from the second quarter of 1994 level of
$712 million, and $1.52 billion in the first six months of 1995, an increase of
6% from the first six months of 1994 level of $1.44 billion. The increases in
net sales for the second quarter of 1995 resulted primarily from volume
increases (approximately $52 million), with significant increases primarily
attributed to export shipments to the former Soviet Union and the Middle East
and continued strong sales in key markets in Europe, and favorable foreign
17
<PAGE>
currency developments (approximately $51 million). The increase in net sales for
the first six months of 1995 primarily resulted from favorable foreign currency
developments (approximately $63 million), higher pricing (approximately $11
million) and favorable product mix (approximately $21 million). Tobacco
International's operating company contribution of $147 million in the second
quarter of 1995 decreased 15% from the second quarter of 1994 level of $173
million due to higher administrative costs (approximately $21 million), higher
manufacturing costs (approximately $15 million) and higher promotional and
selling expenses (approximately $11 million), which were partially offset by
higher volume (approximately $26 million) and favorable foreign currency
developments (approximately $7 million). Tobacco International's operating
company contribution of $326 million in the first six months of 1995 decreased
7% from the first six months of 1994 level of $352 million due to higher
administrative costs (approximately $23 million) and higher promotional and
selling expenses (approximately $9 million) which were partially offset by
higher pricing (approximately $11 million). The decline in operating income for
both the second quarter of 1995 and the first six months of 1995 reflected the
lower Tobacco International operating company contribution.
FOOD
The food business is conducted by operating subsidiaries of Nabisco
Holdings. Nabisco's businesses in the United States are comprised of the Nabisco
Biscuit Company, the Specialty Products Company, the LifeSavers Company, the
Planters Company, the Food Service Company and the Fleischmann's Company
(collectively, the "Domestic Food Group"). Nabisco's businesses outside the
United States are conducted by Nabisco Ltd and Nabisco International, Inc.
("Nabisco International," and together with Nabisco Ltd, the "International Food
Group").
Nabisco Holdings reported net sales of $2.06 billion in the second quarter
of 1995, an increase of 9% from the second quarter of 1994 level of $1.89
billion, and $3.90 billion in the first six months of 1995, an increase of 8%
from the first six months of 1994 level of $3.60 billion, with the Domestic Food
Group up 5% and 3%, respectively, and the International Food Group up 20% and
25%, respectively. The Domestic Food Group second quarter net sales increase was
primarily attributable to volume gains at the Nabisco Biscuit Company
(approximately $54 million), reflecting the successful introduction of breakfast
snacks and new SnackWell's products, and volume gains for the Fleischmann's,
Food Service and Specialty Products Companies (approximately $28 million). The
Domestic Food Group net sales increase for the first six months was primarily
attributable to volume gains at the Nabisco Biscuit Company (approximately $100
million), reflecting the success of new product introductions and product line
extensions, and volume gains at the Food Service and LifeSavers Companies
(approximately $17 million), offset in part by sales decreases at the
Fleischmann's, Planters and Specialty Products Companies (approximately $21
million). The International Food Group second quarter net sales increase was
primarily the result of improved results in Brazil (approximately $52 million)
due to the continuation of the country's second half 1994 economic recovery and
volume growth in the Brazilian biscuit business, together with improvements in
Canada, Iberia and Argentina (approximately $27 million). The International Food
Group net sales increase for the first six months was primarily the result of
improved results in Brazil (approximately $100 million), the favorable impact of
the April 1994 acquisition of Establecimiento Modelo Terrabusi S.A.
("Terrabusi") (approximately $62 million) and the favorable performance from the
Iberian and Canadian businesses (approximately $27 million) which were partially
offset by lower net sales in Mexico (approximately $21 million) due to the
devaluation of the peso.
Nabisco Holdings' operating company contribution was $287 million in the
second quarter of 1995, an increase of $16 million from the second quarter 1994
level of $271 million, and $532 million in the first six months of 1995, an
increase of 9% from the first six months of 1994 level of $490 million, with the
International Food Group up 39% and 38%, respectively, and the Domestic Food
Group at the same profit level as last year's second quarter and up 3% for the
comparable six month period. The operating company contribution for the Domestic
Food Group during the second quarter of 1995 was flat
18
<PAGE>
compared with the corresponding period of the prior year as the impact of higher
net sales (approximately $25 million) was offset by higher consumer marketing,
selling and distribution expenses at Nabisco Biscuit Company to support business
building initiatives. The Domestic Food Group's increase in operating company
contribution for the first six months of 1995 was primarily due to savings
generated from productivity programs (approximately $65 million) which was
offset in part by higher consumer marketing, selling and distribution expenses
at Nabisco Biscuit Company (approximately $50 million). The International Food
Group's increase in operating company contribution for the second quarter 1995
was primarily due to the profit impact of the increased sales in Brazil, Iberia,
Argentina and Canada (approximately $15 million) and improved results in Mexico
due to restructuring and productivity programs (approximately $4 million). The
International Food Group's increase in operating company contribution for the
first six months of 1995 was primarily due to the profit impact of increased
sales in Brazil, Iberia and Canada (approximately $19 million) and the impact of
the Terrabusi acquisition (approximately $10 million).
Nabisco Holdings' operating income was $231 million in the second quarter of
1995, an increase of 7% from the second quarter 1994 level of $215 million, and
$419 million in the first six months of 1995, an increase of 11% from the first
six months of 1994 level of $379 million, as a result of the increases in
operating company contribution discussed above.
Interest and Debt Expense
Consolidated interest and debt expense amounted to $222 million in the
second quarter of 1995 and $442 million in the first six months of 1995, a
decrease of 25% for both the second quarter and first six months of 1995
compared to the corresponding 1994 periods, primarily as a result of
refinancings that were completed during 1994 and lower debt levels from the
application of proceeds from the issuance of preferred stock during 1994 and the
issuance of Nabisco Holdings Class A Common Stock during the first quarter of
1995, offset in part by the impact of higher market interest rates.
Other Income (Expense), Net
Consolidated other income (expense), net for the second quarter of 1995
includes a pre-tax charge of approximately $103 million for fees and expenses
incurred in connection with the Exchange Offers and the Consent Solicitations.
See Note 1 to the Consolidated Condensed Financial Statements.
Net Income
RJRN Holdings reported net income of $153 million in the second quarter of
1995 and $351 million in the first six months of 1995, an increase of $107
million for the second quarter of 1995 and an increase of $110 million for the
first six months of 1995 compared to the corresponding 1994 periods. Such
increases primarily reflect lower interest expense and the absence in 1995 of
any reported losses on early extinguishments of debt that more than offset the
fees and expenses incurred in connection with the Exchange Offers and the
Consent Solicitations and lower operating income.
Restructuring and Realignment Reserve Balances
As of June 30, 1995, the balance of the 1993 restructuring and 1994
headquarters realignment reserves aggregated $207 million, a decrease of $84
million from the corresponding balance of $291 million at December 31, 1994. The
amount of after tax cash savings for the six months ended June 30, 1995 was
approximately $110 million. Management expects future annual after tax cash
savings to be in the range of approximately $215 million to $240 million.
19
<PAGE>
Liquidity and Financial Condition
Net cash flows from operating activities for the first six months of 1995
were $389 million, a decrease of $252 million from the first six months of 1994
level of $641 million. The decrease in net cash flows from operating activities
reflects lower income before extraordinary item, accounts payable and accrued
liabilities and higher receivable levels and income taxes paid.
The components of net cash flows from operating activities are as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
----------------
1995 1994
------ ------
<S> <C> <C>
(IN MILLIONS)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income............................................................... $ 351 $ 241
Adjustments to reconcile net income to cash flows from (used in)
operating activities:
Depreciation of property, plant and equipment........................ 236 222
Amortization (principally intangibles)............................... 344 346
Deferred income tax provision (benefit).............................. (99) (3)
Non-cash interest and debt expense................................... 10 106
Extraordinary item--loss on early extinguishments of debt before
income taxes....................................................... -- 223
Changes in working capital items, net................................ (458) (393)
Other, net........................................................... 5 (101)
------ ------
Total adjustments.................................................. 38 400
------ ------
NET CASH FLOWS FROM OPERATING ACTIVITIES................................. $ 389 $ 641
------ ------
------ ------
</TABLE>
Free cash flow, another measure used by management to monitor liquidity and
financial condition and which represents cash available for the repayment of
debt and certain other corporate purposes before the consideration of any debt
and equity financing transactions, acquisition expenditures and divestiture
proceeds, resulted in an outflow of $178 million and an inflow of $240 million
for the first six months of 1995 and 1994, respectively. The decrease in free
cash flow from 1994 to 1995 primarily reflects higher operating working capital
requirements (primarily higher receivable levels, lower accounts payable and
accrued liabilities), capital expenditures, tax and dividend payments and
payment of fees and expenses incurred in connection with the Exchange Offers and
the Consent Solicitations.
The components of free cash flow are as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
----------------
1995 1994
------ ------
<S> <C> <C>
(IN MILLIONS)
OPERATING INCOME........................................................... $1,264 $1,307
Amortization of intangibles.............................................. 318 312
------ ------
OPERATING COMPANY CONTRIBUTION............................................. 1,582 1,619
Depreciation and other amortization...................................... 262 256
Increase in operating working capital.................................... (439) (299)
Capital expenditures..................................................... (294) (270)
Change in other assets and liabilities................................... 16 (46)
------ ------
OPERATING CASH FLOW*....................................................... 1,127 1,260
Taxes paid............................................................... (371) (286)
Interest paid............................................................ (428) (490)
Dividends paid........................................................... (250) (155)
Other, net............................................................... (256) (89)
------ ------
FREE CASH FLOW............................................................. $ (178) $ 240
------ ------
------ ------
</TABLE>
(Footnotes on following page)
20
<PAGE>
(Footnotes for preceding page)
------------
* Operating cash flow, which is used as an internal management measurement for
evaluating business performance, includes, in addition to net cash flows from
(used in) operating activities as recorded in the Consolidated Condensed
Statement of Cash Flows, proceeds from the sale of capital assets less capital
expenditures, and is adjusted to exclude income taxes paid and items of a
financial nature (such as interest paid, interest income, and other
miscellaneous financial income or expense items).
At June 30, 1995, RJRN Holdings had an outstanding total debt level (notes
payable and long-term debt, including current maturities) and a total capital
level (total debt and stockholders' equity) of approximately $10.6 billion and
$22.0 billion, respectively, of which total debt was lower by approximately $507
million and total capital was lower by approximately $85 million from the
corresponding amounts at December 31, 1994. RJRN Holdings' ratio of total debt
to total stockholders' equity was .94-to-1 at June 30, 1995 and 1.0-to-1 at
December 31, 1994. RJRN's ratio of total debt to common equity was .89-to-1 at
June 30, 1995 and 1.0-to-1 at December 31, 1994. In addition, total current
liabilities and long-term debt of RJRN's subsidiaries as of June 30, 1995 was
approximately $7.6 billion, exclusive of intercompany indebtedness among such
subsidiaries.
The aggregate amount of consolidated indebtedness subject to fluctuating
interest rates approximated $1.8 billion at June 30, 1995. This represents a
decrease of $2.5 billion from the year-end 1994 level of $4.3 billion, primarily
due to the application of approximately $1.2 billion of the net proceeds from
the Nabisco Holdings initial public offering to repay a portion of Nabisco's
borrowing under the 1994 Nabisco Credit Agreement and Nabisco's interest rate
derivative transactions entered into during the second quarter of 1995.
RJRN Holdings' effective interest rate on its consolidated long-term debt
increased from 7.7% at December 31, 1994 to 7.8% at June 30, 1995, primarily as
a result of a lower proportion of consolidated indebtedness subject to
fluctuating interest rates. Future effective interest rates may vary as a result
of RJRN's ongoing management of interest rate exposure and changing market
interest rates as well as refinancing activities and changes in the ratings
assigned to RJRN's debt securities by independent rating agencies.
The 1995 RJRN Credit Agreement is a $2.75 billion three year revolving bank
credit facility that provides for the issuance of up to $800 million of
irrevocable letters of credit. Availability is reduced by the aggregate amount
of outstanding borrowings, commercial paper issuances in excess of $750 million
and letters of credit issued. RJRN obtained consents under the New RJRN Credit
Agreements on August 2, 1995 to clarify certain technical issues concerning the
calculation of certain financial ratios. At June 30, 1995, approximately $470
million stated amount of letters of credit and approximately $575 million in
borrowings were outstanding under the 1995 RJRN Credit Agreement, and
approximately $805 million of commercial paper was outstanding. Accordingly,
the amount available under the 1995 RJRN Credit Agreement at June 30, 1995 was
approximately $1.65 billion.
The RJRN Commercial Paper Facility provides a 364 day back-up line of credit
to support commercial paper issuances of up to $750 million. Availability is
reduced by an amount equal to the aggregate amount of domestic commercial paper
outstanding. Because the aggregate amount of domestic commercial paper
outstanding at June 30, 1995 exceeded $750 million, no amount was available
under this facility at June 30, 1995.
The 1995 Nabisco Credit Agreement is a five year, $3.5 billion revolving
bank credit facility that provides for the issuance of up to $300 million of
irrevocable letters of credit. Availability is reduced by the aggregate amount
of outstanding borrowings, letters of credit and, under certain circumstances,
commercial paper. At June 30, 1995, approximately $1.3 billion in borrowings and
no letters of credit and commercial paper were outstanding under the 1995
Nabisco Credit Agreement. Accordingly, the
21
<PAGE>
amount available under the 1995 Nabisco Credit Agreement at June 30, 1995 was
approximately $2.2 billion.
On January 26, 1995, Nabisco Holdings completed the initial public offering
of 51,750,000 shares of its Class A Common Stock at an initial offering price of
$24.50 per share. (See Note 9 to the Consolidated Condensed Financial
Statements.) Nabisco used all of the approximately $1.2 billion of net proceeds
from the initial public offering to repay a portion of its borrowings under the
1994 Nabisco Credit Agreement.
On April 1, 1995, RJRN Holdings paid an initial quarterly dividend on the
Common Stock of $.375 per share. In May 1995, the Board of Directors of RJRN
Holdings declared a quarterly dividend on the Common Stock of $.375 per share,
which was paid on July 1, 1995 to stockholders of record on June 9, 1995. RJRN
Holdings expects to continue to pay a quarterly cash dividend on the Common
Stock equal to $.375 per share or $1.50 per share on an annualized basis. RJRN
Holdings believes that neither the restrictions under the New RJRN Credit
Agreements described below nor the policies of its Board of Directors described
in the Registrants' Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, will limit its ability to pay these dividends.
On April 12, 1995, the stockholders of RJRN Holdings approved a one-for-five
reverse stock split and the corresponding reduction in the number of authorized
shares of Common Stock from 2,200,000,000 to 440,000,000. Accordingly, the rates
at which shares of ESOP Convertible Preferred Stock, par value $.01 per share,
and Series C Conversion Preferred Stock, par value $.01 per share, convert into
shares of Common Stock were proportionately adjusted.
During the second quarter of 1995, RJRN repaid $300 million aggregate
principal amount of its outstanding 9.25% Notes which matured on May 1, 1995 and
redeemed $200 million aggregate principal amount of its outstanding 8.875% Notes
due 1998 with proceeds from borrowings under the 1991 RJRN Credit Agreement.
On June 5, 1995, RJRN and Nabisco consummated the Exchange Offers. As part
of the transaction, RJRN returned to Nabisco approximately $1.8 billion of
intercompany notes that had been issued by Nabisco and were held by a
non-Nabisco affiliate of RJRN. The New Notes issued by Nabisco in the Exchange
Offers have interest rates, principal amounts, maturities and redemption
provisions identical to the corresponding Old Notes issued by RJRN. Nabisco
subsequently borrowed approximately $2.4 billion under the 1995 Nabisco Credit
Agreement to (a) repay or repurchase an additional $2.1 billion of intercompany
notes of Nabisco and its subsidiaries; (b) repay approximately $125 million of
outstanding borrowings under the 1994 Nabisco Credit Agreement; (c) repay
approximately $89 million of an intercompany note from Nabisco to Nabisco
Holdings; and (d) pay a $79 million dividend to Nabisco Holdings. Nabisco
Holdings used the payments it received to repay the balance of a $168 million
intercompany note to RJRN.
Concurrently with the Exchange Offers, RJRN consummated the Consent
Solicitations. The Exchange Offers, the Consent Solicitations and certain
related transactions were designed, among other things, to enable Nabisco to
obtain long-term debt financing independent of RJRN and to repay its
intercompany debt to RJRN.
On June 5, 1995, RJRN applied the approximately $2.3 billion that it
received from Nabisco and Nabisco Holdings in repayment of the intercompany
notes to repay a portion of its borrowings under the 1991 RJRN Credit Agreement.
RJRN used an additional approximately $330 million of borrowings under the 1995
RJRN Credit Agreement to repay the balance of its obligations under the Old RJRN
Credit Agreements and to pay certain expenses associated with the Exchange
Offers, the Consent Solicitations and related transactions.
22
<PAGE>
On June 28, 1995 Nabisco issued $400 million principal amount of 6.70% Notes
Due 2002, $400 million principal amount of 6.85% Notes Due 2005 and $400 million
principal amount of 7.55% Debentures Due 2015. The net proceeds from the
issuance of such debt securities were used to repay borrowings under the 1995
Nabisco Credit Agreement.
On June 30, 1995, RJRN filed a registration statement with the Securities
and Exchange Commission to register the offering from time to time of its debt
securities in one or more series with an aggregate initial public offering price
of up to approximately $1.0 billion.
See Subsequent Events for a discussion of certain additional debt
refinancings and repayments.
On June 30, 1995, Nabisco had outstanding fixed interest rate swaps with an
aggregate notional principal amount of $1.0 billion and caps covering an
aggregate notional principal amount of $100 million all with expiration dates
within one year. The estimated fair value of these arrangements as of June 30,
1995 was unfavorable by approximately $2 million, based on calculations from
independent third parties for similar arrangements. Nabisco entered into such
agreements to effectively fix a portion of its interest rate exposure on its
floating rate debt.
The payment of dividends and the making of distributions by RJRN Holdings to
its stockholders are subject to direct and indirect restrictions under certain
financing agreements and debt instruments of the Registrants and their
subsidiaries. The New RJRN Credit Agreements generally restrict cumulative
common and preferred dividends and distributions by RJRN Holdings after April
28, 1995 to $1 billion, plus 50% of cumulative consolidated net income, as
defined, after January 1, 1995, plus the net cash proceeds of up to $250 million
in any twelve month period from issuances of equity securities. The New RJRN
Credit Agreements and certain other financing agreements also limit the ability
of RJRN Holdings and its subsidiaries to incur indebtedness, engage in
transactions with stockholders and affiliates, create liens, sell or dispose of
certain assets and certain subsidiaries' stock, issue certain equity securities
and engage in certain mergers or consolidations.
The 1995 Nabisco Credit Agreement generally restricts cumulative common and
preferred dividends and distributions after April 28, 1995 by Nabisco Holdings
to its stockholders, including RJRN, to $300 million plus 50% of Nabisco
Holdings' cumulative consolidated net income after January 1, 1995. In general,
loans and advances by Nabisco Holdings and its subsidiaries to RJRN are
effectively subject to a $100 million limit and may only be extended to RJRN's
foreign subsidaries. The 1995 Nabisco Credit Agreement also limits the ability
of Nabisco Holdings and its subsidiaries to incur indebtedness, engage in
transactions with stockholders and affiliates, create liens, sell or dispose of
certain assets and certain subsidiaries' stock, engage in certain mergers or
consolidations. These restrictions have not had and are not expected to have a
material effect on the ability of Nabisco Holdings to pay its anticipated
dividends, or on the ability of RJRN to meet its obligations. The Registrants
believe that they and their subsidiaries are currently in compliance with all
restrictions imposed by the terms of their indebtedness.
Management of RJRN Holdings and its subsidiaries are continuing to review
various strategic transactions, including but not limited to, acquisitions,
divestitures, mergers and joint ventures. No assurance may be given that any
such transactions will be announced or completed.
Capital expenditures were $294 million for the first six months of 1995. The
current level of expenditures planned for all of 1995 is expected to be
approximately $750 million to $800 million (approximately 60% Food and 40%
Tobacco), which will be funded primarily by cash flows from operating
activities. Management expects that its capital expenditure program will
continue at a level sufficient to support the strategic and operating needs of
the Registrants' businesses.
23
<PAGE>
The amount of cash outlays incurred during the first six months of 1995 in
connection with the restructuring and realignment programs announced in 1993 and
1994 was primarily offset by the after-tax cash savings realized from the
restructuring and realignment programs during such period.
Subsequent Events
The Board of Directors of Nabisco Holdings declared an initial quarterly
dividend of $.1375 per share which was paid on July 3, 1995 to stockholders of
record on June 15, 1995. Nabisco Holdings expects to continue to pay a quarterly
cash dividend on its common stock equal to $.1375 per share or $.55 per share on
an annualized basis (approximately $146 million annually in the aggregate). On
an annualized basis, RJRN would receive approximately $117 million of the
aggregate Nabisco Holdings' dividend.
On July 14, 1995, Nabisco issued $400 million principal amount of 7.05%
Notes Due 2007. The net proceeds from the issuance of such debt securities were
used to repay a portion of borrowings under the 1995 Nabisco Credit Agreement.
On July 17, 1995, Nabisco redeemed its outstanding 8 5/8% Sinking Fund
Debentures Due March 15, 2017 at a price of $1,051.75 for each $1,000 principal
amount of debentures, plus accrued and unpaid interest thereon. The aggregate
redemption price and accrued interest on these debentures was approximately $442
million.
On July 24, 1995, RJRN issued $400 million aggregate principal amount of 8%
Notes Due 2001 and $250 million aggregate principal amount of 8 3/4% Notes Due
2007. The net proceeds from the issuance of these securities were or will be
used to repay borrowings under the 1995 RJRN Credit Agreement, to retire
commercial paper and for general corporate purposes.
RJRN Holdings has filed a registration statement with the Securities and
Exchange Commission to exchange preferred securities issued by a newly-formed
controlled affiliate for up to 49,000,000 of the Series B Depositary Shares,
each representing 1/1000 of a share of its Series B Preferred Stock. The
affiliate's principal asset would consist of junior subordinated debentures
issued by RJRN Holdings in an amount and with terms sufficient to make payments
on the preferred securities. No assurance can be given that this exchange offer
will be completed.
On August 2, 1995, RJRN obtained consents under the New RJRN Credit
Agreements to clarify certain technical issues concerning the calculation of
certain financial ratios.
RJRT and Tobacco International are exploring ways to increase efficiency and
productivity and to reduce the cost structures of their respective businesses.
-------------------
24
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
TOBACCO-RELATED LITIGATION
During 1995 through July 25, 1995, 28 new actions have been filed or served
against RJRT and/or its affiliates or indemnitees, including 1 action purporting
to be a class action, and 15 actions, including two suits containing class
action allegations, have been dismissed or otherwise resolved in favor of RJRT
and or its affiliates or indemnitees without trial. As of July 25, 1995, 68
active cases were pending against RJRT and/or its affiliates or indemnitees, 66
in the United States, and two in Canada. The United States cases are in 22
states and are distributed as follows: eleven in Louisiana, twelve in Florida,
six in Texas, four in each of Kansas and Indiana, three in each of California,
Mississippi and Tennessee, two in each of Alabama, Colorado, Minnesota,
Pennsylvania and West Virginia and one in each of Illinois, New Jersey,
Oklahoma, Massachusetts, Nevada, South Carolina, New Hampshire, New York,
Missouri and North Carolina. Of the 66 active cases in the United States, 40 are
pending in state court and 25 in federal court.
Of the 68 active cases pending as of July 25, 1995 (i) six cases purport to
be class actions on behalf of many thousands of individuals; purported classes
include individuals claiming to be addicted to cigarettes and flight attendants
alleging personal injury from exposure to environmental tobacco smoke in their
workplace, (ii) one case involves plaintiffs purporting to act as private
attorneys general to claim that an RJRT advertising campaign constitutes an
unfair business practice under state law and (iii) three cases are suits brought
by individual states and a fourth by a state and health insurer on various
theories to recoup expenses incurred in the treatment of diseases purportedly
associated with cigarette smoking and to enjoin certain marketing practices.
For additional information about tobacco-related litigation and legal
proceedings, see Note 8-- Contingencies--Tobacco-Related Litigation of Notes to
Consolidated Condensed Financial Statements.
-------------------
Litigation is subject to many uncertainties, and it is possible that some of
the tobacco-related legal actions, proceedings or claims could be decided
against RJRT or its affiliates or indemnitees. Determinations of liability or
adverse rulings against other cigarette manufacturers that are defendants in
similar actions, even if such rulings are not final, could adversely affect the
litigation against RJRT or its affiliates or indemnitees and increase the number
of such claims. Although it is impossible to predict the outcome of such events
or their effect on RJRT, a significant increase in litigation activities could
have an adverse effect on RJRT. RJRT believes that it has a number of valid
defenses to any such actions, including but not limited to those defenses based
on preemption under the Cipollone decision, and RJRT intends to defend
vigorously all such actions.
-------------------
The Registrants believe that the ultimate outcome of all pending litigation
matters should not have a material adverse effect on either of the Registrants'
financial position; however, it is possible that the results of operations or
cash flows of the Registrants in a particular quarterly or annual period or the
financial condition of the Registrants could be materially affected by the
ultimate outcome of certain pending litigation matters. Management is unable to
derive a meaningful estimate of the amount or range of such possible loss in any
particular quarterly or annual period or in the aggregate.
EPA PROCEEDING
In April 1995, RJRN Holdings was named a "potentially responsible party"
with certain third parties under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) with respect to a "superfund" site at
which a former subsidiary of RJRN had operations. The Registrants currently
cannot reasonably estimate the investigative or remedial costs, if any, for
which they may be liable in connection with this matter.
25
<PAGE>
ITEM 5. OTHER INFORMATION
On June 29, 1995, H. John Greeniaus, President and Chief Executive Officer
of Nabisco Holdings and Nabisco, and James W. Johnston, Chairman of R.J.
Reynolds Tobacco Worldwide, each assumed the positions of Vice Chairman of RJRN
Holdings and of RJRN and joined the offices of the chairman at each such
company. As Vice Chairman, Mr. Greeniaus has parent-company oversight of
domestic tobacco operations at RJRT. Mr. Greeniaus also continues his worldwide
Nabisco responsibilities as President and Chief Executive Officer of Nabisco
Holdings and Nabisco. Mr. Johnston, in addition to his responsibilities as Vice
Chairman, is responsible for Tobacco International and is managing public policy
initiatives for worldwide tobacco operations in his role as Chairman of R.J.
Reynolds Tobacco Worldwide. Andrew J. Schindler, President and Chief Operating
Officer of RJRT, has assumed the additional responsibility of Chief Executive
Officer of that company and reports to Mr. Greeniaus as Vice Chairman.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<C> <S>
3.1 Certificate of Amendment to Amended and Restated Certificate of Incorporation of
RJR Nabisco Holdings Corp. filed April 12, 1995. (Incorporated by reference to the
Registrants' report on Form 10-Q for the quarter ended March 31, 1995.)
3.1(a) Composite of the Amended and Restated Certificate of Incorporation of RJR Nabisco
Holdings Corp. as amended to and including April 12, 1995. (Incorporated by
reference to the Registrants' report on Form 10-Q for the quarter ended March 31,
1995.)
*4.1 Amended and Restated Indenture between RJR Nabisco, Inc. and Citibank, N.A., dated
as of July 24, 1995.
*10.1 Credit Agreement (the "Three Year Credit Agreement") among RJR Nabisco Holdings
Corp., RJR Nabisco, Inc., Bankers Trust Company, The Chase Manhattan Bank, N.A.,
Chemical Bank, Citibank, N.A. and the Fuji Bank, Limited as Senior Managing Agents
and various lending institutions, dated as of April 28, 1995.
*10.2 Credit Agreement (the "364 Day Credit Agreement") among RJR Nabisco Holdings
Corp., RJR Nabisco, Inc., Bankers Trust Company, the Chase Manhattan Bank, N.A.,
Chemical Bank, Citibank, N.A. and the Fuji Bank, Limited as Senior Managing Agents
and various lending institutions, dated as of April 28, 1995.
10.3 Credit Agreement among Nabisco Holdings Corp., Nabisco, Inc., Bankers Trust
Company, The Chase Manhattan Bank, N.A., Chemical Bank, Citibank, N.A. and the
Fuji Bank, Limited as Senior Managing Agents and various lending institutions,
dated as of April 28, 1995 (the "Nabisco Credit Agreement") (incorporated by
reference to Exhibit 4.3 to Amendment No. 1 filed June 16, 1995 to the
Registration Statement on Form S-3 of Nabisco, Inc., Registration Statement No.
33-93214, filed June 7, 1995).
*10.4 First Amendment to Nabisco Credit Agreement, dated as of July 24, 1995.
*10.5 Agreement and Waiver to the Three Year Credit Agreement and the 364 Day Credit
Agreement, dated as of July 27, 1995.
*11.1 RJR Nabisco Holdings Corp. Computation of Earnings Per Share for the three months
ended June 30, 1995 and 1994.
*11.2 RJR Nabisco Holdings Corp. Computation of Earnings Per Share for the six months
ended June 30, 1995 and 1994.
*12.1 RJR Nabisco Holdings Corp. Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends for the six months ended June 30, 1995.
*12.2 RJR Nabisco, Inc. Computation of Ratio of Earnings to Fixed Charges for the six
months ended June 30, 1995.
*27.1 RJR Nabisco Holdings Corp. Financial Data Schedule.
*27.2 RJR Nabisco, Inc. Financial Data Schedule
</TABLE>
------------
* Filed herewith.
(b) Reports on Form 8-K
Report on Form 8-K dated May 22, 1995, of RJR Nabisco, Inc., filing a press
release dated May 18, 1995 and an advertisement dated May 19, 1995, each
relating to its amended Consent Solicitation.
Report on Form 8-K dated May 25, 1995, of RJR Nabisco, Inc., filing a press
release dated May 24, 1995, relating to its amended consent solicitation.
Report on Form 8-K dated May 30, 1995, of RJR Nabisco, Inc. filing a press
release dated May 26, 1995, relating to the successful completion of the
Exchange Offer and Consent Solicitations.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
(Registrants)
<TABLE>
<S> <C>
Date: August , 1995 /s/ ROBERT S. ROATH
.............................................
Robert S. Roath,
Senior Vice President and
Chief Financial Officer
/s/ RICHARD G. RUSSELL
.............................................
Richard G. Russell,
Senior Vice President and Controller
</TABLE>
Exhibit 4.1
========================================================
RJR NABISCO, INC.,
Issuer
AND
CITIBANK, N.A.,
Trustee
Amended and Restated Indenture
Dated as of
July 24, 1995
__________
========================================================
<PAGE>
TABLE OF CONTENTS
__________
Page
----
PARTIES.............................................. 1
RECITALS
Authorization of Indenture...................... 1
Compliance with Legal Requirements.............. 1
Purpose of and Consideration for Indenture...... 1
ARTICLE ONE
DEFINITIONS.
SECTION 1.1. Certain Terms Defined................. 2
Attributable Debt..................... 2
Authenticating Agent.................. 2
Authorized Newspaper.................. 2
Board of Directors.................... 3
Board Resolution...................... 3
Business Day.......................... 3
Commission............................ 3
Composite Rate........................ 3
Consolidated Net Worth................ 4
Corporate Trust Office................ 4
Coupon................................ 4
covenant defeasance................... 4
Depositary............................ 5
Dollar................................ 5
ECU................................... 5
Event of Default...................... 5
Exempted Debt......................... 5
Foreign Currency...................... 5
Funded Debt........................... 5
Holder, Holder of Securities,
Securityholder...................... 5
Indenture............................. 6
Interest.............................. 6
Issuer................................ 6
Issuer Order.......................... 6
Nabisco Holdings...................... 6
<PAGE>
Judgment Currency..................... 6
Officers' Certificate................. 6
Opinion of Counsel.................... 6
Original issue date................... 6
Original Issue Discount Security...... 7
Outstanding........................... 7
Periodic Offering..................... 8
Person................................ 8
Principal............................. 8
Principal Property.................... 8
Registered Global Security............ 8
Registered Security................... 8
Responsible Officer................... 8
Restricted Subsidiary................. 9
Security or Securities................ 9
Securities Act........................ 9
Subsidiary............................ 9
Trust Indenture Act of 1939........... 10
Trustee............................... 10
U.S. Government Obligations........... 10
Unregistered Security................. 10
Vice President........................ 10
Yield to Maturity..................... 10
ARTICLE TWO
SECURITIES.
SECTION 2.1. Forms Generally....................... 10
SECTION 2.2. Form of Trustee's Certificate
of Authentication................... 11
SECTION 2.3. Amount Unlimited; Issuable in Series.. 12
SECTION 2.4. Authentication and Delivery of
Securities.......................... 15
SECTION 2.5. Execution of Securities............... 18
SECTION 2.6. Certificate of Authentication......... 19
SECTION 2.7. Denomination and Date of
Securities; Payments of Interest.... 19
SECTION 2.8. Registration, Transfer and Exchange... 20
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost
and Stolen Securities............... 24
SECTION 2.10. Cancellation of Securities;
Destruction Thereof................. 26
SECTION 2.11. Temporary Securities.................. 26
SECTION 2.12. CUSIP Numbers......................... 27
2
<PAGE>
ARTICLE THREE
COVENANTS OF THE ISSUER.
SECTION 3.1. Payment of Principal and Interest..... 27
SECTION 3.2. Offices for Payments, etc............. 28
SECTION 3.3. Appointment to Fill a Vacancy in
Office of Trustee................... 30
SECTION 3.4. Paying Agents......................... 30
SECTION 3.5. Certificate to Trustee................ 31
SECTION 3.6. Negative Pledge....................... 31
SECTION 3.7. Certain Sale and Lease-back
Transactions........................ 32
SECTION 3.8. Funded Debt of Restricted
Subsidiaries........................ 34
SECTION 3.9. Luxembourg Publications................ 35
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE.
SECTION 4.1. Issuer to Furnish Trustee Information
as to Names and Addresses of
Securityholders..................... 35
SECTION 4.2. Reports by the Issuer................. 35
SECTION 4.3. Reports by the Trustee................ 35
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT.
SECTION 5.1. Event of Default Defined; Acceleration
of Maturity; Waiver of Default...... 36
SECTION 5.2. Collection of Indebtedness by Trustee;
Trustee May Prove Debt.............. 39
SECTION 5.3. Application of Proceeds............... 42
SECTION 5.4. Suits for Enforcement................. 43
SECTION 5.5. Restoration of Rights on Abandonment
of Proceedings...................... 43
SECTION 5.6. Limitations on Suits by
Securityholders..................... 43
SECTION 5.7. Unconditional Right of
Securityholders to Institute
Certain Suits....................... 44
3
<PAGE>
SECTION 5.8. Powers and Remedies Cumulative;
Delay or Omission Not Waiver of
Default............................. 44
SECTION 5.9. Control by Securityholders............ 45
SECTION 5.10. Waiver of Past Defaults............... 45
SECTION 5.11. Trustee to Give Notice of Default,
But May Withhold in Certain
Circumstances....................... 46
SECTION 5.12. Right of Court to Require Filing
of Undertaking to Pay Costs......... 46
ARTICLE SIX
CONCERNING THE TRUSTEE.
SECTION 6.1. Duties and Responsibilities of the
Trustee; During Default; Prior to
Default............................. 47
SECTION 6.2. Certain Rights of the Trustee......... 49
SECTION 6.3. Trustee Not Responsible for Recitals,
Disposition of Securities or
Application of Proceeds Thereof..... 50
SECTION 6.4. Trustee and Agents May Hold
Securities; Collections, etc........ 51
SECTION 6.5. Moneys Held by Trustee................ 51
SECTION 6.6. Compensation and Indemnification
of Trustee and Its Prior Claim...... 51
SECTION 6.7. Right of Trustee to Rely on
Officers' Certificate, etc.......... 52
SECTION 6.8. Indentures Not Creating Conflicting
Interests for the Trustee........... 52
SECTION 6.9. Persons Eligible for Appointment
as Trustee.......................... 52
SECTION 6.10. Resignation and Removal; Appointment
of Successor Trustee................ 53
SECTION 6.11. Acceptance of Appointment by
Successor Trustee................... 55
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business of Trustee... 56
SECTION 6.13. Appointment of Authenticating Agent... 56
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS.
SECTION 7.1. Evidence of Action Taken by
Securityholders..................... 58
SECTION 7.2. Proof of Execution of Instruments and
of Holding of Securities; Record
4
<PAGE>
Date................................ 58
SECTION 7.3. Holders to Be Treated as Owners....... 60
SECTION 7.4. Securities Owned by Issuer Deemed Not
Outstanding......................... 60
SECTION 7.5. Right of Revocation of Action Taken... 61
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES.
SECTION 8.1. Supplemental Indentures Without
Consent of Securityholders.......... 62
SECTION 8.2. Supplemental Indentures With Consent
of Securityholders.................. 63
SECTION 8.3. Effect of Supplemental Indenture...... 65
SECTION 8.4. Documents to Be Given to Trustee...... 66
SECTION 8.5. Notation on Securities in Respect of
Supplemental Indentures............. 66
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE.
SECTION 9.1. Covenant Not to Merge, Consolidate,
Sell or Convey Property Except
Under Certain Conditions............ 66
SECTION 9.2. Successor Corporation Substituted..... 67
SECTION 9.3. Opinion of Counsel to Trustee......... 67
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.
SECTION 10.1. Satisfaction and Discharge of
Indenture........................... 68
SECTION 10.2. Application by Trustee of Funds
Deposited for Payment of Securities. 72
SECTION 10.3. Repayment of Moneys Held by Paying
Agent............................... 73
SECTION 10.4. Return of Moneys Held By Trustee
and Paying Agent Unclaimed
for Two Years....................... 73
5
<PAGE>
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS.
SECTION 11.1. Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from
Individual Liability................ 73
SECTION 11.2. Provisions of Indenture for the Sole
Benefit of Parties and Security-
holders............................. 74
SECTION 11.3. Successors and Assigns of Issuer
Bound by Indenture.................. 74
SECTION 11.4. Notices and Demands on Issuer,
Trustee and Securityholders......... 74
SECTION 11.5. Officers' Certificates and Opinions
of Counsel; Statements to Be Con-
tained Therein...................... 75
SECTION 11.6. Payments Due on Saturdays, Sundays
and Holidays........................ 76
SECTION 11.7. Conflict of Any Provision of
Indenture with Trust Indenture
Act of 1939......................... 76
SECTION 11.8. New York Law to Govern................ 77
SECTION 11.9. Counterparts.......................... 77
SECTION 11.10. Effect of Headings.................... 77
SECTION 11.11. Securities in a Foreign Currency
or in ECU........................... 77
SECTION 11.12. Judgment Currency..................... 78
SECTION 11.13. Severability of Provisions............ 79
SECTION 11.14. Company Released from Indenture
Requirements Under Certain
Circumstances....................... 79
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS.
SECTION 12.1. Applicability of Article.............. 79
SECTION 12.2. Notice of Redemption; Partial
Redemptions......................... 79
SECTION 12.3. Payment of Securities Called for
Redemption.......................... 81
SECTION 12.4. Exclusion of Certain Securities from
Eligibility for Selection for
Redemption.......................... 82
SECTION 12.5. Mandatory and Optional Sinking Funds.. 82
TESTIMONIUM.......................................... 87
6
<PAGE>
SIGNATURES........................................... 87
ACKNOWLEDGMENTS...................................... 88
7
<PAGE>
THIS AMENDED AND RESTATED INDENTURE, dated as of July 24, 1995
between RJR NABISCO, INC., a Delaware corporation (the "Issuer"), and
CITIBANK, N.A., a national association (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer and the Trustee have previously entered into
an Indenture dated August 1, 1992 (the "Original Indenture); and
WHEREAS, on June 5, 1995 the Issuer and the Trustee executed a
Supplemental Indenture to the Original Indenture; and
WHEREAS, the Issuer desires to amend and restate the Original
Indenture; and
WHEREAS, the Issuer has duly authorized the issue from time to
time of its debentures, notes or other evidences of indebtedness to be
issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the
terms of this Indenture and to provide, among other things, for the
authentication, delivery and administration thereof, the Issuer has duly
authorized the execution and delivery of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and
delivery of this Indenture to provide, among other things, for the
authentication, delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the holders thereof, the Issuer and the Trustee mutually
covenant and agree for the equal and proportionate benefit of the
respective holders from time to time of the Securities or of series thereof
and of the Coupons, if any, appertaining thereto as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS
-----------
SECTION 1.1 Certain Terms Defined. The following terms (except
---------------------
as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture
supplemental hereto shall have the respective meanings specified in this
Section. All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939 or the definitions of which in the Securities
Act of 1933 are referred to in the Trust Indenture Act of 1939, including
terms defined therein by reference to the Securities Act of 1933 (except as
herein otherwise expressly provided or unless the context otherwise clearly
requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of this
Indenture. All accounting terms used herein and not expressly defined
shall have the meanings assigned to such terms in accordance with generally
accepted accounting principles, and the term "generally accepted accounting
-----------------------------
principles" means such accounting principles as are generally accepted at
----------
the time of any computation. The words "herein", "hereof" and "hereunder"
------ ------ ---------
and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision. The terms
defined in this Article have the meanings assigned to them in this Article
and include the plural as well as the singular.
"Attributable Debt" means, when used in connection with a sale
-----------------
and lease-back transaction referred to in Section 3.7, on any date as of
which the amount thereof is to be determined, the product of (a) the net
proceeds from such sale and lease-back transaction multiplied by (b) a
fraction, the numerator of which is the number of full years of the term of
the lease relating to the property involved in such sale and lease-back
transaction (without regard to any options to renew or extend such term)
remaining on the date of the making of such computation and the denominator
of which is the number of full years of the term of such lease measured
from the first day of such term.
"Authenticating Agent" shall have the meaning set forth in
--------------------
Section 6.13.
"Authorized Newspaper" means a newspaper (which, in the case of
--------------------
The City of New York, will, if practicable, be The Wall Street Journal
(Eastern Edition), in the case of the United Kingdom, will, if practicable,
be the Financial Times (London Edition) and, in the case of Luxembourg,
will, if practicable, be the Luxemburger Wort) published in an
2
<PAGE>
official language of the country of publication customarily published at
least once a day for at least five days in each calendar week and of
general circulation in The City of New York, the United Kingdom or in
Luxembourg, as applicable. If it shall be impractical in the opinion of
the Trustee to make any publication of any notice required hereby in an
Authorized Newspaper, any publication or other notice in lieu thereof which
is made or given with the approval of the Trustee shall constitute a
sufficient publication of such notice.
"Board of Directors" means either the Board of Directors of the
------------------
Issuer or any committee of such Board duly authorized to act hereunder.
"Board Resolution" means a copy of one or more resolutions
----------------
certified by the Secretary or any Assistant Secretary of the Issuer to have
been duly adopted or consented to by the Board of Directors and as being in
full force and effect as of the date of certification, which copy is
delivered to the Trustee.
"Business Day" means any day, other than a Saturday or Sunday,
------------
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in The City of New
York and (i) with respect to any Note the interest of which is based on
LIBOR, in the City of London, (ii) with respect to Notes denominated in a
specified currency other than U.S. dollars, Australian dollars or European
Currency Units, in the principal financial center of the country of the
specified currency, (iii) with respect to Notes denominated in Australian
dollars, in Sydney and (iv) with respect to Notes denominated in European
Currency Units, in Luxembourg and that is not a non-European Currency Units
clearing day, as determined by the European Currency Units Banking
Association in Paris.
"Commission" means the Securities and Exchange Commission, as
----------
from time to time constituted, created under the Securities Exchange Act of
1934, as amended or if at any time after the execution and delivery of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act of 1939, then the body
performing such duties on such date.
"Composite Rate" means, at any time, the rate of interest, per
--------------
annum, compounded semiannually, equal to the sum of the rates of interest
borne by each of the Securities of a series Outstanding hereunder (as
specified on the face of each of the Securities, provided, that, in the
--------
case of the Securities with variable rates of interest, the interest rate
to be used in calculating the Composite Rate shall be
3
<PAGE>
the interest rate applicable to such Securities at the beginning of the
year in which the Composite Rate is being determined and, provided,
--------
further, that, in the case of Securities of a series which do not bear
interest, the interest rate to be used in calculating the Composite Rate
shall be a rate equal to the yield to maturity on such Securities,
calculated at the time of issuance of such Securities) multiplied, in the
case of each of the Securities of a series, by the percentage of the
aggregate principal amount of all of the Securities then Outstanding
represented by such Security. For the purposes of this calculation, the
aggregate principal amounts of Outstanding Securities of a series that are
denominated in a foreign currency, shall be calculated in the manner set
forth in Section 11.11.
"Consolidated Net Worth" means, at any date of determination, the
----------------------
consolidated stockholder's equity of the Issuer, as set forth on the then
most recently available consolidated balance sheet of the Issuer and its
consolidated Subsidiaries; provided that if at such date Nabisco Holdings,
including its successors and assigns, is a consolidated Subsidiary of the
Issuer, such calculation shall be increased by (i) the amount of the
minority interest in Nabisco Holdings, including its successors and
assigns, as set forth on the then most recently available consolidated
balance sheet of the Issuer and its consolidated Subsidiaries, and reduced
by (ii) the consolidated stockholders' equity of Nabisco Holdings,
including its successors and assigns, as set forth on the then most
recently available consolidated balance sheet of Nabisco Holdings and its
consolidated subsidiaries; provided further that if at such date Nabisco
Holdings, including its successors and assigns, is not a consolidated
Subsidiary of the Issuer, such calculation shall be reduced by the amount
of the Issuer's investment in Nabisco Holdings, including its successors
and assigns, if any, as set forth on the then most recently available
consolidated balance sheet of the Issuer and its consolidated Subsidiaries.
"Corporate Trust Office" means the office of the Trustee at which
----------------------
the corporate trust business of the Trustee shall, at any particular time,
be principally administered, which office is, as of the date hereof,
located at 120 Wall Street, 13th Floor, New York, New York 10043,
Attention: Corporate Trust Administration.
"Coupon" means any interest coupon appertaining to a Security.
------
"covenant defeasance" shall have the meaning set forth in Section
-------------------
10.1(C).
4
<PAGE>
"Depositary" means, with respect to the Securities of any series
----------
issuable or issued in the form of one or more Registered Global Securities,
the Person designated as Depositary by the Company pursuant to Section 2.3
until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall
mean or include each Person who is then a Depositary hereunder, and if at
any time there is more than one such Person, "Depositary" as used with
respect to the Securities of any such series shall mean the Depositary with
respect to the Registered Global Securities of that series.
"Dollar" means the coin or currency of the United States of
------
America as at the time of payment is legal tender for the payment of public
and private debts.
"ECU" means the European Currency Unit as defined and revised
---
from time to time by the Council of European Communities.
"Event of Default" means any event or condition specified as such
----------------
in Section 5.1, continued for the period of time, if any, therein
designated.
"Exempted Debt" means the sum, without duplication, of the
-------------
following items outstanding as of the date Exempted Debt is being
determined: (i) indebtedness of the Issuer and its Restricted Subsidiaries
incurred after the date of this Indenture and secured by liens created or
assumed or permitted to exist pursuant to Section 3.6(b), (ii) Attributable
Debt of the Issuer and its Restricted Subsidiaries in respect of all sale
and lease-back transactions with regard to any Principal Property entered
into pursuant to Section 3.7(b) and (iii) Funded Debt of Restricted
Subsidiaries created, assumed or guaranteed or permitted to exist pursuant
to Section 3.8(b).
"Foreign Currency" means either (i) a currency issued by the
----------------
government of a country other than the United States or (ii) ECU's or
another composite currency the value of which is determined by reference to
the values of the currencies of any group of countries.
"Funded Debt" means all indebtedness for money borrowed,
-----------
including purchase money indebtedness, having a maturity of more than one
year from the date of its creation or having a maturity of less than one
year but by its terms being renewable or extendible, at the option of the
obligor in respect thereof, beyond one year from its creation.
"Holder", "Holder of Securities", "Securityholder" or other
------ -------------------- --------------
similar terms mean (a) in the case of any Registered Security, the person
in whose name such Security is
5
<PAGE>
registered in the security register kept by or on behalf of the Issuer for
that purpose in accordance with the terms hereof, and (b) in the case of
any Unregistered Security, the bearer of such Security, or any Coupon
appertaining thereto, as the case may be.
"Indenture" means this instrument as originally executed and
---------
delivered or, if amended or supplemented as herein provided, as so amended
or supplemented or both, and shall include the forms and terms of
particular series of Securities established as contemplated hereunder.
"Interest" means, when used with respect to non-interest bearing
--------
Securities, interest payable after maturity.
"Issuer" means (except as otherwise provided in Article Five) RJR
------
Nabisco, Inc., a Delaware corporation, and, its successors and assigns
through the operation of or pursuant to the provisions of Article Nine.
"Issuer Order" means a written statement, request or order of the
------------
Issuer signed in its name by the Chief Executive Officer, the President,
any Vice President, the Treasurer or the Controller of the Issuer and
delivered to the Trustee.
"Judgment Currency" shall have the meaning set forth in Section
-----------------
11.12.
"Nabisco Holdings" means Nabisco Holdings Corp., a Delaware
----------------
corporation.
"Officers' Certificate" means a certificate signed by the
---------------------
Chairman of the Board of Directors or Vice Chairman of the Board of
Directors or the President or the Chief Executive Officer or any Vice
President and by the Treasurer or Controller or the Secretary or any
Assistant Treasurer or Assistant Controller or Assistant Secretary of the
Issuer and delivered to the Trustee. Each such certificate shall comply
with Section 314 of the Trust Indenture Act of 1939 and include (except as
otherwise provided in this Indenture) the statements provided for in
Section 11.5.
"Opinion of Counsel" means an opinion in writing signed by legal
------------------
counsel who may be an employee of or counsel to the Issuer. Each such
opinion shall comply with Section 314 of the Trust Indenture Act of 1939
and include the statements provided for in Section 11.5, if and to the
extent required hereby.
"original issue date" of any Security (or portion thereof) means
-------------------
the earlier of (a) the date of authentication
6
<PAGE>
of such Security or (b) the date of any Security (or portion thereof) for
which such Security was issued (directly or indirectly) on registration of
transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that
--------------------------------
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant
to Section 5.1.
"Outstanding", when used with reference to Securities, shall,
-----------
subject to the provisions of Section 7.4, mean, as of any particular time,
all Securities authenticated and delivered by the Trustee under this
Indenture, except
(a) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys or U.S. Government Obligations (as provided
in Section 10.1) in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the
Issuer) or shall have been set aside, segregated and held in trust by
the Issuer for the Holders of such Securities (if the Issuer shall act
as its own paying agent), provided that if such Securities, or
--------
portions thereof, are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving
such notice; and
(c) Securities in substitution for which other Securities shall
have been authenticated and delivered, or which shall have been paid,
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented
that such Security is held by a person in whose hands such Security is
a legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite principal
amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 5.1.
7
<PAGE>
"Periodic Offering" means an offering of Securities of a series
-----------------
from time to time, the specific terms of which Securities, including,
without limitation, the rate or rates of interest, if any, thereon, the
stated maturity or maturities thereof and the redemption provisions, if
any, with respect thereto, are to be determined by the Company or its
agents upon the issuance of such Securities.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"principal" whenever used with reference to the Securities or any
---------
Security or any portion thereof, shall be deemed to include "and premium,
if any".
"Principal Property" means land, land improvements, buildings and
------------------
associated factory and laboratory equipment owned or leased pursuant to a
capital lease and used by the Issuer or a Restricted Subsidiary primarily
for processing, producing, packaging or storing its products, raw
materials, inventories or other materials and supplies and located within
the United States of America and having an acquisition cost plus
capitalized improvements in excess of 2% of Consolidated Net Worth as of
the date of such determination, but shall not include any such property
financed through the issuance of tax exempt governmental obligations, or
any such property that has been determined by Board Resolution of the
Issuer not to be of material importance to the respective businesses
conducted by the Issuer or such Restricted Subsidiary, effective as of the
date such resolution is adopted.
"Registered Global Security", means a Security evidencing all or
--------------------------
a part of a series of Registered Securities, issued to the Depositary for
such series in accordance with Section 2.4, and bearing the legend
prescribed in Section 2.4.
"Registered Security" means any Security registered on the
-------------------
Security register of the Issuer.
"Responsible Officer" means, when used with respect to the
-------------------
Trustee, any Senior Trust Officer, any Vice President, any Trust Officer,
any Assistant Trust Officer, or any other officer or assistant officer of
the Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to
whom any corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.
8
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"Restricted Subsidiary" means any Subsidiary organized and
---------------------
existing under the laws of the United States of America and the principal
business of which is carried on within the United States of America which
owns or is a lessee pursuant to a capital lease of any Principal Property
and in which the investment of the Issuer and all its Subsidiaries exceeds
5% of Consolidated Net Worth as of the date of such determination other
than:
(i) each Subsidiary the major part of whose business
consists of finance, banking, credit, leasing, insurance,
financial services or other similar operations, or any
combination thereof;
(ii) each Subsidiary formed or acquired after the date
hereof for the purpose of acquiring the business or assets of
another Person and which does not acquire all or any substantial
part of the business or assets of the Issuer or any Restricted
Subsidiary; and
(iii) Nabisco Holdings, each subsidiary of Nabisco Holdings and
each of their successors and assigns;
provided, however, that the Board of Directors of the Issuer may by Board
-------- -------
Resolution declare any such Subsidiary to be a Restricted Subsidiary,
effective as of the date such resolution is adopted.
"Security" or "Securities" has the meaning stated in the first
-------- ----------
recital of this Indenture, and to the extent a Security is issued as an
Unregistered Security, the term Security or Securities shall also include
the Coupon (if any) appertaining to such Security if the context so
requires, or, as the case may be, Securities that have been authenticated
and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Subsidiary" means any corporation of which at least a majority
----------
of all outstanding stock having by the terms thereof ordinary voting power
in the election of directors of such corporation (irrespective of whether
or not at the time stock of any class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned by the Issuer,
or by one or more Subsidiaries of the Issuer or by the Issuer and one or
more Subsidiaries.
9
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"Trust Indenture Act of 1939" means the Trust Indenture Act of
---------------------------
1939, as amended, as in force at the date as of which this Indenture was
originally executed.
"Trustee" means the Person identified as "Trustee" in the first
-------
paragraph hereof and, pursuant to the provisions of Article Five, shall
also include any successor trustee. "Trustee" shall also mean or include
each Person who is then a trustee hereunder and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the trustee with respect to the Securities of such
series.
"U.S. Government Obligations" shall have the meaning set forth in
---------------------------
Section 10.1(A).
"Unregistered Security" means any Security other than a
---------------------
Registered Security.
"Vice President" when used with respect to the Issuer or the
--------------
Trustee, means any vice president, whether or not designated by a number or
a word or words added before or after the title of "Vice President".
"Yield to Maturity" means as the context may require the yield to
-----------------
maturity (i) on a series of Securities or (ii) if the Securities of a
series are issuable from time to time, on a Security of such series,
calculated at the time of issuance of such series in the case of clause (i)
or at the time of issuance of such Security of such series in the case of
clause (ii), or, if applicable, at the most recent redetermination of
interest on such series or on such Security, and calculated in accordance
with the constant interest method or such other accepted financial practice
as is specified in the terms of such Security.
ARTICLE TWO
SECURITIES
----------
SECTION 2.1 Forms Generally. The Securities of each series and
---------------
the Coupons, if any, to be attached thereto shall be substantially in such
form (not inconsistent with this Indenture) as shall be established by or
pursuant to one or more Board Resolutions (as set forth, in a Board
Resolution or, to the extent established pursuant to, rather than set
forth, in a Board Resolution, an Officer's Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have
imprinted or otherwise reproduced thereon such
10
<PAGE>
legend or legends or endorsements, not inconsistent with the provisions of
this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with any rules of any securities
exchange or to conform to general usage, all as may be determined by the
officers executing such Securities and Coupons, if any, as evidenced by
their execution of the Securities and Coupons.
Unless otherwise specified as contemplated by Section 2.3,
Unregistered Securities shall have coupons attached. The definitive
Securities and Coupons, if any, shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities and Coupons, if any.
SECTION 2.2 Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
Dated: CITIBANK, N.A.,
as Trustee
By______________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed
with respect to any series of Securities, then the Trustee's Certificate of
Authentication to be borne by the Securities of each such series shall be
substantially as follows:
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<PAGE>
"This is one of the Securities referred to in the
within-mentioned Indenture."
CITIBANK, N.A.,
as Trustee
_________________________,
as Authenticating Agent
By_______________________
Authorized Signatory
SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate
------------------------------------
principal amount of Securities which may be authenticated and delivered
under this Indenture is unlimited.
The Securities may be issued in one or more series and each such
series shall rank equally and pari passu with all other senior and
unsubordinated debt of the Issuer. There shall be established in or
pursuant to one or more Board Resolutions (and to the extent established
pursuant to rather than set forth in a Board Resolution, in an Officers'
Certificate detailing such establishment) or established in one or more
indentures supplemental hereto, prior to the initial issuance of Securities
of any series,
(1) the designation of the Securities of the series, which shall
distinguish the Securities of the series from the Securities of all
other series;
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture and any limitation on the ability of the Issuer to
increase such aggregate principal amount after the initial issuance of
the Securities of that Series (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 2.8, 2.9,
2.11, 8.5 or 12.3);
(3) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited
to, any Foreign Currency);
(4) the date or dates on which the principal of the Securities
of the series is payable (which date or dates may be fixed or
extendible);
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<PAGE>
(5) the rate or rates (which may be fixed on variable) per annum
at which the Securities of the series shall bear interest, if any, the
date or dates from which such interest shall accrue, on which such
interest shall be payable and (in the case of Registered Securities)
on which a record shall be taken for the determination of Holders to
whom interest is payable and/or the method by which such rate or rates
or date or dates shall be determined;
(6) the place or places where the principal of and any interest
on Securities of the series shall be payable (if other than as
provided in Section 3.2), any Registered Securities of the series may
be surrendered for exchange, notices, demands to or upon the Company
in respect of the Securities of the series and this Indenture may be
served and where notice to Holders pursuant to Section 11.4 may be
published;
(7) the right, if any, of the Issuer to redeem Securities of
such series, in whole or in part, at its option and the period or
periods within which, the price or prices at which and any terms and
conditions upon which Securities of the series may be so redeemed,
pursuant to any sinking fund or otherwise;
(8) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series pursuant to any mandatory redemption,
sinking fund or analogous provisions or at the option of a Holder
thereof and the price or prices at which and the period or periods
within which and any of the terms and conditions upon which Securities
of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof in case of Registered Securities, or $1,000 and
$5,000 in the case of Unregistered Securities, the denominations in
which Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof;
(11) if other than the coin or currency in which the Securities
of that series are denominated, the coin or currency in which payment
of the principal of or interest on the Securities of such series shall
be payable;
13
<PAGE>
(12) if the principal of or interest on the Securities of such
series are to be payable, at the election of the Issuer or a Holder
thereof, in a coin or currency other than that in which the Securities
are denominated, the period or periods within which, and the terms and
conditions upon which, such election may be made;
(13) if the amount of payments of principal of and interest on
the Securities of the series may be determined with reference to an
index based on a coin or currency other then that in which the
Securities of the series are denominated, the manner in which such
amounts shall be determined;
(14) whether the Securities of the series will be issuable as
Registered Securities (and if so, whether such Securities will be
issuable as Registered Global Securities) or Unregistered Securities
(with or without Coupons), or any combination of the foregoing, any
restrictions applicable to the offer, sale or delivery of Unregistered
Securities or the payment of interest thereon and, if other than as
provided in Section 2.8, the terms upon which Unregistered Securities
of any series may be exchanged for Registered Securities of such
series and vice versa;
(15) whether and under what circumstances the Issuer will pay
additional amounts on the Securities of the series held by a person
who is not a U.S. person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the
Issuer will have the option to redeem such Securities rather than pay
such additional amounts;
(16) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and terms of such certificates, documents or conditions;
(17) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Securities of such series;
(18) the terms of any warrants attached to the Securities of the
series;
(19) provisions, if any, for the defeasance of Securities of a
particular series (including provisions
14
<PAGE>
permitting defeasance of less than all Securities of a particular
series), which provisions may be in addition to, in substitution for,
in subtraction from, or in modification of (or any combination of the
foregoing) the provisions of Article Ten;
(20) whether the Securities of the series are issuable in whole
or in part as one or more global Securities and, in such case, the
identity of the Depositary for such global Security or Securities;
(21) any other events of default or covenants with respect to
the Securities of such series; and
(22) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and Coupons, if any,
appertaining thereto, shall be substantially identical, except in the case
of Registered Securities as to denomination and except as may otherwise be
provided by or pursuant to the Board Resolution or Officers' Certificate
referred to above or as set forth in any such indenture supplemental
hereto. All Securities of any one series need not be issued at the same
time and may be issued from time to time, consistent with the terms of this
Indenture, if so provided by or pursuant to such Board Resolution, such
Officer's Certificate or in any such indenture supplemental hereto. If any
of the terms of the series are established by action taken pursuant to a
Board Resolution, a copy of an appropriate record of such action shall be
certified by a Secretary or Assistant Secretary of the Issuer and delivered
to the trustee at or prior to the delivery of the Officer's Certificate
setting forth the terms of the series.
SECTION 2.4 Authentication and Delivery of Securities. At any
-----------------------------------------
time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Securities of any series having attached
thereto appropriate Coupons, if any, executed by the Issuer to the Trustee
for authentication together with the applicable documents referred to below
in this Section, and the Trustee shall thereupon authenticate and deliver
such Securities to or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from
time to time by an Issuer Order. The maturity date, original issue date,
interest rate and any other terms of the Securities of such series and
Coupons, if any, appertaining thereto shall be determined by or pursuant to
such Issuer Order and procedures. If provided for in such procedures, such
Issuer Order may
15
<PAGE>
authorize authentication and delivery pursuant to oral instructions from
the Issuer or its duly authorized agent, which instructions shall be
promptly confirmed in writing in the form of an Issuer Order or in the form
of instructions delivered by a person who is authorized under an Issuer
Order previously delivered to the Trustee by facsimile or electronic
transmission. In authenticating such Securities and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs 2, 3 and 4 below only at or before the time of the first
request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.1) shall be fully protected in relying
upon, unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and
setting forth delivery instructions if the Securities and
Coupons, if any, are not to be delivered to the Issuer, provided
that, with respect to Securities of a series subject to a
Periodic Offering, (a) such Issuer Order may be delivered by the
Issuer to the Trustee prior to the delivery to the Trustee of
such Securities for authentication and delivery, (b) the Trustee
shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate principal
amount not exceeding the aggregate principal amount established
for such series, pursuant to an Issuer Order or pursuant to
procedures acceptable to the Trustee as may be specified from
time to time by an Issuer Order, (c) the maturity date or dates,
original issue date or dates, interest rate or rates and any
other terms of Securities of such series shall be determined by
an Issuer Order or pursuant to such procedures and (d) if
provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic
instructions from the Issuer or its duly authorized agent or
agents, which oral instructions shall be promptly confirmed in
writing;
(2) any Board Resolution, Officers' Certificate and/or
executed supplemental indenture referred to in Sections 2.1 and
2.3 by or pursuant to which the forms and terms of the Securities
of a series and Coupons, if any, were established;
(3) an Officers' Certificate setting forth the form or
forms and terms of the Securities and Coupons, if any, stating
that the form or forms and terms of the Securities of such series
and
16
<PAGE>
Coupons, if any, have been established pursuant to Sections 2.1 and
2.3 and comply with this Indenture, and covering such other matters as
the Trustee may reasonably request; and
(4) At the option of the Issuer, either an Opinion of
Counsel, or a letter addressed to the Trustee permitting it to
rely on an Opinion of Counsel, substantially to the effect that
the Securities have been duly authorized and, if executed and
authenticated in accordance with the provisions of the Indenture
and delivered to and duly paid for by the purchasers thereof on
the date of such opinion, would be entitled to the benefits of
the Indenture and would be valid and binding obligations of the
Issuer, enforceable against the Issuer in accordance with their
respective terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors
generally and of general principles of equity whether applied by
a court of law or equity.
Such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the State of New York and the federal law of the
United States, upon opinions of other counsel (copies of which shall be
delivered to the Trustee), who shall be counsel reasonably satisfactory to
the Trustee, in which case the opinion shall state that such counsel
believes he and the Trustee are entitled so to rely. Such counsel may also
state that, insofar as such opinion involves factual matters, he has
relied, to the extent he deems proper, upon certificates of officers of the
Issuer and its subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the
Issuer or if the Trustee in good faith by its board of directors or board
of trustees, executive committee, or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would
expose the Trustee to personal liability to existing Holders or would
affect the Trustee's own rights, duties or immunities under the Securities,
this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more
Registered Global Securities, then the Issuer shall execute and the Trustee
shall, in accordance
17
<PAGE>
with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Registered Global Securities that (i)
shall represent and shall be denominated in an amount equal to the
aggregate principal amount of all of the Securities of such series issued
and not yet cancelled, (ii) shall be registered in the name of the
Depositary for such Registered Global Security or Securities or the nominee
of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions and (iv) shall
bear a legend substantially to the following effect: "Unless and until it
is exchanged in whole or in part for Securities in definitive registered
form, this Security may not be transferred except as a whole by the
Depositary to the nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary."
Each Depositary designated pursuant to Section 2.3 must, at the
time of its designation and at all times while it serves as Depositary, be
a clearing agency registered under the Securities Exchange Act of 1934 and
any other applicable statute or regulation.
SECTION 2.5 Execution of Securities. The Securities and, if
-----------------------
applicable, each Coupon appertaining thereto shall be signed on behalf of
the Issuer by both (a) the Chairman of its Board of Directors or any Vice
Chairman of its Board of Directors or its President or any Vice President
and (b) by its Treasurer or any Assistant Treasurer or its Secretary or any
Assistant Secretary, under its corporate seal (except in the case of
Coupons and in the case of any Registered Global Security) which may, but
need not, be attested. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the
Issuer may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of
the seal or any such signature shall not affect the validity or
enforceability of any Security that has been duly authenticated and
delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of
the Securities or Coupons, if any, shall cease to be such officer before
the Security or Coupon so signed (or the Security to which the Coupon so
signed appertains) shall be authenticated and delivered by the Trustee or
disposed of by the Issuer, such Security or Coupon nevertheless may be
authenticated and delivered or disposed of as though the person who signed
such Security or Coupon had not ceased to be such officer of the Issuer;
and any Security or
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<PAGE>
Coupon may be signed on behalf of the Issuer by such persons as, at the
actual date of the execution of such Security or Coupon, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
SECTION 2.6 Certificate of Authentication. Only such Securities
-----------------------------
as shall bear thereon a certificate of authentication substantially in the
form hereinbefore recited, executed by the Trustee by the manual signature
of one of its authorized signatories, shall be entitled to the benefits of
this Indenture or be valid or obligatory for any purpose. No Coupon shall
be entitled to the benefits of this Indenture or shall be valid and
obligatory for any purpose until the certificate of authentication on the
Security to which such Coupon appertains shall have been duly executed by
the Trustee. The execution of such certificate by the Trustee upon any
Security or Coupon executed by the Issuer shall be conclusive evidence that
the Security or Coupon so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of
------------------------------------------------
Interest. The Securities of each series shall be issuable as Registered
--------
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.3. or, with respect to Registered Securities of
any series, if any so established, in denominations of $1,000 and any
integral multiple thereof. If the denominations of Unregistered Securities
of any series are not so established, such Securities shall be issuable in
denominations of $1,000 and $5,000. The Securities of each series shall be
numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same
may determine, as evidenced by the execution thereof.
Each Registered Security shall be dated the date of its
authentication. Each Unregistered Security shall be dated as provided in
the resolution or resolutions of the Board of Directors of the Issuer
referred to in Section 2.3. The Securities of each series shall bear
interest, if any, from the date, and such interest and shall be payable on
the dates, established as contemplated by Section 2.3.
The person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the
19
<PAGE>
record date and prior to such interest payment date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
interest payment date for such series, in which case such defaulted
interest shall be paid to the persons in whose names Outstanding Registered
Securities for such series are registered at the close of business on a
subsequent record date (which shall be not less than five Business Days
prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Issuer to the Holders of
Registered Securities not less than 15 days preceding such subsequent
record date. The term "record date" as used with respect to any interest
payment date (except a date for payment of defaulted interest) for the
Securities of any series shall mean the date specified as such in the terms
of the Registered Securities of such series established as contemplated by
Section 2.3, or, if no such date is so established, if such interest
payment date is the first day of a calendar month, the fifteenth day of the
next preceding calendar month or, if such interest payment date is the
fifteenth day of a calendar month, the first day of such calendar month,
whether or not such record date is a Business Day.
SECTION 2.8 Registration, Transfer and Exchange. The Issuer
-----------------------------------
will keep or cause to be kept at each office or agency to be maintained for
the purpose as provided in Section 3.2, for each series of Securities, a
register or registers in which, subject to such reasonable regulations as
it may prescribe, it will provide for the registration of Registered
Securities of such series and the registration of transfer of Registered
Securities of such series. Such register shall be in written form in the
English language or in any other form capable of being converted into such
form within a reasonable time. At all reasonable times such register or
registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any
Registered Security of any series at any such office or agency to be
maintained for the purpose as provided in Section 3.2, the Issuer shall
execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Registered Security or Registered
Securities of the same series, maturity date, interest rate and original
issue date in authorized denominations for a like aggregate principal
amount.
Unregistered Securities (except for any temporary global
Unregistered Securities) and Coupons (except for Coupons attached to any
temporary global Unregistered Securities) shall be transferable by
delivery.
20
<PAGE>
At the option of the Holder thereof, Registered Securities of any
series (other than a Registered Global Security, except as set forth below)
may be exchanged for a Registered Security or Registered Securities of such
series having authorized denominations and an equal aggregate principal
amount, upon surrender of such Registered Securities to be exchanged at the
agency of the Issuer that shall be maintained for such purpose in
accordance with Section 3.2 and upon payment, if the Issuer shall so
require, of the charges hereinafter provided. If the Securities of any
series are issued in both registered and unregistered form, except as
otherwise specified pursuant to Section 2.3, at the option of the Holder
thereof, Unregistered Securities of any series may be exchanged for
Registered Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Unregistered
Securities to be exchanged at the agency of the Issuer that shall be
maintained for such purpose in accordance with Section 3.2, with, in the
case of Unregistered Securities that have Coupons attached, all unmatured
Coupons and all matured Coupons in default thereto appertaining, and upon
payment, if the Issuer shall so require, of the charges hereinafter
provided. At the option of the Holder thereof, if Unregistered Securities
of any series, maturity date, interest rate and original issue date are
issued in more than one authorized denomination, except as otherwise
specified pursuant to Section 2.3, such Unregistered Securities may be
exchanged for Unregistered Securities of such series having authorized
denominations and an equal aggregate principal amount, upon surrender of
such Unregistered Securities to be exchanged at the agency of the Issuer
that shall be maintained for such purpose in accordance with Section 3.2 or
as specified pursuant to Section 2.3, with, in the case of Unregistered
Securities that have Coupons attached, all unmatured Coupons and all
matured Coupons in default thereto appertaining, and upon payment, if the
Issuer shall so require, of the charges hereinafter provided. Unless
otherwise specified pursuant to Section 2.3, Registered Securities of any
series may not be exchanged for Unregistered Securities of such series.
Whenever any Securities are so surrendered for exchange, the Issuer shall
execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. All
Securities and Coupons surrendered upon any exchange or transfer provided
for in this Indenture shall be promptly cancelled and returned to the
Issuer.
All Registered Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer
21
<PAGE>
and the Trustee duly executed by, the holder or his attorney duly
authorized in writing.
The Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities. No service charge
shall be made for any such transaction.
The Issuer shall not be required to exchange or register a
transfer of (a) any Securities of any series for a period of 15 days next
preceding the first mailing of notice of redemption of Securities of such
series to be redeemed, or (b) any Securities of such series selected,
called or being called for redemption, in whole or in part, except, in the
case of any Security of such series where public notice has been given that
such Security is to be redeemed in part, the portion thereof not so to be
redeemed.
Notwithstanding any other provision of this Section 2.8, unless
and until it is exchanged in whole or in part for Securities in definitive
registered form, a Registered Global Security representing all or a portion
of the Securities of a series may not be transferred except as a whole by
the Depositary for such series to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor
Depositary for such series or a nominee of such successor Depositary.
If at any time the Depositary for any Registered Securities of a
series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Registered Securities or if at any time the Depositary for such Registered
Securities shall no longer be eligible under Section 2.4, the Issuer shall
appoint a successor Depositary eligible under Section 2.4 with respect to
such Registered Securities. If a successor Depositary eligible under
Section 2.4 for such Registered Securities is not appointed by the Issuer
within 90 days after the Issuer receives such notice or becomes aware of
such ineligibility, the Issuer's election pursuant to Section 2.3 that such
Registered Securities be represented by one or more Registered Global
Securities shall no longer be effective and the Issuer will execute, and
the Trustee, upon receipt of an Officer's Certificate for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive
registered form without coupons, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Registered
Global Security or Securities representing
22
<PAGE>
such Registered Securities in exchange for such Registered Global Security
or Securities.
The Issuer may at any time and in its sole discretion determine
that the Registered Securities of any series issued in the form of one or
more Registered Global Securities shall no longer be represented by a
Registered Global Security or Securities. In such event the Issuer will
execute, and the Trustee, upon receipt of an Officer's Certificate for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive
registered form without coupons, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Registered
Global Security or Securities representing such Registered Securities, in
exchange for such Registered Global Security or Securities.
Any time the Securities are not represented by Registered Global
Securities pursuant to the preceding two paragraphs, the Issuer agrees to
supply the Trustee with a reasonable supply of certificated Securities
without the legend required by Section 2.4 hereof and the Trustee agrees to
hold such Securities in safekeeping until authenticated pursuant to the
terms of this Indenture.
If specified by the Issuer pursuant to Section 2.3 with respect
to Securities represented by a Registered Global Security, the Depositary
for such Registered Global Security may surrender such Registered Global
Security in exchange in whole or in part for Securities of the same series
in definitive registered form on such terms as are acceptable to the Issuer
and such Depositary. Thereupon, the Issuer shall execute, and the Trustee
shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new
Registered Security or Securities of the same series, of any
authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Registered Global Security;
and
(ii) to such Depositary a new Registered Global Security in a
denomination equal to the difference, if any, between the
principal amount of the surrendered Registered Global Security
and the aggregate principal amount of Registered Securities
authenticated and delivered pursuant to clause (i) above.
23
<PAGE>
Upon the exchange of a Registered Global Security for Securities
in definitive registered form without coupons, in authorized denominations,
such Registered Global Security shall be cancelled by the Trustee or an
agent of the Issuer or the Trustee. Securities in definitive registered
form without Coupons issued in exchange for a Registered Global Security
pursuant to this Section 2.8 shall be registered in such names and in such
authorized denominations as the Depositary for such Registered Global
Security, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee or an agent of the Issuer or the
Trustee. The Trustee or such agent shall deliver such Securities to or as
directed by the Persons in whose names such Securities are so registered.
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Notwithstanding anything herein or in the terms of any series of
Securities to the contrary, none of the Issuer, the Trustee or any agent of
the Issuer or the Trustee (any of which, other than the Issuer, shall be
entitled to rely on an Officer's Certificate and an Opinion of Counsel)
shall be required to exchange any Unregistered Security for a Registered
Security if such exchange would result in adverse Federal income tax
consequences to the Issuer (such as, for example, the inability of the
Issuer to deduct from its income, as computed for Federal income tax
purposes, the interest payable on the Unregistered Securities) under then
applicable United States Federal income tax laws.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
----------------------------------------------
Securities. In case any temporary or definitive Security or any Coupon
----------
appertaining to any Security shall become mutilated, defaced or be
destroyed, lost or stolen, the Issuer in its discretion may execute, and
upon the written request of any officer of the Issuer, the Trustee shall
authenticate and deliver, a new Security of the same series, maturity date,
interest rate and original issue date, bearing a number or other
distinguishing symbol not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen with Coupons (if
any) corresponding to the Coupons appertaining to the Securities so
mutilated, defaced, destroyed, lost or stolen, or in exchange or
substitution for the Security to which such mutilated, defaced, destroyed,
lost or stolen Coupon appertained, with Coupons
24
<PAGE>
appertaining thereto corresponding to the Coupons so mutilated, defaced,
destroyed, lost or stolen. In every case the applicant for a substitute
Security or Coupon shall furnish to the Issuer and to the Trustee and any
agent of the Issuer or the Trustee such security or indemnity as may be
required by them to indemnify and defend and to save each of them harmless
and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security or Coupon
and of the ownership thereof and in the case of mutilation or defacement
shall surrender the Security and related Coupons (if any) to the Trustee or
such agent.
Upon the issuance of any substitute Security or Coupon, the
Issuer may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee or its
agent) connected therewith. In case any Security or Coupon which has
matured or is about to mature or has been called for redemption in full
shall become mutilated or defaced or be destroyed, lost or stolen, the
Issuer may instead of issuing a substitute Security or Coupon, pay or
authorize the payment of the same or the relevant Coupon (without surrender
thereof except in the case of a mutilated or defaced Security or Coupon),
if the applicant for such payment shall furnish to the Issuer and to the
Trustee and any agent of the Issuer or the Trustee such security or
indemnity as any of them may require to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish
to the Issuer and the Trustee and any agent of the Issuer or the Trustee
evidence to their satisfaction of the destruction, loss or theft of such
Security or Coupon and of the ownership thereof.
Every substitute Security or Coupon of any series issued pursuant
to the provisions of this Section by virtue of the fact that any such
Security or Coupon is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Issuer, whether or not the
destroyed, lost or stolen Security or Coupon shall be at any time
enforceable by anyone and shall be entitled to all the benefits of (but
shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities or
Coupons of such series duly authenticated and delivered hereunder. All
Securities and Coupons shall be held and owned upon the express condition
that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced
or destroyed, lost or stolen Securities and Coupons and shall preclude any
and all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with
25
<PAGE>
respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof.
-----------------------------------------------
All Securities and Coupons surrendered for payment, redemption,
registration of transfer or exchange, or for credit against any payment in
respect of a sinking or analogous fund, if surrendered to the Issuer or any
agent of the Issuer or the Trustee or any agent of the Trustee, shall be
delivered to the Trustee or its agent for cancellation or, if surrendered
to the Trustee, shall be cancelled by it; and no Securities or Coupons
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture. The Trustee shall destroy cancelled
Securities held by it and deliver a certificate of destruction to the
Issuer. If the Issuer shall acquire any of the Securities or Coupons, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
delivered to the Trustee or its agent for cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation of
--------------------
definitive Securities for any series, the Issuer may execute and upon
Issuer Order the Trustee shall authenticate and deliver temporary
Securities for such series (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee). Temporary
Securities of any series shall be issuable as Registered Securities without
coupons, or as Unregistered Securities with or without coupons attached
thereto, of any authorized denomination, and substantially in the form of
the definitive Securities of such series but with such omissions,
insertions and variations as may be appropriate for temporary Securities,
all as may be determined by the Issuer with the concurrence of the Trustee
as evidenced by the execution and authentication thereof. Temporary
Securities may contain such references to any provisions of this Indenture
as may be appropriate. Every temporary Security shall be executed by the
Issuer and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Securities. Without unreasonable delay the Issuer shall execute and shall
furnish definitive Securities of such series and thereupon temporary
Registered Securities of such series may be surrendered in exchange
therefor without charge at each office or agency to be maintained by the
Issuer for that purpose pursuant to Section 3.2 and, in the case of
Unregistered Securities, at an agency maintained by the Issuer for such
purpose as specified pursuant to Section 2.3, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of
26
<PAGE>
the same series having authorized denominations and, in the case of
Unregistered Securities, having attached thereto any appropriate Coupons.
Until so exchanged, the temporary Securities of any series shall be
entitled to the same benefits under this Indenture as definitive Securities
of such series, unless otherwise established pursuant to Section 2.3. The
provisions of this Section are subject to any restrictions or limitations
on the issue and delivery of temporary Unregistered Securities of any
series that may be established pursuant to Section 2.3 (including any
provision that Unregistered Securities of such series initially be issued
in the form of a single global Unregistered Security to be delivered to a
depositary or agency located outside the United States and the procedures
pursuant to which definitive or global Unregistered Securities of such
series will be issued in exchange for such temporary global Unregistered
Security).
SECTION 2.12 CUSIP Numbers. The Issuer in issuing the
-------------
Securities may use "CUSIP" numbers (if then generally in use), and, if so,
the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
--------
representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers.
ARTICLE THREE
COVENANTS OF THE ISSUER
-----------------------
SECTION 3.1 Payment of Principal and Interest. The Issuer
---------------------------------
covenants and agrees for the benefit of each series of Securities that it
will duly and punctually pay or cause to be paid the principal of, and
interest on, each of the Securities of such series (together with any
additional amounts payable pursuant to the terms of such Securities) at the
place or places, at the respective times and in the manner provided in such
Securities and in the Coupons, if any, appertaining thereto and in this
Indenture. The interest on Securities with Coupons attached (together with
any additional amounts payable pursuant to the terms of such Securities)
shall be payable only upon presentation and surrender of the several
Coupons for such interest installments as are evidenced thereby as they
severally mature. The interest on any temporary Unregistered Securities
(together with any additional amounts payable pursuant to the terms of such
Securities) shall be paid, as
27
<PAGE>
to the installments of interest evidenced by Coupons attached thereto, if
any, only upon presentation and surrender thereof, and, as to the other
installments of interest, if any, only upon presentation of such Securities
for notation thereon of the payment of such interest. The interest on
Registered Securities (together with any additional amounts payable
pursuant to the terms of such Securities) shall be payable only to or upon
the written instructions of the Holders thereof and at the option of the
Issuer may be paid by wire transfer or mailing checks for such interest
payable to or upon the written order of such Holders at their last
addresses as they appear on the registry books of the Issuer.
Notwithstanding any provisions of this Indenture and the
Securities of any series to the contrary, if the Issuer and a Holder of
Registered Securities so agree, payments of interest on, and any portion of
the principal of any Securities (other than interest payable at maturity or
on any redemption or repayment date or the final payment of principal on a
Security), shall be made by the Paying Agent upon receipt from the Issuer
of immediately available funds by 11:00 A.M., New York City time (or such
other time as may be agreed to between the Company and the Trustee),
directly to the Holder of such Security (whether by Federal funds, wire
transfer or otherwise) if the Holder has delivered written instructions to
the Trustee 15 days prior to such payment date requesting that such payment
will be so made and designating the bank account to which such payments
shall be so made and in the case of payments of principal surrenders the
same to the Trustee in exchange for a Security or Securities aggregating
the same principal amount as the unredeemed principal amount of the
Securities surrendered. The Trustee shall be entitled to rely on the last
instruction delivered by the Holder pursuant to this Section 3.1 unless a
new instruction is delivered 15 days prior to a payment date. The Issuer
will indemnify and hold the Trustee harmless against any loss, liability or
expense (including attorneys' fees) resulting from any act or omission to
act on the part of the Issuer or any such Holder in connection with any
such agreement or which the Paying Agent may incur as a result of making
any payment in accordance with any such agreement.
SECTION 3.2 Offices for Payments, etc. The Issuer will maintain
--------------------------
in the Borough of Manhattan, The City of New York, an agency where the
Registered Securities of each series may be presented for payment, an
agency where the Securities of each series may be presented for exchange as
is provided in this Indenture and, if applicable, pursuant to Section 2.3
an agency where the Registered Securities of each series may be presented
for registration of transfer as in this Indenture provided. Unless
otherwise
28
<PAGE>
provided pursuant to Section 2.3, the Issuer initially appoints the
Corporate Trust Office of the Trustee, in New York, New York, as such
office or agency for the purposes of this Section.
The Issuer will maintain one or more agencies in a city or cities
located outside the United States (including any city in which such an
agency is required to be maintained under the rules of any stock exchange
on which the Securities of such series are listed) where the Unregistered
Securities, if any, of each series and Coupons, if any, appertaining
thereto may be presented for payment. No payment on any Unregistered
Security or Coupon will be made upon presentation of such Unregistered
Security or Coupon at an agency of the Issuer within the United States nor
will any payment be made by transfer to an account in, or by mail to an
address in, the United States unless pursuant to applicable United States
laws and regulations then in effect such payment can be made without
adverse tax consequences to the Issuer. Notwithstanding the foregoing, if
full payment in Dollars at each agency maintained by the Issuer outside the
United States for payment on such Unregistered Securities or Coupons
appertaining thereto is illegal or effectively precluded by exchange
controls or other similar restrictions, payments in Dollars of Unregistered
Securities of any series and Coupons appertaining thereto which are payable
in Dollars may be made at an agency of the Issuer maintained in the Borough
of Manhattan, The City of New York.
The Issuer will maintain in the Borough of Manhattan, The City of
New York, an agency where notices and demands to or upon the Issuer in
respect of the Securities of any series, the Coupons appertaining thereto
or this Indenture may be served.
The Issuer will give to the Trustee written notice of the
location of each such agency and of any change of location thereof. In
case the Issuer shall fail to maintain any agency required by this Section
to be located in the Borough of Manhattan, The City of New York, or shall
fail to give such notice of the location or of any change in the location
of any of the above agencies, presentations and demands may be made and
notices may be served at the Corporate Trust Office of the Trustee.
The Issuer may from time to time designate one or more additional
agencies where the Securities of a series and Coupons appertaining thereto
may be presented for payment, where the Securities of that series may be
presented for exchange as provided in this Indenture and pursuant to
Section 2.3 where the Registered Securities of that series may be presented
for registration of transfer as
29
<PAGE>
in this Indenture provided, and the Issuer may from time to time rescind
any such designation, as the Issuer may deem desirable or expedient;
provided, however, that no such designation or rescission shall in any
-------- -------
manner relieve the Issuer of its obligation to maintain the agencies
provided for in the immediately preceding paragraphs. The Issuer will give
to the Trustee prompt written notice of any such designation or rescission
thereof.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.
--------------------------------------------------
The Issuer, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.10, a successor
Trustee, so that there shall at all times be a Trustee with respect to each
series of Securities hereunder.
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a
-------------
paying agent other than the Trustee with respect to the Securities of any
series, it will cause such paying agent to execute and deliver to the
Trustee an instrument in which such agent shall agree with the Trustee,
subject to the provisions of this Section that such paying agent,
(a) will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities of such
series (whether such sums have been paid to it by the Issuer or by any
other obligor on the Securities of such series) in trust for the
benefit of the holders of the Securities of such series, or Coupons
appertaining thereto, or of the Trustee, until such sums shall be paid
to such holders or otherwise disposed of as herein provided;
(b) will give the Trustee notice of any failure by the Issuer
(or by any other obligor on the Securities of such series) to make any
payment of the principal of or interest on the Securities of such
series when the same shall be due and payable, and
(c) at any time during the continuance of any such failure, upon
the written request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust by such paying agent.
The Issuer will, on or prior to each due date of the principal of
or interest on the Securities of such series, deposit with the paying agent
a sum sufficient to pay such principal or interest so becoming due, and
(unless such paying agent is the Trustee) the Issuer will promptly notify
the Trustee of its action or of any failure to take such action.
30
<PAGE>
If the Issuer shall act as its own paying agent with respect to
the Securities of any series, it will, on or before each due date of the
principal of or interest on the Securities of such series, set aside,
segregate and hold in trust for the benefit of the holders of the
Securities of such series or the Coupons appertaining thereto a sum
sufficient to pay such principal or interest so becoming due. The Issuer
will promptly notify the Trustee of its action or of any failure to take
such action.
The Issuer hereby initially appoints the Trustee as registrar and
paying agent. Anything in this Section to the contrary notwithstanding,
the Issuer may at any time, for the purpose of obtaining a satisfaction and
discharge with respect to one or more or all series of Securities
hereunder, or for any other reason, pay or cause to be paid, or by Issuer
Order direct any paying agent to pay to the Trustee all sums held in trust
for any such series by the Issuer or any paying agent hereunder, as
required by this Section, such sums to be held by the Trustee upon the
trusts herein contained.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to
the provisions of Section 10.3 and 10.4.
SECTION 3.5 Certificate to Trustee. The Issuer will furnish to
----------------------
the Trustee annually, on or before a date not more than four months after
the end of its fiscal year (which, on the date hereof, is a calendar year),
a brief certificate (which need not comply with Section 11.5) from its
principal executive, financial or accounting officer as to his or her
knowledge of the compliance of the Issuer with all conditions and covenants
under the Indenture (such compliance to be determined without regard to any
period of grace or requirement of notice provided under the Indenture).
SECTION 3.6 Negative Pledge. (a) The Issuer will not, and will
---------------
not permit any Restricted Subsidiary to, mortgage or pledge as security for
any indebtedness any shares of stock, indebtedness or other obligations of
a Subsidiary or any Principal Property of the Issuer or a Restricted
Subsidiary, whether such shares of stock, indebtedness or other obligations
of a Subsidiary or Principal Property is owned at the date of this
Indenture or hereafter acquired, unless the Issuer secures or causes such
Restricted Subsidiary to secure the outstanding Securities equally and
ratably with all indebtedness secured by such mortgage or pledge, so long
as such indebtedness shall be so secured; provided, however, that this
--------
covenant shall not apply in the case of: (i) the creation of any mortgage,
31
<PAGE>
pledge or other lien on any shares of stock, indebtedness or other
obligations of a Subsidiary or any Principal Property hereafter acquired
(including acquisitions by way of merger or consolidation) by the Issuer or
a Restricted Subsidiary contemporaneously with such acquisition, or within
120 days thereafter, to secure or provide for the payment or financing of
any part of the purchase price thereof, or the assumption of any mortgage,
pledge or other lien upon any shares of stock, indebtedness or other
obligations of a Subsidiary or any Principal Property hereafter acquired
existing at the time of such acquisition, or the acquisition of any shares
of stock, indebtedness or other obligations of a Subsidiary or any
Principal Property subject to any mortgage, pledge or other lien without
the assumption thereof, provided that every such mortgage, pledge or lien
--------
referred to in this clause (i) shall attach only to the shares of stock,
indebtedness or other obligations of a Subsidiary or any Principal Property
so acquired and fixed improvements thereon; (ii) any mortgage, pledge or
other lien on any shares of stock, indebtedness or other obligations of a
Subsidiary or any Principal Property existing at the date of this
Indenture; (iii) any mortgage, pledge or other lien on any shares of stock,
indebtedness or other obligations of a Subsidiary or any Principal Property
in favor of the Issuer or any Restricted Subsidiary; (iv) any mortgage,
pledge or other lien on Principal Property being constructed or improved
securing loans to finance such construction or improvements; (v) any
mortgage, pledge or other lien on shares of stock, indebtedness or other
obligations of a Subsidiary or any Principal Property incurred in
connection with the issuance of tax-exempt governmental obligations; (vi)
any renewal of or substitution for any mortgage, pledge or other lien
permitted by any of the preceding clauses (i) through (v), provided, in the
--------
case of a mortgage, pledge or other lien permitted under clause (i), (ii)
or (iv), the debt secured is not increased nor the lien extended to any
additional assets.
(b) Notwithstanding the provisions of paragraph (a) of this
Section, the Issuer or any Restricted Subsidiary may create or assume liens
in addition to those permitted by paragraph (a) of this Section, and renew,
extend or replace such liens, provided that at the time of such creation,
--------
assumption, renewal, extension or replacement, and after giving effect
thereto, Exempted Debt does not exceed 10% of Consolidated Net Worth.
SECTION 3.7 Certain Sale and Lease-back Transactions. (a) The
----------------------------------------
Issuer will not, and will not permit any Restricted Subsidiary to, sell or
transfer, directly or indirectly, except to the Issuer or a Restricted
Subsidiary, any Principal Property as an entirety, or any substantial
32
<PAGE>
portion thereof, with the intention of taking back a lease of such
property, except a lease for a period of three years or less at the end of
which it is intended that the use of such property by the lessee will be
discontinued; provided that, notwithstanding the foregoing, the Issuer or
--------
any Restricted Subsidiary may sell any such Principal Property and lease it
back for a longer period (i) if the Issuer or such Restricted Subsidiary
would be entitled, pursuant to the provisions of Section 3.6(a), to create
a mortgage on the property to be leased securing Funded Debt in an amount
equal to the Attributable Debt with respect to such sale and lease-back
transaction without equally and ratably securing the outstanding Securities
or (ii) if (A) the Issuer promptly informs the Trustee of such transaction,
(B) the net proceeds of such transaction are at least equal to the fair
value (as determined by Board Resolution of the Issuer) of such property
and (C) the Issuer causes an amount equal to the net proceeds of the sale
to be applied to the retirement, within 120 days after receipt of such
proceeds, of Funded Debt incurred or assumed by the Issuer or a Restricted
Subsidiary (including the Securities); provided further that, in lieu of
--------
applying all of or any part of such net proceeds to such retirement, the
Issuer may, within 75 days after such sale, deliver or cause to be
delivered to the applicable trustee for cancellation either debentures or
notes evidencing Funded Debt of the Issuer (which may include the
Outstanding Securities) or of a Restricted Subsidiary previously
authenticated and delivered by the applicable trustee, and not theretofore
tendered for sinking fund purposes or called for a sinking fund or
otherwise applied as a credit against an obligation to redeem or retire
such notes or debentures, and an Officers' Certificate (which Certificate
shall be delivered to the Trustee and each paying agent and which need not
contain the statements prescribed by the second paragraph of Section 11.5)
stating that the Issuer elects to deliver or cause to be delivered such
debentures or notes in lieu of retiring Funded Debt as hereinabove
provided. If the Issuer shall so deliver debentures or notes to the
applicable trustee and the Issuer shall duly deliver such Officers'
Certificate, the amount of cash which the Issuer shall be required to apply
to the retirement of Funded Debt under this Section 3.7(a) shall be reduced
by an amount equal to the aggregate of the then applicable optional
redemption prices (not including any optional sinking fund redemption
prices) of such debentures or notes, or, if there are no such redemption
prices, the principal amount of such debentures or notes; provided, that in
--------
the case of debentures or notes which provide for an amount less than the
principal amount thereof to be due and payable upon a declaration of the
maturity thereof, such amount of cash shall be reduced by the amount of
principal of such debentures or notes that would be due and payable as of
the date of such application
33
<PAGE>
upon a declaration of acceleration of the maturity thereof pursuant to the
terms of the indenture pursuant to which such debentures or notes were
issued.
(b) Notwithstanding the provisions of paragraph (a) of this
Section 3.7, the Issuer or any Restricted Subsidiary may enter into sale
and lease-back transactions in addition to those permitted by paragraph (a)
of this Section 3.7 and without any obligation to retire any outstanding
Securities or other Funded Debt, provided that at the time of entering into
--------
such sale and lease-back transactions and after giving effect thereto,
Exempted Debt does not exceed 10% of Consolidated Net Worth.
SECTION 3.8 Funded Debt of Restricted Subsidiaries. (a) The
--------------------------------------
Issuer will not permit any Restricted Subsidiary
(A) to create, assume or permit to exist any Funded Debt
other than (i) Funded Debt secured by a mortgage, pledge or lien
which is permitted to such Restricted Subsidiary under the
provisions of Section 3.6, (ii) Funded Debt owed to the Issuer or
any Restricted Subsidiary, (iii) Funded Debt of a corporation
existing at the time it becomes a Restricted Subsidiary, (iv)
Funded Debt existing on the date of this Indenture, (v) Funded
Debt created in connection with the issuance of tax-exempt
government obligations; or (vi) renewals, extensions or
replacements of the foregoing.
(B) to guarantee, directly or indirectly through any
arrangement which is substantially the equivalent of a guarantee,
any Funded Debt except for (i) guarantees existing on the date of
this Indenture, (ii) guarantees which, on the date of this
Indenture, a Restricted Subsidiary is obligated to give, (iii)
guarantees of Funded Debt secured by a mortgage, pledge or lien
which is permitted to such Restricted Subsidiary under the
provisions of Section 3.6 and (iv) renewals, extensions or
replacements of the foregoing.
(b) Notwithstanding the provisions of paragraph (a) of this
Section 3.8, any Restricted Subsidiary may create, assume or guarantee
Funded Debt in addition to that permitted by paragraph (a) of this Section
3.8, and renew, extend or replace such Funded Debt, provided that at the
--------
time of such creation, assumption, guarantee, renewal, extension or
replacement, and after giving effect thereto, Exempted Debt does not exceed
10% of Consolidated Net Worth.
34
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SECTION 3.9 Luxembourg Publications. In the event of the
-----------------------
publication of any notice pursuant to Section 5.11, 6.10(a), 6.11, 8.2,
12.2 or 12.5, the party making such publication in the Borough of
Manhattan, The City of New York and London shall also, to the extent that
notice is required to be given to Holders of Securities of any series
listed on The Luxembourg exchange by applicable Luxembourg law or stock
exchange regulation, make a similar publication in Luxembourg.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
----------------------
SECTION 4.1 Issuer to Furnish Trustee Information as to Names
-------------------------------------------------
and Addresses of Securityholders. If and so long as the Trustee shall not
--------------------------------
be the Security registrar for the Securities of any series, the Issuer and
any other obligor on the Securities will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of
the names and addresses of the Holders of the Registered Securities of such
series pursuant to Section 312 of the Trust Indenture Act of 1939 (a)
semi-annually not more than 15 days after each record date for the payment
of interest on such Registered Securities, as hereinabove specified, as of
such record date and on dates to be determined pursuant to Section 2.3 for
non-interest bearing Registered Securities in each year as of a date not
more than 15 days prior to the time such information is furnished, and (b)
at such other times as the Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request as of a date not more than
15 days prior to the time such information is furnished.
SECTION 4.2 Reports by the Issuer. The Issuer covenants to file
---------------------
with the Trustee, within 15 days after the Issuer is required to file the
same with the Commission, copies of the annual reports and of the
information, documents, and other reports which the Issuer may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 or pursuant to Section 314 of the Trust
Indenture Act of 1939.
SECTION 4.3 Reports by the Trustee. Any Trustee's report
----------------------
required under Section 313(a) of the Trust Indenture Act of 1939 shall be
transmitted on or before July 15 in each year following the date hereof, so
long as any Securities are outstanding hereunder, and shall be dated as of
a date convenient to the Trustee no more than 60 nor less than 45 days
prior thereto.
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ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
-------------------
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
---------------------------------------------------
Waiver of Default. "Event of Default" with respect to Securities of any
-----------------
series wherever used herein, means each one of the following events which
shall have occurred and be continuing (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any installment of interest upon
any of the Securities of such series as and when the same shall become
due and payable, and continuance of such default for a period of 30
days; or
(b) default in the payment of all or any part of the principal
on any of the Securities of such series as and when the same shall
become due and payable either at maturity, upon any redemption, by
declaration or otherwise; or
(c) default in the payment of any sinking fund installment as
and when the same shall become due and payable by the terms of the
Securities of such series; or
(d) default in the performance, or breach, of any covenant or
agreement of the Issuer in respect of the Securities of such series
(other than a covenant or agreement in respect of the Securities of
such series a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of
such default or breach for a period of 90 days after there has been
given, by registered or certified mail, to the Issuer by the Trustee
or to the Issuer and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of all series affected
thereby, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(e) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Issuer in an involuntary
case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in
36
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hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or similar official) of the Issuer
or for any substantial part of its property or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(f) the Issuer or any Restricted Subsidiary shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent
to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of
the Issuer or for any substantial part of its property, or make any
general assignment for the benefit of creditors; or
(g) any other Event of Default provided in the supplemental
indenture or Board Resolution under which such series of Securities is
issued or in the form of Security for such series.
If an Event of Default described in clauses (a), (b), (c), (d) or (g) above
(if the Event of Default under clause (d) or (g) is with respect to less
than all series of Securities then Outstanding) occurs and is continuing,
then, and in each and every such case, except for any series of Securities
the principal of which shall have already become due and payable, either
the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities of each such affected series then Outstanding
hereunder (voting as a single class) by notice in writing to the Issuer
(and to the Trustee if given by Securityholders), may declare the entire
principal (or, if the Securities of any such affected series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of such series) of all Securities of all such
affected series, and the interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause
(d) or (g) (if the Event of Default under clause (d) or (g), as the case
may be, is with respect to all series of Securities then Outstanding), (e)
or (f) occurs and is continuing, then and in each and every such case,
unless the principal of all the Securities shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of all the Securities then Outstanding hereunder
(treated as one class), by notice in writing to the Issuer (and to the
Trustee if given by
37
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Securityholders), may declare the entire principal (or, if any Securities
are Original Issue Discount Securities, such portion of the principal as
may be specified in the terms thereof) of all the Securities then
Outstanding and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become
immediately due and payable.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal (or, if the Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof) of the Securities of any series (or of all
the Securities, as the case may be) shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, the Issuer
shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Securities of each such
series (or of all the Securities, as the case may be) and the principal of
any and all Securities of each such series (or of all the Securities, as
the case may be) which shall have become due otherwise than by acceleration
(with interest upon such principal and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest, at the same rate as the rate of interest or Yield to Maturity (in
the case of Original Issue Discount Securities) specified in the Securities
of each such series (or at the respective rates of interest or Yields to
Maturity of all the Securities, as the case may be) to the date of such
payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith, and if
any and all Events of Default under the Indenture, other than the
non-payment of the principal of Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as
provided herein, then and in every such case the Holders of a majority in
aggregate principal amount of all the Securities of each such series, or of
all the Securities, in each case voting as a single class, then
Outstanding, by written notice to the Issuer and to the Trustee, may waive
all defaults with respect to each such series (or with respect to all the
Securities, as the case may be) and rescind and annul such declaration and
its consequences, but no such waiver or rescission and annulment shall
extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
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For all purposes under this Indenture, if a portion of the
principal of any Original Issue Discount Securities shall have been
accelerated and declared due and payable pursuant to the provisions hereof,
then, from and after such declaration, unless such declaration has been
rescinded and annulled, the principal amount of such Original Issue
Discount Securities shall be deemed, for all purposes hereunder, to be such
portion of the principal thereof as shall be due and payable as a result of
such acceleration, and payment of such portion of the principal thereof as
shall be due and payable as a result of such acceleration, together with
interest, if any, thereon and all other amounts owing thereunder, shall
constitute payment in full of such Original Issue Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May
--------------------------------------------------
Prove Debt. The Issuer covenants that (a) in case default shall be made in
----------
the payment of any installment of interest on any of the Securities of any
series when such interest shall have become due and payable, and such
default shall have continued for a period of 30 days or (b) in case default
shall be made in the payment of all or any part of the principal of any of
the Securities of any series when the same shall have become due and
payable, whether upon maturity of the Securities of such series or upon any
redemption or by declaration or otherwise, then upon demand of the Trustee,
the Issuer will pay to the Trustee for the benefit of the Holders of the
Securities of such series the whole amount that then shall have become due
and payable on all Securities of such series and such Coupons for principal
or interest, as the case may be (with interest to the date of such payment
upon the overdue principal and, to the extent that payment of such interest
is enforceable under applicable law, on overdue installments of interest at
the same rate as the rate of interest or Yield to Maturity (in the case of
Original Issue Discount Securities) specified in the Securities of such
series); and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and any reasonable expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities of any series to the Holders,
whether or not the principal of and interest on the Securities of such
series be overdue.
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<PAGE>
In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final decree against the
Issuer or other obligor upon the Securities and collect in the manner
provided by law out of the property of the Issuer or other obligor upon the
Securities, wherever situated, the moneys adjudged or decreed to be
payable.
In case there shall be pending proceedings relative to the Issuer
or any other obligor upon the Securities under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency
or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its
property or such other obligor, or in case of any other comparable judicial
proceedings relative to the Issuer or other obligor upon the Securities, or
to the creditors or property of the Issuer or such other obligor, the
Trustee, irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest (or, if the Securities of any series are
Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) owing and
unpaid in respect of the Securities, and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad faith)
and of the Securityholders allowed in any judicial proceedings
relative to the Issuer or other obligor upon the Securities or to the
creditors or property of the Issuer or such other obligor,
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the holders of the
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Securities of any series in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and
(c) to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Securityholders and of the
Trustee on their behalf; and any trustee, receiver, or liquidator,
custodian or other similar official is hereby authorized by each of
the Securityholders to make payments to the Trustee, and, in the event
that the Trustee shall consent to the making of payments directly to
the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding except, as aforesaid, to vote
for the election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities of any series or Coupons
appertaining to such Securities, may be enforced by the Trustee without the
possession of any of the Securities of such series or Coupons appertaining
to such Securities or the production thereof at any trial or other
proceedings relative thereto, and any such action or proceedings instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of such Securities or Coupons appertaining to such
Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party) the Trustee shall be held to
represent all the
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Holders of the Securities or Coupons appertaining to such Securities in
respect of which such action was taken, and it shall not be necessary to
make any Holders of such Securities or Coupons appertaining to such
Securities parties to any such proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected by
-----------------------
the Trustee pursuant to this Article in respect of any series shall be
applied in the following order at the date or dates fixed by the Trustee
and, in case of the distribution of such moneys on account of principal or
interest, upon presentation of the several Securities and Coupons
appertaining to such Securities in respect of which monies have been
collected and stamping (or otherwise noting) thereon the payment, or
issuing Securities of such series in reduced principal amounts in exchange
for the presented Securities of like series if only partially paid, or upon
surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to such
series in respect of which monies have been collected, including
reasonable compensation to the Trustee and each predecessor Trustee
and their respective agents and attorneys and of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee and their respective agents and attorneys except
as a result of negligence or bad faith;
SECOND: In case the principal of the Securities of such series
in respect of which moneys have been collected shall not have become
and be then due and payable, to the payment of interest on the
Securities of such series in default in the order of the maturity of
the installments of such interest, with interest (to the extent that
such interest has been collected by the Trustee) upon the overdue
installments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities)
specified in such Securities, such payments to be made ratably to the
persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in
respect of which moneys have been collected shall have become and
shall be then due and payable, to the payment of the whole amount then
owing and unpaid upon all the Securities of such series for principal
and interest, with interest upon the overdue principal, and (to the
extent that such interest has been collected by the Trustee) upon
overdue installments of interest at the same rate as the rate of
interest or Yield to Maturity (in the case of Original
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Issue Discount Securities) specified in the Securities of such series;
and in case such moneys shall be insufficient to pay in full the whole
amount so due and unpaid upon the Securities of such series, then to
the payment of such principal and interest or Yield to Maturity,
without preference or priority of principal over interest or Yield to
Maturity, or of interest or Yield to Maturity over principal, or of
any installment of interest over any other installment of interest, or
of any Security of such series over any other Security of such series,
ratably to the aggregate of such principal and accrued and unpaid
interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the Issuer
or any other person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of Default
---------------------
has occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any of such rights, either at
law or in equity or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in
aid of the exercise of any power granted in this Indenture or to enforce
any other legal or equitable right vested in the Trustee by this Indenture
or by law.
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings.
---------------------------------------------------
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
for any reason, or shall have been determined adversely to the Trustee,
then and in every such case the Issuer and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Issuer, the Trustee and the
Securityholders shall continue as though no such proceedings had been
taken.
SECTION 5.6 Limitations on Suits by Securityholders. No Holder
---------------------------------------
of any Security of any series or of any Coupon appertaining thereto shall
have any right by virtue or by availing of any provision of this Indenture
to institute any action or proceeding at law or in equity or in bankruptcy
or otherwise upon or under or with respect to this Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously
shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided,
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and unless also the Holders of not less than 25% in aggregate principal
amount of the Securities of each affected series then Outstanding (treated
as a single class) shall have made written request upon the Trustee to
institute such action or proceedings in its own name as trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein
or thereby and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such
action or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 5.9; it
being understood and intended, and being expressly covenanted by the taker
and Holder of every Security or Coupon with every other taker and Holder
and the Trustee, that no one or more Holders of Securities of any series or
Coupons appertaining to such Securities shall have any right in any manner
whatever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of any other such Holder of
Securities or Coupons appertaining to such Securities, or to obtain or seek
to obtain priority over or preference to any other such Holder or to
enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all Holders of
Securities of the applicable series and Coupons appertaining to such
Securities. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 5.7 Unconditional Right of Securityholders to Institute
---------------------------------------------------
Certain Suits. Notwithstanding any other provision in this Indenture and
-------------
any provision of any Security or Coupon, the right of any Holder of any
Security or Coupon to receive payment of the principal of and interest on
such Security or Coupon on or after the respective due dates expressed in
such Security or Coupon, or to institute suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission
-------------------------------------------------
Not Waiver of Default. Except as provided in Section 5.6, no right or
---------------------
remedy herein conferred upon or reserved to the Trustee or to the Holders
of Securities or Coupons is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
44
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shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of
Securities or Coupons to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any
such right or power or shall be construed to be a waiver of any such Event
of Default or an acquiescence therein; and, subject to Section 5.6, every
power and remedy given by this Indenture or by law to the Trustee or to the
Holders of Securities or Coupons may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Holders of
Securities or Coupons.
SECTION 5.9 Control by Securityholders. The Holders of a
--------------------------
majority in aggregate principal amount of the Securities of each series
affected (with each such series voting as a separate class) at the time
Outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with respect to the
Securities of such series by this Indenture; provided that such direction
--------
shall not be otherwise than in accordance with law and the provisions of
this Indenture and provided further that (subject to the provisions of
-------- -------
Section 6.1) the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel, shall determine that
the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith by its board of directors, the executive committee,
or a trust committee of directors or Responsible Officers of the Trustee
shall determine that the action or proceedings so directed would involve
the Trustee in personal liability or if the Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to
such direction would be unduly prejudicial to the interests of Holders of
the Securities of all series so affected not joining in the giving of said
direction, it being understood that (subject to Section 6.1) the Trustee
shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee
in its discretion to take any action deemed proper by the Trustee and which
is not inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the
-----------------------
acceleration of the maturity of the Securities as provided in Section 5.1,
the Holders of a majority in aggregate principal amount of the Securities
of all series at the time Outstanding with respect to which an event of
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<PAGE>
default shall have occurred and be continuing (voting as a single class)
may on behalf of the Holders of all such Securities waive any past default
or Event of Default described in Section 5.1 and its consequences, except a
default in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Security
affected. In the case of any such waiver, the Issuer, the Trustee and the
Holders of all such Securities of each series affected shall be restored to
their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of
Default arising therefrom shall be deemed to have been cured, and not to
have occurred for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold
---------------------------------------------------
in Certain Circumstances. The Trustee shall, within ninety days after the
------------------------
occurrence of a default with respect to the Securities of any series, give
notice of all defaults with respect to that series known to the Trustee (i)
if any Unregistered Securities of that series are then Outstanding, to the
Holders thereof, by publication at least once in an Authorized Newspaper in
the Borough of Manhattan, the City of New York and at least once in an
Authorized Newspaper in London (and, if required by Section 3.9, at least
once in an Authorized Newspaper in Luxembourg) and (ii) to all Holders of
Securities of such series in the manner and to the extent provided in
Section 313(c) of the Trust Indenture Act of 1939, unless in each case such
defaults shall have been cured before the mailing or publication of such
notice (the term "default" or "defaults" for the purposes of this Section
being hereby defined to mean any event or condition which is, or with
notice or lapse of time or both would become, an Event of Default);
provided that, except in the case of default in the payment of the
--------
principal of or interest on any of the Securities of such series, or in the
payment of any sinking fund installment on such series, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors or
trustees and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders of such series.
SECTION 5.12 Right of Court to Require Filing of Undertaking to
--------------------------------------------------
Pay Costs. All parties to this Indenture agree, and each Holder of any
---------
Security or Coupon by his
46
<PAGE>
acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to:
(A) any suit instituted by the Trustee,
(B) any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the
case of any suit relating to or arising under clauses (d) or (g) of Section
5.1 (if the suit relates to Securities of more than one but less than all
series), 10% in aggregate principal amount of Securities Outstanding
affected thereby, or in the case of any suit relating to or arising under
clauses (d) or (g) (if the suit under (d) or (g) relates to all the
Securities then Outstanding), (c), (e) or (f) of Section 5.1, 10% in
aggregate principal amount of all Securities Outstanding, or
(C) any suit instituted by any Securityholder for the
enforcement of the payment of the principal of or interest on any Security
on or after the due date expressed in such Security or any date fixed for
redemption.
ARTICLE SIX
CONCERNING THE TRUSTEE
----------------------
SECTION 6.1 Duties and Responsibilities of the Trustee; During
--------------------------------------------------
Default; Prior to Default. With respect to the Holders of any series of
-------------------------
Securities issued hereunder, the Trustee, prior to the occurrence of an
Event of Default with respect to the Securities of a particular series and
after the curing or waiving of all Events of Default which may have
occurred with respect to such series, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case
an Event of Default with respect to the Securities of a series has occurred
(which has not been cured or waived) the Trustee shall exercise with
respect to such series of Securities such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as
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<PAGE>
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect
to the Securities of any series and after the curing or waiving of all
such Events of Default with respect to such series which may have
occurred:
(i) the duties and obligations of the Trustee with
respect to the Securities of any series shall be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in
this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions
expressed therein, upon any statements, certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders pursuant to Section 5.9 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any
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trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there shall be reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such liability is not reasonably assured to it.
The provisions of this Section 6.1 are in furtherance of and
subject to Sections 315 and 316 of the Trust Indenture Act of 1939.
SECTION 6.2 Certain Rights of the Trustee. In furtherance of
-----------------------------
and subject to the Trust Indenture Act of 1939, and subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
Opinion of Counsel (or both) or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, note, coupon, security or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Issuer;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and any written advice
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in reliance thereon in
accordance with such advice or Opinion of Counsel;
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(e) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders pursuant to the
provisions of this Indenture, unless such Securityholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred therein or
thereby;
(f) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(g) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless
requested in writing so to do by the Holders of not less than a
majority in aggregate principal amount of the Securities of all series
affected then Outstanding; provided that, if the payment within a
--------
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of
every such investigation shall be paid by the Issuer or, if paid by
the Trustee or any predecessor trustee, shall be repaid by the Issuer
upon demand; and
(h) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the
Trustee shall not be responsible for any misconduct or negligence on
the part of any such agent or attorney appointed with due care by it
hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of
----------------------------------------------------
Securities or Application of Proceeds Thereof. The recitals contained
---------------------------------------------
herein and in the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuer, and the
Trustee assumes no responsibility for the correctness of
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the same. The Trustee makes no representation as to the validity or
sufficiency of this Indenture or of the Securities or Coupons. The Trustee
shall not be accountable for the use or application by the Issuer of any of
the Securities or of the proceeds thereof.
SECTION 6.4 Trustee and Agents May Hold Securities; Collections,
----------------------------------------------------
etc. The Trustee or any agent of the Issuer or the Trustee, in its
---
individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not the Trustee or
such agent and may otherwise deal with the Issuer and receive, collect,
hold and retain collections from the Issuer with the same rights it would
have if it were not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the provisions
----------------------
of Section 10.4 hereof, all moneys received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds
except to the extent required by mandatory provisions of law. Neither the
Trustee nor any agent of the Issuer or the Trustee shall be under any
liability for interest on any moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and Its
---------------------------------------------------
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from
-----------
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) and the Issuer covenants and
agrees to pay or reimburse the Trustee and each predecessor Trustee upon
its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of it in accordance with any of the
provisions of this Indenture and the Securities or the issuance of the
Securities or of series thereof (including the reasonable compensation and
the expenses and disbursements of its counsel and of all agents and other
persons not regularly in its employ) except to the extent any such expense,
disbursement or advance may arise from its negligence or bad faith. The
Issuer also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability or expense
arising out of or in connection with the acceptance or administration of
this Indenture and the Securities or the issuance of the Securities or of
series thereof or the trusts hereunder and the performance of its duties
hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises, except to the extent
such loss liability or expense is due to the negligence or bad faith of the
Trustee
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or such predecessor Trustee. The obligations of the Issuer under this
Section to compensate and indemnify the Trustee and each predecessor
Trustee and to pay or reimburse the Trustee and each predecessor Trustee
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of
this Indenture or the rejection or termination of this Indenture under
bankruptcy law. Such additional indebtedness shall be a senior claim to
that of the Securities upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the Holders
of particular Securities or Coupons, and the Securities are hereby
subordinated to such senior claim. If the Trustee renders services and
incurs expenses following an Event of Default under Section 5.1(e) or
Section 5.1(f) hereof, the parties hereto and the holders by their
acceptance of the Securities hereby agree that such expenses are intended
to constitute expenses of administration under any bankruptcy law.
SECTION 6.7 Right of Trustee to Rely on Officers' Certificate,
--------------------------------------------------
etc. Subject to Sections 6.1 and 6.2, whenever in the administration of
----
the trusts of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or
suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by an Officers' Certificate
delivered to the Trustee, and such certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant
to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 6.8 Indentures Not Creating Potential Conflicting
---------------------------------------------
Interests for the Trustee. The following indentures are hereby
-------------------------
specifically described for the purposes of Section 310(b)(l) of the Trust
Indenture Act of 1939: Indenture dated as of April 15, 1991, as amended,
and Amended and Restated Indenture dated as of May 18, 1992.
SECTION 6.9 Persons Eligible for Appointment as Trustee. The
-------------------------------------------
Trustee for each series of Securities hereunder shall at all times be a
corporation having a combined capital and surplus of at least $50,000,000,
and which is eligible in accordance with the provisions of Section 310(a)
of the Trust Indenture Act of 1939. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of a
Federal, State or District of Columbia supervising or examining authority,
then for the purposes of this Section, the
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combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
SECTION 6.10 Resignation and Removal; Appointment of Successor
-------------------------------------------------
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed,
-------
may at any time resign with respect to one or more or all series of
Securities by giving written notice of resignation to the Issuer and (i) if
any Unregistered Securities of a series affected are then Outstanding, by
giving notice of such resignation to the Holders thereof, by publication at
least once in an Authorized Newspaper in the Borough of Manhattan, the City
of New York, and at least once in an Authorized Newspaper in London (and,
if required by Section 3.9, at least once in an Authorized Newspaper in
Luxembourg), (ii) if any Unregistered Securities of a Series affected are
then Outstanding, by mailing notice of such resignation to the Holders
thereof who have filed their names and addresses with the Trustee pursuant
to Section 313(c)(2) of the Trust Indenture Act of 1939 at such addresses
as were so furnished to the Trustee and (iii) by mailing notice of such
resignation to the Holders of then Outstanding Registered Securities of
each series affected at their addresses as they shall appear on the
registry books. Upon receiving such notice of resignation, the Issuer
shall promptly appoint a successor trustee or trustees with respect to the
applicable series by written instrument in duplicate, executed by authority
of the Board of Directors, one copy of which instrument shall be delivered
to the resigning Trustee and one copy to the successor trustee or trustees.
If no successor trustee shall have been so appointed with respect to any
series and have accepted appointment within 30 days after the mailing of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of a Security or Securities
of the applicable series for at least six months may, subject to the
provisions of Section 5.12, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act of 1939 with respect to any
series of Securities after written request therefor by the Issuer or
by any Securityholder who has been a bona fide Holder of a
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Security or Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 hereunder and Section 310(a) of the
Trust Indenture Act of 1939 and shall fail to resign after written
request therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to
the applicable series of Securities and appoint a successor trustee for
such series by written instrument, in duplicate, executed by order of the
Board of Directors of the Issuer, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 315(e) of the Trust Indenture Act
of 1939, any Securityholder who has been a bona fide Holder of a Security
or Securities of such series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor trustee with respect to such series. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of
the Securities of each series then Outstanding may at any time remove the
Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer
the evidence provided for in Section 7.1 of the action in that regard taken
by the Securityholders.
(d) Any resignation or removal of the Trustee with respect to
any series and any appointment of a successor trustee with respect to such
series pursuant to any of the provisions of this Section 6.9 shall become
effective upon acceptance of appointment by the successor trustee as
provided in Section 6.10.
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SECTION 6.11 Acceptance of Appointment by Successor Trustee.
----------------------------------------------
Any successor trustee appointed as provided in Section 6.9 shall execute
and deliver to the Issuer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or
removal of the predecessor trustee with respect to all or any applicable
series shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations with respect to such series of its
predecessor hereunder, with like effect as if originally named as trustee
for such series hereunder; but, nevertheless, on the written request of the
Issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over
to the successor trustee all moneys at the time held by it hereunder and
shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of
any such successor trustee, the Issuer shall execute any and all
instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers. Any
trustee ceasing to act shall, nevertheless, retain a prior claim upon all
property or funds held or collected by such trustee to secure any amounts
then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the
Securities of one or more (but not all) series, the Issuer, the predecessor
Trustee and each successor trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture supplemental
hereto which shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
predecessor Trustee with respect to the Securities of any series as to
which the predecessor Trustee is not retiring shall continue to be vested
in the predecessor Trustee, and shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and
that each such trustee shall be trustee of a trust or trusts under separate
indentures.
No successor trustee with respect to any series of Securities
shall accept appointment as provided in this Section 6.11 unless at the
time of such acceptance such successor trustee shall be qualified under
Section 310(b) of the Trust Indenture Act of 1939 and eligible under the
provisions of Section 6.9.
55
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Upon acceptance of appointment by any successor trustee as
provided in this Section 6.11, the Issuer shall give notice thereof (a) if
any Unregistered Securities of a series affected are then Outstanding, to
the Holders thereof, by publication of such notice at least once in an
Authorized Newspaper in the Borough of Manhattan, the City of New York and
at least once in an Authorized Newspaper in London (and, if required by
Section 3.9, at least once in an Authorized Newspaper in Luxembourg), (b)
if any Unregistered Securities of a series affected are then Outstanding,
to the Holders thereof who have filed their names and addresses with the
Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939,
by mailing such notice to such Holders at such addresses as were so
furnished to the Trustee (and the Trustee shall make such information
available to the Issuer for such purpose) and (c) to the Holders of
Registered Securities of each series affected, by mailing such notice to
such Holders at their addresses as they shall appear on the registry books.
If the acceptance of appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.10. If the Issuer fails
to give such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of Trustee. Any corporation into which the Trustee may be merged
-------------------
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under Section 310(b) of
--------
the Trust Indenture Act of 1939 and eligible under the provisions of
Section 6.9, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any of the Securities or Coupons
(if any) of any series shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication
of any predecessor Trustee and deliver such Securities or Coupons so
authenticated; and, in case at that time any of the Securities or Coupons
(if any) of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities or Coupons either in the name
of any predecessor hereunder or in the name of the successor Trustee; and
in all such cases such certificate shall have
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<PAGE>
the full force which it is anywhere in the Securities or Coupons of such
series or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the certificate of
--------
authentication of any predecessor Trustee or to authenticate Securities or
Coupons (if any) of any series in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 6.13 Appointment of Authenticating Agent. As long as
-----------------------------------
any Securities of a series remain Outstanding, the Trustee may, by an
instrument in writing, appoint with the approval of the Issuer and
authenticating agent (the "Authenticating Agent") which shall be authorized
to act on behalf of the Trustee to authenticate Securities, including
Securities issued upon exchange, registration of transfer, partial
redemption or pursuant to Section 2.9. Securities of each such series
authenticated by such Authenticating Agent shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee. Whenever reference is made in
this Indenture to the authentication and delivery of Securities of any
series by the Trustee or to the Trustee's Certificate of Authentication,
such reference shall be deemed to include authentication and delivery on
behalf of the Trustee by an Authenticating Agent for such series and a
Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United
States of America or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$10,000,000 (determined as provided in Section 6.9 with respect to the
Trustee) and subject to supervision or examination by Federal or State
authority.
Any corporation into which any Authenticating Agent may be merged
or converted, or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be
the Authenticating Agent with respect to all series of Securities for which
it served as Authenticating Agent without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent. Any Authenticating Agent may at any time, and if it shall cease to
be eligible shall, resign by giving written notice of resignation to the
Trustee and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any
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Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.13 with respect to one or more series of
Securities, the Trustee shall upon receipt of an Issuer Order appoint a
successor Authenticating Agent. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities of its predecessor hereunder,
with like effect as if originally named as Authenticating Agent. The
Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the
Securities of any series shall have no responsibility or liability for any
action taken by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4, 6.6, 6.9 and 7.3 shall be applicable to
any Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
------------------------------
SECTION 7.1 Evidence of Action Taken by Securityholders. Any
-------------------------------------------
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series
may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such specified percentage of
Securityholders in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if
made in the manner provided in this Article.
SECTION 7.2 Proof of Execution of Instruments and of Holding of
---------------------------------------------------
Securities; Record Date. Subject to Sections 6.1 and 6.2, the execution of
-----------------------
any instrument by a Securityholder or his agent or proxy may be proved in
the following manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the person executing such
instruments acknowledged to him the execution
58
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thereof, or by an affidavit of a witness to such execution sworn to
before any such notary or other such officer. Where such execution is
by or on behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute sufficient proof of the
authority of the person executing the same. The fact of the holding
by any Holder of an Unregistered Security of any series, and the
identifying number of such Security and the date of his holding the
same, may be proved by the production of such Security or by a
certificate executed by any trust company, bank, banker or recognized
securities dealer wherever situated satisfactory to the Trustee, if
such certificate shall be deemed by the Trustee to be satisfactory.
Each such certificate shall be dated and shall state that on the date
thereof a Security of such series bearing a specified identifying
number was deposited with or exhibited to such trust company, bank,
banker or recognized securities dealer by the person named in such
certificate. Any such certificate may be issued in respect of one or
more Unregistered Securities of one or more series specified therein.
The holding by the person named in any such certificate of any
Unregistered Securities of any series specified therein shall be
presumed to continue for a period of one year from the date of such
certificate unless at the time of any determination of such holding
(1) another certificate bearing a later date issued in respect of the
same Securities shall be produced, or (2) the Security of such series
specified in such certificate shall be produced by some other person,
or (3) the Security of such series specified in such certificate shall
have ceased to be Outstanding. Subject to Sections 6.1 and 6.2, the
fact and date of the execution of any such instrument and the amount
and numbers of Securities of any series held by the person so
executing such instrument and the amount and numbers of any Security
or Securities for such series may also be proven in accordance with
such reasonable rules and regulations as may be prescribed by the
Trustee for such series or in any other manner which the Trustee for
such series may deem sufficient.
(b) In the case of Registered Securities, the ownership of such
Securities shall be proved by the Security register or by a
certificate of the Security registrar.
The Issuer may set a record date for purposes of determining the
identity of holders of Securities of any series entitled to vote or consent
to any action referred to in Section 7.1, which record date may be set at
any time or from time to time by notice to the Trustee, for any date or
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dates (in the case of any adjournment or reconsideration) not more than 60
days nor less than five days prior to the proposed date of such vote or
consent, and thereafter, notwithstanding any other provisions hereof with
respect to Registered Securities of any series, only Holders of Registered
Securities of such series of record on such record date shall be entitled
to so vote or give such consent or revoke such vote or consent.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the
-------------------------------
Trustee and any agent of the Issuer or the Trustee may deem and treat the
person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of
or on account of the principal of and, subject to the provisions of this
Indenture, interest on such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the
Trustee shall be affected by any notice to the contrary. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may treat the Holder of
any Unregistered Security and the Holder of any Coupon as the absolute
owner of such Unregistered Security or Coupon (whether or not such
Unregistered Security or Coupon shall be overdue) for the purpose of
receiving payment thereof or on account thereof and for all other purposes
and neither the Issuer, the Trustee, nor any agent of the Issuer or the
Trustee shall be affected by any notice to the contrary. All such payments
so made to any such person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Registered Security,
Unregistered Security or Coupon.
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding.
-------------------------------------------------
In determining whether the Holders of the requisite aggregate principal
amount of Outstanding Securities of any or all series have concurred in any
direction, consent or waiver under this Indenture, Securities which are
owned by the Issuer or any other obligor on the Securities with respect to
which such determination is being made or by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuer or any other obligor on the Securities with respect
to which such determination is being made shall be disregarded and deemed
not to be Outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Trustee shall be protected
in relying on any such direction, consent or waiver only Securities which
the Trustee knows are so owned shall be so disregarded. Securities so
owned
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which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Issuer or any other obligor upon the Securities or any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuer or any other obligor on the Securities. In case of
a dispute as to such right, the advice of counsel shall be full protection
in respect of any decision made by the Trustee in accordance with such
advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above-described persons; and, subject to Sections 6.1
and 6.2, the Trustee shall be entitled to accept such Officers' Certificate
as conclusive evidence of the facts therein set forth and of the fact that
all Securities not listed therein are Outstanding for the purpose of any
such determination.
SECTION 7.5. Right of Revocation of Action Taken. At any time
-----------------------------------
prior to (but not after) the evidencing to the Trustee, as provided in
Section 7.1, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Securities of any or all series, as
the case may be, specified in this Indenture in connection with such
action, any Holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the
Holders of which have consented to such action may, by filing written
notice at the Corporate Trust Office and upon proof of holding as provided
in this Article, revoke such action so far as concerns such Security.
Except as aforesaid any such action taken by the Holder of any Security
shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Securities issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon
any such Security. Any action taken by the Holders of the percentage in
aggregate principal amount of the Securities of any or all series, as the
case may be, specified in this Indenture in connection with such action
shall be conclusively binding upon the Issuer, the Trustee and the Holders
of all the Securities affected by such action.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 8.1 Supplemental Indentures Without Consent of
------------------------------------------
Securityholders. The Issuer, when authorized by a Board Resolution (which
---------------
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in
accordance with or pursuant to an Issuer Order), and the Trustee may from
time to time and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities of one or more series any
property or assets;
(b) to evidence the succession of another corporation to the
Issuer, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer
pursuant to Article Nine;
(c) to add to the covenants of the Issuer such further
covenants, restrictions, conditions or provisions as its Board of
Directors and the Trustee shall consider to be for the protection or
benefit of the Holders of all or any Series of Securities or Coupons,
(and if such covenants, restrictions, conditions or provisions are for
the protection or benefit of less than all series of Securities,
stating that they are expressly being included solely for the benefit
or protection of such series), and to make the occurrence, or the
occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, that in
--------
respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority in aggregate principal
amount of the Securities of such series to waive such an Event of
Default;
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(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture; or to make such other provisions in
regard to matters or questions arising under this Indenture or under
any supplemental indenture as the Board of Directors may deem
necessary or desirable and which shall not adversely affect the
interests of the Holders of the Securities or Coupons in any material
respect;
(e) to establish the form or forms or terms of Securities of any
series or of the Coupons appertaining to such Securities as permitted
by Sections 2.1 and 2.3;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Section 6.11;
(g) to provide for uncertificated Securities and to make all
appropriate changes for such purpose; and
(h) to comply with the requirements of the Trust Indenture Act
of 1939.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and
to accept the conveyance, transfer, assignment, mortgage or pledge of any
property thereunder, but the Trustee shall not be obligated to enter into
any such supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities at the time outstanding, notwithstanding any of the provisions
of Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of
---------------------------------------
Securityholders. With the consent (evidenced as provided in Article Seven)
---------------
of the Holders of not less than a majority in aggregate principal amount of
the Securities at the time Outstanding of all series affected by such
supplemental
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indenture (voting as one class), the Issuer, when authorized by a Board
Resolution (which resolution may provide general terms or parameters for
such action and may provide that the specific terms of such action may be
determined in accordance with or pursuant to an Issuer Order), and the
Trustee may, from time to time and at any time, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities of each such series or of the
Coupons appertaining to such Securities; provided, that no such
--------
supplemental indenture shall (a) extend the final maturity of any Security,
or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any amount payable on
redemption thereof or make the principal thereof (including any amount in
respect of original issue discount), or interest thereon payable in any
coin or currency other than that provided in the Securities and Coupons or
in accordance with the terms thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon
an acceleration of the maturity thereof pursuant to Section 5.1 or the
amount thereof provable in bankruptcy pursuant to Section 5.2, or alter the
provisions of Sections 11.11 or 11.12 or impair or affect the right of any
Securityholder to institute suit for the payment thereof or, if the
Securities provide therefor, any right of repayment at the option of the
Securityholder in each case without the consent of the Holder of each
Security so affected, or (b) reduce the aforesaid percentage in principal
amount of Securities of any series, the consent of the Holders of which is
required for any such supplemental indenture, without the consent of the
Holders of each Security so affected.
A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or
which modifies the rights of Holders of Securities with respect to such
covenant or provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series or of the
Coupons appertaining to such Securities.
Upon the request of the Issuer, accompanied by a copy of a Board
Resolution (which resolution may provide general terms or parameters for
such action and may provide that the specific terms of such action may be
determined in accordance with or pursuant to an Issuer Order) certified by
the secretary or an assistant secretary of the Issuer authorizing the
execution of any such supplemental
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indenture, and upon the filing with the Trustee of evidence of the consent
of Securityholders as aforesaid and other documents, if any, required by
Sections 7.1 and 8.4, the Trustee shall join with the Issuer in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise, in which case the Trustee may in its discretion, but shall
not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the
Trustee shall give notice thereof (i) to the Holders of then Outstanding
Registered Securities of each series affected thereby, by mailing a notice
thereof by first class mail to such Holders at their addresses as they
shall appear on the Security register, (ii) if any Unregistered Securities
of a series affected thereby are then Outstanding, to the Holders thereof
who have filed their names and addresses with the Trustee pursuant to
Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing a notice
thereof by first class mail to such Holders at such addresses as were so
furnished to the Trustee and (iii) if any Unregistered Securities of a
series affected thereby are then Outstanding, to all Holders thereof, by
publication of a notice thereof at least one in an Authorized Newspaper in
the Borough of Manhattan, The City of New York and at least once in an
Authorized Newspaper in London (and, if required by Section 3.9, at least
once in an Authorized Newspaper in Luxembourg), and in each case such
notice shall set forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the
--------------------------------
execution of any supplemental indenture pursuant to the provisions hereof,
this Indenture shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Issuer and the Holders of Securities of each series affected thereby shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and
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be deemed to be part of the terms and conditions of this Indenture for any
and all purposes.
SECTION 8.4 Documents to Be Given to Trustee. The Trustee,
--------------------------------
subject to the provisions of Sections 6.1 and 6.2, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental
-------------------------------------------------
Indentures. Securities of any series authenticated and delivered after the
----------
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee for such series
as to any matter provided for by such supplemental indenture or as to any
action taken at any such meeting. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of
this Indenture contained in any such supplemental indenture may be prepared
by the Issuer, authenticated by the Trustee and delivered in exchange for
the Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
-----------------------------------------
SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey
--------------------------------------------------
Property Except Under Certain Conditions. Nothing contained in this
----------------------------------------
Indenture or in any of the Securities shall prevent any consolidation or
merger of the Issuer into any other corporation or corporations (whether or
not affiliated with the Issuer), or successive consolidations or mergers to
which the Issuer or its respective successor or successors shall be a party
or parties, or shall prevent any sale, lease or conveyance of the property
of the Issuer as an entirety or substantially as an entirety; provided,
--------
that upon any such consolidation, merger, sale, lease or conveyance to
which the Issuer is a party and in which the Issuer is not the surviving
corporation, the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed or observed by
the Issuer and the due and punctual payment of the principal of and
interest on all of the Securities, according to their tenor, shall be
expressly assumed by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee, by the corporation formed
by such consolidation, or into which the
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Issuer shall have been merged, or which shall have acquired such property.
SECTION 9.2 Successor Corporation Substituted. In case of any
---------------------------------
such consolidation, merger, sale or conveyance, and following such an
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Issuer, with the same effect as if it
had been named herein. Such successor corporation may cause to be signed,
and may issue either in its own name or in the name of the Issuer prior to
such succession any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Issuer and delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Issuer and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the
officers of the Issuer to the Trustee for authentication, and any
Securities which such successor corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All of the
Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or
conveyance such changes in phraseology and form (but not in substance) may
be made in the Securities or Coupons thereafter to be issued as may be
appropriate.
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Issuer or any successor corporation which
shall theretofore have become such in the manner described in this Article
shall be discharged from all obligations and covenants under this Indenture
and the Securities and may be liquidated and dissolved.
SECTION 9.3 Opinion of Counsel to Trustee. The Trustee, subject
-----------------------------
to the provisions of Sections 6.1 and 6.2, may receive an Opinion of
Counsel, prepared in accordance with Section 11.5, as conclusive evidence
that any such consolidation, merger, sale, lease or conveyance, and any
such assumption, and any such liquidation or dissolution, complies with the
applicable provisions of this Indenture.
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ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.
----------------
SECTION 10.1 Satisfaction and Discharge of Indenture. (A) If
---------------------------------------
at any time (a) the Issuer shall have paid or caused to be paid the
principal of and interest on all the Securities of any series Outstanding
hereunder and all unmatured Coupons appertaining thereto (other than
Securities of such series and Coupons appertaining thereto which have been
destroyed, lost or stolen and which have been replaced or paid as provided
in Section 2.9) as and when the same shall have become due and payable, or
(b) the Issuer shall have delivered to the Trustee for cancellation all
Securities of any series theretofore authenticated and all unmatured
Coupons appertaining thereto (other than any Securities of such series and
Coupons appertaining thereto which shall have been destroyed, lost or
stolen and which shall have been replaced or paid as provided in Section
2.9) or (c) in the case of any series of Securities where the exact amount
(including the currency of payment) of principal of and interest due on
which can be determined at the time of making the deposit referred to in
clause (ii) below, (i) all the Securities of such series and all unmatured
Coupons appertaining thereto not theretofore delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the
giving of notice of redemption, and (ii) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee as trust funds the
entire amount in cash (other than moneys repaid by the Trustee or any
paying agent to the Issuer in accordance with Section 10.4) or, in the case
of any series of Securities the payments on which may only be made in
Dollars, direct obligations of, or obligations guaranteed by, the United
States of America, backed by its full faith and credit ("U.S. Government
Obligations"), maturing as to principal and interest at such times and in
such amounts as will insure the availability of cash, or a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (X) the principal and interest on all
Securities of such series and Coupons appertaining thereto on each date
that such principal or interest is due and payable and (Y) any mandatory
sinking fund payments on the dates on which such payments are due and
payable in accordance with the terms of the Indenture and the Securities of
such series; and if, in any such case, the Issuer shall also pay or cause
to be paid all other sums
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payable hereunder by the Issuer, then this Indenture shall cease to be of
further effect (except as to (i) rights of registration of transfer and
exchange of Securities of such series and of Coupons appertaining thereto
and the Issuer's right of optional redemption, if any, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii)
rights of Holders of Securities and Coupons appertaining thereto to receive
payments of principal thereof and interest thereon, upon the original
stated due dates therefor (but not upon acceleration), and remaining rights
of the Holders to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v)
the rights of the Holders of Securities of such series and Coupons
appertaining thereto as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them, and (vi) the
obligations of the Issuer under Section 3.2) and the Trustee, on demand of
the Issuer accompanied by an Officer's Certificate and an Opinion of
Counsel which comply with Section 11.5 and at the cost and expense of the
Issuer, shall execute proper instruments acknowledging such satisfaction of
and discharging this Indenture; provided, that the rights of Holders of the
--------
Securities and Coupons to receive amounts in respect of principal of and
interest on the Securities and Coupons held by them shall not be delayed
longer than required by then-applicable mandatory rules or policies of any
securities exchange upon which the Securities are listed. The Issuer
agrees to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred and to compensate the Trustee for any
services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities of such series.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 6.6 and the
obligations of the Trustee under Section 10.1 shall survive.
(B) The following provisions shall apply to the Securities of
each series unless specifically otherwise provided in a Board Resolution,
Officers' Certificate or indenture supplemental hereto provided pursuant to
Section 2.3. In addition to discharge of the Indenture pursuant to the
next preceding paragraph, in the case of any series of Securities the exact
amounts (including the currency of payment) of principal of and interest
due on which can be determined at the time of making the deposit referred
to in clause (a) below, the Issuer shall be deemed to have paid and
discharged the entire indebtedness on all the Securities of such a series
and the Coupons appertaining thereto on the 91st day after the date of the
deposit referred to in subparagraph (a) below, and the provisions of this
Indenture with respect to the Securities of such series and Coupons
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appertaining thereto shall no longer be in effect (except as to (i) rights
of registration of transfer and exchange of Securities of such series and
of Coupons appertaining thereto and the Issuer's right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed,
lost or stolen Securities or Coupons, (iii) rights of Holders of Securities
and Coupons appertaining thereto to receive payments of principal thereof
and interest thereon, upon the original stated due dates therefor (but not
upon acceleration), and remaining rights of the Holders to receive
mandatory sinking fund payments, if any, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) the rights of the
Holders of Securities of such series and Coupons appertaining thereto as
beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them and (vi) the obligations of the
Issuer under Section 3.2) and the Trustee, at the expense of the Issuer,
shall at the Issuer's request, execute proper instruments acknowledging the
same, if
(a) with reference to this provision the Issuer has
irrevocably deposited or caused to be irrevocably deposited with
the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders
of the Securities of such series and Coupons appertaining thereto
(i) cash in an amount, or (ii) in the case of any series of
Securities the payments on which may only be made in Dollars,
U.S. Government Obligations, maturing as to principal and
interest at such times and in such amounts as will insure the
availability of cash or (iii) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal and interest
on all Securities of such series and Coupons appertaining thereto
on each date that such principal or interest is due and payable
and (B) any mandatory sinking fund payments on the dates on which
such payments are due and payable in accordance with the terms of
the Indenture and the Securities of such series;
(b) such deposit will not result in a breach or violation
of, or constitute a default under, any agreement or instrument to
which the Issuer is a party or by which it is bound;
(c) the Issuer has delivered to the Trustee an Opinion of
Counsel based on the fact that (x)
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the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling or (y) since the date hereof, there
has been a change in the applicable Federal income tax law, in either
case to the effect that, and such opinion shall confirm that, the
Holders of the Securities of such series and Coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit, defeasance and discharge and
will be subject to Federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred; and
(d) the Issuer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this provision have been complied with.
(C) The Issuer shall be released from its obligations with
respect to the Securities of any series, and any Coupons appertaining
thereto, Outstanding (except for: (i) the obligations set forth as
exceptions above in paragraph (A); (ii) the obligations to (w) compensate
and indemnify the Trustee, (x) to appoint a successor Trustee, (y) to repay
certain moneys held by the Paying Agent and (z) to return certain unclaimed
moneys held by the Trustee; and (iii) such obligations of the Issuer as are
required by the Trust Indenture Act) on and after the date the conditions
set forth below are satisfied (hereinafter, "covenant defeasance"). For
this purpose, such covenant defeasance means that, with respect to the
Outstanding Securities of any series, the Issuer is required only to comply
with the above obligations and shall have no liability in respect of any
term, condition or limitation set forth in any other Section, whether
directly or indirectly by reason of any reference to such Section by any
other remaining provision or in any other document and such compliance
only to the above obligations shall not constitute an Event of Default
under Section 5.1. The following shall be the conditions to application of
this subsection C of this Section 10.1:
(a) The Issuer has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the holders
of the Securities of such series and coupons appertaining
thereto, (i) cash in an amount, or (ii) in the case of any series
of
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Securities the payments on which may only be made in Dollars, U.S.
Government Obligations maturing as to principal and interest at such
times and in such amounts as will insure the availability of cash or
(iii) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
(X) the principal and interest on all Securities of such series and
Coupons appertaining thereto and (Y) any mandatory sinking fund
payments on the day on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of such
series.
(b) Such covenant defeasance shall not cause the Trustee to
have a conflicting interest as defined in Section 6.8 and for
purposes of the Trust Indenture Act of 1939 with respect to any
securities of the Issuer.
(c) Such covenant defeasance shall not result in a breach
or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Issuer is a party
or by which it is bound.
(d) The Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Securities of such series and Coupons appertaining thereto will
not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred.
(e) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for relating to the
covenant defeasance contemplated by this provision have been
complied with.
SECTION 10.2 Application by Trustee of Funds Deposited for
---------------------------------------------
Payment of Securities. Subject to Section 10.4, all moneys deposited with
---------------------
the Trustee pursuant to Section 10.1 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including
the Issuer acting as its own paying agent), to the Holders of the
particular Securities of such series and
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of Coupons appertaining thereto for the payment or redemption of which such
moneys have been deposited with the Trustee, of all sums due and to become
due thereon for principal and interest; but such money need not be
segregated from other funds except to the extent required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In
----------------------------------------
connection with the satisfaction and discharge of this Indenture with
respect to Securities of any series, all moneys then held by any paying
agent under the provisions of this Indenture with respect to such series of
Securities shall, upon demand of the Issuer, be repaid to it or paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent
-------------------------------------------------
Unclaimed for Two Years. Any moneys or Government Securities deposited
-----------------------
with or paid to the Trustee or any paying agent for the payment of the
principal of or interest on any Security of any series or Coupons
appertaining thereto and not applied but remaining unclaimed for two years
after the date upon which such principal or interest shall have become due
and payable, shall, upon the written request of the Issuer and unless
otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Issuer by the Trustee
for such series or such paying agent, and the Holder of the Security of
such series shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look
only to the Issuer for any payment which such Holder may be entitled to
collect, and all liability of the Trustee or any paying agent with respect
to such moneys shall thereupon cease.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.1 Incorporators, Stockholders, Officers and Directors
---------------------------------------------------
of Issuer Exempt from Individual Liability. No recourse under or upon any
------------------------------------------
obligation, covenant or agreement contained in this Indenture, or in any
Security or Coupons, or because of any indebtedness evidenced thereby,
shall be had against any incorporator, as such or against any past, present
or future stockholder, officer or director, as such, of the Issuer or of
any successor, either directly or through the Issuer or any successor,
under any rule of law, statute or constitutional
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provision or by the enforcement of any assessment or by any legal or
equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities and the Coupons
appertaining thereto by the holders thereof and as part of the
consideration for the issue of the Securities and the Coupons appertaining
thereto.
SECTION 11.2 Provisions of Indenture for the Sole Benefit of
-----------------------------------------------
Parties and Securityholders. Nothing in this Indenture or in the
---------------------------
Securities and the Coupons appertained thereto, expressed or implied, shall
give or be construed to give to any person, firm or corporation, other than
the parties hereto and their successors and the Holders of the Securities
and the Coupons appertaining thereto, any legal or equitable right, remedy
or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of
the parties hereto and their successors and of the Holders of the
Securities or Coupons, if any.
SECTION 11.3 Successors and Assigns of Issuer Bound by
-----------------------------------------
Indenture. All the covenants, stipulations, promises and agreements in
---------
this Indenture contained by or in behalf of the Issuer shall bind its
successors and assigns, whether so expressed or not.
SECTION 11.4 Notices and Demands on Issuer, Trustee and
------------------------------------------
Securityholders. Any notice or demand which by any provision of this
---------------
Indenture is required or permitted to be given or served by the Trustee or
by the Holders of Securities to or on the Issuer may be given or served (i)
in the case of the Trustee, by telecopier, confirmed by overnight courier,
and (ii) in the case of the Holders of Securities, by being deposited
postage prepaid, first-class mail (except as otherwise specifically
provided herein) addressed (until another address of the Issuer is filed by
the Issuer with the Trustee) to RJR Nabisco, Inc. at 1301 Avenue of the
Americas, New York, New York, 10019, (telefax 212-969-9230), Attention:
General Counsel. Any notice, direction, request or demand by the Issuer or
any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made (i) in the
case of the Issuer, by telecopier and confirmed by overnight courier and
(ii) in the case of any Securityholder, at the Corporate Trust Office which
is on the date hereof 120 Wall Street, New York, New York 10043, Attention:
Corporate Trust Administration (telefax 212-480-1614).
Where this Indenture provides for notice to Holders of Registered
Securities, such notice shall be sufficiently given (unless otherwise
herein expressly
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provided) if in writing and mailed, first class postage prepaid, to each
such Holder entitled thereto, at his last address as it appears in the
Security register. In any case where notice to such Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon
such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the
Issuer and Securityholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 11.5 Officers' Certificates and Opinions of Counsel;
-----------------------------------------------
Statements to Be Contained Therein. Upon any application or demand by the
----------------------------------
Issuer to the Trustee to take any action under any of the provisions of
this Indenture, the Issuer shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of
any such application or demand as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to
such particular application or demand, no additional certificate or opinion
need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (a) a statement that
the person making such certificate or opinion has read such covenant or
condition, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based, (c) a statement that,
in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been complied with and
(d) a statement as to whether or not, in
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the opinion of such person, such condition or covenant has been complied
with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that
the certificate or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid
are erroneous, or in the exercise of reasonable care should know that the
same are erroneous. Any certificate, statement or opinion of counsel may
be based, insofar as it relates to factual matters, information with
respect to which is in the possession of the Issuer, upon the certificate,
statement or opinion of or representations by an officer of officers of the
Issuer, unless such counsel knows that the certificate, statement or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Issuer
or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or
firm of accountants in the employ of the Issuer, unless such officer or
counsel, as the case may be, knows that the certificate or opinion or
representations with respect to the accounting matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm
is independent.
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays.
-----------------------------------------------
If the date of maturity of interest on or principal of the Securities of
any series or any Coupons appertaining thereto or the date fixed for
redemption or repayment of any such Security or Coupon shall not be a
Business Day, then payment of interest or principal need not be made on
such date, but may be made on the next succeeding Business Day (unless
otherwise provided in the terms of the Security) with the same force and
effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
SECTION 11.7 Conflict of Any Provision of Indenture with Trust
-------------------------------------------------
Indenture Act of 1939. If and to the extent that any provision of this
---------------------
Indenture limits, qualifies or conflicts with another provision included in
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this Indenture by operation of Sections 310 to 317, inclusive, of the Trust
Indenture Act of 1939 (an "incorporated provision"), such incorporated
provision shall control.
SECTION 11.8 New York Law to Govern. This Indenture and each
----------------------
Security shall be deemed to be a contract under the laws of the State of
New York, and for all purposes shall be construed in accordance with the
laws of such State, regardless of the laws that might otherwise govern
under applicable New York principles of conflicts of law and except as may
otherwise be required by mandatory provisions of law.
SECTION 11.9 Counterparts. This Indenture may be executed in
------------
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10 Effect of Headings. The Article and Section
------------------
headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.11 Securities in a Foreign Currency or in ECU.
------------------------------------------
Unless otherwise specified in an Officers' Certificate delivered pursuant
to Section 2.3 of this Indenture with respect to a particular series of
Securities, whenever for purposes of this Indenture any action may be taken
by the Holders of a specified percentage in aggregate principal amount of
Securities of all series or all series affected by a particular action at
the time Outstanding and, at such time, there are Outstanding Securities of
any series which are denominated in a coin or currency other than Dollars
(including ECUs), then the principal amount of Securities of such series
which shall be deemed to be Outstanding for the purpose of taking such
action shall be that amount of Dollars that could be obtained for such
amount at the Market Exchange Rate. For purposes of this Section 11.11,
Market Exchange Rate shall mean the noon Dollar buying rate in New York
City for cable transfers of that currency as published by the Federal
Reserve Bank of New York; provided, however, in the case of ECUs, Market
-------- -------
Exchange Rate shall mean the rate of exchange determined by the Commission
of the European Communities (or any successor thereto) as published in the
Official Journal of the European Communities (such publication or any
successor publication, the "Journal"). If such Market Exchange Rate is not
available for any reason with respect to such currency, the Trustee shall
use, in its sole discretion and without liability on its part, such
quotation of the Federal Reserve Bank of New York or, in the case of ECUs,
the rate of exchange as published in the Journal, as of the most
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recent available date, or quotations or, in the case of ECUs, rates of
exchange from one or more major banks in The City of New York or in the
country of issue of the currency in question, which for purposes of the ECU
shall be Brussels, Belgium, or such other quotations or, in the case of
ECU, rates of exchange as the Trustee shall deem appropriate. The
provisions of this paragraph shall apply in determining the equivalent
principal amount in respect of Securities of a series denominated in a
currency other than Dollars in connection with any action taken by Holders
of Securities pursuant to the terms of this Indenture.
All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the
preceding paragraph shall be in its sole discretion and shall, in the
absence of manifest error, be conclusive to the extent permitted by law for
all purposes and irrevocably binding upon the Issuer and all Holders.
SECTION 11.12 Judgment Currency. The Issuer agrees, to the
-----------------
fullest extent that it may effectively do so under applicable law, that (a)
if for the purpose of obtaining judgment in any court it is necessary to
convert the sum due in respect of the principal of or interest on the
Securities of any series (the "Required Currency") into a currency in which
a judgment will be rendered (the "Judgment Currency"), the rate of exchange
used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the day on which final unappealable
judgment is entered, unless such day is not a New York Banking Day, then,
to the extent permitted by applicable law, the rate of exchange used shall
be the rate at which in accordance with normal banking procedures the
Trustee could purchase in The City of New York the Required Currency with
the Judgment Currency on the New York Banking Day preceding the day on
which final unappealable judgment is entered and (b) its obligations under
this Indenture to make payments in the Required Currency (i) shall not be
discharged or satisfied by any tender, or any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such
tender or recovery shall result in the actual receipt, by the payee, of the
full amount of the Required Currency expressed to be payable in respect of
such payments, (ii) shall be enforceable as an alternative or additional
cause of action for the purpose of recovering in the Required Currency the
amount, if any, by which such actual receipt shall fall short of the full
amount of the Required Currency so expressed to be payable and (iii) shall
not be affected by judgment being obtained for any other sum
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due under this Indenture. For purposes of the foregoing, "New York Banking
Day" means any day except a Saturday, Sunday or a legal holiday in The City
of New York or a day on which banking institutions in The City of New York
are authorized or required by law or executive order to close.
SECTION 11.13 Severability of Provisions. Any prohibition,
--------------------------
invalidity or unenforceability of any provision of this Indenture in any
jurisdiction shall not invalidate or render unenforceable the remaining
provisions hereof in such jurisdiction and shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.14 Company Released from Indenture Requirements Under
--------------------------------------------------
Certain Circumstances. Whenever in this Indenture the Issuer shall be
---------------------
required to do or not to do anything so long as any of the Securities of
any series shall be Outstanding, the Issuer shall, notwithstanding any such
provision, not be required to comply with such provisions if it shall be
entitled to have this Indenture satisfied and discharged pursuant to the
provisions hereof, even though in either case the Holders of any of the
Securities of that series shall have failed to present and surrender them
for payment pursuant to the terms of this Indenture.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
------------------------------------------
SECTION 12.1 Applicability of Article. The provisions of this
------------------------
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement
of Securities of a series except as otherwise specified as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2 Notice of Redemption; Partial Redemptions. Notice
-----------------------------------------
of redemption to the Holders of Registered Securities of any series to be
redeemed as a whole or in part at the option of the Issuer shall be given
by mailing notice of such redemption by first class mail, postage prepaid,
at least 30 days and not more than 60 days prior to the date fixed for
redemption to such Holders of Registered Securities of such series at their
last addresses as they shall appear upon the registry books. Notice of
redemption to the Holders of Unregistered Securities to be redeemed as a
whole or in part, who have filed their names and addresses with the Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, shall be
given by mailing notice of such redemption, by first class mail,
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postage prepaid, at least 30 days and not more than 60 prior to the date
fixed for redemption, to such Holders at such addresses as were so
furnished to the Trustee (and, in the case of any such notice given by the
Issuer, the Trustee shall make such information available to the Issuer for
such purpose). Notice of redemption to all other Holders of Unregistered
Securities shall be published in an Authorized Newspaper in the Borough of
Manhattan, The City of New York and in an Authorized Newspaper in London
(and, if required by Section 3.9, in an Authorized Newspaper in
Luxembourg), in each case, once in each of three successive calendar weeks,
the first publication to be not less than 30 nor more than 60 days prior to
the date fixed for redemption. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder receives the notice. Failure to give notice by
mail, or any defect in the notice to the Holder of any Security of a series
designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security of
such series.
The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and
surrender of such Securities and, in the case of Securities with Coupons
attached thereto, of all Coupons appertaining thereto maturing after the
date fixed for redemption, that such redemption is pursuant to the
mandatory or optional sinking fund, or both, if such be the case, that
interest accrued to the date fixed for redemption will be paid as specified
in such notice and that on and after said date interest thereon or on the
portions thereof to be redeemed will cease to accrue. In case any Security
of a series is to be redeemed in part only the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for redemption, upon surrender of
such Security, a new Security or Securities of such series in principal
amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be
redeemed at the option of the Issuer shall be given by the Issuer or, at
the Issuer's request, by the Trustee in the name and at the expense of the
Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with
the Trustee or with one or more paying agents (or, if the Issuer is acting
as its own paying agent, set aside, segregate and hold in trust as provided
in Section 3.4) an amount of money sufficient to redeem on the
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redemption date all the Securities of such series so called for redemption
at the appropriate redemption price, together with accrued interest to the
date fixed for redemption. If less than all the outstanding Securities of
a series are to be redeemed, the Issuer will deliver to the Trustee at
least 15 days prior to the last date on which notice of redemption may be
given to Holders pursuant to the first paragraph of this Section 12.2 (or
such shorter period as shall be acceptable to the Trustee) an Officers'
Certificate stating the aggregate principal amount of Securities to be
redeemed. In case of a redemption at the election of the Issuer prior to
the expiration of any restriction on such redemption, the Issuer shall
deliver to the Trustee, prior to the giving of any notice of redemption to
Holders pursuant to this Section, an Officer's Certificate stating that
such redemption is not prohibited by such restriction.
If less than all the Securities of a series are to be redeemed,
the Trustee shall select, in such manner as it shall deem appropriate and
fair, Securities of such Series to be redeemed in whole or in part.
Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple
thereof. The Trustee shall promptly notify the Issuer in writing of the
Securities of such series selected for redemption and, in the case of any
Securities of such series selected for partial redemption, the principal
amount thereof to be redeemed. For all purposes of this Indenture, unless
the context otherwise requires, all provisions relating to the redemption
of Securities of any series shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
If all of the outstanding Securities of a series are to be
redeemed, the Issuer will deliver to the Trustee at least 10 days prior to
the last date on which notice of redemption may be given to Holders
pursuant to the first paragraph of this Section 12.2 an Officers'
Certificate stating that all such Securities are to be redeemed. In case
of a redemption at the election of the Issuer prior to the expiration of
any restriction on such redemption, the Issuer shall deliver to the
Trustee, prior to the giving of any notice of redemption to Holders
pursuant to this Section, an Officer's Certificate stating that such
redemption is not prohibited by such restriction.
SECTION 12.3 Payment of Securities Called for Redemption. If
-------------------------------------------
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and
payable on the date and at the place stated in such notice at the
applicable redemption price, together with interest accrued to the date
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fixed for redemption, and on and after said date (unless the Issuer shall
default in the payment of such Securities at the redemption price, together
with interest accrued to said date) interest on the Securities or portions
of Securities so called for redemption shall cease to accrue, and the
unmatured Coupons, if any, appertaining thereto shall be void and, except
as provided in Sections 6.5 and 10.4, such Securities shall cease from and
after the date fixed for redemption to be entitled to any benefit or
security under this Indenture, and the Holders thereof shall have no right
in respect of such Securities except the right to receive the redemption
price thereof and unpaid interest to the date fixed for redemption. On
presentation and surrender of such Securities at a place of payment
specified in said notice, together with all Coupons, if any, appertaining
thereto maturing after the date fixed for redemption, said Securities or
the specified portions thereof shall be paid and redeemed by the Issuer at
the applicable redemption price, together with interest accrued thereon to
the date fixed for redemption; provided that payment of interest becoming
--------
due on or prior to the date fixed for redemption shall be payable in the
case of Securities with Coupons attached thereto, to the Holders of the
Coupons for such interest upon surrender thereof, and in the case of
Registered Securities, to the Holders of such Registered Securities
registered as such on the relevant record date subject to the terms and
provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate
of interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security.
If any Security with Coupons attached thereto is surrendered for
redemption and is not accompanied by all appurtenant Coupons maturing after
the date fixed for redemption, the surrender of such missing Coupon or
Coupons may be waived by the Issuer and the Trustee, if there be furnished
to each of them such security or indemnity as they may require to save each
of them harmless.
Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or
on the order of the Holder thereof, at the expense of the Issuer, a new
Security or Securities of such series (with Coupons attached, if any), of
authorized denominations, in principal amount equal to the unredeemed
portion of the Security so presented.
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SECTION 12.4 Exclusion of Certain Securities from Eligibility
------------------------------------------------
for Selection for Redemption. Securities shall be excluded from
----------------------------
eligibility for selection for redemption if they are identified by
registration and certificate number in a written statement signed by an
authorized officer of the Issuer and delivered to the Trustee at least 40
days prior to the last date on which notice of redemption may be given as
being owned of record and beneficially by, and not pledged or hypothecated
by either (a) the Issuer or (b) an entity specifically identified in such
written statement directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer.
SECTION 12.5 Mandatory and Optional Sinking Funds. The minimum
------------------------------------
amount of any sinking fund payment provided for by the terms of Securities
of any series is herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided for by the terms
of the Securities of any series is herein referred to as an "optional
sinking fund payment". The date on which a sinking fund payment is to be
made is herein referred to as the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of
such series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee
for cancellation pursuant to Section 2.10, (b) receive credit for optional
sinking fund payments (not previously so credited) made pursuant to this
Section, or (c) receive credit for Securities of such series (not
previously so credited) redeemed by the Issuer through any optional
redemption provision contained in the terms of such series. Securities so
delivered or credited shall be received or credited by the Trustee at the
sinking fund redemption price specified in such Securities.
On or before the sixtieth day next preceding each sinking fund
payment date for any series, the Issuer will deliver to the Trustee an
Officer's Certificate (which need not contain the statements required by
Section 11.5) (a) specifying the portion of the mandatory sinking fund
payment to be satisfied by payment of cash and the portion to be satisfied
by credit of Securities of such series and the basis for such credit, (b)
stating that none of the Securities of such series has theretofore been so
credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred
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(which have not been waived or cured) and are continuing and (d) stating
whether or not the Issuer intends to exercise its right to make an optional
sinking fund payment with respect to such series and, if so, specifying the
amount of such optional sinking fund payment which the Issuer intends to
pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to
the Trustee in order for the Issuer to be entitled to credit therefor as
aforesaid which have not theretofore been delivered to the Trustee shall be
delivered for cancellation pursuant to Section 2.10 to the Trustee with
such Officer's Certificate (or reasonably promptly thereafter if acceptable
to the Trustee). Such Officer's Certificate shall be irrevocable and upon
its receipt by the Trustee the Issuer shall become unconditionally
obligated to make all the cash payments or payments therein referred to, if
any, on or before the next succeeding sinking fund payment date. Failure
of the Issuer, on or before any such sixtieth day, to deliver such
Officer's Certificate and Securities specified in this paragraph, if any,
shall not constitute a default but shall constitute, on and as of such
date, the irrevocable election of the Issuer (i) that the mandatory sinking
fund payment for such series due on the next succeeding sinking fund
payment date shall be paid entirely in cash without the option to deliver
or credit Securities of such series in respect thereof and (ii) that the
Issuer will make no optional sinking fund payment with respect to such
series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or
ECU) or a lesser sum if the Issuer shall so request with respect to the
Securities of any particular series, such cash shall be applied on the next
succeeding sinking fund payment date to the redemption of Securities of
such series at the sinking fund redemption price together with accrued
interest to the date fixed for redemption. If such amount shall be $50,000
(or the equivalent thereof in any Foreign Currency or ECU) or less and the
Issuer makes no such request then it shall be carried over until a sum in
excess of $50,000 (or the equivalent thereof in any Foreign Currency or
ECU) is available. The Trustee shall select, in the manner provided in
Section 12.2, for redemption on such sinking fund payment date a sufficient
principal amount of Securities of such series to absorb said cash, as
nearly as may be, and shall (if requested in writing by the Issuer) inform
the Issuer of the serial numbers of the Securities of such series (or
portions thereof) so selected. Securities shall be excluded from
eligibility for redemption under this
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Section if they are identified by registration and certificate number in an
Officer's Certificate delivered to the Trustee at least 60 days prior to
the sinking fund payment date as being owned of record and beneficially by,
and not pledged or hypothecated by either (a) the Issuer or (b) an entity
specifically identified in such Officer's Certificate as directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuer. The Trustee, in the name and at the expense of
the Issuer (or the Issuer, if it shall so request the Trustee in writing)
shall cause notice of redemption of the Securities of such series to be
given in substantially the manner provided in Section 12.2 (and with the
effect provided in Section 12.3) for the redemption of Securities of such
series in part at the option of the Issuer. The amount of any sinking fund
payments not so applied or allocated to the redemption of Securities of
such series shall be added to the next cash sinking fund payment for such
series and, together with such payment, shall be applied in accordance with
the provisions of this Section. Any and all sinking fund moneys held on
the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated), which are not held for the
payment or redemption of particular Securities of such series shall be
applied, together with other moneys, if necessary, sufficient for the
purpose, to the payment of the principal of, and interest on, the
Securities of such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay
to the Trustee in cash or shall otherwise provide for the payment of all
interest accrued to the date fixed for redemption on Securities to be
redeemed on the next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any
Securities of a series with sinking fund moneys or mail any notice of
redemption of Securities for such series by operation of the sinking fund
during the continuance of a default in payment of interest on such
Securities or of any Event of Default except that, where the mailing of
notice of redemption of any Securities shall theretofore have been made,
the Trustee shall redeem or cause to be redeemed such Securities, provided
that it shall have received from the Issuer a sum sufficient for such
redemption. Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default shall occur,
and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such default or Event of Default, be deemed to have been
collected under Article Five and held for the payment of all such
Securities. In case such Event of Default shall have been waived as
provided in Section 5.10 or the default cured
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on or before the sixtieth day preceding the sinking fund payment date in
any year, such moneys shall thereafter be applied on the next succeeding
sinking fund payment date in accordance with this Section to the redemption
of such Securities.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the date first written above.
RJR NABISCO, INC., ISSUER
By: /s/ Jo-Ann Ford
-----------------------------
Name: Jo-Ann Ford
Title: Senior Vice President
[CORPORATE SEAL]
Attest:
By: /s/ Suzanne P. Jenney
------------------------
Name: Suzanne P. Jenney
Title: Assistant Corporate
Secretary
CITIBANK, N.A., as Trustee
By: /s/ Louis A. Piscitelli
--------------------------
Name: Louis A. Piscitelli
Title: Senior Officer
[CORPORATE SEAL]
Attest:
By: /s/ Ronald L. Pierce
-----------------------
Name: Ronald L. Pierce
Title: Assistant Vice President
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 24th day of July, 1995 before me personally
came Jo-Ann Ford to me personally known, who, being by me duly sworn, did
depose and say that he resides at New York, NY that she is a Senior Vice
President of RJR NABISCO, INC., one of the corporations described in and
which executed the above instrument; and that she signed her name thereto
by authority of the Board of Directors of said corporation.
[NOTARIAL SEAL]
/s/ Jodi Martin
-----------------------
Notary Public
88
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 24th day of July, 1995 before me personally
came Louis Piscatelli to me personally known, who, being by me
duly sworn, did depose and say that he resides at Staten Island, NY
that he is a Senior Trust Officer of Citibank, N.A., one of
the corporations described in and which executed the above
instrument; that she knows the corporate seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that she
signed her name thereto by like authority.
[NOTARIAL SEAL]
/s/ Doris Ware
------------------------
Notary Public
89
<PAGE>
FORM OF NOTE [DEBENTURE]
CUSIP: ___________
No. ___ $___________
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest herein.
RJR NABISCO, INC.
_____% [Note][Debenture] Due ____
RJR NABISCO, INC., a Delaware corporation (the "Issuer", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co. or
registered assigns, at the office or agency of the Issuer in New York, New
York, the principal sum of ______________ Dollars on _________, in the coin
or currency of the United States, and to pay interest,
[monthly][quarterly][semi-annually] on ______________ (each an "Interest
Payment Date") each year, commencing ___________, on said principal sum at
said office or agency, in like coin or currency, at the rate per annum
specified in the title of this [Note][Debenture], from the Interest Payment
Date next preceding the date of this [Note][Debenture] to which interest
has been paid or duly provided for, unless the date hereof is a date to
which interest has been paid or duly provided for, in which case from the
date of this [Note][Debenture], or unless no interest has been paid or duly
provided for on these [Notes][Debentures], in which case from ___________,
until payment of said principal sum has been made or duly provided for;
provided, that payment of interest may be made at the option of the Issuer
--------
by check mailed to the address of the person entitled thereto as such
address shall appear on the Security register or by wire transfer.
Notwithstanding the foregoing, if the date hereof is after ______________
and before the following Interest Payment Date, this
<PAGE>
[Note][Debenture] shall bear interest from such Interest Payment Date;
provided, that if the Issuer shall default in the payment of interest due
--------
on such Interest Payment Date, then this [Note][Debenture] shall bear
interest from the next preceding Interest Payment Date to which interest
has been paid or duly provided for or, if no interest has been paid or duly
provided for on these [Notes][Debentures], from ____________. The interest
so payable on any Interest Payment Date will, subject to certain exceptions
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this [Note][Debenture] is registered at the close of
business on the ____________ next preceding such Interest Payment Date,
whether or not such day is a business day.
Reference is made to the further provisions of this
[Note][Debenture] set forth on the reverse hereof. Such further provisions
shall for all purposes have the same effect as though fully set forth at
this place.
This [Note][Debenture] shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have
been manually signed by the Trustee under the Indenture referred to on the
reverse hereof.
IN WITNESS WHEREOF, RJR NABISCO, INC. has caused this instrument
to be signed manually or by facsimile by its duly authorized officers and
has caused a facsimile of its corporate seal to be affixed hereunto or
imprinted hereon.
Dated:
RJR NABISCO, INC.
By_________________________
Name:
Title:
2
<PAGE>
CERTIFICATE OF AUTHENTICATION
This one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated: CITIBANK, N.A.,
as Trustee
By______________________
Authorized Signatory
3
<PAGE>
REVERSE OF [NOTE][DEBENTURE]
RJR NABISCO, INC.
_____% [Note][Debenture] Due ____
This [Note][Debenture] is one of a duly authorized issue of
debentures, notes, bonds or other evidences of indebtedness of the issuer
(hereinafter called the "Securities") of the series hereinafter specified,
all issued or to be issued under and pursuant to an amended and restated
indenture dated as of ________, 1995 (herein called the "Indenture"), duly
executed and delivered by the Issuer to Citibank, N.A., as Trustee (herein
called the "Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Issuer and the Holders of the Securities. The Securities may
be issued in one or more series, which different series may be issued in
various aggregate principal amounts, may mature at different times, may
bear interest (if any) at different rates, may be subject to different
redemption provisions (if any), may be subject to different sinking,
purchase or analogous funds (if any) and may otherwise vary as in the
Indenture provided. This [Note][Debenture] is one of a series designated
as the _______% [Notes][Debentures] Due ____ of the Issuer, limited in
aggregate principal amount to $___________.
Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Issuer shall pay interest on overdue principal
and, to the extent lawful, on overdue installments of interest at the rate
per annum borne by this [Note][Debenture]. If a payment date is not a
--- -----
business day at a place of payment, payment may be made at that place on
the next succeeding day that is a business day, and no interest shall
accrue for the intervening period.
In case an Event of Default (as defined in the Indenture) with
respect to the _____% [Notes][Debentures] Due ____ shall have occurred and
be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding (as
defined in the Indenture) of all series to be affected (voting as one
class), evidenced as in the Indenture provided, to execute supplemental
indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the Holders of the
Securities of each such series; provided, that no such supplemental
--------
indenture shall (i) extend the final maturity of any Security, or reduce
the principal amount thereof, or reduce the rate or extend the time of
payment of any interest thereon, or reduce any amount
4
<PAGE>
payable on redemption thereof or make the principal thereof (including any
amount in respect of original issue discount), or interest thereon payable
in any coin or currency other than that provided in the Securities and
Coupons or in accordance with the terms thereof, or reduce the amount of
the principal of an Original Issue Discount Security that would be due and
payable upon an acceleration of the maturity thereof pursuant to Section
5.1 of the Indenture or the amount thereof provable in bankruptcy pursuant
to Section 5.2 of the Indenture, or alter the provisions of Sections 11.11
or 11.12 of the Indenture, or impair or affect the right of any
Securityholder to institute suit for the payment thereof or, if the
Securities provide therefor, any right of repayment at the option of the
Securityholder in each case without the consent of the Holder of each
Security so affected, or (ii) reduce the aforesaid percentage of
Securities, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holder of each Security
so affected. It is also provided in the Indenture that, with respect to
certain defaults or Events of Default regarding the Securities of any
series, the Holders of a majority in aggregate principal amount of the
Securities of each such series (or, in the case of certain defaults or
Events of Default, all of the Securities), in each case voting as a single
class, then Outstanding may, on behalf of the Holders of all the Securities
of such series (or all of the Securities, as the case may be), in certain
events waive all defaults with respect to such series (or with respect to
all of the Securities, as the case may be) and rescind and annul a
declaration accelerating the maturity of such Securities and its
consequences, but no such waiver or rescission and annulment shall extend
to or shall affect any subsequent default or shall impair any right
consequent thereon. The preceding sentence shall not apply to a default in
the payment of the principal of or premium, if any, or interest on any of
the Securities. Any such consent or waiver by the Holder of this
[Note][Debenture] (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and
owners of this [Note][Debenture] and any [Notes][Debentures] which may be
issued in exchange or substitution herefor, irrespective of whether or not
any notation thereof is made upon this [Note][Debenture] or such other
[Notes][Debentures].
No reference herein to the Indenture and no provision of this
[Note][Debenture] or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and any premium and interest on this [Note][Debenture] in the manner, at
the place, at the respective times, at the rate and in the coin or currency
herein prescribed.
The [Notes] [Debentures] are issuable initially only in registered
form without coupons in denominations of $_____ and any multiple of
$_____ at the office or agency of the Issuer in the Borough of Manhattan,
The City of New York, and in the manner and subject to the limitations
provided in the Indenture, but without the payment of any service charge,
[Notes] [Debentures] may be exchanged for a like aggregate principal amount
of [Notes] [Debentures] of other authorized denominations.
5
<PAGE>
This [Note] [Debenture] will [not] be redeemable prior to
maturity.
Upon due presentment for registration of transfer of this
[Note] [Debenture] at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, a new [Note] [Debenture] or
[Notes] [Debentures] of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Indenture, without charge except
for any tax or other governmental charge imposed in connection therewith.
The Issuer, the Trustee and any authorized agent of the Issuer or
the Trustee may deem and treat the registered Holder hereof as the absolute
owner of this [Note] [Debenture] (whether or not this [Note] [Debenture]
shall be overdue and notwithstanding any notation of ownership or other
writing hereon made by anyone other than the Issuer or the Trustee or any
authorized agent of the Issuer or the Trustee), for the purpose of
receiving payment of, or on account of, the principal hereof and premium,
if any, and, subject to the provisions on the face hereof, interest hereon,
and for all other purposes, and neither the Issuer nor the Trustee nor any
authorized agent of the Issuer or the Trustee shall be affected by any
notice to the contrary.
No recourse under or upon any obligation, covenant or agreement
of the Issuer in the Indenture or any indenture supplemental thereto or in
any [Note] [Debenture], or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer or director, as such, past, present, or future, of the Issuer or of
any successor, either directly or through the Issuer or any successor,
under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance hereof and as part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have
the respective meanings assigned thereto in the Indenture.
6
Exhibit 10.1
============================================================================
CREDIT AGREEMENT
AMONG
RJR NABISCO HOLDINGS CORP.,
RJR NABISCO, INC.
AND
BANKERS TRUST COMPANY,
THE CHASE MANHATTAN BANK, N.A.,
CHEMICAL BANK,
CITIBANK, N.A.
AND
THE FUJI BANK, LIMITED,
AS SENIOR MANAGING AGENTS
AND
VARIOUS LENDING INSTITUTIONS
---------------------------------
Dated as of April 28, 1995
---------------------------------
$2,750,000,000
===========================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . 1
1.01 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing; Maximum Number of
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.03 Notice of Borrowing of Committed Loans . . . . . . . . . . . . . 4
1.04 Competitive Bid Borrowings . . . . . . . . . . . . . . . . . . . 5
1.05 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . 7
1.06 Notes; Register . . . . . . . . . . . . . . . . . . . . . . . . 7
1.07 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.08 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . 9
1.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.10 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . 10
1.11 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . 11
1.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.13 Change of Lending Office . . . . . . . . . . . . . . . . . . . . 14
1.14 Maturity Date Extensions . . . . . . . . . . . . . . . . . . . . 14
1.15 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . 15
1.16 Notice of Certain Costs . . . . . . . . . . . . . . . . . . . . 16
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 16
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 16
2.02 Letter of Credit Requests . . . . . . . . . . . . . . . . . . . 17
2.03 Letter of Credit Participations . . . . . . . . . . . . . . . . 17
2.04 Agreement to Repay Letter of Credit Drawings . . . . . . . . . . 20
2.05 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . 20
2.06 Indemnification; Nature of Letter of Credit Issuers'
Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3. Fees; Commitments . . . . . . . . . . . . . . . . . . . . . . . 23
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.02 Voluntary Reduction of Commitments . . . . . . . . . . . . . . . 24
3.03 Mandatory Reduction of Commitments, etc. . . . . . . . . . . . . 24
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . 25
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . 26
(i)
<PAGE>
Page
----
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . 27
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 29
5.01 Effectiveness; Notes . . . . . . . . . . . . . . . . . . . . . . 29
5.02 No Default; Representations and Warranties . . . . . . . . . . . 29
5.03 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 29
5.04 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . 30
5.05 Corporate Proceedings . . . . . . . . . . . . . . . . . . . . . 30
5.06 Organizational Documentation, etc. . . . . . . . . . . . . . . . 30
5.07 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . . 30
5.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.09 Termination of the Existing Credit Agreements . . . . . . . . . 31
5.10 Projections; Pro Forma Balance Sheets . . . . . . . . . . . . . 31
5.11 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . 31
6.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . 32
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . 32
6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . 33
6.06 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 33
6.07 Investment Company Act . . . . . . . . . . . . . . . . . . . . . 33
6.08 True and Complete Disclosure . . . . . . . . . . . . . . . . . . 33
6.09 Financial Condition; Financial Statements . . . . . . . . . . . 34
6.10 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . 34
6.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 35
6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.13 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.14 Pollution and Other Regulations . . . . . . . . . . . . . . . . 35
6.15 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . 36
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . 36
7.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . 38
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.04 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 39
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . 39
7.06 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . 39
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(ii)
<PAGE>
Page
----
7.09 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . 40
7.10 Competitive Bid Loan Outstandings . . . . . . . . . . . . . . . 41
7.11 Existing L/C Cash Collateral Agreement . . . . . . . . . . . . . 41
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 41
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . 41
8.02 Consolidation, Merger, Sale of Assets, etc. . . . . . . . . . . 41
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.05 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . 45
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 46
8.07 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . 46
8.08 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . 47
8.09 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.10 Cash Interest Coverage Ratio . . . . . . . . . . . . . . . . . . 48
SECTION 9. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 48
9.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . 48
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.04 Default Under Other Agreements . . . . . . . . . . . . . . . . . 49
9.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . 49
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.07 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.08 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 11. The Senior Managing Agents . . . . . . . . . . . . . . . . . . 75
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 76
11.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 76
11.03 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . 76
11.04 Reliance by Senior Managing Agents . . . . . . . . . . . . . . 77
11.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 77
11.06 Non-Reliance on Senior Managing Agents and Other Banks . . . . 78
11.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 78
11.08 Senior Managing Agent in Its Individual Capacity . . . . . . . 79
11.09 Successor Senior Managing Agents . . . . . . . . . . . . . . . 79
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 80
12.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . 80
12.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . 80
(iii)
<PAGE>
Page
----
12.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . 81
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . 84
12.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . 84
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . 84
12.08 Governing Law; Submission to Jurisdiction; Venue . . . . . . . 85
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . 86
12.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . 87
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . 87
12.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 87
12.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 88
SECTION 13. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
13.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 88
13.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . 89
13.04 Independent Obligation . . . . . . . . . . . . . . . . . . . . 89
13.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.09 Limitation on Enforcement . . . . . . . . . . . . . . . . . . . 91
ANNEX I -- List of Banks and Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Existing Letters of Credit
ANNEX IV -- Certain Litigation
ANNEX V -- Schedule of Material Subsidiaries
ANNEX VI -- Existing Liens
ANNEX VII -- Existing Subsidiary Indebtedness
EXHIBIT A -- Form of Revolving Note
EXHIBIT B -- Form of Letter of Credit Request
EXHIBIT C-1 -- Form of Opinion of Assistant General Counsel of the
Borrower
EXHIBIT C-2 -- Form of Opinion of White & Case, Special Counsel to
the Banks
EXHIBIT D-1 -- Notice of Assignment
EXHIBIT D-2 -- Form of Assignment Agreement
EXHIBIT E -- Form of Confidentiality Agreement
(iv)
<PAGE>
CREDIT AGREEMENT, dated as of April 28, 1995, among RJR NABISCO
HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a
Delaware corporation (the "Borrower"), and the lending institutions listed
from time to time on Annex I hereto (each a "Bank" and, collectively, the
"Banks"). Unless otherwise defined herein, all capitalized terms used
herein and defined in Section 10 are used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Banks are willing to make available the credit facility provided for
herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (A) Subject to and upon the terms and
-----------
conditions herein set forth, each Bank severally agrees to make a loan or
loans (each a "Revolving Loan" and, collectively, the "Revolving Loans") to
the Borrower, which Revolving Loans:
(i) shall be made at any time and from time to time on and
after the Effective Date and prior to such Bank's Maturity Date;
(ii) may, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Reference Rate Loans or
Eurodollar Loans, provided that all Revolving Loans made by all
--------
Banks pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Revolving Loans
of the same Type;
(iii) may be repaid and reborrowed in accordance with the
provisions hereof; and
(iv) shall not exceed for any Bank at any time outstanding
that aggregate principal amount which, when added to (A) the
product of (x) such Bank's Adjusted Percentage and (y) the sum of
(I) the aggregate Letter of Credit Outstandings and (II) the
---
aggregate outstanding principal amount of all Swingline Loans
then outstanding plus (B) the product of (x) such Bank's
----
Percentage and (y) the aggregate outstanding principal amount of
all
<PAGE>
Competitive Bid Loans then outstanding, equals the Commitment of
such Bank at such time.
(B) Subject to and upon the terms and conditions herein set
forth, each Swingline Lender severally agrees, at any time and from time to
time on and after the Initial Borrowing Date and prior to the Swingline
Maturity Date, to make a loan or loans (each a "Swingline Loan" and,
collectively, the "Swingline Loans") to the Borrower, which Swingline
Loans:
(i) shall be Reference Rate Loans;
(ii) shall have the benefit of the provisions of Section
1.01(C);
(iii) shall not exceed in the aggregate at any one time
outstanding the Swingline Commitment of such Swingline Lender at
such time;
(iv) shall not exceed in the aggregate for all Swingline
Lenders at any one time outstanding, when combined with the
aggregate principal amount of all Revolving Loans and Competitive
Bid Loans then outstanding and all Letter of Credit Outstandings
at such time, the Total Commitment then in effect; and
(v) may be repaid and reborrowed in accordance with the
provisions hereof.
On (x) the Swingline Maturity Date, all Swingline Loans shall be repaid in
full and (y) the last Business Day of each calendar quarter, all Swingline
Loans shall be repaid in full and may not be reborrowed until the next
succeeding Business Day, provided that repayment of the Swingline Loans
pursuant to this clause (y) shall not be required to the extent that the
aggregate outstanding principal amount of Swingline Loans to be repaid is
less than $25,000,000. No Swingline Lender will make a Swingline Loan
after it has received written notice from the Required Banks that one or
more of the applicable conditions to Credit Events specified in Section 5
are not then satisfied.
(C) On any Business Day, a Swingline Lender (the "Notifying SL
Lender") may, in its sole discretion, give notice to the Banks that all
then outstanding Swingline Loans shall be funded with a Borrowing of
Revolving Loans (provided that such notice shall be deemed to have been
--------
automatically given by each Swingline Lender and each Swingline Lender
shall constitute a Notifying SL Lender upon the occurrence of an Event of
Default under Section 9.05), in which case a Borrowing of Revolving Loans
constituting Reference Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all
Banks pro rata based on each Bank's
--- ----
-2-
<PAGE>
Adjusted Percentage, and the proceeds thereof shall be applied directly to
repay all Swingline Lenders for their outstanding Swingline Loans. Each
Bank hereby irrevocably agrees to make Reference Rate Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence and on the date
specified in writing by the Notifying SL Lender notwithstanding (i) that
the amount of the Mandatory Borrowing may not comply with the Minimum
Borrowing Amount otherwise required hereunder, (ii) whether any conditions
specified in Section 5 are then satisfied, (iii) whether a Default or an
Event of Default has occurred and is continuing, (iv) the date of such
Mandatory Borrowing and (v) any reduction in the Total Commitment after any
such Swingline Loans were made. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code in respect of the Borrower), each Bank
(other than each Swingline Lender with respect to its Swingline Loans)
hereby agrees that it shall forthwith purchase from each Swingline Lender
(without recourse or warranty) such assignment of its outstanding Swingline
Loans as shall be necessary to cause the Banks to share in such Swingline
Loans ratably based upon their respective Adjusted Percentages; provided,
--------
that all interest payable on such Swingline Loans shall be for the account
of the Swingline Lenders until the date the respective assignment is
purchased and, to the extent attributable to the purchased assignment,
shall be payable to the Bank purchasing same from and after such date of
purchase.
(D) Subject to and upon the terms and conditions herein set
forth, each Bank severally agrees that the Borrower may incur a loan or
loans (each a "Competitive Bid Loan" and, collectively, the "Competitive
Bid Loans") pursuant to a Competitive Bid Borrowing from time to time on
and after the Initial Borrowing Date and prior to the date which is the
third Business Day preceding the date which is 14 days prior to the
Facility Maturity Date; provided, that after giving effect to any
--------
Competitive Bid Borrowing and the use of the proceeds thereof, the
aggregate outstanding principal amount of Competitive Bid Loans when
combined with the aggregate outstanding principal amount of all Revolving
Loans and Swingline Loans then outstanding and the aggregate Letter of
Credit Outstandings at such time shall not exceed the Total Commitment at
such time. Within the foregoing limits and subject to the conditions set
out in Section 1.04, Competitive Bid Loans may be repaid and reborrowed in
accordance with the provisions hereof.
1.02 Minimum Amount of Each Borrowing; Maximum Number of
---------------------------------------------------
Borrowings. The aggregate principal amount of each Borrowing of Committed
----------
Loans shall not be less than the Minimum Borrowing Amount with respect
thereto (except that Mandatory Borrowings shall be made in the amounts
required by Section 1.01(C)). More than one Borrowing may be incurred on
any date; provided, that at no time shall there be outstanding more than
--------
twenty Borrowings of Eurodollar Loans under this Agreement.
-3-
<PAGE>
1.03 Notice of Borrowing of Committed Loans. (a) Whenever the
--------------------------------------
Borrower desires to incur Revolving Loans hereunder (other than Mandatory
Borrowings), it shall give the Payments Administrator at the Payments
Administrator's Office (x) prior to 11:00 A.M. (New York time) at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Revolving Loans constituting
Eurodollar Loans and (y) prior to 11:00 A.M. (New York time) at least one
Business Day's prior written notice (or telephonic notice promptly con-
firmed in writing) of each Borrowing of Revolving Loans constituting
Reference Rate Loans. Each such notice (each, together with each notice of
a Borrowing of Swingline Loans pursuant to Section 1.03(b), a "Notice of
Borrowing") shall be irrevocable and shall specify (i) the aggregate
principal amount of the Revolving Loans to be made pursuant to such
Borrowing, (ii) the date of Borrowing (which shall be a Business Day) and
(iii) whether the respective Borrowing shall consist of Reference Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest Period to
be initially applicable thereto. The Payments Administrator shall promptly
give each Bank written notice (or telephonic notice promptly confirmed in
writing) of each proposed Borrowing of Revolving Loans, of such Bank's
proportionate share thereof and of the other matters covered by the Notice
of Borrowing.
(b) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give the Payments Administrator at the Payments
Administrator's Office written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Swingline Loans prior to 11:00
A.M. (New York time) on the date of such Borrowing. Each such notice shall
be irrevocable and shall specify (i) the aggregate principal amount of the
Swingline Loans to be made pursuant to such Borrowing and (ii) the date of
Borrowing (which shall be a Business Day). The Payments Administrator
shall promptly give each Swingline Lender written notice (or telephonic
notice promptly confirmed in writing) of each proposed Borrowing of
Swingline Loans, of such Swingline Lender's proportionate share thereof and
of the other matters covered by the Notice of Borrowing.
(c) Mandatory Borrowings shall be made upon the notice specified
in Section 1.01(C), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of Mandatory Borrowings as
set forth in such Section.
(d) Without in any way limiting the obligation of the Borrower
to confirm in writing any notice it may give hereunder by telephone, the
Payments Administrator may act prior to receipt of written confirmation
without liability upon the basis of such telephonic notice, believed by the
Payments Administrator in good faith to be from the Chairman, Chief
Financial Officer or Treasurer of the Borrower, or from any other person
designated in writing to the Payments Administrator by the Chief Financial
Officer or Treasurer of the Borrower as a person entitled to give
telephonic notices under this Agreement on behalf of the Borrower. In each
such case the Borrower hereby waives the
-4-
<PAGE>
right to dispute the Payments Administrator's record of the terms of any
such telephonic notice.
1.04 Competitive Bid Borrowings. (a) Whenever the Borrower
--------------------------
desires to incur a Competitive Bid Borrowing, it shall deliver to the
Payments Administrator at the Payments Administrator's Office, prior to
11:00 A.M. (New York time) at least three Business Days prior to the date
of such proposed Competitive Bid Borrowing, a written notice (a "Notice of
Competitive Bid Borrowing"), which notice shall specify in each case
(i) the date (which shall be a Business Day) and the aggregate amount of
the proposed Competitive Bid Borrowing, (ii) the maturity date for
repayment of each Competitive Bid Loan to be made as part of such
Competitive Bid Borrowing (which maturity date may not be earlier than 14
days after the date of such Competitive Bid Borrowing or later than the
earlier to occur of (x) 180 days after the date of such Competitive Bid
Borrowing and (y) the third Business Day preceding the Facility Maturity
Date), (iii) the interest payment date or dates relating thereto and
(iv) any other terms to be applicable to such Competitive Bid Borrowing.
The Payments Administrator shall promptly notify each Bidder Bank of each
such request for a Competitive Bid Borrowing received by it from the
Borrower by telecopying to each such Bidder Bank a copy of the related
Notice of Competitive Bid Borrowing.
(b) Each Bidder Bank shall, if, in its sole discretion, it
elects to do so, irrevocably offer to make one or more Competitive Bid
Loans to the Borrower as part of such proposed Competitive Bid Borrowing at
a rate or rates of interest specified by such Bank in its sole discretion
and determined by such Bank independently of each other Bank, by notifying
the Payments Administrator (which shall give prompt notice thereof to the
Borrower) before 11:00 A.M. (New York time) on the date (the "Reply Date")
which is two Business Days before the date of such proposed Competitive Bid
Borrowing, of the minimum amount and maximum amount of each Competitive Bid
Loan which such Bank would be willing to make as part of such proposed
Competitive Bid Borrowing (which amounts may, subject to the proviso to the
first sentence of Section 1.01(D), exceed such Bank's Commitment), the rate
or rates of interest therefor and such Bank's lending office with respect
to such Competitive Bid Loan; provided, that if the Payments Administrator
--------
in its capacity as a Bank shall, in its sole discretion, elect to make any
such offer, it shall notify the Borrower of such offer before 9:30 A.M.
(New York time) on the Reply Date. Any Bidder Bank not giving the Payments
Administrator the notice specified in the preceding sentence shall not be
obligated to, and shall not, make any Competitive Bid Loan as part of such
Competitive Bid Borrowing.
-5-
<PAGE>
(c) The Borrower shall, in turn, before 12:00 Noon (New York
time) on the Reply Date, either:
(i) cancel such Competitive Bid Borrowing by giving the Payments
Administrator notice to such effect, or
(ii) accept one or more of the offers made by any Bidder Bank or
Banks by giving notice (in writing or by telephone confirmed in
writing) to the Payments Administrator of the amount of each
Competitive Bid Loan (which amount shall be equal to or greater than
the minimum amount, and equal to or less than the maximum amount,
notified to the Borrower by the Payments Administrator on behalf of
such Bidder Bank for such Competitive Bid Borrowing) to be made by
each Bidder Bank as part of such Competitive Bid Borrowing, and reject
any remaining offers made by Banks by giving the Payments
Administrator notice to that effect; provided, that (x) acceptance of
--------
offers may only be made on the basis of ascending Absolute Rates
commencing with the lowest rate so offered and (y) if offers are made
by two or more Bidder Banks at the same rate and acceptance of all
such equal offers would result in a greater principal amount of
Competitive Bid Loans being accepted than the aggregate principal
amount requested by the Borrower, the Borrower shall then have the
right to accept one or more such equal offers in their entirety and
reject the other equal offer or offers or to allocate acceptance among
all such equal offers (but giving effect to the minimum and maximum
amounts specified for each such offer), as the Borrower may elect in
its sole discretion; provided further, that in no event shall the
----------------
aggregate principal amount of the Competitive Bid Loans accepted by
the Borrower as part of a Competitive Bid Borrowing exceed the amount
specified by the Borrower in the related Notice of Competitive Bid
Borrowing.
(d) If the Borrower notifies the Payments Administrator that
such Competitive Bid Borrowing is cancelled, the Payments Administrator
shall give prompt notice thereof to the Bidder Banks and such Competitive
Bid Borrowing shall not be made.
(e) If the Borrower accepts one or more of the offers made by
any Bidder Bank or Banks, the Payments Administrator shall in turn promptly
notify (x) each Bidder Bank that has made an offer of the date and aggre-
gate amount of such Competitive Bid Borrowing and whether or not any offer
or offers made by such Bidder Bank have been accepted by the Borrower and
(y) each Bidder Bank that is to make a Competitive Bid Loan as part of such
Competitive Bid Borrowing of the amount of each Competitive Bid Loan to be
made by such Bidder Bank.
-6-
<PAGE>
(f) On the last Business Day of each calendar quarter, the
Payments Administrator shall notify the Banks of the aggregate principal
amount of Competitive Bid Loans outstanding at such time.
1.05 Disbursement of Funds. (a) No later than 1:00 P.M. (New
---------------------
York time) on the date of each Borrowing (including Mandatory Borrowings),
each Bank will make available its pro rata portion, if any, of each
--- ----
Borrowing requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund
under any Borrowing in U.S. dollars and immediately available funds to the
Payments Administrator at the Payments Administrator's Office and the
Payments Administrator will (except in the case of Mandatory Borrowings)
make available to the Borrower by depositing to its account at the Payments
Administrator's Office the aggregate of the amounts so made available in
U.S. dollars and the type of funds received. Unless the Payments Admin-
istrator shall have been notified by any Bank prior to the date of any such
Borrowing that such Bank does not intend to make available to the Payments
Administrator its portion of the Borrowing or Borrowings to be made on such
date, the Payments Administrator may assume that such Bank has made such
amount available to the Payments Administrator on such date of Borrowing,
and the Payments Administrator, in reliance upon such assumption, may (in
its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not
in fact made available to the Payments Administrator by such Bank and the
Payments Administrator has made available same to the Borrower, the
Payments Administrator shall be entitled to recover such corresponding
amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Payments Administrator's demand therefor, the Payments
Administrator shall promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Payments Administrator.
The Payments Administrator shall also be entitled to recover from such Bank
or the Borrower, as the case may be, interest on such corresponding amount
in respect of each day from the date such corresponding amount was made
available by the Payments Administrator to the Borrower to the date such
corresponding amount is recovered by the Payments Administrator, at a rate
per annum equal to (x) if paid by such Bank, the overnight Federal Funds
Rate or (y) if paid by the Borrower, the then applicable rate of interest,
calculated in accordance with Section 1.09, for the respective Loans.
(c) Nothing in this Section 1.05 shall be deemed to relieve any
Bank from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Bank as a
result of any default by such Bank hereunder.
1.06 Notes; Register. (a) The Borrower's obligation to pay the
---------------
principal of, and interest on, the Revolving Loans made by each Bank shall,
except as provided in
-7-
<PAGE>
Sections 1.15 and 12.04, be evidenced by a promissory note duly executed
and delivered by the Borrower substantially in the form of Exhibit A with
blanks appropriately completed in conformity herewith (each a "Note" and,
collectively, the "Notes").
(b) The Note issued to each Bank shall (i) be payable to the
order of such Bank and be dated the Initial Borrowing Date, (ii) be in a
stated principal amount equal to the Commitment of such Bank and be payable
in the principal amount of the Revolving Loans evidenced thereby, (iii)
mature on such Bank's Maturity Date and (iv) bear interest as provided in
the appropriate clause of Section 1.09 in respect of the Reference Rate
Loans and Eurodollar Loans, as the case may be, evidenced thereby.
(c) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to
any transfer of its Note endorse on the reverse side thereof the
outstanding principal amount of Revolving Loans evidenced thereby. Failure
to make any such notation or any error in any such notation shall not
affect the Borrower's obligations in respect of such Revolving Loans.
(d) The Payments Administrator shall maintain at the Payments
Administrator's Office a register for the recordation of the names and
addresses of the Banks, the Commitments of the Banks from time to time, and
the principal amount of the Revolving Loans, Swingline Loans and
Competitive Bid Loans owing to each Bank from time to time together with
the maturity and interest rates applicable to each such Competitive Bid
Loan, and other terms applicable thereto (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent
manifest error. The Register shall be available for inspection by the
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
1.07 Conversions. The Borrower shall have the option to convert
-----------
on any Business Day all or a portion equal to at least the Minimum
Borrowing Amount of the outstanding principal amount of Revolving Loans of
one Type into a Borrowing or Borrowings of another Type; provided, that (i)
--------
no partial conversion of Eurodollar Loans shall reduce the outstanding
principal amount of Eurodollar Loans made pursuant to a single Borrowing to
less than the Minimum Borrowing Amount, (ii) Reference Rate Loans may only
be converted into Eurodollar Loans if no Event of Default is in existence
on the date of the conversion and (iii) Borrowings resulting from conver-
sions pursuant to this Section 1.07 shall be limited in number as provided
in Section 1.02. Each such conversion shall be effected by the Borrower by
giving the Payments Administrator at the Payments Administrator's Office
prior to 11:00 A.M. (New York time) at least three Business Days' (or one
Business Day's in the case of a conversion into Reference Rate Loans) prior
written notice (or telephonic notice promptly confirmed in writing) (each a
"Notice of Conversion") specifying the Revolving Loans to be so converted,
the Type of Revolving Loans to be converted into and, if to be converted
into Eurodollar Loans, the Interest Period to be
-8-
<PAGE>
initially applicable thereto. The Payments Administrator shall give each
Bank notice as promptly as practicable of any such proposed conversion
affecting any of its Revolving Loans.
1.08 Pro Rata Borrowings. All Borrowings of Revolving Loans
-------------------
under this Agreement shall be loaned by the Banks pro rata on the basis of
--- ----
their Percentages; provided that all Borrowings of Revolving Loans made
--------
pursuant to a Mandatory Borrowing shall be loaned by the Banks pro rata on
--- ----
the basis of their Adjusted Percentages. All Borrowings of Swingline Loans
shall be loaned by the Swingline Lenders pro rata on the basis of their
--- ----
Swingline Commitments. It is understood that no Bank shall be responsible
for any default by any other Bank in its obligation to make Loans hereunder
and that each Bank shall be obligated to make the Loans provided to be made
by it hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.09 Interest. (a) The unpaid principal amount of each
--------
Reference Rate Loan shall bear interest from the date of the Borrowing
thereof until maturity (whether by acceleration or otherwise) at a rate per
annum which shall at all times be the Applicable Reference Rate Margin plus
the Reference Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at
all times be the Applicable Eurodollar Margin plus the relevant Eurodollar
Rate.
(c) The unpaid principal amount of each Competitive Bid Loan
shall bear interest from the date the proceeds thereof are made available
to the Borrower until maturity (whether by acceleration or otherwise) at
the rate or rates per annum specified by a Bidder Bank or Banks, as the
case may be, pursuant to Section 1.04(b) and accepted by the Borrower
pursuant to Section 1.04(c).
(d) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan shall bear interest at a rate per
annum equal to the Reference Rate in effect from time to time plus the sum
of (i) 2% and (ii) the Applicable Reference Rate Margin; provided, that
--------
each Eurodollar Loan and Competitive Bid Loan shall bear interest after
maturity (whether by acceleration or otherwise) until the end of the
Interest Period then applicable thereto at a rate per annum equal to 2% in
excess of the rate of interest applicable thereto at maturity.
(e) Interest on each Loan shall accrue from and including the
date of any Borrowing to but excluding the date of any repayment thereof
and shall be payable (i) in respect of each Reference Rate Loan, quarterly
in arrears on the 15th day of each January, April, July and October, (ii)
in respect of any Competitive Bid Loan, at such times as spec
-9-
<PAGE>
ified in the Notice of Competitive Bid Borrowing relating thereto, (iii) in
respect of each Eurodollar Loan, on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three-month intervals after the
first day of such Interest Period, (iv) in respect of each Loan (other than
a Reference Rate Loan), on any prepayment (on the amount prepaid) and (v)
in respect of each Loan, at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(f) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(g) The Payments Administrator, upon determining the interest
rate for any Borrowing of Eurodollar Loans for any Interest Period, shall
promptly notify the Borrower and the Banks thereof.
1.10 Interest Periods. At the time the Borrower gives a Notice
----------------
of Competitive Bid Borrowing in respect of the making of a Competitive Bid
Borrowing or at the time it gives a Notice of Borrowing or Notice of
Conversion in respect of the making of, or conversion into, a Borrowing of
Eurodollar Loans (in the case of the initial Interest Period applicable
thereto) or prior to 11:00 A.M. (New York time) on the third Business Day
prior to the expiration of an Interest Period applicable to a Borrowing of
Eurodollar Loans, it shall have the right to elect by giving the Payments
Administrator written notice (or telephonic notice promptly confirmed in
writing) the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be (x) in the case of a
Eurodollar Loan, a one, two, three or six month period and (y) in the case
of a Competitive Bid Loan, subject to availability, a period of 14 to 180
days as elected by the Borrower in the related Notice of Competitive Bid
Borrowing. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of Reference Rate Loans) and each
Interest Period occurring thereafter in respect of such Borrowing
shall commence on the day on which the next preceding Interest Period
expires;
(ii) if any Interest Period relating to a Borrowing of Eurodollar
Loans begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such calendar
month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business
-10-
<PAGE>
Day, provided that if any Interest Period in respect of a Eurodollar
--------
Loan would otherwise expire on a day which is not a Business Day but
is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day; and
(iv) no Interest Period in respect of Eurodollar Loans shall
extend beyond the Facility Maturity Date.
Notwithstanding the foregoing, if an Event of Default is in existence at
the time any Interest Period in respect of any Eurodollar Loans is to
expire, such Eurodollar Loans may not be continued as Eurodollar Loans but
instead shall be automatically converted on the last day of such Interest
Period into Reference Rate Loans. If upon the expiration of any Interest
Period in respect of Eurodollar Loans, the Borrower has failed to elect a
new Interest Period to be applicable thereto as provided above, the
Borrower shall be deemed to have elected to convert such Borrowing into a
Borrowing of Reference Rate Loans effective as of the expiration date of
such current Interest Period.
1.11 Increased Costs, Illegality, etc. (a) In the event that
---------------------------------
(x) in the case of clause (i) below, the Majority SMA or (y) in the case of
clauses (ii) and (iii) below, any Bank shall have determined (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after the
date of this Agreement affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loans or Competitive Bid Loans because of
(x) any change since the date of this Agreement (or, in the case of
any such cost or reduction with respect to any Competitive Bid Loan,
since the date of the making of such Competitive Bid Loan) in any
applicable law, governmental rule, regulation, guideline or order (or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order) (such as, for example, but not limited to, a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting the interbank Eurodollar market; or
-11-
<PAGE>
(iii) at any time, that the making or continuance of any Loan
(other than Reference Rate Loans) has become unlawful by compliance by
such Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law even though
the failure to comply therewith would not be unlawful), or, in the
case of a Eurodollar Loan, has become impracticable as a result of a
contingency occurring after the date of this Agreement which materi-
ally and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Majority SMA, in the case of
clause (i) above) shall on such date give notice (if by telephone confirmed
in writing) to the Borrower and to the Payments Administrator of such
determination (which notice the Payments Administrator shall promptly
transmit to each of the other Banks). Thereafter (x) in the case of clause
(i) above, Eurodollar Loans shall no longer be available until such time as
the Payments Administrator notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Majority SMA no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
shall be deemed rescinded by the Borrower, (y) in the case of clause (ii)
above, the Borrower shall pay to such Bank, upon written demand therefor,
such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its
sole discretion shall determine) as shall be required to compensate such
Bank for such increased costs or reductions in amounts receivable hereunder
(a written notice as to the additional amounts owed to such Bank, showing
in reasonable detail the basis for the calculation thereof, submitted to
the Borrower by such Bank shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions specified in
Section 1.11(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan or Competitive Bid Loan
is affected by the circumstances described in Section 1.11(a)(ii) (for
Eurodollar Loans only) or (iii), the Borrower may (and in the case of a
Eurodollar Loan or a Competitive Bid Loan affected pursuant to Section
1.11(a)(iii) shall) either (i) if the affected Eurodollar Loan or
Competitive Bid Loan is then being made pursuant to a Borrowing, cancel
said Borrowing by giving the Payments Administrator telephonic notice (con-
firmed promptly in writing) thereof as promptly as practicable after the
Borrower was notified by a Bank pursuant to Section 1.11(a)(ii) or (iii),
(ii) if the affected Eurodollar Loan is then outstanding, upon at least
three Business Days' notice to the Payments Administrator, require the
affected Bank to convert each such Eurodollar Loan into a Reference Rate
Loan or (iii) if the affected Competitive Bid Loan is then outstanding,
prepay such Competitive Bid Loan in full; provided, that if more than one
--------
Bank is affected in a similar manner at any time, then all such similarly
affected Banks must be treated the same pursuant to this Section 1.11(b).
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<PAGE>
(c) If after the date hereof, the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by a Bank or its
parent with any request or directive made or adopted after the date hereof
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's or its parent's
capital or assets as a consequence of such Bank's commitments or
obligations hereunder to a level below that which such Bank or its parent
could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Bank's or its parent's policies
with respect to capital adequacy), then from time to time, within 15 days
after demand by such Bank (with a copy to the Payments Administrator), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or its parent for such reduction. Each Bank, upon
determining in good faith that any additional amounts will be payable
pursuant to this Section 1.11(c), will give prompt written notice thereof
to the Borrower, which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts, although the failure
to give any such notice shall not, subject to Section 1.16, release or
diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.11(c) upon receipt of such notice.
1.12 Compensation. The Borrower shall compensate each Bank,
------------
upon its written request (which request shall set forth in reasonable
detail the basis for requesting such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund its Eurodollar
Loans or Competitive Bid Loans but excluding any loss of anticipated profit
with respect to such Loans) which such Bank may sustain: (i) if for any
reason (other than a default by such Bank or the Payments Administrator) a
Borrowing of Eurodollar Loans or Competitive Bid Loans accepted by the
Borrower in accordance with Section 1.04(c)(ii) does not occur on a date
specified therefor in a Notice of Borrowing, Notice of Competitive Bid
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower
or deemed withdrawn pursuant to Section 1.11); (ii) if any repayment or
conversion of any of its Eurodollar Loans or any repayment of Competitive
Bid Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans
is not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (x) any other default by the Borrower
to repay its Eurodollar Loans or Competitive Bid Loans when required by the
terms of this Agreement or (y) an election made pursuant to Section
1.11(b). Calculation of all amounts payable to a Bank under this Section
1.12 in respect of Eurodollar Loans shall be made as though that Bank had
actually funded its relevant Eurodollar Loan through the purchase of a
Eurodollar deposit bearing interest at the Eurodollar Rate in an amount
equal to the amount of that
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<PAGE>
Loan, having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of
that Bank to a domestic office of that Bank in the United States of
America; provided, however, that each Bank may fund each of its Eurodollar
-------- -------
Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this Section
1.12.
1.13 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.11(a)(ii)
or (iii), 2.05 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considera-
tions of such Bank) to designate another lending office for any Loans
affected by such event; provided, that such designation is made on such
--------
terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this
Section 1.13 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Section 1.11, 2.05 or 4.04.
1.14 Maturity Date Extensions. Prior to (but not less than 60
------------------------
days nor more than 90 days prior to) the first anniversary of the
Measurement Date and prior to (but not less than 60 days nor more than 90
days prior to) each subsequent anniversary of the Measurement Date, the
Borrower may make a written request to the Payments Administrator, who
shall forward a copy of each such request to each of the Continuing Banks,
that the Facility Maturity Date then in effect be extended to the date
which is one year after such existing Facility Maturity Date. Such request
shall be accompanied by a certificate of an Authorized Officer of the
Borrower stating that no Default or Event of Default has occurred and is
continuing. If, by the date (a "Response Date") which is 30 days prior to
any such anniversary, Continuing Banks holding at least 85% of the
Commitments held by Continuing Banks agree thereto in writing, the Facility
Maturity Date, and the Maturity Date of each Continuing Bank then
consenting, shall be automatically extended to such first anniversary of
the then existing Facility Maturity Date. In the event that the Borrower
has not obtained the requisite percentage of Continuing Banks to permit an
extension by the relevant Response Date, the Borrower may extend the
deadline for obtaining such percentage to the 30th day following such
Response Date in order to take such actions, including those contemplated
by Section 1.15, with respect to any Bank that is a Non-Continuing Bank
after giving effect to such Response Date in order to obtain the requisite
percentage of Banks constituting Continuing Banks to permit such extension.
The Payments Administrator shall notify the Borrower and each Bank of the
effectiveness of any such extension. No Bank shall be obligated to grant
any extensions pursuant to this Section 1.14 and any such extension shall
be in the sole discretion of each of them. A Bank's Maturity Date shall
not be so extended pursuant to this Section 1.14 for (x) any Bank that is a
Non-Continuing Bank at the time such request for extension is made and (y)
any Continuing
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<PAGE>
Bank at the time of such request that has not consented in writing, within
the time specified above, to any such request for the extension thereof.
1.15 Replacement of Banks. If (w) any Bank becomes a Non-
--------------------
Continuing Bank, (x) any Bank becomes a Defaulting Bank or otherwise
defaults in its obligations to make Loans or fund Unpaid Drawings, (y) any
Bank refuses to give timely consent to proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks or (z) any Bank is owed increased costs
under Section 1.11, Section 2.05 or Section 4.04 which in the judgment of
the Borrower are material in amount and which are not otherwise requested
generally by the other Banks, the Borrower shall have the right, if no
Event of Default then exists and, in the case of a Bank described in clause
(z) above, such Bank has not withdrawn its request for such compensation or
changed its applicable lending office with the effect of eliminating or
substantially decreasing (to a level which in the judgment of the Borrower
is not material) such increased cost, to replace such Bank (the "Replaced
Bank") with one or more other Eligible Transferee or Transferees
(collectively, the "Replacement Bank") reasonably acceptable to the
Majority SMA, provided that (i) at the time of any replacement pursuant to
this Section 1.15, the Replacement Bank shall enter into one or more
Assignment Agreements pursuant to which the Replacement Bank shall acquire
all of the Commitment and outstanding Loans of, and participations in
Letters of Credit by, the Replaced Bank and, in connection therewith, shall
pay to (x) the Replaced Bank in respect thereof an amount equal to the sum
of (a) an amount equal to the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Bank, (b) an amount equal to such
Replaced Bank's Adjusted Percentage of all Unpaid Drawings that have been
funded by such Replaced Bank, together with all then unpaid interest with
respect thereto at such time and (c) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to Section
3.01 hereof and (y) the appropriate Letter of Credit Issuer an amount equal
to such Replaced Bank's Adjusted Percentage of any Unpaid Drawing not
funded by such Replaced Bank, (ii) all obligations of the Borrower owing to
the Replaced Bank (other than those specifically described in clause (i)
above in respect of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced Bank con-
currently with such replacement, (iii) the Maturity Date applicable to the
Replacement Bank's Commitment shall be the Facility Maturity Date then in
effect and (iv) in the event that such Replaced Bank is a party to the 364
DF Credit Agreement, the Borrower shall also take the actions specified in
Section 1.14 of the 364 DF Credit Agreement and replace such Bank as a Bank
thereunder. Upon the execution of the respective assignment documentation,
the payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Note executed by the Borrower, the Replacement Bank shall
become a Bank hereunder and the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification provisions under
this Agreement, which shall survive as to such Replaced Bank.
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<PAGE>
1.16 Notice of Certain Costs. Notwithstanding anything in this
-----------------------
Agreement to the contrary, to the extent any notice required by Section
1.11 or 2.05 is given by any Bank more than 180 days after the occurrence
of the event giving rise to the additional cost, reduction in amounts or
other additional amounts of the type described in such Section, such Bank
shall not be entitled to compensation under Section 1.11 or Section 2.05,
as the case may be, for any such amounts incurred or accruing prior to the
giving of such notice to the Borrower.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower, at any time and from time to
time on or after the Initial Borrowing Date and prior to the Facility
Maturity Date, may request that a Letter of Credit Issuer issue, for the
account of the Borrower and in support of any Permitted Obligations, to
replace Existing Letters of Credit or in support of such other obligations
of the Borrower and/or any other Non-Nabisco Subsidiaries as are acceptable
to the Majority SMA, on an offering and as available basis, an irrevocable
standby letter of credit or letters of credit in such form as may be
approved by such Letter of Credit Issuer and the Majority SMA.
(b) Notwithstanding the foregoing (i) no Letter of Credit shall
be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time would exceed either (x) $800,000,000 or (y) when
added to the sum of the aggregate principal amount of all Revolving Loans
made by Non-Defaulting Banks and all Competitive Bid Loans and all
Swingline Loans then outstanding, the Adjusted Total Commitment; (ii) each
Letter of Credit shall, unless otherwise agreed by the Majority SMA and the
Letter of Credit Issuer, have an expiry date occurring no later than one
year after the date of issuance thereof, and in no event occurring later
than the Business Day next preceding the Facility Maturity Date, except
that, in the case of the Existing Letters of Credit, the initial expiry
date will be automatically extended for consecutive one year periods (but
not later than the Business Day preceding the Facility Maturity Date)
unless (I) any of the Letter of Credit Issuers thereof elects, in
accordance with the terms of such Existing Letter of Credit, not to permit
any such extension, (II) the Borrower elects not to obtain such extension
or (III) the Required Banks shall have notified the Payments Administrator
(who shall promptly inform the Letter of Credit Issuers thereof) on or
prior to the seventy-seventh day preceding any such extension that a
Default or Event of Default has occurred and is continuing or would result
from the extension of the then outstanding Existing Letters of Credit and,
accordingly, that the then expiry date for all the outstanding Existing
Letters of Credit shall not be extended, in which case the Letter of Credit
Issuers of all then outstanding Existing Letters of Credit shall, and
hereby agree to, give notice to the beneficiaries thereof of such
nonextension; (iii) each Letter of Credit shall be denominated in U.S.
dollars or an Approved Alternate Currency; and (iv) no Letter of Credit
shall be issued by a Letter of Credit Issuer after it has received a notice
in writing from the
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<PAGE>
Required Banks that one or more of the applicable conditions specified in
Section 5 are not then satisfied.
(c) Annex III hereto contains a description of all letters of
credit issued pursuant to the Existing Credit Agreements and outstanding on
the Effective Date. Each such letter of credit, including any extension or
renewal thereof (each, as amended from time to time in accordance with the
terms thereof and hereof, an "Existing Letter of Credit") shall constitute
a "Letter of Credit" for all purposes of this Agreement, issued, for
purposes of Section 2.03(a), on the Initial Borrowing Date.
2.02 Letter of Credit Requests. Whenever the Borrower desires
-------------------------
that a Letter of Credit be issued for its account, it shall give the
Payments Administrator and the Letter of Credit Issuer or Letter of Credit
Issuers that are to issue same at least five Business Days' (or such lesser
number of days as may be agreed to by the relevant Letter of Credit Issuer)
written notice thereof. Each notice shall be executed by the Borrower and
shall be in the form of Exhibit B attached hereto (each a "Letter of Credit
Request"). The Payments Administrator shall promptly transmit copies of
each Letter of Credit Request to each Bank.
2.03 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter
of Credit Issuer shall be deemed to have sold and transferred to each other
Bank (each such other Bank, in its capacity under this Section 2.03, a
"Participant"), and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and
participation (each a "participation"), to the extent of such Participant's
Adjusted Percentage, in such Letter of Credit, each substitute letter of
credit, each drawing made thereunder and the obligations of the Borrower
under this Agreement with respect thereto, and any security therefor (other
than pursuant to the Existing L/C Cash Collateral Agreement) or guaranty
pertaining thereto (although Letter of Credit Fees will be paid directly to
the Payments Administrator for the ratable account of the Participants as
provided in Section 3.01(c) and the Participants shall have no right to
receive any portion of any Facing Fees). Upon any change in the
Commitments of the Banks pursuant to Section 1.15 or 12.04, the termination
of a Commitment of a Non-Continuing Bank or the occurrence of any Bank
Default, it is hereby agreed that, with respect to all outstanding Letters
of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this Section 2.03 to reflect the new
Adjusted Percentages of the assignor and assignee Bank or of all Non-
Defaulting Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
the Letter of Credit Issuer issuing same shall have no obligation relative
to the Participants other than to confirm that any documents required to be
delivered under such Letter of Credit have
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<PAGE>
been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be
taken by a Letter of Credit Issuer under or in connection with any Letter
of Credit issued by it, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Letter of
Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any
payment under any Letter of Credit issued by it and the Borrower shall not
have reimbursed such amount in full to such Letter of Credit Issuer
pursuant to Section 2.04(a), such Letter of Credit Issuer shall promptly
notify the Payments Administrator and each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the Payments
Administrator for the account of such Letter of Credit Issuer, the amount
of such Participant's Adjusted Percentage of such unreimbursed payment in
lawful money of the United States of America and in same day funds;
provided, however, that no Participant shall be obligated to pay to the
-------- -------
Payments Administrator for the account of such Letter of Credit Issuer its
Adjusted Percentage of such unreimbursed amount for any wrongful payment
made by such Letter of Credit Issuer under a Letter of Credit as a result
of acts or omissions constituting willful misconduct or gross negligence on
the part of such Letter of Credit Issuer. If such Letter of Credit Issuer
so notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to the Payments Administrator for the
account of such Letter of Credit Issuer such Participant's Adjusted
Percentage of the amount of such payment on such Business Day in same day
funds. If and to the extent such Participant shall not have so made its
Adjusted Percentage of the amount of such payment available to the Payments
Administrator for the account of such Letter of Credit Issuer, such
Participant agrees to pay to the Payments Administrator for the account of
such Letter of Credit Issuer, forthwith on demand such amount, together
with interest thereon for each day from such date until the date such
amount is paid to the Payments Administrator for the account of such Letter
of Credit Issuer at the overnight Federal Funds Rate. The failure of any
Participant to make available to the Payments Administrator for the account
of the applicable Letter of Credit Issuer its Adjusted Percentage of any
payment under any Letter of Credit shall not relieve any other Participant
of its obligation hereunder to make available to the Payments Administrator
for the account of such Letter of Credit Issuer its Adjusted Percentage of
any payment under any Letter of Credit on the date required, as specified
above, but no Participant shall be responsible for the failure of any other
Participant to make available to the Payments Administrator such other
Participant's Adjusted Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment in
respect of an unpaid reimbursement obligation as to which the Payments
Administrator has received for the account of such Letter of Credit Issuer
any payments from the Participants pursuant to the preceding clause (c),
such Letter of Credit Issuer shall pay to the Payments
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<PAGE>
Administrator and the Payments Administrator shall promptly pay to each
Participant which has paid its Adjusted Percentage of such reimbursement
obligation, in lawful money of the United States of America and in same day
funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of
such reimbursement obligation and interest thereon accruing after the
purchase of the respective participations.
(e) The obligations of the Participants to make payments to the
Payments Administrator for the account of the Letter of Credit Issuers with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or excep-
tion whatsoever (except as expressly provided in Section 2.03(c)) and shall
be made in accordance with the terms and conditions of this Agreement under
all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in
a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Payments
Administrator, any Letter of Credit Issuer, any Bank, or other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the Borrower and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents;
(v) the occurrence of any Default or Event of Default; or
(vi) the failure of any condition precedent set forth in Section 5
hereof to have been satisfied at the time of the issuance of any
Letter of Credit unless the applicable Letter of Credit Issuer shall
have received a notice in writing to such effect from the Required
Banks pursuant to Section 2.01(b)(iv) hereof prior to the issuance of
such Letter of Credit.
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<PAGE>
2.04 Agreement to Repay Letter of Credit Drawings. (a) The
--------------------------------------------
Borrower hereby agrees to reimburse the respective Letter of Credit Issuer,
by making payment to the Payments Administrator in U.S. dollars and
immediately available funds at the Payments Administrator's Office, for any
payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued by it (each such amount so paid until reimbursed,
an "Unpaid Drawing") immediately after, and in any event on the date of,
notice given by such Letter of Credit Issuer to the Borrower of such
payment (which notice each Letter of Credit Issuer hereby agrees to give
promptly after the making of any payment or disbursement under a Letter of
Credit), with interest on the amount so paid or disbursed by such Letter of
Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (New York
time) on the date of such payment or disbursement, from and including the
date paid or disbursed to but excluding the date such Letter of Credit
Issuer is reimbursed therefor, at a rate per annum which shall be the
Applicable Reference Rate Margin plus the Reference Rate as in effect from
time to time (plus an additional 2% per annum if not reimbursed by the
second Business Day following any such notice of payment or disbursement),
such interest to be payable on demand. Notwithstanding the foregoing, to
the extent that a Letter of Credit Issuer of a Letter of Credit denominated
in a currency other than U.S. dollars has agreed in writing to such
arrangement at the time of the issuance of such Letter of Credit, the
Borrower shall reimburse any Drawing thereunder in the currency in which
such Letter of Credit is denominated; provided, that (x) if any such Draw-
--------
ing is made at a time when there exists an Event of Default or (y) if such
reimbursement is not made by the close of business two Business Days after
the Borrower has received notice of such Drawing, then, in either such
case, such reimbursement shall instead be made in U.S. dollars and in
immediately available funds.
(b) The Borrower's obligations under this Section 2.04 to
reimburse each Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) issued by it shall be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which the Borrower or any other
Person may have or have had against any Bank (including in its capacity as
a Letter of Credit Issuer or as a Participant), including, without
limitation, any defense based upon the failure of any drawing under a
Letter of Credit (each a "Drawing") to conform to the terms of the Letter
of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such Drawing; provided, that the Borrower shall not be
--------
obligated to reimburse the respective Letter of Credit Issuer for any
wrongful payment made by such Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or
gross negligence on the part of such Letter of Credit Issuer.
2.05 Increased Costs. If after the date hereof, the adoption of
---------------
any applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency
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<PAGE>
charged with the interpretation or administration thereof, or actual com-
pliance by any Letter of Credit Issuer or any Participant with any request
or directive made or adopted after the date hereof (whether or not having
the force of law), by any such authority, central bank or comparable agency
shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against letters of credit issued by
such Letter of Credit Issuer, or such Participant's participation therein,
or (ii) impose on any Letter of Credit Issuer or any Participant any other
conditions affecting its obligations under this Agreement in respect of
Letters of Credit or participations therein or any Letter of Credit or such
Participant's participation therein; and the result of any of the foregoing
is to increase the cost to such Letter of Credit Issuer or such Participant
of issuing, maintaining or participating in any Letter of Credit, or to
reduce the amount of any sum received or receivable by such Letter of
Credit Issuer or such Participant hereunder in respect of Letters of Credit
or participations therein, then, upon demand to the Borrower by such Letter
of Credit Issuer or such Participant, as the case may be (a copy of which
notice shall be sent by such Letter of Credit Issuer or such Participant to
each Senior Managing Agent), the Borrower shall pay to such Letter of
Credit Issuer or such Participant such additional amount or amounts as will
compensate such Letter of Credit Issuer or such Participant for such
increased cost or reduction. A certificate submitted to the Borrower by
such Letter of Credit Issuer or such Participant, as the case may be (a
copy of which certificate shall be sent by such Letter of Credit Issuer or
such Participant to each Senior Managing Agent), setting forth in
reasonable detail the basis for the determination of such additional amount
or amounts necessary to compensate such Letter of Credit Issuer or such
Participant as aforesaid shall be conclusive and binding on the Borrower
absent manifest error although the failure to deliver any such certificate
shall not, subject to Section 1.16, release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
2.05 upon receipt of such certificate.
2.06 Indemnification; Nature of Letter of Credit Issuers'
----------------------------------------------------
Duties. (a) In addition to its other obligations under this Section 2,
------
the Borrower hereby agrees to protect, indemnify, pay and save each of the
Letter of Credit Issuers harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees but excluding those taxes excluded
from the definition of Taxes in Section 4.04) that any such Letter of
Credit Issuer may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit or (ii) the failure
of any Letter of Credit Issuer to honor a drawing under a Letter of Credit
as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority
(all such acts or omissions, herein called "Government Acts").
(b) As between the Borrower and the Letter of Credit Issuers,
the Borrower shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Letter of Credit Issuers
shall not be responsible: (i) for the form,
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validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in part,
that may prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon a Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (vii) for any consequences arising from causes beyond
the control of the Letter of Credit Issuers, including, without limitation,
any Government Acts. None of the above shall affect, impair, or prevent
the vesting of any of the Letter of Credit Issuers' rights or powers
hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
any Letter of Credit Issuer, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted in good faith,
shall not put such Letter of Credit Issuer under any resulting liability to
the Borrower. It is the intention of the parties that this Agreement shall
be construed and applied to protect and indemnify the Letter of Credit
Issuers against any and all risks involved in the issuance of the Letters
of Credit arising from any present or future Government Acts. The Letter
of Credit Issuers shall not, in any way, be liable for any failure by the
Letter of Credit Issuers or anyone else to pay any Drawing under any Letter
of Credit as a result of any Government Acts or any other cause beyond the
control of the Letter of Credit Issuers.
(d) Nothing in this Section 2.06 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.04 hereof.
The obligations of the Borrower under this Section 2.06 shall survive the
termination of this Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or impair the
rights of the Letter of Credit Issuers to enforce any right, power or
benefit under this Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 2.06, (i) the Borrower shall have no obligation to indemnify any
Letter of Credit Issuer in respect of any liability incurred by such Letter
of Credit Issuer arising solely out of the gross negligence or willful
misconduct of such Letter of Credit Issuer, as determined by a court of
competent jurisdiction and (ii) the Borrower shall have a claim against any
Letter of Credit Issuer and such Letter of Credit Issuer shall be liable to
the Borrower to the extent,
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<PAGE>
but only to the extent, of any direct, as opposed to consequential, damages
suffered by the Borrower which the Borrower proves were caused by (x) such
Letter of Credit Issuer's willful misconduct or gross negligence in
determining whether the documents presented under its Letter of Credit
complied with the terms of such Letter of Credit or (y) such Letter of
Credit Issuer's willful or grossly negligent failure to pay under its
Letter of Credit after presentation to it of a drawing certificate and any
other documents strictly complying with the terms and conditions of such
Letter of Credit.
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The Borrower agrees to pay the Payments
----
Administrator a facility fee (the "Facility Fee") for the account of each
Non-Defaulting Bank for the period from and including the Measurement Date
to but not including the Facility Maturity Date or, if earlier, the date
upon which the Total Commitment has been terminated, computed for each day
at a rate equal to the Applicable Facility Fee Percentage for such day
multiplied by the then Commitment of such Bank. Such Facility Fee shall be
due and payable quarterly in arrears on the 15th day of each January,
April, July and October and on the date upon which the Total Commitment is
terminated.
(b) The Borrower agrees to pay to the Payments Administrator a
utilization fee (the "Utilization Fee") for the account of the Banks pro
---
rata on the basis of their respective Adjusted Percentages, computed for
----
each day during a Utilization Period at a rate equal to the Applicable
Utilization Fee Percentage for such day multiplied by the daily average
Total Adjusted Utilization Amount for such Utilization Period. Such
Utilization Fee shall be due and payable in arrears on the 15th day of each
January, April, July and October and on the date upon which the Total
Commitment is terminated.
(c) The Borrower agrees to pay to the Payments Administrator for
the account of the Banks pro rata on the basis of their respective Adjusted
--- ----
Percentages, a fee in respect of each Letter of Credit (the "Letter of
Credit Fee"), computed for each day at a rate equal to the Applicable
Eurodollar Margin for such day multiplied by the then Stated Amount of such
Letter of Credit. Such Letter of Credit Fees shall be due and payable
quarterly in arrears on the 15th day of each January, April, July and
October and on the date upon which the Total Commitment is terminated.
(d) The Borrower agrees to pay to the Payments Administrator for
the account of each Letter of Credit Issuer a fee in respect of each Letter
of Credit issued by it (the "Facing Fee") computed for each day at a rate
equal to the Applicable Facing Fee Percentage for such day multiplied by
the average daily Stated Amount of such Letter of Credit. Such Facing Fees
shall be due and payable quarterly in arrears on the 15th day of each
January, April, July and October and on the date upon which the Total
Commitment is terminated.
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<PAGE>
(e) The Borrower hereby agrees to pay directly to (i) each
Letter of Credit Issuer upon each issuance of, drawing under, and/or
amendment of, a Letter of Credit issued by such Letter of Credit Issuer
such amount as shall at the time of such issuance, drawing or amendment be
the administrative charge which such Letter of Credit Issuer is customarily
charging for issuances of, drawings under or amendments of, letters of
credit issued by it and (ii) each Letter of Credit Issuer issuing an
Existing Letter of Credit the fees and other amounts specified in the
accepted fee letter executed by the Borrower and such Letter of Credit
Issuer.
(f) The Borrower shall pay to the Payments Administrator for the
account of each Senior Managing Agent and each other Bank the fees
specified in the accepted commitment letter, or related fee letter,
executed by such Senior Managing Agent or such Bank, as the case may be,
when and as due.
(g) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Reduction of Commitments. Upon at least three
----------------------------------
Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Payments Administrator at the Payments Administrator's
Office (which notice the Payments Administrator shall promptly transmit to
each of the Banks), the Borrower shall have the right, without premium or
penalty, to terminate the Total Unutilized Commitment, in part or in whole
(or, to the extent that at such time there are no Loans outstanding and no
Letter of Credit Outstandings, to terminate the Total Commitment, in
whole); provided, that (x) any such termination shall apply to
--------
proportionately and permanently reduce the Commitment of each of the Banks
and (y) any partial reduction pursuant to this Section 3.02 shall be in the
amount of at least $50,000,000.
3.03 Mandatory Reduction of Commitments, etc. (a) The Total
----------------------------------------
Commitment and the Total Swingline Commitment (and the Commitment and
Swingline Commitment, if any, of each Bank) shall be terminated on the
Commitment Termination Date unless the Initial Borrowing Date has occurred
on or before such date.
(b) On the date which is the earlier of (x) 30 days after any
date on which a Change of Control occurs and (y) the date on which any
Indebtedness of the Borrower in excess of $100,000,000 individually or
$250,000,000 in the aggregate is required to be repurchased as a result of
any such Change of Control, the Total Commitment and Total Swingline
Commitment shall be reduced to zero.
(c) The Total Commitment shall be reduced on any date on which
an Additional Permitted International Tobacco Sale is consummated by an
aggregate amount equal to the aggregate fair market value of the assets and
capital stock which are disposed
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<PAGE>
of pursuant to such Additional Permitted International Tobacco Sale. In
addition, the Total Commitment shall be reduced on the 180th day following
any date on which an Additional Permitted International Tobacco Joint
Venture is consummated by an aggregate amount equal to the aggregate fair
market value of the assets and capital stock which are disposed of pursuant
to such Additional Permitted International Tobacco Joint Venture.
(d) The Total Commitment shall terminate on the Facility
Maturity Date.
(e) The Total Swingline Commitment shall terminate on the
Swingline Maturity Date.
(f) Each Bank's Commitment and Swingline Commitment, if any,
shall terminate on such Bank's Maturity Date.
(g) Each partial reduction of the Total Commitment pursuant to
Section 3.03 (c) shall apply proportionately to the Commitment of each
Bank.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. The Borrower shall have the right
---------------------
to prepay Revolving Loans and Swingline Loans in whole or in part from time
to time on the following terms and conditions: (i) the Borrower shall give
the Payments Administrator at the Payments Administrator's Office written
notice (or telephonic notice promptly confirmed in writing) of its intent
to make such prepayment, the amount of such prepayment and (in the case of
Eurodollar Loans) the specific Borrowing(s) pursuant to which made, which
notice shall be given by the Borrower no later than (x) in the case of
Revolving Loans, 11:00 A.M. (New York time) one Business Day prior to, or
(y) in the case of Swingline Loans, 11:00 A.M. (New York time) on, the date
of such prepayment and shall promptly be transmitted by the Payments
Administrator to each of the Banks or Swingline Lenders, as the case may
be; (ii) each partial prepayment of any Borrowing shall be in an aggregate
principal amount of at least $25,000,000, provided that no partial
--------
prepayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Revolving Loans made pursuant to such Borrowing to
an amount less than the Minimum Borrowing Amount for Eurodollar Loans; and
(iii) each prepayment in respect of any Revolving Loans or Swingline Loans
made pursuant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans or Swingline Loans, provided that, at the Borrower's election in
connection with any prepayment pursuant to this Section 4.01, such
prepayment shall not be applied to any Revolving Loan of a Defaulting Bank
at any time when the aggregate amount of Revolving Loans of any Non-
Defaulting Bank exceeds such Non-Defaulting Bank's Percentage of all
Revolving Loans then outstanding. The Borrower shall not have the right to
voluntarily prepay any Competitive Bid Loans.
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<PAGE>
4.02 Mandatory Prepayments.
---------------------
(A) Requirements:
------------
(a) If on any date the sum of the outstanding principal amount
of Revolving Loans made by Non-Defaulting Banks, Swingline Loans and
Competitive Bid Loans and the aggregate amount of Letter of Credit
Outstandings (all the foregoing, collectively, the "Aggregate
Outstandings") exceeds the Adjusted Total Commitment as then in effect, the
Borrower shall repay on such date the principal of Swingline Loans and,
after Swingline Loans have been paid in full, Revolving Loans, in an amount
equal to such excess. If, after giving effect to the prepayment of all
outstanding Swingline Loans and Revolving Loans, the Aggregate Outstandings
exceed the Adjusted Total Commitment then in effect, the Borrower shall pay
to the Payments Administrator an amount in cash equal to such excess and
the Payments Administrator shall hold such payment as security for the
obligations of the Borrower hereunder (including without limitation
obligations in respect of Letter of Credit Outstandings) pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory
to the Payments Administrator (which shall permit certain investments in
cash equivalents satisfactory to the Payments Administrator, until the
proceeds are applied to the secured obligations). If, after giving effect
to the prepayment of all outstanding Swingline Loans and Revolving Loans
and the cash collateralization of all Letter of Credit Outstandings as set
forth above, the remaining Aggregate Outstandings exceed the Adjusted Total
Commitment, the Borrower shall repay on such date the principal of
Competitive Bid Loans in an aggregate amount equal to such excess, provided
that no Competitive Bid Loan shall be prepaid pursuant to this sentence
unless the Bank that made same consents to such prepayment. In addition,
the Borrower shall repay the Revolving Loans and Swingline Loans, if any,
of each Bank on such Bank's Maturity Date.
(b) On the date of any reduction to the Total Commitment
pursuant to Section 3.03(c) hereof, an amount equal to the aggregate amount
of such reduction shall be applied (i) first, to the prepayment of
Swingline Loans, and (ii) second, to the extent remaining after the
application required by the immediately preceding clause (i), to the
prepayment of the outstanding principal amount of Revolving Loans.
(B) Application. With respect to each prepayment of Loans
-----------
required by this Section 4.02, the Borrower may designate the Types of
Loans which are to be prepaid and the specific Borrowing(s) pursuant to
which made; provided, that: (i) if any prepayment of Eurodollar Loans made
--------
pursuant to a single Borrowing shall reduce the outstanding Revolving Loans
made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for Eurodollar Loans, such Borrowing shall immediately be
converted into Reference Rate Loans; (ii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans; and
--- ----
(iii) notwithstanding the provisions of the preceding clause (ii), no
prepayment made pursuant to Section 4.02(A)(a)
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<PAGE>
(other than the last sentence thereof) of Revolving Loans shall be applied
to the Revolving Loans of any Defaulting Bank. In the absence of a
designation by the Borrower as described in the preceding sentence, the
Payments Administrator shall, subject to the above, make such designation
in its sole discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.12.
4.03 Method and Place of Payment. (a) Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement shall be
made to the Payments Administrator for the ratable account of the Banks
entitled thereto, not later than 1:00 P.M. (New York time) on the date when
due and shall be made in immediately available funds and in lawful money of
the United States of America at the Payments Administrator's Office, it
being understood that written, telex or facsimile notice by the Borrower to
the Payments Administrator to make a payment from the funds in the Bor-
rower's account at the Payments Administrator's Office shall constitute the
making of such payment to the extent of such funds held in such account.
The Payments Administrator will thereafter cause to be distributed on the
same day (if payment was actually received by the Payments Administrator
prior to 2:00 P.M. (New York time) on such day) like funds relating to the
payment of principal or interest or Fees ratably to the Banks entitled
thereto. If and to the extent that any such distribution shall not be so
made by the Payments Administrator in full on the same day (if payment was
actually received by the Payments Administrator prior to 2:00 P.M. (New
York time) on such day), the Payments Administrator shall pay to each Bank
its ratable amount thereof and each such Bank shall be entitled to receive
from the Payments Administrator, upon demand, interest on such amount at
the overnight Federal Funds Rate for each day from the date such amount is
paid to the Payments Administrator until the date the Payments Admin-
istrator pays such amount to such Bank.
(b) Any payments under this Agreement which are made later than
1:00 P.M. (New York time) shall be deemed to have been made on the next
succeeding Business Day. Whenever any payment to be made hereunder shall
be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such
extension.
4.04 Net Payments. (a) All payments made by the Borrower
------------
hereunder will be made without setoff or counterclaim. The Borrower will
pay, prior to the date on which penalties attach thereto, all present and
future income, stamp and other taxes, levies, or costs and charges
whatsoever imposed, assessed, levied or collected on or in respect of a
Loan and/or the recording, registration, notarization or other
formalization thereof and/or any payments of principal, interest or other
amounts made on or in respect of a Loan (all such taxes, levies, costs and
charges being herein collectively called "Taxes"; provided that Taxes shall
--------
not include taxes imposed on or measured by the overall net income of that
Bank (or any alternative tax imposed generally by any relevant jurisdiction
in lieu of a tax
-27-
<PAGE>
on net income) by the United States of America or any political subdivision
or taxing authority thereof or therein, taxes imposed under Section 884 of
the Code or taxes on or measured by the overall net income (or any
alternative tax imposed generally by any relevant jurisdiction in lieu of a
tax on net income) of that Bank or any foreign office, branch or subsidiary
of that Bank by any foreign country or subdivision thereof in which that
Bank or that office, branch or subsidiary is doing business). The Borrower
shall also pay such additional amounts equal to increases in taxes payable
by that Bank described in the foregoing proviso which increases are
attributable to payments made by the Borrower described in the immediately
preceding sentence of this Section. Promptly after the date on which
payment of any such Tax is due pursuant to applicable law, the Borrower
will, at the request of that Bank, furnish to that Bank evidence, in form
and substance satisfactory to that Bank, that the Borrower has met its
obligation under this Section 4.04. The Borrower will indemnify each Bank
against, and reimburse each Bank on demand for, any Taxes, as determined by
that Bank in its good faith and reasonable discretion. Such Bank shall
provide the Borrower with appropriate receipts for any payments or
reimbursements made by the Borrower pursuant to this Section 4.04.
(b) Each Bank which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes agrees to provide to the Borrower on or prior to the Measurement
Date, or in the case of a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.15 or Section 12.04
(unless the respective Bank was already a Bank hereunder immediately prior
to such assignment or transfer and such Bank is in compliance with the
provisions of this Section 4.04(b)), on the date of such assignment or
transfer to such Bank, two accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying
to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement or
any Note. Each Bank that is a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, but that is not a corporation (as such term is defined in Section
7701(a)(3) of the Code) for such purposes, agrees to provide to the
Borrower on or prior to the Measurement Date, or in the case of a Bank that
is an assignee or transferee of an interest under this Agreement pursuant
to Section 1.15 or Section 12.04 (unless the respective Bank was already a
Bank hereunder immediately prior to such assignment or transfer and such
Bank is in compliance with the provisions of this Section 4.04(b)), on the
date of such assignment to such Bank, two accurate and complete original
signed copies of Internal Revenue Service Form W-9 (or successor form). In
addition, each such Bank agrees that from time to time after the
Measurement Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect,
it will deliver to the Borrower two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, as the case
may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from United
States withholding tax with respect to payments
-28-
<PAGE>
under this Agreement or any Note, or it shall immediately notify the
Borrower and the Administrative Agent of its inability to deliver any such
form. Notwithstanding anything to the contrary contained in Section
4.04(a), (x) the Borrower shall be entitled, to the extent it is required
to do so by law, to deduct or withhold income or other similar taxes
imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for United
States federal income tax purposes and which has not provided to the Bor-
rower such forms that establish a complete exemption from such deduction or
withholding and (y) the Borrower shall not be obligated pursuant to Section
4.04(a) to pay a Bank in respect of income or similar taxes imposed by the
United States or any additional amounts with respect thereto if such Bank
has not provided to the Borrower the Internal Revenue Service forms
required to be provided to the Borrower pursuant to this Section 4.04(b).
SECTION 5. Conditions Precedent. The obligation of each Bank to
--------------------
make any Loans (other than pursuant to a Mandatory Borrowing) and the
obligation of each Letter of Credit Issuer to issue (or in the case of
Existing Letters of Credit, to maintain on the Initial Borrowing Date)
Letters of Credit, is subject, at the time of the making of each such Loan
and/or the issuance (or in the case of Existing Letters of Credit,
maintenance on the Initial Borrowing Date) of each such Letter of Credit
(except as otherwise hereinafter indicated), to the satisfaction of the
following conditions at such time:
5.01 Effectiveness; Notes. On the Initial Borrowing Date (and
--------------------
concurrently with the incurrence of Loans hereunder on such date in the
case of clauses (ii) and (iii) below), (i) this Agreement shall have become
effective as provided in Section 12.10 and there shall have been delivered
to the Payments Administrator for the account of each Bank the appropriate
Note or Notes executed by the Borrower in the amount, maturity and as
otherwise provided herein, (ii) the Effective Date under, and as defined
in, the 364 DF Credit Agreement shall have occurred and (iii) the Initial
Borrowing Date under, and as defined in, the Nabisco Credit Agreement shall
have occurred.
5.02 No Default; Representations and Warranties. At the time of
------------------------------------------
each Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event.
5.03 Officer's Certificate. On the Initial Borrowing Date, the
---------------------
Payments Administrator shall have received certificates dated such date
signed by an appropriate officer of each of Holdings and the Borrower
stating that all of the applicable conditions set forth in Sections 5.02,
5.07(a) and (b) and 5.09 exist as of such date.
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<PAGE>
5.04 Opinions of Counsel. On the Initial Borrowing Date, the
-------------------
Payments Administrator shall have received an opinion, or opinions, in form
and substance satisfactory to each Senior Managing Agent, addressed to each
of the Banks and dated the Initial Borrowing Date, from (i) Jo-Ann Ford,
Esq., Senior Vice President, Law of Holdings and the Borrower, which
opinion shall cover the matters contained in Exhibit C-1 hereto and (ii)
White & Case, special counsel to the Banks, which opinion shall cover the
matters contained in Exhibit C-2 hereto, together with such other opinions
covering such matters as the Senior Managing Agents shall reasonably
request, from counsel, and in form and substance, satisfactory to the
Senior Managing Agents.
5.05 Corporate Proceedings. On the Initial Borrowing Date, all
---------------------
corporate and legal proceedings and all instruments and agreements in
connection with the transactions contemplated by this Agreement and the
other Credit Documents shall be satisfactory in form and substance to each
Senior Managing Agent, and the Payments Administrator shall have received
all information and copies of all certificates, documents and papers,
including records of corporate proceedings and governmental approvals, if
any, which any Senior Managing Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
5.06 Organizational Documentation, etc. On the Initial
----------------------------------
Borrowing Date, the Banks shall have received copies of the Certificate of
Incorporation and By-Laws of each Credit Party, certified as true and
complete by an appropriate corporate officer or governmental authority.
5.07 Adverse Change, etc. (a) On the Initial Borrowing Date,
--------------------
(x) nothing shall have occurred which has a material adverse effect on the
ability of either Credit Party to perform its obligations to the Banks and
(y) there shall have been no material adverse change in the operations,
business, property, assets or financial condition of Holdings and its
Subsidiaries taken as a whole from that of Holdings and its Subsidiaries
taken as a whole on December 31, 1994. None of the Pro Forma Events shall
be deemed such a material adverse change.
(b) On the Initial Borrowing Date, all governmental and third
party approvals in connection with the Refinancing, the transactions
contemplated by the Credit Documents and otherwise referred to herein or
therein to be completed on or before the Initial Borrowing Date shall have
been obtained and remain in effect.
5.08 Litigation. On the Initial Borrowing Date, except as set
----------
forth in Annex IV hereto, there shall be no actions, suits or proceedings
pending or threatened with respect to Holdings or any of its Subsidiaries
that (i) are reasonably likely to have a material adverse effect on the
business, properties, assets, operations, financial condition
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<PAGE>
or prospects of Holdings and its Subsidiaries taken as a whole or (ii) are
reasonably likely to have a material adverse effect on the rights or
remedies of the Banks or on the ability of either Credit Party to perform
its obligations to the Banks hereunder or under any other Credit Document
to which it is a party.
5.09 Termination of the Existing Credit Agreements. On the
---------------------------------------------
Initial Borrowing Date and concurrently with the incurrence of Loans on
such date, the total commitments under the Existing Credit Agreements shall
have been terminated, and all loans thereunder shall have been repaid in
full, together with interest thereon, and all other amounts owing pursuant
to the Existing Credit Agreements shall have been repaid in full (except to
the extent the letters of credit issued thereunder remain outstanding
hereunder as Existing Letters of Credit) and the Existing Credit Agreements
shall have been terminated and be of no further force or effect (except as
to indemnities contained therein which survive the termination of the
Existing Credit Agreements in accordance with the terms thereof).
5.10 Projections; Pro Forma Balance Sheets. On or prior to the
-------------------------------------
Initial Borrowing Date, the Banks shall have received (i) financial
forecasts for Holdings and its Non-Nabisco Subsidiaries and the Borrower
and its Subsidiaries that are Non-Nabisco Subsidiaries for the period from
January 1, 1995 to and including the initial Facility Maturity Date (the
"Projections") and (ii) pro forma consolidated balance sheets of Holdings
--- -----
and its Non-Nabisco Subsidiaries and of the Borrower and its Subsidiaries
that are Non-Nabisco Subsidiaries as at December 31, 1994, which in each
case give effect to the Refinancing and the other transactions contemplated
by the Registration Statement. The Projections (and the supporting
assumptions and explanations thereto) and pro forma balance sheets shall be
--- -----
in form and substance satisfactory to the Senior Managing Agents.
5.11 Fees, etc. On the Initial Borrowing Date, the Borrower
----------
shall have paid to each Senior Managing Agent and each Bank all costs, fees
and expenses payable to the Senior Managing Agents or the Banks, to the
extent then due.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to each of the Banks that
all of the applicable conditions specified above exist as of that time.
All of the certificates, legal opinions and other documents and papers
referred to in this Section 5, unless otherwise specified, shall be
delivered to the Payments Administrator at the Payments Administrator's
Office for the account of each of the Banks and, except for the Notes, in
sufficient counterparts for each of the Banks and shall be satisfactory in
form and substance to each Senior Managing Agent.
SECTION 6. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement, to make the Loans and
issue or participate in Letters of Credit as provided for herein, each of
Holdings and the Borrower makes the
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<PAGE>
following representations and warranties to and agreements with the Banks,
all of which shall survive the execution and delivery of this Agreement and
the making of the Loans and the issuance of the Letters of Credit (with the
occurrence of each Credit Event being deemed to constitute a representation
and warranty that the matters specified in this Section 6 are true and
correct in all material respects on and as of the date hereof and as of the
date of each such Credit Event unless such representation and warranty
expressly indicates that it is being made as of any specific date):
6.01 Corporate Status. Each of Holdings and each of its
----------------
Material Subsidiaries (i) is a duly organized and validly existing
corporation or other entity in good standing under the laws of the
jurisdiction of its organization and has the corporate or other
organizational power and authority to own its property and assets and to
transact the business in which it is engaged and (ii) has duly qualified
and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure
to be so qualified would have a material adverse effect on the operations,
business, properties, assets or financial condition of Holdings and its
Subsidiaries taken as a whole.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms
and provisions of the Credit Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. Each Credit
Party has duly executed and delivered each Credit Document to which it is a
party and each such Credit Document constitutes the legal, valid and
binding obligation of such Person enforceable in accordance with its terms.
6.03 No Violation. Neither the execution, delivery and
------------
performance by any Credit Party of the Credit Documents to which it is a
party nor compliance with the terms and provisions thereof, nor the
consummation of the transactions contemplated therein (including, without
limitation, the Refinancing) (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of
any court or governmental instrumentality, (ii) will conflict or be incon-
sistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in
the creation or imposition of (or the obligation to create or impose) any
Lien upon any of the property or assets of Holdings or any of its
Subsidiaries pursuant to the terms of any material indenture, mortgage,
deed of trust, agreement or other instrument to which Holdings or any of
its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (iii) will violate any provision
of the charter or By-Laws of Holdings or any of its Subsidiaries.
6.04 Litigation. Except as set forth on Annex IV, there are no
----------
actions, suits or proceedings pending or threatened with respect to
Holdings or any of its
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<PAGE>
Subsidiaries (i) that are reasonably likely to have a material adverse
effect on the business, properties, assets, operations, financial condition
or prospects of Holdings and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries that are Non-Nabisco Subsidiaries taken as a
whole or (ii) that are reasonably likely to have a material adverse effect
on the rights or remedies of the Banks or on the ability of either Credit
Party to perform its obligations to them hereunder and under the other
Credit Documents to which it is a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
-----------------------------------
all Loans shall be utilized by the Borrower (i) to refinance outstandings
under the Existing Credit Agreements and (ii) for general corporate
purposes of Holdings and/or its Non-Nabisco Subsidiaries (including,
without limitation, payment of fees and expenses in connection with the
Refinancing, the refinancing of Indebtedness and financing acquisitions
permitted hereunder).
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System. At the time of each Credit Event, not more than 25% of the value
of the assets of the Borrower or Holdings and its Subsidiaries on a
consolidated basis subject to the restrictions contained in Sections 8.02
and 8.03 will constitute Margin Stock. Notwithstanding the foregoing
provisions of this Section 6.05, no proceeds of any Loan will be utilized
to purchase any Margin Stock in a transaction, or as part of a series of
transactions, the result of which is the ownership by Holdings and/or its
Subsidiaries (including without limitation the Borrower) of 5% or more of
the capital stock of a corporation unless the Board of Directors of such
corporation has approved such transaction prior to any public announcement
of the purchase, or the intent to purchase, any such Margin Stock.
6.06 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any foreign or domestic governmental or
public body or authority, or any subdivision thereof, is required to
authorize or is required in connection with (i) the execution, delivery and
performance of any Credit Document or (ii) the legality, validity, binding
effect or enforceability of any Credit Document.
6.07 Investment Company Act. Neither Holdings nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.08 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) heretofore or contemporaneously furnished by or on
behalf of either Credit Party or any of its Subsidiaries in writing to any
Senior Managing Agent or any Bank for
-33-
<PAGE>
purposes of or in connection with this Agreement or any transaction contem-
plated herein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of such Persons in writing to any Bank
will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to
state any material fact necessary to make such information (taken as a
whole) not misleading at such time in light of the circumstances under
which such information was provided. The projections and pro forma
financial information contained in such materials were based on good faith
estimates and assumptions believed by such Persons to be reasonable at the
time made, it being recognized by the Banks that such projections as to
future events are not to be viewed as facts and that actual results during
the period or periods covered by any such projections may differ from the
projected results.
6.09 Financial Condition; Financial Statements. The
-----------------------------------------
consolidated balance sheets of each of Holdings and its Subsidiaries and
the Borrower and its Subsidiaries, at December 31, 1992, at December 31,
1993 and at December 31, 1994 and the related consolidated statements of
income and cash flows (and retained earnings) for the fiscal years ended as
of said dates, which statements have been examined by Deloitte & Touche,
independent certified public accountants, who delivered an unqualified
opinion in respect thereof, and the pro forma (after giving effect to the
--- -----
Refinancing and related financings) consolidated balance sheets of Holdings
and its Non-Nabisco Subsidiaries and of the Borrower and its Subsidiaries
that are Non-Nabisco Subsidiaries as at December 31, 1994, copies of which
have heretofore been furnished to each Bank, present fairly the
consolidated financial position of Holdings and the Borrower at the dates
of said statements and the results of operations for the periods covered
thereby (or, in the case of the pro forma balance sheets, present a good
--- -----
faith estimate of the adjusted consolidated pro forma financial condition
--- -----
of Holdings and the Borrower at the date thereof). All such financial
statements (other than the aforesaid pro forma balance sheets) have been
--- -----
prepared in accordance with GAAP consistently applied except to the extent
provided in the notes to said financial statements. There has been no
material adverse change in the operations, business, property, assets or
financial condition of Holdings and its Subsidiaries taken as a whole or of
the Borrower and its Subsidiaries taken as a whole or of the Borrower and
its Subsidiaries that are Non-Nabisco Subsidiaries taken as a whole from
that of Holdings and its Subsidiaries or the Borrower and its Subsidiaries
or the Borrower and its Subsidiaries that are Non-Nabisco Subsidiaries, as
the case may be, on December 31, 1994.
6.10 Tax Returns and Payments. Each of Holdings and its
------------------------
Subsidiaries has filed all federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and
has paid all material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those contested in
good faith. Holdings and each of its Subsidiaries have paid, or have
provided adequate reserves (in the good faith judgment of the management of
Holdings) for the payment of,
-34-
<PAGE>
all federal, state and foreign income taxes applicable for all prior fiscal
years and for the current fiscal year to the date hereof.
6.11 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to any Plan; no Plan is insolvent or in reorganization, no Plan has
an Unfunded Current Liability, and no Plan has an accumulated or waived
funding deficiency or permitted decreases in its funding standard account
within the meaning of Section 412 of the Code; neither Holdings, any
Subsidiary nor any ERISA Affiliate has incurred any material liability to
or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the
Code; no proceedings have been instituted to terminate any Plan; no
condition exists which presents a material risk to Holdings or any
Subsidiary of incurring a liability to or on account of a Plan pursuant to
the foregoing provisions of ERISA and the Code, except to the extent that
all events described in the preceding clauses of this Section 6.11 and then
in existence would not, in the aggregate, be likely to have a material
adverse effect on the business, operations or financial condition of
Holdings and its Subsidiaries taken as a whole. With respect to Plans that
are multiemployer plans (within the meaning of Section 3(37) of ERISA) and
Plans which are not currently maintained or contributed to by Holdings, any
Subsidiary or any ERISA Affiliate, the representations and warranties in
this Section are made to the best knowledge of Holdings.
6.12 Subsidiaries. Annex V hereto lists each Material
------------
Subsidiary of Holdings (and the direct and indirect ownership interest of
Holdings therein), in each case existing on the Effective Date. All
ownership percentages referred to in Annex V are calculated without regard
to directors' or nominees' qualifying shares.
6.13 Patents, etc. Holdings and each of its Subsidiaries have
-------------
obtained all material patents, trademarks, servicemarks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions,
that are necessary for the operation of their respective businesses as pre-
sently conducted and as proposed to be conducted.
6.14 Pollution and Other Regulations. Holdings and each of its
-------------------------------
Subsidiaries are in material compliance with all material laws and
regulations relating to pollution and environmental control, equal
employment opportunity and employee safety in all domestic jurisdictions in
which Holdings and each of its Subsidiaries is presently doing business,
and Holdings will comply and cause each of its Subsidiaries to comply with
all such laws and regulations which may be imposed in the future in
jurisdictions in which Holdings or such Subsidiary may then be doing
business other than in each case those the non-compliance with which would
not have a material adverse effect on the business, assets, properties or
financial condition of Holdings and its Subsidiaries taken as a whole.
-35-
<PAGE>
6.15 Properties. Holdings and each of its Subsidiaries have
----------
good title to all properties that are necessary for the operation of their
respective businesses as presently conducted and as proposed to be
conducted, free and clear of all Liens, other than as permitted by this
Agreement.
SECTION 7. Affirmative Covenants. Holdings hereby covenants and
---------------------
agrees that on the Effective Date and thereafter, for so long as this
Agreement is in effect and until the Commitments and each Letter of Credit
have terminated and the Loans and Unpaid Drawings, together with interest,
Fees and all other Obligations incurred hereunder, are paid in full:
7.01 Information Covenants. Holdings will furnish to each Bank:
---------------------
(a) Annual Financial Statements. Within 100 days after the
---------------------------
close of each fiscal year of Holdings (x) to the extent prepared to
comply with SEC requirements, a copy of the SEC Form 10-Ks filed by
Holdings and the Borrower with the SEC for such fiscal year, or, if no
such Form 10-K was so filed by Holdings and/or the Borrower for such
fiscal year, the consolidated balance sheet of Holdings and its Sub-
sidiaries and of the Borrower and its Subsidiaries, as at the end of
such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for such fiscal year, setting
forth comparative consolidated figures as of the end of and for the
preceding fiscal year, and examined by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of Holdings or
any of its Subsidiaries as a going concern, together in any event with
a certificate of such accounting firm stating that in the course of
its regular audit of the business of Holdings and the Borrower, which
audit was conducted in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge of any
Default or Event of Default which has occurred and is continuing or,
if in the opinion of such accounting firm such a Default or Event of
Default has occurred and is continuing, a statement as to the nature
thereof and (y) the consolidated balance sheet of Holdings and its
Non-Nabisco Subsidiaries and of the Borrower and its Subsidiaries that
are Non-Nabisco Subsidiaries, as at the end of such fiscal year and
the related consolidated statements of income and retained earnings
and of cash flows for such fiscal year, setting forth comparative
consolidated figures as of the end of and for the preceding fiscal
year, and examined by an independent certified public accountant of
recognized national standing whose opinion shall not be qualified as
to the scope of audit or as to the status of Holdings or any of its
Non-Nabisco Subsidiaries as a going concern.
(b) Quarterly Financial Statements. As soon as available and in
------------------------------
any event within 55 days after the close of each of the first three
quarterly accounting periods
-36-
<PAGE>
in each fiscal year of Holdings (x) to the extent prepared to comply
with SEC requirements, a copy of the SEC Form 10-Qs filed by Holdings
and the Borrower with the SEC for each such quarterly period, or, if
no such Form 10-Q was so filed by Holdings and the Borrower with
respect to any such quarterly period, the consolidated condensed
balance sheet of Holdings and its Subsidiaries and of the Borrower and
its Subsidiaries as at the end of such quarterly period and the
related consolidated condensed statements of income for such quarterly
period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period, and the related consolidated
condensed statement of cash flows for the elapsed portion of the
fiscal year ended with the last day of such quarterly period, and (y)
the consolidated condensed balance sheet of Holdings and its Non-
Nabisco Subsidiaries and of the Borrower and its Subsidiaries that are
Non-Nabisco Subsidiaries, as at the end of such quarterly period and
the related consolidated condensed statements of income for such
quarterly period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, and the related
consolidated condensed statement of cash flows for the elapsed portion
of the fiscal year ended with the last day of such quarterly period,
and in each case setting forth comparative consolidated figures for
the related periods in the prior fiscal year or, in the case of such
consolidated condensed balance sheet, for the last day of the prior
fiscal year, all of which shall be certified by the Chief Financial
Officer, Controller, Chief Accounting Officer or other Authorized
Officer of Holdings or the Borrower, as the case may be, subject to
changes resulting from audit and normal year-end audit adjustments.
(c) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(a) and (b), a
certificate of the Chief Financial Officer, Controller, Chief
Accounting Officer or other Authorized Officer of Holdings to the
effect that no Default or Event of Default exists or, if any Default
or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth the calculations required
to establish whether Holdings and its Subsidiaries were in compliance
with the provisions of Sections 8.03(h), 8.04(i), 8.05, 8.07, 8.08,
8.09 and 8.10 as at the end of such fiscal period or year, as the case
may be.
(d) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after any senior financial or legal officer
of either Credit Party obtains knowledge thereof, notice of (x) the
occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of
existence thereof and what action Holdings proposes to take with
respect thereto and (y) any litigation or governmental proceeding
pending against or affecting Holdings or any of its Subsidiaries which
is likely to have a material adverse effect on the business,
properties, assets, financial condition or
-37-
<PAGE>
prospects of Holdings and its Subsidiaries taken as a whole or the
ability of either Credit Party to perform its obligations hereunder or
under any other Credit Document.
(e) Credit Rating Changes. Promptly after any senior financial
---------------------
or legal officer of either Credit Party obtains knowledge thereof,
notice of any change in the Applicable Credit Rating assigned by
either Rating Agency.
(f) International Tobacco Sales and Joint Ventures. On the date
----------------------------------------------
of the consummation of any sale or disposition (including through
joint venture arrangements) of the assets (other than inventory and
equipment to the extent sold or disposed of in the ordinary course of
business) of, or the capital stock of entities included in,
International Tobacco, a certificate of the Chief Financial Officer of
Holdings setting forth the fair market value of the assets and capital
stock included in such sale or disposition, and stating whether such
sale or disposition was through a joint venture arrangement.
(g) Other Information. Promptly upon transmission thereof,
-----------------
copies of any filings and registrations with, and reports to, the
Securities and Exchange Commission or any successor thereto (the
"SEC") by Holdings or any of its Subsidiaries (other than amendments
to any registration statement (to the extent such registration
statement, in the form it becomes effective, is delivered to the
Banks), exhibits to any registration statement and any registration
statements on Form S-8) and copies of all financial statements, proxy
statements, notices and reports that Holdings or any of its
Subsidiaries shall send to analysts or the holders of any publicly
issued debt of Holdings and/or any of its Subsidiaries in their
capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement) and, with
reasonable promptness, such other information or documents (financial
or otherwise) as any Senior Managing Agent on its own behalf or on
behalf of the Required Banks may reasonably request from time to time.
7.02 Books, Records and Inspections. Holdings will, and will
------------------------------
cause each of its Subsidiaries to, permit, upon reasonable notice to the
Chief Financial Officer, Controller or any other Authorized Officer of the
Borrower, officers and designated representatives of any Senior Managing
Agent or the Required Banks to visit and inspect any of the properties or
assets of Holdings and any of its Subsidiaries in whomsoever's possession,
and to examine the books of account of Holdings and any of its Subsidiaries
and discuss the affairs, finances and accounts of Holdings and of any of
its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as any Senior Managing Agent or the
Required Banks may desire.
-38-
<PAGE>
7.03 Insurance. Holdings will, and will cause each of its
---------
Subsidiaries to, at all times maintain in full force and effect insurance
in such amounts, covering such risks and liabilities and with such
deductibles or self-insured retentions as are in accordance with normal
industry practice.
7.04 Payment of Taxes. Holdings will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all 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 material penalties attach thereto, and all lawful claims
which, if unpaid, might become a Lien or charge upon any properties of
Holdings or any of its Subsidiaries; provided, that neither Holdings 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 if it has maintained adequate reserves (in the good faith
judgment of the management of Holdings) with respect thereto in accordance
with GAAP.
7.05 Consolidated Corporate Franchises. Holdings will do, and
---------------------------------
will cause each of its Material Subsidiaries to do, or cause to be done,
all things necessary to preserve and keep in full force and effect its
existence, rights and authority; provided, that any transaction permitted
--------
by Section 8.02 will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Holdings will, and will
------------------------------
cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls)
other than those the non-compliance with which would not have a material
adverse effect on the business, properties, assets or financial condition
of Holdings and its Subsidiaries taken as a whole or on the ability of
either Credit Party to perform its obligations under any Credit Document to
which it is party.
7.07 ERISA. As soon as possible and, in any event, within 10
-----
days after Holdings or any Subsidiary knows or has reason to know of the
occurrence of any of the following, Holdings will deliver to each of the
Banks a certificate of the Chief Financial Officer, Treasurer or Controller
of Holdings setting forth details as to such occurrence and the action, if
any, which Holdings, such Subsidiary or an ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be
given to or filed with or by Holdings, such Subsidiary, such ERISA
Affiliate, the PBGC, a Plan participant (other than notices relating to an
individual participant's benefits) or the Plan administrator with respect
thereto: that a Reportable Event has occurred, that an accumulated funding
deficiency has been incurred or an application may be or has been made to
the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including
-39-
<PAGE>
any required installment payments) or an extension of any amortization
period under Section 412 of the Code with respect to a Plan, that a Plan
which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA,
that a Plan has an Unfunded Current Liability giving rise to a lien under
ERISA or the Code, that proceedings may be or have been instituted to
terminate a Plan which has an Unfunded Current Liability, that a proceeding
has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan, or that Holdings, any Subsidiary or any
ERISA Affiliate will or may incur any liability (including any contingent
or secondary liability) to or on account of the termination of or
withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204
of ERISA or with respect to a Plan under Section 4971 or 4975 of the Code
or Section 409 or 502(i) or 502(l) of ERISA. Upon request of a Bank,
Holdings will deliver to such Bank a complete copy of the annual report
(Form 5500) of each Plan required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of any notices received by
Holdings or any Subsidiary shall be delivered to the Banks no later than 10
days after the later of the date such notice has been filed with the
Internal Revenue Service or the PBGC, given to Plan participants (other
than notices relating to an individual participant's benefits) or received
by Holdings or such Subsidiary.
7.08 Good Repair. Holdings will, and will cause each of its
-----------
Subsidiaries to, ensure that its properties and equipment used or useful in
its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, and
that from time to time there are made in such properties 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.
7.09 End of Fiscal Years; Fiscal Quarters. Holdings will, for
------------------------------------
financial reporting purposes, cause (i) each of its and the Borrower's
fiscal years to end on December 31 of each year, (ii) each of its and the
Borrower's fiscal quarters to end on March 31, June 30, September 30 and
December 31 of each year and (iii) each of the Subsidiaries to maintain the
accounting periods maintained by such Subsidiary on the Effective Date,
consistent with the past practice and procedures of each such Subsidiary;
provided that any of the foregoing fiscal or reporting periods may be
--------
changed if (x) Holdings gives the Banks 30 days' prior written notice of
such proposed change and (y) prior to effecting such change Holdings and
the Majority SMA shall have agreed upon adjustments, if any, to Sections
8.03(h), 8.04(i), 8.05, 8.07, 8.08, 8.09 and 8.10 (and the definitions used
therein) the sole purpose of which shall be to give effect to the proposed
change in fiscal or accounting periods (it being understood and agreed that
to the extent that Holdings and the Majority SMA cannot agree on
appropriate adjustments to such Sections (or that no adjustments are
necessary), the proposed change may not be effected).
-40-
<PAGE>
7.10 Competitive Bid Loan Outstandings. On the date of the
---------------------------------
delivery by the Borrower of any Notice of Borrowing, Notice of Competitive
Bid Borrowing or Letter of Credit Request at any time when the Borrower
shall have knowledge that a mandatory prepayment is required pursuant to
Section 4.02(A)(a) of this Agreement and, in any event, on the last
Business Day of each fiscal quarter of the Borrower, the Borrower will
furnish to the Payments Administrator (with an information copy to each of
the other Senior Managing Agents) a statement setting forth the aggregate
outstanding principal amount of Competitive Bid Loans at such time.
7.11 Existing L/C Cash Collateral Agreement. The Borrower will
--------------------------------------
perform all of its obligations under the Existing L/C Cash Collateral
Agreement (including without limitation its obligation to make deposits to
the collateral account established under the Existing L/C Cash Collateral
Agreement in the amounts and at the times required pursuant to the terms
thereof).
SECTION 8. Negative Covenants. Holdings hereby covenants and
------------------
agrees that on the Effective Date and thereafter, for so long as this
Agreement is in effect and until the Commitments and each Letter of Credit
have terminated and the Loans and Unpaid Drawings, together with interest,
Fees and all other Obligations incurred hereunder, are paid in full:
8.01 Changes in Business. Except as otherwise permitted by
-------------------
Section 8.02, Holdings and its Subsidiaries, taken as a whole, will not
substantively alter the character of their business from that conducted by
Holdings and its Subsidiaries taken as a whole at the Effective Date.
8.02 Consolidation, Merger, Sale of Assets, etc. Holdings will
-------------------------------------------
not, and will not permit any Subsidiary to, wind up, liquidate or dissolve
its affairs, or enter into any transaction of merger or consolidation, sell
or otherwise dispose of all or a substantial part of its property or assets
or agree to do any of the foregoing at any future time, except that the
following shall be permitted:
(a) So long as no Event of Default would result therefrom, the
Borrower may merge or consolidate with Holdings or any Wholly-Owned
Subsidiary of Holdings, provided that the surviving corporation, if
--------
not the Borrower, executes and delivers agreements assuming the
Borrower's obligations under this Agreement and the Notes, which
assumption agreements and all related actions and documentation shall
be in form and substance satisfactory to the Senior Managing Agents;
and
(b) Any Subsidiary of the Borrower may be merged or consolidated
with or into, or be liquidated into, any Person (other than Holdings,
unless the Borrower has merged or consolidated with Holdings) and any
such Subsidiary may convey,
-41-
<PAGE>
lease, sell or transfer all or any part of its business,
properties and assets to any such Person, provided, that if any such
--------
transaction involves a Material Subsidiary, after giving effect to
such transaction, no Event of Default would result therefrom.
Notwithstanding anything to the contrary contained above in this Section
8.02, no Restricted Sales shall be permitted.
8.03 Liens. Holdings will not, and will not permit any of its
-----
Non-Nabisco Subsidiaries to, (x) create, incur, assume or suffer to exist
any Lien in respect of Indebtedness upon any property or assets of any kind
(real or personal, tangible or intangible) of Holdings or any such Non-
Nabisco Subsidiary whether now owned or hereafter acquired or (y) assign
any right to receive income as security for the payment of Indebtedness,
except:
(a) Liens created by the Existing L/C Cash Collateral Agreement;
(b) (i) Liens and assignments under the Salem Facility or under
any Replacement Receivables Facility, and (ii) other Liens existing on
the Effective Date securing Indebtedness outstanding on the Effective
Date in an aggregate principal amount not exceeding $125,000,000 and
Liens securing extensions, renewals or refinancings of any of the
Indebtedness referred to in this clause (b)(ii) to the extent that any
such Indebtedness (x) is not increased from that outstanding at the
time of any such extension, renewal or refinancing and (y) is not
secured by Liens on any additional assets;
(c) Liens encumbering customary initial deposits and margin
deposits, and other Liens incurred in the ordinary course of business
and which are within the general parameters customary in the industry,
securing obligations under Permitted Commodities Agreements;
(d) Liens securing reimbursement obligations of the Borrower and
its Subsidiaries that are Non-Nabisco Subsidiaries with respect to (x)
trade letters of credit incurred in the ordinary course of business,
which are to be repaid in full not more than one year after the date
originally incurred to finance the purchase of goods by the Borrower
or any of its Subsidiaries that are Non-Nabisco Subsidiaries, provided
--------
that such Liens shall attach only to documents or other property
relating to such letters of credit and the products and proceeds
thereof and (y) letters of credit incurred in the ordinary course of
business in connection with payments of foreign excise taxes in
respect of tobacco sales, provided that (i) no such letter of credit
--------
shall have an expiry date later than six months after the date of
issuance thereof and (ii) such Liens are granted in the ordinary
course of business;
-42-
<PAGE>
(e) Liens (x) arising pursuant to purchase money mortgages
securing Indebtedness (and any extensions, renewals or refinancings of
such Indebtedness to the extent not increasing the outstanding
principal amount thereof) representing the purchase price (or
financing of the purchase price within 180 days after the respective
purchase) of assets acquired after the Effective Date, provided that
--------
(i) any such Liens attach only to the assets so purchased and (ii) the
Indebtedness (including any such permitted extensions, renewals or
refinancings) secured by any such Lien does not exceed 100%, nor is
less than 70%, of the purchase price of the property being purchased
and (y) existing on specific tangible assets at the time acquired by
Holdings or any of its Non-Nabisco Subsidiaries or on assets of a
Person at the time such Person first becomes a Subsidiary (together
with Liens securing any extensions, renewals or refinancings of the
Indebtedness secured thereby to the extent not increasing the
outstanding principal amount thereof), provided that (i) any such
--------
Liens were not created at the time of or in contemplation of the
acquisition of such assets or Person by Holdings and/or its Non-
Nabisco Subsidiaries, (ii) in the case of any such acquisition of a
Person, any such Lien attaches only to a specific tangible asset of
such Person and not assets of such Person generally and (iii) the
Indebtedness secured by any such Lien does not exceed 100% of the fair
market value of the asset to which such Lien attaches, determined at
the time of the acquisition of such asset or at the time such Person
first becomes a Subsidiary, as the case may be;
(f) The defeasance or cash collateralization of Indebtedness
supported on the Effective Date by an Existing Letter of Credit
specified in Part B of Annex III (or of guaranties or letters of
credit (other than Letters of Credit) supporting such Indebtedness),
provided that on or prior to the date of such defeasance or cash
--------
collateralization such Existing Letter of Credit (or any Letter of
Credit issued in replacement thereof) shall have been terminated and
returned to the Letter of Credit Issuers in respect thereof;
(g) Liens on the assets of International Tobacco located in
Germany securing Indebtedness permitted to be incurred pursuant to
Section 8.04(g)(i); and
(h) Liens and assignments not otherwise permitted by the forego-
ing clauses (a) through (g) securing any Indebtedness of Holdings
and/or its Non-Nabisco Subsidiaries provided that the aggregate
principal amount of Indebtedness on a consolidated basis secured by
Liens permitted by this clause (h) shall not exceed an amount equal to
7-1/2% of Consolidated Net Worth at any time.
8.04 Indebtedness. Holdings will not permit any Non-Nabisco
------------
Subsidiary (other than the Borrower) to contract, create, incur, assume or
suffer to exist any Indebtedness, except:
-43-
<PAGE>
(a) (i) Indebtedness owing by any such Subsidiary to Holdings or
any Wholly-Owned Subsidiary of Holdings and (ii) Indebtedness of any
such Subsidiary (x) consisting of Contingent Obligations in respect
of, or (y) constituting reimbursement obligations under letters of
credit issued in support of, obligations of any Subsidiary of Holdings
(other than the Borrower) to the extent such other obligations are
permitted by this Agreement;
(b) (i) Indebtedness under the Salem Facility or any Replacement
Receivables Facility and (ii) other Existing Debt of such Subsidiaries
in an aggregate principal amount not exceeding $500,000,000 and any
extensions, renewals or refinancings of any of the Indebtedness
referred to in this clause (b)(ii), provided that such Indebtedness is
not increased from that outstanding at the time of any such extension,
renewal or refinancing;
(c) Obligations under letters of credit described in Section
8.03(d);
(d) Indebtedness in respect of Permitted Currency Agreements and
Permitted Commodities Agreements;
(e) Obligations of Subsidiaries of the Borrower under letters of
credit incurred in the ordinary course of business in connection with
the purchase of tobacco or other products or goods for use in the day-
to-day operations of the Borrower and its Subsidiaries consistent with
the Borrower's past practices or then current industry practices;
(f) Indebtedness secured by Liens permitted by Section 8.03(e);
(g) (i) Indebtedness incurred by International Tobacco with
respect to its operations in Germany in an outstanding principal
amount not to exceed $175,000,000 at any time and (ii) Indebtedness
(and any extensions, renewals or refinancings of such Indebtedness to
the extent not increasing the outstanding principal amount thereof)
incurred by RJR-MacDonald or any other Canadian Subsidiary of Holdings
in an aggregate outstanding principal amount not to exceed
$250,000,000 at any time for all such Canadian Subsidiaries;
(h) Indebtedness of any such Subsidiary in any manner
guaranteeing or intended to guarantee, whether directly or indirectly,
any leases, dividends or other monetary obligations of any Person in
which such Subsidiary has an ownership interest, provided that the
--------
aggregate maximum stated or determinable amount (or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
of such Indebtedness as determined in good faith by such Subsidiary)
of all
-44-
<PAGE>
Indebtedness permitted pursuant to this clause (h) shall not exceed at
any time an amount in excess of $150,000,000; and
(i) Indebtedness not otherwise permitted by the foregoing
clauses (a) through (h), provided that the aggregate outstanding
--------
principal amount of Indebtedness on a consolidated basis incurred
pursuant to this clause (i) shall not exceed at any time an amount
equal to 7-1/2% of Consolidated Net Worth at such time.
8.05 Limitation on Dividends. Holdings will not declare or pay
-----------------------
any dividends (other than dividends payable solely in its capital stock) or
return any capital to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for a consideration, any shares of any class of its capital
stock now or hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares but not including any
convertible debt), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of
Holdings now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by Holdings with respect to its capital stock
but not including any convertible debt) (all of the foregoing "Dividends"),
provided that so long as no Event of Default then exists in the case of
--------
clauses (ii) and (iii):
(i) Holdings may issue shares of Holdings Common Stock upon the
exercise of any warrants or options or upon the conversion or redemption
of any convertible or redeemable preferred or preference stock, and in
connection with any such exercise, conversion or redemption Holdings may
pay cash in lieu of issuing fractional shares of Holdings Common Stock;
(ii) Holdings may repurchase Holdings Common Stock (and/or options or
warrants in respect thereof) pursuant to, and in accordance with the
terms of, management and/or employee stock plans;
(iii) Holdings may declare and pay, or otherwise effect, any other
Dividend provided that, at the time it is declared, the aggregate amount
of such Dividend, when added to all Dividends theretofore declared
pursuant to this clause (iii) after the Effective Date shall not exceed
an amount equal to the sum of (x) $1,000,000,000 plus (y) 50% of
Cumulative Consolidated Net Income plus (z) the aggregate cash proceeds
(net of underwriting discounts and commissions) received by Holdings
after the Effective Date from issuances of its equity securities
(provided that the aggregate amount of such aggregate net cash proceeds
--------
received in any twelve-month period shall be deemed not to exceed
$250,000,000 for purposes of this clause (iii)(z)), in each case
-45-
<PAGE>
determined at the time of the declaration thereof, provided that such
--------
Dividend is paid within 45 days of the making of such declaration;
(iv) Holdings may issue and exchange shares of any class or series of
its common stock now or hereafter outstanding for shares of any other
class or series of its common stock now or hereafter outstanding;
(v) Holdings may, in connection with any reclassification of its
common stock and any exchange permitted by clause (iv) above, pay cash
in lieu of issuing fractional shares of any class or series of its
common stock; and
(vi) Holdings may effect the Permitted Series B Exchange Offer.
8.06 Transactions with Affiliates. Holdings will not, and will
----------------------------
not permit any Subsidiary to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
Affiliate (other than any Wholly-Owned Subsidiary of Holdings and, in the
case of a member of the Nabisco Group, any other member of the Nabisco
Group) other than on terms and conditions substantially as favorable to
Holdings or such Subsidiary as would be obtainable by Holdings or such Sub-
sidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate; provided, that the foregoing restrictions shall
--------
not apply to: (i) customary fees paid to members of the Board of Directors
of Holdings and of its Subsidiaries; (ii) the RJRN Agreements; (iii) the
Refinancing; and (iv) any transaction with any member of the Nabisco Group
if the Board of Directors of Holdings determines in good faith that such
transaction is in the best interest of Holdings and/or such Subsidiary, as
the case may be.
8.07 Consolidated Net Worth. Holdings will not permit
----------------------
Consolidated Net Worth at any time during any period listed below to be
less than the amount set forth opposite such period below:
Period Amount
------ ------
Initial Borrowing Date $7,500,000,000
to and including
December 31, 1995
January 1, 1996 $7,750,000,000
to and including
December 31, 1996
January 1, 1997 $8,000,000,000
-46-
<PAGE>
to and including
December 31, 1997
Thereafter $8,250,000,000
8.08 Fixed Charge Coverage Ratio. Holdings will not permit the
---------------------------
ratio of (i) Adjusted Operating Income to (ii) Consolidated Fixed Charges
for any Test Period ending during any period set forth below to be less
than the ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date 1.60:1
to and including
December 31, 1995
January 1, 1996 1.65:1
to and including
December 31, 1996
January 1, 1997 1.75:1
to and including
December 31, 1997
Thereafter 1.80:1
8.09 Leverage Ratio. Holdings will not permit the ratio of (i)
--------------
Adjusted Consolidated Debt to (ii) Adjusted Operating Income for the Test
Period last ended at any time during any period set forth below to be more
than the ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date 2.60:1
to and including
December 31, 1995
January 1, 1996 2.45:1
to and including
December 31, 1996
-47-
<PAGE>
January 1, 1997 2.25:1
to and including
December 31, 1997
Thereafter 2.0:1
8.10 Cash Interest Coverage Ratio. Holdings will not permit the
----------------------------
ratio of (i) Adjusted Operating Income to (ii) Consolidated Cash Interest
Expense for any Test Period ending during any period listed below to be
less than the ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date 3.50:1
to and including
December 31, 1995
Thereafter 4.00:1
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment
--------
when due of any principal of the Loans or (ii) default, and such default
shall continue for five or more days, in the payment when due of any
interest on the Loans or any Fees or any Unpaid Drawings or any other
amounts owing hereunder or under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or
---------------------
statement made or deemed made by either Credit Party herein or in any other
Credit Document or in any statement or certificate delivered or required to
be delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
9.03 Covenants. Either Credit Party shall (a) default in the
---------
due performance or observance by it of any term, covenant or agreement
contained in Section 7.10 or 8, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those
referred to in Section 9.01, 9.02 or clause (a) of this Section 9.03)
contained in this Agreement and such default shall continue unremedied for
a period of at least 30 days after notice to the defaulting party by any
Senior Managing Agent or the Required Banks; or
-48-
<PAGE>
9.04 Default Under Other Agreements. (a) Holdings or any of
------------------------------
its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) in excess of $75,000,000
individually or $150,000,000 in the aggregate, for Holdings and its
Subsidiaries, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or agree-
ment evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice or lapse of time is
required, provided that the existence of any Event of Default under this
Section 9.04(a)(ii) with respect to Indebtedness outstanding under the 364
DF Credit Agreement or the Nabisco Credit Agreement shall be determined
after giving effect to any notice or lapse of time provided to the Borrower
in the 364 DF Credit Agreement or Nabisco in the Nabisco Credit Agreement,
as the case may be), any such Indebtedness to become due prior to its
stated maturity; or (b) any such Indebtedness shall be declared to be due
and payable, or required to be prepaid other than by a regularly scheduled
required prepayment or as a mandatory prepayment (unless such required
prepayment or mandatory prepayment results from a default or an event of
the type that constitutes an Event of Default), prior to the stated
maturity thereof; or
9.05 Bankruptcy, etc. Holdings or any of its Material
----------------
Subsidiaries shall commence a voluntary case concerning itself under Title
11 of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against Holdings or any of its Material Subsidiaries and
the petition is not controverted within 10 days after service of notice of
such case on Holdings or such Material Subsidiary, or is not dismissed
within 60 days after commencement of the case; or a custodian (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Holdings or any of its Material
Subsidiaries; or Holdings or any of its Material Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to Holdings or
any of its Material Subsidiaries; or there is commenced against Holdings or
any of its Material Subsidiaries any such proceeding which remains
undismissed for a period of 60 days; or Holdings or any of its Material
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or
Holdings or any of its Material Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or Holdings or
any of its Material Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Material Subsidiaries for the purpose of effecting any of the foregoing; or
-49-
<PAGE>
9.06 ERISA. (a) A single-employer plan (as defined in Section
-----
4001 of ERISA) maintained or contributed to by any Credit Party or any of
its Subsidiaries or any ERISA Affiliate shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year or
part thereof or a waiver of such standard or extension of any amortization
period is sought or granted under Section 412 of the Code or shall provide
security to induce the issuance of such waiver or extension, (b) any Plan
is or shall have been terminated or the subject of termination proceedings
under ERISA or an event has occurred entitling the PBGC to terminate a Plan
under Section 4042(a) of ERISA, (c) any Plan shall have an Unfunded Current
Liability, (d) Holdings or any Subsidiary or any ERISA Affiliate has
incurred or is likely to incur a material liability to or on account of a
termination of or a withdrawal from a Plan under Section 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA, (e) Holdings or any Subsidiary has
incurred after the Effective Date liabilities (after giving effect to any
reserves applicable thereto and maintained on the Effective Date) pursuant
to one or more employee welfare benefit plans (as defined in Section 3(1)
of ERISA) which provide benefits to retired employees (other than as
required by Section 601 of ERISA) or employee pension benefit plans (as
defined in Section 3(2) of ERISA) (except in each case solely as a result
of a change in estimate or adjustment of liabilities existing on the
Effective Date upon the adoption or implementation of Financial Accounting
Statement 106), or (f) Holdings or any Subsidiary or any ERISA Affiliate
has incurred a liability under Section 409, 502(i) or 502(l) of ERISA or
Section 4971 or 4975 of the Code; and there shall result from any such
event or events described in the preceding clauses of this Section 9.06 the
imposition of a Lien upon the assets of Holdings or any Subsidiary, the
granting of a security interest, or a liability or a material risk of
incurring a liability, which Lien, security interest or liability would
have a material adverse effect upon the business, operations or financial
condition of Holdings and its Subsidiaries taken as a whole; or
9.07 Guaranty. The Guaranty or any provision thereof shall
--------
cease to be in full force or effect, or the Guarantor or any Person acting
by or on behalf of the Guarantor shall deny or disaffirm the Guarantor's
obligations under the Guaranty or the Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to the Guaranty; or
9.08 Judgments. One or more judgments or decrees shall be
---------
entered against Holdings or any of its Material Subsidiaries involving a
liability of $75,000,000 or more in the case of any one such judgment or
decree and $150,000,000 or more in the aggregate for all such judgments and
decrees for Holdings and its Material Subsidiaries (to the extent not paid
or fully covered by insurance) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof;
-50-
<PAGE>
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, any Senior Managing Agent shall, upon the
written request of the Required Banks, by written notice to Holdings and
the Borrower, take any or all of the following actions, without prejudice
to the rights of any Senior Managing Agent or any Bank to enforce its
claims against the Borrower, except as otherwise specifically provided for
in this Agreement (provided that, if an Event of Default specified in
--------
Section 9.05 shall occur with respect to the Borrower, the result which
would occur upon the giving of written notice by any Senior Managing Agent
as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitment
terminated, whereupon the Commitment and Swingline Commitment, if any, of
each Bank shall forthwith terminate immediately and any Facility Fee and
Utilization Fee theretofore accrued shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and any
accrued interest in respect of all Loans and all other Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Holdings and the Borrower; (iii)
terminate any Letter of Credit which may be terminated in accordance with
its terms; and (iv) direct the Borrower to pay (and the Borrower agrees
that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 9.05 with respect to the Borrower, it will
pay) to the Payments Administrator at the Payments Administrator's Office
such additional amounts of cash, to be held as security for the Borrower's
reimbursement obligations for Drawings that may subsequently occur there-
under, equal to the aggregate Stated Amount of all Letters of Credit issued
and then outstanding.
Notwithstanding anything contained in the foregoing paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to
the preceding paragraph, the Borrower shall pay all arrears of interest and
all payments on account of 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 Events of Default and Defaults (other than non-payment
of the principal of and accrued interest on the Loans, in each case which
is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 12.12, then Non-Defaulting Banks holding at
least 66-2/3% of the Adjusted Total Commitment (which Banks shall include
in any event the Majority SMA), by written notice to Holdings and the
Borrower, may at their option rescind and annul the acceleration and its
consequences; but such action shall not affect any subsequent Event of
Default or Default or impair any right consequent thereon. The provisions
of this paragraph are intended merely to bind the Banks to a decision which
may be made at the election of the aforesaid percentage of the Banks and
are not intended to benefit the Borrower and do not grant the Borrower the
right to require the Banks to rescind or annul any acceleration hereunder,
even if the conditions set forth herein are met.
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<PAGE>
SECTION 10. Definitions. As used herein, the following terms
-----------
shall have the meanings herein specified unless the context otherwise
requires. Defined terms in this Agreement shall include in the singular
number the plural and in the plural the singular:
"Absolute Rate" shall mean an interest rate (rounded to the
nearest .0001) expressed as a decimal.
"Additional Permitted International Tobacco Joint Ventures" shall
mean any sale or disposition through a joint venture arrangement of the
assets (other than inventory and equipment to the extent sold or disposed
of in the ordinary course of business) of, or the capital stock of entities
included in, International Tobacco that is not otherwise excluded from the
definition of Restricted Sales pursuant to clause (iv) of the proviso in
such definition.
"Additional Permitted International Tobacco Sales" shall mean any
sale or disposition (excluding through joint venture arrangements) of the
assets (other than inventory and equipment to the extent sold or disposed
of in the ordinary course of business) of, or the capital stock of entities
included in, International Tobacco that is not otherwise excluded from the
definition of Restricted Sales pursuant to clause (iv) of the proviso in
such definition.
"Adjusted Consolidated Debt" shall mean the sum (without
duplication) of (i) notes payable, (ii) the current maturities of long-term
debt, (iii) long-term debt and (iv) all other amounts representing
liabilities with respect to pay-in-kind interest to the extent included in
"Other Liabilities", all as determined for Holdings and its Non-Nabisco
Subsidiaries in accordance with GAAP, it being understood that determina-
tions of the amounts specified in clauses (i), (ii), (iii) and (iv) shall
(x) exclude Permitted Grantor Trust Subordinated Debt and (y) otherwise be
made on a consistent basis with the methodology utilized by Holdings to
determine such amounts on the Effective Date.
"Adjusted Operating Income" shall mean for any period (x) the
consolidated operating income of Holdings and its Non-Nabisco Subsidiaries
for such period plus (y) the sum of the consolidated depreciation expense
and consolidated amortization expense of Holdings and its Non-Nabisco
Subsidiaries for such period, all as determined in accordance with GAAP, it
being understood that the determination of the amount specified in clauses
(x) and (y) shall be made on a consistent basis with the methodology
utilized by Holdings to determine such amount on the Effective Date,
provided that (i) for the purposes of Section 8.08 only, for any Test
--------
Period during which Consolidated Fixed Charges includes cash taxes paid as
a result of any extraordinary sale of assets, Adjusted Operating Income
shall include a portion of the gross cash proceeds received by Holdings
and/or its Non-Nabisco Subsidiaries as a result of such extraordinary sale
of assets equal to the percentage of such gross cash proceeds determined by
dividing the cash taxes paid during such Test
-52-
<PAGE>
Period as a result of such sale by the aggregate cash taxes payable as a
result of such sale, (ii) for the purposes only of (A) Section 8.09 and (B)
to the extent such acquisition resulted in Consolidated Capital
Expenditures, Section 8.08, for any Test Period during which any
acquisition of any Person or business occurs, Adjusted Operating Income
shall give pro forma effect to such acquisition as if it occurred on the
--- -----
first day of such Test Period and (iii) for the purpose of Sections 8.08,
8.09 and 8.10, for any Test Period during which Holdings or any of its Non-
Nabisco Subsidiaries holds any Grantor Trust Interests, Adjusted Operating
Income shall exclude any amounts received by Holdings and/or such
Subsidiary pursuant to, or in respect of, such Grantor Trust Interests.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank such Bank's Percentage and (y) at a time when
a Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and
(ii) for each Bank that is a Non-Defaulting Bank, the percentage determined
by dividing such Bank's Commitment at such time by the Adjusted Total
Commitment at such time, it being understood that all references herein to
Commitments at a time when the Total Commitment has been terminated shall
be references to the Commitments in effect immediately prior to such
termination, provided that (A) no Bank's Adjusted Percentage shall change
--------
upon the occurrence of a Bank Default from that in effect immediately prior
to such Bank Default if after giving effect to such Bank Default, and any
repayment of Loans at such time pursuant to Section 4.02(A)(a) or
otherwise, the sum of (i) the aggregate outstanding principal amount of
Loans plus (ii) the Letter of Credit Outstandings exceeds the Adjusted
Total Commitment, (B) the changes to the Adjusted Percentage that would
have become effective upon the occurrence of a Bank Default but that did
not become effective as a result of the preceding clause (A) shall become
effective on the first date after the occurrence of the relevant Bank
Default on which the sum of (i) the aggregate outstanding principal amount
of the Loans plus (ii) the Letter of Credit Outstandings is equal to or
less than the Adjusted Total Commitment and (C) if (i) a Non-Defaulting
Bank's Adjusted Percentage is changed pursuant to the preceding clause (B)
and (ii) any repayment of such Bank's Loans that were made during the
period commencing after the date of the relevant Bank Default and ending on
the date of such change to its Adjusted Percentage must be returned to the
Borrower as a preferential or similar payment in any bankruptcy or similar
proceeding of the Borrower, then the change to such Non-Defaulting Bank's
Adjusted Percentage effected pursuant to said clause (B) shall be reduced
to that positive change, if any, as would have been made to its Adjusted
Percentage if (x) such repayments had not been made and (y) the maximum
change to its Adjusted Percentage would have resulted in the sum of the
outstanding principal of Revolving Loans made by such Bank plus such Bank's
new Adjusted Percentage of the outstanding principal amount of Swingline
Loans and of Letter of Credit Outstandings equalling such Bank's Commitment
at such time.
"Adjusted Total Commitment" shall mean at any time the Total
Commitment less the aggregate Commitments of all Defaulting Banks.
-53-
<PAGE>
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power (i) to vote 20% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Outstandings" shall have the meaning provided in
Section 4.02(A)(a).
"Aggregate Borrower Commitments" shall mean at any time the sum
of (i) the Total Commitment hereunder plus (ii) the Total 364 DF
----
Commitment, in each case at such time.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time modified, amended and/or supplemented.
"Agreement Percentage" shall mean at any time the percentage
obtained by dividing (i) the Total Commitment hereunder at such time by
(ii) the Aggregate Borrower Commitments at such time.
"Applicable Credit Rating" shall mean the highest rating level (a
rating level being, e.g., each of BBB-, BBB and BBB+, in the case of S&P)
----
assigned by each Rating Agency to any of the Long Term Debt Issues of
Holdings or the Borrower.
"Applicable Eurodollar Margin" shall mean, in respect of each
Interest Period commencing during a period set forth below, the percentage
set forth below opposite such period below:
Applicable
Period Eurodollar Margin
------ -----------------
NIG Period .700%
Minimum Investment Grade Period .400%
Increased Investment Grade Period .300%
Maximum Investment Grade Period .225%
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<PAGE>
"Applicable Facility Fee Percentage" shall mean, at any time
during a period set forth below, the percentage set forth opposite such
period below:
Applicable Facility
Period Fee Percentage
------ --------------
NIG Period .300%
Minimum Investment Grade Period .225%
Increased Investment Grade Period .200%
Maximum Investment Grade Period .175%
"Applicable Facing Fee Percentage" shall mean, with respect to
any Letter of Credit, such percentage or percentages as may be agreed to by
the Borrower and the Letter of Credit Issuer issuing such Letter of Credit
at the time of the issuance thereof.
"Applicable Reference Rate Margin" shall mean, at any time during
a period set forth below, the percentage set forth opposite such period
below:
Applicable
Reference
Period Rate Margin
------ -----------
NIG Period .200%
Minimum Investment Grade Period 0%
Increased Investment Grade Period 0%
Maximum Investment Grade Period 0%
"Applicable Utilization Fee Percentage" shall mean, at any time
during a period set forth below, the percentage set forth opposite such
period below:
Applicable
Utilization
Period Fee Percentage
------ --------------
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NIG Period .250%
Minimum Investment Grade Period .125%
Increased Investment Grade Period 0%
Maximum Investment Grade Period 0%
"Approved Alternate Currency" shall mean Canadian Dollars, Pounds
Sterling, Dutch Guilders, Deutsche Marks, Japanese Yen, French Francs,
Swiss Francs and Belgian Francs.
"Assignment Agreement" shall have the meaning provided in Section
12.04(b)(A).
"Authorized Officer" shall mean any senior officer of Holdings or
the Borrower, as the case may be, designated as such in writing to the
Senior Managing Agents by Holdings or the Borrower, as the case may be, in
each case to the extent acceptable to the Majority SMA.
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to
fund its portion of any unreimbursed payment under Section 2.03(c) or (ii)
a Bank having notified any Senior Managing Agent and/or the Borrower that
it does not intend to comply with its obligations under Section 1.01(A) or
1.01(C) or under Section 2.03(c), in the case of either (i) or (ii) as a
result of the appointment of a receiver or conservator with respect to such
Bank at the direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" shall mean, for any day, the average of the publicly
announced prime rates, base rates and/or reference rates on such date of
BTCo, Chase, Chemical and Citibank.
"Bidder Bank" shall mean each Bank that has notified in writing
(and has not withdrawn such notice) the Payments Administrator that it
desires to participate generally in the bidding arrangements relating to
Competitive Bid Borrowings.
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"Borrower" shall have the meaning provided in the first paragraph
of this Agreement and shall also include any Person which is the surviving
corporation after giving effect to any transaction permitted by Section
8.02 involving the Borrower.
"Borrowing" shall mean and include (i) the incurrence of
Swingline Loans from the Swingline Lenders on a pro rata basis on a given
--- ----
date, (ii) the incurrence of one Type of Loan by the Borrower from all of
the Banks on a pro rata basis on a given date (or resulting from
--- ----
conversions on a given date), having in the case of Eurodollar Loans the
same Interest Period, provided that Reference Rate Loans incurred pursuant
--------
to Section 1.11(b) shall be considered part of any related Borrowing of
Eurodollar Loans and (iii) a Competitive Bid Borrowing.
"BTCo" shall mean Bankers Trust Company and any successor
corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any
day which shall be in the City of New York a legal holiday or a day on
which banking institutions are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) and which is
also a day for trading by and between banks in U.S. dollar deposits in the
interbank Eurodollar market.
"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 conformity with GAAP, is, or is required to be, accounted for as
a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of Holdings or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"CBABS" shall mean Chemical Bank, Agent Bank Services.
"Change of Control" shall mean and include (a) at any time
Continuing Directors shall not constitute a majority of the Board of
Directors of Holdings or the Borrower; and/or (b) any Person or group (as
such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), shall acquire, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-
5 of the Exchange Act) of 30% or more, on a fully diluted basis, of the
economic or voting interest in Holdings' capital stock; and/or (c) except
to the extent Holdings and the
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Borrower have merged, Holdings ceases to own 100% of the common stock of
the Borrower.
"Chase" shall mean The Chase Manhattan Bank, N.A. and any
successor corporation thereto by merger, consolidation or otherwise.
"Chemical" shall mean Chemical Bank and any successor corporation
thereto by merger, consolidation or otherwise.
"Citibank" shall mean Citibank, N.A. and any successor
corporation thereto by merger, consolidation or otherwise.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect
at the date of this Agreement and any subsequent provisions of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Committed Loans" shall mean Revolving Loans and Swingline Loans.
"Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto, as the same may be
reduced from time to time pursuant to Section 3.02, 3.03, 9 and/or
12.04(b)(A).
"Commitment Termination Date" shall mean December 31, 1995.
"Commodities Agreement" shall mean any forward contract, futures
contract, option contract or similar agreement or arrangement, in each case
intended to protect the Persons entering into same from fluctuations in the
price of, or shortage of supply of, commodities.
"Competitive Bid Borrowing" shall mean a Borrowing of Competitive
Bid Loans pursuant to Section 1.04 with respect to which the Borrower has
requested that the Banks offer to make Competitive Bid Loans at Absolute
Rates.
"Competitive Bid Loans" shall have the meaning provided in
Section 1.01(D).
"Computation Date" shall mean the last Business Day of each month
and any other date specified in writing by a Letter of Credit Issuer with
respect to an Existing Letter of Credit, or any replacement or renewal
thereof.
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"Consolidated Capital Expenditures" shall mean, for any period,
the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or capitalized
under Capital Leases but excluding any amount representing capitalized
interest) by Holdings and its Non-Nabisco Subsidiaries during that period
that, in conformity with GAAP, are or are required to be included as addi-
tions during such period to property, plant or equipment reflected in a
consolidated balance sheet of Holdings and its Non-Nabisco Subsidiaries,
provided that (x) except as set forth in clause (y) below, Consolidated
--------
Capital Expenditures shall in any event include the purchase price paid in
connection with the acquisition of any Person (including through the pur-
chase of all of the capital stock or other ownership interests of such
Person, or through merger or consolidation with any Person) to the extent
allocable to property, plant and equipment that in each case is used in the
United States to manufacture and/or distribute tobacco products and (y)
Consolidated Capital Expenditures shall in any event exclude expenditures
made in connection with the replacement, substitution or restoration of
assets (i) to the extent financed from insurance proceeds paid on account
of the loss of or damage to the assets being replaced or restored or (ii)
with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced.
"Consolidated Cash Interest Expense" shall mean, for any period,
(i) consolidated interest expense of Holdings and its Non-Nabisco
Subsidiaries, but excluding, however, to the extent included in such
consolidated interest expense, (x) non-cash interest expense and
(y) amortization of debt issuance cost plus (ii) cash dividends paid on all
preferred stock of Holdings and its Non-Nabisco Subsidiaries during such
period, it being understood that the determination of the amounts specified
in clauses (i)(x) and (i)(y) shall be made on a consistent basis with the
methodology utilized by Holdings to determine such amounts on the Effective
Date.
"Consolidated Fixed Charges" shall mean, for any period, the sum,
without duplication, of the amounts for such period of (i) Consolidated
Cash Interest Expense, (ii) cash taxes paid during such period, and (iii)
Consolidated Capital Expenditures, all as determined on a consolidated
basis for Holdings and its Non-Nabisco Subsidiaries in accordance with
GAAP, it being understood that the determination of the amounts specified
in clause (iii) shall be made on a consistent basis with the methodology
utilized by Holdings to determine such amount on the Effective Date.
"Consolidated Net Worth" shall mean, as at any date of
determination, the sum of (x) the stockholders' equity of Holdings and (y)
to the extent not included in clause (x) the minority interests
attributable to Grantor Trust Interests, all as determined in accordance
with GAAP and as would be reflected on a consolidated balance sheet of
Holdings and its Non-Nabisco Subsidiaries only prepared as of such date, it
being understood that determinations of such amounts shall be made on a
consistent basis with the methodology utilized by Holdings to determine
such amounts on the Effective Date.
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"Contingent Obligations" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other monetary obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
-------- -------
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the lesser of (x) the maximum stated or
determinable amount of such Contingent Obligation and (y) the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in
good faith.
"Continuing Bank" shall mean, at any time, each Bank whose
Maturity Date is the Facility Maturity Date.
"Continuing Director" shall mean, at any date, an individual (x)
who is a member of the Board of Directors of Holdings or the Borrower, as
the case may be, on the date of this Agreement, (y) who, as at such date,
has been a member of such Board of Directors for at least the twelve
preceding months, or (z) who has been nominated to be a member of such
Board of Directors by a majority of the other Continuing Directors then in
office.
"Credit Documents" shall mean this Agreement and the Notes.
"Credit Event" shall mean and include the making of a Loan and/or
the issuance of a Letter of Credit.
"Credit Party" shall mean each of Holdings and the Borrower.
"Credit Rating" shall mean (i) the Applicable Credit Rating
assigned by each Rating Agency, if such Applicable Credit Ratings are the
same or (ii) if the Applicable Credit Ratings assigned by the Rating Agen-
cies differ, the higher of the Applicable Credit Ratings assigned by the
Rating Agencies, provided that in the event the Applicable Credit
--------
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<PAGE>
Rating of any Rating Agency shall be more than one rating level above the
Applicable Credit Rating of the other Rating Agency, the Credit Rating
shall be one level below the higher Applicable Credit Rating.
"Cumulative Consolidated Net Income" shall mean, at any time for
any determination thereof, the sum of (x)(i) consolidated net income of
Holdings and its Non-Nabisco Subsidiaries, determined in accordance with
GAAP, for the period (taken as one accounting period) commencing January 1,
1995 and ending on the last day of the last fiscal quarter of Holdings then
ended plus (ii) all losses from debt retirement deducted in determining
such consolidated net income of Holdings and its Non-Nabisco Subsidiaries
for the period referred to in clause (x)(i) above plus (iii) all cash
dividends actually received from NHC during such period to the extent not
included in clause (x)(i) above minus (y) any amount received by Holdings
and/or any of its Subsidiaries pursuant to, or in respect of, Grantor Trust
Interests to the extent included in determining consolidated net income for
the purpose of clause (x) above.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap
or other similar agreement designed to protect the Persons entering into
same against fluctuations in currency values.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Dividend Notes" shall mean, collectively, (a) the $1,070,000,000
floating rate note issued by Nabisco due December 1, 1996; (b) the
$1,470,000,000 fixed rate note issued by Nabisco due December 1, 2001; (c)
the $966,000,000 fixed rate note issued by Nabisco due December 1, 2006;
and (d) the $1,300,000,000 floating rate note issued by NHC with a
remaining balance of approximately $168,000,000, all of which are held by
the Borrower or its Wholly-Owned Subsidiary, RJRN Processing, Inc.
"Dividends" shall have the meaning provided in Section 8.05.
"Domestic Tobacco" shall mean R.J. Reynolds Tobacco Company, a
New Jersey corporation, except for the businesses and operations thereof
(and capital stock interests therein) which are included in International
Tobacco and the intangibles as used by International Tobacco.
"Drawing" shall have the meaning provided in Section 2.04(b).
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<PAGE>
"Effective Date" shall have the meaning provided in Section
12.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D); provided that Eligible Transferee shall not include any
--------
Person (or any Affiliate thereof) who competes with Holdings and its
Subsidiaries in the tobacco, cookie, cracker, snack food or candy business.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Holdings, a Subsidiary or a Credit Party
would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" shall mean each Revolving Loan bearing
interest at the rates provided in Section 1.09(b).
"Eurodollar Rate" shall mean with respect to each Interest Period
for a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the interbank
Eurodollar market by each Reference Bank for dollar deposits of amounts in
same day funds comparable to the outstanding principal amount of the
Eurodollar Loan of such Reference Bank for which an interest rate is then
being determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Loan, determined as of 10:00 A.M. (New York
time) on the date which is two Business Days prior to the commencement of
such Interest Period, divided (and rounded upward to the next whole
multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D); provided, that if
--------
one or more of the Reference Banks fails to provide the Payments Admin-
istrator with its aforesaid rate, then the Eurodollar Rate shall be
determined based on the rate or rates provided to the Payments
Administrator by the other Reference Bank or Banks.
"Event of Default" shall have the meaning provided in Section 9.
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"Existing Credit Agreements" shall mean, collectively, (i) the
Credit Agreement, dated as of December 1, 1991 and (ii) the Credit
Agreement, dated as of April 5, 1993, each as in effect on the Effective
Date.
"Existing Debt" shall mean the Indebtedness of Subsidiaries
(other than the Borrower) of Holdings outstanding on the Effective Date and
set forth in Annex VII.
"Existing L/C Cash Collateral Agreement" shall mean the Cash
Collateral Agreement, dated as of April 28, 1995, among the Borrower, as
pledgor, Sumitomo Bank, Limited, New York Branch, The Sanwa Bank Limited,
New York Branch and Dai-Ichi Kangyo Bank, Limited, New York Branch, each as
a Letter of Credit Issuer, and Sumitomo Bank, Limited, New York Branch, as
collateral agent, as amended, modified and/or supplemented from time to
time in accordance with the terms thereof.
"Existing Letter of Credit" shall have the meaning provided in
Section 2.01(c).
"Facility Fee" shall have the meaning provided in Section
3.01(a).
"Facility Maturity Date" shall mean the date which is the third
anniversary of the Measurement Date, as the same may be extended pursuant
to Section 1.14.
"Facing Fee" shall have the meaning provided in Section 3.01(d).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Payments
Administrator from three Federal Funds brokers of recognized standing
selected by the Payments Administrator.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 3.01.
"Fuji" shall mean The Fuji Bank, Limited and any successor
corporation thereto by merger, consolidation or otherwise.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being
understood and agreed that
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determinations in accordance with GAAP for purposes of Section 8, including
defined terms as used therein, shall be made pursuant to Section 12.07(a).
"Government Acts" shall have the meaning provided in Section
2.06(a).
"Grantor Trust" shall mean the Person which may be a grantor
trust or any other entity but shall not be Holdings or any Subsidiary of
Holdings that is a member of the Nabisco Group to whom the Permitted
Grantor Trust Subordinated Debt is issued in connection with the Permitted
Series B Exchange Offer, it being understood and agreed that the
organizational documents of the Grantor Trust shall be satisfactory to the
Senior Managing Agents.
"Grantor Trust Interest" shall mean the shares of any class or
series of stock of, or other equity participation interests in, the Grantor
Trust.
"Guarantor" for purposes of Section 13 of this Agreement shall
mean Holdings to the extent not merged or consolidated with the Borrower in
accordance with Section 8.02.
"Guaranty" shall mean the guaranty of Holdings set forth in
Section 13, as the same may be supplemented, amended or modified from time
to time.
"Hedging Agreements" shall mean and include Commodities
Agreements, Currency Agreements and Interest Rate Agreements.
"Holdings" shall have the meaning provided in the first paragraph
of this Agreement and shall also include any Person which is the surviving
corporation after giving effect to any transaction permitted by Section
8.02 involving Holdings.
"Holdings Common Stock" shall mean the common stock of Holdings.
"Increased Investment Grade Period" shall mean any period during
which the Credit Rating at all times is the Increased Investment Grade
Rating.
"Increased Investment Grade Rating" shall mean the rating
assigned by each Rating Agency which is one rating level above the Minimum
Investment Grade Rating, it being understood that as of the date of this
Agreement the "Increased Investment Grade Rating" of S&P is BBB and the
"Increased Investment Grade Rating" of Moody's is Baa2.
"Indebtedness" of any Person shall mean (i) all indebtedness of
such Person for borrowed money, (ii) the deferred purchase price of assets
or services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such
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Person, (iii) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on
any property owned by such first Person, whether or not such Indebtedness
has been assumed, (v) all Capitalized Lease Obligations of such Person,
(vi) all obligations of such Person to pay a specified purchase price for
goods or services whether or not delivered or accepted, i.e., take-or-pay
----
and similar obligations, (vii) all obligations of such Person under Hedging
Agreements, (viii) all Contingent Obligations of such Person, and (ix) the
outstanding unreimbursed purchase price paid to Salem in respect of the
purchase of receivables from it pursuant to the Salem Facility, provided
--------
that Indebtedness shall not include (x) trade payables and accrued
expenses, in each case arising in the ordinary course of business and (y)
any obligation of the Borrower or any Subsidiary thereof to purchase
tobacco and/or other products, services and produce utilized in its bus-
iness pursuant to the RJRN Agreements or agreements entered into in the
ordinary course of business on a basis consistent with the Borrower's past
practices or then current industry practices and provided further, that (a)
----------------
for the purposes of Section 9.04, the amount of Indebtedness represented by
any Hedging Agreement shall be at any time the unrealized net loss
position, if any, of the Borrower and/or its Subsidiaries thereunder on a
marked to market basis determined no more than one month prior to such time
and (b) for the purposes of determining the Indebtedness permitted to be
secured by Section 8.03(h) or outstanding under Section 8.04(i), the amount
of Indebtedness included in such determination that is attributable to all
Hedging Agreements secured or permitted thereunder, as the case may be,
shall be the Net Termination Value, if any, of all such Hedging Agreements.
"Initial Borrowing Date" shall mean the date on which the initial
Credit Event occurs.
"Interest Period" shall mean, with respect to any Loan, the
interest period applicable thereto, as determined pursuant to Section 1.10.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate futures contract, interest rate option contract or other
similar agreement or arrangement.
"International Tobacco" shall mean the international tobacco
business managed by R.J. Reynolds Tobacco International, Inc. substantially
as it exists on the Effective Date and consisting of (i) the manufacture
for export from the United States and the sale outside the United States of
tobacco products by Domestic Tobacco and (ii) the manufacture and sale
outside the United States of tobacco products by certain Subsidiaries of
the Borrower, it being understood and agreed that Puerto Rico shall be
deemed to be outside of the United States for the purpose of this
definition.
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"Letter of Credit" shall mean each standby letter of credit
issued pursuant to Section 2.01.
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(c).
"Letter of Credit Issuer" shall mean and include each Bank
requested by the Borrower to issue Letters of Credit to the extent
consented to by such Bank.
"Letter of Credit Outstandings" shall mean, at any time, the sum
of, without duplication, (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement (other
than customary negative pledge clauses) to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the
nature thereof).
"Loan" shall mean any Competitive Bid Loan, Revolving Loan or
Swingline Loan.
"Long Term Debt Issues" shall mean, with respect to each of
Holdings and the Borrower, each issuance of long-term senior debt of such
Person which ranks on a parity, as to payment and security, with the
Guaranty or the Loans, as the case may be.
"Majority SMA" shall mean, at any time, at least one-half in
number of the Senior Managing Agents.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(C).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Subsidiary" shall mean and include, at any time, the
Borrower and each other Subsidiary of Holdings to the extent that (x) the
aggregate book value of the assets of such Subsidiary is equal to or more
than $300,000,000 or (y) the revenues of such Subsidiary during its then
most recently ended fiscal year were equal to or more than $150,000,000.
"Maturity Date" shall mean, with respect to each Bank, the date
which is the third anniversary of the Measurement Date, as the same may be
extended for such Bank pursuant to Section 1.14.
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"Maximum Investment Grade Period" shall mean any period during
which the Credit Rating is, or is at any level above, the Maximum
Investment Grade Rating.
"Maximum Investment Grade Rating" shall mean the rating assigned
by each Rating Agency which is one rating level above the Increased
Investment Grade Rating, it being understood that as of the date of this
Agreement the lowest "Maximum Investment Grade Rating" of S&P is BBB+ and
the lowest "Maximum Investment Grade Rating" of Moody's is Baa1.
"Measurement Date" shall mean the date which is the earlier of
(x) August 1, 1995 and (y) the Initial Borrowing Date.
"Minimum Borrowing Amount" shall mean (i) with respect to a
Borrowing of Revolving Loans, $25,000,000 and (ii) with respect to a
Borrowing of Swingline Loans, $5,000,000.
"Minimum Investment Grade Period" shall mean any period during
which the Credit Rating is at all times the Minimum Investment Grade
Rating.
"Minimum Investment Grade Rating" shall mean the lowest rating
level established as investment grade by each Rating Agency, it being
understood that as of the date of this Agreement the "Minimum Investment
Grade Rating" of S&P is BBB- and the "Minimum Investment Grade Rating" of
Moody's is Baa3.
"Moody's" shall mean Moody's Investors Service, Inc., or any
successor corporation thereto.
"Nabisco" shall mean Nabisco, Inc., a New Jersey corporation.
"Nabisco Biscuit Division" shall mean the portion of the business
of NHC and the Subsidiaries of NHC engaged in the manufacture and sale of
crackers and cookies in the United States.
"Nabisco Credit Agreement" shall mean the Credit Agreement of
even date herewith among NHC, Nabisco and the lending institutions party
thereto, as the same may be modified, supplemented or amended from time to
time.
"Nabisco Group" shall mean NHC and all Persons who are direct
and/or indirect subsidiaries of NHC.
"Net Termination Value" shall mean at any time, with respect to
all Hedging Agreements for which a Net Termination Value is being
determined, the excess, if positive,
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of (i) the aggregate of the unrealized net loss position of the Borrower
and/or its Subsidiaries under each of such Hedging Agreements on a marked
to market basis determined no more than one month prior to such time less
(ii) the aggregate of the unrealized net gain position of the Borrower
and/or its Subsidiaries under each of such Hedging Agreements on a marked
to market basis determined no more than one month prior to such time.
"NHC" shall mean Nabisco Holdings Corp. (formerly known as
Nabisco Brands, Inc.), a Delaware corporation.
"NIG Period" shall mean any period during which the Credit Rating
is at all times below the Minimum Investment Grade Rating.
"Non-Continuing Bank" shall mean, at any time, each Bank which is
not a Continuing Bank at such time.
"Non-Defaulting Bank" shall mean and include each Bank other than
a Defaulting Bank.
"Non-Nabisco Subsidiary" shall mean each Subsidiary of Holdings
other than NHC and its Subsidiaries.
"Note" shall have the meaning provided in Section 1.06(a).
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Competitive Bid Borrowing" shall have the meaning
provided in Section 1.04.
"Notice of Conversion" shall have the meaning provided in Section
1.07.
"Notifying SL Lender" shall have the meaning provided in Section
1.01(C).
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to any Senior Managing Agent, the Payments Administrator or
any Bank pursuant to the terms of this Agreement or any other Credit
Document.
"Participant" shall have the meaning provided in Section 2.03(a).
"Payments Administrator" shall mean Chemical, provided, that if
--------
Chemical shall cease to constitute a Senior Managing Agent hereunder, the
remaining Senior
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Managing Agents shall have the option to appoint one of such remaining
Senior Managing Agents as the Payments Administrator.
"Payments Administrator's Office" shall mean the office of the
Payments Administrator located at 270 Park Avenue, New York, New York
10017, or such other office in New York City as the Payments Administrator
may hereafter designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean at any time for each Bank, the percentage
obtained by dividing such Bank's Commitment by the Total Commitment,
provided that at any time when the Total Commitment shall have been
--------
terminated each Bank's Percentage shall be the percentage obtained by
dividing such Bank's outstanding Revolving Loans by the aggregate
outstanding Revolving Loans.
"Permitted Commodities Agreement" shall mean any Commodities
Agreement entered into in the ordinary course of business by the Borrower
and/or any other Non-Nabisco Subsidiaries to the extent consistent with the
practices of the Borrower and such Subsidiaries prior to the Effective Date
or with then current practices in the industry.
"Permitted Currency Agreement" shall mean any Currency Agreement
entered into in the ordinary course of business by the Borrower or any
other Non-Nabisco Subsidiary to an extent consistent with the practices of
the Borrower and such Subsidiaries prior to the Effective Date or with then
current practices in the industry, provided that no domestic Non-Nabisco
--------
Subsidiary (other than domestic Subsidiaries all or substantially all of
the business and operations of which are conducted outside the United
States) may be an obligor under or a guarantor of any such Currency
Agreements entered into after the Effective Date.
"Permitted Grantor Trust Subordinated Debt" shall mean
subordinated debt of Holdings in an aggregate principal amount not to
exceed (x) $1,250,000,000 less (y) the aggregate liquidation value of
Holdings Series B 9.25% Cumulative Preferred Stock, par value $.01 per
share, outstanding after the Permitted Series B Exchange Offer issued to
the Grantor Trust in connection with the Permitted Series B Exchange Offer,
all of the terms and conditions of which shall be acceptable to the Senior
Managing Agents and which shall provide, in any event, that such
subordinated debt shall not mature prior to the date which is at least
thirty years after the date of issuance thereof, and may provide that such
subordinated debt be subject to customary optional maturity extensions at
the option of Holdings and customary grace periods on payments thereunder,
and which may not be amended or modified without the consent of the Senior
Managing Agents.
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"Permitted Obligations" shall mean and include obligations (i) to
pay taxes, (ii) to pay import duties, to post customs bonds and otherwise
in connection with customs and trade laws, (iii) to purchase equipment or
fixtures and otherwise in connection with capital expenditures, (iv) in
connection with the importation or purchase of tobacco or other products or
goods for use in the day-to-day operations of the Borrower and its
Subsidiaries that are Non-Nabisco Subsidiaries consistent with the
Borrower's practices in effect prior to the Effective Date or with then
current practices in the industry, (v) to make utility payments, (vi) in
connection with worker's compensation obligations or other employee
disability obligations, (vii) to provide credit support for any of the
foregoing, (viii) in respect of employee loans made in connection with
transfers, (ix) to provide credit support for suppliers and distributors in
the ordinary course of business and (x) to support Indebtedness supported
by Existing Letters of Credit on the Effective Date.
"Permitted Series B Exchange Offer" shall mean the exchange of
Grantor Trust Interests for some or all of Holdings' Series B 9.25%
Cumulative Preferred Stock, par value $.01 per share.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribution of), or at any time
during the five calendar years preceding the date of this Agreement was
maintained or contributed to by (or to which there is an obligation to
contribution of), Holdings, a Subsidiary, a Credit Party or an ERISA
Affiliate.
"Pro Forma Events" shall mean, with respect to the financial
statements of the Credit Parties, the transactions and events in the
Refinancing leading to the adjustments set forth in the pro forma balance
sheets to be delivered to the Banks pursuant to Section 5.10(ii).
"Rating Agency" shall mean each of S&P and Moody's.
"Reference Banks" shall mean BTCo, Chase, Chemical and Citibank.
"Reference Rate" shall mean, at any time, the higher of (x) the
rate which is 1/2 of 1% in excess of the Federal Funds Rate and (y) the
Base Rate as in effect from time to time.
"Reference Rate Loan" shall mean each Revolving Loan or Swingline
Loan bearing interest at the rates provided in Section 1.09(a).
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"Refinancing" shall mean (i) the entering into by Holdings and
the Borrower, or NHC and Nabisco, as the case may be, of this Agreement,
the 364 DF Credit Agreement and the Nabisco Credit Agreement, and the
incurrence on the Initial Borrowing Date of Loans hereunder and Loans as
defined in the Nabisco Credit Agreement and the application of the proceeds
thereof as provided for herein and therein and (ii) the consummation of the
Exchange Offer (as defined in the Nabisco Credit Agreement).
"Register" shall have the meaning provided in Section 1.06(d).
"Registration Statement" shall mean the Registration Statement on
Form S-4, all documents incorporated therein by reference and all
amendments and exhibits thereto and related documents filed by Nabisco with
the SEC on March 10, 1995, in the form delivered to the Banks as of the
Effective Date, as the same may be modified from time to time by amendments
filed by Nabisco with the SEC that, in form and substance, are satisfactory
to the Senior Managing Agents.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Replacement Receivables Facility" shall mean any receivables
purchase facility that replaces or refinances the Salem Facility or any
prior Replacement Receivables Facility, together with any liquidity
facility relating thereto, to the extent (i) the aggregate amount of
available credit to Salem under such facility does not exceed the aggregate
amount available to Salem under the Salem Facility or the Replacement
Receivables Facility, as the case may be, being replaced or refinanced and
(ii) the Liens created thereunder, and under any related purchase
agreements between Salem, on the one hand, and R.J. Reynolds Tobacco
Company, on the other hand, do not attach to any assets not subject to the
Liens created under the Salem Facility or Replacement Receivables Facility,
as the case may be, being replaced or refinanced. References to the
Replacement Receivables Facility shall include any liquidity facility
relating to the receivables purchase facility referred to in the preceding
sentence.
"Reply Date" shall have the meaning provided in Section 1.04(b).
"Reportable Event" shall mean an event described in Section
4043(b) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
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"Required Banks" shall mean at any time either (A) (i) the
Majority SMA plus (ii) Non-Defaulting Banks (including any of the Senior
Managing Agents) holding more than 50% of the Adjusted Total Commitment
(or, if the Total Commitment has been terminated, of the Adjusted Total
Commitment as in effect immediately prior to such termination), or (B) Non-
Defaulting Banks holding more than 66-2/3% of the Adjusted Total Commitment
(or, if the Total Commitment has been terminated, of the Adjusted Total
Commitment as in effect immediately prior to such termination).
"Restricted Sales" shall mean and include the sale or other
disposition, whether such sale or disposition is of capital stock or
assets, to any Person other than the Borrower or a Wholly-Owned Subsidiary
of the Borrower in one or more transactions of all or substantially all or
any substantial portion of the assets (other than (i) inventory and
equipment to the extent sold or disposed of in the ordinary course of
business and (ii) receivables pursuant to the Salem Facility, the Hanover
Facility, as defined in the Nabisco Credit Agreement, any Replacement
Receivables Facility or any Replacement Receivables Facility, as defined in
the Nabisco Credit Agreement) of (x) Domestic Tobacco, (y) International
Tobacco and (z) Nabisco Biscuit Division, in each case as constituted on
the Effective Date; provided that Restricted Sales shall not include (i)
--------
the sale by the Borrower of any of the capital stock it owns of NHC or
Nabisco if after giving effect thereto the Borrower continues to (A)
directly own no less than 80% on a fully diluted basis of (I) the economic
interest in NHC's common stock and (II) the voting interest in NHC's
capital stock and (B) directly and/or indirectly own no less than 80% on a
fully diluted basis of (I) the economic interest in Nabisco's common stock
and (II) the voting interest in Nabisco's capital stock; (ii) the issuance
of stock or securities exercisable for or convertible into stock by NHC
and/or Nabisco (I) pursuant to any incentive plans or arrangements for
directors, officers, key employees and other persons having a unique
relationship to NHC and its Subsidiaries or (II) to third parties, provided
--------
that after giving effect to any such issuances, the Borrower shall (A)
directly own no less than 60% on a fully diluted basis of (I) the economic
interest in NHC's common stock and (II) the voting interest in NHC's
capital stock and (B) directly and/or indirectly own no less than 60% on a
fully diluted basis of (I) the economic interest in Nabisco's common stock
and (II) the voting interest in Nabisco's capital stock; (iii) the sale or
disposition of any interest in the Nabisco Biscuit Division (other than the
capital stock of NHC and/or Nabisco) to any Wholly-Owned Subsidiary of NHC;
(iv) any sale or disposition (including through joint venture arrangements)
of the assets of, or the capital stock of entities included in,
International Tobacco to the extent that the aggregate fair market value of
the assets and capital stock included in all such sales and dispositions do
not exceed $2,000,000,000; (v) Additional Permitted International Tobacco
Sales; and (vi) Additional Permitted International Tobacco Joint Ventures.
"Revolving Loan" shall have the meaning provided in Section
1.01(A).
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"RJRN Agreements" shall have the meaning provided such term in
the Nabisco Credit Agreement.
"Salem" shall mean one or more special purpose, Wholly-Owned
Subsidiaries of the Borrower engaged exclusively in the business of
purchasing and financing domestic trade accounts receivable generated by
R.J. Reynolds Tobacco Company.
"Salem Facility" shall mean a receivables purchase facility among
Salem, Corporate Asset Funding Company, Inc., CIESCO L.P., Citibank, N.A.
and/or Citicorp North America, Inc., which facility is governed by
documentation (including the receivables purchase agreements between Salem
and R.J. Reynolds Tobacco Company) in effect on the Effective Date as such
documentation may be amended from time to time. References to the Salem
Facility shall include any liquidity facility relating to the receivables
purchase facility referred to in the preceding sentence.
"S&P" shall mean Standard & Poor's Ratings Group, or any
successor corporation thereto.
"SEC" shall have the meaning provided in Section 7.01(g).
"SEC Regulation D" shall mean Regulation D as promulgated under
the Securities Act of 1933, as amended, as the same may be in effect from
time to time.
"Senior Managing Agent" shall mean and include BTCo, Chase,
Chemical, Citibank and Fuji, and any successor to any thereof appointed
pursuant to Section 11.09.
"Stated Amount" of any Letter of Credit shall mean the maximum
amount available to be drawn thereunder, determined without regard to
whether any conditions to drawing could then be met.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries, (ii) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than a 50%
equity interest at the time and (iii) the Grantor Trust, provided that no
--------
joint venture owned by RJR Nabisco Cyprus Limited shall constitute a
Subsidiary. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of Holdings.
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"Swingline Commitment" shall mean for each Swingline Lender,
$20,000,000.
-----------
"Swingline Lender" shall mean and include each of BTCo, Chase,
Chemical, Citibank and Fuji, in each case, so long as such entity
constitutes a Bank hereunder.
"Swingline Loans" shall have the meaning provided in Section
1.01(B).
"Swingline Maturity Date" shall mean the date which is five
Business Days prior to the Facility Maturity Date.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Period" shall mean for any determination under Section
8.08, 8.09 or 8.10 the four consecutive fiscal quarters of the Borrower
then last ended.
"364 DF Credit Agreement" shall mean the Credit Agreement of even
date herewith among Holdings, the Borrower and the lending institutions
party thereto relating to commitments aggregating $750,000,000, as the same
may be modified, supplemented or amended from time to time.
"Total Adjusted Utilization Amount" at any time shall mean (i)
the Agreement Percentage (determined at such time) multiplied by (ii) an
amount equal to (x) the Total Utilization Amount at such time less (y) the
aggregate principal amount of all Loans hereunder made by Defaulting Banks
and outstanding at such time plus all Loans under, and as defined in, the
364 DF Credit Agreement made by Defaulting Banks (as defined thereunder)
and outstanding at such time.
"Total Commitment" shall mean the sum of the Commitments of each
Bank.
"Total Swingline Commitment" shall mean the sum of the Swingline
Commitments of each of the Swingline Lenders, provided that the Total
Swingline Commitment shall not at any time exceed the Total Commitment.
"Total 364 DF Commitment" shall mean the Total Commitment under,
and as defined in, the 364 DF Credit Agreement.
"Total Unutilized Commitment" shall mean the excess of (x) the
Total Commitment over (y) the sum of (i) the aggregate outstanding
principal amount of all Revolving Loans, Swingline Loans and Competitive
Bid Loans and (ii) the Letter of Credit Outstandings.
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"Total Utilization Amount" shall mean at any time the sum of
(i) the aggregate outstanding principal amount of all Loans hereunder at
such time plus (ii) all Letter of Credit Outstandings at such time plus
---- ----
(iii) the aggregate outstanding principal amount of all Loans under, and as
defined in, the 364 DF Credit Agreement at such time.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Reference Rate Loan or
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount,
if any, by which the present value of the accrued benefits under such Plan
as of the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by such Plan's actuary in the most recent annual
valuation of such Plan, exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"Unpaid Drawing" shall have the meaning provided in Section
2.04(a).
"Utilization Fee" shall have the meaning provided in Section
3.01(b).
"Utilization Period" shall mean each of the following periods to
the extent that during such period the average daily Total Utilization
Amount exceeds 50% of the average daily Aggregate Borrower Commitments:
(i) the period from and including the Effective Date to and including the
14th day of July 1995, (ii) each successive period of July 15 to and
including October 14, October 15 to and including January 14, January 15 to
and including April 14 and April 15 to and including July 14 thereafter,
and (iii) if the Total Commitment is terminated during any such period, the
period from and including the first day of such period to and including the
day on which the Total Commitment is terminated.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary
of such Person to the extent all of the capital stock or other ownership
interests in such Subsidiary, other than directors' or nominees' qualifying
shares is owned directly or indirectly by such Person.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device,
telegraph or cable.
SECTION 11. The Senior Managing Agents.
--------------------------
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11.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints BTCo, Chase, Chemical, Citibank and Fuji as Senior Managing Agents
(such term to include any of the Senior Managing Agents acting as Payments
Administrator) of such Bank to act as specified herein and in the other
Credit Documents, and each such Bank hereby irrevocably authorizes BTCo,
Chase, Chemical, Citibank and Fuji, as the Senior Managing Agents for such
Bank, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated to the respective Senior
Managing Agents by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Each Senior Managing Agent agrees to act as such upon the express
conditions contained in this Section 11. Notwithstanding any provision to
the contrary elsewhere in this Agreement, no Senior Managing Agent shall
have any duties or responsibilities, except those expressly set forth
herein or in the other Credit Documents, or any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise
exist against any Senior Managing Agent. The provisions of this Section 11
are solely for the benefit of the Senior Managing Agents and the Banks, and
no Credit Party shall have any rights as a third party beneficiary of any
of the provisions hereof, provided that Holdings shall have the rights
--------
granted to it pursuant to Section 11.09. In performing its functions and
duties under this Agreement, each Senior Managing Agent shall act solely as
agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for
either Credit Party. No Managing Agent, Lead Manager, Manager or Co-
Manager shall have any duties or obligations in its capacity as such under
this Agreement.
11.02 Delegation of Duties. Each Senior Managing 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 concerning all matters pertaining to such duties. Without
limiting the foregoing, Chemical as Payments Administrator may appoint
CBABS as its agent to perform the functions of the Payments Administrator
hereunder relating to the advancing of funds to the Borrower and
distribution of funds to the Banks and to perform such other related
functions of the Payments Administrator hereunder as are reasonably
incidental to such functions. No Senior Managing 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
required by Section 11.03.
11.03 Exculpatory Provisions. No Senior Managing Agent nor any
----------------------
of its officers, directors, employees, agents, attorneys-in-fact or
affiliates (including, without limitation, CBABS in the case of Chemical)
shall be (i) liable for any action lawfully taken or omitted to be taken by
it or such Person under or in connection with this Agreement (except for
its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations
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or warranties made by Holdings, any Subsidiary or any of their respective
officers contained in this Agreement, any other Credit Document or in any
certificate, report, statement or other document referred to or provided
for in, or received by any Senior Managing Agent under or in connection
with, this Agreement or any other Credit Document or for any failure of
Holdings or any Subsidiary or any of their respective officers to perform
its obligations hereunder or thereunder. No Senior Managing Agent shall be
under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or
records of Holdings or any Subsidiary. No Senior Managing Agent shall be
responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any
Credit Document 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 any other documents in connection herewith or therewith furnished or
made by any Senior Managing Agent to the Banks or by or on behalf of the
Borrower to any Senior Managing Agent or any Bank 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 of the existence
or possible existence of any Default or Event of Default.
11.04 Reliance by Senior Managing Agents. Each Senior Managing
----------------------------------
Agent and CBABS shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile transmission, telex or
teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Credit
Parties), independent accountants and other experts selected by such Senior
Managing Agent. Each Senior Managing Agent and CBABS shall be fully
justified in failing or refusing to take any action under this Agreement or
any other Credit Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Senior Managing Agent and CBABS
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 Banks (or to the extent specifically
provided in Section 12.12, all the Banks), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the
Banks.
11.05 Notice of Default. No Senior Managing Agent shall be
-----------------
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless such Senior Managing Agent has received
notice from a Bank or the Borrower or
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Holdings referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the
event that any Senior Managing Agent receives such a notice, such Senior
Managing Agent shall give prompt notice thereof to the Banks. Each Senior
Managing Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Banks; provided,
--------
that, unless and until a Senior Managing Agent shall have received such
directions, such Senior Managing Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
11.06 Non-Reliance on Senior Managing Agents and Other Banks.
------------------------------------------------------
Each Bank expressly acknowledges that no Senior Managing Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
have made any representations or warranties to it and that no act by any
Senior Managing Agent hereafter taken, including any review of the affairs
of Holdings or any Subsidiary, shall be deemed to constitute any
representation or warranty by any Senior Managing Agent to any Bank. Each
Bank represents to each Senior Managing Agent that it has, independently
and without reliance upon any Senior Managing Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, assets,
operations, property, financial and other conditions, prospects and cred-
itworthiness of Holdings and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon any Senior
Managing Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of
Holdings and its Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Payments
Administrator hereunder, no Senior Managing Agent shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
conditions, prospects or creditworthiness of Holdings or any Subsidiary
which may come into the possession of such Senior Managing Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affil-
iates.
11.07 Indemnification. The Banks agree to indemnify each Senior
---------------
Managing Agent in its capacity as such ratably according to their aggregate
Commitments (or, if the Total Commitment has been terminated, their
aggregate Commitments as in effect immediately prior to such termination),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation,
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at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against such Senior Managing Agent in its capacity
as such 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 the transactions contemplated hereby or any action taken or
omitted to be taken by any Senior Managing Agent under or in connection
with any of the foregoing, but only to the extent that any of the foregoing
is not paid by Holdings or any of its Subsidiaries; provided, that no Bank
--------
shall be liable to any Senior Managing Agent for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from
such Senior Managing Agent's gross negligence or willful misconduct. If
any indemnity furnished to any Senior Managing Agent for any purpose shall,
in the opinion of such Senior Managing Agent, be insufficient or become
impaired, such Senior Managing 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 Section 11.07
shall survive the payment of all Obligations.
11.08 Senior Managing Agents in Their Individual Capacities.
-----------------------------------------------------
Each Senior Managing Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with Holdings
and its Subsidiaries as though such Senior Managing Agent were not a Senior
Managing Agent hereunder. With respect to the Loans made by it and all
Obligations owing to it, each Senior Managing Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the
same as though it were not a Senior Managing Agent, and the terms "Bank"
and "Banks" shall include each Senior Managing Agent in its individual
capacity.
11.09 Successor Senior Managing Agents. Any Senior Managing
--------------------------------
Agent may resign as a Senior Managing Agent upon 20 days' notice to the
Banks, provided that prior to, and as a condition of, the last remaining
--------
Senior Managing Agent so resigning, the Required Banks shall appoint from
among the Banks a successor Senior Managing Agent for the Banks subject to
prior approval by Holdings (such approval not to be unreasonably withheld,
provided that such Bank agrees to assume the Swingline Commitment of such
--------
Senior Managing Agent in full), whereupon such successor agent shall
succeed to the rights, powers and duties of the Senior Managing Agents, and
the term "Senior Managing Agents" shall include such successor agent
effective upon its appointment, and the resigning Senior Managing Agent's
rights, powers and duties as a Senior Managing Agent shall be terminated,
without any other or further act or deed on the part of such former Senior
Managing Agent or any of the parties to this Agreement. After any retiring
Senior Managing Agent's resignation hereunder as a Senior Managing Agent,
the provisions of this Section 11 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was a Senior Managing
Agent under this Agreement.
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SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. The Borrower agrees to:
-------------------------
(i) pay all reasonable out-of-pocket costs and expenses of (x) the Senior
Managing Agents, whether or not the transactions herein contemplated are
consummated, in connection with the negotiation, preparation, execution and
delivery of the Credit Documents and the documents and instruments referred
to therein and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees and disbursements of
White & Case but of no other counsel) and (y) each Senior Managing Agent
and each of the Banks in connection with the enforcement of the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and disbursements of counsel for
each Senior Managing Agent and for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and
save each of the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to such Bank) to pay such taxes; and (iii) indemnify
each Bank, its officers, directors, employees, representatives and agents
from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of,
any investigation, litigation or other proceeding (whether or not any Bank
is a party thereto) related to the entering into and/or performance of any
Credit Document or the use of the proceeds of any Loans hereunder or the
Refinancing or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such los-
ses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
12.02 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 Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to either 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 Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of either
Credit Party against and on account of the Obligations and liabilities of
such Credit Party to such Bank under this Agreement or under any of the
other Credit Documents, including, without limitation, all interests in
Obligations of such Credit Party purchased by such Bank pursuant to Section
12.06(b), and all other claims of any nature or description arising out of
or connected with this Agreement or any other Credit Document, irrespective
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of whether or not such Bank shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, facsimile transmission or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered, if to a Credit Party, at the address specified opposite its
signature below or in the other relevant Credit Documents, as the case may
be; if to any Bank, at its address specified for such Bank on Annex II
hereto; or, at such other address as shall be designated by any party in a
written notice to the other parties hereto. All such notices and
communications shall be telegraphed, telexed, telecopied, or cabled or sent
by overnight courier, and shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be
--------------------
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, provided that no
--------
Credit Party may assign or transfer any of its interests hereunder, except
to the extent any such assignment results from the consummation of a
transaction permitted under Section 8.02, without the prior written consent
of the Banks and provided further that the rights of each Bank to transfer,
-------- -------
assign or grant participations in its rights and/or obligations hereunder
shall be limited as set forth below in this Section 12.04, provided that
--------
nothing in this Section 12.04 shall prevent or prohibit any Bank from
pledging its rights under this Agreement and/or its Loans and/or Note
hereunder to a Federal Reserve Bank in support of borrowings made by such
Bank from such Federal Reserve Bank.
(b) Each Bank shall have the right to transfer, assign or grant
participations in all or any part of its remaining rights and obligations
hereunder on the basis set forth below in this clause (b).
(A) Assignments. At any time on and after May 15, 1995, each
-----------
Bank may assign pursuant to an Assignment Agreement substantially in the
form of Exhibit D-2 hereto (each, an "Assignment Agreement") all or a
portion of its rights and obligations hereunder pursuant to this clause
(b)(A) to (x) one or more Banks or (y) one or more other Eligible
Transferees, provided that any such assignment pursuant to clause (y) above
--------
shall be in the aggregate amount of at least (I) in the event of an
assignment relating to this Agreement only, $10,000,000, except to the
extent that after giving effect to such assignment such Bank's Commitment
is reduced to zero and (II) in the event of an assignment relating to this
Agreement and the 364 DF Credit Agreement, $5,000,000, provided that the
--------
aggregate amount of such assignment under this Agreement and the 364 DF
Credit Agreement is at least $10,000,000, except to the extent that after
giving effect to such assignment such Bank's Commitment hereunder is
reduced to zero. Any assignment to another Bank pursuant to this clause
(b)(A) will become effective upon the payment to the Payments Adminis
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trator by (I) either the assigning or the assignee Bank or (II) in the case
of an assignment pursuant to Section 1.15, the Replacement Bank, of a
nonrefundable assignment fee of $2,500 and the recording by the Payments
Administrator of such assignment, and the resultant effects thereof on the
Commitments of the assigning Bank and the assignee Bank, in the Register,
the Payments Administrator hereby agreeing to effect such recordation no
later than five Business Days after its receipt of a written notification
by the assigning Bank and the assignee Bank of the proposed assignment,
provided that the Payments Administrator shall not be required to, and
--------
shall not, so record any assignment in the Register on or after the date on
which any proposed amendment, modification or supplement in respect of this
Agreement has been circulated to the Banks for approval until the earlier
of (x) the effectiveness of such amendment, modification or supplement in
accordance with Section 12.12 or (y) 30 days following the date on which
such proposed amendment, modification or supplement was circulated to the
Banks. Assignments pursuant to this clause (b)(A) to any Person not
theretofore a Bank hereunder will only be effective if the Payments Admin-
istrator shall have received a written notice in the form of Exhibit D-1
hereto from the assigning Bank and the assignee Bank and payment of a
nonrefundable assignment fee of $2,500 to the Payments Administrator
(provided, that in the event of simultaneous assignments relating to this
--------
Agreement and the 364 DF Credit Agreement, such fee shall be $2,500) by
(I) either the assigning or the assignee Bank or (II) in the case of an
assignment pursuant to Section 1.15, the Replacement Bank. No later than
five Business Days after its receipt of such written notice, the Payments
Administrator will record such assignment, and the resultant effects
thereof on the Commitment of the assigning Bank, in the Register, at which
time such assignment shall become effective, provided that the Payments
--------
Administrator shall not be required to, and shall not, so record any
assignment in the Register on or after the date on which any proposed
amendment, modification or supplement in respect of this Agreement has been
circulated to the Banks for approval until the earlier of (x) the
effectiveness of such amendment, modification or supplement in accordance
with Section 12.12 or (y) 30 days following the date on which such proposed
amendment, modification or supplement was circulated to the Banks. Upon
the effectiveness of any assignment pursuant to this clause (b)(A), (x) the
assignee will become a "Bank" for all purposes of this Agreement and the
other Credit Documents with a Commitment as so recorded by the Payments
Administrator in the Register, and to the extent of such assignment, the
assigning Bank shall be relieved of its obligations hereunder with respect
to the portion of its Commitment being assigned and (y) if such assignment
occurs after the Initial Borrowing Date, the Borrower shall issue new Notes
(in exchange for the Note of the assigning Bank) to the assigning Bank (to
the extent such Bank's Commitment is not reduced to zero as a result of
such assignment) and to the assignee Bank, in each case to the extent
requested by the assigning Bank or assignee Bank, as the case may be, in
conformity with the requirements of Section 1.06 to the extent needed to
reflect the revised Commitments of such Banks. The Payments Administrator
will (x) notify each Letter of Credit Issuer with respect to Existing
Letters of Credit within 5 Business Days of the effectiveness of any
assignment hereunder and (y) prepare on the last
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Business Day of each calendar quarter during which an assignment has become
effective pursuant to this clause (b)(A) a new Annex I giving effect to all
such assignments effected during such quarter and will promptly provide
same to the Borrower and each of the Banks.
(B) Participations. Each Bank may transfer, grant or assign
--------------
participations in all or any part of such Bank's interests and obligations
hereunder pursuant to this clause (b)(B) to any Eligible Transferee,
provided that (i) such Bank shall remain a "Bank" for all purposes of this
--------
Agreement and the transferee of such participation shall not constitute a
Bank hereunder and (ii) no participant under any such participation shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
(x) extend the final scheduled maturity of any of the Loans or the
Commitment in which such participant is participating, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or Fees applicable to any of the
Loans, Commitments or Letters of Credit or postpone the payment of any
thereof or (z) release the Guaranty. In the case of any such
participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights
against the granting Bank in respect of such participation to be those set
forth in the agreement with such Bank creating such participation) and all
amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation, provided that such participant shall
--------
be entitled to receive additional amounts under Sections 1.11, 1.12, 2.05
and 4.04 on the same basis as if it were a Bank. In addition, each
agreement creating any participation must include an agreement by the
participant to be bound by the provisions of Section 12.15 and such
participant shall have executed a confidentiality agreement in the form of
Exhibit E hereto.
(c) Notwithstanding any other provisions of this Section 12.04,
no transfer or assignment of the interests or obligations of any Bank
hereunder or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Borrower or the Guarantor
to file a registration statement with the SEC or to qualify the Loans under
the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby
represents, and each Person that becomes a Bank pursuant to an assignment
permitted by the preceding clause (b)(A) will upon its becoming party to
this Agreement represent, that it is an Eligible Transferee which makes
loans in the ordinary course of its business and that it will make or
acquire Loans for its own account in the ordinary course of such business,
provided that, subject to the preceding clauses (a) through (c), the
--------
disposition of any promissory notes or other evidences of or interests in
Indebtedness held by such Bank shall at all times be within its exclusive
control.
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12.05 No Waiver; Remedies Cumulative. No failure or delay on
------------------------------
the part of any Senior Managing Agent, Payments Administrator or any Bank
in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between either Credit Party and
any Senior Managing Agent or any Bank 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 expressly provided
are cumulative and not exclusive of any rights or remedies which any Senior
Managing Agent or any Bank would otherwise have. No notice to or demand on
either Credit Party in any case shall entitle either Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Senior Managing Agents or the
Banks to any other or further action in any circumstances without notice or
demand.
12.06 Payments Pro Rata. (a) The Payments Administrator agrees
-----------------
that promptly after its receipt of each payment from or on behalf of either
Credit Party in respect of any Obligations of such Credit Party, it shall,
except as otherwise provided in this Agreement, distribute such payment to
the Banks pro rata based upon their respective shares, if any, of the
--- ----
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise) which is applicable to the payment of the
principal of, or interest on, the Loans or Fees, of a sum which with
respect to the related sum or sums received by other Banks is in a greater
proportion than the total of such Obligations then owed and due to such
Bank bears to the total of such Obligations then owed and due to all of the
Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from
the other Banks an interest in the Obligations of the respective Credit
Party to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount; provided, that if all or
--------
any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in
writing by Holdings to the Banks); provided, that, except as otherwise
--------
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to
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prepare, the historical financial statements delivered to the Banks
pursuant to Section 6.09, provided that in the event GAAP shall be modified
--------
from that in effect at the time of the preparation of such financial
statements, the Borrower shall be entitled to utilize GAAP, as so modified,
for purposes of such computations to the extent that (x) the Borrower gives
the Banks 30 days' prior written notice of such proposed modification and
(y) prior thereto the Borrower and the Majority SMA shall have agreed upon
adjustments, if any, to Sections 8.03(h), 8.04(i), 8.05, 8.07, 8.08, 8.09
and 8.10 (and the definitions used therein) the sole purpose of which shall
be to give effect to such proposed change (it being understood and agreed
that to the extent that the Borrower and the Majority SMA cannot agree on
appropriate adjustments to such Sections (or that no adjustments are
necessary), the proposed change may not be effected); and provided further,
-------- -------
that if at any time the computations determining compliance with Section 8
utilize accounting principles different from those utilized in the
financial statements furnished to the Banks, such financial statements
shall be accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be
made on the actual number of days elapsed over a year of 360 days.
(c) All determinations of the Stated Amount of Letters of Credit
and of the principal amount of Unpaid Drawings, in each case to the extent
denominated in a currency other than U.S. dollars, shall be made by
converting same into U.S. dollars at (x) if a Currency Agreement has been
entered into by the Borrower and/or any of its Subsidiaries in connection
with such Indebtedness, and is in effect at the time of such determination,
the rate provided in such Currency Agreement, provided that this clause (x)
--------
shall not be applicable (I) unless the Payments Administrator has received
sufficient information from the Borrower to determine the exchange rate
established by such Currency Agreement and the duration thereof, or (II) to
any determination of the Borrower's obligation to reimburse in U.S. dollars
a Drawing under a Letter of Credit denominated in a currency other than
U.S. dollars, (y) in the case of a determination of the Borrower's
obligation to reimburse in U.S. dollars a Drawing under a Letter of Credit
denominated in a currency other than U.S. dollars, the spot exchange rate
for the currency in question of the Letter of Credit Issuer on the date of
such Drawing or (z) if the provisions of the foregoing clauses (x) and (y)
are not applicable, the "official" exchange rate, if applicable, or the
spot exchange rate for the currency in question calculated by the Payments
Administrator on the last Computation Date preceding the date on which any
such determination is being made and at such other times as the Payments
Administrator elects to make such determination, it being understood that
the Payments Administrator shall have no obligation to make any such other
determinations. The Payments Administrator will promptly notify the
Borrower and each Letter of Credit Issuer of its determinations hereunder.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a)
------------------------------------------------
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
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OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW 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, each Credit Party hereby irrevocably
accepts for itself and in respect of its property, generally and uncon-
ditionally, 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 re-
spective Credit Party at its address for notices pursuant to Section 12.03,
such service to become effective 30 days after such mailing. Each Credit
Party hereby irrevocably appoints Holdings as its agent for service of
process in respect of any such action or proceeding. Nothing herein shall
affect the right of any Senior Managing Agent or any Bank to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against either 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
the preceding clause (a) 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.
12.09 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
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with Holdings and the Payments Administrator.
12.10 Effectiveness. This Agreement shall become effective on
-------------
the date (the "Effective Date") on which each of Holdings and the Borrower
and each of the Banks shall have signed a copy hereof (whether the same or
different copies) and shall have delivered the same to the Payments
Administrator at the Payments Administrator's Office or, in the case of the
Banks, shall have given to the Payments Administrator telephonic (confirmed
in writing), written, telex or facsimile notice (actually received) at such
office that the same has been signed and mailed to it. The Payments
Administrator will give Holdings and each Bank prompt written notice of the
occurrence of the Effective Date.
12.11 Headings Descriptive. 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.
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12.12 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the Required Banks; provided, that (x)
--------
no such change, waiver, discharge or termination shall, without the consent
of each Bank (other than a Defaulting Bank) with Obligations being directly
affected thereby, (i) extend the scheduled final maturity of any Loan or
Note, or any portion thereof, or reduce the rate or extend the time of
payment of interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) thereon or Fees or reduce the
principal amount thereof, or increase the Commitment of any Bank over the
amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total
Commitment shall not constitute a change in the terms of the Commitment of
any Bank), (ii) release the Guaranty, (iii) amend, modify or waive any
provision of this Section, or Section 1.11, 1.12, 1.14, 2.05, 4.04, 9.01,
11.07, 12.01, 12.02, 12.04, 12.06, 12.07(b) or 12.15, (iv) reduce any
percentage specified in, or otherwise modify, the definition of Required
Banks or (v) consent to the assignment or transfer by either Credit Party
of any of its rights and obligations under this Agreement; and (y) the
financial covenants set forth in Sections 8.03(h), 8.04(i), 8.05, 8.07,
8.08, 8.09 and 8.10 (and the defined terms used therein) may be adjusted
with the consent of Holdings, the Borrower and the Majority SMA to the
extent provided in Sections 7.09 and 12.07(a). No provision of Section 11
may be amended or modified without the consent of any Senior Managing Agent
adversely affected thereby. The obligations of Swingline Lenders to make
Swingline Loans, the terms of any such Swingline Loans and the obligations
of the other Banks to fund Mandatory Drawings shall not be amended or
modified without the consent of the Swingline Lenders. The terms of
Section 2 shall not be amended or modified without the consent of any
Letter of Credit Issuer adversely affected thereby.
12.13 Survival. All indemnities set forth herein including,
--------
without limitation, in Section 1.11, 1.12, 2.05, 4.04, 11.07 or 12.01 shall
survive the execution and delivery of this Agreement and the making of the
Loans, the issuances of Letters of Credit, the repayment of the Obligations
and the termination of the Total Commitment.
12.14 Domicile of Loans. Subject to Section 12.04, each Bank
-----------------
may transfer and carry its Loans at, to or for the account of any branch
office, subsidiary or affiliate of such Bank; provided, that the Borrower
--------
shall not be responsible for costs arising under Section 1.11, 1.12, 2.05
or 4.04 resulting from any such transfer (other than a transfer pursuant to
Section 1.13) to the extent not otherwise applicable to such Bank prior to
such transfer.
12.15 Confidentiality. Subject to Section 12.04, each Bank
---------------
shall hold all non-public information furnished by or on behalf of Holdings
or the Borrower in connection with such Bank's evaluation of whether to
become a Bank hereunder or obtained pursuant
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to the requirements of this Agreement, which has been identified as such by
Holdings ("Confidential Information"), in accordance with its customary
procedure for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide transferee or participant
(which shall be an Eligible Transferee) in connection with the contemplated
transfer of any Loans or participations therein or as required or requested
by any governmental agency or representative thereof or pursuant to legal
process or to such Bank's attorneys or independent auditors; provided,
--------
that, unless specifically prohibited by applicable law or court order, each
Bank shall notify Holdings of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Bank by such governmental
agency) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further, that in no event
-------- -------
shall any Bank be obligated or required to return any materials furnished
by Holdings or any Subsidiary. Each Bank agrees that it will not provide
to prospective assignees, transferees or participants any of the Confident-
ial Information unless such Person has executed a Confidentiality Agreement
in the form of Exhibit E.
12.16 Waiver of Jury Trial. Each of the parties to this
--------------------
Agreement hereby irrevocably waives all right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this
Agreement, the other Credit Documents or the transactions contemplated
hereby or thereby.
SECTION 13. Guaranty.
--------
13.01 The Guaranty. In order to induce the Banks to enter into
------------
this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by the Guarantor from the proceeds of the
Loans and the issuance of the Letters of Credit, the Guarantor hereby
agrees with the Banks as follows: the Guarantor hereby unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full
and prompt payment when due, whether upon maturity, by acceleration or
otherwise, of any and all indebtedness of the Borrower to the Banks. If
any or all of the indebtedness of the Borrower to the Banks becomes due and
payable hereunder, the Guarantor unconditionally promises to pay such
indebtedness to the Banks, or order, on demand, together with any and all
expenses which may be incurred by the Senior Managing Agents or the Banks
in collecting any of the indebtedness. The word "indebtedness" is used in
this Section 13 in its most comprehensive sense and includes any and all
advances, debts, obligations and liabilities of the Borrower arising in
connection with this Agreement and any other Credit Document, in each case,
heretofore, now, or hereafter made, incurred or created, whether
voluntarily or involuntarily, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not such indebtedness
is from time to time reduced, or extinguished and thereafter increased or
incurred, whether the Borrower
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may be liable individually or jointly with others, whether or not recovery
upon such indebtedness may be or hereafter become barred by any statute of
limitations, and whether or not such indebtedness may be or hereafter
become otherwise unenforceable.
13.02 Bankruptcy. Additionally, the Guarantor unconditionally
----------
and irrevocably guarantees the payment of any and all indebtedness of the
Borrower to the Banks whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 9.05, and unconditionally promises to pay such indebtedness to the
Banks, or order, on demand, in lawful money of the United States.
13.03 Nature of Liability. The liability of the Guarantor
-------------------
hereunder is exclusive and independent of any security for or other
guaranty of the indebtedness of the Borrower whether executed by the
Guarantor, any other guarantor or by any other party, and the liability of
the Guarantor hereunder shall not be affected or impaired by (a) any
direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower, or (c) any payment on or in reduction of any
such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any
payment made to the Senior Managing Agents or the Banks on the indebtedness
which the Senior Managing Agents or such Banks repay the Borrower pursuant
to court order in any bankruptcy, reorganization, arrangement, moratorium
or other debtor relief proceeding, and the Guarantor waives any right to
the deferral or modification of its obligations hereunder by reason of any
such proceeding.
13.04 Independent Obligation. The obligations of the Guarantor
----------------------
hereunder are independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted
against the Guarantor whether or not action is brought against any other
guarantor or the Borrower and whether or not any other guarantor or the
Borrower be joined in any such action or actions. The Guarantor waives, to
the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof.
Any payment by the Borrower or other circumstance which operates to toll
any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to the Guarantor.
13.05 Authorization. The Guarantor authorizes the Senior
-------------
Managing Agents and the Banks without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting
or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of, the indebtedness or any part
thereof in accordance with this Agreement, including any increase or
decrease of the
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rate of interest thereon, (b) take and hold security from any guarantor or
any other party for the payment of this guaranty or the indebtedness and
exchange, enforce, waive and release any such security, (c) apply such
security and direct the order or manner of sale thereof as the Senior
Managing Agents and the Banks in their discretion may determine and (d)
release or substitute any one or more endorsers, guarantors, the Borrower
or other obligors.
13.06 Reliance. It is not necessary for the Senior Managing
--------
Agents or the Banks to inquire into the capacity or powers of the Borrower
or its Subsidiaries or the officers, directors, partners or agents acting
or purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
13.07 Subordination. Any indebtedness of the Borrower now or
-------------
hereafter held by the Guarantor is hereby subordinated to the indebtedness
of the Borrower to the Senior Managing Agents and the Banks; and such
indebtedness of the Borrower to the Guarantor, if any Senior Managing
Agent, after an Event of Default has occurred, so requests, shall be
collected, enforced and received by the Guarantor as trustee for the Banks
and be paid over to the Banks on account of the indebtedness of the
Borrower to the Banks, but without affecting or impairing in any manner the
liability of the Guarantor under the other provisions of this Guaranty.
Prior to the transfer by the Guarantor of any note or negotiable instrument
evidencing any indebtedness of the Borrower to the Guarantor, the Guarantor
shall mark such note or negotiable instrument with a legend that the same
is subject to this subordination.
13.08 Waiver. (a) The Guarantor waives any right (except as
------
shall be required by applicable statute and cannot be waived) to require
the Senior Managing Agents or the Banks to (a) proceed against the
Borrower, any other guarantor or any other party, (b) proceed against or
exhaust any security held from the Borrower, any other guarantor or any
other party or (c) pursue any other remedy in the Senior Managing Agents'
or the Banks' power whatsoever. The Guarantor waives any defense based on
or arising out of any defense of the Borrower, any other guarantor or any
other party other than payment in full of the indebtedness, including,
without limitation, any defense based on or arising out of the disability
of the Borrower, any other guarantor or any other party, or the
unenforceability of the indebtedness or any part thereof from any cause, or
the cessation from any cause of the liability of the Borrower other than
payment in full of the indebtedness. The Senior Managing Agents and the
Banks may, at their election, foreclose on any security held by the Senior
Managing Agents or the Banks by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to
the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Senior Managing Agents and the Banks may have against
the Borrower or any other party, or any security, without affecting or
impairing in any way the liability
-90-
<PAGE>
of the Guarantor hereunder except to the extent the indebtedness has been
paid. The Guarantor waives any defense arising out of any such election by
the Senior Managing Agents and the Banks, even though such election
operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of the Guarantor against the Borrower or any other
party or any security. Until all indebtedness of the Borrower to the Banks
shall have been paid in full, the Guarantor shall not have any right of
subrogation, and waives any right to enforce any remedy which the Senior
Managing Agents and the Banks now have or may hereafter have against the
Borrower, and waives any benefit of, and any right to participate in, any
security now or hereafter held by the Senior Managing Agents and the Banks.
(b) The Guarantor waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of
acceptance of this Guaranty, and notices of the existence, creation or
incurring of new or additional indebtedness. The Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the indebtedness and the nature, scope and extent
of the risks which the Guarantor assumes and incurs hereunder, and agrees
that the Senior Managing Agents and the Banks shall have no duty to advise
the Guarantor of information known to them regarding such circumstances or
risks.
13.09 Limitation on Enforcement. The Banks agree that this
-------------------------
Guaranty may be enforced only by the action of a Senior Managing Agent
acting upon the instructions of the Required Banks and that no Bank shall
have any right individually to seek to enforce or to enforce this Guaranty,
it being understood and agreed that such rights and remedies may be
exercised by each Senior Managing Agent for the benefit of the Banks upon
the terms of this Agreement.
* * *
-91-
<PAGE>
<TABLE><CAPTION>
RJRN
ANNEX III
EXISTING LETTERS OF CREDIT*
(as of March 31, 1995)
A. EUROBOND LETTERS OF CREDIT**
L/C ISSUERS STATED AMOUNT
SUPPORT SUPPORTED DEBT TO (With maximum liability (Specified in the currency in which
L/C NO. WHICH L/C RELATES under the L/C) the L/C is denominated)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 RJR NABISCO, INC. Dai-lchi Kangyo (25%) Principal (US): $120,000,000.00
5 3/8% Dual Currency Bonds The Sanwa Bank (25%) Interest (SFR): $11,944,444.45
Due June 17, 2001 Sumitomo Bank (50%)
2 RJR NABISCO, INC. Dai-lchi Kangyo (25%) Principal (US): $275,000,000.00
5 3/8% Swiss Franc Bonds The Sanwa Bank (25%) Interest (SFR): $16,423,611.10
Due October 8, 2000 Sumitomo Bank (50%) ---------------
TOTAL $423,368,055.55
===============
</TABLE>
*Since March 31, 1995, Existing Letters of Credit may have been
replaced or allowed to expire, and additional Letters of Credit may
have been issued in the ordinary course of business and to support
certain inventory financing programs.
**Amount of interest covered by Eurobond Letters of Credit fluctuates
with amount of accruals.
<PAGE>
<TABLE><CAPTION>
B. OTHER STANDBY LETTERS OF CREDIT
NATIONSBANK
Beneficiary Fee/Rate Issue Date Expiry Original Amount O/S
(in b.p) Issue Amount (at 3/31/95) L/C No.
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NATD 80.00 5/20/94 5/20/95 $322,400,000.00 $3,224,000.00 40545
Duke Power Company 80.00 5/18/94 12/31/95 $13,377,033.00 $15,997,491.00 40569
State of New Hampshire 80.00 8/2/94 8/2/95 $500,000.00 $500,000.00 40637
Alabama Indus. Relations 80.00 8/2/94 8/2/95 $200,000.00 $200,000.00 40741
State of California 80.00 11/2/94 11/2/95 $4,667,565.00 $4,667,565.00 40899
State of Minnesota 80.00 12/13/94 12/13/95 $621,688.00 $621,688.00 41011
State of New York 80.00 1/1/95 1/1/96 $6,478,000.00 $6,478,000.00 41073
Mich. Workers Comp 80.00 1/3/95 1/3/96 $500,000.00 $500,000.00 41074
Illinois Ind. Commission 80.00 1/5/95 1/5/96 $5,950,000.00 $5,950,000.00 41081
--------------
$38,138,744.00
<CAPTION>
BANK OF NEW YORK
Beneficiary Fee/Rate Issue Date Expiry Original Amount O/S
(in b.p) Issue Amount (at 3/31/95) L/C No.
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rabobank Nederland 77.50 12/1/94 12/1/95 $31,401,000.00 $31,401,000.00 31573
Rabobank Nederland 77.50 12/5/94 12/5/95 $3,955,214.00 $3,955,241.00 31600
Rabobank Nederland 77.50 1/2/95 1/2/96 $10,467,122.00 $10,467,122.00 31572
$45,823,363.00
--------------
TOTAL $83,962,107.00
==============
</TABLE>
<PAGE>
RJRN
ANNEX IV
CERTAIN LITIGATION
------------------
As described on pages 6 through 12 and F-19 through F-24 of the Annual
Report on Form 10-K of the Credit Parties for the fiscal year ended December
31, 1994 that was filed with the Securities and Exchange Commission.
<PAGE>
RJRN
ANNEX V
MATERIAL SUBSIDIARIES
---------------------
1. Establecimiento Modelo Terrabusi SAIC
2. RJR Nabisco, Inc.
3. Nabisco Holdings Corp.
4. R.J. Reynolds Tobacco Company
5. Nabisco, Inc.
6. Produtos Alimenticios Fleischmann e Royal Ltda.
7. Nabisco Brands Limited
8. RJR-Macdonald Inc.
9. R.J. Reynolds Tobacco GmbH
10. R.J. Reynolds Tobacco International S.A.
11. R.J. Reynolds Tobacco International (Asia Pacific), Inc.
12. R.J. Reynolds Tobacco B.V.
13. Royal Brands, S.A.
14. Various intermediate holding companies between the Borrower and the other
companies named above.
<PAGE>
<TABLE><CAPTION>
RJRN
ANNEX VI
EXISTING LIENS
--------------
(In Millions)
<S> <C> <C>
DOMESTIC LIENS
RJR Nabisco, Inc. Winston-Salem S&L (NCP Annex) Land and Building
RJR Nabisco, Inc. Wachovia Bank & Trust (NCP Mortgage) Land and Building
RJR Nabisco, Inc. Wachovia Bank & Trust Certificate of Deposit
TOTAL DOMESTIC LIENS
INTERNATIONAL LIENS
RJR Mc T Co., Ltd Diamond Leasing Capitalized Leases
RJR Mc T Co., Ltd Ryoshin Leasing Capitalized Leases
RJRT B.V. Leasing Company Capitalized Leases
RJRT GMBH Industrie Kreditbank Long Term Debt
RJRTC Sdn. Bhd Aseam Bankers (M) Bhd. Capitalized Leases
TOTAL INTERNATIONAL LIENS
TOTAL LIENS
<CAPTION>
O/S BAL
12/31/94
<S> <C> <C>
DOMESTIC LIENS
RJR Nabisco, Inc. 11/01/1995 $0.1
RJR Nabisco, Inc. 02/01/2003 0.7
RJR Nabisco, Inc. 12/7/94 0.5
-----------
TOTAL DOMESTIC LIENS $1.3
INTERNATIONAL LIENS
RJR Mc T Co., Ltd $0.2
RJR Mc T Co., Ltd 0.1
RJRT B.V. 1.5
RJRT GMBH 31.3
RJRTC Sdn. Bhd 0.3
-----------
TOTAL INTERNATIONAL LIENS $33.4
-----------
TOTAL LIENS $34.7
===========
</TABLE>
<PAGE>
<TABLE><CAPTION>
RJRN
ANNEX VII
EXISTING SUBSIDIARY DEBT
(In Millions)
O/S BAL
12/31/94
-----------------------
<S> <C> <C>
DOMESTIC SUBSIDIARY DEBT
--------------------------------------
Letters of Credit $54.6
Surety Bonds 28.6
Contingent Obligations- Tax Bond 1.2
Guarantees: Cress Tobacco Co. Loan 24.7
-----------------------
TOTAL DOMESTIC SUBSIDIARY DEBT $109.1
FOREIGN SUBSIDIARY DEBT
--------------------------------------
Long Term Debt $77.1
Capital Leases 2.1
Mpm Trade Loc's 8.7
Short Term Credit Lines 258.3
-----------------------
TOTAL FOREIGN SUBSIDIARY DEBT (See attached schedule) $346.2
-----------------------
TOTAL SUBSIDIARY DEBT $455.3
=======================
</TABLE>
<PAGE>
<TABLE><CAPTION>
RJRN INTERNATIONAL CREDIT FACLITIES
IN MILLIONS (totals may not add exactly due to rounding)
13-Apr-95 USD EQUIV
O/S
COMPANY NAME LENDER CUR 4th Qtr. 94 FACILITY TYPE
<S> <C> <C> <C> <C>
CHINA-AMER. CIGARETTE CO. BANK OF CHINA RMB $9.2 S/T BANK LINE
RJ REYNOLDS FINANCE S.A. ISTITUTO BANCARIO SAN PAOLO USD $7.2 S/T BANK LINE
RJR MC T CO., LTD. DIAMOND LEASING JPY $0.2 CAPITALIZED LEASES
RJR MC T CO., LTD. MITSUBISHI BANK JPY $1.5 S/T BANK LINE
RJR MC T CO., LTD. RYOSHIN LEASING JPY $0.1 CAPITALIZED LEASES
RJR MC T CO., LTD. YASUDA TRUST JPY $1.0 S/T BANK LINE
RJR REKLAM CITIBANK TUL $0.1 S/T BANK LINE
RJR TOBACCO RT HUNGARY ABN AMRO HUF $0.9 S/T BANK LINE
RJR TOBACCO RT HUNGARY CENTRAL-EUROPEAN INT'L BK LTD. USD $0.5 S/T BANK LINE
RJR TOBACCO RT HUNGARY CITIBANK HUF $3.2 S/T BANK LINE
RJR TUTUN SANAYI A.S. CHEMICAL TUL $0.2 S/T BANK LINE
RJR TUTUN SANAYI A.S. CITIBANK TUL $0.9 S/T BANK LINE
RJR TUTUN SANAYI A.S. CITIBANK USD $29.0 LONG TERM DEBT
RJR TUTUN SANAYI A.S. RJR MACDONALD, INC. USD $9.0 LONG TERM DEBT
RJR TUTUN SANAYI A.S. YAPI KREDI BANK TUL $14.7 S/T BANK LINE
RJR-MACDONALD INC. CANADIAN IMPERIAL BANK OF COM. CAD $0.4 S/T BANK LINE
RJR-MACDONALD INC. COMMERCIAL PAPER INVESTORS CAD $83.6 S/T BANK LINE
RJRT B.V. LEASING COMPANY NGL $1.5 CAPITALIZED LEASES
RJRT GMBH DEUTSCHE BANK AG DEM $32.3 S/T BANK LINE
RJRT GMBH ELSASS B/ SOCIETE GENERALE DEM $19.4 S/T BANK LINE
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $3.4 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $2.7 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $3.2 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $8.8 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $7.8 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $5.6 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $7.8 LONG TERM DEBT
RJRT GMBH WESTDEUTCHE - LANDESBANK DEM $29.0 S/T BANK LINE
RJRT GMBH - BELGIUM BR. BANQUE BRUXELLLES LAMBERT BEF $0.7 NON-TRADE LC'S-OTHER
RJRT GMBH - BELGIUM BR. KREDIETBANK BEF $0.3 S/T BANK LINE
RJRT GMBH - BELGIUM BR. KREDIETBANK BEF $8.0 NON-TRADE LC'S-OTHER
RJRTC SDN. BHD. ASEAM BANKERS (M) BHD. MYR $0.3 CAPITALIZED LEASES
RJRTI (AP) JAPAN BRANCH MITSUBISHI BANK JPY $51.2 S/T BANK LINE
RJRTI-KOREA CITIBANK USD $2.5 S/T BANK LINE
R.J. REYNOLDS ITALIA S.R.L. MONTE DEI PASCHI DI SIENA ITL $0.3 S/T BANK LINE
WORLDWIDE BRANDS INC. BANK OF AMERICA USD $0.1 S/T BANK LINE
CANADA SHORT TERM LINES
FUNGIBLE SHORT TERM LINES
GRAND TOTALS: $346.2
</TABLE>
Exhibit 10.2
============================================================================
CREDIT AGREEMENT
AMONG
RJR NABISCO HOLDINGS CORP.,
RJR NABISCO, INC.
AND
BANKERS TRUST COMPANY,
THE CHASE MANHATTAN BANK, N.A.,
CHEMICAL BANK,
CITIBANK, N.A.
AND
THE FUJI BANK, LIMITED,
AS SENIOR MANAGING AGENTS
AND
VARIOUS LENDING INSTITUTIONS
---------------------------------
Dated as of April 28, 1995
---------------------------------
$750,000,000
============================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . 1
1.01 Commitments . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing; Maximum Number of
Borrowings . . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing of Revolving Loans . . . . . . . . . . . 2
1.04 Competitive Bid Borrowings . . . . . . . . . . . . . . . . . 3
1.05 Disbursement of Funds . . . . . . . . . . . . . . . . . . . 5
1.06 Notes; Register . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Conversions . . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . 7
1.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Interest Periods . . . . . . . . . . . . . . . . . . . . . . 8
1.11 Increased Costs, Illegality, etc. . . . . . . . . . . . . . 9
1.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 11
1.13 Change of Lending Office . . . . . . . . . . . . . . . . . . 12
1.14 Replacement of Banks . . . . . . . . . . . . . . . . . . . . 12
1.15 Notice of Certain Costs . . . . . . . . . . . . . . . . . . 13
SECTION 2. Fees; Commitments . . . . . . . . . . . . . . . . . . . . . 13
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.02 Voluntary Reduction of Commitments . . . . . . . . . . . . . 13
2.03 Mandatory Reduction of Commitments, etc. . . . . . . . . . . 14
SECTION 3. Payments . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 14
3.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . 14
3.03 Method and Place of Payment . . . . . . . . . . . . . . . . 15
3.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4. Conditions Precedent to the Effective Date . . . . . . . . 17
4.01 Execution of Agreement . . . . . . . . . . . . . . . . . . . 17
4.02 Notes; RJRN Credit Agreement; Nabisco Credit Agreement . . . 18
4.03 Officer's Certificate . . . . . . . . . . . . . . . . . . . 18
4.04 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . 18
(i)
<PAGE>
Page
----
4.05 Corporate Proceedings . . . . . . . . . . . . . . . . . . . 18
4.06 Organizational Documentation, etc. . . . . . . . . . . . . . 18
4.07 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . 18
4.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.09 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5. Conditions Precedent to Loans . . . . . . . . . . . . . . . 19
5.01 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . 19
5.02 No Default; Representations and Warranties . . . . . . . . . 19
5.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. Representations, Warranties and Agreements . . . . . . . . 20
6.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . 20
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . 20
6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . 20
6.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . 21
6.06 Governmental Approvals . . . . . . . . . . . . . . . . . . . 21
6.07 Investment Company Act . . . . . . . . . . . . . . . . . . . 22
6.08 True and Complete Disclosure . . . . . . . . . . . . . . . . 22
6.09 Financial Condition; Financial Statements . . . . . . . . . 22
6.10 Tax Returns and Payments . . . . . . . . . . . . . . . . . . 23
6.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 23
6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . 23
6.14 Pollution and Other Regulations . . . . . . . . . . . . . . 24
6.15 Properties . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . 24
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . 24
7.02 Books, Records and Inspections . . . . . . . . . . . . . . . 26
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.04 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 27
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . 27
7.06 Compliance with Statutes, etc. . . . . . . . . . . . . . . . 27
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . 28
7.09 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . 28
7.10 Commercial Paper and Competitive Bid Loan Outstandings . . . 29
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . 29
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . 29
(ii)
<PAGE>
Page
----
8.02 Consolidation, Merger, Sale of Assets, etc. . . . . . . . . 29
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 31
8.05 Limitation on Dividends . . . . . . . . . . . . . . . . . . 33
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . 34
8.07 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . 34
8.08 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . 35
8.09 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . 35
8.10 Cash Interest Coverage Ratio . . . . . . . . . . . . . . . . 36
SECTION 9. Events of Default . . . . . . . . . . . . . . . . . . . . . 36
9.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . 36
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.04 Default Under Other Agreements . . . . . . . . . . . . . . . 36
9.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . 37
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.07 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.08 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11. The Senior Managing Agents . . . . . . . . . . . . . . . . 60
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 60
11.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . 61
11.03 Exculpatory Provisions . . . . . . . . . . . . . . . . . . 61
11.04 Reliance by Senior Managing Agents . . . . . . . . . . . . 62
11.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . 62
11.06 Non-Reliance on Senior Managing Agents and Other Banks . . 62
11.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . 63
11.08 Senior Managing Agent in Its Individual Capacity . . . . . 64
11.09 Successor Senior Managing Agents . . . . . . . . . . . . . 64
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 64
12.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . 64
12.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . 65
12.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . 65
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . 68
12.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . 68
12.07 Calculations; Computations . . . . . . . . . . . . . . . . 69
12.08 Governing Law; Submission to Jurisdiction; Venue . . . . . 70
(iii)
<PAGE>
Page
----
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 70
12.10 Headings Descriptive . . . . . . . . . . . . . . . . . . . 70
12.11 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . 70
12.12 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.13 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . 71
12.14 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 71
12.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 72
SECTION 13. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 72
13.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . 72
13.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . 72
13.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . 73
13.04 Independent Obligation . . . . . . . . . . . . . . . . . . 73
13.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . 73
13.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . 74
13.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.09 Limitation on Enforcement . . . . . . . . . . . . . . . . . 75
ANNEX I -- List of Banks and Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Certain Litigation
ANNEX IV -- Schedule of Material Subsidiaries
ANNEX V -- Existing Liens
ANNEX VI -- Existing Subsidiary Indebtedness
EXHIBIT A -- Form of Revolving Note
EXHIBIT B-1 -- Form of Opinion of Assistant General Counsel of the
Borrower
EXHIBIT B-2 -- Form of Opinion of White & Case, Special Counsel to
the Banks
EXHIBIT C-1 -- Notice of Assignment
EXHIBIT C-2 -- Form of Assignment Agreement
EXHIBIT D -- Form of Confidentiality Agreement
(iv)
<PAGE>
CREDIT AGREEMENT, dated as of April 28, 1995, among RJR NABISCO
HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a
Delaware corporation (the "Borrower"), and the lending institutions listed
from time to time on Annex I hereto (each a "Bank" and, collectively, the
"Banks"). Unless otherwise defined herein, all capitalized terms used
herein and defined in Section 10 are used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Banks are willing to make available the credit facility provided for
herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (A) Subject to and upon the terms and
-----------
conditions herein set forth, each Bank severally agrees to make a loan or
loans (each a "Revolving Loan" and, collectively, the "Revolving Loans") to
the Borrower, which Revolving Loans:
(i) shall be made at any time and from time to time on and after
the Effective Date and prior to the Maturity Date;
(ii) may, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Reference Rate Loans or Euro-
dollar Loans, provided that all Revolving Loans made by all Banks
--------
pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Revolving Loans of the same Type;
(iii) may be repaid and reborrowed in accordance with the provi-
sions hereof; and
(iv) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x)
such Bank's Percentage and (y) the sum of (I) the aggregate
outstanding principal amount of all Competitive Bid Loans then
outstanding and (II) the Commercial Paper Outstandings at such time,
equals the Commitment of such Bank at such time.
<PAGE>
(B) Subject to and upon the terms and conditions herein set
forth, each Bank severally agrees that the Borrower may incur a loan or
loans (each a "Competitive Bid Loan" and, collectively, the "Competitive
Bid Loans") pursuant to a Competitive Bid Borrowing from time to time on
and after the Effective Date and prior to the date which is the third
Business Day preceding the date which is 14 days prior to the Maturity
Date; provided, that after giving effect to any Competitive Bid Borrowing
--------
and the use of the proceeds thereof, the aggregate outstanding principal
amount of Competitive Bid Loans when combined with the aggregate
outstanding principal amount of all Revolving Loans then outstanding and
the aggregate Commercial Paper Outstandings at such time shall not exceed
the Total Commitment at such time. Within the foregoing limits and subject
to the conditions set out in Section 1.04, Competitive Bid Loans may be
repaid and reborrowed in accordance with the provisions hereof.
1.02 Minimum Amount of Each Borrowing; Maximum Number of
---------------------------------------------------
Borrowings. The aggregate principal amount of each Borrowing of Revolving
----------
Loans shall not be less than the Minimum Borrowing Amount. More than one
Borrowing may be incurred on any date; provided, that at no time shall
--------
there be outstanding more than eight Borrowings of Eurodollar Loans under
this Agreement.
1.03 Notice of Borrowing of Revolving Loans. (a) Whenever the
--------------------------------------
Borrower desires to incur Revolving Loans hereunder, it shall give the
Payments Administrator at the Payments Administrator's Office (x) prior to
11:00 A.M. (New York time) at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Revolving Loans constituting Eurodollar Loans and (y) prior to
11:00 A.M. (New York time) at least one Business Day's prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing of
Revolving Loans constituting Reference Rate Loans. Each such notice (each
a "Notice of Borrowing") shall be irrevocable and shall specify (i) the
aggregate principal amount of the Revolving Loans to be made pursuant to
such Borrowing, (ii) the date of Borrowing (which shall be a Business Day)
and (iii) whether the respective Borrowing shall consist of Reference Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest Period to
be initially applicable thereto. The Payments Administrator shall promptly
give each Bank written notice (or telephonic notice promptly confirmed in
writing) of each proposed Borrowing of Revolving Loans, of such Bank's
proportionate share thereof and of the other matters covered by the Notice
of Borrowing.
(b) Without in any way limiting the obligation of the Borrower
to confirm in writing any notice it may give hereunder by telephone, the
Payments Administrator may act prior to receipt of written confirmation
without liability upon the basis of such telephonic notice, believed by the
Payments Administrator in good faith to be from the Chairman, Chief
Financial Officer or Treasurer of the Borrower, or from any other person
designated in writing to the Payments Administrator by the Chief Financial
Officer or
-2-
<PAGE>
Treasurer of the Borrower as a person entitled to give telephonic notices
under this Agreement on behalf of the Borrower. In each such case the
Borrower hereby waives the right to dispute the Payments Administrator's
record of the terms of any such telephonic notice.
1.04 Competitive Bid Borrowings. (a) Whenever the Borrower
--------------------------
desires to incur a Competitive Bid Borrowing, it shall deliver to the
Payments Administrator at the Payments Administrator's Office, prior to
11:00 A.M. (New York time) at least three Business Days prior to the date
of such proposed Competitive Bid Borrowing, a written notice (a "Notice of
Competitive Bid Borrowing"), which notice shall specify in each case
(i) the date (which shall be a Business Day) and the aggregate amount of
the proposed Competitive Bid Borrowing, (ii) the maturity date for
repayment of each Competitive Bid Loan to be made as part of such
Competitive Bid Borrowing (which maturity date may not be earlier than 14
days after the date of such Competitive Bid Borrowing or later than the
earlier to occur of (x) 180 days after the date of such Competitive Bid
Borrowing and (y) the third Business Day preceding the Maturity Date),
(iii) the interest payment date or dates relating thereto and (iv) any
other terms to be applicable to such Competitive Bid Borrowing. The
Payments Administrator shall promptly notify each Bidder Bank of each such
request for a Competitive Bid Borrowing received by it from the Borrower by
telecopying to each such Bidder Bank a copy of the related Notice of
Competitive Bid Borrowing.
(b) Each Bidder Bank shall, if, in its sole discretion, it
elects to do so, irrevocably offer to make one or more Competitive Bid
Loans to the Borrower as part of such proposed Competitive Bid Borrowing at
a rate or rates of interest specified by such Bank in its sole discretion
and determined by such Bank independently of each other Bank, by notifying
the Payments Administrator (which shall give prompt notice thereof to the
Borrower) before 11:00 A.M. (New York time) on the date (the "Reply Date")
which is two Business Days before the date of such proposed Competitive Bid
Borrowing, of the minimum amount and maximum amount of each Competitive Bid
Loan which such Bank would be willing to make as part of such proposed
Competitive Bid Borrowing (which amounts may, subject to the proviso to the
first sentence of Section 1.01(B), exceed such Bank's Commitment), the rate
or rates of interest therefor and such Bank's lending office with respect
to such Competitive Bid Loan; provided, that if the Payments Administrator
--------
in its capacity as a Bank shall, in its sole discretion, elect to make any
such offer, it shall notify the Borrower of such offer before 9:30 A.M.
(New York time) on the Reply Date. Any Bidder Bank not giving the Payments
Administrator the notice specified in the preceding sentence shall not be
obligated to, and shall not, make any Competitive Bid Loan as part of such
Competitive Bid Borrowing.
-3-
<PAGE>
(c) The Borrower shall, in turn, before 12:00 Noon (New York
time) on the Reply Date, either:
(i) cancel such Competitive Bid Borrowing by giving the Payments
Administrator notice to such effect, or
(ii) accept one or more of the offers made by any Bidder Bank or
Banks by giving notice (in writing or by telephone confirmed in
writing) to the Payments Administrator of the amount of each
Competitive Bid Loan (which amount shall be equal to or greater than
the minimum amount, and equal to or less than the maximum amount,
notified to the Borrower by the Payments Administrator on behalf of
such Bidder Bank for such Competitive Bid Borrowing) to be made by
each Bidder Bank as part of such Competitive Bid Borrowing, and reject
any remaining offers made by Banks by giving the Payments
Administrator notice to that effect; provided, that (x) acceptance of
--------
offers may only be made on the basis of ascending Absolute Rates
commencing with the lowest rate so offered and (y) if offers are made
by two or more Bidder Banks at the same rate and acceptance of all
such equal offers would result in a greater principal amount of
Competitive Bid Loans being accepted than the aggregate principal
amount requested by the Borrower, the Borrower shall then have the
right to accept one or more such equal offers in their entirety and
reject the other equal offer or offers or to allocate acceptance among
all such equal offers (but giving effect to the minimum and maximum
amounts specified for each such offer), as the Borrower may elect in
its sole discretion; provided further, that in no event shall the
----------------
aggregate principal amount of the Competitive Bid Loans accepted by
the Borrower as part of a Competitive Bid Borrowing exceed the amount
specified by the Borrower in the related Notice of Competitive Bid
Borrowing.
(d) If the Borrower notifies the Payments Administrator that
such Competitive Bid Borrowing is cancelled, the Payments Administrator
shall give prompt notice thereof to the Bidder Banks and such Competitive
Bid Borrowing shall not be made.
(e) If the Borrower accepts one or more of the offers made by
any Bidder Bank or Banks, the Payments Administrator shall in turn promptly
notify (x) each Bidder Bank that has made an offer of the date and aggre-
gate amount of such Competitive Bid Borrowing and whether or not any offer
or offers made by such Bidder Bank have been accepted by the Borrower and
(y) each Bidder Bank that is to make a Competitive Bid Loan as part of such
Competitive Bid Borrowing of the amount of each Competitive Bid Loan to be
made by such Bidder Bank.
-4-
<PAGE>
(f) On the last Business Day of each calendar quarter, the
Payments Administrator shall notify the Banks of the aggregate principal
amount of Competitive Bid Loans outstanding at such time.
1.05 Disbursement of Funds. (a) No later than 1:00 P.M. (New
---------------------
York time) on the date of each Borrowing, each Bank will make available its
pro rata portion, if any, of each Borrowing requested to be made on such
--- ----
date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund
under any Borrowing in U.S. dollars and immediately available funds to the
Payments Administrator at the Payments Administrator's Office and the
Payments Administrator will make available to the Borrower by depositing to
its account at the Payments Administrator's Office the aggregate of the
amounts so made available in U.S. dollars and the type of funds received.
Unless the Payments Administrator shall have been notified by any Bank
prior to the date of any such Borrowing that such Bank does not intend to
make available to the Payments Administrator its portion of the Borrowing
or Borrowings to be made on such date, the Payments Administrator may
assume that such Bank has made such amount available to the Payments
Administrator on such date of Borrowing, and the Payments Administrator, in
reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Payments
Administrator by such Bank and the Payments Administrator has made avail-
able same to the Borrower, the Payments Administrator shall be entitled to
recover such corresponding amount from such Bank. If such Bank does not
pay such corresponding amount forthwith upon the Payments Administrator's
demand therefor, the Payments Administrator shall promptly notify the Bor-
rower, and the Borrower shall immediately pay such corresponding amount to
the Payments Administrator. The Payments Administrator shall also be
entitled to recover from such Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Payments Administrator
to the Borrower to the date such corresponding amount is recovered by the
Payments Administrator, at a rate per annum equal to (x) if paid by such
Bank, the overnight Federal Funds Rate or (y) if paid by the Borrower, the
then applicable rate of interest, calculated in accordance with Section
1.09, for the respective Loans.
(c) Nothing in this Section 1.05 shall be deemed to relieve any
Bank from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Bank as a
result of any default by such Bank hereunder.
1.06 Notes; Register. (a) The Borrower's obligation to pay the
---------------
principal of, and interest on, the Revolving Loans made by each Bank shall,
except as provided in Sections 1.14 and 12.04, be evidenced by a promissory
note duly executed and delivered
-5-
<PAGE>
by the Borrower substantially in the form of Exhibit A with blanks
appropriately completed in conformity herewith (each a "Note" and,
collectively, the "Notes").
(b) The Note issued to each Bank shall (i) be payable to the
order of such Bank and be dated the Effective Date, (ii) be in a stated
principal amount equal to the Commitment of such Bank and be payable in the
principal amount of the Revolving Loans evidenced thereby, (iii) mature on
the Maturity Date and (iv) bear interest as provided in the appropriate
clause of Section 1.09 in respect of the Reference Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby.
(c) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to
any transfer of its Note endorse on the reverse side thereof the
outstanding principal amount of Revolving Loans evidenced thereby. Failure
to make any such notation or any error in any such notation shall not
affect the Borrower's obligations in respect of such Revolving Loans.
(d) The Payments Administrator shall maintain at the Payments
Administrator's Office a register for the recordation of the names and
addresses of the Banks, the Commitments of the Banks from time to time, and
the principal amount of the Revolving Loans and Competitive Bid Loans owing
to each Bank from time to time together with the maturity and interest
rates applicable to each such Competitive Bid Loan, and other terms
applicable thereto (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error. The
Register shall be available for inspection by the Borrower or any Bank at
any reasonable time and from time to time upon reasonable prior notice.
1.07 Conversions. The Borrower shall have the option to convert
-----------
on any Business Day all or a portion equal to at least the Minimum
Borrowing Amount of the outstanding principal amount of Revolving Loans of
one Type into a Borrowing or Borrowings of another Type; provided, that (i)
--------
no partial conversion of Eurodollar Loans shall reduce the outstanding
principal amount of Eurodollar Loans made pursuant to a single Borrowing to
less than the Minimum Borrowing Amount, (ii) Reference Rate Loans may only
be converted into Eurodollar Loans if no Event of Default is in existence
on the date of the conversion and (iii) Borrowings resulting from conver-
sions pursuant to this Section 1.07 shall be limited in number as provided
in Section 1.02. Each such conversion shall be effected by the Borrower by
giving the Payments Administrator at the Payments Administrator's Office
prior to 11:00 A.M. (New York time) at least three Business Days' (or one
Business Day's in the case of a conversion into Reference Rate Loans) prior
written notice (or telephonic notice promptly confirmed in writing) (each a
"Notice of Conversion") specifying the Revolving Loans to be so converted,
the Type of Revolving Loans to be converted into and, if to be converted
into Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Payments Administrator shall give each Bank notice as
-6-
<PAGE>
promptly as practicable of any such proposed conversion affecting any of
its Revolving Loans.
1.08 Pro Rata Borrowings. All Borrowings of Revolving Loans
-------------------
under this Agreement shall be loaned by the Banks pro rata on the basis of
--- ----
their Percentages. It is understood that no Bank shall be responsible for
any default by any other Bank in its obligation to make Loans hereunder and
that each Bank shall be obligated to make the Loans provided to be made by
it hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.09 Interest. (a) The unpaid principal amount of each
--------
Reference Rate Loan shall bear interest from the date of the Borrowing
thereof until maturity (whether by acceleration or otherwise) at a rate per
annum which shall at all times be the Applicable Reference Rate Margin plus
the Reference Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at
all times be the Applicable Eurodollar Margin plus the relevant Eurodollar
Rate.
(c) The unpaid principal amount of each Competitive Bid Loan
shall bear interest from the date the proceeds thereof are made available
to the Borrower until maturity (whether by acceleration or otherwise) at
the rate or rates per annum specified by a Bidder Bank or Banks, as the
case may be, pursuant to Section 1.04(b) and accepted by the Borrower
pursuant to Section 1.04(c).
(d) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan shall bear interest at a rate per
annum equal to the Reference Rate in effect from time to time plus the sum
of (i) 2% and (ii) the Applicable Reference Rate Margin; provided, that
--------
each Eurodollar Loan and Competitive Bid Loan shall bear interest after
maturity (whether by acceleration or otherwise) until the end of the
Interest Period then applicable thereto at a rate per annum equal to 2% in
excess of the rate of interest applicable thereto at maturity.
(e) Interest on each Loan shall accrue from and including the
date of any Borrowing to but excluding the date of any repayment thereof
and shall be payable (i) in respect of each Reference Rate Loan, quarterly
in arrears on the 15th day of each January, April, July and October, (ii)
in respect of any Competitive Bid Loan, at such times as specified in the
Notice of Competitive Bid Borrowing relating thereto, (iii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months,
on each date occurring at three-month intervals after the first day of such
Interest Period, (iv) in respect of each Loan (other than
-7-
<PAGE>
a Reference Rate Loan), on any prepayment (on the amount prepaid) and (v)
in respect of each Loan, at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(f) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(g) The Payments Administrator, upon determining the interest
rate for any Borrowing of Eurodollar Loans for any Interest Period, shall
promptly notify the Borrower and the Banks thereof.
1.10 Interest Periods. At the time the Borrower gives a Notice
----------------
of Competitive Bid Borrowing in respect of the making of a Competitive Bid
Borrowing or at the time it gives a Notice of Borrowing or Notice of
Conversion in respect of the making of, or conversion into, a Borrowing of
Eurodollar Loans (in the case of the initial Interest Period applicable
thereto) or prior to 11:00 A.M. (New York time) on the third Business Day
prior to the expiration of an Interest Period applicable to a Borrowing of
Eurodollar Loans, it shall have the right to elect by giving the Payments
Administrator written notice (or telephonic notice promptly confirmed in
writing) the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be (x) in the case of a
Eurodollar Loan, a one, two, three or six month period and (y) in the case
of a Competitive Bid Loan, subject to availability, a period of 14 to 180
days as elected by the Borrower in the related Notice of Competitive Bid
Borrowing. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of Reference Rate Loans) and each
Interest Period occurring thereafter in respect of such Borrowing
shall commence on the day on which the next preceding Interest Period
expires;
(ii) if any Interest Period relating to a Borrowing of Eurodollar
Loans begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such calendar
month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in
--------
respect of a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day; and
-8-
<PAGE>
(iv) no Interest Period in respect of Eurodollar Loans shall
extend beyond the Maturity Date.
Notwithstanding the foregoing, if an Event of Default is in existence at
the time any Interest Period in respect of any Eurodollar Loans is to
expire, such Eurodollar Loans may not be continued as Eurodollar Loans but
instead shall be automatically converted on the last day of such Interest
Period into Reference Rate Loans. If upon the expiration of any Interest
Period in respect of Eurodollar Loans, the Borrower has failed to elect a
new Interest Period to be applicable thereto as provided above, the
Borrower shall be deemed to have elected to convert such Borrowing into a
Borrowing of Reference Rate Loans effective as of the expiration date of
such current Interest Period.
1.11 Increased Costs, Illegality, etc. (a) In the event that
---------------------------------
(x) in the case of clause (i) below, the Majority SMA or (y) in the case of
clauses (ii) and (iii) below, any Bank shall have determined (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after the
date of this Agreement affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loans or Competitive Bid Loans because of
(x) any change since the date of this Agreement (or, in the case of
any such cost or reduction with respect to any Competitive Bid Loan,
since the date of the making of such Competitive Bid Loan) in any
applicable law, governmental rule, regulation, guideline or order (or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order) (such as, for example, but not limited to, a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting the interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any Loan
(other than Reference Rate Loans) has become unlawful by compliance by
such Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law even though
the failure to comply therewith would not be unlawful), or, in the
case of a Eurodollar Loan, has become impracticable as a
-9-
<PAGE>
result of a contingency occurring after the date of this Agreement
which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Majority SMA, in the case of
clause (i) above) shall on such date give notice (if by telephone confirmed
in writing) to the Borrower and to the Payments Administrator of such
determination (which notice the Payments Administrator shall promptly
transmit to each of the other Banks). Thereafter (x) in the case of clause
(i) above, Eurodollar Loans shall no longer be available until such time as
the Payments Administrator notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Majority SMA no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
shall be deemed rescinded by the Borrower, (y) in the case of clause (ii)
above, the Borrower shall pay to such Bank, upon written demand therefor,
such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its
sole discretion shall determine) as shall be required to compensate such
Bank for such increased costs or reductions in amounts receivable hereunder
(a written notice as to the additional amounts owed to such Bank, showing
in reasonable detail the basis for the calculation thereof, submitted to
the Borrower by such Bank shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions specified in
Section 1.11(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan or Competitive Bid Loan
is affected by the circumstances described in Section 1.11(a)(ii) (for
Eurodollar Loans only) or (iii), the Borrower may (and in the case of a
Eurodollar Loan or a Competitive Bid Loan affected pursuant to Section
1.11(a)(iii) shall) either (i) if the affected Eurodollar Loan or
Competitive Bid Loan is then being made pursuant to a Borrowing, cancel
said Borrowing by giving the Payments Administrator telephonic notice (con-
firmed promptly in writing) thereof as promptly as practicable after the
Borrower was notified by a Bank pursuant to Section 1.11(a)(ii) or (iii),
(ii) if the affected Eurodollar Loan is then outstanding, upon at least
three Business Days' notice to the Payments Administrator, require the
affected Bank to convert each such Eurodollar Loan into a Reference Rate
Loan or (iii) if the affected Competitive Bid Loan is then outstanding,
prepay such Competitive Bid Loan in full; provided, that if more than one
--------
Bank is affected in a similar manner at any time, then all such similarly
affected Banks must be treated the same pursuant to this Section 1.11(b).
(c) If after the date hereof, the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by a Bank or its
parent with any request or directive made or adopted after the date hereof
-10-
<PAGE>
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's or its parent's
capital or assets as a consequence of such Bank's commitments or
obligations hereunder to a level below that which such Bank or its parent
could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Bank's or its parent's policies
with respect to capital adequacy), then from time to time, within 15 days
after demand by such Bank (with a copy to the Payments Administrator), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or its parent for such reduction. Each Bank, upon
determining in good faith that any additional amounts will be payable
pursuant to this Section 1.11(c), will give prompt written notice thereof
to the Borrower, which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts, although the failure
to give any such notice shall not, subject to Section 1.15, release or
diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.11(c) upon receipt of such notice.
1.12 Compensation. The Borrower shall compensate each Bank,
------------
upon its written request (which request shall set forth in reasonable
detail the basis for requesting such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund its Eurodollar
Loans or Competitive Bid Loans but excluding any loss of anticipated profit
with respect to such Loans) which such Bank may sustain: (i) if for any
reason (other than a default by such Bank or the Payments Administrator) a
Borrowing of Eurodollar Loans or Competitive Bid Loans accepted by the
Borrower in accordance with Section 1.04(c)(ii) does not occur on a date
specified therefor in a Notice of Borrowing, Notice of Competitive Bid
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower
or deemed withdrawn pursuant to Section 1.11); (ii) if any repayment or
conversion of any of its Eurodollar Loans or any repayment of Competitive
Bid Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans
is not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (x) any other default by the Borrower
to repay its Eurodollar Loans or Competitive Bid Loans when required by the
terms of this Agreement or (y) an election made pursuant to Section
1.11(b). Calculation of all amounts payable to a Bank under this Section
1.12 in respect of Eurodollar Loans shall be made as though that Bank had
actually funded its relevant Eurodollar Loan through the purchase of a
Eurodollar deposit bearing interest at the Eurodollar Rate in an amount
equal to the amount of that Loan, having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar
deposit from an offshore office of that Bank to a domestic office of that
Bank in the United States of America; provided, however, that each Bank may
-------- -------
fund each of its Eurodollar Loans in any manner it sees fit and the fore-
going assumption shall be utilized only for the calculation of amounts
payable under this Section 1.12.
-11-
<PAGE>
1.13 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.11(a)(ii)
or (iii) or 3.04 with respect to such Bank, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans affected by
such event; provided, that such designation is made on such terms that such
--------
Bank and its lending office suffer no economic, legal or regulatory dis-
advantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.13
shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Section 1.11 or 3.04.
1.14 Replacement of Banks. If (x) any Bank becomes a Defaulting
--------------------
Bank or otherwise defaults in its obligations to make Loans, (y) any Bank
refuses to give timely consent to proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks or (z) any Bank is owed increased costs under Section 1.11
or Section 3.04 which in the judgment of the Borrower are material in
amount and which are not otherwise requested generally by the other Banks,
the Borrower shall have the right, if no Event of Default then exists and,
in the case of a Bank described in clause (z) above, such Bank has not
withdrawn its request for such compensation or changed its applicable
lending office with the effect of eliminating or substantially decreasing
(to a level which in the judgment of the Borrower is not material) such
increased cost, to replace such Bank (the "Replaced Bank") with one or more
other Eligible Transferee or Transferees (collectively, the "Replacement
Bank") reasonably acceptable to the Majority SMA, provided that (i) at the
time of any replacement pursuant to this Section 1.14, the Replacement Bank
shall enter into one or more Assignment Agreements pursuant to which the
Replacement Bank shall acquire all of the Commitment and outstanding Loans
of the Replaced Bank and, in connection therewith, shall pay to the
Replaced Bank in respect thereof an amount equal to the sum of (a) an
amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Bank and (b) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant
to Section 2.01 hereof, (ii) all obligations of the Borrower owing to the
Replaced Bank (other than those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced Bank con-
currently with such replacement and (iii) in the event that such Replaced
Bank is a party to the RJRN Credit Agreement, the Borrower shall also take
the actions specified in Section 1.15 of the RJRN Credit Agreement and
replace such Bank as a Bank thereunder. Upon the execution of the
respective assignment documentation, the payment of amounts referred to in
clauses (i) and (ii) above and, if so requested by the Replacement Bank,
delivery to the Replacement Bank of the appropriate Note executed by the
Borrower, the Replacement Bank shall become a Bank hereunder and the
Replaced Bank shall cease to constitute a Bank hereunder, except with
respect to indemnification provisions under this Agreement, which shall
survive as to such Replaced Bank.
-12-
<PAGE>
1.15 Notice of Certain Costs. Notwithstanding anything in this
-----------------------
Agreement to the contrary, to the extent any notice required by Section
1.11 is given by any Bank more than 180 days after the occurrence of the
event giving rise to the additional cost, reduction in amounts or other
additional amounts of the type described in such Section, such Bank shall
not be entitled to compensation under Section 1.11 for any such amounts
incurred or accruing prior to the giving of such notice to the Borrower.
SECTION 2. Fees; Commitments.
-----------------
2.01 Fees. (a) The Borrower agrees to pay the Payments
----
Administrator a facility fee (the "Facility Fee") for the account of each
Non-Defaulting Bank for the period from and including the Measurement Date
to but not including the Maturity Date or, if earlier, the date upon which
the Total Commitment has been terminated, computed for each day at a rate
equal to the Facility Fee Percentage for such day multiplied by the then
Commitment of such Bank. Such Facility Fee shall be due and payable
quarterly in arrears on the 15th day of each January, April, July and
October and on the date upon which the Total Commitment is terminated.
(b) The Borrower agrees to pay to the Payments Administrator a
utilization fee (the "Utilization Fee") for the account of the Banks pro
---
rata on the basis of their respective Adjusted Percentages, computed for
----
each day during a Utilization Period at a rate equal to the Applicable
Utilization Fee Percentage for such day multiplied by the daily average
Total Adjusted Utilization Amount for such Utilization Period. Such
Utilization Fee shall be due and payable in arrears on the 15th day of each
January, April, July and October and on the date upon which the Total
Commitment is terminated.
(c) The Borrower shall pay to the Payments Administrator for the
account of each Senior Managing Agent and each other Bank the fees
specified in the accepted commitment letter, or related fee letter,
executed by such Senior Managing Agent or such Bank, as the case may be,
when and as due.
(d) All computations of Fees shall be made in accordance with
Section 12.07(b).
2.02 Voluntary Reduction of Commitments. Upon at least three
----------------------------------
Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Payments Administrator at the Payments Administrator's
Office (which notice the Payments Administrator shall promptly transmit to
each of the Banks), the Borrower shall have the right, without premium or
penalty, to terminate the Total Unutilized Commitment, in part or in whole
(or, to the extent that at such time there are no Loans outstanding, to
terminate the Total Commitment, in whole); provided, that (x) any such
--------
termination shall apply to proportionately and permanently reduce the
Commitment of each of the Banks and (y) any
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<PAGE>
partial reduction pursuant to this Section 2.02 shall be in the amount of
at least $10,000,000.
2.03 Mandatory Reduction of Commitments, etc. (a) The Total
----------------------------------------
Commitment (and the Commitment of each Bank) shall be terminated on the
Commitment Termination Date unless the Effective Date has occurred on or
before such date.
(b) On the date which is the earlier of (x) 30 days after any
date on which a Change of Control occurs and (y) the date on which any
Indebtedness of the Borrower in excess of $100,000,000 individually or
$250,000,000 in the aggregate is required to be repurchased as a result of
any such Change of Control, the Total Commitment shall be reduced to zero.
(c) The Total Commitment shall terminate on the Maturity Date.
SECTION 3. Payments.
--------
3.01 Voluntary Prepayments. The Borrower shall have the right
---------------------
to prepay Revolving Loans in whole or in part from time to time on the
following terms and conditions: (i) the Borrower shall give the Payments
Administrator at the Payments Administrator's Office written notice (or
telephonic notice promptly confirmed in writing) of its intent to make such
prepayment, the amount of such prepayment and (in the case of Eurodollar
Loans) the specific Borrowing(s) pursuant to which made, which notice shall
be given by the Borrower no later than 11:00 A.M. (New York time) one
Business Day prior to the date of such prepayment and shall promptly be
transmitted by the Payments Administrator to each of the Banks; (ii) each
partial prepayment of any Borrowing shall be in an aggregate principal
amount of at least $5,000,000, provided that no partial prepayment of Euro-
--------
dollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Revolving Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount for Eurodollar Loans; and (iii) each
prepayment in respect of any Revolving Loans made pursuant to a Borrowing
shall be applied pro rata among such Revolving Loans, provided that, at the
--- ----
Borrower's election in connection with any prepayment pursuant to this
Section 3.01, such prepayment shall not be applied to any Revolving Loan of
a Defaulting Bank at any time when the aggregate amount of Revolving Loans
of any Non-Defaulting Bank exceeds such Non-Defaulting Bank's Percentage of
all Revolving Loans then outstanding. The Borrower shall not have the
right to voluntarily prepay any Competitive Bid Loans.
3.02 Mandatory Prepayments.
---------------------
(A) Requirements. If on any date the sum of the outstanding
------------
principal amount of Revolving Loans made by Non-Defaulting Banks and
Competitive Bid Loans and
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<PAGE>
the aggregate amount of Commercial Paper Outstandings (all the foregoing,
collectively, the "Aggregate Outstandings") exceeds the Adjusted Total
Commitment as then in effect, the Borrower shall repay on such date the
principal of Revolving Loans in an amount equal to such excess. If, after
giving effect to the prepayment of all outstanding Revolving Loans, the
Aggregate Outstandings exceed the Adjusted Total Commitment then in effect,
the Borrower shall repay on such date the principal of Competitive Bid
Loans in an aggregate amount equal to such excess, provided that no
Competitive Bid Loan shall be prepaid pursuant to this sentence unless the
Bank that made same consents to such prepayment. In addition, the Borrower
shall repay all Loans on the Maturity Date.
(B) Application. With respect to each prepayment of Loans
-----------
required by this Section 3.02, the Borrower may designate the Types of
Loans which are to be prepaid and the specific Borrowing(s) pursuant to
which made; provided, that: (i) if any prepayment of Eurodollar Loans made
--------
pursuant to a single Borrowing shall reduce the outstanding Revolving Loans
made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for Eurodollar Loans, such Borrowing shall immediately be
converted into Reference Rate Loans; (ii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans; and
--- ----
(iii) notwithstanding the provisions of the preceding clause (ii), no
prepayment made pursuant to Section 3.02(A) (other than the last sentence
thereof) of Revolving Loans shall be applied to the Revolving Loans of any
Defaulting Bank. In the absence of a designation by the Borrower as
described in the preceding sentence, the Payments Administrator shall,
subject to the above, make such designation in its sole discretion with a
view, but no obligation, to minimize breakage costs owing under Section
1.12.
3.03 Method and Place of Payment. (a) Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement shall be
made to the Payments Administrator for the ratable account of the Banks
entitled thereto, not later than 1:00 P.M. (New York time) on the date when
due and shall be made in immediately available funds and in lawful money of
the United States of America at the Payments Administrator's Office, it
being understood that written, telex or facsimile notice by the Borrower to
the Payments Administrator to make a payment from the funds in the Bor-
rower's account at the Payments Administrator's Office shall constitute the
making of such payment to the extent of such funds held in such account.
The Payments Administrator will thereafter cause to be distributed on the
same day (if payment was actually received by the Payments Administrator
prior to 2:00 P.M. (New York time) on such day) like funds relating to the
payment of principal or interest or Fees ratably to the Banks entitled
thereto. If and to the extent that any such distribution shall not be so
made by the Payments Administrator in full on the same day (if payment was
actually received by the Payments Administrator prior to 2:00 P.M. (New
York time) on such day), the Payments Administrator shall pay to each Bank
its ratable amount thereof and each such Bank shall be entitled to receive
from the Payments Administrator, upon demand, interest on such amount at
the overnight Federal
-15-
<PAGE>
Funds Rate for each day from the date such amount is paid to the Payments
Administrator until the date the Payments Administrator pays such amount to
such Bank.
(b) Any payments under this Agreement which are made later than
1:00 P.M. (New York time) shall be deemed to have been made on the next
succeeding Business Day. Whenever any payment to be made hereunder shall
be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such
extension.
3.04 Net Payments. (a) All payments made by the Borrower
------------
hereunder will be made without setoff or counterclaim. The Borrower will
pay, prior to the date on which penalties attach thereto, all present and
future income, stamp and other taxes, levies, or costs and charges
whatsoever imposed, assessed, levied or collected on or in respect of a
Loan and/or the recording, registration, notarization or other
formalization thereof and/or any payments of principal, interest or other
amounts made on or in respect of a Loan (all such taxes, levies, costs and
charges being herein collectively called "Taxes"; provided that Taxes shall
--------
not include taxes imposed on or measured by the overall net income of that
Bank (or any alternative tax imposed generally by any relevant jurisdiction
in lieu of a tax on net income) by the United States of America or any
political subdivision or taxing authority thereof or therein, taxes imposed
under Section 884 of the Code or taxes on or measured by the overall net
income (or any alternative tax imposed generally by any relevant
jurisdiction in lieu of a tax on net income) of that Bank or any foreign
office, branch or subsidiary of that Bank by any foreign country or
subdivision thereof in which that Bank or that office, branch or subsidiary
is doing business). The Borrower shall also pay such additional amounts
equal to increases in taxes payable by that Bank described in the foregoing
proviso which increases are attributable to payments made by the Borrower
described in the immediately preceding sentence of this Section. Promptly
after the date on which payment of any such Tax is due pursuant to
applicable law, the Borrower will, at the request of that Bank, furnish to
that Bank evidence, in form and substance satisfactory to that Bank, that
the Borrower has met its obligation under this Section 3.04. The Borrower
will indemnify each Bank against, and reimburse each Bank on demand for,
any Taxes, as determined by that Bank in its good faith and reasonable
discretion. Such Bank shall provide the Borrower with appropriate receipts
for any payments or reimbursements made by the Borrower pursuant to this
Section 3.04.
(b) Each Bank which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes agrees to provide to the Borrower on or prior to the Measurement
Date, or in the case of a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.14 or Section 12.04
(unless the respective Bank was already a Bank hereunder immediately prior
to such assignment or transfer and such Bank is in compliance with the
provisions of this
-16-
<PAGE>
Section 3.04(b)), on the date of such assignment or transfer to such Bank,
two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement or any Note. Each Bank
that is a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, but that is not a
corporation (as such term is defined in Section 7701(a)(3) of the Code) for
such purposes, agrees to provide to the Borrower on or prior to the
Measurement Date, or in the case of a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 1.14 or
Section 12.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer and such Bank is in
compliance with the provisions of this Section 3.04(b)), on the date of
such assignment to such Bank, two accurate and complete original signed
copies of Internal Revenue Service Form W-9 (or successor form). In
addition, each such Bank agrees that from time to time after the
Measurement Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect,
it will deliver to the Borrower two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, as the case
may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from United
States withholding tax with respect to payments under this Agreement or any
Note, or it shall immediately notify the Borrower and the Administrative
Agent of its inability to deliver any such form. Notwithstanding anything
to the contrary contained in Section 3.04(a), (x) the Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or
withhold income or other similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for United States federal income tax
purposes and which has not provided to the Borrower such forms that
establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 3.04(a) to pay a
Bank in respect of income or similar taxes imposed by the United States or
any additional amounts with respect thereto if such Bank has not provided
to the Borrower the Internal Revenue Service forms required to be provided
to the Borrower pursuant to this Section 3.04(b).
SECTION 4. Conditions Precedent to the Effective Date. This
------------------------------------------
Agreement shall become effective on the date (the "Effective Date") which
is the later of April 28, 1995 and the date on which the following
conditions shall have been satisfied:
4.01 Execution of Agreement. Each of Holdings, the Borrower and
----------------------
each of the Banks shall have signed a copy of this Agreement (whether the
same or different copies) and shall have delivered same to the Payments
Administrator or, in the case of the Banks, shall have given to the
Payments Administrator telephonic (confirmed in writing),
-17-
<PAGE>
written, telex or facsimile notice (actually received) at such office that
the same has been signed and mailed to it.
4.02 Notes; RJRN Credit Agreement; Nabisco Credit Agreement. On
------------------------------------------------------
the Effective Date, (i) there shall have been delivered to the Payments
Administrator for the account of each Bank the appropriate Note executed by
the Borrower in the amount, maturity and as otherwise provided herein, (ii)
the Initial Borrowing Date under, and as defined in, the RJRN Credit
Agreement shall have occurred and (iii) the Initial Borrowing Date under,
and as defined in, the Nabisco Credit Agreement shall have occurred.
4.03 Officer's Certificate. On the Effective Date, the Payments
---------------------
Administrator shall have received certificates dated such date signed by an
appropriate officer of each of Holdings and the Borrower stating that all
of the applicable conditions set forth in Sections 4.02, 4.07(a) and (b)
and 4.09 exist as of such date.
4.04 Opinions of Counsel. On the Effective Date, the Payments
-------------------
Administrator shall have received an opinion, or opinions, in form and
substance satisfactory to each Senior Managing Agent, addressed to each of
the Banks and dated the Effective Date, from (i) Jo-Ann Ford, Esq., Senior
Vice President, Law of Holdings and the Borrower, which opinion shall cover
the matters contained in Exhibit B-1 hereto and (ii) White & Case, special
counsel to the Banks, which opinion shall cover the matters contained in
Exhibit B-2 hereto.
4.05 Corporate Proceedings. On the Effective Date, all
---------------------
corporate and legal proceedings and all instruments and agreements in
connection with the transactions contemplated by this Agreement and the
other Credit Documents shall be satisfactory in form and substance to each
Senior Managing Agent, and the Payments Administrator shall have received
all information and copies of all certificates, documents and papers,
including records of corporate proceedings and governmental approvals, if
any, which any Senior Managing Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
4.06 Organizational Documentation, etc. On the Effective Date,
----------------------------------
the Banks shall have received copies of the Certificate of Incorporation
and By-Laws of each Credit Party, certified as true and complete by an
appropriate corporate officer or governmental authority.
4.07 Adverse Change, etc. (a) On the Effective Date,
--------------------
(x) nothing shall have occurred which has a material adverse effect on the
ability of either Credit Party to perform its obligations to the Banks and
(y) there shall have been no material adverse change in the operations,
business, property, assets or financial condition of Holdings and
-18-
<PAGE>
its Subsidiaries taken as a whole from that of Holdings and its
Subsidiaries taken as a whole on December 31, 1994. None of the Pro Forma
Events shall be deemed such a material adverse change.
(b) On the Effective Date, all governmental and third party
approvals in connection with the Refinancing, the transactions contemplated
by the Credit Documents and otherwise referred to herein or therein to be
completed on or before the Effective Date shall have been obtained and
remain in effect.
4.08 Litigation. On the Effective Date, except as set forth in
----------
Annex III hereto, there shall be no actions, suits or proceedings pending
or threatened with respect to Holdings or any of its Subsidiaries that
(i) are reasonably likely to have a material adverse effect on the
business, properties, assets, operations, financial condition or prospects
of Holdings and its Subsidiaries taken as a whole or (ii) are reasonably
likely to have a material adverse effect on the rights or remedies of the
Banks or on the ability of either Credit Party to perform its obligations
to the Banks hereunder or under any other Credit Document to which it is a
party.
4.09 Fees, etc. On the Effective Date, the Borrower shall have
----------
paid to each Senior Managing Agent and each Bank all costs, fees and
expenses payable to the Senior Managing Agents or the Banks, to the extent
then due.
SECTION 5. Conditions Precedent to Loans. The obligation of
-----------------------------
each Bank to make any Loans is subject, at the time of the making of each
such Loan, to the satisfaction of the following conditions at such time:
5.01 Effectiveness. The Effective Date shall have occurred.
-------------
5.02 No Default; Representations and Warranties. At the time of
------------------------------------------
the making of each Loan and also after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Loan.
5.03 Notice of Borrowing. Prior to the making of each Revolving
-------------------
Loan, the Payments Administrator shall have received a Notice of Borrowing
meeting the requirements of Section 1.03(a). Prior to the making of each
Competitive Bid Loan, the Payments Administrator shall have received a
Notice of Competitive Bid Borrowing meeting the requirements of Section
1.04(a).
-19-
<PAGE>
The acceptance of the benefits of each Loan shall constitute a
representation and warranty by each Credit Party to each of the Banks that
all of the applicable conditions specified above in Sections 4 and 5 exist
as of that time. All of the certificates, legal opinions and other docu-
ments and papers referred to in Sections 4 and 5, unless otherwise spec-
ified, shall be delivered to the Payments Administrator at the Payments
Administrator's Office for the account of each of the Banks and, except for
the Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to each Senior Managing Agent.
SECTION 6. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Loans as
provided for herein, each of Holdings and the Borrower makes the following
representations and warranties to and agreements with the Banks, all of
which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the making of each Loan being deemed to
constitute a representation and warranty that the matters specified in this
Section 6 are true and correct in all material respects on and as of the
date hereof and as of the date of each such Loan unless such representation
and warranty expressly indicates that it is being made as of any specific
date):
6.01 Corporate Status. Each of Holdings and each of its
----------------
Material Subsidiaries (i) is a duly organized and validly existing
corporation or other entity in good standing under the laws of the
jurisdiction of its organization and has the corporate or other
organizational power and authority to own its property and assets and to
transact the business in which it is engaged and (ii) has duly qualified
and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure
to be so qualified would have a material adverse effect on the operations,
business, properties, assets or financial condition of Holdings and its
Subsidiaries taken as a whole.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms
and provisions of the Credit Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. Each Credit
Party has duly executed and delivered each Credit Document to which it is a
party and each such Credit Document constitutes the legal, valid and
binding obligation of such Person enforceable in accordance with its terms.
6.03 No Violation. Neither the execution, delivery and
------------
performance by any Credit Party of the Credit Documents to which it is a
party (including, without limitation, the incurrence of Loans by the
Borrower hereunder) nor compliance with the terms and provisions thereof,
nor the consummation of the transactions contemplated therein (including,
without limitation, the Refinancing) (i) will contravene any applicable
provision
-20-
<PAGE>
of any law, statute, rule, regulation, order, writ, injunction or decree of
any court or governmental instrumentality, (ii) will conflict or be incon-
sistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in
the creation or imposition of (or the obligation to create or impose) any
Lien upon any of the property or assets of Holdings or any of its
Subsidiaries pursuant to the terms of any material indenture, mortgage,
deed of trust, agreement or other instrument to which Holdings or any of
its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (iii) will violate any provision
of the charter or By-Laws of Holdings or any of its Subsidiaries.
6.04 Litigation. Except as set forth on Annex III, there are no
----------
actions, suits or proceedings pending or threatened with respect to
Holdings or any of its Subsidiaries (i) that are reasonably likely to have
a material adverse effect on the business, properties, assets, operations,
financial condition or prospects of Holdings and its Subsidiaries taken as
a whole or the Borrower and its Subsidiaries that are Non-Nabisco
Subsidiaries taken as a whole or (ii) that are reasonably likely to have a
material adverse effect on the rights or remedies of the Banks or on the
ability of either Credit Party to perform its obligations to them hereunder
and under the other Credit Documents to which it is a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
-----------------------------------
all Loans shall be utilized by the Borrower for general corporate purposes
of Holdings and/or its Non-Nabisco Subsidiaries (including, without
limitation, the refinancing of Indebtedness and financing acquisitions
permitted hereunder).
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System. At the time of the making of each Loan, not more than 25% of the
value of the assets of the Borrower or Holdings and its Subsidiaries on a
consolidated basis subject to the restrictions contained in Sections 8.02
and 8.03 will constitute Margin Stock. Notwithstanding the foregoing
provisions of this Section 6.05, no proceeds of any Loan will be utilized
to purchase any Margin Stock in a transaction, or as part of a series of
transactions, the result of which is the ownership by Holdings and/or its
Subsidiaries (including without limitation the Borrower) of 5% or more of
the capital stock of a corporation unless the Board of Directors of such
corporation has approved such transaction prior to any public announcement
of the purchase, or the intent to purchase, any such Margin Stock.
6.06 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any foreign or domestic governmental or
public body or authority, or any subdivision thereof, is required to
authorize or is required in connection with (i) the execution, delivery
-21-
<PAGE>
and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
6.07 Investment Company Act. Neither Holdings nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.08 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) heretofore or contemporaneously furnished by or on
behalf of either Credit Party or any of its Subsidiaries in writing to any
Senior Managing Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated herein is, and all other
such factual information (taken as a whole) hereafter furnished by or on
behalf of such Persons in writing to any Bank will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at
such time in light of the circumstances under which such information was
provided. The projections and pro forma financial information contained in
such materials were based on good faith estimates and assumptions believed
by such Persons to be reasonable at the time made, it being recognized by
the Banks that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any
such projections may differ from the projected results.
6.09 Financial Condition; Financial Statements. The
-----------------------------------------
consolidated balance sheets of each of Holdings and its Subsidiaries and
the Borrower and its Subsidiaries, at December 31, 1992, at December 31,
1993 and at December 31, 1994 and the related consolidated statements of
income and cash flows (and retained earnings) for the fiscal years ended as
of said dates, which statements have been examined by Deloitte & Touche,
independent certified public accountants, who delivered an unqualified
opinion in respect thereof, and the pro forma (after giving effect to the
--- -----
Refinancing and related financings) consolidated balance sheets of Holdings
and its Non-Nabisco Subsidiaries and of the Borrower and its Subsidiaries
that are Non-Nabisco Subsidiaries as at December 31, 1994, copies of which
have heretofore been furnished to each Bank, present fairly the
consolidated financial position of Holdings and the Borrower at the dates
of said statements and the results of operations for the periods covered
thereby (or, in the case of the pro forma balance sheets, present a good
--- -----
faith estimate of the adjusted consolidated pro forma financial condition
--- -----
of Holdings and the Borrower at the date thereof). All such financial
statements (other than the aforesaid pro forma balance sheets) have been
--- -----
prepared in accordance with GAAP consistently applied except to the extent
provided in the notes to said financial statements. There has been no
material adverse change in the operations, business, property, assets or
financial condition of Holdings and its Subsidiaries taken as a whole or of
the Borrower and its Subsidiaries taken as a whole or of the Borrower and
its Subsidiaries that are Non-Nabisco Subsidiaries taken as a whole from
that of Holdings
-22-
<PAGE>
and its Subsidiaries or the Borrower and its Subsidiaries or the Borrower
and its Subsidiaries that are Non-Nabisco Subsidiaries, as the case may be,
on December 31, 1994.
6.10 Tax Returns and Payments. Each of Holdings and its
------------------------
Subsidiaries has filed all federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and
has paid all material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those contested in
good faith. Holdings and each of its Subsidiaries have paid, or have
provided adequate reserves (in the good faith judgment of the management of
Holdings) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to
the date hereof.
6.11 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to any Plan; no Plan is insolvent or in reorganization, no Plan has
an Unfunded Current Liability, and no Plan has an accumulated or waived
funding deficiency or permitted decreases in its funding standard account
within the meaning of Section 412 of the Code; neither Holdings, any
Subsidiary nor any ERISA Affiliate has incurred any material liability to
or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the
Code; no proceedings have been instituted to terminate any Plan; no
condition exists which presents a material risk to Holdings or any
Subsidiary of incurring a liability to or on account of a Plan pursuant to
the foregoing provisions of ERISA and the Code, except to the extent that
all events described in the preceding clauses of this Section 6.11 and then
in existence would not, in the aggregate, be likely to have a material
adverse effect on the business, operations or financial condition of
Holdings and its Subsidiaries taken as a whole. With respect to Plans that
are multiemployer plans (within the meaning of Section 3(37) of ERISA) and
Plans which are not currently maintained or contributed to by Holdings, any
Subsidiary or any ERISA Affiliate, the representations and warranties in
this Section are made to the best knowledge of Holdings.
6.12 Subsidiaries. Annex IV hereto lists each Material
------------
Subsidiary of Holdings (and the direct and indirect ownership interest of
Holdings therein), in each case existing on the Effective Date. All
ownership percentages referred to in Annex IV are calculated without regard
to directors' or nominees' qualifying shares.
6.13 Patents, etc. Holdings and each of its Subsidiaries have
-------------
obtained all material patents, trademarks, servicemarks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions,
that are necessary for the operation of their respective businesses as pre-
sently conducted and as proposed to be conducted.
-23-
<PAGE>
6.14 Pollution and Other Regulations. Holdings and each of its
-------------------------------
Subsidiaries are in material compliance with all material laws and
regulations relating to pollution and environmental control, equal
employment opportunity and employee safety in all domestic jurisdictions in
which Holdings and each of its Subsidiaries is presently doing business,
and Holdings will comply and cause each of its Subsidiaries to comply with
all such laws and regulations which may be imposed in the future in
jurisdictions in which Holdings or such Subsidiary may then be doing
business other than in each case those the non-compliance with which would
not have a material adverse effect on the business, assets, properties or
financial condition of Holdings and its Subsidiaries taken as a whole.
6.15 Properties. Holdings and each of its Subsidiaries have
----------
good title to all properties that are necessary for the operation of their
respective businesses as presently conducted and as proposed to be
conducted, free and clear of all Liens, other than as permitted by this
Agreement.
SECTION 7. Affirmative Covenants. Holdings hereby covenants and
---------------------
agrees that on the Effective Date and thereafter, for so long as this
Agreement is in effect and until the Commitments have terminated and the
Loans, together with interest, Fees and all other Obligations incurred
hereunder, are paid in full:
7.01 Information Covenants. Holdings will furnish to each Bank:
---------------------
(a) Annual Financial Statements. Within 100 days after the
---------------------------
close of each fiscal year of Holdings (x) to the extent prepared to
comply with SEC requirements, a copy of the SEC Form 10-Ks filed by
Holdings and the Borrower with the SEC for such fiscal year, or, if no
such Form 10-K was so filed by Holdings and/or the Borrower for such
fiscal year, the consolidated balance sheet of Holdings and its Sub-
sidiaries and of the Borrower and its Subsidiaries, as at the end of
such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for such fiscal year, setting
forth comparative consolidated figures as of the end of and for the
preceding fiscal year, and examined by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of Holdings or
any of its Subsidiaries as a going concern, together in any event with
a certificate of such accounting firm stating that in the course of
its regular audit of the business of Holdings and the Borrower, which
audit was conducted in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge of any
Default or Event of Default which has occurred and is continuing or,
if in the opinion of such accounting firm such a Default or Event of
Default has occurred and is continuing, a statement as to the nature
thereof and (y) the consolidated balance sheet of Holdings and its
Non-Nabisco Subsidiaries and of the Borrower and its Subsidiaries that
are Non-Nabisco Subsidiaries, as at the end of
-24-
<PAGE>
such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for such fiscal year, setting
forth comparative consolidated figures as of the end of and for the
preceding fiscal year, and examined by an independent certified public
accountant of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of Holdings or
any of its Non-Nabisco Subsidiaries as a going concern.
(b) Quarterly Financial Statements. As soon as available and in
------------------------------
any event within 55 days after the close of each of the first three
quarterly accounting periods in each fiscal year of Holdings (x) to
the extent prepared to comply with SEC requirements, a copy of the SEC
Form 10-Qs filed by Holdings and the Borrower with the SEC for each
such quarterly period, or, if no such Form 10-Q was so filed by
Holdings and the Borrower with respect to any such quarterly period,
the consolidated condensed balance sheet of Holdings and its
Subsidiaries and of the Borrower and its Subsidiaries as at the end of
such quarterly period and the related consolidated condensed
statements of income for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, and the related consolidated condensed statement of cash flows
for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, and (y) the consolidated condensed balance
sheet of Holdings and its Non-Nabisco Subsidiaries and of the Borrower
and its Subsidiaries that are Non-Nabisco Subsidiaries, as at the end
of such quarterly period and the related consolidated condensed
statements of income for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, and the related consolidated condensed statement of cash flows
for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, and in each case setting forth comparative
consolidated figures for the related periods in the prior fiscal year
or, in the case of such consolidated condensed balance sheet, for the
last day of the prior fiscal year, all of which shall be certified by
the Chief Financial Officer, Controller, Chief Accounting Officer or
other Authorized Officer of Holdings or the Borrower, as the case may
be, subject to changes resulting from audit and normal year-end audit
adjustments.
(c) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(a) and (b), a
certificate of the Chief Financial Officer, Controller, Chief
Accounting Officer or other Authorized Officer of Holdings to the
effect that no Default or Event of Default exists or, if any Default
or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth the calculations required
to establish whether Holdings and its Subsidiaries were in compliance
with the provisions of Sections 8.03(h), 8.04(i), 8.05, 8.07, 8.08,
8.09 and 8.10 as at the end of such fiscal period or year, as the case
may be.
-25-
<PAGE>
(d) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after any senior financial or legal officer
of either Credit Party obtains knowledge thereof, notice of (x) the
occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of
existence thereof and what action Holdings proposes to take with
respect thereto and (y) any litigation or governmental proceeding
pending against or affecting Holdings or any of its Subsidiaries which
is likely to have a material adverse effect on the business,
properties, assets, financial condition or prospects of Holdings and
its Subsidiaries taken as a whole or the ability of either Credit
Party to perform its obligations hereunder or under any other Credit
Document.
(e) Credit Rating Changes. Promptly after any senior financial
---------------------
or legal officer of either Credit Party obtains knowledge thereof,
notice of any change in the Applicable Credit Rating assigned by
either Rating Agency.
(f) Other Information. Promptly upon transmission thereof,
-----------------
copies of any filings and registrations with, and reports to, the
Securities and Exchange Commission or any successor thereto (the
"SEC") by Holdings or any of its Subsidiaries (other than amendments
to any registration statement (to the extent such registration
statement, in the form it becomes effective, is delivered to the
Banks), exhibits to any registration statement and any registration
statements on Form S-8) and copies of all financial statements, proxy
statements, notices and reports that Holdings or any of its
Subsidiaries shall send to analysts or the holders of any publicly
issued debt of Holdings and/or any of its Subsidiaries in their
capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement) and, with
reasonable promptness, such other information or documents (financial
or otherwise) as any Senior Managing Agent on its own behalf or on
behalf of the Required Banks may reasonably request from time to time.
7.02 Books, Records and Inspections. Holdings will, and will
------------------------------
cause each of its Subsidiaries to, permit, upon reasonable notice to the
Chief Financial Officer, Controller or any other Authorized Officer of the
Borrower, officers and designated representatives of any Senior Managing
Agent or the Required Banks to visit and inspect any of the properties or
assets of Holdings and any of its Subsidiaries in whomsoever's possession,
and to examine the books of account of Holdings and any of its Subsidiaries
and discuss the affairs, finances and accounts of Holdings and of any of
its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as any Senior Managing Agent or the
Required Banks may desire.
-26-
<PAGE>
7.03 Insurance. Holdings will, and will cause each of its
---------
Subsidiaries to, at all times maintain in full force and effect insurance
in such amounts, covering such risks and liabilities and with such
deductibles or self-insured retentions as are in accordance with normal
industry practice.
7.04 Payment of Taxes. Holdings will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all 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 material penalties attach thereto, and all lawful claims
which, if unpaid, might become a Lien or charge upon any properties of
Holdings or any of its Subsidiaries; provided, that neither Holdings 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 if it has maintained adequate reserves (in the good faith
judgment of the management of Holdings) with respect thereto in accordance
with GAAP.
7.05 Consolidated Corporate Franchises. Holdings will do, and
---------------------------------
will cause each of its Material Subsidiaries to do, or cause to be done,
all things necessary to preserve and keep in full force and effect its
existence, rights and authority; provided, that any transaction permitted
--------
by Section 8.02 will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Holdings will, and will
------------------------------
cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls)
other than those the non-compliance with which would not have a material
adverse effect on the business, properties, assets or financial condition
of Holdings and its Subsidiaries taken as a whole or on the ability of
either Credit Party to perform its obligations under any Credit Document to
which it is party.
7.07 ERISA. As soon as possible and, in any event, within 10
-----
days after Holdings or any Subsidiary knows or has reason to know of the
occurrence of any of the following, Holdings will deliver to each of the
Banks a certificate of the Chief Financial Officer, Treasurer or Controller
of Holdings setting forth details as to such occurrence and the action, if
any, which Holdings, such Subsidiary or an ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be
given to or filed with or by Holdings, such Subsidiary, such ERISA
Affiliate, the PBGC, a Plan participant (other than notices relating to an
individual participant's benefits) or the Plan administrator with respect
thereto: that a Reportable Event has occurred, that an accumulated funding
deficiency has been incurred or an application may be or has been made to
the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including
-27-
<PAGE>
any required installment payments) or an extension of any amortization
period under Section 412 of the Code with respect to a Plan, that a Plan
which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA,
that a Plan has an Unfunded Current Liability giving rise to a lien under
ERISA or the Code, that proceedings may be or have been instituted to
terminate a Plan which has an Unfunded Current Liability, that a proceeding
has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan, or that Holdings, any Subsidiary or any
ERISA Affiliate will or may incur any liability (including any contingent
or secondary liability) to or on account of the termination of or
withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204
of ERISA or with respect to a Plan under Section 4971 or 4975 of the Code
or Section 409 or 502(i) or 502(l) of ERISA. Upon request of a Bank,
Holdings will deliver to such Bank a complete copy of the annual report
(Form 5500) of each Plan required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of any notices received by
Holdings or any Subsidiary shall be delivered to the Banks no later than 10
days after the later of the date such notice has been filed with the
Internal Revenue Service or the PBGC, given to Plan participants (other
than notices relating to an individual participant's benefits) or received
by Holdings or such Subsidiary.
7.08 Good Repair. Holdings will, and will cause each of its
-----------
Subsidiaries to, ensure that its properties and equipment used or useful in
its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, and
that from time to time there are made in such properties 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.
7.09 End of Fiscal Years; Fiscal Quarters. Holdings will, for
------------------------------------
financial reporting purposes, cause (i) each of its and the Borrower's
fiscal years to end on December 31 of each year, (ii) each of its and the
Borrower's fiscal quarters to end on March 31, June 30, September 30 and
December 31 of each year and (iii) each of the Subsidiaries to maintain the
accounting periods maintained by such Subsidiary on the Effective Date,
consistent with the past practice and procedures of each such Subsidiary;
provided that any of the foregoing fiscal or reporting periods may be
--------
changed if (x) Holdings gives the Banks 30 days' prior written notice of
such proposed change and (y) prior to effecting such change Holdings and
the Majority SMA shall have agreed upon adjustments, if any, to Sections
8.03(h), 8.04(i), 8.05, 8.07, 8.08, 8.09 and 8.10 (and the definitions used
therein) the sole purpose of which shall be to give effect to the proposed
change in fiscal or accounting periods (it being understood and agreed that
to the extent that Holdings and the Majority SMA cannot agree on
appropriate adjustments to such Sections (or that no adjustments are
necessary), the proposed change may not be effected).
-28-
<PAGE>
7.10 Commercial Paper and Competitive Bid Loan Outstandings. On
------------------------------------------------------
the date of the delivery by the Borrower of any Notice of Borrowing or
Notice of Competitive Bid Borrowing at any time when the Borrower shall
have knowledge that a mandatory prepayment is required pursuant to Section
3.02(A)(a) of this Agreement and, in any event, on the last Business Day of
each fiscal quarter of the Borrower, the Borrower will furnish to the
Payments Administrator (with an information copy to each of the other
Senior Managing Agents) a statement setting forth the aggregate amount of
Commercial Paper Outstandings and the aggregate outstanding principal
amount of Competitive Bid Loans at such time.
SECTION 8. Negative Covenants. Holdings hereby covenants and
------------------
agrees that on the Effective Date and thereafter, for so long as this
Agreement is in effect and until the Commitments have terminated and the
Loans, together with interest, Fees and all other Obligations incurred
hereunder, are paid in full:
8.01 Changes in Business. Except as otherwise permitted by
-------------------
Section 8.02, Holdings and its Subsidiaries, taken as a whole, will not
substantively alter the character of their business from that conducted by
Holdings and its Subsidiaries taken as a whole at the Effective Date.
8.02 Consolidation, Merger, Sale of Assets, etc. Holdings will
-------------------------------------------
not, and will not permit any Subsidiary to, wind up, liquidate or dissolve
its affairs, or enter into any transaction of merger or consolidation, sell
or otherwise dispose of all or a substantial part of its property or assets
or agree to do any of the foregoing at any future time, except that the
following shall be permitted:
(a) So long as no Event of Default would result therefrom, the
Borrower may merge or consolidate with Holdings or any Wholly-Owned
Subsidiary of Holdings, provided that the surviving corporation, if
--------
not the Borrower, executes and delivers agreements assuming the
Borrower's obligations under this Agreement and the Notes, which
assumption agreements and all related actions and documentation shall
be in form and substance satisfactory to the Senior Managing Agents;
and
(b) Any Subsidiary of the Borrower may be merged or consolidated
with or into, or be liquidated into, any Person (other than Holdings,
unless the Borrower has merged or consolidated with Holdings) and any
such Subsidiary may convey, lease, sell or transfer all or any part of
its business, properties and assets to any such Person, provided, that
--------
if any such transaction involves a Material Subsidiary, after giving
effect to such transaction, no Event of Default would result
therefrom.
Notwithstanding anything to the contrary contained above in this Section
8.02, no Restricted Sales shall be permitted.
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<PAGE>
8.03 Liens. Holdings will not, and will not permit any of its
-----
Non-Nabisco Subsidiaries to, (x) create, incur, assume or suffer to exist
any Lien in respect of Indebtedness upon any property or assets of any kind
(real or personal, tangible or intangible) of Holdings or any such Non-
Nabisco Subsidiary whether now owned or hereafter acquired or (y) assign
any right to receive income as security for the payment of Indebtedness,
except:
(a) Liens created by the Existing L/C Cash Collateral Agreement;
(b) (i) Liens and assignments under the Salem Facility or under
any Replacement Receivables Facility, and (ii) other Liens existing on
the Effective Date securing Indebtedness outstanding on the Effective
Date in an aggregate principal amount not exceeding $125,000,000 and
Liens securing extensions, renewals or refinancings of any of the
Indebtedness referred to in this clause (b)(ii) to the extent that any
such Indebtedness (x) is not increased from that outstanding at the
time of any such extension, renewal or refinancing and (y) is not
secured by Liens on any additional assets;
(c) Liens encumbering customary initial deposits and margin
deposits, and other Liens incurred in the ordinary course of business
and which are within the general parameters customary in the industry,
securing obligations under Permitted Commodities Agreements;
(d) Liens securing reimbursement obligations of the Borrower and
its Subsidiaries that are Non-Nabisco Subsidiaries with respect to (x)
trade letters of credit incurred in the ordinary course of business,
which are to be repaid in full not more than one year after the date
originally incurred to finance the purchase of goods by the Borrower
or any of its Subsidiaries that are Non-Nabisco Subsidiaries, provided
--------
that such Liens shall attach only to documents or other property
relating to such letters of credit and the products and proceeds
thereof and (y) letters of credit incurred in the ordinary course of
business in connection with payments of foreign excise taxes in
respect of tobacco sales, provided that (i) no such letter of credit
--------
shall have an expiry date later than six months after the date of
issuance thereof and (ii) such Liens are granted in the ordinary
course of business;
(e) Liens (x) arising pursuant to purchase money mortgages
securing Indebtedness (and any extensions, renewals or refinancings of
such Indebtedness to the extent not increasing the outstanding
principal amount thereof) representing the purchase price (or
financing of the purchase price within 180 days after the respective
purchase) of assets acquired after the Effective Date, provided that
--------
(i) any such Liens attach only to the assets so purchased and (ii) the
Indebtedness (including any such permitted extensions, renewals or
refinancings) secured by any
-30-
<PAGE>
such Lien does not exceed 100%, nor is less than 70%, of the purchase
price of the property being purchased and (y) existing on specific
tangible assets at the time acquired by Holdings or any of its Non-
Nabisco Subsidiaries or on assets of a Person at the time such Person
first becomes a Subsidiary (together with Liens securing any
extensions, renewals or refinancings of the Indebtedness secured
thereby to the extent not increasing the outstanding principal amount
thereof), provided that (i) any such Liens were not created at the
--------
time of or in contemplation of the acquisition of such assets or
Person by Holdings and/or its Non-Nabisco Subsidiaries, (ii) in the
case of any such acquisition of a Person, any such Lien attaches only
to a specific tangible asset of such Person and not assets of such
Person generally and (iii) the Indebtedness secured by any such Lien
does not exceed 100% of the fair market value of the asset to which
such Lien attaches, determined at the time of the acquisition of such
asset or at the time such Person first becomes a Subsidiary, as the
case may be;
(f) The defeasance or cash collateralization of Indebtedness
supported on the Effective Date by an Existing Letter of Credit under,
and as defined in, the RJRN Credit Agreement (or of guaranties or
letters of credit (other than Letters of Credit under, and as defined
in, the RJRN Credit Agreement) supporting such Indebtedness), provided
--------
that on or prior to the date of such defeasance or cash
collateralization such Existing Letter of Credit (or any letter of
credit issued in replacement thereof) shall have been terminated and
returned to the issuer in respect thereof;
(g) Liens on the assets of International Tobacco located in
Germany securing Indebtedness permitted to be incurred pursuant to
Section 8.04(g)(i); and
(h) Liens and assignments not otherwise permitted by the forego-
ing clauses (a) through (g) securing any Indebtedness of Holdings
and/or its Non-Nabisco Subsidiaries provided that the aggregate
principal amount of Indebtedness on a consolidated basis secured by
Liens permitted by this clause (h) shall not exceed an amount equal to
7-1/2% of Consolidated Net Worth at any time.
8.04 Indebtedness. Holdings will not permit any Non-Nabisco
------------
Subsidiary (other than the Borrower) to contract, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) (i) Indebtedness owing by any such Subsidiary to Holdings or
any Wholly-Owned Subsidiary of Holdings and (ii) Indebtedness of any
such Subsidiary (x) consisting of Contingent Obligations in respect
of, or (y) constituting reimbursement obligations under letters of
credit issued in support of, obligations of any
-31-
<PAGE>
Subsidiary of Holdings (other than the Borrower) to the extent such
other obligations are permitted by this Agreement;
(b) (i) Indebtedness under the Salem Facility or any Replacement
Receivables Facility and (ii) other Existing Debt of such Subsidiaries
in an aggregate principal amount not exceeding $500,000,000 and any
extensions, renewals or refinancings of any of the Indebtedness
referred to in this clause (b)(ii), provided that such Indebtedness is
not increased from that outstanding at the time of any such extension,
renewal or refinancing;
(c) Obligations under letters of credit described in Section
8.03(d);
(d) Indebtedness in respect of Permitted Currency Agreements and
Permitted Commodities Agreements;
(e) Obligations of Subsidiaries of the Borrower under letters of
credit incurred in the ordinary course of business in connection with
the purchase of tobacco or other products or goods for use in the day-
to-day operations of the Borrower and its Subsidiaries consistent with
the Borrower's past practices or then current industry practices;
(f) Indebtedness secured by Liens permitted by Section 8.03(e);
(g) (i) Indebtedness incurred by International Tobacco with
respect to its operations in Germany in an outstanding principal
amount not to exceed $175,000,000 at any time and (ii) Indebtedness
(and any extensions, renewals or refinancings of such Indebtedness to
the extent not increasing the outstanding principal amount thereof)
incurred by RJR-MacDonald or any other Canadian Subsidiary of Holdings
in an aggregate outstanding principal amount not to exceed
$250,000,000 at any time for all such Canadian Subsidiaries;
(h) Indebtedness of any such Subsidiary in any manner
guaranteeing or intended to guarantee, whether directly or indirectly,
any leases, dividends or other monetary obligations of any Person in
which such Subsidiary has an ownership interest, provided that the
--------
aggregate maximum stated or determinable amount (or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
of such Indebtedness as determined in good faith by such Subsidiary)
of all Indebtedness permitted to be incurred pursuant to this clause
(h) shall not exceed at any time an amount in excess of $150,000,000;
and
(i) Indebtedness not otherwise permitted by the foregoing
clauses (a) through (h), provided that the aggregate outstanding
--------
principal amount of Indebted
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<PAGE>
ness on a consolidated basis incurred pursuant to this clause (i)
shall not exceed at any time an amount equal to 7-1/2% of Consolidated
Net Worth at such time.
8.05 Limitation on Dividends. Holdings will not declare or pay
-----------------------
any dividends (other than dividends payable solely in its capital stock) or
return any capital to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for a consideration, any shares of any class of its capital
stock now or hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares but not including any
convertible debt), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of
Holdings now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by Holdings with respect to its capital stock
but not including any convertible debt) (all of the foregoing "Dividends"),
provided that so long as no Event of Default then exists in the case of
--------
clauses (ii) and (iii):
(i) Holdings may issue shares of Holdings Common Stock upon the
exercise of any warrants or options or upon the conversion or redemption
of any convertible or redeemable preferred or preference stock, and in
connection with any such exercise, conversion or redemption Holdings may
pay cash in lieu of issuing fractional shares of Holdings Common Stock;
(ii) Holdings may repurchase Holdings Common Stock (and/or options or
warrants in respect thereof) pursuant to, and in accordance with the
terms of, management and/or employee stock plans;
(iii) Holdings may declare and pay, or otherwise effect, any other
Dividend provided that, at the time it is declared, the aggregate amount
of such Dividend, when added to all Dividends theretofore declared
pursuant to this clause (iii) after the Effective Date shall not exceed
an amount equal to the sum of (x) $1,000,000,000 plus (y) 50% of
Cumulative Consolidated Net Income plus (z) the aggregate cash proceeds
(net of underwriting discounts and commissions) received by Holdings
after the Effective Date from issuances of its equity securities
(provided that the aggregate amount of such aggregate net cash proceeds
--------
received in any twelve-month period shall be deemed not to exceed
$250,000,000 for purposes of this clause (iii)(z)), in each case
determined at the time of the declaration thereof, provided that such
--------
Dividend is paid within 45 days of the making of such declaration;
(iv) Holdings may issue and exchange shares of any class or series of
its common stock now or hereafter outstanding for shares of any other
class or series of its common stock now or hereafter outstanding;
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<PAGE>
(v) Holdings may, in connection with any reclassification of its
common stock and any exchange permitted by clause (iv) above, pay cash
in lieu of issuing fractional shares of any class or series of its
common stock; and
(vi) Holdings may effect the Permitted Series B Exchange Offer.
8.06 Transactions with Affiliates. Holdings will not, and will
----------------------------
not permit any Subsidiary to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
Affiliate (other than any Wholly-Owned Subsidiary of Holdings and, in the
case of a member of the Nabisco Group, any other member of the Nabisco
Group) other than on terms and conditions substantially as favorable to
Holdings or such Subsidiary as would be obtainable by Holdings or such Sub-
sidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate; provided, that the foregoing restrictions shall
--------
not apply to: (i) customary fees paid to members of the Board of Directors
of Holdings and of its Subsidiaries; (ii) the RJRN Agreements; (iii) the
Refinancing; and (iv) any transaction with any member of the Nabisco Group
if the Board of Directors of Holdings determines in good faith that such
transaction is in the best interest of Holdings and/or such Subsidiary, as
the case may be.
8.07 Consolidated Net Worth. Holdings will not permit
----------------------
Consolidated Net Worth at any time during any period listed below to be
less than the amount set forth opposite such period below:
Period Amount
------ ------
Initial Borrowing Date $7,500,000,000
to and including
December 31, 1995
January 1, 1996 $7,750,000,000
to and including
December 31, 1996
January 1, 1997 $8,000,000,000
to and including
December 31, 1997
Thereafter $8,250,000,000
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<PAGE>
8.08 Fixed Charge Coverage Ratio. Holdings will not permit the
---------------------------
ratio of (i) Adjusted Operating Income to (ii) Consolidated Fixed Charges
for any Test Period ending during any period set forth below to be less
than the ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date 1.60:1
to and including
December 31, 1995
January 1, 1996 1.65:1
to and including
December 31, 1996
January 1, 1997 1.75:1
to and including
December 31, 1997
Thereafter 1.80:1
8.09 Leverage Ratio. Holdings will not permit the ratio of (i)
--------------
Adjusted Consolidated Debt to (ii) Adjusted Operating Income for the Test
Period last ended at any time during any period set forth below to be more
than the ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date 2.60:1
to and including
December 31, 1995
January 1, 1996 2.45:1
to and including
December 31, 1996
January 1, 1997 2.25:1
to and including
December 31, 1997
Thereafter 2.0:1
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<PAGE>
8.10 Cash Interest Coverage Ratio. Holdings will not permit the
----------------------------
ratio of (i) Adjusted Operating Income to (ii) Consolidated Cash Interest
Expense for any Test Period ending during any period listed below to be
less than the ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date 3.50:1
to and including
December 31, 1995
Thereafter 4.00:1
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment
--------
when due of any principal of the Loans or (ii) default, and such default
shall continue for five or more days, in the payment when due of any
interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or
---------------------
statement made or deemed made by either Credit Party herein or in any other
Credit Document or in any statement or certificate delivered or required to
be delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
9.03 Covenants. Either Credit Party shall (a) default in the
---------
due performance or observance by it of any term, covenant or agreement
contained in Section 7.10 or 8, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those
referred to in Section 9.01, 9.02 or clause (a) of this Section 9.03)
contained in this Agreement and such default shall continue unremedied for
a period of at least 30 days after notice to the defaulting party by any
Senior Managing Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Holdings or any of
------------------------------
its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) in excess of $75,000,000
individually or $150,000,000 in the aggregate, for Holdings and its
Subsidiaries, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition
relating to any such Indebtedness
-36-
<PAGE>
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to per-
mit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause (determined without regard to
whether any notice or lapse of time is required, provided that the
existence of any Event of Default under this Section 9.04(a)(ii) with
respect to Indebtedness outstanding under the RJRN Credit Agreement or the
Nabisco Credit Agreement shall be determined after giving effect to any
notice or lapse of time provided to the Borrower in the RJRN Credit
Agreement or Nabisco in the Nabisco Credit Agreement, as the case may be),
any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness shall be declared to be due and payable, or required
to be prepaid other than by a regularly scheduled required prepayment or as
a mandatory prepayment (unless such required prepayment or mandatory
prepayment results from a default or an event of the type that constitutes
an Event of Default), prior to the stated maturity thereof; or
9.05 Bankruptcy, etc. Holdings or any of its Material
----------------
Subsidiaries shall commence a voluntary case concerning itself under Title
11 of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against Holdings or any of its Material Subsidiaries and
the petition is not controverted within 10 days after service of notice of
such case on Holdings or such Material Subsidiary, or is not dismissed
within 60 days after commencement of the case; or a custodian (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Holdings or any of its Material
Subsidiaries; or Holdings or any of its Material Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to Holdings or
any of its Material Subsidiaries; or there is commenced against Holdings or
any of its Material Subsidiaries any such proceeding which remains
undismissed for a period of 60 days; or Holdings or any of its Material
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or
Holdings or any of its Material Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or Holdings or
any of its Material Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Material Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section
-----
4001 of ERISA) maintained or contributed to by any Credit Party or any of
its Subsidiaries or any ERISA Affiliate shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year or
part thereof or a waiver of such standard or extension of any amortization
period is sought or granted under Section 412 of the Code or shall
-37-
<PAGE>
provide security to induce the issuance of such waiver or extension, (b)
any Plan is or shall have been terminated or the subject of termination
proceedings under ERISA or an event has occurred entitling the PBGC to
terminate a Plan under Section 4042(a) of ERISA, (c) any Plan shall have an
Unfunded Current Liability, (d) Holdings or any Subsidiary or any ERISA
Affiliate has incurred or is likely to incur a material liability to or on
account of a termination of or a withdrawal from a Plan under Section 515,
4062, 4063, 4064, 4069, 4201 or 4204 of ERISA, (e) Holdings or any
Subsidiary has incurred after the Effective Date liabilities (after giving
effect to any reserves applicable thereto and maintained on the Effective
Date) pursuant to one or more employee welfare benefit plans (as defined in
Section 3(1) of ERISA) which provide benefits to retired employees (other
than as required by Section 601 of ERISA) or employee pension benefit plans
(as defined in Section 3(2) of ERISA) (except in each case solely as a
result of a change in estimate or adjustment of liabilities existing on the
Effective Date upon the adoption or implementation of Financial Accounting
Statement 106), or (f) Holdings or any Subsidiary or any ERISA Affiliate
has incurred a liability under Section 409, 502(i) or 502(l) of ERISA or
Section 4971 or 4975 of the Code; and there shall result from any such
event or events described in the preceding clauses of this Section 9.06 the
imposition of a Lien upon the assets of Holdings or any Subsidiary, the
granting of a security interest, or a liability or a material risk of
incurring a liability, which Lien, security interest or liability would
have a material adverse effect upon the business, operations or financial
condition of Holdings and its Subsidiaries taken as a whole; or
9.07 Guaranty. The Guaranty or any provision thereof shall
--------
cease to be in full force or effect, or the Guarantor or any Person acting
by or on behalf of the Guarantor shall deny or disaffirm the Guarantor's
obligations under the Guaranty or the Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to the Guaranty; or
9.08 Judgments. One or more judgments or decrees shall be
---------
entered against Holdings or any of its Material Subsidiaries involving a
liability of $75,000,000 or more in the case of any one such judgment or
decree and $150,000,000 or more in the aggregate for all such judgments and
decrees for Holdings and its Material Subsidiaries (to the extent not paid
or fully covered by insurance) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, any Senior Managing Agent shall, upon the
written request of the Required Banks, by written notice to Holdings and
the Borrower, take any or all of the following actions, without prejudice
to the rights of any Senior Managing Agent or any Bank to enforce its
claims against the Borrower, except as otherwise specifically provided for
in this Agreement (provided that, if an Event of Default specified in
--------
Section 9.05 shall occur with
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<PAGE>
respect to the Borrower, the result which would occur upon the giving of
written notice by any Senior Managing Agent as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such
notice): (i) declare the Total Commitment terminated, whereupon the
Commitment of each Bank shall forthwith terminate immediately and any Fee
theretofore accrued shall forthwith become due and payable without any
other notice of any kind; and (ii) declare the principal of and any accrued
interest in respect of all Loans and all other Obligations owing hereunder
and thereunder to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by Holdings and the Borrower.
Notwithstanding anything contained in the foregoing paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to
the preceding paragraph, the Borrower shall pay all arrears of interest and
all payments on account of 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 Events of Default and Defaults (other than non-payment
of the principal of and accrued interest on the Loans, in each case which
is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 12.11, then Non-Defaulting Banks holding at
least 66-2/3% of the Adjusted Total Commitment (which Banks shall include
in any event the Majority SMA), by written notice to Holdings and the
Borrower, may at their option rescind and annul the acceleration and its
consequences; but such action shall not affect any subsequent Event of
Default or Default or impair any right consequent thereon. The provisions
of this paragraph are intended merely to bind the Banks to a decision which
may be made at the election of the aforesaid percentage of the Banks and
are not intended to benefit the Borrower and do not grant the Borrower the
right to require the Banks to rescind or annul any acceleration hereunder,
even if the conditions set forth herein are met.
SECTION 10. Definitions. As used herein, the following terms
-----------
shall have the meanings herein specified unless the context otherwise
requires. Defined terms in this Agreement shall include in the singular
number the plural and in the plural the singular:
"Absolute Rate" shall mean an interest rate (rounded to the
nearest .0001) expressed as a decimal.
"Additional Permitted International Tobacco Joint Ventures" shall
mean any sale or disposition through a joint venture arrangement of the
assets (other than inventory and equipment to the extent sold or disposed
of in the ordinary course of business) of, or the capital stock of entities
included in, International Tobacco that is not otherwise excluded from the
definition of Restricted Sales pursuant to clause (iv) of the proviso in
such definition.
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<PAGE>
"Additional Permitted International Tobacco Sales" shall mean any
sale or disposition (excluding through joint venture arrangements) of the
assets (other than inventory and equipment to the extent sold or disposed
of in the ordinary course of business) of, or the capital stock of entities
included in, International Tobacco that is not otherwise excluded from the
definition of Restricted Sales pursuant to clause (iv) of the proviso in
such definition.
"Adjusted Consolidated Debt" shall mean the sum (without
duplication) of (i) notes payable, (ii) the current maturities of long-term
debt, (iii) long-term debt and (iv) all other amounts representing
liabilities with respect to pay-in-kind interest to the extent included in
"Other Liabilities", all as determined for Holdings and its Non-Nabisco
Subsidiaries in accordance with GAAP, it being understood that determina-
tions of the amounts specified in clauses (i), (ii), (iii) and (iv) shall
(x) exclude Permitted Grantor Trust Subordinated Debt and (y) otherwise be
made on a consistent basis with the methodology utilized by Holdings to
determine such amounts on the Effective Date.
"Adjusted Operating Income" shall mean for any period (x) the
consolidated operating income of Holdings and its Non-Nabisco Subsidiaries
for such period plus (y) the sum of the consolidated depreciation expense
and consolidated amortization expense of Holdings and its Non-Nabisco
Subsidiaries for such period, all as determined in accordance with GAAP, it
being understood that the determination of the amount specified in clauses
(x) and (y) shall be made on a consistent basis with the methodology
utilized by Holdings to determine such amount on the Effective Date,
provided that (i) for the purposes of Section 8.08 only, for any Test
--------
Period during which Consolidated Fixed Charges includes cash taxes paid as
a result of any extraordinary sale of assets, Adjusted Operating Income
shall include a portion of the gross cash proceeds received by Holdings
and/or its Non-Nabisco Subsidiaries as a result of such extraordinary sale
of assets equal to the percentage of such gross cash proceeds determined by
dividing the cash taxes paid during such Test Period as a result of such
sale by the aggregate cash taxes payable as a result of such sale, (ii) for
the purposes only of (A) Section 8.09 and (B) to the extent such
acquisition resulted in Consolidated Capital Expenditures, Section 8.08,
for any Test Period during which any acquisition of any Person or business
occurs, Adjusted Operating Income shall give pro forma effect to such
--- -----
acquisition as if it occurred on the first day of such Test Period and
(iii) for the purpose of Sections 8.08, 8.09 and 8.10, for any Test Period
during which Holdings or any of its Non-Nabisco Subsidiaries holds any
Grantor Trust Interests, Adjusted Operating Income shall exclude any
amounts received by Holdings and/or such Subsidiary pursuant to, or in
respect of, such Grantor Trust Interests.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank such Bank's Percentage and (y) at a time when
a Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and
(ii) for each Bank that is a Non-Defaulting Bank, the percentage determined
by dividing such Bank's Commitment at such time by the
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<PAGE>
Adjusted Total Commitment at such time, it being understood that all
references herein to Commitments at a time when the Total Commitment has
been terminated shall be references to the Commitments in effect
immediately prior to such termination.
"Adjusted Total Commitment" shall mean at any time the Total
Commitment less the aggregate Commitments of all Defaulting Banks.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power (i) to vote 20% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Borrower Commitments" shall mean at any time the sum
of (i) the Total Commitment hereunder and (ii) the Total Commitment under,
and as defined in, the RJRN Credit Agreement, in each case at such time.
"Aggregate Outstandings" shall have the meaning provided in
Section 3.02(A)(a).
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time modified, amended and/or supplemented.
"Agreement Percentage" shall mean at any time the percentage
obtained by dividing (i) the Total Commitment hereunder at such time by
(ii) the Aggregate Borrower Commitments at such time.
"Applicable Credit Rating" shall mean the highest rating level (a
rating level being, e.g., each of BBB-, BBB and BBB+, in the case of S&P)
----
assigned by each Rating Agency to any of the Long Term Debt Issues of
Holdings or the Borrower.
"Applicable Eurodollar Margin" shall mean, in respect of each
Interest Period commencing during a period set forth below, the percentage
set forth below opposite such period below:
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<PAGE>
Applicable
Period Eurodollar Margin
------ -----------------
NIG Period .825%
Minimum Investment Grade Period .450%
Increased Investment Grade Period .325%
Maximum Investment Grade Period .225%
"Applicable Reference Rate Margin" shall mean, at any time during
a period set forth below, the percentage set forth opposite such period
below:
Applicable
Reference
Period Rate Margin
------ -----------
NIG Period .325%
Minimum Investment Grade Period 0%
Increased Investment Grade Period 0%
Maximum Investment Grade Period 0%
"Applicable Utilization Fee Percentage" shall mean, at any time
during a period set forth below, the percentage set forth opposite such
period below:
Applicable
Utilization
Period Fee Percentage
------ --------------
NIG Period .250%
Minimum Investment Grade Period .125%
Increased Investment Grade Period 0%
Maximum Investment Grade Period 0%
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<PAGE>
"Assignment Agreement" shall have the meaning provided in Section
12.04(b)(A).
"Authorized Officer" shall mean any senior officer of Holdings or
the Borrower, as the case may be, designated as such in writing to the
Senior Managing Agents by Holdings or the Borrower, as the case may be, in
each case to the extent acceptable to the Majority SMA.
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or (ii)
a Bank having notified any Senior Managing Agent and/or the Borrower that
it does not intend to comply with its obligations under Section 1.01(A), in
the case of either (i) or (ii) as a result of the appointment of a receiver
or conservator with respect to such Bank at the direction or request of any
regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" shall mean, for any day, the average of the publicly
announced prime rates, base rates and/or reference rates on such date of
BTCo, Chase, Chemical and Citibank.
"Bidder Bank" shall mean each Bank that has notified in writing
(and has not withdrawn such notice) the Payments Administrator that it
desires to participate generally in the bidding arrangements relating to
Competitive Bid Borrowings.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement and shall also include any Person which is the surviving
corporation after giving effect to any transaction permitted by Section
8.02 involving the Borrower.
"Borrowing" shall mean and include (i) the incurrence of one Type
of Loan by the Borrower from all of the Banks on a pro rata basis on a
--- ----
given date (or resulting from conversions on a given date), having in the
case of Eurodollar Loans the same Interest Period, provided that Reference
--------
Rate Loans incurred pursuant to Section 1.11(b) shall be considered part of
any related Borrowing of Eurodollar Loans and (ii) a Competitive Bid
Borrowing.
"BTCo" shall mean Bankers Trust Company and any successor
corporation thereto by merger, consolidation or otherwise.
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<PAGE>
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any
day which shall be in the City of New York a legal holiday or a day on
which banking institutions are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) and which is
also a day for trading by and between banks in U.S. dollar deposits in the
interbank Eurodollar market.
"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 conformity with GAAP, is, or is required to be, accounted for as
a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of Holdings or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"CBABS" shall mean Chemical Bank, Agent Bank Services.
"Change of Control" shall mean and include (a) at any time
Continuing Directors shall not constitute a majority of the Board of
Directors of Holdings or the Borrower; and/or (b) any Person or group (as
such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), shall acquire, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-
5 of the Exchange Act) of 30% or more, on a fully diluted basis, of the
economic or voting interest in Holdings' capital stock; and/or (c) except
to the extent Holdings and the Borrower have merged, Holdings ceases to own
100% of the common stock of the Borrower.
"Chase" shall mean The Chase Manhattan Bank, N.A. and any
successor corporation thereto by merger, consolidation or otherwise.
"Chemical" shall mean Chemical Bank and any successor corporation
thereto by merger, consolidation or otherwise.
"Citibank" shall mean Citibank, N.A. and any successor
corporation thereto by merger, consolidation or otherwise.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect
at the date of this Agreement and any
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<PAGE>
subsequent provisions of the Code, amendatory thereof, supplemental thereto
or substituted therefor.
"Commercial Paper Outstandings" shall mean, at any time, an
amount equal to the sum of (x) the face amount of all commercial paper
previously issued by Holdings and/or any of its Subsidiaries at a discount
and outstanding at such time plus (y) a principal amount of all commercial
paper previously issued by Holdings and/or any of its Subsidiaries on an
interest bearing basis and outstanding at such time.
"Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto, as the same may be
reduced from time to time pursuant to Section 2.02, 2.03, 9 and/or
12.04(b)(A).
"Commitment Termination Date" shall mean December 31, 1995.
"Commodities Agreement" shall mean any forward contract, futures
contract, option contract or similar agreement or arrangement, in each case
intended to protect the Persons entering into same from fluctuations in the
price of, or shortage of supply of, commodities.
"Competitive Bid Borrowing" shall mean a Borrowing of Competitive
Bid Loans pursuant to Section 1.04 with respect to which the Borrower has
requested that the Banks offer to make Competitive Bid Loans at Absolute
Rates.
"Competitive Bid Loans" shall have the meaning provided in
Section 1.01(B).
"Consolidated Capital Expenditures" shall mean, for any period,
the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or capitalized
under Capital Leases but excluding any amount representing capitalized
interest) by Holdings and its Non-Nabisco Subsidiaries during that period
that, in conformity with GAAP, are or are required to be included as addi-
tions during such period to property, plant or equipment reflected in a
consolidated balance sheet of Holdings and its Non-Nabisco Subsidiaries,
provided that (x) except as set forth in clause (y) below, Consolidated
--------
Capital Expenditures shall in any event include the purchase price paid in
connection with the acquisition of any Person (including through the pur-
chase of all of the capital stock or other ownership interests of such
Person, or through merger or consolidation with any Person) to the extent
allocable to property, plant and equipment that in each case is used in the
United States to manufacture and/or distribute tobacco products and (y)
Consolidated Capital Expenditures shall in any event exclude expenditures
made in connection with the replacement, substitution or restoration of
assets (i) to the extent financed from insurance proceeds paid on account
of the loss of or damage to the assets
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being replaced or restored or (ii) with awards of compensation arising from
the taking by eminent domain or condemnation of the assets being replaced.
"Consolidated Cash Interest Expense" shall mean, for any period,
(i) consolidated interest expense of Holdings and its Non-Nabisco
Subsidiaries, but excluding, however, to the extent included in such
consolidated interest expense, (x) non-cash interest expense and
(y) amortization of debt issuance cost plus (ii) cash dividends paid on all
preferred stock of Holdings and its Non-Nabisco Subsidiaries during such
period, it being understood that the determination of the amounts specified
in clauses (i)(x) and (i)(y) shall be made on a consistent basis with the
methodology utilized by Holdings to determine such amounts on the Effective
Date.
"Consolidated Fixed Charges" shall mean, for any period, the sum,
without duplication, of the amounts for such period of (i) Consolidated
Cash Interest Expense, (ii) cash taxes paid during such period, and (iii)
Consolidated Capital Expenditures, all as determined on a consolidated
basis for Holdings and its Non-Nabisco Subsidiaries in accordance with
GAAP, it being understood that the determination of the amounts specified
in clause (iii) shall be made on a consistent basis with the methodology
utilized by Holdings to determine such amount on the Effective Date.
"Consolidated Net Worth" shall mean, as at any date of
determination, the sum of (x) the stockholders' equity of Holdings and (y)
to the extent not included in clause (x), the minority interests
attributable to Grantor Trust Interests, all as determined in accordance
with GAAP and as would be reflected on a consolidated balance sheet of
Holdings and its Non-Nabisco Subsidiaries only prepared as of such date, it
being understood that determinations of such amounts shall be made on a
consistent basis with the methodology utilized by Holdings to determine
such amounts on the Effective Date.
"Contingent Obligations" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other monetary obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
-------- -------
include endorsements of instruments for deposit or collection in the
ordinary course of business. The
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amount of any Contingent Obligation shall be deemed to be an amount equal
to the lesser of (x) the maximum stated or determinable amount of such
Contingent Obligation and (y) the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Continuing Director" shall mean, at any date, an individual (x)
who is a member of the Board of Directors of Holdings or the Borrower, as
the case may be, on the date of this Agreement, (y) who, as at such date,
has been a member of such Board of Directors for at least the twelve
preceding months, or (z) who has been nominated to be a member of such
Board of Directors by a majority of the other Continuing Directors then in
office.
"Credit Documents" shall mean this Agreement and the Notes.
"Credit Party" shall mean each of Holdings and the Borrower.
"Credit Rating" shall mean (i) the Applicable Credit Rating
assigned by each Rating Agency, if such Applicable Credit Ratings are the
same or (ii) if the Applicable Credit Ratings assigned by the Rating Agen-
cies differ, the higher of the Applicable Credit Ratings assigned by the
Rating Agencies, provided that in the event the Applicable Credit Rating of
--------
any Rating Agency shall be more than one rating level above the Applicable
Credit Rating of the other Rating Agency, the Credit Rating shall be one
level below the higher Applicable Credit Rating.
"Cumulative Consolidated Net Income" shall mean, at any time for
any determination thereof, the sum of (x)(i) consolidated net income of
Holdings and its Non-Nabisco Subsidiaries, determined in accordance with
GAAP, for the period (taken as one accounting period) commencing January 1,
1995 and ending on the last day of the last fiscal quarter of Holdings then
ended plus (ii) all losses from debt retirement deducted in determining
such consolidated net income of Holdings and its Non-Nabisco Subsidiaries
for the period referred to in clause (x)(i) above plus (iii) all cash
dividends actually received from NHC during such period to the extent not
included in clause (x)(i) minus (y) any amount received by Holdings and/or
any of its Subsidiaries pursuant to, or in respect of, Grantor Trust
Interests to the extent included in determining consolidated net income for
the purpose of clause (x) above.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap
or other similar agreement designed to protect the Persons entering into
same against fluctuations in currency values.
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"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Dividend Notes" shall mean, collectively, (a) the $1,070,000,000
floating rate note issued by Nabisco due December 1, 1996; (b) the
$1,470,000,000 fixed rate note issued by Nabisco due December 1, 2001; (c)
the $966,000,000 fixed rate note issued by Nabisco due December 1, 2006;
and (d) the $1,300,000,000 floating rate note issued by NHC with a
remaining balance of approximately $168,000,000, all of which are held by
the Borrower or its Wholly-Owned Subsidiary, RJRN Processing, Inc.
"Dividends" shall have the meaning provided in Section 8.05.
"Domestic Tobacco" shall mean R.J. Reynolds Tobacco Company, a
New Jersey corporation, except for the businesses and operations thereof
(and capital stock interests therein) which are included in International
Tobacco and the intangibles as used by International Tobacco.
"Effective Date" shall have the meaning provided in Section 4.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D); provided that Eligible Transferee shall not include any
--------
Person (or any Affiliate thereof) who competes with Holdings and its
Subsidiaries in the tobacco, cookie, cracker, snack food or candy business.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Holdings, a Subsidiary or a Credit Party
would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" shall mean each Revolving Loan bearing
interest at the rates provided in Section 1.09(b).
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"Eurodollar Rate" shall mean with respect to each Interest Period
for a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the interbank
Eurodollar market by each Reference Bank for dollar deposits of amounts in
same day funds comparable to the outstanding principal amount of the
Eurodollar Loan of such Reference Bank for which an interest rate is then
being determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Loan, determined as of 10:00 A.M. (New York
time) on the date which is two Business Days prior to the commencement of
such Interest Period, divided (and rounded upward to the next whole
multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D); provided, that if
--------
one or more of the Reference Banks fails to provide the Payments Admin-
istrator with its aforesaid rate, then the Eurodollar Rate shall be
determined based on the rate or rates provided to the Payments
Administrator by the other Reference Bank or Banks.
"Event of Default" shall have the meaning provided in Section 9.
"Existing Debt" shall mean the Indebtedness of Subsidiaries
(other than the Borrower) of Holdings outstanding on April 28, 1995 and set
forth in Annex VI.
"Existing L/C Cash Collateral Agreement" shall have the meaning
provided therefor in the RJRN Credit Agreement.
"Facility Fee" shall have the meaning provided in Section
2.01(a).
"Facility Fee Percentage" shall mean .175%.
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Payments
Administrator from three Federal Funds brokers of recognized standing
selected by the Payments Administrator.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 2.01.
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"Fuji" shall mean The Fuji Bank, Limited and any successor
corporation thereto by merger, consolidation or otherwise.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being
understood and agreed that determinations in accordance with GAAP for
purposes of Section 8, including defined terms as used therein, shall be
made pursuant to Section 12.07(a).
"Grantor Trust" shall mean the Person which may be a grantor
trust or any other entity but shall not be Holdings or any Subsidiary of
Holdings that is a member of the Nabisco Group to whom the Permitted
Grantor Trust Subordinated Debt is issued in connection with the Permitted
Series B Exchange Offer, it being understood and agreed that the
organizational documents of the Grantor Trust shall be satisfactory to the
Senior Managing Agents.
"Grantor Trust Interest" shall mean the shares of any class or
series of stock of, or other equity participation interests in, the Grantor
Trust.
"Guarantor" for purposes of Section 13 of this Agreement shall
mean Holdings to the extent not merged or consolidated with the Borrower in
accordance with Section 8.02.
"Guaranty" shall mean the guaranty of Holdings set forth in
Section 13, as the same may be supplemented, amended or modified from time
to time.
"Hedging Agreements" shall mean and include Commodities
Agreements, Currency Agreements and Interest Rate Agreements.
"Holdings" shall have the meaning provided in the first paragraph
of this Agreement and shall also include any Person which is the surviving
corporation after giving effect to any transaction permitted by Section
8.02 involving Holdings.
"Holdings Common Stock" shall mean the common stock of Holdings.
"Increased Investment Grade Period" shall mean any period during
which the Credit Rating at all times is the Increased Investment Grade
Rating.
"Increased Investment Grade Rating" shall mean the rating
assigned by each Rating Agency which is one rating level above the Minimum
Investment Grade Rating, it being understood that as of the date of this
Agreement the "Increased Investment Grade Rating" of S&P is BBB and the
"Increased Investment Grade Rating" of Moody's is Baa2.
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"Indebtedness" of any Person shall mean (i) all indebtedness of
such Person for borrowed money, (ii) the deferred purchase price of assets
or services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed, (v) all Capitalized
Lease Obligations of such Person, (vi) all obligations of such Person to
pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all
----
obligations of such Person under Hedging Agreements, (viii) all Contingent
Obligations of such Person, and (ix) the outstanding unreimbursed purchase
price paid to Salem in respect of the purchase of receivables from it
pursuant to the Salem Facility, provided that Indebtedness shall not
--------
include (x) trade payables and accrued expenses, in each case arising in
the ordinary course of business and (y) any obligation of the Borrower or
any Subsidiary thereof to purchase tobacco and/or other products, services
and produce utilized in its business pursuant to the RJRN Agreements or
agreements entered into in the ordinary course of business on a basis
consistent with the Borrower's past practices or then current industry
practices and provided further, that (a) for the purposes of Section 9.04,
----------------
the amount of Indebtedness represented by any Hedging Agreement shall be at
any time the unrealized net loss position, if any, of the Borrower and/or
its Subsidiaries thereunder on a marked to market basis determined no more
than one month prior to such time and (b) for the purposes of determining
the Indebtedness permitted to be secured by Section 8.03(h) or outstanding
under Section 8.04(i), the amount of Indebtedness included in such
determination that is attributable to all Hedging Agreements secured or
permitted thereunder, as the case may be, shall be the Net Termination
Value, if any, of all such Hedging Agreements.
"Interest Period" shall mean, with respect to any Loan, the
interest period applicable thereto, as determined pursuant to Section 1.10.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate futures contract, interest rate option contract or other
similar agreement or arrangement.
"International Tobacco" shall mean the international tobacco
business managed by R.J. Reynolds Tobacco International, Inc. substantially
as it exists on the Effective Date and consisting of (i) the manufacture
for export from the United States and the sale outside the United States of
tobacco products by Domestic Tobacco and (ii) the manufacture and sale
outside the United States of tobacco products by certain Subsidiaries of
the Borrower, it being understood and agreed that Puerto Rico shall be
deemed to be outside of the United States for the purpose of this
definition.
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"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement (other
than customary negative pledge clauses) to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the
nature thereof).
"Loan" shall mean any Competitive Bid Loan or Revolving Loan.
"Long Term Debt Issues" shall mean, with respect to each of
Holdings and the Borrower, each issuance of long-term senior debt of such
Person which ranks on a parity, as to payment and security, with the
Guaranty or the Loans, as the case may be.
"Majority SMA" shall mean, at any time, at least one-half in
number of the Senior Managing Agents.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Subsidiary" shall mean and include, at any time, the
Borrower and each other Subsidiary of Holdings to the extent that (x) the
aggregate book value of the assets of such Subsidiary is equal to or more
than $300,000,000 or (y) the revenues of such Subsidiary during its then
most recently ended fiscal year were equal to or more than $150,000,000.
"Maturity Date" shall mean the date which is 364 days after the
Measurement Date.
"Maximum Investment Grade Period" shall mean any period during
which the Credit Rating is, or is at any level above, the Maximum
Investment Grade Rating.
"Maximum Investment Grade Rating" shall mean the rating assigned
by each Rating Agency which is one rating level above the Increased
Investment Grade Rating, it being understood that as of the date of this
Agreement the lowest "Maximum Investment Grade Rating" of S&P is BBB+ and
the lowest "Maximum Investment Grade Rating" of Moody's is Baa1.
"Measurement Date" shall mean the date which is the earlier of
(x) August 1, 1995 and (y) the Effective Date.
"Minimum Borrowing Amount" shall mean $25,000,000.
"Minimum Investment Grade Period" shall mean any period during
which the Credit Rating is at all times the Minimum Investment Grade
Rating.
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"Minimum Investment Grade Rating" shall mean the lowest rating
level established as investment grade by each Rating Agency, it being
understood that as of the date of this Agreement the "Minimum Investment
Grade Rating" of S&P is BBB- and the "Minimum Investment Grade Rating" of
Moody's is Baa3.
"Moody's" shall mean Moody's Investors Service, Inc., or any
successor corporation thereto.
"Nabisco" shall mean Nabisco, Inc., a New Jersey corporation.
"Nabisco Biscuit Division" shall mean the portion of the business
of NHC and the Subsidiaries of NHC engaged in the manufacture and sale of
crackers and cookies in the United States.
"Nabisco Credit Agreement" shall mean the Credit Agreement of
even date herewith among NHC, Nabisco and the lending institutions party
thereto, as the same may be modified, supplemented or amended from time to
time.
"Nabisco Group" shall mean NHC and all Persons who are direct
and/or indirect subsidiaries of NHC.
"Net Termination Value" shall mean at any time, with respect to
all Hedging Agreements for which a Net Termination Value is being
determined, the excess, if positive, of (i) the aggregate of the unrealized
net loss position of the Borrower and/or its Subsidiaries under each of
such Hedging Agreements on a marked to market basis determined no more than
one month prior to such time less (ii) the aggregate of the unrealized net
gain position of the Borrower and/or its Subsidiaries under each of such
Hedging Agreements on a marked to market basis determined no more than one
month prior to such time.
"NHC" shall mean Nabisco Holdings Corp. (formerly known as
Nabisco Brands, Inc.), a Delaware corporation.
"NIG Period" shall mean any period during which the Credit Rating
is at all times below the Minimum Investment Grade Rating.
"Non-Defaulting Bank" shall mean and include each Bank other than
a Defaulting Bank.
"Non-Nabisco Subsidiary" shall mean each Subsidiary of Holdings
other than NHC and its Subsidiaries.
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"Note" shall have the meaning provided in Section 1.06(a).
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Competitive Bid Borrowing" shall have the meaning
provided in Section 1.04.
"Notice of Conversion" shall have the meaning provided in Section
1.07.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to any Senior Managing Agent, the Payments Administrator or
any Bank pursuant to the terms of this Agreement or any other Credit
Document.
"Payments Administrator" shall mean Chemical, provided, that if
--------
Chemical shall cease to constitute a Senior Managing Agent hereunder, the
remaining Senior Managing Agents shall have the option to appoint one of
such remaining Senior Managing Agents as the Payments Administrator.
"Payments Administrator's Office" shall mean the office of the
Payments Administrator located at 270 Park Avenue, New York, New York
10017, or such other office in New York City as the Payments Administrator
may hereafter designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean at any time for each Bank, the percentage
obtained by dividing such Bank's Commitment by the Total Commitment,
provided that at any time when the Total Commitment shall have been
--------
terminated each Bank's Percentage shall be the percentage obtained by
dividing such Bank's outstanding Revolving Loans by the aggregate
outstanding Revolving Loans.
"Permitted Commodities Agreement" shall mean any Commodities
Agreement entered into in the ordinary course of business by the Borrower
and/or any other Non-Nabisco Subsidiaries to the extent consistent with the
practices of the Borrower and such Subsidiaries prior to the Effective Date
or with then current practices in the industry.
"Permitted Currency Agreement" shall mean any Currency Agreement
entered into in the ordinary course of business by the Borrower or any
other Non-Nabisco Subsidiary to an extent consistent with the practices of
the Borrower and such Subsidiaries prior to the Effective Date or with then
current practices in the industry, provided that no
--------
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domestic Non-Nabisco Subsidiary (other than domestic Subsidiaries all or
substantially all of the business and operations of which are conducted
outside the United States) may be an obligor under or a guarantor of any
such Currency Agreements entered into after the Effective Date.
"Permitted Grantor Trust Subordinated Debt" shall mean
subordinated debt of Holdings in an aggregate principal amount not to
exceed (x) $1,250,000,000 less (y) the aggregate liquidation value of
Holdings Series B 9.25% Cumulative Preferred Stock, par value $.01 per
share, outstanding after the Permitted Series B Exchange Offer issued to
the Grantor Trust in connection with the Permitted Series B Exchange Offer,
all of the terms and conditions of which shall be acceptable to the Senior
Managing Agents and which shall provide, in any event, that such
subordinated debt shall not mature prior to the date which is at least
thirty years after the date of issuance thereof, and may provide that such
subordinated debt be subject to customary optional maturity extensions at
the option of Holdings and customary grace periods on payments thereunder,
and which may not be amended or modified without the consent of the Senior
Managing Agents.
"Permitted Series B Exchange Offer" shall mean the exchange of
Grantor Trust Interests for some or all of Holdings' Series B 9.25%
Cumulative Preferred Stock, par value $.01 per share.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribution of), or at any time
during the five calendar years preceding the date of this Agreement was
maintained or contributed to by (or to which there is an obligation to
contribution of), Holdings, a Subsidiary, a Credit Party or an ERISA
Affiliate.
"Pro Forma Events" shall mean, with respect to the financial
statements of the Credit Parties, the transactions and events in the
Refinancing leading to the adjustments set forth in the pro forma balance
sheets to be delivered to the Banks pursuant to Section 4.10(ii).
"Rating Agency" shall mean each of S&P and Moody's.
"Reference Banks" shall mean BTCo, Chase, Chemical and Citibank.
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"Reference Rate" shall mean, at any time, the higher of (x) the
rate which is 1/2 of 1% in excess of the Federal Funds Rate and (y) the
Base Rate as in effect from time to time.
"Reference Rate Loan" shall mean each Revolving Loan bearing
interest at the rates provided in Section 1.09(a).
"Refinancing" shall mean (i) the entering into by Holdings and
the Borrower, or NHC and Nabisco, as the case may be, of this Agreement,
the RJRN Credit Agreement and the Nabisco Credit Agreement, and the
incurrence on the Effective Date of Loans as defined in the RJRN Credit
Agreement and Loans as defined in the Nabisco Credit Agreement and the
application of the proceeds thereof as provided for therein and (ii) the
consummation of the Exchange Offer (as defined in the Nabisco Credit
Agreement).
"Register" shall have the meaning provided in Section 1.06(d).
"Registration Statement" shall mean the Registration Statement on
Form S-4, all documents incorporated therein by reference and all
amendments and exhibits thereto and related documents filed by Nabisco with
the SEC on March 10, 1995, in the form delivered to the Banks as of the
Effective Date, as the same may be modified from time to time by amendments
filed by Nabisco with the SEC that, in form and substance, are satisfactory
to the Senior Managing Agents.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Replacement Receivables Facility" shall mean any receivables
purchase facility that replaces or refinances the Salem Facility or any
prior Replacement Receivables Facility, together with any liquidity
facility relating thereto, to the extent (i) the aggregate amount of
available credit to Salem under such facility does not exceed the aggregate
amount available to Salem under the Salem Facility or the Replacement
Receivables Facility, as the case may be, being replaced or refinanced and
(ii) the Liens created thereunder, and under any related purchase
agreements between Salem, on the one hand, and R.J. Reynolds Tobacco
Company, on the other hand, do not attach to any assets not subject to the
Liens created under the Salem Facility or Replacement Receivables Facility,
as the case may be, being replaced or refinanced. References to the
Replacement Receivables
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Facility shall include any liquidity facility relating to the receivables
purchase facility referred to in the preceding sentence.
"Reply Date" shall have the meaning provided in Section 1.04(b).
"Reportable Event" shall mean an event described in Section
4043(b) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Required Banks" shall mean at any time either (A) (i) the
Majority SMA plus (ii) Non-Defaulting Banks (including any of the Senior
Managing Agents) holding more than 50% of the Adjusted Total Commitment
(or, if the Total Commitment has been terminated, of the Adjusted Total
Commitment as in effect immediately prior to such termination), or (B) Non-
Defaulting Banks holding more than 66-2/3% of the Adjusted Total Commitment
(or, if the Total Commitment has been terminated, of the Adjusted Total
Commitment as in effect immediately prior to such termination).
"Restricted Sales" shall mean and include the sale or other
disposition, whether such sale or disposition is of capital stock or
assets, to any Person other than the Borrower or a Wholly-Owned Subsidiary
of the Borrower in one or more transactions of all or substantially all or
any substantial portion of the assets (other than (i) inventory and
equipment to the extent sold or disposed of in the ordinary course of
business and (ii) receivables pursuant to the Salem Facility, the Hanover
Facility, as defined in the Nabisco Credit Agreement, any Replacement
Receivables Facility or any Replacement Receivables Facility, as defined in
the Nabisco Credit Agreement) of (x) Domestic Tobacco, (y) International
Tobacco and (z) Nabisco Biscuit Division, in each case as constituted on
the Effective Date; provided that Restricted Sales shall not include (i)
--------
the sale by the Borrower of any of the capital stock it owns of NHC or
Nabisco if after giving effect thereto the Borrower continues to (A)
directly own no less than 80% on a fully diluted basis of (I) the economic
interest in NHC's common stock and (II) the voting interest in NHC's
capital stock and (B) directly and/or indirectly own no less than 80% on a
fully diluted basis of (I) the economic interest in Nabisco's common stock
and (II) the voting interest in Nabisco's capital stock; (ii) the issuance
of stock or securities exercisable for or convertible into stock by NHC
and/or Nabisco (I) pursuant to any incentive plans or arrangements for
directors, officers, key employees and other persons having a unique
relationship to NHC and its Subsidiaries or (II) to third parties, provided
--------
that after giving effect to any such issuances, the Borrower shall (A)
directly own no less than 60% on a fully diluted basis of (I) the economic
interest in NHC's common stock and (II) the voting interest in NHC's
capital stock and (B) directly and/or indirectly own no less than 60% on a
fully diluted basis of (I) the economic interest in Nabisco's common stock
and (II) the voting interest in Nabisco's capital stock; (iii) the sale or
disposition of any interest in the Nabisco Biscuit Division (other than the
capital stock of NHC and/or Nabisco) to any Wholly-Owned Subsidiary of
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NHC; (iv) any sale or disposition (including through joint venture
arrangements) of the assets of, or the capital stock of entities included
in, International Tobacco to the extent that the aggregate fair market
value of the assets and capital stock included in all such sales and
dispositions do not exceed $2,000,000,000; (v) Additional Permitted
International Tobacco Sales; and (vi) Additional Permitted International
Tobacco Joint Ventures.
"Revolving Loan" shall have the meaning provided in Section
1.01(A).
"RJRN Agreements" shall have the meaning provided such term in
the Nabisco Credit Agreement.
"RJRN Credit Agreement" shall mean the Credit Agreement of even
date herewith among Holdings, the Borrower and the lending institutions
party thereto relating to commitments aggregating $2,750,000,000, as the
same may be modified, supplemented or amended from time to time.
"Salem" shall mean one or more special purpose, Wholly-Owned
Subsidiaries of the Borrower engaged exclusively in the business of
purchasing and financing domestic trade accounts receivable generated by
R.J. Reynolds Tobacco Company.
"Salem Facility" shall mean a receivables purchase facility among
Salem, Corporate Asset Funding Company, Inc., CIESCO L.P., Citibank, N.A.
and/or Citicorp North America, Inc., which facility is governed by
documentation (including the receivables purchase agreements between Salem
and R.J. Reynolds Tobacco Company) in effect on the Effective Date as such
documentation may be amended from time to time. References to the Salem
Facility shall include any liquidity facility relating to the receivables
purchase facility referred to in the preceding sentence.
"S&P" shall mean Standard & Poor's Ratings Group, or any
successor corporation thereto.
"SEC" shall have the meaning provided in Section 7.01(f).
"SEC Regulation D" shall mean Regulation D as promulgated under
the Securities Act of 1933, as amended, as the same may be in effect from
time to time.
"Senior Managing Agent" shall mean and include BTCo, Chase,
Chemical, Citibank and Fuji, and any successor to any thereof appointed
pursuant to Section 11.09.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary
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voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries, (ii) any partnership, association,
joint venture or other entity in which such Person directly or indirectly
through Subsidiaries has more than a 50% equity interest at the time and
(iii) the Grantor Trust, provided that no joint venture owned by RJR
--------
Nabisco Cyprus Limited shall constitute a Subsidiary. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of Holdings.
"Taxes" shall have the meaning provided in Section 3.04(a).
"Test Period" shall mean for any determination under Section
8.08, 8.09 or 8.10 the four consecutive fiscal quarters of the Borrower
then last ended.
"Total Adjusted Utilization Amount" at any time shall mean (i)
the Agreement Percentage (determined at such time) multiplied by (ii) an
amount equal to (x) the Total Utilization Amount at such time less (y) the
aggregate principal amount of all Loans hereunder made by Defaulting Banks
and outstanding at such time plus all Loans under, and as defined in, the
RJRN Credit Agreement made by Defaulting Banks (as defined thereunder) and
outstanding at such time.
"Total Commitment" shall mean the sum of the Commitments of each
Bank.
"Total Unutilized Commitment" shall mean the excess of (x) the
Total Commitment over (y) the sum of (i) the aggregate outstanding
principal amount of all Revolving Loans and Competitive Bid Loans and (ii)
the Commercial Paper Outstandings.
"Total Utilization Amount" shall mean at any time the sum of
(i) the aggregate outstanding principal amount of all Loans hereunder at
such time plus (ii) all Letter of Credit Outstandings under, and as defined
----
in, the RJRN Credit Agreement at such time plus (iii) the aggregate
----
outstanding principal amount of all Loans under, and as defined in, the
RJRN Credit Agreement at such time.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Reference Rate Loan or
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount,
if any, by which the present value of the accrued benefits under such Plan
as of the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting
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Standards No. 35, based upon the actuarial assumptions used by such Plan's
actuary in the most recent annual valuation of such Plan, exceeds the fair
market value of the assets allocable thereto, determined in accordance with
Section 412 of the Code.
"Utilization Fee" shall have the meaning provided in Section
2.01(b).
"Utilization Period" shall mean each of the following periods to
the extent that during such period the average daily Total Utilization
Amount exceeds 50% of the average daily Aggregate Borrower Commitments:
(i) the period from and including the Effective Date to and including the
14th day of July 1995, (ii) each successive period of July 15 to and
including October 14, October 15 to and including January 14, January 15 to
and including April 14 and April 15 to and including July 14 thereafter,
and (iii) if the Total Commitment is terminated during any such period, the
period from and including the first day of such period to and including the
day on which the Total Commitment is terminated.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary
of such Person to the extent all of the capital stock or other ownership
interests in such Subsidiary, other than directors' or nominees' qualifying
shares is owned directly or indirectly by such Person.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device,
telegraph or cable.
SECTION 11. The Senior Managing Agents.
--------------------------
11.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints BTCo, Chase, Chemical, Citibank and Fuji as Senior Managing Agents
(such term to include any of the Senior Managing Agents acting as Payments
Administrator) of such Bank to act as specified herein and in the other
Credit Documents, and each such Bank hereby irrevocably authorizes BTCo,
Chase, Chemical, Citibank and Fuji, as the Senior Managing Agents for such
Bank, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated to the respective Senior
Managing Agents by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Each Senior Managing Agent agrees to act as such upon the express
conditions contained in this Section 11. Notwithstanding any provision to
the contrary elsewhere in this Agreement, no Senior Managing Agent shall
have any duties or responsibilities, except those expressly set forth
herein or in the other Credit Documents, or any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise
exist against any Senior Managing Agent. The provisions of this Section 11
are
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solely for the benefit of the Senior Managing Agents and the Banks, and no
Credit Party shall have any rights as a third party beneficiary of any of
the provisions hereof, provided that Holdings shall have the rights granted
--------
to it pursuant to Section 11.09. In performing its functions and duties
under this Agreement, each Senior Managing Agent shall act solely as agent
of the Banks and does not assume and shall not be deemed to have assumed
any obligation or relationship of agency or trust with or for either Credit
Party. No Managing Agent, Lead Manager, Manager or Co-Manager shall have
any duties or obligations in its capacity as such under this Agreement.
11.02 Delegation of Duties. Each Senior Managing 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 concerning all matters pertaining to such duties. Without
limiting the foregoing, Chemical as Payments Administrator may appoint
CBABS as its agent to perform the functions of the Payments Administrator
hereunder relating to the advancing of funds to the Borrower and
distribution of funds to the Banks and to perform such other related
functions of the Payments Administrator hereunder as are reasonably
incidental to such functions. No Senior Managing 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
required by Section 11.03.
11.03 Exculpatory Provisions. No Senior Managing Agent nor any
----------------------
of its officers, directors, employees, agents, attorneys-in-fact or
affiliates (including, without limitation, CBABS in the case of Chemical)
shall be (i) liable for any action lawfully taken or omitted to be taken by
it or such Person under or in connection with this Agreement (except for
its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by Holdings, any Subsidiary or any of
their respective officers contained in this Agreement, any other Credit
Document or in any certificate, report, statement or other document
referred to or provided for in, or received by any Senior Managing Agent
under or in connection with, this Agreement or any other Credit Document or
for any failure of Holdings or any Subsidiary or any of their respective
officers to perform its obligations hereunder or thereunder. No Senior
Managing Agent shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement, or to inspect the prop-
erties, books or records of Holdings or any Subsidiary. No Senior Managing
Agent shall be responsible to any Bank for the effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement
or any Credit Document 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 any other documents in connection herewith or therewith furnished or
made by any Senior Managing Agent to the Banks or by or on behalf of the
Borrower to any Senior Managing Agent or any Bank or be required to
ascertain or
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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 of the existence or
possible existence of any Default or Event of Default.
11.04 Reliance by Senior Managing Agents. Each Senior Managing
----------------------------------
Agent and CBABS shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile transmission, telex or
teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Credit
Parties), independent accountants and other experts selected by such Senior
Managing Agent. Each Senior Managing Agent and CBABS shall be fully
justified in failing or refusing to take any action under this Agreement or
any other Credit Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Senior Managing Agent and CBABS
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 Banks (or to the extent specifically
provided in Section 12.11, all the Banks), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the
Banks.
11.05 Notice of Default. No Senior Managing Agent shall be
-----------------
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless such Senior Managing Agent has received
notice from a Bank or the Borrower or Holdings referring to this Agreement,
describing such Default or Event of Default and stating that such notice is
a "notice of default". In the event that any Senior Managing Agent
receives such a notice, such Senior Managing Agent shall give prompt notice
thereof to the Banks. Each Senior Managing Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Banks; provided, that, unless and until a Senior
--------
Managing Agent shall have received such directions, such Senior Managing
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
11.06 Non-Reliance on Senior Managing Agents and Other Banks.
------------------------------------------------------
Each Bank expressly acknowledges that no Senior Managing Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
have made any representations or warranties to it and that no act by any
Senior Managing Agent hereafter taken, including any review of the affairs
of Holdings or any Subsidiary, shall be deemed to constitute any
representation or warranty by any Senior Managing Agent to any Bank. Each
Bank
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represents to each Senior Managing Agent that it has, independently and
without reliance upon any Senior Managing Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, assets,
operations, property, financial and other conditions, prospects and cred-
itworthiness of Holdings and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon any Senior
Managing Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of
Holdings and its Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Payments
Administrator hereunder, no Senior Managing Agent shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
conditions, prospects or creditworthiness of Holdings or any Subsidiary
which may come into the possession of such Senior Managing Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affil-
iates.
11.07 Indemnification. The Banks agree to indemnify each Senior
---------------
Managing Agent in its capacity as such ratably according to their aggregate
Commitments (or, if the Total Commitment has been terminated, their
aggregate Commitments as in effect immediately prior to such termination),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Obligations)
be imposed on, incurred by or asserted against such Senior Managing Agent
in its capacity as such 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 the transactions contemplated hereby or any action
taken or omitted to be taken by any Senior Managing Agent under or in
connection with any of the foregoing, but only to the extent that any of
the foregoing is not paid by Holdings or any of its Subsidiaries; provided,
--------
that no Bank shall be liable to any Senior Managing Agent for the payment
of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Senior Managing Agent's gross negligence or
willful misconduct. If any indemnity furnished to any Senior Managing
Agent for any purpose shall, in the opinion of such Senior Managing Agent,
be insufficient or become impaired, such Senior Managing 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 Section 11.07 shall survive the payment of all Obligations.
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11.08 Senior Managing Agents in Their Individual Capacities.
-----------------------------------------------------
Each Senior Managing Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with Holdings
and its Subsidiaries as though such Senior Managing Agent were not a Senior
Managing Agent hereunder. With respect to the Loans made by it and all
Obligations owing to it, each Senior Managing Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the
same as though it were not a Senior Managing Agent, and the terms "Bank"
and "Banks" shall include each Senior Managing Agent in its individual
capacity.
11.09 Successor Senior Managing Agents. Any Senior Managing
--------------------------------
Agent may resign as a Senior Managing Agent upon 20 days' notice to the
Banks, provided that prior to, and as a condition of, the last remaining
--------
Senior Managing Agent so resigning, the Required Banks shall appoint from
among the Banks a successor Senior Managing Agent for the Banks subject to
prior approval by Holdings (such approval not to be unreasonably withheld,
provided that such Bank agrees to assume the Swingline Commitment of such
--------
Senior Managing Agent in full), whereupon such successor agent shall
succeed to the rights, powers and duties of the Senior Managing Agents, and
the term "Senior Managing Agents" shall include such successor agent
effective upon its appointment, and the resigning Senior Managing Agent's
rights, powers and duties as a Senior Managing Agent shall be terminated,
without any other or further act or deed on the part of such former Senior
Managing Agent or any of the parties to this Agreement. After any retiring
Senior Managing Agent's resignation hereunder as a Senior Managing Agent,
the provisions of this Section 11 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was a Senior Managing
Agent under this Agreement.
SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. The Borrower agrees to:
-------------------------
(i) pay all reasonable out-of-pocket costs and expenses of (x) the Senior
Managing Agents, whether or not the transactions herein contemplated are
consummated, in connection with the negotiation, preparation, execution and
delivery of the Credit Documents and the documents and instruments referred
to therein and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees and disbursements of
White & Case but of no other counsel) and (y) each Senior Managing Agent
and each of the Banks in connection with the enforcement of the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and disbursements of counsel for
each Senior Managing Agent and for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and
save each of the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to such Bank) to pay such taxes; and (iii) indemnify
each Bank, its officers, directors, employees, representatives and agents
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from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of,
any investigation, litigation or other proceeding (whether or not any Bank
is a party thereto) related to the entering into and/or performance of any
Credit Document or the use of the proceeds of any Loans hereunder or the
Refinancing or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such los-
ses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
12.02 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 Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to either 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 Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of either
Credit Party against and on account of the Obligations and liabilities of
such Credit Party to such Bank under this Agreement or under any of the
other Credit Documents, including, without limitation, all interests in
Obligations of such Credit Party purchased by such Bank pursuant to Section
12.06(b), 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 Bank shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, facsimile transmission or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered, if to a Credit Party, at the address specified opposite its
signature below or in the other relevant Credit Documents, as the case may
be; if to any Bank, at its address specified for such Bank on Annex II
hereto; or, at such other address as shall be designated by any party in a
written notice to the other parties hereto. All such notices and
communications shall be telegraphed, telexed, telecopied, or cabled or sent
by overnight courier, and shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be
--------------------
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, provided that no
--------
Credit Party may assign or transfer any of its interests hereunder, except
to the extent any such assignment results from the consummation of a
transaction permitted under Section 8.02, without the prior written consent
of the Banks and
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provided further that the rights of each Bank to transfer, assign or grant
-------- -------
participations in its rights and/or obligations hereunder shall be limited
as set forth below in this Section 12.04, provided that nothing in this
--------
Section 12.04 shall prevent or prohibit any Bank from pledging its rights
under this Agreement and/or its Loans and/or Note hereunder to a Federal
Reserve Bank in support of borrowings made by such Bank from such Federal
Reserve Bank.
(b) Each Bank shall have the right to transfer, assign or grant
participations in all or any part of its remaining rights and obligations
hereunder on the basis set forth below in this clause (b).
(A) Assignments. Each Bank may assign pursuant to an Assignment
-----------
Agreement substantially in the form of Exhibit C-2 hereto (each, an
"Assignment Agreement") all or a portion of its rights and obligations
hereunder pursuant to this clause (b)(A) to (x) one or more Banks or (y)
one or more other Eligible Transferees, provided that any such assignment
--------
pursuant to clause (y) above shall be in the aggregate amount of at least
(I) in the event of an assignment relating to this Agreement only,
$10,000,000, except to the extent that after giving effect to such
assignment such Bank's Commitment is reduced to zero and (II) in the event
of an assignment relating to this Agreement and the RJRN Credit Agreement,
$5,000,000, provided that the aggregate amount of such assignment under
--------
this Agreement and the RJRN Credit Agreement is at least $10,000,000,
except to the extent that after giving effect to such assignment such
Bank's Commitment hereunder is reduced to zero. Any assignment to another
Bank pursuant to this clause (b)(A) will become effective upon the payment
to the Payments Administrator by (I) either the assigning or the assignee
Bank or (II) in the case of an assignment pursuant to Section 1.14, the
Replacement Bank, of a nonrefundable assignment fee of $2,500 and the
recording by the Payments Administrator of such assignment, and the
resultant effects thereof on the Commitments of the assigning Bank and the
assignee Bank, in the Register, the Payments Administrator hereby agreeing
to effect such recordation no later than five Business Days after its
receipt of a written notification by the assigning Bank and the assignee
Bank of the proposed assignment, provided that the Payments Administrator
--------
shall not be required to, and shall not, so record any assignment in the
Register on or after the date on which any proposed amendment, modification
or supplement in respect of this Agreement has been circulated to the Banks
for approval until the earlier of (x) the effectiveness of such amendment,
modification or supplement in accordance with Section 12.11 or (y) 30 days
following the date on which such proposed amendment, modification or
supplement was circulated to the Banks. Assignments pursuant to this
clause (b)(A) to any Person not theretofore a Bank hereunder will only be
effective if the Payments Administrator shall have received a written
notice in the form of Exhibit C-1 hereto from the assigning Bank and the
assignee Bank and payment of a nonrefundable assignment fee of $2,500 to
the Payments Administrator (provided, that in the event of simultaneous
--------
assignments relating to this Agreement and the RJRN Credit Agreement, such
fee shall be
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$2,500) by (I) either the assigning or the assignee Bank or (II) in the
case of an assignment pursuant to Section 1.14, the Replacement Bank. No
later than five Business Days after its receipt of such written notice, the
Payments Administrator will record such assignment, and the resultant
effects thereof on the Commitment of the assigning Bank, in the Register,
at which time such assignment shall become effective, provided that the
--------
Payments Administrator shall not be required to, and shall not, so record
any assignment in the Register on or after the date on which any proposed
amendment, modification or supplement in respect of this Agreement has been
circulated to the Banks for approval until the earlier of (x) the
effectiveness of such amendment, modification or supplement in accordance
with Section 12.11 or (y) 30 days following the date on which such proposed
amendment, modification or supplement was circulated to the Banks. Upon
the effectiveness of any assignment pursuant to this clause (b)(A), (x) the
assignee will become a "Bank" for all purposes of this Agreement and the
other Credit Documents with a Commitment as so recorded by the Payments
Administrator in the Register, and to the extent of such assignment, the
assigning Bank shall be relieved of its obligations hereunder with respect
to the portion of its Commitment being assigned and (y) if such assignment
occurs after the Effective Date, the Borrower shall issue new Notes (in
exchange for the Note of the assigning Bank) to the assigning Bank (to the
extent such Bank's Commitment is not reduced to zero as a result of such
assignment) and to the assignee Bank, in each case to the extent requested
by the assigning Bank or assignee Bank, as the case may be, in conformity
with the requirements of Section 1.06 to the extent needed to reflect the
revised Commitments of such Banks. The Payments Administrator will prepare
on the last Business Day of each calendar quarter during which an
assignment has become effective pursuant to this clause (b)(A) a new Annex
I giving effect to all such assignments effected during such quarter and
will promptly provide same to the Borrower and each of the Banks.
(B) Participations. Each Bank may transfer, grant or assign
--------------
participations in all or any part of such Bank's interests and obligations
hereunder pursuant to this clause (b)(B) to any Eligible Transferee,
provided that (i) such Bank shall remain a "Bank" for all purposes of this
--------
Agreement and the transferee of such participation shall not constitute a
Bank hereunder and (ii) no participant under any such participation shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
(x) extend the final scheduled maturity of any of the Loans or the
Commitment in which such participant is participating, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or Fees applicable to any of the
Loans or Commitments or postpone the payment of any thereof or (z) release
the Guaranty. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against the granting Bank in respect of
such participation to be those set forth in the agreement with such Bank
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such
participation, provided that such participant shall be entitled to
--------
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receive additional amounts under Sections 1.11, 1.12 and 3.04 on the same
basis as if it were a Bank. In addition, each agreement creating any
participation must include an agreement by the participant to be bound by
the provisions of Section 12.14 and such participant shall have executed a
confidentiality agreement in the form of Exhibit D hereto.
(c) Notwithstanding any other provisions of this Section 12.04,
no transfer or assignment of the interests or obligations of any Bank
hereunder or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Borrower or the Guarantor
to file a registration statement with the SEC or to qualify the Loans under
the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby
represents, and each Person that becomes a Bank pursuant to an assignment
permitted by the preceding clause (b)(A) will upon its becoming party to
this Agreement represent, that it is an Eligible Transferee which makes
loans in the ordinary course of its business and that it will make or
acquire Loans for its own account in the ordinary course of such business,
provided that, subject to the preceding clauses (a) through (c), the
--------
disposition of any promissory notes or other evidences of or interests in
Indebtedness held by such Bank shall at all times be within its exclusive
control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on
------------------------------
the part of any Senior Managing Agent, Payments Administrator or any Bank
in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between either Credit Party and
any Senior Managing Agent or any Bank 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 expressly provided
are cumulative and not exclusive of any rights or remedies which any Senior
Managing Agent or any Bank would otherwise have. No notice to or demand on
either Credit Party in any case shall entitle either Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Senior Managing Agents or the
Banks to any other or further action in any circumstances without notice or
demand.
12.06 Payments Pro Rata. (a) The Payments Administrator agrees
-----------------
that promptly after its receipt of each payment from or on behalf of either
Credit Party in respect of any Obligations of such Credit Party, it shall,
except as otherwise provided in this Agreement, distribute such payment to
the Banks pro rata based upon their respective shares, if any, of the
--- ----
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right
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of setoff or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or otherwise) which is
applicable to the payment of the principal of, or interest on, the Loans or
Fees, of a sum which with respect to the related sum or sums received by
other Banks is in a greater proportion than the total of such Obligations
then owed and due to such Bank bears to the total of such Obligations then
owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without
recourse or warranty from the other Banks an interest in the Obligations of
the respective Credit Party to such Banks in such amount as shall result in
a proportional participation by all of the Banks in such amount; provided,
--------
that if all or any portion of such excess amount is thereafter recovered
from such Bank, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in
writing by Holdings to the Banks); provided, that, except as otherwise
--------
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the historical financial statements
delivered to the Banks pursuant to Section 6.09, provided that in the event
--------
GAAP shall be modified from that in effect at the time of the preparation
of such financial statements, the Borrower shall be entitled to utilize
GAAP, as so modified, for purposes of such computations to the extent that
(x) the Borrower gives the Banks 30 days' prior written notice of such
proposed modification and (y) prior thereto the Borrower and the Majority
SMA shall have agreed upon adjustments, if any, to Sections 8.03(h),
8.04(i), 8.05, 8.07, 8.08, 8.09 and 8.10 (and the definitions used therein)
the sole purpose of which shall be to give effect to such proposed change
(it being understood and agreed that to the extent that the Borrower and
the Majority SMA cannot agree on appropriate adjustments to such Sections
(or that no adjustments are necessary), the proposed change may not be
effected); and provided further, that if at any time the computations
-------- -------
determining compliance with Section 8 utilize accounting principles
different from those utilized in the financial statements furnished to the
Banks, such financial statements shall be accompanied by reconciliation
work-sheets.
(b) All computations of interest and Fees hereunder shall be
made on the actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a)
------------------------------------------------
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
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<PAGE>
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, 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 12.03, such service to become effective 30 days after such
mailing. Each Credit Party hereby irrevocably appoints Holdings as its
agent for service of process in respect of any such action or proceeding.
Nothing herein shall affect the right of any Senior Managing Agent or any
Bank to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against either 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
the preceding clause (a) 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.
12.09 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
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with Holdings and the Payments Administrator.
12.10 Headings Descriptive. 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.
12.11 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the Required Banks; provided, that (x)
--------
no such change, waiver, discharge or termination shall, without the consent
of each Bank (other than a Defaulting Bank) affected thereby, (i) extend
the scheduled final maturity of any Loan or Note, or any portion thereof,
or reduce the rate or extend the time of payment of interest (other than as
a result of waiving the applicability of any post-default increase in
interest rates) thereon or Fees or reduce the principal amount thereof, or
increase the Commitment of any Bank over the amount thereof then in effect
(it being understood that a waiver of any Default or Event of Default or of
a mandatory
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<PAGE>
reduction in the Total Commitment shall not constitute a change in the
terms of the Commitment of any Bank), (ii) release the Guaranty, (iii)
amend, modify or waive any provision of this Section, or Section 1.11,
1.12, 1.14, 3.04, 9.01, 11.07, 12.01, 12.02, 12.04, 12.06, 12.07(b) or
12.14, (iv) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer
by either Credit Party of any of its rights and obligations under this
Agreement; and (y) the financial covenants set forth in Sections 8.03(h),
8.04(i), 8.05, 8.07, 8.08, 8.09 and 8.10 (and the defined terms used
therein) may be adjusted with the consent of Holdings, the Borrower and the
Majority SMA to the extent provided in Sections 7.09 and 12.07(a). No
provision of Section 11 may be amended or modified without the consent of
any Senior Managing Agent adversely affected thereby.
12.12 Survival. All indemnities set forth herein including,
--------
without limitation, in Section 1.11, 1.12, 3.04, 11.07 or 12.01 shall
survive the execution and delivery of this Agreement and the making of the
Loans, the repayment of the Obligations and the termination of the Total
Commitment.
12.13 Domicile of Loans. Subject to Section 12.04, each Bank
-----------------
may transfer and carry its Loans at, to or for the account of any branch
office, subsidiary or affiliate of such Bank; provided, that the Borrower
--------
shall not be responsible for costs arising under Section 1.11, 1.12 or 3.04
resulting from any such transfer (other than a transfer pursuant to Section
1.13) to the extent not otherwise applicable to such Bank prior to such
transfer.
12.14 Confidentiality. Subject to Section 12.04, each Bank
---------------
shall hold all non-public information furnished by or on behalf of Holdings
or the Borrower in connection with such Bank's evaluation of whether to
become a Bank hereunder or obtained pursuant to the requirements of this
Agreement, which has been identified as such by Holdings ("Confidential
Information"), in accordance with its customary procedure for handling
confidential information of this nature and in accordance with safe and
sound banking practices and in any event may make disclosure reasonably
required by any bona fide transferee or participant (which shall be an
Eligible Transferee) in connection with the contemplated transfer of any
Loans or participations therein or as required or requested by any
governmental agency or representative thereof or pursuant to legal process
or to such Bank's attorneys or independent auditors; provided, that, unless
--------
specifically prohibited by applicable law or court order, each Bank shall
notify Holdings of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of
the financial condition of such Bank by such governmental agency) for
disclosure of any such non-public information prior to disclosure of such
information; and provided further, that in no event shall any Bank be
----------------
obligated or required to return any materials furnished by Holdings or any
Subsidiary. Each Bank agrees that it will not provide to prospective
assignees, transferees or participants any of the Confidential
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<PAGE>
Information unless such Person has executed a Confidentiality Agreement in
the form of Exhibit D.
12.15 Waiver of Jury Trial. Each of the parties to this
--------------------
Agreement hereby irrevocably waives all right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this
Agreement, the other Credit Documents or the transactions contemplated
hereby or thereby.
SECTION 13. Guaranty.
--------
13.01 The Guaranty. In order to induce the Banks to enter into
------------
this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by the Guarantor from the proceeds of the
Loans, the Guarantor hereby agrees with the Banks as follows: the
Guarantor hereby unconditionally and irrevocably guarantees as primary
obligor and not merely as surety the full and prompt payment when due,
whether upon maturity, by acceleration or otherwise, of any and all
indebtedness of the Borrower to the Banks. If any or all of the indebted-
ness of the Borrower to the Banks becomes due and payable hereunder, the
Guarantor unconditionally promises to pay such indebtedness to the Banks,
or order, on demand, together with any and all expenses which may be
incurred by the Senior Managing Agents or the Banks in collecting any of
the indebtedness. The word "indebtedness" is used in this Section 13 in
its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of the Borrower arising in connection with this
Agreement and any other Credit Document, in each case, heretofore, now, or
hereafter made, incurred or created, whether voluntarily or involuntarily,
absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time
reduced, or extinguished and thereafter increased or incurred, whether the
Borrower may be liable individually or jointly with others, whether or not
recovery upon such indebtedness may be or hereafter become barred by any
statute of limitations, and whether or not such indebtedness may be or
hereafter become otherwise unenforceable.
13.02 Bankruptcy. Additionally, the Guarantor unconditionally
----------
and irrevocably guarantees the payment of any and all indebtedness of the
Borrower to the Banks whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 9.05, and unconditionally promises to pay such indebtedness to the
Banks, or order, on demand, in lawful money of the United States.
13.03 Nature of Liability. The liability of the Guarantor
-------------------
hereunder is exclusive and independent of any security for or other
guaranty of the indebtedness of the Borrower whether executed by the
Guarantor, any other guarantor or by any other party, and the liability of
the Guarantor hereunder shall not be affected or impaired by (a) any
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<PAGE>
direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower, or (c) any payment on or in reduction of any
such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any
payment made to the Senior Managing Agents or the Banks on the indebtedness
which the Senior Managing Agents or such Banks repay the Borrower pursuant
to court order in any bankruptcy, reorganization, arrangement, moratorium
or other debtor relief proceeding, and the Guarantor waives any right to
the deferral or modification of its obligations hereunder by reason of any
such proceeding.
13.04 Independent Obligation. The obligations of the Guarantor
----------------------
hereunder are independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted
against the Guarantor whether or not action is brought against any other
guarantor or the Borrower and whether or not any other guarantor or the
Borrower be joined in any such action or actions. The Guarantor waives, to
the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof.
Any payment by the Borrower or other circumstance which operates to toll
any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to the Guarantor.
13.05 Authorization. The Guarantor authorizes the Senior
-------------
Managing Agents and the Banks without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting
or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of, the indebtedness or any part
thereof in accordance with this Agreement, including any increase or
decrease of the rate of interest thereon, (b) take and hold security from
any guarantor or any other party for the payment of this guaranty or the
indebtedness and exchange, enforce, waive and release any such security,
(c) apply such security and direct the order or manner of sale thereof as
the Senior Managing Agents and the Banks in their discretion may determine
and (d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors.
13.06 Reliance. It is not necessary for the Senior Managing
--------
Agents or the Banks to inquire into the capacity or powers of the Borrower
or its Subsidiaries or the officers, directors, partners or agents acting
or purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
13.07 Subordination. Any indebtedness of the Borrower now or
-------------
hereafter held by the Guarantor is hereby subordinated to the indebtedness
of the Borrower to the
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<PAGE>
Senior Managing Agents and the Banks; and such indebtedness of the Borrower
to the Guarantor, if any Senior Managing Agent, after an Event of Default
has occurred, so requests, shall be collected, enforced and received by the
Guarantor as trustee for the Banks and be paid over to the Banks on account
of the indebtedness of the Borrower to the Banks, but without affecting or
impairing in any manner the liability of the Guarantor under the other
provisions of this Guaranty. Prior to the transfer by the Guarantor of any
note or negotiable instrument evidencing any indebtedness of the Borrower
to the Guarantor, the Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.
13.08 Waiver. (a) The Guarantor waives any right (except as
------
shall be required by applicable statute and cannot be waived) to require
the Senior Managing Agents or the Banks to (a) proceed against the
Borrower, any other guarantor or any other party, (b) proceed against or
exhaust any security held from the Borrower, any other guarantor or any
other party or (c) pursue any other remedy in the Senior Managing Agents'
or the Banks' power whatsoever. The Guarantor waives any defense based on
or arising out of any defense of the Borrower, any other guarantor or any
other party other than payment in full of the indebtedness, including,
without limitation, any defense based on or arising out of the disability
of the Borrower, any other guarantor or any other party, or the
unenforceability of the indebtedness or any part thereof from any cause, or
the cessation from any cause of the liability of the Borrower other than
payment in full of the indebtedness. The Senior Managing Agents and the
Banks may, at their election, foreclose on any security held by the Senior
Managing Agents or the Banks by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to
the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Senior Managing Agents and the Banks may have against
the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of the Guarantor hereunder except to the
extent the indebtedness has been paid. The Guarantor waives any defense
arising out of any such election by the Senior Managing Agents and the
Banks, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of the Guarantor
against the Borrower or any other party or any security. Until all
indebtedness of the Borrower to the Banks shall have been paid in full, the
Guarantor shall not have any right of subrogation, and waives any right to
enforce any remedy which the Senior Managing Agents and the Banks now have
or may hereafter have against the Borrower, and waives any benefit of, and
any right to participate in, any security now or hereafter held by the
Senior Managing Agents and the Banks.
(b) The Guarantor waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of
acceptance of this Guaranty, and notices of the existence, creation or
incurring of new or additional indebtedness. The Guarantor assumes
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<PAGE>
all responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the indebtedness and the nature, scope and extent
of the risks which the Guarantor assumes and incurs hereunder, and agrees
that the Senior Managing Agents and the Banks shall have no duty to advise
the Guarantor of information known to them regarding such circumstances or
risks.
13.09 Limitation on Enforcement. The Banks agree that this
-------------------------
Guaranty may be enforced only by the action of a Senior Managing Agent
acting upon the instructions of the Required Banks and that no Bank shall
have any right individually to seek to enforce or to enforce this Guaranty,
it being understood and agreed that such rights and remedies may be
exercised by each Senior Managing Agent for the benefit of the Banks upon
the terms of this Agreement.
* * *
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<PAGE>
RJRN
ANNEX III
---------
CERTAIN LITIGATION
------------------
As described on pages 6 through 12 and F-19 through F-24 of the Annual
Report on Form 10-K of the Credit Parties for the fiscal year ended December
31, 1994 that was filed with the Securities and Exchange Commission.
<PAGE>
RJRN
ANNEX IV
MATERIAL SUBSIDIARIES
---------------------
1. Establecimiento Modelo Terrabusi SAIC
2. RJR Nabisco, Inc.
3. Nabisco Holdings Corp.
4. R.J. Reynolds Tobacco Company
5. Nabisco, Inc.
6. Produtos Alimenticios Fleischmann e Royal Ltda.
7. Nabisco Brands Limited
8. RJR-Macdonald Inc.
9. R.J. Reynolds Tobacco GmbH
10. R.J. Reynolds Tobacco International S.A.
11. R.J. Reynolds Tobacco International (Asia Pacific), Inc.
12. R.J. Reynolds Tobacco B.V.
13. Royal Brands, S.A.
14. Various intermediate holding companies between the Borrower and the other
companies named above.
<PAGE>
<TABLE><CAPTION>
RJRN
ANNEX V
EXISTING LIENS
--------------
(In Millions)
<S> <C> <C>
DOMESTIC LIENS
RJR Nabisco, Inc. Winston-Salem S&L (NCP Annex) Land and Building
RJR Nabisco, Inc. Wachovia Bank & Trust (NCP Mortgage) Land and Building
RJR Nabisco, Inc. Wachovia Bank & Trust Certificate of Deposit
TOTAL DOMESTIC LIENS
INTERNATIONAL LIENS
RJR Mc T Co., Ltd Diamond Leasing Capitalized Leases
RJR Mc T Co., Ltd Ryoshin Leasing Capitalized Leases
RJRT B.V. Leasing Company Capitalized Leases
RJRT GMBH Industrie Kreditbank Long Term Debt
RJRTC Sdn. Bhd Aseam Bankers (M) Bhd. Capitalized Leases
TOTAL INTERNATIONAL LIENS
TOTAL LIENS
<CAPTION>
O/S BAL
12/31/94
<S> <C> <C>
DOMESTIC LIENS
RJR Nabisco, Inc. 11/01/1995 $0.1
RJR Nabisco, Inc. 02/01/2003 0.7
RJR Nabisco, Inc. 12/7/94 0.5
-----------
TOTAL DOMESTIC LIENS $1.3
INTERNATIONAL LIENS
RJR Mc T Co., Ltd $0.2
RJR Mc T Co., Ltd 0.1
RJRT B.V. 1.5
RJRT GMBH 31.3
RJRTC Sdn. Bhd 0.3
-----------
TOTAL INTERNATIONAL LIENS $33.4
-----------
TOTAL LIENS $34.7
===========
</TABLE>
<PAGE>
<TABLE><CAPTION>
RJRN
ANNEX VI
EXISTING SUBSIDIARY DEBT
(In Millions)
O/S BAL
12/31/94
-----------------------
<S> <C> <C>
DOMESTIC SUBSIDIARY DEBT
--------------------------------------
Letters of Credit $54.6
Surety Bonds 28.6
Contingent Obligations- Tax Bond 1.2
Guarantees: Cress Tobacco Co. Loan 24.7
-----------------------
TOTAL DOMESTIC SUBSIDIARY DEBT $109.1
FOREIGN SUBSIDIARY DEBT
--------------------------------------
Long Term Debt $77.1
Capital Leases 2.1
Mpm Trade Loc's 8.7
Short Term Credit Lines 258.3
-----------------------
TOTAL FOREIGN SUBSIDIARY DEBT (See attached schedule) $346.2
-----------------------
TOTAL SUBSIDIARY DEBT $455.3
=======================
</TABLE>
<PAGE>
<TABLE><CAPTION>
RJRN INTERNATIONAL CREDIT FACLITIES
IN MILLIONS (totals may not add exactly due to rounding)
13-Apr-95 USD EQUIV
O/S
COMPANY NAME LENDER CUR 4th Qtr. 94 FACILITY TYPE
<S> <C> <C> <C> <C>
CHINA-AMER. CIGARETTE CO. BANK OF CHINA RMB $9.2 S/T BANK LINE
RJ REYNOLDS FINANCE S.A. ISTITUTO BANCARIO SAN PAOLO USD $7.2 S/T BANK LINE
RJR MC T CO., LTD. DIAMOND LEASING JPY $0.2 CAPITALIZED LEASES
RJR MC T CO., LTD. MITSUBISHI BANK JPY $1.5 S/T BANK LINE
RJR MC T CO., LTD. RYOSHIN LEASING JPY $0.1 CAPITALIZED LEASES
RJR MC T CO., LTD. YASUDA TRUST JPY $1.0 S/T BANK LINE
RJR REKLAM CITIBANK TUL $0.1 S/T BANK LINE
RJR TOBACCO RT HUNGARY ABN AMRO HUF $0.9 S/T BANK LINE
RJR TOBACCO RT HUNGARY CENTRAL-EUROPEAN INT'L BK LTD. USD $0.5 S/T BANK LINE
RJR TOBACCO RT HUNGARY CITIBANK HUF $3.2 S/T BANK LINE
RJR TUTUN SANAYI A.S. CHEMICAL TUL $0.2 S/T BANK LINE
RJR TUTUN SANAYI A.S. CITIBANK TUL $0.9 S/T BANK LINE
RJR TUTUN SANAYI A.S. CITIBANK USD $29.0 LONG TERM DEBT
RJR TUTUN SANAYI A.S. RJR MACDONALD, INC. USD $9.0 LONG TERM DEBT
RJR TUTUN SANAYI A.S. YAPI KREDI BANK TUL $14.7 S/T BANK LINE
RJR-MACDONALD INC. CANADIAN IMPERIAL BANK OF COM. CAD $0.4 S/T BANK LINE
RJR-MACDONALD INC. COMMERCIAL PAPER INVESTORS CAD $83.6 S/T BANK LINE
RJRT B.V. LEASING COMPANY NGL $1.5 CAPITALIZED LEASES
RJRT GMBH DEUTSCHE BANK AG DEM $32.3 S/T BANK LINE
RJRT GMBH ELSASS B/ SOCIETE GENERALE DEM $19.4 S/T BANK LINE
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $3.4 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $2.7 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $3.2 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $8.8 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $7.8 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $5.6 LONG TERM DEBT
RJRT GMBH INDUSTRIE KREDITBANK (IDI) DEM $7.8 LONG TERM DEBT
RJRT GMBH WESTDEUTCHE - LANDESBANK DEM $29.0 S/T BANK LINE
RJRT GMBH - BELGIUM BR. BANQUE BRUXELLLES LAMBERT BEF $0.7 NON-TRADE LC'S-OTHER
RJRT GMBH - BELGIUM BR. KREDIETBANK BEF $0.3 S/T BANK LINE
RJRT GMBH - BELGIUM BR. KREDIETBANK BEF $8.0 NON-TRADE LC'S-OTHER
RJRTC SDN. BHD. ASEAM BANKERS (M) BHD. MYR $0.3 CAPITALIZED LEASES
RJRTI (AP) JAPAN BRANCH MITSUBISHI BANK JPY $51.2 S/T BANK LINE
RJRTI-KOREA CITIBANK USD $2.5 S/T BANK LINE
R.J. REYNOLDS ITALIA S.R.L. MONTE DEI PASCHI DI SIENA ITL $0.3 S/T BANK LINE
WORLDWIDE BRANDS INC. BANK OF AMERICA USD $0.1 S/T BANK LINE
CANADA SHORT TERM LINES
FUNGIBLE SHORT TERM LINES
GRAND TOTALS: $346.2
</TABLE>
Exhibit 10.4
FIRST AMENDMENT TO NABISCO CREDIT AGREEMENT
-------------------------------------------
AMENDMENT (this "Amendment"), dated as of July 24, 1995, among NABISCO
HOLDINGS CORP., a Delaware corporation ("Holdings"), NABISCO, INC., a New
Jersey corporation (the "Borrower") and the lending institutions party to
the Credit Agreement referred to below. All capitalized terms used herein
and not otherwise defined herein shall have the respective meanings
provided such terms in the Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, the Borrower and various lending institutions
(the "Banks") are parties to a Credit Agreement, dated as of April 28, 1995
(the "Credit Agreement"); and
WHEREAS, Holdings, the Borrower and the Banks wish to amend the
Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments to the Credit Agreement.
----------------------------------
1. Section 1.04 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and by inserting the following new
Section 1.04 in lieu thereof:
"1.04 Competitive Bid Borrowings. (a) Whenever the Borrower
--------------------------
desires to incur a Competitive Bid Borrowing, it shall deliver to the
Payments Administrator at the Payments Administrator's Office, prior to
11:00 A.M. (New York time) (x) at least four Business Days prior to the
date of such proposed Competitive Bid Borrowing in the case of a Spread
Borrowing, and (y) at least one Business Day prior to the date of such
proposed Competitive Bid Borrowing, in the case of an Absolute Rate
Borrowing, a written notice (a "Notice of Competitive Bid Borrowing"),
which notice shall specify in each case (i) the date (which shall be a
Business Day) and the aggregate amount of the proposed Competitive Bid
Borrowing, (ii) the maturity date for repayment of each and every Compet-
itive Bid Loan to be made as part of such Competitive Bid Borrowing (which
maturity date may be (A) one, two, three or six months after the date of
such Competitive Bid Borrowing in the case of a Spread Borrowing, and (B)
between 7 and 180 days, inclusive, after the date of
<PAGE>
such Competitive Bid Borrowing in the case of an Absolute Rate Borrowing,
provided that in no event shall the maturity date of any Competitive Bid
--------
Borrowing be later than the third Business Day preceding the Maturity
Date), (iii) the interest payment date or dates relating thereto, (iv)
whether the proposed Competitive Bid Borrowing is to be an Absolute Rate
Borrowing or a Spread Borrowing, and if a Spread Borrowing, the Interest
Rate Basis, and (v) any other terms to be applicable to such Competitive
Bid Borrowing. The Payments Administrator shall promptly notify each
Bidder Bank of each such request for a Competitive Bid Borrowing received
by it from the Borrower by telecopying to each such Bidder Bank a copy of
the related Notice of Competitive Bid Borrowing.
(b) Each Bidder Bank shall, if, in its sole discretion, it
elects to do so, irrevocably offer to make one or more Competitive Bid
Loans to the Borrower as part of such proposed Competitive Bid Borrowing at
a rate or rates of interest (which shall be a specified Spread over or
under the Interest Rate Basis in the case of a Spread Borrowing or an
Absolute Rate in the case of an Absolute Rate Borrowing) specified by such
Bank in its sole discretion and determined by such Bank independently of
each other Bank, by notifying the Payments Administrator (which shall give
prompt notice thereof to the Borrower) before 10:00 A.M. (New York time) on
the date (the "Reply Date") which is (x) in the case of an Absolute Rate
Borrowing, the date of such proposed Competitive Bid Borrowing and (y) in
the case of a Spread Borrowing, three Business Days before the date of such
proposed Competitive Bid Borrowing, of the minimum amount and maximum
amount of each Competitive Bid Loan which such Bank would be willing to
make as part of such proposed Competitive Bid Borrowing (which amounts may,
subject to the proviso to Section 1.01(D), exceed such Bank's Commitment),
the rate or rates of interest therefor and such Bank's lending office with
respect to such Competitive Bid Loan, provided that if the Payments
--------
Administrator in its capacity as a Bank shall, in its sole discretion,
elect to make any such offer, it shall notify the Borrower of such offer
before 9:30 A.M. (New York time) on the Reply Date. Any Bidder Bank not
giving the Payments Administrator the notice specified in the preceding
sentence shall not be obligated to, and shall not, make any Competitive Bid
Loan as part of such Competitive Bid Borrowing.
(c) The Borrower shall, in turn, before 11:00 A.M. (New York
time) (x) on the Reply Date in the case of a proposed Absolute Rate
Borrowing and (y) on the Business Day following the Reply Date in the case
of a proposed Spread Borrowing, either:
(i) cancel such Competitive Bid Borrowing by giving the
Payments Administrator notice to such effect, or
(ii) accept one or more of the offers made by any Bidder
Bank or Banks by giving notice (in writing or by telephone
confirmed in writing) to the Payments Administrator of the amount
of each Competitive Bid Loan (which amount shall be equal to or
greater than the minimum amount, and equal to or less than the
maximum amount, notified to the Borrower by the
-2-
<PAGE>
Payments Administrator on behalf of such Bidder Bank for such Competi-
tive Bid Borrowing) to be made by each Bidder Bank as part of such
Competitive Bid Borrowing, and reject any remaining offers made by
Banks by giving the Payments Administrator notice to that effect, pro-
----
vided that (x) acceptance of offers may only be made on the basis of
-----
ascending Absolute Rates (in the case of an Absolute Rate Borrowing)
or Spreads (in the case of a Spread Borrowing), commencing with the
lowest rate so offered and (y) if offers are made by two or more
Bidder Banks at the same rate and acceptance of all such equal offers
would result in a greater principal amount of Competitive Bid Loans
being accepted than the aggregate principal amount requested by the
Borrower, the Borrower shall then have the right to accept one or more
such equal offers in their entirety and reject the other equal offer
or offers or to allocate acceptance among all such equal offers (but
giving effect to the minimum and maximum amounts specified for each
such offer), as the Borrower may elect in its sole discretion,
provided further that in no event shall the aggregate principal amount
----------------
of the Competitive Bid Loans accepted by the Borrower as part of a
Competitive Bid Borrowing exceed the amount specified by the Borrower
in the related Notice of Competitive Bid Borrowing.
(d) If the Borrower notifies the Payments Administrator that
such Competitive Bid Borrowing is cancelled, the Payments Administrator
shall give prompt notice thereof to the Bidder Banks and such Competitive
Bid Borrowing shall not be made.
(e) If the Borrower accepts one or more of the offers made by
any Bidder Bank or Banks, the Payments Administrator shall in turn promptly
notify (x) each Bidder Bank that has made an offer of the date and aggre-
gate amount of such Competitive Bid Borrowing and whether or not any offer
or offers made by such Bidder Bank have been accepted by the Borrower and
(y) each Bidder Bank that is to make a Competitive Bid Loan as part of such
Competitive Bid Borrowing of the amount of each Competitive Bid Loan to be
made by such Bidder Bank.
(f) On the last Business Day of each calendar quarter, the
Payments Administrator shall notify the Banks of the aggregate principal
amount of Competitive Bid Loans outstanding at such time.".
2. Section 1.10 of the Credit Agreement is hereby amended by (i)
deleting the first sentence thereof in its entirety and inserting the
following new sentence in lieu thereof:
"At the time the Borrower gives a Notice of Borrowing or Notice
of Conversion in respect of the making of, or conversion into, a
Borrowing of Eurodollar Loans (in the case of the initial
Interest Period applicable
-3-
<PAGE>
thereto) or prior to 11:00 A.M. (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by
giving the Agent written notice (or telephonic notice promptly
confirmed in writing) of the Interest Period applicable to such
Borrowing, which Interest Period shall, at the option of the Borrower,
be a one, two, three or six month period.";
(ii) inserting the phrase "or a Spread Borrowing priced by reference to the
Eurodollar Rate" immediately after the phrase "Eurodollar Loans" appearing
in clause (ii) of said Section 1.10 and (iii) inserting the phrase "or a
Spread Borrowing priced by reference to the Eurodollar Rate" immediately
after the phrase "Eurodollar Loans" appearing in clause (iii) of said
Section 1.10.
3. Section 8.02(b) of the Credit Agreement is hereby amended by
deleting the phrase "the Borrower" the first time such phrase appears
therein in its entirety and inserting the word "Holdings" in lieu thereof.
4. The definition of "Commercial Paper Outstandings" appearing
in Section 10 of the Credit Agreement shall be amended by deleting the
dollar amount "$1,000,000,000" appearing therein in its entirety and
inserting the dollar amount "$1,500,000,000" in lieu thereof.
5. Section 10 of the Credit Agreement shall be further amended
by (i) deleting the definitions "Eurodollar Rate" and "Interest Period" in
their entirety and (ii) inserting the following definitions in appropriate
alphabetical order:
"Absolute Rate Borrowing" shall mean a Competitive Bid Borrowing
with respect to which the Borrower has requested that the Banks offer
to make Competitive Bid Loans at Absolute Rates.
"Eurodollar Rate" shall mean with respect to each Interest Period
for a Eurodollar Loan (or for a Spread Borrowing priced by reference
to the Eurodollar Rate), (i) the arithmetic average (rounded to the
nearest 1/100 of 1%) of the offered quotation to first-class banks in
the interbank Eurodollar market by each Reference Bank for dollar
deposits of amounts in same day funds comparable to the outstanding
principal amount of the Eurodollar Loan of such Reference Bank for
which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar
Loan (or in the case of such Spread Borrowing, the arithmetic average
of the offered rates for deposits in U.S. dollars for the applicable
Interest Period (or the period closest to such applicable Interest
Period) which appear on the Reuters Screen LIBO Page), determined as
of 10:00 A.M. (New York time) on the date which is two Business Days
prior to the commencement of such Interest Period, divided (and
rounded upward to the next
-4-
<PAGE>
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities
under Regulation D), provided, that if one or more of the Reference
--------
Banks fails to provide the Payments Administrator with its aforesaid
rate for an Interest Period applicable to Eurodollar Loans, then the
Eurodollar Rate for such Interest Period shall be determined based on
the rate or rates provided to the Payments Administrator by the other
Reference Bank or Banks.
"Interest Period" shall mean with respect to (i) any Revolving
Loan constituting a Eurodollar Loan, the interest period applicable
thereto as determined pursuant to Section 1.10 and (ii) any
Competitive Bid Loan, the period from the date of the making thereof
to the maturity date thereof as specified in the respective Notice of
Competitive Bid Borrowing.
"Interest Rate Basis" shall mean the Eurodollar Rate and/or such
other basis for determining an interest rate as the Borrower and the
Payments Administrator may agree upon from time to time.
"Spread" shall mean a percentage per annum (rounded to the
nearest .0001%) in excess of, or less than, an Interest Rate Basis.
"Spread Borrowing" shall mean a Competitive Bid Borrowing with
respect to which the Borrower has requested the Banks to make
Competitive Bid Loans at a Spread over or under a specified Interest
Rate Basis."
II. Miscellaneous Provisions
------------------------
1. In order to induce the Banks to enter into this Amendment
each Credit Party hereby (i) makes each of the representations, warranties
and agreements contained in Section 6 of the Credit Agreement and (ii)
represents and warrants that there exists no Default or Event of Default,
in each case on the Amendment Date (as defined below), after giving effect
to this Amendment.
2. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of
the Credit Agreement or any other Credit Document.
-5-
<PAGE>
3. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete
set of counterparts shall be lodged with Holdings and the Payments
Administrator.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.
5. This Amendment shall become effective on the date (the
"Amendment Date") when each of the Credit Parties and the Banks
constituting Required Banks shall have signed a copy hereof (whether the
same or different copies) and shall have delivered (including by way of
facsimile transmission) the same to White & Case, 1155 Avenue of the
Americas, New York, New York 10036, Attention: Eric F. Leicht, Esq.
(Facsimile No.: (212) 354-8113). In addition, after transmitting its
executed signature page as provided above, each of the Banks shall deliver
executed hard copies of this Amendment to White & Case, 1155 Avenue of the
Americas, New York, New York 10036, Attention: Eric F. Leicht, Esq.
* * *
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the
date first above written.
NABISCO HOLDINGS CORP.
By
-------------------------------------------
Title:
NABISCO, INC.
By
-------------------------------------------
Title:
-7-
Exhibit 10.5
AGREEMENT AND WAIVER TO THE 3 YEAR CREDIT AGREEMENT
---------------------------------------------------
AGREEMENT AND WAIVER TO THE 364 DAY CREDIT AGREEMENT
----------------------------------------------------
AGREEMENT (this "Agreement"), dated as of July 27, 1995, among RJR NABISCO
HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a
Delaware corporation (the "Borrower"), and the lending institutions party
to the 3 Year Credit Agreement and the 364 Day Credit Agreement referred to
below. All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided such terms in the 3 Year Credit
Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, the Borrower and various lending institutions
(the "3 Year Banks") are parties to a Credit Agreement, dated as of April
28, 1995 (the "3 Year Credit Agreement"); and
WHEREAS, Holdings, the Borrower and various lending institutions
(the "364 Day Banks"; and together with the 3 Year Banks, the "Banks") are
parties to a Credit Agreement, dated as of April 28, 1995 (the "364 Day
Credit Agreement" and, together with the 3 Year Credit Agreement, the
"Credit Agreements");
WHEREAS, Holdings, the Borrower and the 3 Year Banks wish to
enter into the agreements and waivers with respect to the 3 Year Credit
Agreement as herein provided;
WHEREAS, Holdings, the Borrower and the 364 Day Banks wish to
enter into the agreements and waivers with respect to the 364 Day Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. Agreement with Respect to the Credit Agreements
-----------------------------------------------
1. Each of the Banks hereby agrees that the phrase "preferred
stock" appearing in the definition of "Consolidated Cash Interest Expense"
contained in Section 10 of the Credit Agreement to which it is a party does
not include Holdings' Series A Conversion Preferred Stock, Series C
Conversion Preferred Stock or ESOP Convertible Preferred Stock.
II. Waiver with Respect to the Credit Agreements
--------------------------------------------
<PAGE>
1. Each of the Banks hereby waives compliance by Holdings with
the terms of Section 8.09 of each of the Credit Agreements to which it is a
party for the Test Period ending June 30, 1995, provided that the waiver
--------
set forth in this Section II (1) shall cease to have full force and effect
in the event that the ratio of (i) Adjusted Consolidated Debt to (ii)
Adjusted Operating Income for the Test Period ended on June 30, 1995 shall
be more than 2.62:1. Each of the Banks hereby further waives any Default
or Event of Default under each of the Credit Agreements to which it is a
party which may have occurred on or prior to the Agreement Date solely from
Holdings' failure to comply with the requirements of Section 8.09 under
each of the Credit Agreements to which it is a party for the Test Period
ended June 30, 1995 without giving effect to the proviso contained in the
immediately preceding sentence.
III. Miscellaneous Provisions
------------------------
1. In order to induce the Banks to enter into this Agreement,
each Credit Party hereby (i) makes each of the representations, warranties
and agreements contained in Section 6 of each Credit Agreement and (ii)
represents and warrants that there exists no Default or Event of Default,
in each case on the Agreement Date (as defined below), after giving effect
to this Agreement.
2. This Agreement is limited as specified and shall not
constitute a modification, acceptance, agreement or waiver of any other
provision of either Credit Agreement or any other Credit Document (as
defined in each Credit Agreement).
3. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete
set of counterparts shall be lodged with Holdings and the Payments
Administrator.
4. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.
5. This Agreement shall become effective on the date (the
"Agreement Date") when (i) each of the Credit Parties, (ii) the 3 Year
Banks constituting Required Banks under the 3 Year Credit Agreement and
(iii) and the 364 Day Banks constituting Required Banks under the 364 Day
Credit Agreement, shall have signed a copy hereof (whether the same or
different copies) and shall have delivered (including by way of facsimile
transmission) the same to White & Case, 1155 Avenue of the Americas, New
York, New York 10036, Attention: Eric F. Leicht, Esq. (Facsimile No.:
(212) 354-8113). In addition, after transmitting its executed signature
page as provided above, each of the Banks shall deliver executed hard
copies of this Agreement to White & Case, 1155 Avenue of the Americas, New
York, New York 10036, Attention: Eric F. Leicht, Esq.
-2-
EXHIBIT 11.1
RJR NABISCO HOLDINGS CORP.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1994
---------------------------- ----------------------------
PRIMARY FULLY DILUTED(A) PRIMARY FULLY DILUTED(A)
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Average number of common and common equivalent
shares outstanding during the period (in
thousands):
Common Stock and Series C Depositary Shares
issued and outstanding at beginning of
period........................................ 325,229 325,229 269,718 269,718
Average number of shares of common stock issued
during the period (including shares of common
stock issued during the period through the
exercise of options).......................... -- -- 32,344 32,344
Average number of shares related to value of
restricted stock earned during the period..... 10 10 -- --
Average number of stock options outstanding
during the period and shares issuable under
performance shares granted.................... 993 993 1,829 2,076
Shares issuable upon conversion of ESOP
convertible preferred stock................... -- 3,042 -- 3,101
--------- -------- --------- --------
Average number of common and common equivalent
shares outstanding during the period.......... 326,232 329,274 303,891 307,239
--------- -------- --------- --------
--------- -------- --------- --------
Income (loss) applicable to common stock:
Income before extraordinary item................ $ 153 $ 153 $ 192 $ 192
Preferred stock dividends....................... (32) (29) (32) (29)
Income tax benefit on ESOP preferred stock
dividends..................................... -- -- -- (1)
--------- -------- --------- --------
Income before extraordinary item applicable to
common stock.................................. 121 124 160 162
Extraordinary item.............................. -- -- (146) (146)
--------- -------- --------- --------
Net income applicable to common stock........... $ 121 $ 124 $ 14 $ 16
--------- -------- --------- --------
--------- -------- --------- --------
Income (loss) per common and common equivalent
share:
Income before extraordinary item................ $ 0.37 $ 0.38 $ 0.53 $ 0.53
Extraordinary item.............................. -- -- (0.48) (0.48)
--------- -------- --------- --------
Net income...................................... $ 0.37 $ 0.38 $ 0.05 $ 0.05
--------- -------- --------- --------
--------- -------- --------- --------
</TABLE>
------------
(A) For purposes of this Exhibit, the calculations of fully diluted earnings per
share include common stock equivalents and other potentially dilutive
securities that produce an anti-dilutive result.
EXHIBIT 11.2
RJR NABISCO HOLDINGS CORP.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1994
------------------------ ----------------------
FULLY FULLY
PRIMARY DILUTED(A) PRIMARY DILUTED(A)
---------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Average number of common and common equivalent
shares outstanding during the period (in
thousands):
Common Stock and Series C Depositary Shares
issued and outstanding at beginning of
period...................................... 325,107 325,107 269,602 269,602
Average number of shares of common stock issued
during the period (including shares of common
stock issued during the period through the
exercise of options).......................... 103 103 16,276 16,276
Average number of shares related to value of
restricted stock earned during the period..... 6 6 -- --
Average number of stock options outstanding
during the period and shares issuable under
performance shares granted.................... 1,101 1,181 2,614 2,738
Shares issuable upon conversion of ESOP
convertible preferred stock................... 3,049 -- 3,107
---------- ---------- -------- ----------
Average number of common and common equivalent
shares outstanding during the period.......... 326,317 329,446 288,492 291,723
---------- ---------- -------- ----------
---------- ---------- -------- ----------
Income (loss) applicable to common stock:
Income before extraordinary item................ $ 351 $ 351 $ 386 $ 386
Preferred stock dividends....................... (65) (58) (65) (58)
Income tax benefit on ESOP preferred stock
dividends..................................... -- (1) -- (1)
---------- ---------- -------- ----------
Income before extraordinary item applicable to
common stock.................................. 286 292 321 327
Extraordinary item.............................. -- -- (145) (145)
---------- ---------- -------- ----------
Net income applicable to common stock........... $ 286 $ 292 $ 176 $ 182
---------- ---------- -------- ----------
---------- ---------- -------- ----------
Income (loss) per common and common equivalent
share:
Income before extraordinary item................ $ 0.88 $ 0.89 $ 1.11 $ 1.12
Extraordinary item.............................. -- -- (0.48) (0.48)
---------- ---------- -------- ----------
Net income...................................... $ 0.88 $ 0.89 $ 0.63 $ 0.64
---------- ---------- -------- ----------
---------- ---------- -------- ----------
</TABLE>
------------
(A) For purposes of this Exhibit, the calculations of fully diluted earnings per
share include common stock equivalents and other potentially dilutive
securities that produce an anti-dilutive result.
EXHIBIT 12.1
RJR NABISCO HOLDINGS CORP.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995
----------------
<S> <C>
Earnings before fixed charges:
Income before minority interest in income of Nabisco......................... $ 374
Provision for income taxes................................................... 293
--------
Income before income taxes................................................... 667
Interest and debt expense.................................................... 442
Interest portion of rental expense........................................... 26
--------
Earnings before fixed charges.................................................. $ 1,135
--------
--------
Combined fixed charges and preferred stock dividends:
Interest and debt expense.................................................... $ 442
Interest portion of rental expense........................................... 26
Capitalized interest......................................................... 6
Preferred stock dividends*................................................... 222
--------
Combined fixed charges and preferred stock dividends....................... $ 696
--------
--------
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends...... 1.6
--------
--------
</TABLE>
------------
* Represents dividends of $10 million on ESOP Preferred Stock and pre-tax
equivalent amount on dividends of $58 million on the Series B Preferred Stock
and $80 million on the Series C PERCS.
EXHIBIT 12.2
RJR NABISCO, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995
--------------
<S> <C>
Earnings before fixed charges:
Income before minority interest in income of Nabisco....................... $ 376
Provision for income taxes................................................. 296
-------
Income before income taxes................................................. 672
Interest and debt expense.................................................. 442
Interest portion of rental expense......................................... 26
-------
Earnings before fixed charges................................................ $1,140
-------
-------
Fixed charges:
Interest and debt expense.................................................. $ 442
Interest portion of rental expense......................................... 26
Capitalized interest....................................................... 6
-------
Total fixed charges...................................................... $ 474
-------
-------
Ratio of earnings to fixed charges........................................... 2.4
-------
-------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS EXHIBIT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RJRN HOLDINGS' CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000847903
<NAME> RJR NABISCO HOLDINGS CORP.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 772
<SECURITIES> 0
<RECEIVABLES> 1,245
<ALLOWANCES> 0
<INVENTORY> 2,579
<CURRENT-ASSETS> 5,010
<PP&E> 8,097
<DEPRECIATION> (2,565)
<TOTAL-ASSETS> 31,894
<CURRENT-LIABILITIES> 3,870
<BONDS> 9,867
<COMMON> 3
3
1,317
<OTHER-SE> 10,007
<TOTAL-LIABILITY-AND-EQUITY> 31,894
<SALES> 7,621
<TOTAL-REVENUES> 7,621
<CGS> 3,496
<TOTAL-COSTS> 6,357
<OTHER-EXPENSES> (155)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (442)
<INCOME-PRETAX> 667
<INCOME-TAX> 293
<INCOME-CONTINUING> 351
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 351
<EPS-PRIMARY> .88
<EPS-DILUTED> .89
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS EXHIBIT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RJRN'S CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000083612
<NAME> RJR NABISCO, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 772
<SECURITIES> 0
<RECEIVABLES> 1,245
<ALLOWANCES> 0
<INVENTORY> 2,579
<CURRENT-ASSETS> 5,010
<PP&E> 8,097
<DEPRECIATION> (2,565)
<TOTAL-ASSETS> 31,892
<CURRENT-LIABILITIES> 3,727
<BONDS> 9,867
<COMMON> 0
0
0
<OTHER-SE> 11,926
<TOTAL-LIABILITY-AND-EQUITY> 31,892
<SALES> 7,621
<TOTAL-REVENUES> 7,621
<CGS> 3,496
<TOTAL-COSTS> 6,350
<OTHER-EXPENSES> (157)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (442)
<INCOME-PRETAX> 672
<INCOME-TAX> 296
<INCOME-CONTINUING> 353
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 353
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
