FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission file number 1-10716
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2687639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
315 East Eisenhower Parkway, Ann Arbor, Michigan 48108
(Address of principal executive offices) (Zip Code)
(313) 747-7025
(Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding at
Class July 31, 1996
Common Stock, $.01 Par Value 36,670,013
<PAGE>
TRIMAS CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
June 30, 1996 and December 31, 1995 1
Consolidated Condensed Statements of
Income for the Three Months and Six
Months Ended June 30, 1996 and 1995 2
Consolidated Condensed Statements of
Cash Flows for the Six Months
Ended June 30, 1996 and 1995 3
Notes to Consolidated Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5
Part II. Other Information and Signature 9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31,
1996 1995
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $108,570,000 $ 92,390,000
Receivables 92,110,000 71,200,000
Inventories 86,410,000 85,490,000
Other current assets 2,350,000 2,510,000
Total current assets 289,440,000 251,590,000
Property and equipment 176,020,000 173,700,000
Excess of cost over net assets
of acquired companies 142,730,000 144,860,000
Other assets 44,960,000 46,210,000
Total assets $653,150,000 $616,360,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 27,800,000 $ 24,390,000
Other current liabilities 33,590,000 29,740,000
Total current liabilities 61,390,000 54,130,000
Deferred income taxes and other 37,950,000 36,360,000
Long-term debt 187,040,000 187,200,000
Total liabilities 286,380,000 277,690,000
Shareholders' equity:
Common stock, $.01 par value, authorized
100 million shares, outstanding 36.6
million shares 370,000 370,000
Paid-in capital 154,920,000 155,430,000
Retained earnings 213,310,000 185,370,000
Cumulative translation adjustments (1,830,000) (2,500,000)
Total shareholders' equity 366,770,000 338,670,000
Total liabilities and
shareholders' equity $653,150,000 $616,360,000
The accompanying notes are an integral part of the
consolidated financial statements.
1
<PAGE>
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $307,900,000 $299,520,000 $160,200,000 $151,920,000
Cost of sales (206,980,000) (201,390,000) (106,740,000) (101,390,000)
Selling, general and
administrative expenses (45,860,000) (44,230,000) (22,870,000) (21,100,000)
Operating profit 55,060,000 53,900,000 30,590,000 29,430,000
Interest expense (5,520,000) (7,440,000) (2,830,000) (3,700,000)
Other, net (principally
interest income) 2,840,000 3,130,000 1,450,000 1,650,000
(2,680,000) (4,310,000) (1,380,000) (2,050,000)
Income before income
taxes 52,380,000 49,590,000 29,210,000 27,380,000
Income taxes 20,430,000 19,590,000 11,390,000 10,820,000
Net income $ 31,950,000 $ 30,000,000 $ 17,820,000 $ 16,560,000
Earnings per common
share:
Primary $.86 $.81 $.48 $.45
Fully diluted $.80 $.76 $.45 $.42
Dividends declared per
common share $.11 $.09 $.06 $.05
Weighted average number
of common and common
equivalent shares
outstanding:
Primary 36,968,000 36,994,000 36,983,000 37,001,000
Fully diluted 42,065,000 42,088,000 42,065,000 42,088,000
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
<PAGE>
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1996 1995
CASH FROM (USED FOR):
OPERATIONS:
Net income $ 31,950,000 $ 30,000,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 11,510,000 10,850,000
Deferred income taxes 2,200,000 1,400,000
(Increase) decrease in receivables (20,010,000) (20,370,000)
(Increase) decrease in inventories (920,000) (2,950,000)
Increase (decrease) in accounts
payable and other current
liabilities 6,590,000 4,090,000
Other, net (140,000) (3,110,000)
Net cash from (used for)
operations 31,180,000 19,910,000
INVESTMENTS:
Capital expenditures (11,140,000) (9,930,000)
Net cash from (used for)
investments (11,140,000) (9,930,000)
FINANCING:
Retirement of long-term debt (200,000) (270,000)
Common stock dividends paid (3,660,000) (2,930,000)
Net cash from (used for)
financing (3,860,000) (3,200,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period 16,180,000 6,780,000
At beginning of period 92,390,000 107,670,000
At end of period $108,570,000 $114,450,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
<PAGE>
TRIMAS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
A. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation
have been included, and such adjustments are of a normal recurring nature.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. For further information, refer
to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31,
1995. Certain amounts in the 1995 financial statements have been
reclassified to conform with the current presentation.
B. Inventories by component are as follows:
June 30, December 31,
1996 1995
Finished goods $46,980,000 $47,490,000
Work in process 13,990,000 14,200,000
Raw material 25,440,000 23,800,000
$86,410,000 $85,490,000
C. Property and equipment reflects accumulated depreciation of $125.1 million
and $116.8 million as of June 30, 1996 and December 31, 1995, respectively.
4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Consolidated net sales during the second quarter of 1996 equaled $160.2
million, an increase of 5.5 percent over the comparable 1995 period and the
highest quarterly total in Company history. Record sales during the first half
of 1996 equaled $307.9 million, compared to $299.5 million in 1995. The
Company's Towing Systems, Specialty Container Products and Corporate Companies
segments all recorded increased sales during the six months and quarter ended
June 30, 1996.
Second quarter sales by the Towing Systems segment increased to $56.4
million, compared to $55.1 million in the second quarter of 1995. Increased
sales to both independent hitch installers and to the specialty automotive
retail market were partially offset by lower sales to the marine aftermarket.
Ongoing new product introductions also aided second quarter sales performance.
Unfavorable weather conditions which began during the first quarter continued
into the second quarter and negatively affected segment sales performance.
First half segment sales equaled $105.6 million, which compares to $103.3
million in 1995.
Second quarter 1996 sales for the Specialty Fasteners segment were $37.1
million, which equaled sales recorded in the comparable period of 1995. Sales
during the first half of 1996 of $73.1 million decreased $3.0 million compared
to 1995 because first quarter sales were below last year's level. First half
sales were negatively impacted by reduced sales to the heavy-duty truck and
appliance markets, and decreased demand for automotive related metallurgical
services. Increasing build rates at aerospace manufacturers has lead to an
increase in segment sales of aerospace fasteners.
5
<PAGE>
Sales for the Specialty Container Products segment for the second quarter
and first six months ended June 30, 1996 increased 12.9 percent and 6.5 percent
respectively. Second quarter sales equaled $47.0 million bringing the six month
total to $89.8 million. Export sales of specialty compressed gas cylinders to
the medical industry in the Far East contributed to the second quarter
increase. Increasing demand for specialty gasket products used by industrial
processing industries also added to this segment's sales performance. The
Corporate Companies segment sales increased 10.3 percent for the first six
months of 1996 to $39.4 million. Sales of specialty insulation products
increased as the commercial construction market continued to improve.
The Company's consolidated gross margin for the first six months of both
1996 and 1995 equaled 32.8 percent. During the second quarters of 1996 and 1995
gross margin equaled 33.4 percent and 33.3 percent respectively. Because of the
seasonal factors relating to the Towing Systems segment, gross margin recorded
in the second quarter is typically higher than that which is realized during the
first quarter.
The Company's consolidated operating profit for the first six months of
1996 increased to $55.1 million and represented an operating margin of 17.9
percent compared to 1995's first six months operating profit of $53.9 million or
18.0 percent of net sales. Operating profit for the second quarter 1996 of
$30.6 million represented an operating margin of 19.1 percent.
Interest expense decreased in the six and three month periods ended
June 30, 1996 primarily because of the $51.5 million reduction of long-term debt
in the third quarter of 1995, and because of lower prevailing interest rates.
Consequently, lower levels of cash and cash equivalents and lower interest rates
during 1996 resulted in lower interest income during the current periods.
6
<PAGE>
Net income for the six months and three months ended June 30, 1996 was
$32.0 million and $17.8 million respectively, compared to $30.0 million and
$16.6 million in last year's comparable periods. Primary earnings per common
share increased 6.2 percent to $.86 for the first six months of 1996 compared
to 1995's primary earnings per common share of $.81, both based on 37.0 million
shares outstanding. Fully diluted earnings per common share increased 5.3
percent to $.80 versus $.76 last year, both based on 42.1 million shares
outstanding. Primary and fully diluted earnings per common share for the second
quarter of 1996 were $.48 and $.45, compared to $.45 and $.42 last year.
Liquidity, Working Capital and Cash Flows
The Company's financial strategies include maintaining a relatively high
level of liquidity. Historically, TriMas Corporation has generated sufficient
cash flows from operating activities to fund capital expenditures, debt service
and dividends, while maintaining its strategic level of liquidity. At June 30,
1996 the current ratio was 4.7 to 1 and working capital equaled $228.1 million,
including $108.6 million of cash and cash equivalents. The Company had
available credit of $278.0 million under its revolving credit facility at June
30, 1996.
Cash flows from operations provided $31.2 million and $19.9 million during
the first six months of 1996 and 1995 respectively. These operating cash flows
were net of increases in accounts receivable of $20.0 million in 1996 and $20.4
million in 1995 due mainly to the seasonality of the Towing Systems segment, as
well as the increased sales levels. Historically, the cash flow provided by the
seasonal increase in receivables is realized later in the year. A corresponding
increase in accounts payable and accrued liabilities provided cash flow of $6.6
million and $4.1 million in the first
7
<PAGE>
six months of 1996 and 1995 respectively. Capital expenditures during the first
six months equaled $11.1 million in 1996 and $9.9 million in 1995. Common stock
dividends totaled $3.7 million in 1996 versus $2.9 million in 1995.
In late June, the Company acquired Queensland Towbar Pty. Ltd., Australia's
second largest manufacturer of vehicle hitches and towing products. During
July, the Company acquired The Englass Group Limited, a United Kingdom-based
supplier of specialty dispensing and packaging products. Annualized combined
sales of Queensland Towbar and Englass are in excess of $20.0 million.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets, are adequate to fund its
strategies for future growth, including working capital, expenditures for
manufacturing expansion and efficiencies, market share initiatives, and
corporate development activities.
8
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on May 15, 1996 at which
the two nominees for the Company's Board of Directors, identified in
the Company's proxy statement dated April 11, 1996, were re-elected
and the selection of Coopers & Lybrand L.L.P. to audit the Company's
financial statements for the year 1996 was ratified. Following is a
tabulation of shares voted:
Election of Directors
Richard A. Manoogian Herbert S. Amster
For 34,202,762 34,204,655
Withheld 47,037 45,144
Ratification of selection of Coopers & Lybrand L.L.P.
For 34,215,645
Against 9,998
Abstentions 24,156
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4 Credit Agreement dated July 23, 1996 among TriMas
Corporation Limited, TriMas Corporation, Certain Banks and
NationsBank, N.A. (London Branch) as Agent
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K:
None were filed during the quarter ended June 30, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIMAS CORPORATION
Date: August 14, 1996 By: /s/William E. Meyers
William E. Meyers
Vice President - Controller
(Chief accounting officer
and authorized signatory)
9
<PAGE>
Exhibit Index
Exhibit
Number Description of Document
4 Credit Agreement dated July 23, 1996 among TriMas Corporation Limited,
TriMas Corporation, Certain Banks and NationsBank, N.A. (London
Branch) as Agent
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
EXHIBIT 4
AGREEMENT
DATED 23rd July, 1996
20,000,000 British Pounds
REVOLVING CREDIT FACILITY
FOR
TRIMAS CORPORATION LIMITED
ALLEN & OVERY
London
<PAGE>
INDEX
CLAUSE PAGE
1. Interpretation. . . . . . . . . . . . . . . . . . . . . . . 1
2. The Facility. . . . . . . . . . . . . . . . . . . . . . . . 11
3. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. Conditions Precednet. . . . . . . . . . . . . . . . . . . . 12
5. Drawdown. . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Instrument Option . . . . . . . . . . . . . . . . . . . . . 14
8. Claims Under, and Repayment of, Instruments . . . . . . . . 15
9. Counter-Indemnity for Instruments . . . . . . . . . . . . . 16
10. Banks' Agreement to Reimburse . . . . . . . . . . . . . . . 18
11. Prepayment and Cancellation . . . . . . . . . . . . . . . . 19
12. Interest and Instrument Fees. . . . . . . . . . . . . . . . 21
13. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 22
14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15. Market Disruption . . . . . . . . . . . . . . . . . . . . . 24
16. Increased Costs . . . . . . . . . . . . . . . . . . . . . . 25
17. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . 26
18. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 26
19. Representations and Warranties. . . . . . . . . . . . . . . 29
20. Undertakings. . . . . . . . . . . . . . . . . . . . . . . . 32
21. Default . . . . . . . . . . . . . . . . . . . . . . . . . . 37
22. The Agent and the Issuing Bank. . . . . . . . . . . . . . . 40
23. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
24. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 44
25. Stamp Duties. . . . . . . . . . . . . . . . . . . . . . . . 45
26. Indmenities . . . . . . . . . . . . . . . . . . . . . . . . 45
27. Evidences and Calculations. . . . . . . . . . . . . . . . . 46
28. Amendments and Waivers. . . . . . . . . . . . . . . . . . . 46
29. Changes to the Parties. . . . . . . . . . . . . . . . . . . 47
30. Disclosure of Information . . . . . . . . . . . . . . . . . 50
31. Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . 50
32. Pro Rata Sharing. . . . . . . . . . . . . . . . . . . . . . 50
33. Severability. . . . . . . . . . . . . . . . . . . . . . . . 51
34. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 51
35. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 52
36. Lanugage. . . . . . . . . . . . . . . . . . . . . . . . . . 52
37. Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . 53
38. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . 54
39. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 54
<PAGE>
Schedules
1. Banks and Commitments. . . . . . . . . . . . . . . . . . . . 55
2. Conditions Precedent Documents . . . . . . . . . . . . . . . 56
3. Calucaltion of the MLA Cost. . . . . . . . . . . . . . . . . 58
4. Form of Request. . . . . . . . . . . . . . . . . . . . . . . 60
5. Form of Novation Certificate . . . . . . . . . . . . . . . . 62
Signatories . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
<PAGE>
THIS AGREEMENT is dated 23rd July, 1996 between:-
(1) TRIMAS CORPORATION LIMITED(Registered No. 3226735) (the "Borrower");
(2) TRIMAS CORPORATION, a Delaware corporation (the "Guarantor");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the "Banks");
(4) NATIONSBANK, N.A. (London Branch) as issuing bank in respect of the
Instruments (in this capacity the "Issuing Bank"); and
(5) NATIONSBANK, N.A. (London Branch) as agent (in this capacity the
"Agent").
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Definitions
In this Agreement:-
"Acquired Debt"
means, with respect to any person who becomes a Subsidiary on or after
the date hereof, Debt of such person which was outstanding before such
person became a Subsidiary and which was not created in contemplation
of such person becoming a Subsidiary.
"Adjusted Operating Profit"
of any person, as of any date, means (a) the sum of operating profit
plus all non-cash charges for such person, minus (b) all non-cash
credits for such person; in each case determined for the four most
recently completed fiscal quarters of such person as one computation
period, in accordance with generally accepted accounting principles. In
the event that any person acquires any corporation or business,
Adjusted Operating Profit of such person shall be calculated on a pro
forma basis (which, to the extent deemed reasonable to the Agent, may
include as pro forma adjustments, reasonable eliminations of excess
compensation (including salaries) and other adjustments that are
attributable to the change in ownership or management of the
corporation or business) as if such person had owned the acquired
corporation or business for the four fiscal quarters preceding the
acquisition.
"Affiliate"
when used with respect to any person means any other person which,
directly or indirectly, controls or is controlled by or is under common
control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any person, shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise.
<PAGE>
2
"Business Day"
means a day other than a Saturday, Sunday or other day on which the
Agent is not open for business to the public for carrying on
substantially all of its banking functions.
"Capital Lease"
of any person means any lease which, in accordance with generally
accepted accounting principles, is required to be capitalised on the
books of such person.
"Capitalisation"
means the sum of the following amounts for the Guarantor and its
Consolidated Subsidiaries:
(i) Consolidated Funded Debt; plus
(ii) Consolidated Stockholder Equity; plus
(iii) Convertible Subordinated Debt.
"Code"
means the United States Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.
"Commitment"
means the amount in Sterling set opposite the name of a Bank in
Schedule 1 to the extent not cancelled or reduced under this Agreement.
"Consolidated" or "consolidated"
means, when used with reference to any financial term in this
Agreement, the aggregate for two or more persons of the amounts
signified by such term for all such persons determined on a
consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated Subsidiary"
of any person means any Subsidiary which would be consolidated on the
consolidated balance sheet of such person in accordance with generally
accepted accounting principles.
"Controlled Group"
means the Guarantor and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Guarantor, are treated as
a single employer generally under Section 414(b) or 414(c) of the Code.
<PAGE>
3
"Convertible Subordinated Debt"
means, as of any date, all Debt of the Guarantor of the type described
in subsection (i) of the definition of "Funded Debt" now outstanding or
hereafter created, issued, incurred or (if the assignor is released
therefrom), assumed by the Guarantor, which is unsecured, unguaranteed,
convertible into common stock of the Guarantor at the option of the
holder thereof and subordinated to amounts payable (actually or
contingently) under the Finance Documents pursuant to a written
agreement which contains provisions which, at the time of issuance
thereof, are customary for a subordinated debt issuance of its type;
provided, however, in any event such agreement shall:
(i) contain provisions customary at time of issuance prohibiting the
repayment, prepayment, repurchase, retirement or redemption of
such Debt upon the occurrence and continuance of Events of
Default hereunder;
(ii) not contain provisions providing for any regularly scheduled
repayment, repurchase, retirement or redemption of any principal
of such Debt prior to 1st February, 1998;
(iii) contain customary covenants which, in the aggregate and
considered as a whole at the time such Debt is issued, are
materially less restrictive than the covenants contained herein;
and
(iv) not contain provisions whereby the occurrence of a Default other
than an Event of Default hereunder constitutes simply by reason
of such occurrence a default or an event of default thereunder.
"Current Assets"
of any person means, as of any date, all assets of such person which,
in accordance with generally accepted accounting principles, would be
classified as current assets on a balance sheet of such person.
"Credit"
means a Loan or an Instrument or (to the extent the context so
requires) the principal amount of any of the above outstanding for the
time being.
"Debt"
of any person means, as of any date, (a) indebtedness of such person
for money borrowed; (b) the capitalised portion of lease rental
obligations of such person under Capital Leases; (c) other indebtedness
of such person incurred in connection with the acquisition of any real
or personal property, stock, debt or other assets (to the extent that
any of the foregoing acquisition indebtedness is represented by any
notes, bonds, debentures or similar evidences of indebtedness); and (d)
obligations of such person in respect of indebtedness and obligations
of others of the types referred to in each of the foregoing clauses (a)
- (c), for the payment of which such person is directly or contingently
liable, or which is secured by any property of such person.
<PAGE>
4
"Default"
means an Event of Default or an event which, with the giving of notice,
lapse of time, determination of materiality or fulfilment of any other
applicable condition (or any combination of the foregoing), would
constitute an Event of Default.
"Dollars" and "$"
means the lawful money for the time being of the United States of
America.
"Domestic Subsidiary"
means any Subsidiary which is incorporated under the laws of, or has
its principal office in, the United States of America or any state
thereof.
"Drawdown Date"
means the date of the advance of a Loan or the issue of an Instrument.
"EBIT"
of any person means, for any period earnings of such person before
interest and taxes and before reflecting extraordinary gains or losses
and gains or losses from discontinued operations.
"Environmental Laws"
means any and all applicable United States federal, state and local
statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licences, agreements
and other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial, toxic or
hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA"
means the United States Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"Event of Default"
means an event specified as such in Clause 21.1 (Events of Default).
"Expiry Date"
means, in respect of an Instrument, the date stated on its face to be
the last on which any demand may be made under it.
<PAGE>
5
"Facility"
means the facility referred to in Clause 2.1 (Facility).
"Facility Office"
means the office(s) notified by a Bank to the Agent:-
(a) on or before the date it becomes a Bank; or
(b) by not less than 5 Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Fee Payment Date"
means 31st March, 30th June, 30th September and 31st December in each
calendar year.
"Final Repayment Date"
means 1st July, 2000.
"Finance Document"
means this Agreement, a Novation Certificate or any other document
designated as such by the Agent and the Borrower.
"Finance Party"
means a Bank, the Issuing Bank or the Agent.
"Funded Debt"
of any person means (i) all Debt of such person having a maturity of
more than twelve months from the date of determination thereof or
having a maturity of less than twelve months but by its terms being
renewable or extendable at the option of such person beyond twelve
months from the date of such determination, including, with respect to
the Guarantor, and without limitation, all Loans under this Agreement
having such a final maturity on the date of such determination less
(ii) cash, cash equivalents and marketable securities (each as defined
and determined in accordance with generally accepted accounting
principles) in excess of $10,000,000 in the aggregate less (iii) the
outstanding principal balance of all Convertible Subordinated Debt.
"generally accepted accounting principles"
means generally accepted accounting principles, as in effect from time
to time, applied on a basis consistent (except for changes concurred in
by the Guarantor's independent public accountants), with the most
recent audited consolidated financial statements of the Guarantor and
its Consolidated Subsidiaries filed with the United States Securities
and Exchange Commission on Form 10-K (if one has been filed) and
delivered to the Agent; provided that, if the Guarantor notifies the
Agent that the Guarantor wishes to amend any covenant in Clause 20
<PAGE>
6
to eliminate the effect of any change in generally accepted accounting
principles on the operation of such covenant (or if the Agent notifies
the Guarantor that the Banks wish to amend Clause 20 for such purpose)
then the Guarantor's compliance with such covenant shall be determined
on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or
such covenant is amended in a manner satisfactory to the Guarantor and
the Banks.
"Instrument"
means a standby letter of credit or guarantee in form and substance
acceptable to the Majority Banks issued, or to be issued, by the Banks
under the Facility in accordance with Clause 7 (Instrument option).
"Interest Coverage Ratio"
means the ratio of (a) Consolidated EBIT of the Guarantor and its
Consolidated Subsidiaries to (b) Consolidated Net Interest Expense of
the Guarantor and its Consolidated Subsidiaries.
"Leverage Ratio"
means the ratio of (a) Consolidated Funded Debt of the Guarantor and
its Consolidated Subsidiaries to (b) Capitalisation.
"Liability Proportion"
means, in respect of a Bank and an Instrument at any time, the
proportion borne by that Bank's Commitment on the Drawdown Date of that
Instrument (adjusted to take account only of any transfer of
Commitments by or to that Bank made under Clause 29.2 (Transfers by
Banks) after that Drawdown Date) to the Total Commitments at that time.
"LIBOR"
means the rate quoted by the Agent to leading banks in the London
interbank market at or about 11.00 a.m. on the first day of the Term
for the offering of deposits in Sterling for a period comparable to the
Term.
"Loan"
means a loan made by the Banks under the Facility.
"Majority Banks"
means, at any time, Banks whose Commitments:-
(a) then aggregate more than 50% of the Total Commitments; or
(b) if the Total Commitments have been reduced to zero, aggregated
more than 50% of the Total Commitments immediately before the
reduction.
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7
"Margin"
means:
(i) 0.325% per annum for any Rate Period if the Pricing Ratio as of
the end of the most recently ended fiscal quarter of the
Guarantor prior to such Rate Period is less than 1.5 to 1.0;
(ii) 0.375% per annum for any Rate Period if the Pricing Ratio as of
the end of the most recently ended fiscal quarter of the
Guarantor prior to such Rate Period is equal to or greater than
1.5 to 1.0 but less than 2.0 to 1.0;
(iii) 0.50% per annum for any Rate Period if the Pricing Ratio as of
the end of the most recently ended fiscal quarter of the
Guarantor prior to such Rate Period is equal to or greater than
2.0 to 1.0 but less than 3.0 to 1.0;
(iv) 0.625% per annum for any Rate Period if the Pricing Ratio as of
the end of the most recently ended fiscal quarter of the
Guarantor prior to such Rate Period is equal to or greater than
3.0 to 1.0 but less than 3.5 to 1.0;
(v) 0.75% per annum for any Rate Period if the Pricing Ratio as of
the end of the most recently ended fiscal quarter of the
Guarantor prior to such Rate Period is equal to or greater than
3.5 to 1.0.
"MLA Cost"
means the cost imputed to the Banks of compliance with the Mandatory
Liquid Assets requirements of the Bank of England during the Term of
a Loan, determined in accordance with Schedule 3.
"Net Income"
of any person means, for any period, the net income (after deduction
for income and other taxes of such person determined by reference to
income or profits of such person) of such person, determined in
accordance with generally accepted accounting principles.
"Net Interest Expense"
of any person means, for any period, all interest expense of such
person less all income of such person earned on cash balances and
investment balances.
"Novation Certificate"
has the meaning given to it in Clause 29.3 (Procedure for novations).
"Obligor"
means the Borrower or the Guarantor.
<PAGE>
8
"Party"
means a party to this Agreement.
"PBGC"
means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" or "person"
includes an individual, a corporation, an association, a partnership,
a trust or estate, a joint stock company, an unincorporated
organisation, a joint venture, a trade or business (whether or not
incorporated), a government (foreign or domestic) and any agency or
political subdivision thereof, or any other entity.
"Plan"
means at any time an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of
the Controlled Group for employees of a member of the Controlled Group
or (ii) maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group is then
making or accruing an obligation to make contributions or has within
the preceding five plan years made contributions; provided, that no
"multi-employer plan" as defined in Section 3(37) of ERISA shall
constitute a Plan for purposes hereof.
"Pricing Ratio"
means the ratio of (a) Funded Debt to (b) Adjusted Operating Profit.
"Qualifying Bank"
means a bank as defined in section 840A of the Income and Corporation
Taxes Act 1988 and which is within the charge to U.K. corporation tax
as regards any interest received by it under this Agreement.
"Rate Period"
means each period commencing on the day of the Agent's receipt of (or
if earlier the date that the Agent should have received) financial
information pursuant to Clause 4.2(b) or 20.3(c) for any fiscal
quarter and ending on the day of the Agent's receipt of (or if earlier
the date that the Agent should have received) such financial
information for the following fiscal quarter; provided, however, the
initial Rate Period shall commence on the date hereof.
"Refunding Loan"
means a Loan which, after application of the proceeds of such Loan,
results in no net increase in the aggregate outstanding principal
amount of the Loans.
<PAGE>
9
"Repayment Date"
means the last day of the Term of a Loan.
"Request"
means a request made by the Borrower for a Credit, substantially in
the appropriate form of Schedule 4.
"Sterling"
means the lawful money for the time being of the United Kingdom.
"Security Interest"
means, with respect to any asset, any mortgage, lien, pledge, security
interest or similar encumbrance in respect of such asset; provided
that a subordination agreement shall not be deemed to create a
Security Interest. For the purposes of this Agreement, either Obligor
or any Consolidated Subsidiary thereof shall be deemed to own subject
to a Security Interest any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other similar title retention
agreement relating to such asset.
"Significant Subsidiary"
means any Subsidiary which is a "Significant Subsidiary" as defined in
Rule 1-02 of Regulation S-X under the United States Securities
Exchange Act of 1934, as amended.
"Stockholder Equity"
of any person means, as of any date, the stockholder equity of such
person as determined in accordance with generally accepted accounting
principles.
"Subsidiary"
of any person means any other person (whether now existing or
hereafter organised or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the
securities or other ownership interests of each class having ordinary
voting power or analogous right (other than securities or other
ownership interests which have such power or right only by reason of
the happening of a contingency), at the time as of which any
determination is being made, are owned, beneficially and of record,
by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof.
"Tangible Net Worth"
of any person means, as of any date, the aggregate of all assets
(excluding treasury stock) which would be shown on a balance sheet of
such person as of the date of determination prepared in accordance
with generally accepted accounting principles, provided that there
shall be deducted from the amount of such assets, to the extent
otherwise included therein, (a) any reserves on assets of such person
where a reserve is proper in accordance with generally accepted
accounting principles, including, without limitation, reserves for
depreciation, amortisation or obsolescence, loss on receivables or
inventory valuation, (b) any unamortised
<PAGE>
10
goodwill, patents, trademarks, trade names or other like intangible
assets of such person and (c) unamortised debt discount or expense of
such person, and provided, further, that there shall also be deducted
from such amount, (d) all obligations of such person which, in
accordance with generally accepted accounting principles, would be
classified as liabilities on a balance sheet of such person.
"Term"
means:-
(a) in respect of a Loan, the period selected by the Borrower in the
relevant Request for which it is to be outstanding;
(b) in respect of an Instrument, the period from its Drawdown Date to
its Expiry Date (both dates inclusive).
"Total Commitments"
means the aggregate for the time being of the Commitments, being
20,000,000 British Pounds at the date of this Agreement.
"Unfunded Benefit Liabilities"
means, with respect to any Plan as of any date, the amount of the
unfunded benefit liabilities with respect to such Plan determined in
accordance with Section 4001(a) (18) of ERISA.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference
to:-
(i) "assets" includes properties, revenues and rights of every
description;
an "authorisation" includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration and
notarisation;
the payment of "cash cover" to a Bank is to the payment of an
amount by the Borrower to that Bank, that amount to be held by
that Bank (or deposited by that Bank with another bank or
financial institution) on such terms as that Bank may require as
security for the Borrower's obligations under Clause 9 (Counter-
indemnity for instruments)
the "face amount" of an Instrument at any time is to the amount
which is expressed on its face to be the maximum aggregate
amount that may be drawn under it at, or any time after, that
time.
a period of one or more "months" is a reference to a period
starting on one day in a calendar month and ending on the
numerically corresponding day in the relevant later calendar
month, except that, if there is no numerically corresponding day
in the month in which that period ends, that period shall end on
the last Business Day in that calendar month;
<PAGE>
11
the "principal amount" of an Instrument is to its face amount;
the "repayment" or "prepayment" of an Instrument (or any
grammatical derivative or variation of those terms or the
corresponding verbs) is to its repayment or prepayment in
accordance with Clause 8.2 (Repayment and prepayment of
Instruments);
a "regulation" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law) of any governmental body, agency, department or
regulatory, self-regulatory or other authority or organisation;
(ii) a provision of a law is a reference to that provision as amended
or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement;
(iv) a person includes its successors and assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or that other document as amended, novated or
supplemented;
(vi) a time of day is a reference to London time; and
(vii) all computations required hereunder and all financial terms
used herein shall be made or construed in accordance with
generally accepted principles unless such principles are
inconsistent with the express requirements of this Agreement.
(b) Unless the contrary intention appears, a term used in any other
Finance Document or in any notice given under or in connection with
any Finance Document has the same meaning in that Finance Document or
notice as in this Agreement.
(c) The index to and the headings in this Agreement are for convenience
only and are to be ignored in construing this Agreement.
2. THE FACILITY
2.1 Facility
(a) Subject to the terms of this Agreement, the Banks grant to the
Borrower a committed short-term Sterling advance facility under which
the Banks shall, when requested by the Borrower, make Credits
available to the Borrower up to an aggregate principal amount not
exceeding, at any time, the Total Commitments at that time. No Bank
is obliged to participate in any Credit if to do so would cause the
aggregate principal amount of its participation in all Credits to
exceed its Commitment.
(b) The aggregate principal amount of all Instruments outstanding at any
time shall not exceed 5,000,000 British Pounds.
2.2 Number of Requests and Drawdowns
No Request may specify a Drawdown Date which is within 5 Business Days
of another Drawdown Date, although up to 5 Credits may be drawn on the
same day. Subject to the
<PAGE>
12
above, any number of Requests may be delivered on the same day and/or
specifying the same Drawdown Date, whether or not the Terms requested
are similar.
2.3 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents are
several. Failure of a Finance Party to carry out those obligations
does not relieve any other Party of its obligations under the Finance
Documents. No Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights. A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
3. PURPOSE
(a) The Borrower shall apply each Credit for lawful general corporate
purposes including acquisition.
(b) Without affecting the obligations of either Obligor in any way, no
Finance Party is bound to monitor or verify the application of the
proceeds of any Credit.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to either Obligor under this
Agreement are subject to the condition precedent that the Agent has
notified the Borrower and the Banks that it has received all of the
documents set out in Schedule 2 in form and substance satisfactory to
the Agent.
4.2 Further conditions precedent
The obligations of each Bank to participate in a Loan and the
obligation of the Issuing Bank to issue an Instrument, are subject to
the further conditions precedent that:-
(a) on both the date of the Request and the Drawdown Date for that
Credit:-
(i) the representations and warranties in Clause 19
(Representations and warranties) (except in the case of a
Refunding Loan as set out in Clause 19.13(b)) to be
repeated on those dates are correct and will be correct in
all material respects immediately after the Credit is made
available; and
(ii) except in the case of a Refunding Loan no Default is
outstanding or might result from the making or drawing of
that Credit or, in the case of a Refunding Loan, no Event
of Default is outstanding or would result from the making,
of that Refunding Loan;
and
(b) the Agent has received all such other documents, opinions,
certificates, consents and assurances as it may reasonably
request in connection with the Credit including in respect of a
Loan a Certificate from the President, Chief Financial Officer,
Chief
<PAGE>
13
Accounting Officer or Treasurer of the Guarantor setting forth
the Margin and the applicable rates for the fees payable under
Clause 23, in each case for the initial Rate Period.
5. DRAWDOWN
5.1 Receipt of Requests
The Borrower may utilise the Facility for the drawdown of a Loan if
the Agent receives, not later than 4.00 p.m. on the Business Day
before the proposed Drawdown Date, a duly completed Request unless the
Term specified in the Request is of an optional duration in which case
the Borrower may utilise the Facility if the Agent receives not later
than 10.00 a.m. on the Business Day before the proposed Drawdown Date
a duly completed Request.
5.2 Completion of Requests
A Request will not be regarded as having been duly completed unless:-
(a) the Drawdown Date is a Business Day;
(b) the principal amount of the Loan is a minimum of 500,000 British
Pounds and an integral multiple of 100,000 British Pounds;
(c) only one Term is specified which:-
(i) does not overrun the Final Repayment Date; and
(ii) is a period of an approved duration or of an optional
duration;
and
(d) the payment instructions comply with Clause 13 (Payments).
In this Clause:-
"approved duration" means a period of one, two or three months; and
"optional duration" means a period of between 7 days and 12 months.
5.3 Amount of each Bank's participation in the Loan
The amount of a Bank's participation in the Loan will be the
proportion of the Loan which its Commitment bears to the Total
Commitments on the date of receipt of the relevant Request.
5.4 Notification of the Banks
The Agent shall, not later than 10.00 a.m. on the Drawdown Date,
notify each Bank of the details of the requested Loan and the amount
of its participation in the Loan unless the Term of the requested Loan
is of an optional duration in which case the Agent shall notify each
Bank not later than 12.00 noon on the Business Day prior to the
Drawdown Date.
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14
5.5 Selection of an optional duration
(a) If the Borrower selects a Term of an optional duration, it may also
select in the relevant Request a Term of an approved duration to apply
if the selection of a Term of an optional duration becomes ineffective
in accordance with paragraph (b) below.
(b) If:-
(i) the Borrower requests a Term of an optional duration; and
(ii) the Agent receives notice from a Bank not later than 2.00 p.m. on
the Business Day before the Drawdown Date that matching deposits
may not, in its opinion, be available to it in the London
interbank market to fund its participation in the Loan for that
Term,
the Term for the proposed Loan shall be the alternative period
specified in the relevant Request or, in the absence of any
alternative selection, 3 months.
(c) If the Agent receives a notice from a Bank under paragraph (b) above,
it shall notify the Borrower and the Banks of the new Term for the
proposed Loan not later than 5.00 p.m. on the Business Day before the
Drawdown Date.
5.6 Payment of Proceeds
Subject to the terms of this Agreement, each Bank shall make its
participation in the Loan available to the Agent for the Borrower on
the relevant Drawdown Date.
6. REPAYMENT
The Borrower shall repay each Loan in full on its Repayment Date to
the Agent for the Banks.
7. INSTURMENT OPTION
7.1 Receipt of Requests for Instruments
The Borrower may request that the Issuing Bank issue an Instrument by
giving a duly completed Request to the Agent not later than 4.00 p.m.
on the Business Day before the proposed Drawdown Date.
7.2 Completion of Requests for Instruments
A Request for an Instrument will not be regarded as being duly
completed unless:-
(a) the Drawdown Date is a Business Day;
(b) the face amount of the Instrument is a minimum of 50,000 British
Pounds (and if its face amount will reduce at anytime, the date
of each such reduction and the amount to which it will reduce
must be specified);
(c) only one Term is specified which is such that no demand may be
made under the Instrument after the Final Repayment Date;
<PAGE>
15
(d) it specifies (in such detail as the Majority Banks approve) the
purpose for which the Instrument is required and that purpose is
approved by the Majority Banks;
(e) there is attached to it the form of the requested Instrument
together with the written confirmation of the Beneficiary that
the form is acceptable to it;
(f) the form of the requested Instrument is approved by the Majority
Banks;
(g) it contains instructions acceptable to the Agent as to the
manner in which the Instrument is to be made available.
7.3 Issue of Instruments
(a) The Agent shall promptly notify the Issuing Bank and each Bank of the
details of a Request for an Instrument.
(b) Each Bank shall be conclusively presumed to have approved all such
matters as require the approval of the Majority Bank under Clause 7.2
(Completion of requests for Instruments) unless if expressly notifies
the Agent to the contrary no later than 10.00 a.m. on the proposed
Drawdown Date.
(c) Subject to the provisions of this Agreement, the Issuing Bank will
execute and issue each Instrument, and make it available in
accordance with the relevant Request, on the Drawdown Date.
(d) Without affecting Clause 26.2 (Other Indemnities), the Issuing Bank
will notify the Agent (who shall promptly similarly notify the Banks)
if, for any reason, an Instrument is not issued on its Drawdown Date
after a Request has been given.
8. CLAIMS UNDER, AND REPAYMENT OF, INSTRUMENTS
8.1 Notification and payment of demand
(a) If a Beneficiary makes a demand under an Instrument in accordance
with its terms, the Issuing Bank shall promptly notify the Agent of
the claim whereupon the Agent shall promptly notify the Borrower and
each of the Banks, specifying:-
(i) the final date on or before which payment is to be made (the
"Final Payment Date"); and
(ii) the aggregate amount of the demand (the "Demand Amount") and
each Bank's Liability Proportion in respect of the demand.
(b) Each Bank shall pay its Liability Proportion of the unpaid amount of
the Demand Amount to the Agent for the account of the Issuing Bank on
the Final Payment Date. Any such payment made by a Bank shall be
treated as discharging that Bank's obligations under Clause 10.1
(Banks' undertaking) in respect of the demand giving rise to the
Demand Amount.
(c) Any amount paid by the Issuing Bank pursuant to a demand under an
Instrument shall (despite any contrary or inconsistent provision of
any Finance Document) constitute a Loan (of a principal amount equal
to the amount paid and having a Term ending on such date as the
<PAGE>
16
Issuing Bank may specify) made by the Issuing Bank except to the
extent it is funded or reimbursed by a Bank in which case the
relevant Bank shall be treated as having a participation in the
relevant Loan equal to the amount funded or reimbursed. The making
of such a Loan shall itself discharge the Obligors' obligations under
Clause 9.1 (Indemnity) to indemnify a Bank in respect of an amount
paid by it pursuant to the relevant demand. No Request shall be
required for, and Clause 4.2 (Further conditions precedent) and
Clause 5.2(b) shall not apply to, any such Loan.
8.2 Repayment and prepayment of Instruments
(a) The Borrower may, subject to the other provisions of the Finance
Documents, effect any repayment or prepayment of an Instrument which
it is required or permitted to make under the Finance Documents in
any one or more of the following ways (but no other):-
(i) by procuring a reduction of the Instrument's face amount (in
accordance with its terms and those of the Finance Documents);
and
(ii) by cancelling the Instrument by returning the original to the
Issuing Bank together with the relevant Beneficiary's written
confirmation (satisfactory to the Agent in form and substance)
that none of the Banks has any further liability under the
Instrument.
Any such repayment or prepayment shall take effect by the
amount of the reduction or cancellation, as appropriate.
(b) Nothing in this Clause 8 (Repayment and prepayment of Instruments)
limits or affects any of the Finance Parties' rights under Clause
21.15 Acceleration). No reduction of an Instrument's face amount as
contemplated by paragraph (a)(i) above shall limit or affect the
Borrower's obligations under Clause 9 (Counter-indemnity for
Instruments).
(c) The Issuing Bank shall promptly notify the Agent (who shall notify the
Banks) of any reduction of an Instrument's face amount or cancellation
of any Instrument as contemplated by paragraphs (a)(i) and (ii) above
respectively of which the Issuing Bank is aware.
9. COUNTER-INDEMNITY FOR instruments
9.1 Indemnity
(a) The Borrower undertakes to:-
(i) indemnify and hold harmless each Finance Party from and against
all liabilities, costs, losses, damages and expenses which the
Finance Party incurs or sustains by reason of or arising in any
way whatsoever in connection with or by reference to the issue of
any Instrument or the Finance Party's performance of the
obligations expressed to be assumed by it under or in respect of
any Instrument (including without limitation under Clause 10
(Banks' agreement to reimburse)) except, in any case, to the
extent the liability, cost, loss, damage or expense is
reimbursed, or indemnified against, under any other provision of
this Agreement; and
(ii) without limiting paragraph (i) above, reimburse each Finance
Party on demand any amount paid by it under or in respect of any
Instrument or under Clause 10 (Banks' agreement to reimburse).
<PAGE>
17
(b) Each Obligor unconditionally and irrevocably:-
(i) authorises and directs the Issuing Bank to pay any demand under
and in accordance with any Instrument without requiring proof of
any Obligor's agreement that the amounts so demanded or paid are
or were due and notwithstanding that any Obligor may dispute the
validity of any such request, demand or payment;
(ii) confirms that the Issuing Bank deals in documents only and shall
not be concerned with the legality of the claim or any other
underlying transaction or any set off, counterclaim or defence
as between any Obligor and the relevant Beneficiary; and
(iii) agrees that the Issuing Bank need not have any regard to the
sufficiency, accuracy or genuineness of any such demand or any
certificate or statement in connection therewith or any
incapacity of or limitation upon the powers of any person
signing or issuing such demand, certificate or statement which
appears on its face to be in order and agrees that the Issuing
Bank shall not be obliged to enquire as to any such matters and
may assume that any such demand, certificate or statement
which appears on its face to be in order is correct and properly
made.
9.2 Rights of contribution and subrogation
Until all outstanding Credits have been fully and irrevocably
discharged, all Commitments reduced to nil and all amounts which are
or may become payable by the Obligors under or in connection with the
Finance Documents have been irrevocably paid in full, no Obligor
shall, by virtue of any payment made by it under or in connection with
or referable to this Clause 9 (Counter-indemnity for Instruments) or
otherwise, be subrogated to any rights, security or moneys held or
received by a Finance Party or be entitled at any time to exercise,
claim or have the benefit of any right of contribution or subrogation
or similar right against a Finance Party. The Obligors irrevocably
waive all rights of contribution or similar rights against any Finance
Party.
9.3 Waiver of defences
(a) Each Obligor's obligations under this Clause 9 (Counter-indemnity for
Instruments) shall not be affected by any act, omission, matter or
thing which, but for this provision, might reduce, release or
prejudice any of its obligations under this Clause 9 (Counter-
indemnity for Instruments) in whole or in part, including without
limitation and whether or not known to it:-
(a) any time or waiver granted to or composition with any Beneficiary
or any other person;
(b) any taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights, remedies or securities available to any Finance Party or
other person or arising under any Instrument; and
(c) any unenforceability, illegality or invalidity of any Instrument
to the intent that any Obligor's obligations under this Clause 9
(Counter-indemnity for Instruments) shall remain in full force
and be construed as if there were no such defect.
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18
9.4 Continuing indemnity
This is a continuing indemnity, extends to the ultimate balance of
each Obligor's obligations and liabilities under this Clause 9
(Counter-indemnity for Instruments) and shall continue in force
notwithstanding any intermediate payment in whole or in part of those
obligations or liabilities.
9.5 Additional security
The obligations of each Obligor under this Clause 9 (Counter-indemnity
for Instruments) are in addition to and are not in any way prejudiced
by any collateral or other security now or subsequently held by any
Finance Party or any lien to which any Finance Party may be entitled.
9.6 Preservation of rights
No invalidity or unenforceability of all or any part of this Clause 9
(Counter-indemnity for Instruments) shall affect any rights of
indemnity or otherwise which any Finance Party would or may have in
the absence of or in addition to this Clause 9 (Counter-indemnity for
Instruments).
10. BANKS' AGREEMENT TO REIMBURSE
10.1 Banks' undertaking
Without in any way limiting Clause 8.1(b), each Bank hereby agrees to
reimburse the Issuing Bank, on and subject to the following provisions
of this Clause 10, for that Bank's Liability Proportion of each amount
paid out by the Issuing Bank under or in respect of any Instrument
provided that the liability of a Bank under this Clause 10.1:-
(a) in relation to any particular demand under an Instrument shall
not exceed that Bank's Liability Proportion of the amount
demanded but unpaid for the time being; and
(b) in relation to any particular Instrument shall not exceed (in
aggregate) its Liability Proportion of the face amount of that
Instrument for the time being.
10.2 Acknowledgment of subrogation
Each Obligor agrees and acknowledges that, to the extent that any Bank
makes any payment to the Agent for the Issuing Bank under Clause
8.1(b) or this Clause 10, that Bank will automatically and immediately
be subrogated to any rights the Issuing Bank may have against any
Obligor or their respective assets in respect of the amount so paid.
10.3 Waiver of defences
Each Bank agrees and acknowledges that its obligations under Clause
8.1(b) and this Clause 10 shall not be affected by any act, omission,
matter or thing which but for this provision might operate to release
or otherwise exonerate it from its obligations under those provisions
in whole or in part, including without limitation and whether or not
known to it, each of the following (except to the extent attributable
to the Issuing Bank's gross negligence or wilful default):
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19
(a) any time or waiver granted to or composition with an Obligor, any
Beneficiary or any other person (unless the Issuing Bank
knowingly granted that time or waiver, or knowingly entered into
that composition, without the consent of the Majority Banks);
(b) any taking, variation, compromise, renewal or release of, or
refusal or neglect to perfect or enforce, any rights, remedies or
securities available to the Issuing Bank or any other person or
arising under this Agreement or any other Finance Document; or
(c) any variation or extension of or increase in liabilities made
under this Agreement or any other Finance Document in accordance
with the provisions of this Agreement and (if appropriate) that
Finance Document, so that references in this Clause 10 to this
Agreement or any other Finance Document shall include each such
variation, extension and variation.
10.4 Additional security
The obligations of each Bank under Clause 8.1(b) are separate from its
obligations under this Clause 10, and all such obligations shall be in
addition to and shall not be in any way prejudiced by any collateral
or other security now or hereafter held by the Issuing Bank as
security or any lien to which the Issuing Bank may be entitled.
10.5 Immediate recourse
Each Bank waives any right it may have of first requiring the Issuing
Bank to proceed against or enforce any other rights or security or
claim payment from any Obligor or any other person before claiming
from that Bank under either or both of Clause 8.1(b) and this Clause
10.
11. PREPAYMENT AND CANCELLATION
11.1 Automatic Cancellation of the Total Commitments
The Commitment of each Bank shall be automatically cancelled at close
of business on the Final Repayment Date.
11.2 Voluntary Cancellation
The Borrower may, by giving not less than 3 Business Days' prior
notice to the Agent, cancel the unutilised portion of the Total
Commitments in whole or in part (but, if in part, in an integral
multiple of 100,000 British Pounds). Any cancellation in part shall be
applied against the Commitment of each Bank pro rata.
11.3 Additional right of prepayment and cancellation
(a) If either Obligor is required to pay any amount to a Bank under
Clause 14 (Taxes) or Clause 16 (Increased costs), the Borrower
may, whilst the circumstances giving rise to the requirement
continue, serve a notice of prepayment and cancellation on that
Bank through the Agent. On the date falling 5 Business Days after
the date of service of the notice:-
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20
(i) the Borrower shall prepay that Bank's participation in all the
Loans together with all other amounts payable by it to that Bank
under this Agreement;
(ii) the Borrower in respect of each outstanding Instrument shall pay
cash cover to that Bank in an amount equal to that Bank's
Liability Proportion of the face amount of that Instrument; and
(iii) the Bank's Commitment shall be cancelled on the date of service
of the notice.
(b) The Borrower may, by giving not less than 3 Business Days' prior
notice and subject to Clause 26.2(c) (Other Indemnities) prepay any
Loan in whole or in part (but, if in part, in an integral multiple of
100,000 British Pounds) on any Business Day whether or not that day
is a Repayment Date for that Loan.
11.4 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of
any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in accordance with
the express terms of this Agreement.
(d) No amount prepaid under this Agreement may subsequently be
re-borrowed. No amount of the Total Commitments cancelled under this
Agreement may subsequently be reinstated.
11.5 Mitigation
If circumstances arise in respect of a Bank which would, or would upon
the giving of notice, result in:-
(a) the Borrower being obliged to pay to that Bank an amount under
Clause 14 (Taxes) or 16 (Increased costs); or
(b) the provisions of Clause 15 (Market disruption) applying;
(c) the operation of Clause 17 (Illegality) in relation to that
Bank; or
(d) the provisions of Clause 14.3(b) applying to that Bank,
then, without in any way limiting, reducing or otherwise qualifying
the Borrower's obligations under those Clauses but subject to the
Borrower's rights under Clause 11.3 (Additional right of prepayment
and cancellation), the relevant Bank shall, after consultation with
the Agent and the Borrower, endeavour to take such reasonable steps as
may be reasonably open to it to mitigate or remove those
circumstances, including (without limitation) the transfer of its
rights and obligations under the Finance Documents to another bank or
financial institution acceptable to the Borrower or changing its
Facility Office. However, nothing in this Agreement shall oblige any
Bank to agree to or take any such steps or otherwise to act in any way
which might (in the opinion of the Bank) be prejudicial to that Bank
or inconsistent with any of its banking policies, or to disclose any
information as to its banking policies
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21
or any other matters which it regards as confidential or commercially
sensitive.
12. INTEREST AND INSTRUMENT FEES
12.1 Interest rate
The rate of interest on each Loan for its Term is the rate per annum
determined by the Agent to be the aggregate of the applicable:-
(a) Margin;
(b) LIBOR; and
(c) MLA Cost.
12.2 Due dates
Except as otherwise provided in this Agreement, accrued interest on
each Loan is payable by the Borrower on its Repayment Date and also,
in the case of a Loan with a Term longer than 6 months, on the
date falling 6 months after its Drawdown Date.
12.3 Instrument Fee
(a) The Borrower shall, in respect of each Instrument pay an
Instrument fee to the Agent (for the Banks pro rata to their
respective maximum liabilities under the relevant Instrument
computed at a rate per annum equal to the applicable Margin (as
at the date the fee is payable) on the daily outstanding face
amount for the time being).
(b) The Instrument fee in respect of each Instrument is payable
quarterly in arrear on the last day of each fee period for that
Instrument. The first fee period for an Instrument shall begin
on its Drawdown Date and end immediately before the next Fee
Payment Date, and each succeeding fee period for that Instrument
shall begin on the expiry of the immediately preceding period and
end immediately before the next Fee Payment Date.
(c) The Borrower shall, in respect of each Instrument, pay an up-
front Instrument fee to the Issuing Bank (for its own account
exclusively) on the Drawdown Date for that Instrument of 0.25%
flat on the face amount of that Instrument.
12.4 Default interest
(a) If an Obligor fails to pay any amount payable by it under this
Agreement, it shall forthwith on demand by the Agent pay interest on
the overdue amount from the due date up to the date of actual payment,
as well after as before judgment, at a rate (the "default rate")
determined by the Agent to be 1 per cent. per annum above the higher
of:-
(i) the rate on the overdue amount under Clause 12.1 (Interest rate)
immediately before the due date (if of principal); and
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22
(ii) the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Loan in
the currency of the overdue amount for such successive Terms of
such duration as the Agent may determine (each a "Designated
Term").
(b) The default rate will be determined on each Business Day or the first
day of the relevant Designated Term, as appropriate.
(c) If the Agent determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by the
Reference Banks to leading banks in the London interbank market, the
default rate will be determined by reference to the cost of funds to
the Agent from whatever sources it selects.
(d) Default interest will be compounded at the end of each Designated
Term.
12.5 Notification of rates of interest
The Agent shall promptly notify each relevant Party of the
determination of a rate of interest under this Agreement.
13. PAYMENTS
13.1 Place
All payments by an Obligor or a Bank under this Agreement shall be
made to the Agent to its account at such office or bank as it may
notify to that Obligor or Bank for this purpose.
13.2 Funds
Payments under this Agreement to the Agent shall be made for value on
the due date at such times and in such funds as the Agent may specify
to the Party concerned as being customary at the time for the
settlement of transactions in Sterling.
13.3 Distribution
(a) Each payment received by the Agent under this Agreement for another
Party shall, subject to paragraphs (b) and (c) below, be made
available by the Agent to that Party by payment (on the date and in
the currency and funds of receipt) to its account with such bank in
the principal financial centre of the country of the relevant currency
as it may notify to the Agent for this purpose by not less than 5
Business Days' prior notice.
(b) The Agent may apply any amount received by it for an Obligor in or
towards payment (on the date and in the currency and funds of receipt)
of any amount due from an Obligor under this Agreement or in or
towards the purchase of any amount of any currency to be so applied.
(c) Where a sum is to be paid under this Agreement to the Agent for the
account of another Party, the Agent is not obliged to pay that sum to
that Party until it has established that it has actually received that
sum. The Agent may, however, assume that the sum has been paid to it
in accordance with this Agreement and, in reliance on that assumption,
make available to that Party a corresponding amount. If the sum has
not been made available but the Agent has paid a corresponding
amount to another Party, that Party shall forthwith on demand
refund the
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23
corresponding amount to the Agent together with interest on that
amount from the date of payment to the date of receipt, calculated at
a rate determined by the Agent to reflect its cost of funds.
13.4 Currency
(a) Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
(b) Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement, payable in Sterling.
13.5 Set-off and counterclaim
All payments made by an Obligor under this Agreement shall be made
without set-off or counterclaim.
13.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal
under this Agreement interest is payable on the principal at the rate
payable on the original due date.
13.7 Partial payments
(a) If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Obligors under this Agreement, the
Agent shall apply that payment towards the obligations of the Obligors
under this Agreement in the following order:-
(i) first, in or towards payment pro rata of any unpaid costs and
expenses of the Agent under this Agreement;
(ii) secondly, in or towards payment pro rata of any accrued fees
due but unpaid under Clause 23.1 (Commitment and Facility fee)
and Clause 12.3 (Instrument fee);
(iii) thirdly, in or towards payment pro rata of any accrued interest
due but unpaid under this Agreement;
(iv) fourthly, in or towards payment pro rata of any principal due
but unpaid under this Agreement; and
(v) fifthly, in or towards payment pro rata of any other sum due
but unpaid under this Agreement.
(b) The Agent shall, if so directed by all the Banks, vary the order set
out in sub-paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made by
an Obligor.
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24
14. TAXES
14.1 Gross-up
All payments by an Obligor under the Finance Documents shall be made
without any deduction and free and clear of and without deduction for
or on account of any taxes, except to the extent that the Obligor is
required by law to make payment subject to any taxes. If any tax or
amounts in respect of tax must be deducted, or any other deductions
must be made, from any amounts payable or paid by an Obligor, or paid
or payable by the Agent to a Bank, under the Finance Documents, the
Obligor shall pay such additional amounts as may be necessary to
ensure that the relevant Bank receives a net amount equal to the full
amount which it would have received had payment not been made subject
to tax.
14.2 Tax receipts
All taxes required by law to be deducted or withheld by an Obligor
from any amounts paid or payable under the Finance Documents shall be
paid by the relevant Obligor when due and the Obligor shall, within
15 days of the payment being made, deliver to the Agent for the
relevant Bank evidence satisfactory to that Bank (including all
relevant tax receipts) that the payment has been duly remitted to the
appropriate authority.
14.3 Qualifying Banks
(a) Subject to paragraph (b) below, if, a Bank is not or ceases to be a
Qualifying Bank, no Obligor will be liable to pay to that Bank under
Clause 14.1 (Gross-up) any amount in respect of taxes levied or
imposed by the U.K. or any taxing authority of or in the U.K. in
excess of the amount it would have been obliged to pay if that Bank
had been or had not ceased to be a Qualifying Bank.
(b) Paragraph (a) does not apply if a Bank ceases to be a Qualifying Bank
as a result of the introduction of, change in, or any change in the
interpretation, administration or application of, any law or
regulation or any practice or concession of the U.K. Inland Revenue
occurring after the date of this Agreement.
15. MARKET DISRUPTION
(a) If, in relation to any proposed Loan:
(i) the Agent determines that adequate and fair means do not exist
for ascertaining the applicable LIBOR; or
(ii) the Agent receives notification from Banks whose participations
in a Loan exceed 50 per cent. of that Loan that, in their
opinion:-
(A) matching deposits may not be available to them in the
London interbank market in the ordinary course of business
to fund their participations in that Loan for the relevant
Term; or
(B) the cost to them of matching deposits in the London
interbank market would be in excess of the relevant LIBOR,
<PAGE>
25
the Agent shall promptly notify the Borrower and the
relevant Banks of the fact and that this Clause 15 is in
operation.
(b) After any notification under paragraph (a) above:-
(i) the Loan shall be made on the requested Drawdown Date;
(ii) within 5 Business Days of receipt of the notification, the
Borrower and the Agent shall enter into negotiations for a
period of not more than 30 days with a view to agreeing an
alternative basis for determining the rate of interest and/or
funding applicable to that Loan;
(iii) any alternative basis agreed under paragraph (ii) above with the
prior consent of all the Banks shall be binding on all the
Parties;
(d) if no alternative basis is agreed, each Bank shall (through the
Agent) certify, on or before the last day of the Interest Period
to which the notification relates, an alternative basis for
maintaining its participation in that Loan;
(e) any such alternative basis may include an alternative method of
fixing the interest rate and alternative Interest Periods but it
must reflect the cost to the Bank of funding its participation
in the Loan from whatever sources it may select plus the Margin
plus any MLA Cost; and
(e) each alternative basis so certified shall be binding on the
Obligors and the certifying Bank and treated as part of this
Agreement.
If any alternative basis applies under the above provisions for the
time being, the Agent will, at the Borrower's request, consult with
the Borrower when, and for so long as is, reasonable with a view to
reverting to the normal basis for the calculation of interest.
16. INCREASED COSTS
16.1 Increased costs
(a) Subject to Clause 16.2 (Exceptions), the Borrower shall forthwith on
demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it or any of its Affiliates as a result of
the introduction of, or any change in (or in the interpretation or
application of) any law or regulation (including any relating to
taxation or reserve asset, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control).
(b) In this Agreement "increased cost" means:-
(i) an additional cost incurred by a Finance Party or any of its
Affiliates as a result of it having entered into, or performing,
maintaining or funding its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party
or any of its Affiliates in making, funding or maintaining all
or any advances or credits comprised in a class of
<PAGE>
26
advances or credits formed by or including the participations in
the Loansmade or to be made, or in the Instruments issued or to
be issued, or in the Instruments issued or to be issued, under
this Agreement as is attributable to it making, funding or
maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party or any of its Affiliates
under this Agreement or on its capital; or
(iv) the amount of any payment made by a Finance Party or any of its
Affiliates, or the amount of interest or other return foregone
by a Finance Party or any of its Affiliates, calculated by
reference to any amount received or receivable by a Finance
Party from any other Party under this Agreement.
16.2 Exceptions
Clause 16.1 (Increased costs) does not apply to any increased cost:-
(a) compensated for by the payment of the MLA Cost;
(b) compensated for by the operation of Clause 14 (Taxes);
(c) attributable to any change in the rate of tax on the overall net
income of a Bank (or the overall net income of a division or
branch of the Bank) imposed in the jurisdiction in which its
principal office or Facility Office is situate.
17. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for a Bank or the
Issuing Bank to give effect to any of its obligations as contemplated
by this Agreement or to fund or maintain its participation in any
Credit, then:-
(a) the Bank or (as appropriate) the Issuing Bank may notify the
Borrower through the Agent accordingly; and
(b) (i) the Borrower shall forthwith prepay that Bank's
participation in all the Loans together with all other
amounts payable by it to that Bank under this Agreement;
(ii) the Borrower in respect of each outstanding Instrument
shall pay cash cover to that Bank in an amount equal to
that Bank's Liability Proportion of the face amount of
that Instrument; and
(iii) the Bank's Commitment or (as appropriate) the Issuing
Bank's obligation to issue any Instrument shall be
cancelled.
18. GUARANTEE
18.1 Guarantee
The Guarantor irrevocably and unconditionally:-
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27
(a) as principal obligor, guarantees to each Finance Party prompt
performance by the Borrower of all its obligations under the
Finance Documents;
(b) undertakes with each Finance Party that whenever the Borrower
does not pay any amount when due under or in connection with any
Finance Document, the Guarantor shall forthwith on demand by the
Agent pay that amount as if the Guarantor instead of the Borrower
were expressed to be the principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by it if any obligation guaranteed by the
Guarantor is or becomes unenforceable, invalid or illegal.
18.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by the Borrower under the Finance
Documents, regardless of any intermediate payment or discharge in
whole or in part.
18.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of either
Obligor or any security for those obligations or otherwise) is made in
whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without limitation,
the liability of the Guarantor under this Clause 18 (Guarantee) shall
continue as if the discharge or arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
18.4 Waiver of defences
The obligations of the Guarantor under this Clause 18 (Guarantee) will
not be affected by any act, omission, matter or thing which, but for
this provision, would reduce, release or prejudice any of its
obligations under this Clause 18 (Guarantee) or prejudice or diminish
those obligations in whole or in part, including (whether or not known
to it or any Finance Party):-
(a) any time or waiver granted to, or composition with, the Borrower
or other person;
(b) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, the Borrower or other
person or any non-presentation or non-observance of any formality
or other requirement in respect of any instrument or any failure
to realise the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality
of or dissolution or change in the members or status of the
Borrower or any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Clause 18 (Guarantee) shall include
each variation or replacement;
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28
(e) any unenforceability, illegality or invalidity of any obligation
of any person under any Finance Document or any other document or
security, to the intent that the Guarantor's obligations under
this Clause 18 (Guarantee) shall remain in full force and its
guarantee be construed accordingly, as if there were no
unenforceability, illegality or invalidity;
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of the Borrower
under a Finance Document resulting from any insolvency,
liquidation or dissolution proceedings or from any law,
regulation or order so that each such obligation shall for the
purposes of the Guarantor's obligations under this Clause 18
(Guarantee) shall be construed as if there were no such
circumstance.
18.5 Immediate recourse
The Guarantor waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed
against or enforce any other rights or security or claim payment from
any person before claiming from the Guarantor under this Clause 18
(Guarantee).
18.6 Appropriations
Until all amounts which may be or become payable by the Obligors under
or in connection with the Finance Documents have been irrevocably paid
in full, each Finance Party (or any trustee or agent on its behalf)
may:-
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Guarantor shall not
be entitled to the benefit of the same; and
(b) hold in a suspense account any moneys received from the Guarantor
or on account of the Guarantor's liability under this Clause 18
(Guarantee), without liability to pay interest on those moneys.
18.7 Non-competition
Until all amounts which may be or become payable by the Borrower under
or in connection with the Finance Documents have been irrevocably paid
in full, the Guarantor shall not, after a claim has been made or by
virtue of any payment or performance by it under this Clause 18
(Guarantee):-
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity
in respect of any payment made or moneys received on account of
the Guarantor's liability under this Clause 18 (Guarantee);
(b) claim, rank, prove or vote as a creditor of the Borrower or its
estate in competition with any Finance Party (or any trustee or
agent on its behalf); or
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29
(c) receive, claim or have the benefit of any payment, distribution
or security from or on account of the Borrower, or exercise any
right of set-off as against the Borrower.
The Guarantor shall hold in trust for and forthwith pay or transfer to
the Agent for the Finance Parties any payment or distribution or
benefit of security received by it contrary to this Clause 18.7.
18.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by
any other security now or hereafter held by any Finance Party.
19. REPRESENTATIONS AND WARRANTIES
19.1 Representations and warranties
The Borrower makes the representations and warranties set out in
Clauses 19.1, 19.2, 19.10, 19.11, 19.12(a)(i) and 19.12(b)(i) to each
Finance Party. The Guarantor makes all of the representations and
warranties set out in this Clause 19 to each Finance Party.
19.1 Corporate Existence and Power
Each Obligor and its Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified as a foreign
corporation in each jurisdiction in the United States of America in
which the conduct of its operations or the ownership of its properties
requires such qualification and failure so to qualify would materially
and adversely affect the Guarantor and its Subsidiaries taken as a
whole. All of such corporations have all requisite corporate power to
own their properties and to carry on their businesses, considered as a
whole, substantially as now owned and as now being conducted. Each
Obligor has full power, authority and legal right to execute and
deliver this Agreement, to perform and observe the terms and
provisions hereof and thereof, and (in the case of the Borrower) to
borrow hereunder.
19.2 Corporate Authority
The making and performance by each Obligor of this Agreement have been
duly authorised by all necessary corporate action and do not and will
not violate the provisions of any applicable law or regulation or of
the certificate of incorporation or by-laws of that Obligor or any
Subsidiary of that Obligor or any order of any court, regulatory body
or arbitration tribunal and do not and will not result in the breach
of, or constitute a default or require any consent under, or create
any lien, charge or encumbrance upon any property or assets of that
Obligor or any Subsidiary of that Obligor pursuant to, any indenture
or other agreement or instrument to which that Obligor or any
Subsidiary of that Obligor is a party or by which that Obligor or any
Subsidiary of that Obligor or its property may be bound or affected.
The making of this Agreement does not require, for the validity or
enforceability thereof, any filing with, or consent or approval of,
any state or federal agency or regulatory authority. This Agreement
constitutes, the legal, valid and binding obligations of that Obligor,
enforceable against that Obligor in accordance with their respective
terms.
<PAGE>
30
19.3 Litigation
There are no suits, proceedings, or actions at law or in equity or by
or before any governmental commission, board, bureau or other
administration agency, pending or, to the knowledge of the Guarantor
threatened against the Guarantor or any of its Subsidiaries or
affecting the Guarantor or any of its Subsidiaries, which, in the
opinion of the Guarantor, either (i) are likely to have a material
adverse effect on the financial condition or business of the Guarantor
and its Subsidiaries taken as a whole or (ii) will have an effect on
the enforceability or validity of this Agreement.
19.4 Taxes
The Guarantor and each Domestic Subsidiary of the Guarantor has filed
(or has obtained extensions of the time by which it is required to
file) all tax returns which are required to be filed and are material
to the business, operations or financial position of the Guarantor and
its Subsidiaries taken as a whole, and has paid all taxes shown due
pursuant to such returns or pursuant to any assessment received by the
Guarantor or any Domestic Subsidiary of the Guarantor, except such
taxes, if any, as are being contested in good faith and as to which,
in the opinion of the Guarantor, adequate reserves have been
provided. The Guarantor does not know of any proposed tax assessment
against it or any Domestic Subsidiary of the Guarantor or of any basis
for one, except to the extent any such assessment has been, in the
opinion of the Guarantor, adequately provided for in the
consolidated tax reserves of the Guarantor and its Subsidiaries.
19.5 ERISA
The Guarantor and each member of the Controlled Group (a) has
fulfilled its obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and (b) is in compliance in all
material respects with the presently applicable provisions of ERISA
and, with respect to Plans, the Code.
19.6 Financial Condition
The consolidated balance sheet of the Guarantor and its Subsidiaries
and consolidated statements of income, retained earnings and changes
in financial position of the Guarantor and its Subsidiaries most
recently furnished to the Agent and certified by Coopers & Lybrand,
independent certified public accountants, fairly present the
consolidated financial position of the Guarantor and its Subsidiaries
as at the date thereof, and the consolidated results of operations of
the Guarantor and its Subsidiaries for the period indicated, all in
accordance with generally accepted accounting principles consistently
applied. There has been no material adverse change in the
consolidated operations or condition, financial or otherwise, of the
Guarantor and its Subsidiaries considered as a whole, since the date
to which those accounts were drawn up.
19.7 Investment Company
The Guarantor is not required to be registered under the United States
Investment Company Act of 1940, as amended.
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31
19.8 Environmental Matters
In the ordinary course of its business, the Guarantor conducts
appropriate reviews of the effect of Environmental Laws on the
business, operations and properties of the Guarantor and its
Subsidiaries, in the course of which it identifies and evaluates
pertinent liabilities and costs (including, without limitation,
capital or operating expenditures required for clean-up or closure of
properties presently or previously owned or for the lawful operation
of its current facilities, required constraints or changes in
operating activities, and evaluation of liabilities to third parties,
including employees, together with pertinent costs and expenses).
On the basis of this review, the Guarantor has reasonably concluded
that Environmental Laws are not likely to have a material adverse
effect on the business, financial position or results of operations
of the Guarantor and its Consolidated Subsidiaries, considered as a
whole.
19.9 Compliance with Laws
The Guarantor complies, and has caused each of its Subsidiaries to
comply, in all material respects with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where (i) the necessity of
compliance therewith is contested in good faith by appropriate
proceedings, (ii) no officer of the Guarantor is aware that the
Guarantor or the relevant Subsidiary has failed to comply therewith or
(iii) the Guarantor has reasonably concluded that failure to comply is
not likely to have a material adverse effect on the business,
financial position or results of operations of the Guarantor and its
Consolidated Subsidiaries, taken as a whole.
19.10 No immunity
In any proceedings taken in its jurisdiction of incorporation (and, in
the case of the Guarantor, the federal courts of the United States) in
relation to any Finance Document, no Obligor will be entitled to claim
for itself or any of its assets immunity from suit, execution,
attachment or other legal process.
19.11 Governing law
In any proceedings taken in its jurisdiction of incorporation (and, in
the case of the Guarantor, the federal courts of the United States) in
relation to this Agreement, the choice of English law as the governing
law of this Agreement and any judgment obtained in England will be
recognised and enforced.
19.12 No default
(a) In respect of a Credit other than a Refunding Loan:-
(i) No Default is outstanding or would result from the drawing of
any Credit; and
(ii) no other event is outstanding which constitutes (or, with the
giving of notice, lapse of time, determination of materiality or
the fulfilment of any other applicable condition or any
combination of the foregoing, might constitute) a default under
any document which is binding on the Guarantor or any of its
Subsidiaries or any asset of the Guarantor or any of its
Subsidiaries to an extent or in a manner which would have a
material adverse effect on the business or financial condition
of the Guarantor and its
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32
consolidated Subsidiaries taken as a whole or on the ability of
either Obligor to perform its obligations under this Agreement.
(b) In respect of a Refunding Loan no Event of Default is
outstanding or would result from the making of any Refunding
Loan.
19.13 Times for making representations and warranties
The representations and warranties set out in this Clause 19
(Representations and warranties):-
(a) are made on the date of this Agreement; and
(b) are deemed to be repeated by each Obligor on the date of each
Request and each Drawdown Date with reference to the facts and
circumstances then existing (except, in the case of a Refunding
Loan, the representations and warranties set out in Clause 19.3,
Clause 19.4, Clause 19.5(a), the last sentence of Clause 19.6,
Clause 19.8 and Clause 19.9).
20. UNDERTAKINGS
20.1 Duration
(a) The undertakings in this Clause 20 (Undertakings) remain in force from
the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.
(b) The Borrower undertakes to observe or perform the undertakings
contained in Clauses 20.2 and 20.10. The Guarantor undertakes to
observe or perform all of the undertakings set out in this Clause 20.
20.2 Preservation of Corporate Existence
Each Obligor will preserve and maintain its corporate existence, and
qualify and remain qualified as a validly existing corporation in good
standing in each jurisdiction in which the conduct of its operations
or the ownership of its properties requires such qualification, and
failure so to qualify would materially and adversely affect that
Obligor and its Subsidiaries taken as a whole.
20.3 Periodic Reports
The Guarantor will furnish to the Agent in sufficient copies for all
the Banks:
(a) Within 60 days after the end of each of the first three fiscal
quarters of the Guarantor, the quarterly consolidated financial
statements of the Guarantor and its Consolidated Subsidiaries
including the consolidated balance sheet of the Guarantor and
its Consolidated Subsidiaries as of the end of such quarter,
consolidated statements of income of the Guarantor and its
Consolidated Subsidiaries for such quarter and consolidated
statements of income and cash flow for the period from the
beginning of the Guarantor's then fiscal year to the end of such
quarter, unaudited but certified as presenting in all material
respects the financial position of the Guarantor and its
Consolidated Subsidiaries and the results of their operations in
accordance with
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33
generally accepted accounting principles (subject to year-end
adjustments) by the President, the Chief Financial Officer, the
Chief Accounting Officer or the Treasurer of the Guarantor.
(b) Within 120 days after the end of each fiscal year of the
Guarantor, the consolidated balance sheet of the Guarantor and
its Consolidated Subsidiaries as of the end of such fiscal year
and the consolidated statements of income and cash flow of the
Guarantor and its Consolidated Subsidiaries for such fiscal
year, all in reasonable detail and accompanied by an opinion
thereon by independent certified public accountants of
recognised standing stating that such consolidated financial
statements present fairly the financial position of the
Guarantor and its Consolidated Subsidiaries and the results of
their operations in conformity with generally accepted
accounting principles.
(c) Simultaneously with the delivery of each set of financial
statements referred to in subsections (a) and (b) above, and in
addition, with respect to clause (iii) of this subsection,
within 90 days after the end of each fourth fiscal quarter of
the Guarantor, a certificate of the President, Chief Financial
Officer, Chief Accounting Officer or Treasurer of the Guarantor
(i) setting forth in reasonable detail the calculations required
to establish whether the Guarantor was in compliance with the
requirements of Clauses 20.4 to 20.8, inclusive, on the date of
such financial statements, (ii) stating, to the best of his
knowledge, whether any Default exists on the date of such
certificate and, if any Default exists, setting forth the
details thereof and the action which the Guarantor is taking or
proposes to take with respect thereto, and (iii) setting forth
in reasonable detail the calculation of the Leverage Ratio and
the Interest Coverage Ratio, as of the end of the applicable
fiscal quarter of the Guarantor, and setting forth the Margin,
and the margins for the fees set forth in Clauses 23.1(a) and
(b) hereof commencing with the Agent's receipt of the
certificate.
(d) As soon as practical, and in any event within 30 days after it
is filed with the Securities and Exchange Commission, copies of
all such financial statements and reports as it shall send to
its security holders and of all final prospectuses under the
Securities Act of 1933, as amended, relating to underwritten
public offerings of debt or equity securities of the Guarantor,
reports on forms 10-Q, 10-K and 8-K and all similar regular and
periodic reports filed by it with the Securities and Exchange
Commission.
(e) From time to time, such other information regarding the
financial position or business of the Guarantor as the Agent,
at the direction of any Bank, may reasonably request. Such
information shall be furnished promptly after any such request.
20.4 Limitations on Debt of Consolidated Subsidiaries
(a) The Guarantor will not at any time suffer or permit any
Consolidated Subsidiary to create, incur, issue, guarantee or
assume any Debt if, immediately after giving effect thereto, the
aggregate outstanding amount (determined at that time) of Debt of
all Consolidated Subsidiaries (other than Debt owed to the
Guarantor or one or more other Consolidated Subsidiaries) would
be greater than 15% of the maximum aggregate amount of Debt of
the Guarantor and its Consolidated Subsidiaries which may then be
outstanding without causing a violation of Clause 20.6 hereof.
(b) For purposes of the limitations provided in, and computations
under, this Clause 20.4, (i) when a corporation which is not
currently a Consolidated Subsidiary becomes a Consolidated
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34
Subsidiary it shall be deemed to create at such time all the Debt
it has outstanding immediately after such time (provided that, if
after giving effect to this clause (i), the aggregate outstanding
amount of Debt of all Consolidated Subsidiaries (other than Debt
owed to the Guarantor or one or more other consolidated
Subsidiaries) would be greater than 15% but less than 30% of the
maximum aggregate amount of all Debt of the Guarantor and its
Consolidated Subsidiaries which may then be outstanding without
causing a violation of Clause 20.6 hereof, this clause (i) shall
not apply at the time such corporation becomes a Consolidated
Subsidiary, but such corporation shall be deemed to create on the
15th day after it becomes a Consolidated Subsidiary all the Debt
it has outstanding on such 15th Day), (ii) the disposition (other
than to a Consolidated Subsidiary or the Guarantor) by the
Guarantor or a Subsidiary of capital stock of any Consolidated
Subsidiary which holds Debt of the Guarantor or any other
Consolidated Subsidiary so that the Consolidated Subsidiary
ceases to be a Consolidated Subsidiary after such disposition
shall be deemed the creation of such Debt, and (iii) the
disposition (other than to a Consolidated Subsidiary or the
Guarantor) of Debt of the Guarantor or any Consolidated
Subsidiary by any Consolidated Subsidiary or the Guarantor shall
be deemed the creation of such Debt.
(c) The above limitation shall not prevent any Consolidated
Subsidiary from creating, incurring, issuing, guaranteeing or
assuming Debt for the purpose of extending, renewing or refunding
not more than the principal amount of the Debt than outstanding
of a Consolidated Subsidiary.
20.5 Interest Coverage Ratio
The Guarantor will not permit the Interest Coverage Ratio at the end
of any financial quarter to be less than 2.0 to 1.0, with each such
Interest Coverage Ratio at the end of any fiscal quarter to be
computed for the four consecutive fiscal quarterly periods then
ending as one computation period.
20.6 Leverage Ratio
The Guarantor will not permit the Leverage Ratio at any time to exceed
0.65 to 1.0. The above limitation shall not prevent the Guarantor or
any of its Consolidated Subsidiaries from creating, incurring,
issuing, guaranteeing or assuming Debt for the purpose of extending,
renewing or refunding not more than the principal amount of the Debt
then outstanding of the Guarantor or of a Consolidated Subsidiary.
20.7 Stockholder Equity
The Guarantor will not permit or suffer the Consolidated Stockholder
Equity of the Guarantor and its Consolidated Subsidiaries at any time
to be less than the sum of (a) $170,000,000 plus (b) 75% of the
amount, if any, by which increases in Consolidated Stockholder Equity
of the Guarantor and its Consolidated Subsidiaries on or after 11th
February, 1993 due to the sale or other disposition of stock issued by
the Guarantor exceed decreases thereof on or after 11th February, 1993
due to the acquisition or redemption of stock issued by the Guarantor,
plus (c) the greater of (i) zero and (ii) 50% of the Consolidated Net
Income of the Guarantor and its Consolidated Subsidiaries for each
fiscal year subsequent to 31st December 1992 (excluding any fiscal
year in which Consolidated Net Income is negative), with such
adjustments pursuant to subsections (b) and (c) above to be made at
the end of each fiscal year of the Guarantor thereafter. For purposes
of this Section only, Consolidated Net Income for any relevant year
shall be deemed reduced by the amount of any dividends accrued or
declared with respect to preferred stock of the Guarantor during the
relevant fiscal year.
<PAGE>
35
20.8 Ratio of Funded Debt to Adjusted Operating Profit
The Guarantor will not permit or suffer the ratio of (a) the
Consolidated Funded Debt of the Guarantor and its Consolidated
Subsidiaries to (b) the Consolidated Adjusted Operating Profit of the
Guarantor and its Consolidated Subsidiaries, at any time to be greater
than 4.0 to 1.0. The above limitation shall not prevent the Guarantor
or any of its Consolidated Subsidiaries from creating, incurring,
issuing, guaranteeing or assuming Debt for the purpose of extending,
renewing or refunding not more than the principal amount of the Debt
then outstanding of the Guarantor or of a Consolidated Subsidiary.
20.9 Negative Pledge
Neither the Guarantor nor any of the Guarantor's Consolidated
Subsidiaries will create, assume or suffer to exist any Security
Interest on any asset now owned or hereafter acquired by it, except:
(a) Security Interests existing on the date hereof securing Debt
outstanding on the date hereof in an aggregate principal amount
not exceeding $2,500,000;
(b) any Security Interest existing on any asset of any corporation at
the time such corporation becomes a Consolidated Subsidiary and
not created in contemplation of such event;
(c) any Security Interest on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such asset (or acquiring a corporation or other
entity which owned such asset), provided that such Security
Interest attaches to such asset concurrently with or within 90
days after such acquisition;
(d) any Security Interest on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into
the Guarantor or a Consolidated Subsidiary thereof and not
created in contemplation of such event;
(e) any Security Interest existing on any asset prior to the
acquisition thereof by the Guarantor or a Consolidated Subsidiary
thereof and not created in contemplation of such acquisition;
(f) any Security Interest arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Security Interest
permitted by any of the foregoing subparagraphs of this Clause,
provided that such Debt is not increased and is not secured by
any additional assets;
(g) any Security Interest in favour of the holder of Debt (or any
Person acting for or on behalf of such holder) arising pursuant
to any order of attachment, distraint or similar legal process
arising in connection with court proceedings so long as the
execution or other enforcement thereof is effectively stayed and
the claims thereby are being contested in good faith by
appropriate proceedings;
(h) Security Interests incidental to the normal conduct of its
business or the ownership of its assets which (i) do not secure
Debt and (ii) do not in the aggregate materially
<PAGE>
36
detract (due to the United States Dollar amount of the liability
secured by such Security Interests or otherwise) from the value
of the assets of the Guarantor and the Guarantor's Consolidated
Subsidiaries taken as a whole or in the aggregate materially
impair the use thereof in the operation of the business of the
Guarantor and its Consolidated Subsidiaries taken as a whole;
(i) Security Interests on the assets of TriMas Fasteners, Inc.
securing indebtedness of up to $5,000,000 to be incurred in
connection with any proposed bond financing to be provided in
conjunction with the Guarantor's Frankfort, Indiana expansion
project;
(j) Security Interests on all shipping documents and instruments
issued in connection with letter of credit transactions securing
obligations incurred in connection with such letter of credit
transactions; and
(k) Security Interests securing Debt which are not otherwise
permitted by the foregoing paragraphs of this Clause; provided
that (i) the aggregate outstanding principal amount of Debt
secured by all such Security Interests on Current Assets shall
not at any time exceed 15% of the Consolidated Current Assets of
the Guarantor and its Consolidated Subsidiaries and (ii) the
aggregate outstanding principal amount of Debt secured by all
such Security Interests (including Security Interests referred to
in subsection (i) of this proviso) shall not at any time exceed
the sum of (A) 25% of the Consolidated Current Assets of the
Guarantor and its Consolidated Subsidiaries plus (B) 10% of the
Consolidated Tangible Net Worth of the Guarantor and its
Consolidated Subsidiaries;
provided, however, that the restrictions set forth in this Clause
shall not apply to "margin stock" (as defined in Regulation U of the
Board of Governors of the United States Federal Reserve System), if
and to the extent that the value of the margin stock with respect to
which the rights of the Obligors and their Subsidiaries are
restricted by this Section would otherwise exceed 25% of the value of
all assets with respect to which the rights of the Guarantor and its
Subsidiaries are restricted by this Clause.
20.10 Merger, Consolidation, Sale of Assets
(a) Neither Obligor will directly or indirectly sell, lease, transfer or
otherwise dispose of all or substantially all of its assets other
than to the Guarantor (in the case of disposals by the Borrower) or
a Subsidiary of the Guarantor, or merge or consolidate with any other
Person, unless the Obligor shall be the continuing or surviving
corporation.
(b) No disposition of assets, merger or consolidation referred to in
paragraph (a) of this Clause shall be permitted if, immediately after
giving effect thereto, a Default.
20.11 Notice of Events of Default
The Guarantor will, within thirty (30) days after any officer of the
Guarantor obtains knowledge of a Default, unless the same shall have
been cured within such thirty-day period, give written notice thereof
to the Agent, specifying the nature thereof, the period of existence
thereof, and what action the Guarantor proposes to take with respect
thereto.
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37
20.12 Use of Proceeds
None of the proceeds of the Loans made under this Agreement will be
used in violation of any applicable law or regulation including,
without limitation, Regulation U of the Board of Governors of the
United States Federal Reserve System.
21. DEFAULT
21.1 Events of Default
Each of the events set out in Clauses 21.2 (Non-Payment) to 21.15
(Ownership of the Borrower) (inclusive) is an Event of Default
(whether or not caused by any reason whatsoever outside the control of
either Obligor or any other person).
21.2 Non-Payment
(i) The Borrower shall fail to pay when due any principal of any Loan
or shall fail to pay within five days of the due date thereof any
interest on any Loan or any amount payable under Clause 12 (Interest
and Instrument Fees) or (ii) the Borrower shall fail to pay within
five days of the due date thereof any commitment, facility or Agent's
fee payable under Clause 23 of this Agreement.
21.3 Certain Covenants
The Borrower shall fail to observe or perform any undertaking
contained in Clauses 20.2 or 20.10 or the Guarantor shall fail to
observe or perform any undertaking contained in Clauses 20.2 or 20.4
to 20.11 inclusive.
21.4 Other Defaults
Any Obligor shall fail to observe or perform any covenants or
agreement contained in this Agreement (other than those covered by
Clauses 21.2 or 21.3 above) for thirty (30) days after written notice
thereof has been given to that Obligor by the Agent.
21.5 Misrepresentation
Any representation or warranty of the Borrower to the Finance Parties
contained in Clauses 19.1, 19.2, 19.10, 19.11 and 19.12(a)(i) or any
representations or warranty of the Guarantor or any officer of the
Guarantor to the Finance Parties contained herein, in any Guaranty or
in any certificate, statement or report furnished to the Finance
Parties hereunder shall prove to have been incorrect or misleading in
any material respect on the date when made or deemed made provided
that, if any representation and warranty deemed to have been made by
either Obligors pursuant to Clause 4.2(a)(ii) in respect of a
Refunding Loan and Clause 19.12(b)(i) was incorrect solely by reason
of the existence of an Event of Default of which that Obligor was not
aware when such representation and warranty was deemed to have been
made and which was cured before or promptly after that Obligor became
aware thereof, then such representation and warranty shall be deemed
not to have been incorrect in any material respect.
21.6 Cross Default
The Guarantor or any Significant Subsidiary thereof shall fail to pay
at maturity, or within any applicable period of grace, any Debt (other
than a Loan, or Acquired Debt in an aggregate
<PAGE>
38
outstanding principal amount not exceeding $15,000,000) having an
aggregate principal amount in excess of $5,000,000, and such failure
has not been waived, or fail to observe or perform any term, covenant
or agreement, contained in any agreement (other than this Agreement)
by which it is bound evidencing or securing indebtedness for borrowed
money (other than Acquired Debt in an aggregate outstanding principal
amount not exceeding $15,000,000) for such period of time as would
cause or permit the holder or holders (or any Persons or entity acting
for or on behalf of such holder or holders) thereof or of any
obligations issued thereunder to accelerate the maturity thereof or of
any such obligations, which aggregate more than $5,000,000 and such
failure has not been waived.
21.7 Voluntary Insolvency Proceedings
Either Obligor or any Significant Subsidiary thereof shall (i) apply
for or consent to the appointment of a receiver, trustee, liquidator,
administrator or administrative receiver of itself or of a significant
portion of its assets; (ii) be unable or admit in writing its
inability or is deemed for the purposes of any law to be unable to pay
its debts as they fall due; (iii) make a general assignment,
composition or arrangement for the benefit of creditors; (iv) be
adjudicated a bankrupt, insolvent or in administration; or (v) file a
voluntary petition in bankruptcy or a petition or an answer seeking
reorganisation or an arrangement with creditors or its administration
or to take advantage of any insolvency law, or any answer admitting
the material allegations of a petition filed against it in any
bankruptcy, reorganisation, administration or insolvency proceedings
or a resolution of either the shareholders or the Board of Directors
of such corporation shall be adopted for the purpose of effecting any
of the foregoing.
21.8 Involuntary Insolvency Proceedings
A proceeding shall be instituted without the application, approval or
consent of either Obligor or any Significant Subsidiary thereof, in
any court of competent jurisdiction seeking, in respect of that
Obligor or such Significant Subsidiary, adjudication in bankruptcy,
dissolution, administration, winding up, reorganisation, a
composition, assignment or arrangement with creditors, a readjustment
of debts, the appointment of a receiver, trustee, liquidator,
administrative receiver, administrator or the like of such corporation
or a significant portion of its assets, or other like relief in
respect of such corporation under any insolvency or bankruptcy law,
and the same shall continue undismissed or unstayed and in effect for
any period of sixty consecutive days.
21.9 Analogous Proceedings
There occurs in relation to any Obligor or Significant Subsidiary
thereof, any event which corresponds with any of those mentioned in
Clauses 21.7 and 21.8.
21.10 Judgments
Final judgments for the payment of money in excess of $1,000,000 in
amount shall be rendered by a court of record against the Guarantor or
any Significant Subsidiary thereof and the Guarantor or such
Significant Subsidiary shall not discharge the same or provide for its
discharge, or procure a stay of execution thereof, within sixty days
from the date of entry thereof, and within said period of sixty days
or such longer period during which execution of such judgment shall
have been stayed, move to vacate said judgment or appeal therefrom
and
<PAGE>
39
cause the execution thereof to be stayed pending determination of such
motion or during such appeal.
21.11 ERISA
The Guarantor or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Benefit Liabilities in excess of
$25,000,000 (collectively, a "Material Plan") shall be filed under
Title IV of ERISA by any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be
terminated.
21.12 Unlawfulness
It is or becomes unlawful for the Guarantor to perform any of its
obligations under the Finance Documents.
21.13 Guarantee
The guarantee of the Guarantor is not effective or is alleged by the
Guarantor to be ineffective for any reason.
21.14 Ownership of the Borrower
The Borrower is not or ceases to be a wholly-owned Subsidiary of the
Guarantor.
21.15 Acceleration
On and at any time after the occurrence of an Event of Default the
Agent may, and shall if so directed by the Majority Banks, by notice
to the Borrower:-
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand;
and/or
(d) require the Borrower in respect of each (or any) Instrument to
pay cash cover to each Bank in an amount equal to that Bank's
Liability Proportion of the Instrument and the Borrower shall
immediately comply with such requirement, which shall
immediately constitute a liquidated and accrued debt due and
payment for the benefit of the relevant Bank; and/or
(e) prepay on behalf of the Borrower in respect of the relevant
Instrument all or any part of the amounts which are the subject
of each (or any) Instrument then outstanding and
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40
any such prepayment shall be treated as a payment made
pursuant to a demand under the relevant Instrument for the
purposes of Clause 9 (Counter-indemnity for Instruments) and 10
(Banks' agreement to reimburse).
22. THE AGENT and the issuing bank
22.1 Appointment and duties of the Agent
Each Finance Party (other than the Agent) irrevocably appoints the
Agent to act as its agent under and in connection with the Finance
Documents, and irrevocably authorises the Agent on its behalf to
perform the duties and to exercise the rights, powers and discretions
that are specifically delegated to it under or in connection with the
Finance Documents, together with any other incidental rights, powers
and discretions. The Agent shall have only those duties which are
expressly specified in this Agreement. Those duties are solely of a
mechanical and administrative nature.
22.2 Relationship
(a) The relationship between the Agent and the other Finance Parties
is that of agent and principal only. Nothing in this Agreement
constitutes the Agent as trustee or fiduciary for any other
Party or any other person and the Agent need not hold in trust
any moneys paid to it for a Party or be liable to account for
interest on those moneys.
(b) the relationship between the Issuing Bank and each Bank shall,
to the extent that any payment is made under an Instrument, be
that of the debtor and creditor only. Nothing in the Finance
Documents shall constitute the Issuing Banks, the agent, the
trustee or the fiduciary of any or all of the Banks.
22.3 Majority Banks' directions
The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of
any right, power or discretion or any matter not expressly provided
for in the Finance Documents. Any such instructions given by the
Majority Banks will be binding on all the Banks. In the absence of
such instructions the Agent may act as it considers to be in the best
interests of all the Banks.
22.4 Delegation
The Agent may act under the Finance Documents through its personnel
and agents.
22.5 Responsibility for documentation
The Agent is not responsible to any other Party for:-
(a) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance Document;
or
(c) the accuracy of any statements (whether written or oral) made in
or in connection with any Finance Document.
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41
22.6 Default
(a) The Agent is not obliged to monitor or enquire as to whether or not a
Default has occurred. The Agent will not be deemed to have knowledge
of the occurrence of a Default. However, if the Agent receives notice
from a Party referring to this Agreement, describing the Default and
stating that the event is a Default, it shall promptly notify the
Banks.
(b) The Agent may require the receipt of security satisfactory to it
whether by way of payment in advance or otherwise, against any
liability or loss which it will or may incur in taking any proceedings
or action arising out of or in connection with any Finance Document
before it commences these proceedings or takes that action.
22.7 Exoneration
(a) Without limiting paragraph (b) below, the Agent will not be liable to
any other Party for any action taken or not taken by it under or in
connection with any Finance Document, unless directly caused by its
gross negligence or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or
agent of the Agent in respect of any claim it might have against the
Agent or in respect of any act or omission of any kind (including
negligence or wilful misconduct) by that officer, employee or agent in
relation to any Finance Document.
22.8 Reliance
The Agent may:-
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed to
be within his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's employment and
those representing a Party other than the Agent).
22.9 Credit approval and appraisal
Without affecting the responsibility of either Obligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Bank confirms that it:-
(a) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement
and has not relied exclusively on any information provided to it
by the Agent in connection with any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while
any amount is or may be outstanding under the Finance Documents
or any Commitment is in force.
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42
22.10 Information
(a) The Agent shall promptly forward to the person concerned the original
or a copy of any document which is delivered to the Facility Agent by
a Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clause 4 (Conditions Precedent) upon the
request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent
is not obliged to review or check the accuracy or completeness of any
document it forwards to another Party.
(d) Except as provided above, the Agent has no duty:-
(i) either initially or on a continuing basis to provide any Bank
with any credit or other information concerning the financial
condition or affairs of either Obligor or any related entity of
either Obligor whether coming into its possession or that of any
of its related entities before, on or after the date of this
Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance
with this Agreement, to request any certificates or other
documents from either Obligor.
22.11 The Agent and the Issuing Bank individually
(a) If it is also a Bank, each of the Agent and the Issuing Bank has
the same rights and powers under this Agreement as any other Bank
and may exercise those rights and powers as though it were not
the Agent or the Issuing Bank.
(b) The Agent may:-
(i) carry on any business with an Obligor or its related
entities;
(ii) act as agent or trustee for, or in relation to any
financing involving, an Obligor or its related entities;
and
(iii) retain any profits or remuneration in connection with its
activities under this Agreement or in relation to any of
the foregoing.
22.12 Indemnities
(a) Without limiting the liability of either Obligor under the Finance
Documents, each Bank shall forthwith on demand indemnify the Agent for
its proportion of any liability or loss incurred by the Agent in any
way relating to or arising out of its acting as the Agent, except to
the extent that the liability or loss arises directly from the Agent's
gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which its participation in the Loans and
instruments (if any) bear to all the Loans and Instruments on the date
of the demand. If, however, there are no Loans or Instruments
outstanding on the date of demand, then the proportion will be the
proportion which its Commitment bears to the Total Commitments at the
date of demand or, if the Total Commitments have been cancelled, bore
to the Total Commitments immediately before being cancelled.
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43
(c) The Borrower shall forthwith on demand reimburse each Bank for any
payment made by it under paragraph (a) above.
22.13 Compliance
(a) The Agent may refrain from doing anything which might, in its opinion,
constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person, and may do anything which, in
its opinion, is necessary or desirable to comply with any law or
regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not disclose any
information relating to either Obligor or any of its related entities
if the disclosure might, in the opinion of the Agent, constitute a
breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
22.14 Resignation of Agent
(a) Notwithstanding its irrevocable appointment, the Agent may resign by
giving notice to the Banks and the Borrower, in which case the Agent
may forthwith appoint one of its Affiliates as successor Agent or,
failing that, the Majority Banks may appoint a successor Agent.
(b) If the appointment of a successor Agent is to be made by the Majority
Banks but they have not, within 30 days after notice of resignation,
appointed a successor Agent which accepts the appointment, the
retiring Agent may appoint a successor Agent.
(c) The resignation of the retiring Agent and the appointment of any
successor Agent will both become effective only upon the successor
Agent notifying all the Parties that it accepts the appointment. On
giving the notification, the successor Agent will succeed to the
position of the retiring Agent and the term "Agent" will mean the
successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such assistance
as the successor Agent may reasonably request for the purposes of
performing its functions as the Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 22 (The Agent and
the Issuing Bank) shall continue to benefit the retiring Agent in
respect of any action taken or not taken by it under or in connection
with the Finance Documents while it was the Agent, and, subject to
paragraph (d) above, it shall have no further obligation under any
Finance Document.
22.15 Banks
The Agent may treat each Bank as a Bank, entitled to payments under
this Agreement and as acting through its Facility Office(s) until it
has received notice from the Bank to the contrary by not less than 5
Business Days prior to the relevant payment.
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23. FEES
23.1 Commitment and Facility fee
(a) The Borrower agrees to pay to the Agent for the Banks, rateably in
proportion to their Commitments, a commitment fee on the daily average
amount by which the aggregate amount of the Commitments exceeds the
aggregate amount of the Credits during each Rate Period at a rate
equal to (i) 0.025% per annum if the Pricing Ratio for the fiscal
quarter ending immediately prior to such Rate Period is less than
1.5 to 1.0, (ii) 0.05% per annum if the Pricing Ratio for the fiscal
quarter ending immediately prior to such Rate Period is equal to or
greater than 1.5 to 1.0 but less than 2.0 or (iii) 0.125% per annum if
the Pricing Ratio for the fiscal quarter ending immediately prior to
such Rate Period is equal to or greater than 2.0 to 1.0.
(b) The Borrower agrees to pay to the Agent for the Banks, rateably in
proportion to their Commitments, a facility fee on the daily aggregate
amount of the Commitments (regardless of usage) during each Rate
Period at a rate equal to (i) 0.125% per annum if the Pricing Ratio
for the fiscal quarter ending immediately prior to such Rate Period is
less than 3.0 to 1.0, (ii) 0.15% per annum if the Pricing Ratio for
the fiscal quarter ending immediately prior to such Rate Period is
equal to or greater than 3.0 to 1.0 but less than 3.5 or (iii) 0.25%
per annum if the Pricing Ratio for the fiscal quarter ending
immediately prior to such Rate Period is equal to or greater than 3.5
to 1.0.
(c) Accrued commitment and facility fees are payable quarterly in arrear.
Accrued commitment and facility fees are also payable to the Agent for
the relevant Bank(s) on the cancelled amount of its Commitment at the
time the cancellation takes effect.
23.2 Agent's fee
The Borrower shall pay to the Agent for its own account an agency fee
in such amount as may from time to time be agreed upon by the Borrower
and the Agent.
23.3 VAT
Any fee referred to in this Clause 23 (Fees) is exclusive of any value
added tax or any other tax which might be chargeable in connection
with that fee. If any value added tax or other tax is so chargeable,
it shall be paid by the Borrower at the same time as it pays the
relevant fee.
24. EXPENSES
24.1 Initial and special costs
The Borrower shall forthwith on demand pay the Agent the amount of all
costs and expenses (including legal fees) incurred by it in connection
with:-
(a) the negotiation, preparation, printing and execution of:-
(i) this Agreement and any other documents referred to in this
Agreement;
(ii) any other Finance Document (other than a Novation
Certificate) executed after the date of this Agreement;
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45
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of
an Obligor and relating to a Finance Document or a document
referred to in any Finance Document; and
(c) any other matter, not of an ordinary administrative nature,
arising out of or in connection with a Finance Document.
24.2 Enforcement costs
The Borrower shall forthwith on demand pay to each Finance Party the
amount of all costs and expenses (including legal fees) incurred by
it:-
(a) following an Event of Default in connection with the enforcement
of, or the preservation of any rights under, any Finance
Document; or
(b) in investigating any Default.
25. STAMP DUTIES
The Borrower shall pay and forthwith on demand indemnify each Finance
Party against any liability it incurs in respect of any stamp,
registration and similar tax which is or becomes payable in connection
with the entry into, performance or enforcement of any Finance
Document.
26. INDEMNITIES
26.1 Currency indemnity
(a) If a Finance Party receives an amount in respect of an Obligor's
liability under the Finance Documents or if that liability is
converted into a claim, proof, judgment or order in a currency other
than the currency (the "contractual currency") in which the amount is
expressed to be payable under the relevant Finance Document:-
(i) that Obligor shall indemnify that Finance Party as an
independent obligation against any loss or liability arising
out of or as a result of the conversion;
(ii) if the amount received by that Finance Party, when converted
into the contractual currency at a market rate in the usual
course of its business, is less than the amount owed in the
contractual currency, the Obligor concerned shall forthwith on
demand pay to that Finance Party an amount in the contractual
currency equal to the deficit; and
(iii) the Obligor shall pay to the Finance Party concerned on demand
any exchange costs and taxes payable in connection with any
such conversion.
(b) Each Obligor waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency other than that
in which it is expressed to be payable.
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46
26.2 Other indemnities
The Borrower shall forthwith on demand indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a
consequence of:-
(a) the occurrence of any Default;
(b) the operation of Clause 21.17 (Acceleration) or Clause 32 (Pro
rata sharing);
(c) any payment of principal or an overdue amount being received from
any source otherwise than on its Repayment Date and, for the
purposes of this paragraph (c), the Repayment Date of an overdue
amount is the last day of each Designated Term (as defined in
Clause 12.3 (Default interest)); or
(d) (other than by reason of negligence or default by a Finance
Party) a Credit not being borrowed or issued after the Borrower
has delivered a Request for that Credit.
The Borrower's liability in each case includes any loss of margin or
other loss or expense on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any
amount repaid or prepaid or any Credit.
27. EVIDENCE AND CALCULATIONS
27.1 Accounts
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they
relate.
27.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or
amount under this Agreement is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
27.3 Calculations
Interest (including any applicable MLA Cost) and the fees payable
under Clause 23.1 (Commitment and facility fee) and Clause 12.3
(Interest and Instrument fees) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a
year of 365 days or 366 days in the case of a leap year.
28. AMENDMENTS AND WAIVERS
28.1 Procedure
(a) Subject to Clause 28.2 (Exceptions), any term of the Finance Documents
may be amended or waived with the agreement of the Borrower, the
Majority Banks and the Agent. The Agent may effect, on behalf of the
Majority Banks, an amendment to which they have agreed.
(b) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraph (a) above, and any such amendment or
waiver shall be binding on all the Parties.
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47
28.2 Exceptions
An amendment or waiver which relates to:-
(a) the definition of "Majority Banks" in Clause 1.1;
(b) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment under the Finance
Documents;
(c) an increase in a Bank's Commitment;
(d) the incorporation of additional borrowers and/or drawers or a
change in the Guarantor;
(e) a term of a Finance Document which expressly requires the
consent of each Bank; or
(f) Clause 32 (Pro rata sharing) or this Clause 28 (Amendments and
waivers),
may not be effected without the consent of each Bank.
28.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:-
(i) may be exercised as often as necessary;
(ii) are cumulative and not exclusive of its rights under the general
law; and
(iii) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
29. CHANGES TO THE PARTIES
29.1 Transfers by Obligors
Neither Obligor may assign, transfer, novate or dispose of any of, or
any interest in, its rights and/or obligations under this Agreement.
29.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may at any time assign, transfer or
novate any of its rights and/or obligations under this Agreement to
another bank or financial institution (the "New Bank"). The prior
consent of the Guarantor, the Issuing Bank and the Agent is required
for any such assignment, transfer or novation but may not be
unreasonably withheld or delayed.
(b) A transfer of obligations will be effective only if either:-
(i) the obligations are novated in accordance with Clause 29.3
(Procedure for novations); or
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48
(ii) the New Bank confirms to the Agent, the Issuing Bank and the
Borrower that it undertakes to be bound by the terms of this
Agreement as a Bank in form and substance satisfactory to the
Agent and the Issuing Bank. On the transfer becoming effective
in this manner the Existing Bank shall be relieved of its
obligations under this Agreement to the extent that they are
transferred to the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to sub-
contract an obligation if that Bank remains liable under this
Agreement for that obligation.
(d) On each occasion an Existing Bank assigns, transfers or novates any of
its rights and/or obligations under this Agreement, the New Bank
shall, on the date the assignment, transfer and/or novation takes
effect, pay to the Agent for its own account a fee of 250 British
Pounds.
(e) An Existing Bank is not responsible to a New Bank for:-
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
Document; or
(iii) the accuracy of any statements (whether written or oral) made in
or in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:-
(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement
and has not relied exclusively on any information provided to it
by the Existing Bank in connection with any Finance Document;
and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while
any amount is or may be outstanding under this Agreement or any
Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:-
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause;
or
(ii) support any losses incurred by the New Bank by reason of the
non-performance by either Obligor of its obligations under this
Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank, but
excludes a Bank if no amount is or may be owed to or by that Bank
under this Agreement and its Commitment has been cancelled or reduced
to nil.
29.3 Procedure for novations
(a) A novation is effected if:-
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49
(i) the Existing Bank and the New Bank deliver to the Facility Agent
a duly completed certificate, substantially in the form of
Schedule 5 (a "Novation Certificate"); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation
Certificate on its behalf.
(c) To the extent that they are expressed to be the subject of the
novation in the Novation Certificate:-
(i) the Existing Bank and the other Parties (the "existing Parties")
will be released from their obligations to each other (the
"discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged obligations
only insofar as they are owed to or assumed by the New Bank
instead of the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties and
vice versa (the "discharged rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights
against each other which differ from the discharged rights only
insofar as they are exercisable by or against the New Bank
instead of the Existing Bank,
all on the date of execution of the Novation Certificate by the Agent
or, if later, the date specified in the Novation Certificate.
29.4 Register
The Agent shall keep a register of all the Parties and shall supply
any other Party (at that Party's expense) with a copy of the register
on request.
29.5 Additional payments
If following:-
(a) any transfer or novation of all or any part of the rights or
obligations of a Bank to a New Bank under Clause 29.2 (Transfer
by Banks); or
(b) any change in a Bank's Facility Office,
any additional amount is required to be paid to the New Bank or that
Bank (as the case may be) by a Borrower under Clause 14 (Taxes) or 16
(Increased costs) as a result of laws or regulations in force at the
time of that assignment, transfer, novation or change, then the New
Bank or Bank (acting through its new Facility Office) will be
entitled to receive any such amount only to the extent that the
Existing Bank or Bank (acting through its old Facility Office) would
have been so entitled had there been no assignment, transfer,
novation or change in Facility Office.
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50
30. DISCLOSURE OF INFORMATION
Each Bank agrees that all documentation and other information made
available by the either Obligor to such Bank, whether under the terms
of this Agreement or any other loan agreement with either Obligor,
shall (except to the extent required by legal or governmental process
or otherwise by law including any regulatory requirements applicable
to any Bank or any litigation involving any Bank, or if such
documentation and other information is publicly available or hereafter
becomes publicly available other than by action of any Bank, or was
theretofore known to such Bank independent of any disclosure thereto
by either Obligor) be held in the strictest confidence by such Bank
and used solely by such Bank and any Affiliate of such Bank (and their
respective counsel, accountants and other agents) in connection with
the administration, auditing and review of Credits from time to time
outstanding from such Bank to either Obligor; provided that (a) the
use of such documentation and information by the counsel, the
accountants or the other agents of any bank or any Affiliate of such
Bank shall be subject to the provisions of this Clause 30, (b) such
Bank may disclose such documentation and other information to any
other financial institution to which such Bank sells or proposes to
make an assignment or sell a participation or other interest in any of
its Credits hereunder (or under any other loan agreement with either
Obligor), if such other financial institution, prior to such
disclosure, agrees for the benefit of the relevant Obligor to comply
with the provisions of this Clause (including the provisions of this
Clause allowing further disclosure to other financial institutions to
whom a sale of a participation or other interest is proposed), and
(c) such Bank may disclose the provisions of this Agreement and the
amounts, maturities and interest rates of its Credits (and similar
information relating to any other loan agreement with either Obligor)
to any purchaser or potential purchaser of any interest of such Bank
in any Credit.
31. SET-OFF
A Finance Party may set off any matured obligation owed by an Obligor
under this Agreement (to the extent beneficially owned by that Finance
Party) against any obligation (whether or not matured) owed by that
Finance Party to that Obligor, regardless of the place of payment,
booking branch or currency of either obligation. If the obligations
are in different currencies, the Finance Party may convert either
obligation at a market rate of exchange in its usual course of
business for the purpose of the set-off. If either obligation is
unliquidated or unascertained, the Finance Party may set off in an
amount estimated by it in good faith to be the amount of that
obligation.
32. PRO RATA SHARING
32.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance
Party (the "recovering Finance Party") is discharged by payment, set-
off or any other manner other than through the Agent in accordance
with Clause 13 (Payments) (a "recovery"), then:-
(a) the recovering Finance Party shall, within 3 Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of
the amount which the recovering Finance Party would have
received had the recovery been received by the Agent and
distributed in accordance with Clause 13 (Payments);
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51
(c) subject to Clause 32.3 (Exception), the recovering Finance Party
shall, within 3 Business Days of demand by the Agent, pay to the
Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment
by the Obligor concerned under Clause 13 (Payments) and shall pay
the redistribution to the Finance Parties (other than the
recovering Finance Party) in accordance with Clause 13.7 (Partial
Payments); and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above, and that Obligor will owe the recovering
Finance Party a debt which is equal to the redistribution,
immediately payable and of the type originally discharged.
32.2 Reversal of redistribution
If under Clause 32.1 (Redistribution):-
(a) a recovering Finance Party must subsequently return a recovery,
or an amount measured by reference to a recovery, to an Obligor;
and
(b) the recovering Finance Party has paid a redistribution in
relation to that recovery,
each Finance Party shall, within 3 Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution
paid to that Finance Party. Thereupon the subrogation in Clause
32.1(e) (Redistribution) will operate in reverse to the extent of the
reimbursement.
32.3 Exception
A recovering Finance Party need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against the
Obligor concerned in the amount of the redistribution pursuant to
Clause 32.1(e) (Redistribution).
33. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:-
(a) the legality, validity or enforceability in that jurisdiction of
any other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions
of that or any other provision of the Finance Documents.
34. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a
single copy of this Agreement.
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52
35. NOTICES
35.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by telex or facsimile. Any such
notice will be deemed to be given as follows:-
(a) if in writing, when delivered;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and at
the end of the sender's copy of the notice; and
(c) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
35.2 Addresses for notices
(a) The address, telex number and facsimile number of each Party (other
than the Agent) for all notices under or in connection with this
Agreement are:-
(i) that notified by that Party for this purpose to the Agent on or
before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent
by not less than five Business Days' notice.
(b) The address, telex number and facsimile number of the Agent are:-
New Broad Street House
35 New Broad Street
London EC2M 1NH
Telex No: 883181 NCNB G
Fax No: 0171 628 8692
or such other as the Agent may notify to the other Parties by not less
than 5 Business Days' notice.
(c) The Agent shall, promptly upon request from any Party, give to that
Party the address, telex number or facsimile number of any other Party
applicable at the time for the purposes of this Clause.
36. LANGUAGE
(a) Any notice given under or in connection with any Finance Document
shall be in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:-
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53
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation and, in this case, the English translation shall
prevail unless the document is a statutory or other official
document.
37. JURISDICTION
37.1 Submission
For the benefit of each Finance Party, each Obligor agrees that the
courts of England have jurisdiction to settle any disputes in
connection with any Finance Document and accordingly submits to the
jurisdiction of the English courts.
37.2 Service of process
Without prejudice to any other mode of service, the Guarantor:-
(a) irrevocably appoints the Borrower as its agent for service of
process relating to any proceedings before the English courts in
connection with any Finance Document;
(b) agrees that failure by a process agent to notify the Guarantor of
the process will not invalidate the proceedings concerned; and
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 35.2 (Addresses
for notices).
37.3 Forum convenience and enforcement abroad
Each Obligor:-
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a
Finance Document; and
(b) agrees that a judgment or order of an English court in connection
with a Finance Document is conclusive and binding on it and may
be enforced against it in the courts of any other jurisdiction.
37.4 Non-exclusivity
Nothing in this Clause 37 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance
Document:-
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
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54
38. WAIVER OF JURY TRIAL
The Banks, the Agent, the Borrower and the Guarantor, after consulting
or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right any of them may have to
a trial by jury in any litigation based upon or arising out of this
Agreement or any related instrument or agreement or any of the
transactions contemplated by this Agreement or any course of conduct,
dealing, statement (whether oral or written) or actions of any of
them. None of the Banks, the Agent, the Borrower or the Guarantor
shall seek to consolidate, by counterclaim or otherwise, any such
action in which a jury trial has been waived with any other action in
which a jury trial cannot be or has not been waived.
39. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning of
this Agreement.
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SCHEDULE 1
BANKS AND COMMITMENTS
Banks Commitments
British Pounds
Nationsbank, N.A. (London Branch) 20,000,000
__________
Total Commitments 20,000,000 British Pounds
__________
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SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
1. Both Obligors
A copy of the memorandum and articles of association and certificate of
incorporation of each Obligor.
2. Borrower
(a) A copy of a resolution of the board of directors of the Borrower:-
(i) approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement;
(ii) authorising a specified person or persons to execute this
Agreement on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed
and/or despatched by it under or in connection with this
Agreement;
(b) a specimen of the signature of each person authorised by the resolution
referred to in paragraph (a) above;
(c) a certificate of a director of the Borrower confirming that utilisation
of the Facility in full would not cause any borrowing limit binding on
either Obligor to be exceeded; and
(d) a certificate of an Authorised Signatory of the Borrower certifying
that each copy document specified in this Schedule 2 is correct,
complete and in full force and effect as at a date no earlier than the
date of this Agreement.
3. Guarantor
(a) A copy of a resolution of the board of directors of the Guarantor:-
(i) approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement;
(ii) authorising a specified person or persons to execute this
Agreement on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed
and/or despatched by it under or in connection with this
Agreement;
(b) a specimen of the signature of each person authorised by the
resolutions referred to in paragraphs (a) above.
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4. Other documents
A copy of any other authorisation or other document, opinion or
assurance which the Agent considers to be necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, any Finance Document or for the validity and
enforceability of any Finance Document.
5. Legal opinion
A legal opinion of John R Leekley, legal adviser to the Guarantor,
addressed to the Finance Parties and in form and substance satisfactory
to the Agent.
<PAGE>
58
SCHEDULE 3
CALCULATION OF THE MLA COST
(a) The MLA Cost for a Loan is calculated in accordance with the following
formula:-
BY + L(Y-X) + S(Y-Z)
--------------------% per annum = MLA Cost
100(B+S)
where on the day of application of the formula:-
B is the percentage of the Agent's eligible liabilities which the
Bank of England requires the Agent to hold on a non-interest-
bearing deposit account in accordance with its cash ratio
requirements;
Y is the rate at which Sterling deposits are offered by the Agent
to leading banks in the London interbank market at or about 11.00
a.m. on that day for the relevant period;
L is the percentage of eligible liabilities which the Bank of
England requires the Agent to maintain as secured money with
members of the London Discount Market Association and/or as
secured call money with certain money brokers and gilt-edged
primary market makers;
X is the rate at which secured Sterling deposits in the relevant
amount may be placed by the Agent with members of the London
Discount Market Association and/or as secured call money with
certain money brokers and gilt-edged primary market makers at or
about 11.00 a.m. on that day for the relevant period;
S is the percentage of the Agent's eligible liabilities which the
Bank of England requires the Agent to place as a special deposit;
and
Z is the interest rate per annum allowed by the Bank of England on
special deposits.
(b) For the purposes of this Schedule 3:-
(i) "eligible liabilities" and "special deposits" have the meanings
given to them at the time of application of the formula by the
Bank of England;
(ii) "relevant period" in relation to a Loan, means:-
(A) if its Term is 3 months or less, its Term; or
(B) if its Term is more than 3 months, each successive period
of 3 months and any necessary shorter period comprised in
that Term.
(c) In the application of the formula, B, Y, L, X, S and Z are included in
the formula as figures and not as percentages, e.g. if B = 0.5% and Y =
15%, BY is calculated as 0.5 x 15.
<PAGE>
59
(d) (i) The formula is applied on the first day of each relevant period
comprised in the Term of the relevant Loan.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to four decimal places.
(e) If the Agent determines that a change in circumstances has rendered,
or will render, the formula inappropriate, the Agent (after
consultation with the Banks) shall notify the Borrower of the manner
in which the MLA Cost will subsequently be calculated. The manner of
calculation so notified by the Agent shall, in the absence of manifest
error, be binding on all the Parties.
<PAGE)
60
SCHEDULE 4
FORM OF REQUEST
Part I
For a Loan
To: NATIONSBANK, N.A. (London Branch) as Agent
From: TRIMAS CORPORATION LIMITED
Date:[ ]
TRIMAS CORPORATION LIMITED-20,000,000 British Pounds Revolving Credit Agreement
dated [ ]
July, 1996
1. We wish to borrow a Loan as follows:-
(a) Drawdown Date: [ ]
(b) Amount: [ ] British Pounds
(c) Term: [ ] /alternative Term: [ ]*
(d) Payment Instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
TRIMAS CORPORATION LIMITED
Authorised Signatory
- --------------------
* Complete only of the requested Term is of an optional duration.
<PAGE>
61
Part II
For an Instrument
To: NATIONSBANK, N.A. (London Branch) as Agent
From: TRIMAS CORPORATION LIMITED Dated: [ ]
TRIMAS CORPORATION LIMITED 20,000,000 British Pounds Revolving Credit Agreement
dated [ ] July, 1996
1. We request the Banks to issue an Instrument in the attached form as
follows:-
(a) Drawdown Date: [ ];
(b) Face Amount [ ] [reducing as follows];
(c) Beneficiary: [ ];
(d) Term: [ ];
(e) Expiry Date: [ ];
(f) Purpose: [ ];
(g) Issue Instructions: [ ].
2. We attach copies of the written confirmation of the Beneficiary that
the form of the requested Instrument is acceptable to it.
3. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
TRIMAS CORPORATION LIMITED
Authorised Signatory
.....................................
<PAGE>
62
SCHEDULE 5
FORM OF NOVATION CERTIFICATE
To: NATIONSBANK, N.A. (London Branch) as Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
TRIMAS CORPORATION LIMITED - 20,000,000 British Pounds Revolving Credit
Agreement dated [ ]
July, 1996
We refer to Clause 29.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New
Bank") agree to the Existing Bank and the New Bank novating all the
Existing Bank's rights and obligations referred to in the Schedule in
accordance with Clause 29.3 (Procedure for novations).
2. The specified date for the purposes of Clause 29.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 35.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] Nationsbank, N.A. (London
Office)
By: By: By:
Date: Date: Date:
<PAGE>
63
SIGNATORIES
Borrower
TRIMAS CORPORATION LIMITED
By: /s/ PETER C DECHANTS
Guarantor
TRIMAS CORPORATION
By: /s/ PETER C DECHANTS
Banks
NATIONSBANK N.A. (London Office)
By: /s/ OSCAR CRANZ III
Issuing Bank
NATIONSBANK N.A. (London Office)
By: /s/ OSCAR CRANZ III
Agent
NATIONSBANK, N.A. (London Office)
By: /s/ OSCAR CRANZ III
Exhibit 11
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands, Except Per Share Amounts)
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
Primary:
Net income $31,950 $30,000 $17,820 $16,560
Weighted average common
shares outstanding 36,644 36,644 36,644 36,644
Dilution of stock options 324 350 339 357
Weighted average common
and common equivalent
shares outstanding
after assumed exercise
of options 36,968 36,994 36,983 37,001
Primary earnings per
common share $.86 $.81 $.48 $.45
Fully diluted:
Net income $31,950 $30,000 $17,820 $16,560
Add after tax convertible
debenture related
expenses 1,840 1,840 920 920
Net income as adjusted $33,790 $31,840 $18,740 $17,480
Weighted average common
shares outstanding 36,644 36,644 36,644 36,644
Dilution of stock options 338 361 338 361
Addition from assumed
conversion of convertible
debentures 5,083 5,083 5,083 5,083
Weighted average common
and common equivalent
shares outstanding on
a fully diluted basis 42,065 42,088 42,065 42,088
Fully diluted earnings
per common share $.80 $.76 $.45 $.42
Exhibit 12
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Earnings:
Income before income taxes $52,380 $49,590 $29,210 $27,380
Fixed charges 6,070 7,950 3,090 3,960
Earnings before fixed
charges $58,450 $57,540 $32,300 $31,340
Fixed Charges:
Interest $5,670 $7,540 $2,890 $3,750
Portion of rental expense 470 450 220 230
Fixed charges $6,140 $7,990 $3,110 $3,980
Ratios of earnings to fixed charges 9.5 7.2 10.4 7.9
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIMAS
CORPORATION'S FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 108,570,000
<SECURITIES> 0
<RECEIVABLES> 93,670,000
<ALLOWANCES> 1,560,000
<INVENTORY> 86,410,000
<CURRENT-ASSETS> 289,440,000
<PP&E> 301,120,0000
<DEPRECIATION> 125,100,000
<TOTAL-ASSETS> 653,150,000
<CURRENT-LIABILITIES> 61,390,000
<BONDS> 187,040,000
370,000
0
<COMMON> 0
<OTHER-SE> 366,400,000
<TOTAL-LIABILITY-AND-EQUITY> 653,150,000
<SALES> 307,900,000
<TOTAL-REVENUES> 307,900,000
<CGS> 206,980,000
<TOTAL-COSTS> 206,980,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,520,000
<INCOME-PRETAX> 52,380,000
<INCOME-TAX> 20,430,000
<INCOME-CONTINUING> 31,950,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,950,000
<EPS-PRIMARY> .86
<EPS-DILUTED> .80
</TABLE>
