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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NO.1-10269
ALLERGAN, INC.
(Exact name of Registrant as Specified in its Charter)
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<S> <C>
DELAWARE 95-1622442
(State of Incorporation) (I.R.S. Employer
Identification No.)
2525 DUPONT DRIVE
IRVINE, CALIFORNIA 92715-1599
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number: (714) 752-4500
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which each class registered
Common Stock, $0.01 par value New York Stock Exchange
Preferred Share Purchase Rights
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Securities registered pursuant to Section 12(g) of the Act:
NONE
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes E No____
The aggregate market value of the registrant's voting stock held by
non-affiliates was approximately $1,400,000,000 on February 28, 1994, based
upon the closing price on the New York Stock Exchange on such date.
Common Stock outstanding as of February 28, 1994 - 63,904,229 shares
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendement to this Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate certain information by reference from
the registrant's Annual Report to Stockholders for the fiscal year ended
December 31, 1993. With the exception of the sections of the Annual Report
specifically incorporated by reference herein, the Annual Report is not deemed
filed as part of this Report on Form 10-K.
Part III incorporates certain information by reference from the
registrant's definitive proxy statement for the annual meeting of stockholders
to be held on April 19, 1994, which proxy statement will be filed no later than
120 days after the close of the registrant's fiscal year ended December 31,
1993.
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TABLE OF CONTENTS
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PART I PAGE
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Item 1. Business................................................................. 1
Item 2. Properties............................................................... 7
Item 3. Legal Proceedings........................................................ 8
Item 4. Submission of Matters to a Vote of Security Holders...................... 9
Item I-A. Executive Officers of Allergan, Inc. .................................... 9
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................................... 12
Item 6. Selected Financial Data..................................................... 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 12
Item 8. Financial Statements and Supplementary Data................................. 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................................... 12
PART III
Item 10. Directors and Executive Officers of Allergan, Inc. ......................... 13
Item 11. Executive Compensation...................................................... 13
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................................. 13
Item 13. Certain Relationships and Related Transactions.............................. 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K................................................................. 14
SIGNATURES............................................................................... 15
INDEX OF EXHIBITS........................................................................ 19
INDEPENDENT AUDITORS' REPORTS ON SCHEDULES............................................... 20
SCHEDULES................................................................................ S-1
EXHIBITS.........................................................................(Attached to this
Report on Form 10-K)
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Allergan, Inc. ("Allergan" or the "Company") is a global provider of
specialty therapeutic products principally in the areas of eye and skin care.
Its worldwide consolidated revenues are generated by prescription and
non-prescription pharmaceutical products in the areas of ophthalmology and
dermatology, intraocular lenses (IOLs) and other ophthalmic surgical products,
and contact lens care products.
Allergan was incorporated in California in 1948 and reincorporated in
Delaware in 1977. In 1980, the Company was acquired by SmithKline Beckman
Corporation (then known as "SmithKline Corporation" and herein "SmithKline").
The Company operated as a wholly- owned subsidiary of SmithKline from 1980
until July 27, 1989 when Allergan again became a stand-alone public company
through a spin- off distribution by SmithKline.
During the fourth quarter of 1991, the Company divested its computer-based
ophthalmic diagnostic instrument business, Allergan Humphrey. In November
1992, the Company sold its contact lens business in North and South America.
In August 1993, the Company sold its contact lens business outside of the
Americas.
ALLERGAN BUSINESSES
The following table sets forth, for the periods indicated, the net sales
from continuing operations for each of the Company's specialty therapeutics
businesses:
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____ Year Ended December 31_____
----------------------------------------
1993 1992 1991
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(in millions)
<S> <C> <C> <C>
Specialty Pharmaceuticals
Eye Care $386.2 $359.2 $317.7
Skin Care 32.4 37.3 36.5
--------- -------- --------
418.6 396.5 354.2
Surgical 115.3 111.8 108.2
Optical Lens Care 325.0 322.4 299.3
----- ----- -----
TOTAL $858.9 $830.7 $761.7
====== ====== ======
Domestic
47.5% 47.9% 50.4%
International 52.5% 52.1% 49.6%
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The foregoing table does not include sales of discontinued operations.
See Note 10 of Notes to Consolidated Financial Statements on page 46 of the
1993 Annual Report for further information concerning foreign and domestic
operations.
Specialty Pharmaceuticals
Allergan develops, manufactures and markets a broad range of prescription
ophthalmic products designed to treat diseases and disorders of the eye,
including glaucoma, inflammation,
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infection, allergy and ophthalmic muscle disorders. In addition, the specialty
over-the-counter ("OTC") product line consists of
products designed to treat ocular surface disease, including artificial tears
and ocular decongestants.
The largest segment of the market for ophthalmic prescription drugs is for
the treatment of glaucoma, a sight-threatening disease characterized by
elevated intraocular pressure. For initial treatment of glaucoma, Allergan
sells BETAGAN(R) ophthalmic solution, a beta adrenergic blocking agent;
BETAGAN(R) is Allergan's largest selling pharmaceutical product. PROPINE(R)
ophthalmic solution is the product which is used alone or in combination with
other drugs when initial drug therapy for glaucoma becomes inadequate. Patent
protection for both products expired in the United States in 1991. Although
the Company has not experienced generic competition to date, such competition
is expected to develop in 1994. In 1993, Allergan entered into an agreement
with Schein Pharmaceutical, Inc. whereby Schein will market generic versions of
certain Allergan products that are off- patent in the U.S.; in March 1994,
Schein began marketing a generic version of BETAGAN(R) . Also in March 1994,
Bausch & Lomb announced that it had obtained approval from the United States
Food and Drug Administration ("FDA") to market a generic version of BETAGAN(R)
.
Allergan holds a major share of the U.S. market for ophthalmic steroids.
The Company's PRED FORTE(R) product is widely prescribed to fight ocular
inflammation.
In 1993, Allergan entered into a strategic alliance with Fisons
Corporation to co-promote certain ophthalmic pharmaceuticals in the United
States. The alliance currently involves Allergan's ACULAR(R) 1 ophthalmic
solution for the relief of itch associated with seasonal allergic
conjunctivitis. Later, under the terms of the alliance, co-promotion is
planned to expand to include Fisons' OPTICROM(R) 2 ophthalmic solution and
nedocromil sodium ophthalmic solution.
Allergan's specialty pharmaceuticals include BOTOX(R) (Botulinum Toxin
Type A) purified neurotoxin complex for the treatment of certain neuromuscular
disorders which are characterized by involuntary muscle contractions or spasms.
BOTOX(R) purified neurotoxin complex is being marketed in the United States,
Canada, Germany, France, Italy, New Zealand and a number of other countries for
the treatment of blepharospasm (the uncontrollable abnormal contraction of the
eyelid muscles which can force the eye closed) and strabismus (misalignment of
the eyes) in people 12 years of age and over. In March 1991, an application
was filed with United States FDA for approval of a nonophthalmic claim for an
indication related to a neck and shoulder neuromuscular disorder known as
cervical dystonia (torticollis). Allergan has been asked to provide
supplemental clinical data to support the torticollis filing.
Building upon its strength in marketing to medical specialties and taking
advantage of synergies in research and development, Allergan's skin care
division (known as Allergan Herbert) develops, manufactures and markets a line
of therapeutic skin care products primarily to dermatologists in the United
States. Its product line includes GRIS-PEG(R) tablets, a systemic anti-fungal
product, ELIMITE(R) cream for the treatment of scabies and NAFTIN(R) , a
topical anti-fungal gel and cream.
___________________________________
(1)ACULAR(R) is a registered trademark, which is llicensed from Syntex (U.S.A.)
Inc.
(2)OPTICROM(R) is a registered trademark of Fisons Corporation.
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Surgical
Allergan's surgical division (known as Allergan Medical Optics or AMO)
develops, manufactures and markets intraocular lenses (IOLs), surgically
related pharmaceuticals, phacoemulsification equipment and other ophthalmic
surgical products.
The largest segment of the surgical market is for the treatment of
cataracts. IOLs are used to replace the natural lens of a cataract patient
when it has become clouded. To meet the wide range of IOL products demanded by
the market, Allergan currently offers a variety of models, including rigid
multi-piece and single-piece and small incision designs. Lenses for small
incision surgery include the AMO(R) PHACOFLEX(R) small incision IOL,
introduced in 1989, and the AMO(R) Foldable PHACOFLEX(R) II SI-30NB(TM) small
incision IOL, introduced in April 1993. Small incision IOLs continue to grow
in popularity along with increasing use of phacoemulsification, a method of
cataract extraction that uses ultrasound waves to break the natural lens into
small fragments that can be removed through a hollow needle.
Phacoemulsification requires only a 3 to 4 millimeter incision, compared to
incisions of up to 12 millimeters for other techniques. In 1993, AMO
introduced the AMO(R) PRESTIGE(TM), which Allergan believes represents a
significant technological advance in phacoemulsification equipment.
Sales growth of IOLs in the U.S. has been adversely impacted by price
erosion resulting from competitive pressures.
Optical
The Company has been in the contact lens care market since 1960. It
develops, manufactures and markets a broad range of products worldwide for use
with every available type of contact lens. These products include daily
cleaners to remove undesirable film and deposits from hard, rigid gas permeable
and soft contact lenses; enzymatic cleaners to remove protein deposits from the
surface of contact lenses; and disinfecting solutions to destroy harmful
microorganisms on the surface of contact lenses. Allergan offers products that
can be used in each of the three disinfecting systems now available: heat
systems, cold chemical systems and hydrogen peroxide systems. ULTRACARE(R)
neutralizer/disinfectant, Allergan's one-step hydrogen peroxide disinfection
system, was approved by the FDA in March 1992 for general marketing in the U.S.
COMPLETE(R) , a one-bottle "cold chemical" disinfection system for soft contact
lenses was launched in several countries in the Pan-Asia and Europe regions
during 1993. The U.S. filing for marketing approval of COMPLETE(R) was made
with the FDA in December 1991.
Sales of the Company's proprietary enzymatic cleaners represented 12%, 11%
and 11% of total Company sales in 1991, 1992 and 1993, respectively, and sales
of the Company's hydrogen peroxide disinfection systems represented 14%, 13%
and 14% of total Company sales in 1991, 1992 and 1993, respectively.
EMPLOYEE RELATIONS
At December 31, 1993 the Company employed approximately 4,749 persons
throughout the world, including approximately 2,185 in the United States. None
of the Company's U.S.-based employees are represented by unions. The Company
considers that its relations with its employees are, in general, very good.
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INTERNATIONAL OPERATIONS
The Company believes that international markets represent a significant
opportunity for continued growth. Allergan believes that its well-established
international market presence provides it with a competitive advantage,
enabling the Company to maximize the return on its investment in research,
product development and manufacturing.
Allergan established its first foreign subsidiary in 1964 and currently
sells products in approximately 100 countries. Marketing activities are
coordinated on a worldwide basis and resident management teams provide
leadership and infrastructure for customer focused rapid introduction of new
products in their local markets.
In Japan, the second largest eye care market in the world, certain of
Allergan's eye care pharmaceutical products are licensed to Santen
Pharmaceuticals (the largest eye care pharmaceutical manufacturer in Japan),
and Allergan's contact lens care products are sold through a joint venture
between Santen and Allergan. IOLs and other eye care surgical products are
sold directly in Japan.
SALES AND MARKETING
Allergan maintains global marketing and regional sales organizations.
Supplementing the sales efforts and promotional activities aimed at eye and
skin care professionals, as well as neurologists outside the U.S., who use,
prescribe and recommend its products, Allergan has been shifting its resources
increasingly toward managed care providers. In addition, Allergan advertises
in professional journals and has an extensive direct mail program of
descriptive product literature and scientific information to specialists in the
ophthalmic and dermatological fields. The Company's specialty therapeutic
products are sold to drug wholesalers, independent and chain drug stores,
commercial optical chains, mass merchandisers, food stores, hospitals,
ambulatory surgery centers (ASCs) and medical practitioners, including
neurologists. At December 31, 1993 the Company employed approximately 800
sales representatives throughout the world.
RESEARCH AND DEVELOPMENT
The Company's global research and development efforts focus on eye care,
skin care and neuromuscular products that are safe, effective, convenient and
have an economic benefit. The Company's own research and development
activities are supplemented by a commitment to identifying and obtaining new
technologies through in-licensing, joint ventures and acquisition efforts
including the establishment of research relationships with academic
institutions and individual researchers.
Research and development efforts for specialty pharmaceuticals focus
primarily on new therapeutic products for glaucoma, inflammation, dry eye,
allergy, dystonias and other neuromuscular disorders, and new anti-infective
pharmaceuticals for eye care, acne, inflammation and psoriasis. During the
first quarter of 1993, Allergan began Phase III clinical trials with its
proprietary topical retinoid tarazotene (AGN190168) for both acne and
psoriasis. The results of these trials are expected to be available beginning
in the middle of 1994.
Research and development activities for the surgical division concentrate
on improved cataract surgical systems, implantation instruments and methods,
and new IOL materials and designs, including the AMO(R) ARRAY(R) multifocal
IOL, designed to allow patients to see well over a range of distances.
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Research and development in the contact lens care product area is aimed at
care systems which, without sacrificing efficacy or antimicrobial activity,
will be more convenient for patients to use and thus lead to a higher rate of
compliance with recommended lens care procedures. Improved compliance can
enhance safety and extend the time a patient will be a contact lens wearer.
The Company believes that continued development and commercialization of
disinfection systems that are both easy-to-use and efficacious will be
important for the future success of this part of the Company's business.
During 1992, the Company entered into a joint venture with Ligand
Pharmaceuticals Corporation to combine Ligand's knowledge of intracellular
receptor technology with the Company's experience in receptor-selective
retinoids for topical use. The joint venture filed an Investigational New Drug
Application with the FDA in November 1993 for the use of 9-cis Retinoic acid
(LGD1057) to be given orally for cancer therapy. In 1993, the Company signed
an agreement with Sandoz Pharmaceuticals Corporation to develop, manufacture
and market cyclosporine A for all topical ophthalmic uses. In addition, the
Company has entered into a number of collaborative arrangements with academic
institutions.
The continuing introduction of new products supplied by the Company's
research and development efforts and in-licensing opportunities is critical to
the success of the Company. Delays or failures in one or more significant
research projects could have a material adverse impact on the future operations
of the Company.
At December 31, 1993 there were an aggregate of approximately 630 people
involved in the Company's research and development efforts. The Company's
research and development expenditures associated with continuing operations for
1991, 1992 and 1993 were $70.4 million, $89.5 million and $102.5 million
respectively.
COMPETITION
Allergan faces strong competition in all of its markets. Numerous
companies are engaged in the development, manufacture and marketing of health
care products competitive with those manufactured by Allergan, although these
companies do not necessarily compete in all of Allergan's product lines. Major
eye care competitors include Merck, Alcon Laboratories (a subsidiary of
Nestle), Bausch & Lomb, Ciba Vision Corp. (a subsidiary of Ciba-Geigy), IOLab
(a subsidiary of Johnson & Johnson), Pharmacia Ophthalmics (a subsidiary of
Kabi Pharmacia), Sola/Barnes-Hind (a subsidary of Pilkington plc) and
Wessley-Jessen, Inc. (a subsidiary of Schering- Plough Corporation). These
competitors have equivalent or greater resources than Allergan. The Company's
skin care business competes against a number of companies which have greater
resources than Allergan. In marketing its products to health care
professionals, the Company competes primarily on the basis of product
technology, service and price.
GOVERNMENT REGULATION
Drugs, biologics and medical devices, including IOLs and contact lens care
products, are subject to regulation by the FDA, state agencies and, in varying
degrees, by foreign health agencies. FDA regulation of many of the Company's
products generally requires extensive testing of new products and filing
applications for approval by the FDA prior to sale in the United States. The
FDA reviews these applications and determines whether the product is safe and
effective. The process of developing data to support a pre-market application
and FDA review can be costly and take many years to complete.
Manufacturers of drugs, medical devices and biologics are operating in a
more rigorous regulatory environment than has been the case in previous years.
Several legislative and administrative measures to strengthen government
regulation of medical devices and drugs have
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recently been implemented in the United States, such as the Safe Medical
Devices Act of 1990, which among other things, increased reporting requirements
of adverse events associated with medical devices, and the Prescription Drug
Law Fee Act of 1992, which requires payment of substantial fees to the FDA for
new drug applications. Other measures are pending or have been proposed. In
addition, there has been increased scrutiny of drug and device manufacturers by
the FDA as a result of a scandal in the generic drug industry and controversies
surrounding the safety of certain medical devices. While the Company is not
primarily involved in these areas of business, the impact of increased FDA
scrutiny is felt by all companies in the drug and device industries. Moreover,
in Europe and other major Allergan markets, the regulation of drugs and medical
devices is likewise increasing. The Company is working to ensure that its
operations remain in compliance with FDA and other regulatory requirements.
The total cost of providing health care services has been and will
continue to be subject to review by governmental agencies and legislative
bodies in the major world markets, including the United States, which are faced
with significant pressure to lower health care costs. Prices for some of the
Company's products, specifically IOLs and pharmaceutical products, accounting
for approximately 60% of the Company's 1993 sales, are expected to come under
increased pressure as governments and managed care providers generally increase
their efforts to contain health care costs.
In the United States, a significant percentage of the patients who receive
the Company's IOLs are covered by the federal Medicare program. When a
cataract extraction with IOL implantation is performed in an ambulatory surgery
center ("ASC"), Medicare provides the ASC with a fixed $150 allowance to cover
the cost of the IOL. When the procedure is performed in a hospital outpatient
department, the hospital's reimbursement is determined using a complex formula
that blends the hospital's costs with the $150 allowance paid to ASCs. In
November 1990, the U.S. Health Care Financing Administration (HCFA) issued
proposed regulations under which Medicare would not recognize hospitals'
expenditures for IOLs implanted during outpatient cataract surgery to the
extent that those expenditures exceed the ASC allowance. The Company cannot
predict whether HCFA will promulgate a final regulation imposing this
limitation.
The cost of prescription drugs is receiving substantial attention in the
United States Congress. Legislation enacted in 1990, and amended and
strengthened in 1992, requires pharmaceutical manufacturers to rebate to the
government a portion of their revenues from drugs furnished to Medicaid
patients. In 1992, legislation was enacted that extends these requirements to
covered outpatient pharmaceuticals, and also mandates a reduction in
pharmaceutical prices charged to certain federally-funded facilities as well as
to certain hospitals serving a disproportionate share of low-income patients.
A provision of the Omnibus Budget Reconciliation Act of 1993 limits tax
benefits currently realized by U.S. manufacturers as a result of the
manufacture of certain products in Puerto Rico, beginning in 1994. It is
likely that Congressional attention will continue to focus on the costs of
drugs generally, and particularly on increases in drug prices in excess of the
rate of inflation, given the current government initiatives pertaining to the
overall reform of the U.S. health care system, and those specifically directed
at lowering total costs. The Clinton Administration's health reform bill would
provide all Medicare beneficiaries with a comprehensive drug benefit; however,
manufacturers would be required to pay a "rebate" to the government based on
the volume of a manufacturer's products sold to Medicare beneficiaries. The
Company cannot predict the likelihood of passage of these or other similar or
related bills.
Congress also devoted significant attention in 1992 and in preceding years
to proposing amendments to the Orphan Drug Act. Under one proposal, once
cumulative sales of an orphan drug exceed a designated dollar amount the FDA
would be authorized to approve competitors' marketing applications. The
Company currently markets one orphan drug product, BOTOX (Botulinum Toxin Type
A) purified neurotoxin complex.
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The Company cannot predict what effect these measures would have if they
were ultimately enacted into law. Nor can it predict whether or in what form
health care legislation being formulated by the new Administration will be
passed. However, in general, the adoption of such measures can be expected to
have an adverse impact on the Company's business.
PATENTS, TRADEMARKS AND LICENSES
Allergan owns or is licensed under numerous patents relating to its
products, product uses and manufacturing processes. It now has numerous
patents issued in the United States and corresponding foreign patents issued in
the major countries in which it does business. Allergan believes that its
patents and licenses are important to its business, but that with the exception
of those relating to hydrogen peroxide disinfection systems, no one patent or
license is currently of material importance in relation to its business as a
whole.
Allergan markets its products under various trademarks and considers these
trademarks to be valuable because of their contribution to the market
identification of the various products.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state, local and foreign environmental
laws and regulations. The Company believes that its operations comply in all
material respects with applicable environmental laws and regulations in each
country where the Company has a business presence. Although Allergan continues
to make capital expenditures for environmental protection, it does not
anticipate any significant expenditures in order to comply with such laws and
regulations which would have a material impact on the Company's capital
expenditures, earnings or competitive position. The Company is not aware of
any pending litigation or significant financial obligations arising from
current or past environmental practices. There can be no assurance, however,
that environmental problems relating to properties owned or operated by the
Company will not develop in the future, and the Company cannot predict whether
any such problems, if they were to develop, could require significant
expenditures on the part of the Company. In addition, the Company is unable to
predict what legislation or regulations may be adopted or enacted in the future
with respect to environmental protection and waste disposal.
ITEM 2. PROPERTIES
Allergan's operations are conducted in owned and leased facilities located
throughout the world. Its primary administrative and research facilities are
located in Irvine, California. The following table describes the general
character of the major existing facilities as of February 28, 1994:
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Location Primary Function Interest
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Irvine, California Headquarters, research and development,
manufacturing, administrative Owned/
Leased
Santa Ana, California Manufacturing, warehousing Owned
Berkeley, California Manufacturing, warehousing,
administrative Leased
Waco, Texas Manufacturing, warehousing Owned
Lenoir, North Carolina Manufacturing, administrative, warehousing Owned
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Hormigueros, Puerto Rico Manufacturing, warehousing Owned
Anasco, Puerto Rico Manufacturing, warehousing Leased
Buenos Aires, Argentina Administrative, manufacturing,
warehousing Owned
Markham, Canada Administrative, warehousing Leased
County Mayo, Ireland Administrative, manufacturing,
warehousing Owned
High Wycombe, U.K. Administrative, warehousing Leased
Sophia Antipolis, France Administrative, warehousing Leased
Pomezia, Italy Administrative, manufacturing, Owned
research and development,
warehousing
Madrid, Spain Administrative, warehousing Owned
Ettlingen, Germany Administrative, warehousing Owned
Zaventem, Belgium Administrative, warehousing Leased
Sao Paulo, Brazil Administrative, manufacturing, Owned
warehousing
Johannesburg, South Africa Administrative, warehousing Leased
Sydney, Australia Administrative, warehousing Owned/
Leased
</TABLE>
The company believes its present facilities are adequate for its current
needs.
ITEM 3. LEGAL PROCEEDINGS
Securities Litigation
On November 29,1993, the United States District Court for the Central District
of California granted the Company's Motion for Summary Judgment in the case
captioned, "In Re Allergan Shareholders Litigation," SACV 89-643 AHS (RWRx),
described in the Annual Report on Form 10-K for the year ended December 31,
1992 (the "1992 10-K"), dismissing all of plaintiffs' claims pending against
the Company and the other defendants. Plaintiffs subsequently filed a Notice
of Appeal in the United States Court of Appeals for the Ninth Circuit. During
March 1994, the parties, and others, entered into an agreement (the
"Settlement") as a result of which the appeal was dismissed with prejudice and
the litigation brought to an end. Additionally, the Settlement brought to an
end the derivative action captioned Peter Stuyvesant, Ltd. v. Herbert, et al.,
No. B009384, described in the 1992 10-K.
Other Litigation
The Company and its subsidiaries are involved in various litigation and
claims arising in the normal course of business which Allergan considers to be
normal in view of the size and nature of its business.
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***
Although the ultimate outcome of pending litigation cannot be precisely
ascertained at this time, Allergan believes that any liability resulting from
the aggregate amount of uninsured damages for outstanding lawsuits and claims
will not have a material adverse effect on its consolidated financial position.
However, in view of the unpredictable nature of litigation, no assurances can
be given in this regard.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter during the fourth quarter of the
fiscal year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
ITEM I-A. EXECUTIVE OFFICERS OF ALLERGAN, INC.
The executive officers of the Company and their ages as of February 28, 1994
are as follows:
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<S> <C> <C>
Vicente Anido, Jr., Ph.D. 41 Corporate Vice President and President, Americas Region
Edgar J. Cummins 50 Corporate Vice President and Chief Financial Officer
Jeffrey B. D'Eliscu 43 Corporate Vice President, Corporate Communications
Michael J. Donohoe 51 Corporate Vice President and President, Europe Region
Richard M. Haugen 41 Executive Vice President and Chief Operating Officer
Gavin S. Herbert 61 Chairman of the Board
Richard J. Hilles 51 Corporate Vice President, Human Resources
Lester J. Kaplan, Ph.D. 43 Corporate Vice President, Research and Development
Benjamin F. McGraw III, 44 Corporate Vice President, Corporate Development
Pharm.D.
Diethart Reichardt 51 Corporate Vice President, Optical
Jacqueline J. Schiavo 45 Corporate Vice President, Worldwide Operations
William C. Shepherd 55 President and Chief Executive Officer
Francis R. Tunney, Jr. 46 Corporate Vice President, General Counsel and Secretary
Dwight J. Yoder 49 Vice President, Controller
</TABLE>
Officers are appointed by and hold office at the pleasure of the Board of
Directors.
Dr. Anido has been Corporate Vice President and President, Americas Region
since June 1993. Prior thereto, he had 18 years of experience with
pharmaceutical companies. Dr. Anido was Vice President, Business Management of
the U.S. Prescription Products Division of Marion Merrell Dow, Inc. from 1991
to 1993, President and General Manager (1990-1991) and Vice President, Sales &
Marketing (1989-1990) of Nordic Laboratories, Inc. He also held various
management positions with Marion Laboratories, Inc.
Mr. Cummins has been Corporate Vice President and Chief Financial Officer of
the Company since 1991 and had been Senior Vice President, Finance and Chief
Financial Officer from 1986 to 1991. Mr. Cummins was Treasurer from 1986 to
1989. Prior thereto he held various senior level
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financial positions with American Hospital Supply/Baxter Travenol. Mr. Cummins
is a Director of OSI Corp.
Mr. D'Eliscu has been Corporate Vice President, Corporate Communications since
1992 and was Vice President, Investor Relations and Public Communications from
1991. Mr. D'Eliscu had been Senior Director, Investor Relations of the Company
from June 1989 to February 1991 and prior thereto, he had been Director of
Business Development from 1988 and Senior Product Manager from December 1985.
Mr. D'Eliscu first joined the Company in 1979.
Mr. Donohoe has been Corporate Vice President and President, Europe Region
since 1992. Prior thereto, he was Corporate Vice President and President,
Optical, Consumer/OTC Group from 1991. Mr. Donohoe was Senior Vice President
and General Manager, Contact Lenses from 1990 to 1991 and Area Vice President,
Northern Europe from 1989 to 1990. Mr. Donohoe held the position of Senior
Vice President, Worldwide Marketing for the Optical Division from 1988 to 1989
and was Vice President, International Marketing from 1987 to 1988. Mr. Donohoe
first joined the Company in 1987.
Mr. Haugen has been Executive Vice President and Chief Operating Officer since
April 1992 and had been Corporate Vice President of the Company and President,
Worldwide Eye Marketing and Sales & Operations since January 1992. Prior
thereto, Mr. Haugen was Corporate Vice President and President, Americas Region
in 1991 and had been President of Allergan Optical and Senior Vice President of
the Company from 1989 to 1991. Prior thereto he was Senior Vice President and
President of Allergan Pharmaceuticals from 1988 to 1989 and was Senior Vice
President, Planning and Business Development since 1987. Mr. Haugen first
joined the Company in 1976.
Mr. Herbert has been Chairman of the Board since 1977 and was also Chief
Executive Officer from 1977 to 1991. Prior thereto, Mr. Herbert had been
President and Chief Executive Officer of the Company since 1961. He was
Executive Vice President of SmithKline Beckman Corporation from 1986 to 1989
and President of SmithKline Beckman Corporation's Eye and Skin Care Products
Operations from 1981 to 1989. Mr. Herbert was a founder of the Company in
1950.
Mr. Hilles has been Corporate Vice President, Human Resources since 1991 and
prior thereto was Senior Vice President, Human Resources from 1986 to 1991. He
was Vice President, Human Resources from 1981 to 1986. Mr. Hilles first joined
SmithKline Beckman Corporation in 1965.
Dr. Kaplan has been Corporate Vice President, Research and Development since
1992. He had been Senior Vice President, Pharmaceutical Research and
Development since 1991, Senior Vice President, Research and Development since
1989 and Vice President since 1988. Dr. Kaplan had served as Senior Director
in Group Research and Development from 1986 to 1988 and as Associate Director,
Discovery Research from 1984 to 1986. Dr. Kaplan first joined the Company in
1983.
Dr. McGraw has been Corporate Vice President, Corporate Development since April
1993. Prior thereto, he was President of Carerra Capital Management, Inc., an
investment firm, from 1991 to 1993 and President of MedTech Trends, Inc., an
investment analysis firm, from 1990 to 1993. During the period from 1978 to
1990, Dr. McGraw held various management positions, including Vice President,
Development, with Marion Merrell Dow, Inc. and Marion Laboratories, Inc.,
pharmaceutical companies.
Mr. Reichardt has been Corporate Vice President, Optical since 1992. Prior
thereto, he was Senior Vice President, Marketing/Business Development, Optical
from 1991 and Senior Vice President, Northern Europe from 1983. Mr. Reichardt
first joined the Company in 1972.
10
<PAGE> 13
Ms. Schiavo has been Corporate Vice President, Worldwide Operations since 1992.
She was Senior Vice President, Operations from 1991 and Vice President,
Operations from 1989. Prior thereto, she was Senior Director, Operations from
1988 to 1989. Ms. Schiavo first joined the Company in 1980.
Mr. Shepherd has been President and Chief Executive Officer of the Company
since 1992 and prior thereto had been President and Chief Operating Officer
from 1984 to 1991. Prior to 1984, Mr. Shepherd was President of Allergan U.S.,
Senior Vice President, U.S. Operations and Vice President, Operations.
Mr. Shepherd first joined the Company in 1966.
Mr. Tunney has been Corporate Vice President, General Counsel and Secretary of
the Company since 1991 and prior thereto was Senior Vice President, General
Counsel and Secretary from 1989 to 1991. Mr. Tunney had served as Vice
President, General Counsel and Assistant Secretary of the Company since 1986,
and as Associate General Counsel of the Company since 1985. Prior thereto he
was Senior International Attorney for SmithKline Beckman Corporation which he
joined in 1979.
Mr. Yoder has been Vice President and Controller of the Company since 1990.
Prior thereto, Mr. Yoder held various management positions with Del Taco, Inc.
from 1983 to 1989, including Vice President, Finance of Del Taco/Naugles
Restaurants and Vice President, Controller of Del Taco, Inc. Mr. Yoder first
joined the Company in 1990.
The information required by Item 405 of Regulation S-K is included on page 7 of
the Proxy Statement and is incorporated herein by reference.
11
<PAGE> 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The sections entitled "Shareholder Information" and "Stock Listing" on
page 54 of the Annual Report are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The table entitled "Summary of Selected Financial Data" on page 51 of the
Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three Year Period Ended December
31, 1993" on pages 25-30 of the Annual Report is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, including the notes thereto, together with the
sections entitled "Independent Auditors' Report" and "Quarterly Results
(unaudited)" of the Annual Report included on pages 31-47, 49 and 50,
respectively, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The section entitled "Independent Auditors" on page 26 of the Proxy
Statement is incorporated herein by reference.
12
<PAGE> 15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF ALLERGAN, INC.
Information under this Item is included on pages 2-4 of the Proxy
Statement and such information is incorporated herein by reference.
Information with respect to executive officers is included on pages 11-13 of
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation," and the subsection
entitled "Director Compensation" included in the Proxy Statement on pages 11-15
and 6-7, respectively, are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The common stock information in the section entitled "Security Ownership
of Certain Beneficial Owners and Management" on pages 8-10 of the Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsections entitled "Other Matters" and "Compensation Committee
Interlocks and Insider Participation" on pages 7 and 19, respectively, of the
Proxy Statement are incorporated herein by reference.
13
<PAGE> 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Index to Financial Statements * Page in
----------------------------- -------
Annual Report
-------------
1. Financial Statements included in Part II of this report:
--------------------------------------------------------
<S> <C>
Independent Auditors' Report 49
Consolidated Balance Sheets at December 31, 1993 and
December 31, 1992 31
Consolidated Statements of Earnings for Each of the
Years in the Three Year Period Ended December 31, 1993 32
Consolidated Statements of Cash Flows for Each of the 33
Years in the Three Year Period Ended December 31, 1993
Notes to Consolidated Financial Statements 34-47
</TABLE>
* Incorporated by reference from the indicated pages of the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1993 (and except
for these pages, the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1993, is not deemed filed as part of this report).
<TABLE>
<CAPTION>
2. Schedules Supporting the Consolidated Financial Statements: Page in
----------------------------------------------------------- -------
This Report
-----------
<S> <C>
Independent Auditors' Reports on Schedules 20
</TABLE>
Schedules numbered in accordance with Rule 5.04 of
Regulation S-X:
<TABLE>
<S> <C> <C>
II Loans Outstanding to Employees..................................... S-1
V Property, Plant and Equipment...................................... S-2
VI Accumulated Depreciation of Property, Plant and Equipment.......... S-3
VIII Allowance for Doubtful Accounts.................................... S-4
IX Short-Term Borrowings 1991, 1992 and 1993.......................... S-5
X Supplementary Income Statement Information....................... .. S-6
</TABLE>
All other schedules have been omitted for the reason that the
required information is presented in financial statements or notes thereto, the
amounts involved are not significant or the schedules are not applicable
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the last quarter of
1993.
(c) Item 601 Exhibits
Reference is made to the Index of Exhibits beginning at page 17 of
this report.
(d) Other Financial Statements
There are no financial statements required to be filed by
Regulation S-X which are excluded from the annual report to shareholders by
Rule 14 a-3(b)(1).
14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 22, 1994 ALLERGAN, INC.
By /S/ WILLIAM C. SHEPHERD
William C. Shepherd
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Date: March 22, 1994 By /S/ WILLIAM C. SHEPHERD
William C. Shepherd
President and Chief
Executive Officer
Date: March 22,1994 By /S/ EDGAR J. CUMMINS
Edgar J. Cummins
Corporate Vice President/
Chief Financial Officer
Date: March 22, 1994 By /S/ TAMARA J. ERICKSON
Tamara J. Erickson,
Director
Date: March 22, 1994 By /S/ HANDEL E. EVANS
Handel E. Evans, Director
Date: March 22, 1994 By /S/ WILLIAM R. GRANT
William R. Grant,
Director
Date: March 22, 1994 By /S/ HOWARD E. GREENE,JR.
Howard E. Greene, Jr.,
Director
Date: March 22, 1994 By /S/ RICHARD M. HAUGEN
Richard M. Haugen,
Director
Date: March 22, 1994 By /S/ GAVIN S.HERBERT
Gavin S. Herbert
Chairman of the Board
15
<PAGE> 18
Date: March 23, 1994 By /S/ KENNETH N. KERMES
Kenneth N. Kermes,
Director
Date: March 22,1994 By /S/ LESLIE G. MCCRAW
Leslie G. McCraw,
Director
Date: March 22, 1994 By /S/ LOUIS T. ROSSO
Louis T. Rosso, Director
Date: March 22, 1994 By /S/ LEONARD D. SCHAEFFER
Leonard D. Schaeffer,
Director
Date: March __, 1994 By _______________________
Henry Wendt, Director
16
<PAGE> 19
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C>
3.1 Restated Certificate of Incorporation of the Company as filed with
the State of Delaware on May 22, 1989 (incorporated by reference to
Exhibit 3.1 to Registration Statement on Form S-1 No. 33-28855,
filed May 24, 1989).................
3.2 Bylaws of the Company (incorporated by reference to Exhibit 3 to
Form 8-K filed March 3, 1994)..............................
4.1 Certificate of Designation, Preferences and Rights of Series A
Participating Preferred Stock as filed with the State of Delaware on
May 22, 1989 (incorporated by reference to Exhibit 4.1 to
Registration Statement on Form S-1 No. 33-28855, filed May 24,
1989).......................................
4.2 Rights Agreement, dated as of May 18, 1989, between Allergan, Inc.
and First Chicago Trust Company of New York (as successor Rights
Agent to Morgan Shareholder Services Trust Company (incorporated by
reference to Exhibit 4.2 to Registration Statement on Form S-1 No.
33-28855, filed May 24, 1989).......................................
4.3 Amendment to Rights Agreement, dated as of September 28, 1993
between Allergan, Inc. and First Chicago Trust Company of New York
(as successor Rights Agent to Morgan Shareholder Services Trust
Company) (incorporated by reference to Exhibit 4 to Form 8-K, filed
March 3, 1994).......................................
10.1 Form of director and executive officer Indemnity Agreement
incorporated by reference to Exhibit 10.4 to the Company's Report on
Form 10-K for the Fiscal Year ended December 31,
1992)......................................................
10.2 Allergan, Inc. 1989 Nonemployee Director Stock Plan , as amended and
restated (incorporated by reference to Exhibit A to the Company's
Proxy Statement dated March 17, 1994, filed in definitive form on
March 16, 1994)................................................
10.3 Allergan, Inc. Deferred Directors' Fee Program (incorporated by
reference to Exhibit 10.6 to the Company's Report on Form 10-K for
the Fiscal Year ended December 31, 1991).......................
</TABLE>
17
<PAGE> 20
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered
Page
<S> <C>
10.4 Allergan, Inc. 1989 Incentive Compensation Plan , as amended April
1992 (incorporated by reference to Exhibit 10.2 to the Company's
Report on Form 10-Q for the Quarter ended March 31,
1992)..............................................................
10.5 Restated Allergan, Inc. Employee Stock Ownership Plan ("ESOP")
(incorporated by reference to Exhibit 10.1 to the Company's Report
on Form 10-Q for the Quarter ended June 30,
1993).........................................................
10.6 Restated Allergan, Inc. Savings and Investment Plan (incorporated by
reference to Exhibit 10.2 to the Company's Report on Form 10-Q for
the Quarter ended June 30, ...................................
10.7 Form of Allergan change in control severance agreement (replaces the
document filed as Exhibit 10.8 to Registration Statement on Form
S-1 No. 33-28855) (incorporated by reference to Exhibit 10.13 to the
Company's Report on Form 10-K for the Fiscal Year ended December 31,
1989).....................................................
10.8 $150,000,000 Credit Agreement dated as of December 22, 1993 among
the Company, the Banks Listed Therein, Morgan Guaranty Trust
Company of New York, as Agent and Bank of America National Trust and
Savings Association, as Co-Agent..........................
10.9 $50,000,000 Credit Agreement dated as of December 22, 1993 among the
Company, the Banks Listed Therein, Morgan Guaranty Trust Company of
New York, as Agent and Bank of America National Trust and Savings
Association, as Co-Agent..........................
10.10 Restated Allergan, Inc. Pension Plan ("Pension Plan) (incorporated
by reference to Exhibit 10.3 to the Company's Report on Form 10-Q
for the Quarter ended June 30, 1993)..............................
10.11 Allergan, Inc. Supplemental Retirement Income Plan (incorporated by
reference to Exhibit 10.16 to the Company's Report on Form 10-K for
the Fiscal Year ended December 31, 1989).........................
10.12 Allergan, Inc. Supplemental Executive Benefit Plan (incorporated by
reference to Exhibit 10.17 to the Company's Report on Form 10-K for
the Fiscal Year ended December 31, 1989).........................
10.13 Allergan, Inc. Management Bonus Plan (incorporated by reference to
Exhibit 10.4 to the Company's Report on Form 10-Q for the Quarter
ended June 30, 1993)............................................
10.14 Distribution Agreement dated March 4, 1994 between Allergan, Inc.
and Merrill Lynch & Co. and J.P. Morgan Securities Inc. ........
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
INDEX OF EXHIBITS
<S> <C> <C>
Sequentially
Exhibit Numbered
Number Page
11 Statement re Computation of Earnings Per
Share..............................
13 The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1993 (with the exception of the information
incorporated by reference into Items 5, 6, 7 and 8 of this report,
the Annual Report to Shareholders is not deemed to be filed as part
of this report)..............
22 List of Subsidiaries of the
Company.........................................
23 Consent of KPMG Peat Marwick to the incorporation of their reports
herein to Registration Statements Nos. 33-29528, 33-29527, 33-44770,
33-48908 and 33-66874....................
</TABLE>
19
<PAGE> 22
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
To the Stockholders and Board of Directors of Allergan, Inc.:
Under date of January 24, 1994, we reported on the consolidated balance sheets
of Allergan, Inc. and subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of earnings and cash flows for each of the
years in the two-year period ended December 31, 1993, which are included in the
1993 Annual Report to Stockholders. These consolidated financial statements
and our report thereon are incorporated by reference in the Company's Annual
Report on Form 10-K for the year 1993. In connection with our audit of the
aforementioned consolidated financial statements, we also audited the related
1993 and 1992 consolidated financial statement schedules in the Form 10-K.
These consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statement schedules based on our audits.
In our opinion, such schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
As discussed in note 5 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1992 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." As discussed in
note 7 to the consolidated financial statement, the Company also adopted the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions, " in 1992.
KPMG PEAT MARWICK
Orange County, California
January 24, 1994
20
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Allergan, Inc.
We have audited the consolidated financial statements and the financial
statement schedules of Allergan, Inc. and Subsidiaries listed in the index on
page 14 of this Form 10-K as of December 31, 1991 and for the year ended
December 31, 1991. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Allergan, Inc. and Subsidiaries for the year ended December 31, 1991 in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedules referred to above, when considered
in relation to the basic financial statements taken as a whole present fairly,
in all material respects, the information required to be included therein.
COOPERS & LYBRAND
Newport Beach, California
February 24, 1992
21
<PAGE> 24
SCHEDULE II
ALLERGAN, INC.
Loans Outstanding to Employees
(in thousands)
<TABLE>
<CAPTION>
Balance at end of
Period
Balance at ====================
Beginning Amount Amount Not
of Period Additions Collected Written Off Current Current
========= ========= ========= =========== ======= =======
For the year ended December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
Richard Hilles $ 15 $ - $ 15 $ - $ - $ - Secured by real estate.
</TABLE>
For the year ended December 31, 1992
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
David Bruns $130 $ - $130 $ - $ - $ - See Footnote A.
Richard Hilles 35 - 20 - - $15 Secured by real estate.
</TABLE>
For the year ended December 31, 1991
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
David Bruns $130 $ - $ - $ - $130 $ - See Footnote A.
Richard Hilles 150 - 115 - - 35 Secured by real estate.
</TABLE>
Loans to employees for items arising in the ordinary course of business
including loans in connection with the Company's employee relocation program
and expatriate tax equalization program are excluded from the above schedule.
Footnote A: Collateralized by American Depository Receipts of SmithKline
Beecham at 6% annual interest rate.
S-1
<PAGE> 25
SCHEDULE V
ALLERGAN, INC.
Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
(Dollars in millions)
<TABLE>
<CAPTION>
Balance at (a) Balance
Beginning Retirements Other Changes at end
of Year Additions or Sales Add (Deduct) of Year
------- --------- -------- ------------ -------
<S>> <C> <C> <C> <C> <C>
1993
Land . . . . . . . . . $ 14.4 $ 0.1 $ - $ (0.5) $ 14.0
Buildings . . . . . . . 205.7 23.8 0.5 (8.3) 220.7
Machinery & equipment . 186.1 36.6 10.1 (6.3) 206.3
------ ------- --------- --------- --------
$406.2 $ 60.5 $ 10.6 $ (15.1 $ 441.0
======== ======= ======= ========= ========
1992
Land . . . . . . . . . $ 12.3 $ 0.8 $ - $ 1.3 $ 14.4
Buildings . . . . . . . 171.7 41.3 2.8 (4.5) 205.7
Machinery & equipment . 181.5 24.9 6.5 (13.8) 186.1
------- -------- ------------ ------- -------
$365.5 $ 67.0 $ 9.3 $ (17.0) $ 406.2
========= ======== =========== ========= ========
1991
Land . . . . . . . . . $ 10.1 $ 1.5 $ - $ 0.7 $ 12.3
Buildings . . . . . . . 154.2 26.6 9.0 (0.1) 171.7
Machinery & equipment . 186.9 24.1 23.9 (5.6) 181.5
-------------------- --------------- --------- -------
$351.2 $ 52.2 $ 32.9 $ (5.0) $ 365.5
========== ========== =========== ========= ========
</TABLE>
_________________________
(a) Includes adjustments from translating at current exchange rates,
transfers to and from other accounts and assets of businesses sold
or acquired.
S-2
<PAGE> 26
SCHEDULE VI
ALLERGAN, INC.
Accumulated Depreciation of Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
(Dollars in millions)
<TABLE>
<CAPTION>
Balance at (a) Balance
Beginning Retirements Other Changes at end
of Year Additions or Sales Add(Deduct) of Year
------- --------- -------- ------------ ------
- --
<S> <C> <C> <C> <C> <C> <C>
1993
Buildings . . . . . . . $ 30.3 $ 6.6 $ 0.2 $ 0.7 $ 37.4
Machinery & equipment . 107.3 23.6 8.6 (6.8) 115.5
-------- ------- ------- -------- -------
$137.6 $30.2 $ 8.8 $ (6.1) $152.9
====== ===== ====== ======== =======
1992
Buildings . . . . . . . $ 25.7 $ 5.6 $ 0.8 $ (0.2) $ 30.3
Machinery & equipment . 102.6 22.2 4.8 (12.7) 107.3
---------- ------- -------- -------- -------
$128.3 $27.8 $ 5.6 $(12.9) $137.6
====== ===== ====== ====== ======
1991
Buildings . . . . . . . $ 24.4 $ 6.0 $ 4.5 $ (0.2) $ 25.7
Machinery & equipment . 95.8 23.4 15.1 (1.5) 102.6
-------- ------ ------ -------- -------
$120.2 $29.4 $19.6 $ (1.7) $128.3
====== ===== ===== ======= ======
</TABLE>
_________________________
(a) Includes adjustments from translating at current exchange rates,
transfers to and from other accounts and assets of businesses sold
or acquired.
S-3
<PAGE> 27
SCHEDULE VIII
ALLERGAN, INC.
Allowance for Doubtful Accounts
Years Ended December 31, 1993, 1992 and 1991
(Dollars in millions)
<TABLE>
<CAPTION>
Balance at Balance
Beginning at End
of Year Additions Deductions of Year
======= ========= ========== =======
<S> <C> <C> <C> <C>
1993 $0.4(c)
2.5(b)
-----
$7.0 $1.7(a) $2.9 $5.8
==== ==== ==== ====
1992 $0.5(c)
3.3(b)
-----
$10.4 $0.4(a) $3.8 $7.0
===== ==== ==== ====
1991 $0.9(c)
3.6(b)
-----
$10.6 $4.3(a) $4.5 $10.4
===== ==== ==== =====
</TABLE>
_________________________
(a) Provision charged to earnings.
(b) Accounts written off.
(c) Allowance of business sold.
S-4
<PAGE> 28
SCHEDULE IX
ALLERGAN, INC.
Short-Term Borrowings 1993, 1992 and 1991
(Dollars in millions)
<TABLE>
<CAPTION>
Weighted
Balance Weighted Maximum Amount Average Amount Average
at End Average Outstanding Outstanding Interest Rate
of Year Interest Rate During the Year During the Year During the Year
======= ============= =============== =============== ===============
<S> <C> <C> <C> <C> <C>
1993
Bank Loans $ 4.0 7.3% $ 6.5 $ 4.9 7.4%
Commercial Paper $102.9 3.5% $ 123.0 $ 91 .1 3.2%
1992
Bank Loans $ 3.6 5.9% $ 5.1 $ 3.5 6.7%
Commercial Paper $ 72.7 3.5% $114.0 $ 92.0 5.2%
1991
Bank Loans $13.6 12.5% $ 13.5 $ 7.3 14.6%
Commercial Paper $81.7 6.5% $148.5 $125.4 6.6%
</TABLE>
At the end of each year presented, $30 million of commercial
paper was classified as short-term borrowings while $72.9
million, $42.7 million and $51.7 million, at December 31,
1993, 1992 and 1991 respectively, was classified as long-term
debt because the Company has the ability to refinance this
debt on a long-term basis under the terms of the revolving
credit facility described below. Interest rate calculations
and amounts outstanding during the year are based on the full
amount of commercial paper outstanding.
The average amounts outstanding during the year were computed
using month-end balances.
The weighted average interest rates during the year were
computed by dividing the associated interest expense for the
period by the average amount of borrowings outstanding during
the year.
The Company has various short-term lines of credit at its
foreign subsidiaries used in the normal course of business.
In December 1993, the Company entered into a domestic $200
million revolving credit facility with several banks. A $50
million portion of the facility expires in December 1994 while
the remaining $150 million expires in December 1998. This
credit facility replaced a similar facility entered into in
July 1989. The facility offers various interest rates at the
Company's option based on a percentage of prime or the London
interbank borrowing rates, or other negotiated rates, and is
used to support general corporate purposes and the issuance of
commercial paper in the United States.
S-5
<PAGE> 29
SCHEDULE X
ALLERGAN, INC.
Supplementary Income Statement Information
Years Ended December 31, 1993, 1992 and 1991
(Dollars in millions)
The following amounts have been charged to earnings:
<TABLE>
<CAPTION>
1993 1992 1991
==== ==== ====
<S> <C> <C> <C>
Advertising and promotion costs $75.3 $71.2 $69.9
Royalty expense $25.6 $21.0 $19.9
</TABLE>
S-6
<PAGE> 1
EXHIBIT 10.8
EXECUTION COPY
$150,000,000
CREDIT AGREEMENT
dated as of
December 22, 1993
among
Allergan, Inc.
The Banks Listed Herein
Morgan Guaranty Trust Company of New York,
as Agent
and
Bank of America
National Trust and Savings Association,
as Co-Agent
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C> <C>
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . 13
1.03 Types of Borrowings . . . . . . . . . . . . . . . . . . . . . . 13
1.04 Basis for Ratings . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . 14
2.02 Notice of Committed Borrowings . . . . . . . . . . . . . . . . . 14
2.03 Money Market Borrowings . . . . . . . . . . . . . . . . . . . . 15
2.04 Notice to Banks; Funding of Loans . . . . . . . . . . . . . . . 19
2.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.06 Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . 21
2.07 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.08 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.09 Optional Termination or Reduction of Commitments . . . . . . . . 26
2.10 Mandatory Termination of Commitments . . . . . . . . . . . . . . 26
2.11 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . 26
2.12 General Provisions as to Payments . . . . . . . . . . . . . . . 27
2.13 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.14 Computation of Interest and Fees . . . . . . . . . . . . . . . . 28
ARTICLE III
CONDITIONS
SECTION 3.01 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
__________________________________
* The Table of Contents is not a part of this Agreement.
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<S> <C> <C> <C>
SECTION 4.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . 30
4.02 Corporate and Governmental Authorization; No Contravention . . . 30
4.03 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.04 Financial Information . . . . . . . . . . . . . . . . . . . . . 31
4.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.06 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 31
4.07 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 32
4.08 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.09 Not an Investment Company . . . . . . . . . . . . . . . . . . . 33
4.10 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 33
4.11 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.12 Good Title to Properties . . . . . . . . . . . . . . . . . . . . 33
4.13 Trademarks, Patents, etc. . . . . . . . . . . . . . . . . . . . 34
ARTICLE V
COVENANTS
SECTION 5.01 Information . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.02 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . 36
5.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . 37
5.04 Conduct of Business and Maintenance of Existence . . . . . . . . 37
5.05 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 38
5.06 Inspection of Property, Books and Records . . . . . . . . . . . 38
5.07 Subsidiary Debt . . . . . . . . . . . . . . . . . . . . . . . . 38
5.08 Debt to Capitalization . . . . . . . . . . . . . . . . . . . . . 38
5.09 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . 38
5.10 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . 39
5.11 Consolidations, Mergers and Sales of Assets . . . . . . . . . . 40
5.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 40
5.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 41
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 41
6.02 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
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<TABLE>
<CAPTION>
Page
----
ARTICLE VII
THE AGENT
<S> <C> <C> <C>
SECTION 7.01 Appointment and Authorization . . . . . . . . . . . . . . . . . 44
7.02 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . 44
7.03 Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . 44
7.04 Consultation with Experts . . . . . . . . . . . . . . . . . . . 44
7.05 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . 44
7.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 45
7.07 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . 45
7.08 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 45
7.09 Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.10 Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest Rate Inadequate or Unfair . . . . 46
8.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.03 Increased Cost and Reduced Return . . . . . . . . . . . . . . . 47
8.04 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.05 Base Rate Loans Substituted for Affected Fixed Rate Loans . . . 51
8.06 HLT Classification . . . . . . . . . . . . . . . . . . . . . . . 51
8.07 Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.02 No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.03 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . 53
9.04 Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . 54
9.05 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 54
9.06 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 55
9.07 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.08 Existing Credit Agreement . . . . . . . . . . . . . . . . . . . 57
9.09 Governing Law; Submission to Jurisdiction . . . . . . . . . . . 57
9.10 Counterparts; Integration; Effectiveness . . . . . . . . . . . . 57
9.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
iii
<PAGE> 5
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of General Counsel for the Borrower
Exhibit G - Opinion of Special Counsel to the Agent
Exhibit H - Assignment and Assumption Agreement
Exhibit I - Intellectual Property
iv
<PAGE> 6
CREDIT AGREEMENT
AGREEMENT dated as of December 22, 1993 among ALLERGAN, INC., the
BANKS listed on the signature pages hereof, BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Adjusted Consolidated Net Worth" means at any date Consolidated
Net Worth less (to the extent reflected in the determination thereof) all
investments in unconsolidated Subsidiaries and all equity investments in
Persons which are not Subsidiaries.
"Adjusted London Interbank Offered Rate" has the meaning set forth
in Section 2.07(c).
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Agent, duly
completed by such Bank and submitted to the Agent (with a copy to the
Borrower).
"Affiliate" means (i) any Person (other than the Borrower and its
Subsidiaries) directly or indirectly controlling, controlled by, or under
common control with the Borrower or (ii) any Person (other than the Borrower
and its Subsidiaries) that owns or controls 20% or more of any class of equity
securities of the Borrower or any of its Subsidiaries or Affiliates. For the
purposes of this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by," and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
<PAGE> 7
that Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the
case of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank as a
Base Rate Loan in accordance with the applicable Notice of Committed Borrowing
or pursuant to Article VIII.
"Borrower" means Allergan, Inc., a Delaware corporation, and its
successors.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a Bank as a CD Loan
in accordance with the applicable Notice of Committed Borrowing.
"CD Margin" has the meaning set forth in Section 2.07(b).
2
<PAGE> 8
"CD Reference Banks" means Bank of America National Trust and
Savings Association, Citibank, N.A. and Morgan Guaranty Trust Company of New
York.
"Closing Date" means the date on or after the Effective Date on
which the Agent shall have received the documents specified in or pursuant to
Section 3.01.
"Co-Agent" means Bank of America National Trust and Savings
Association, in its capacity as the Co-Agent hereunder.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.09.
"Commitment Fee Rate" has the meaning set forth in Section 2.08(b).
"Committed Loan" means a loan made by a Bank pursuant to Section
2.01.
"Consolidated Debt" means at any date the Debt of the Borrower and
its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Net Income" means consolidated net income of the
Borrower and its Consolidated Subsidiaries.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries
determined as of such date less (to the extent reflected in determining such
consolidated stockholders' equity) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to September 30, 1993 in the book value of any asset owned
by the Borrower or a Consolidated Subsidiary.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
3
<PAGE> 9
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all Debt secured by a Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person, (vi) all Debt of others
Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.07(b).
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 9.10.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or
4
<PAGE> 10
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary 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 Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as
a Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section 2.07(c).
"Euro-Dollar Reference Banks" means the principal London offices
of Bank of America National Trust and Savings Association, Citibank, N.A. and
Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.07(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means the $200,000,000 Credit
Agreement dated as of June 29, 1989 among the Borrower, the banks listed
therein and Morgan Guaranty Trust Company of New York, as Agent.
5
<PAGE> 11
"Facility Fee Rate" has the meaning set forth in Section 2.08(a).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions as determined by the
Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money
Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base
Rate pursuant to Section 8.01(a)) or any combination of the foregoing.
"Governmental Authority" means any federal, state, local, foreign
or other governmental or administrative body, instrumentality, department or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission or other similar dispute resolving panel or body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Debt of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
6
<PAGE> 12
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Borrowing, the period commencing on
the date of such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
7
<PAGE> 13
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 90 days thereafter;
provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending a minimum of one month
thereafter, as the Borrower may elect in accordance with Section 2.03; provided
that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(5) with respect to each Money Market Absolute Rate Borrowing,
the period commencing on the date of such Borrowing and ending such number of
days thereafter (but not less than 15 days) as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
8
<PAGE> 14
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Irish Affiliate Cash" means an amount equal to 70% of the cash
and cash equivalents denominated in United States dollars or in any currency
which is readily exchangeable into United States dollars and which is not, at
such time, subject to any form of exchange control regulation, and which are
payable by their terms at an address within the United States and by a United
States resident or other person having an address within the United States,
such amount of cash and cash equivalents not to exceed $150,000,000 and such
cash and cash equivalents to be owned by Allergan Pharmaceuticals (Ireland)
Ltd., a branch of Allergan InterAmerica S.A., a Panamanian corporation.
"Level I Status" exists at any date if, at such date, the
Borrower's outstanding senior unsecured long-term debt securities are rated AA-
or higher by S&P and Aa3 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated A-
or higher by S&P and A3 or higher by Moody's and (ii) Level I Status does not
exist.
"Level III Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated BBB
or higher by S&P and Baa2 or higher by Moody's and (ii) neither Level I Status
nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, none of
Level I Status, Level II Status or Level III Status exists.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a
security interest in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it
9
<PAGE> 15
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money
Market Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money
Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"Margin Stock" has the meaning set forth in Regulations U and G of
the Board of Governors of the Federal Reserve System.
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount exceeding $10,000,000.
"Materially Adverse Effect" means any materially adverse change in
the business, operations, condition (financial or otherwise) or assets of the
Borrower and its Subsidiaries taken as a whole.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the
Borrower and the Agent; provided that any Bank may from time to time by notice
to the Borrower and the Agent designate separate Money Market Lending Offices
for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan
10
<PAGE> 16
bearing interest at the Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum
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funding standards under Section 412 of the Internal Revenue Code and either (i)
is maintained, or contributed to, by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has at any time within the
preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Required Banks" means at any time Banks having at least 66% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 66% of the aggregate unpaid
principal amount of the Loans.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's Corporation.
"Status" refers to Level I Status, Level II Status, Level III
Status and/or Level IV Status.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Termination Date" means December 22, 1998 or, if such day is not
a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case
the Termination Date shall be the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value
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of all benefit liabilities under such Plan, determined on a plan termination
basis using the assumptions prescribed by the PBGC for purposes of Section 4044
of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to
such liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Wholly-Owned Subsidiary" means any Subsidiary all of the shares
of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Borrower notifies
the Agent that the Borrower wishes to amend any covenant in Article V to
eliminate the effect of any change in generally accepted accounting principles
on the operation of such covenant (or if the Agent notifies the Borrower that
the Required Banks wish to amend Article V for such purpose), then the
Borrower'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 Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of Euro-Dollar Loans) or by reference to the
provisions of Article II under which participation therein is determined (i.e.,
a "Committed Borrowing" is a Borrowing under Section
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<PAGE> 19
2.01 in which all Banks participate in proportion to their Commitments, while a
"Money Market Borrowing" is a Borrowing under Section 2.03 in which the Bank
participants are determined on the basis of their bids in accordance
therewith).
SECTION 1.04. Basis for Ratings. The credit ratings to be
utilized in the determination of a Status are the ratings assigned to unsecured
obligations of the Borrower without third party credit support. Such ratings
may be pending or implied ratings assigned by the relevant rating agencies if
ratings for outstanding obligations of the foregoing type are not available.
Ratings assigned to any obligation which is secured or which has the benefit of
third party credit support shall be disregarded.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. From the Effective Date until
the day prior to the Termination Date, each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section from time to time in amounts such that the aggregate
principal amount of Committed Loans by such Bank at any one time outstanding
shall not exceed the amount of its Commitment, provided that any Money Market
Loan made by a Bank shall not reduce such Bank's Commitment with respect to its
pro rata portion of any Loan which is not a Money Market Loan. Each Borrowing
under this Section shall be in an aggregate principal amount of $5,000,000 or
any larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(c)) and shall be
made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay, or to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time prior to the Termination Date under this Section.
SECTION 2.02. Notice of Committed Borrowings. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 11:00
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic
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<PAGE> 20
Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to be CD
Loans, Base Rate Loans or Euro-Dollar Loans, and
(d) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks to make offers to make Money Market Loans to the Borrower.
The Banks may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later
than 10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day
prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of Borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
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<PAGE> 21
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of
a Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance
with this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make
Money Market Loans in response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M.
(New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:45 A.M.
(New York City time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Agent or such affiliate notifies the Borrower of the
terms of the offer or offers contained therein not later than (x) one hour
prior to the deadline for the other Banks, in the case of a LIBOR Auction, or
(y) 15 minutes prior to the deadline for the other Banks, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any Money
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<PAGE> 22
Market Quote so made shall be irrevocable except with the written consent of
the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w)
may be greater than or less than the Commitment of the quoting
Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000,
(y) may not exceed the principal amount of Money Market Loans for
which offers being made by such quoting Bank may be accepted, and
(z) may be subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan, expressed
as a percentage (specified to the nearest 1/10,000th of 1%) to be
added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
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<PAGE> 23
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted solely to correct
a manifest error in such former Money Market Quote. The Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Money Market Loans
for which offers have been received for each Interest Period specified in the
related Money Market Quote Request, (B) the respective principal amounts and
Money Market Margins or Money Market Absolute Rates, as the case may be, so
offered and (C) if applicable, limitations on the aggregate principal amount of
Money Market Loans for which offers in any single Money Market Quote may be
accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually
agreed and shall have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction
for which such change is to be effective), the Borrower shall notify the Agent
of its acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the
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<PAGE> 24
applicable amount set forth in the related Money Market Quote
Request,
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as
the case may be, and
(iv) the Borrower may not accept any offer that is described
in subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the absence of manifest
error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share (if
any) of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Bank participating therein shall (except as provided in
subsection (c) of this Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address referred to in Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower at the
Agent's aforesaid address.
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(c) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Bank to
the Agent as provided in subsection (b), or remitted by the Borrower to the
Agent as provided in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such Bank
has made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04 and the Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank and the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the
context may require.
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(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a),
the Agent shall forward such Note to such Bank. Each Bank shall record the
date, amount, type and maturity of each Loan made by it and the date and amount
of each payment of principal made by the Borrower with respect thereto, and
may, if such Bank so elects in connection with any transfer or enforcement of
its Note, endorse on the schedule forming a part thereof appropriate notations
to evidence the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of its Note a continuation
of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin plus the applicable Adjusted CD Rate;
provided that if any CD Loan or any portion thereof shall, as a result of
clause (2)(b) of the definition of Interest Period, have an Interest Period of
less than 30 days, such portion shall bear interest during such Interest Period
at the rate applicable to Base Rate Loans during such period. Such interest
shall be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, 90 days after the first day thereof.
Any overdue principal of or interest on any CD Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the higher of (i) the sum of the CD Margin plus the Adjusted CD Rate
applicable to such Loan and (ii) the Base Rate for such day.
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"CD Margin" means (i) 0.3575% for any day on which Level I Status
exists, (ii) 0.400% for any day on which Level II Status exists, (iii) 0.4625%
for any day on which Level III Status exists and (iv) 0.550% for any day on
which Level IV Status exists.
The "Adjusted CD Rate" applicable to any Interest Period means a
rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [----------] + AR
[1.00 - DRP]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
________________________
* The amount in brackets being rounded upward, if necessary, to
the next higher 1/100 of 1%.
The "CD Base Rate" applicable to any Interest Period is the rate
of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable)
on the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such
Interest Period applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
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"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.3(d) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted automatically on and as
of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus
the applicable Adjusted London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, three months after the first day thereof.
"Euro-Dollar Margin" means (i) 0.2325% for any day on which Level
I Status exists, (ii) 0.275% for any day on which Level II Status exists, (iii)
0.3375% for any day on which Level III Status exists and (iv) 0.425% for any
day on which Level IV Status exists.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in dollars
are offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference
Bank to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining
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the maximum reserve requirement for a member bank of the Federal Reserve System
in New York City with deposits exceeding five billion dollars in respect of
"Eurocurrency liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Euro-Dollar
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any Bank to United States
residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the
date payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable
to such Loan and (ii) the Euro-Dollar Margin plus the quotient obtained
(rounded upward if necessary, to the next higher 1/100 of 1%) by dividing (x)
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of
the respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than six months as the Agent may select) deposits in dollars in
an amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in
the London interbank market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a
rate per annum equal to the sum of 2% plus the Base Rate for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall
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be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of three months after
the first day thereof. Any overdue principal of or interest on any Money
Market Loan shall bear interest, payable on demand, for each day until paid at
a rate per annum equal to the sum of 2% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and
the participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01 shall
apply.
SECTION 2.08. Fees.
(a) Facility Fee. The Borrower shall pay to the Agent for
the account of the Banks ratably a facility fee at the Facility Fee Rate. Such
facility fee shall accrue (i) from and including December 22, 1993 to but
excluding the Termination Date (or earlier date on which the Commitments
terminate in their entirety), on the daily aggregate amount of the Commitments
(whether used or unused) and (ii) from and including the date on which the
Commitments terminate in their entirety to but excluding the date on which the
Loans shall be repaid in their entirety, on the daily aggregate outstanding
principal amount of the Loans.
"Facility Fee Rate" means (i) 0.08% per annum for any day on which
Level I Status exists, (ii) 0.10% per annum for any day on which Level II
Status exists, (iii) 0.1625% per annum for any day on which Level III Status
exists and (iv) 0.20% per annum for any day on which Level IV Status exists.
(b) Commitment Fee. The Borrower shall pay to the Agent for
the account of the Banks ratably in proportion to their Commitments a
commitment fee at the Commitment Fee Rate on the daily amount by which the
aggregate amount of the Commitments exceeds the aggregate outstanding principal
amount of the Loans. Such commitment fee shall accrue from
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and including December 22, 1993 to but excluding the Termination Date (or
earlier date on which the Commitments terminate in their entirety).
"Commitment Fee Rate" means (i) 0.02% per annum for any day on
which Level I Status exists, (ii) 0.025% per annum for any day on which Level
II Status or Level III Status exists and (iii) 0.05% per annum for any day on
which Level IV Status exists.
(c) Payments. Accrued fees under this Section shall be
payable quarterly on each March 15, June 15, September 15 and December 15,
commencing March 15, 1994, and upon the date on which the Commitments terminate
in their entirety (and, if later, the date the Loans shall be repaid in their
entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding
at such time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans.
SECTION 2.10. Mandatory Termination of Commitments. The
Commitments shall terminate on the Termination Date, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable
on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may (i)
upon at least one Domestic Business Day's notice to the Agent, prepay any Base
Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) and (ii) upon at least three Euro-Dollar Business
Days' notice to the Agent, subject to Section 2.13, prepay any CD Borrowing or
Euro-Dollar Borrowing, in whole at any time, or from time to time in part in
amounts aggregating $5,000,000 or any larger multiple of $1,000,000, by paying
the principal amount to be prepaid together with accrued interest thereon to
the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan
(except a Money Market Loan
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bearing interest at the Base Rate pursuant to Section 8.01(a)) prior to the
maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans
and of fees hereunder, not later than 12:00 Noon (New York City time) on the
date when due, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. The Agent will
promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business Day.
Whenever any payment of principal of, or interest on, the Money Market Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such
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Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to Section
2.11, Article VI or VIII or otherwise) on any day other than the last day of
the Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow any Fixed
Rate Loans after notice has been given to any Bank in accordance with Section
2.04(a), the Borrower shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after any such payment or failure
to borrow, provided that such Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which certificate shall
be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365
days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
ARTICLE III
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon
receipt by the Agent of the following documents, each dated the Closing Date
unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date complying with the provisions of Section 2.05;
(b) an opinion of Gibson, Dunn & Crutcher, counsel for the
Borrower, substantially in the form of Exhibit E hereto and an opinion of
Francis R. Tunney, Jr., Esq., Corporate Vice President and General Counsel
of the Borrower, substantially in the form of Exhibit F
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hereto, each such opinion to cover such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit G hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) evidence satisfactory to the Agent that the commitments of
the banks under the Existing Credit Agreement have been terminated and all
loans (if any) outstanding under the Existing Credit Agreement, together
with all interest (if any) and fees accrued thereunder, have been paid in
full or arrangements satisfactory to the Agent for such payment have been
made; and
(e) all documents the Agent may reasonably request relating to
the existence of the Borrower, the corporate authority for and the validity
of this Agreement and the Notes, and any other matters relevant hereto, all
in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Borrower and the Banks of the Closing Date,
and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) the fact that the Closing Date shall have occurred on or
prior to December 31, 1993;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments;
(d) the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
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(e) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the date of
such Borrowing; provided that, in the case of a Refunding Borrowing, this
clause (e) shall not apply to (i) the representations and warranties set
forth in Sections 4.04(c) and 4.05 insofar as they relate to any matter
which has theretofore been disclosed in writing by the Borrower to the
Banks or (ii) the representation and warranty set forth in Section 4.13
insofar as it relates to claimed rights that are not actual rights.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(c), (d) and (e) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official under any
provision of law or regulation applicable to the Borrower, and do not
contravene, or constitute a default under, any provision of law or regulation
applicable to the Borrower or of the restated certificate of incorporation or
by-laws of the Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of its Subsidiaries
or result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower and the Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
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SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1992 and the related consolidated
statements of earnings and cash flows for the fiscal year then ended, reported
on by KPMG Peat Marwick, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of September 30, 1993 and the related
unaudited consolidated statements of earnings and cash flows for the nine
months then ended, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
subsection (a) of this Section, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such nine-month period
(subject to normal year-end adjustments).
(c) Since September 30, 1993 there has been no material adverse
change in the business, financial position, assets, liabilities or results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any Governmental
Authority in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business or consolidated financial
position of the Borrower and its Subsidiaries, taken as a whole, or which in
any manner draws into question the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the
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Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security
under ERISA or the Internal Revenue Code or (iii) incurred any liability under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course
of its business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law
or as a condition of any license, permit or contract, any related constraints
on operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site
disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a Materially Adverse Effect.
SECTION 4.08. Taxes. United States Federal income tax returns of
the Borrower and its Subsidiaries have been examined and closed through the
fiscal year ended December 31, 1986. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary, except assessments which are being contested in good faith
and as to which adequate reserves have been provided. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the reasonable opinion of the
Borrower, adequate.
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SECTION 4.09. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.10. Full Disclosure. All Information (as defined
below) heretofore furnished by the Borrower is, and all Information hereafter
furnished by the Borrower will be, true and accurate in all material respects
on the date as of which such Information is dated or certified (except for any
projections included therein, which projections shall have provided reasonable
estimations of future performance for the periods covered thereby subject to
the uncertainty and approximation inherent in any projections) and not
incomplete by omitting to state anything necessary to make such Information not
misleading at such time except to the extent later Information could reasonably
have been expected to supersede earlier Information. As used in this Section,
the term "Information" means (i) the information set forth in the Borrower's
report on Form 10-K for its fiscal year ended December 31, 1992 and in all
subsequent reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and
registration statements (excluding exhibits thereto and any registration
statements on Form S-8 or its equivalent) which the Borrower shall have filed
with the SEC and (ii) all other information furnished by the Borrower to the
Agent or any Bank for purposes of or in connection with this Agreement, but
only if such other information is (x) financial information, (y) furnished in
writing to all the Banks or to the Agent for distribution to all the Banks or
(z) furnished at a meeting to which all the Banks were invited.
SECTION 4.11. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except where failures to obtain such licenses, authorizations, consents and
approvals would not, in the aggregate, have a Materially Adverse Effect.
SECTION 4.12. Good Title to Properties. The Borrower and its
Subsidiaries have good and marketable title to their respective properties and
assets (except properties and assets that, in the aggregate, are not material
to the Borrower and its Subsidiaries taken as a whole), subject to no Liens of
any kind, except such as would be permitted under Section 5.10.
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SECTION 4.13. Trademarks, Patents, etc. Except as disclosed to
the Banks in Exhibit I hereto, the Borrower and its Subsidiaries possess
trademarks, trade names, copyrights, patents and licenses, or rights in any
thereof, adequate in all material respects for the conduct of their business
(taken as a whole) as now conducted, without material conflict with the rights
or, to the best knowledge of the Borrower, any claimed rights of others.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of
the Banks:
(a) as soon as available and in any event within 105 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of earnings and cash
flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on in a manner
acceptable to the SEC by KPMG Peat Marwick or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, an unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the related
unaudited consolidated statements of earnings and cash flows for such
quarter and for the portion of the Borrower's fiscal year ended at the end
of such quarter, setting forth in the case of such earnings and cash flows
in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and
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(b) above, a certificate of the chief financial officer or the chief
accounting officer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.07 to 5.10, inclusive, on
the date of such financial statements (including, without limitation, the
amount of Irish Affiliate Cash) and (ii) stating whether any Default exists
on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate
of the chief financial officer or the chief accounting officer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the SEC;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any
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such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice
and other information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a Lien
or the posting of a bond or other security, a certificate of the chief
financial officer or the chief accounting officer of the Borrower setting
forth details as to such occurrence and action, if any, which the Borrower
or applicable member of the ERISA Group is required or proposes to take;
(i) promptly upon any officer of the Borrower obtaining
knowledge thereof, notice of any actual or proposed change in the rating of
the Borrower's outstanding senior unsecured long term debt securities by
S&P or Moody's; and
(j) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, or will cause its Subsidiaries to pay and discharge, at or before
maturity (or the expiration of any applicable grace period, as the case may
be), all Material Debt and all other material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate
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reserves (on a consolidated basis) for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary
wear and tear excepted; provided that Borrower and its Subsidiaries shall not
be required to maintain any property or properties which are, in the reasonable
opinion of the Borrower, not material to the business of the Borrower and its
Consolidated Subsidiaries taken as a whole.
(b) The Borrower and its Subsidiaries will maintain (i) physical
damage insurance on all their real and personal properties (except properties
that, in aggregate, are not material to the Borrower and its Subsidiaries taken
as a whole) on an all risks basis (including the perils of flood and quake),
covering the repair and replacement cost of all such property and consequential
loss coverage for business interruption and extra expense, and (ii) public
liability insurance (including products/completed operations liability
coverage) in an amount not less than that which is usually insured against by
companies engaged in the same or a similar business in the same general area.
All such insurance shall be provided by insurers having an A.M. Best
policyholders rating of not less than B+ or such other insurers as the Required
Banks may approve in writing. The Borrower will deliver to the Banks, upon
request of any Bank through the Agent, from time to time full information as to
the insurance carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence.
The Borrower will continue, and will cause its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Borrower
and its Subsidiaries, and will preserve, renew and keep in full force and
effect, and will cause each Subsidiary to preserve, renew and keep in full
force and effect, their respective corporate existences and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that the foregoing shall not prevent any Subsidiary from
terminating its corporate existence or prevent the Borrower or any Subsidiary
from discontinuing any business or any right, privilege or franchise, if all
such terminations and discontinuances, in the aggregate, would not in the
reasonable opinion of the Borrower have a Materially Adverse Effect.
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SECTION 5.05. Compliance with Laws. The Borrower will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA, environmental,
and food and drug, and the rules and regulations under each of the foregoing)
except where (i) the necessity of compliance therewith is contested in good
faith by appropriate proceedings or (ii) noncompliance therewith would not, in
the aggregate, have a Materially Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Bank
at such Bank's expense to visit and inspect any of their respective properties,
to examine and make abstracts from any of their respective books and records
and to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION 5.07. Subsidiary Debt. The Borrower will not permit any
Subsidiary to incur or suffer to exist any Debt (excluding Debt owed to the
Borrower or a Wholly-Owned Subsidiary) in excess of $50,000,000 outstanding at
any time in the aggregate for all Subsidiaries.
SECTION 5.08. Debt to Capitalization. The ratio of (i)
Consolidated Debt less Irish Affiliate Cash to (ii) Consolidated Debt less
Irish Affiliate Cash plus Adjusted Consolidated Net Worth will at no time be
greater than 0.45:1.
SECTION 5.09. Minimum Consolidated Net Worth. Consolidated Net
Worth will at no time be less than $417,000,000; provided that the foregoing
amount shall be increased (i) on December 31, 1993, by 50% of Consolidated Net
Income (if positive) for the Borrower's fiscal quarter then ended, (ii) at the
end of each of the Borrower's fiscal years ending after December 31, 1993, by
50% of Consolidated Net Income (if positive) for such fiscal year and (iii)
100% of the amount by which Consolidated Net Worth is increased from time to
time after September 30, 1993 as a result of the issuance or sale of the
Borrower's capital stock.
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SECTION 5.10. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $20,000,000;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in contemplation
of such event;
(c) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
asset, provided that such Lien attaches to such asset concurrently with or
within 90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in contemplation of
such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not increased
and is not secured by any additional assets;
(g) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith by appropriate proceedings and as to which adequate reserves have
been provided for;
(h) Liens imposed by law, such as landlords', carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations not more
than 60 days past due;
(i) Liens arising out of statutory pledges or deposits under
applicable law relating to worker's
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compensation, unemployment insurance, social security or similar
obligations;
(j) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of similar nature and which do not in
any material way adversely affect or interfere with the use thereof in the
business of the Borrower and its Subsidiaries;
(k) banker's liens in the nature of rights of set-off arising in
the ordinary course of business;
(l) Liens not otherwise permitted by the foregoing clauses of
this Section, arising in the ordinary course of its business, which (i) do
not secure Debt, (ii) do not secure any obligation in an amount
individually or in the aggregate exceeding $50,000,000 and (iii) do not in
the aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business; and
(m) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal amount at any time
outstanding not to exceed 15% of Consolidated Net Worth.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
Borrower will not consolidate or merge with or into any other Person; provided
that the Borrower may merge with a Person if (A) the Borrower is the
corporation surviving such merger and (B) immediately after giving effect to
any such merger, no Default shall have occurred and be continuing and all the
representations and warranties of the Borrower contained in this Agreement
shall be true. The Borrower will not, and will not permit its Subsidiaries to,
sell, lease or otherwise transfer, directly or indirectly, all or any
substantial part of the assets of the Borrower and its Subsidiaries, taken as a
whole, to any other Person.
SECTION 5.12. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes, including the backstop of commercial paper. None of such proceeds
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any Margin Stock.
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SECTION 5.13. Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, enter into
any material transaction, whether or not in the ordinary course of business,
with any Affiliate other than on terms and conditions at least as favorable to
the Borrower, or the affected Subsidiary, as those that would be obtained
through an arm's length negotiation with an unaffiliated third party.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of or
interest on any Loan, any fees or any other amount payable hereunder, which
failure, in the case of interest or fees or amounts other than principal of
any Loan, continues for three Domestic Business Days;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.13, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after written notice thereof has been given
to the Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made
by the Borrower in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or deemed
made);
(e) the Borrower or any Subsidiary shall fail to make any payment
in respect of any Material Debt when due or within any applicable grace
period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or with the
giving of notice or lapse of time or both, would enable) the holder of
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such Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall have
become liable to pay to the PBGC or a Plan under Title IV of ERISA; or
notice of intent to terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, 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; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219 (c)(5) of ERISA,
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with respect to, one or more Multiemployer Plans which could cause one or
more members of the ERISA Group to incur a current payment obligation in
excess of $5,000,000;
(j) a judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Borrower or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed for a period
of 30 days; or
(k) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of 25% or more of
the outstanding shares of common stock of the Borrower; or individuals who,
as of the Effective Date, constitute the board of directors of the Borrower
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Borrower's board of directors, provided that any person
becoming a director after the Effective Date whose election, or nomination
for election by the Borrower's stockholders, is approved by a vote of at
least a majority of the directors then comprising the Incumbent Directors
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election or removal of directors of the Borrower)
shall, for the purposes of this Agreement, be considered as though such
person were an Incumbent Director;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower;
provided that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable without presentment, demand,
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protest or other notice of any kind, all of which are hereby waived by the
Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as
are delegated to the Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as
though it were not the Agent, and Morgan Guaranty Trust Company of New York and
its affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii)
in the absence of its own gross negligence or willful misconduct. Neither the
Agent nor any of its affiliates nor any of their respective directors,
officers,
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agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of the Borrower; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex or similar writing) believed by it to
be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent, the Co- Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time
by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined
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capital and surplus of at least $50,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent
for its own account fees in the amounts and at the times previously agreed upon
between the Borrower and the Agent.
SECTION 7.10. Co-Agent. The Co-Agent shall have no duties or
responsibilities hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Fixed
Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the Agent that the
Adjusted CD Rate or the Adjusted London Interbank Offered Rate, as the case
may be, as determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding their CD Loans or Euro-Dollar Loans, as
the case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended. Unless
the Borrower notifies the Agent at least two Domestic Business Days before the
date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously
been given that it elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a
Base
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Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the
Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans shall be suspended. Before giving any
notice to the Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently with prepaying each
such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority,
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central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding (i) with respect to any CD Loan any such requirement included in
an applicable Domestic Reserve Percentage and (ii) with respect to any
Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment (excluding, with
respect to any CD Loan, any such requirement reflected in an applicable
Assessment Rate) or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Bank (or its Applicable Lending
Office) or shall impose on any Bank (or its Applicable Lending Office) or on
the United States market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans, its Note or its
obligation to make Fixed Rate Loans and the result of any of the foregoing is
to increase the cost to such Bank (or its Applicable Lending Office) of making
or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received
or receivable by such Bank (or its Applicable Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Agent),
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the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction, provided that no such
demand by any Bank shall include any period commencing earlier than 90 days
prior to the date of demand.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower
to or for the account of any Bank or the Agent hereunder or under any Note
shall be made free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Bank
and the Agent, taxes imposed on its income, and franchise taxes imposed on it,
by the jurisdiction under the laws of which such Bank or the Agent (as the case
may be) is organized or any political subdivision thereof and, in the case of
each Bank, taxes imposed on its income, and franchise or similar taxes imposed
on it, by the jurisdiction of such Bank's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Bank or the Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 8.04) such Bank or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions, (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section
9.01, the original or a certified
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copy of a receipt evidencing payment thereof, and, if such receipt relates to
Taxes in respect of a sum payable to any Bank, the Agent shall promptly deliver
such original or certified copy to such Bank.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes, or
charges or similar levies which arise from any payment made hereunder or under
any Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank or the Agent (as the case may be)
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within
15 days from the date such Bank or the Agent (as the case may be) makes demand
therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the case
of each other Bank, and from time to time thereafter if requested in writing by
the Borrower (but only so long as such Bank remains lawfully able to do so),
shall provide the Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to
provide the Borrower with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to
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the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; provided, that should a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Bank pursuant to this Section 8.04, then such Bank
will change the jurisdiction of its Applicable Lending Office so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03 or 8.04 with respect to its CD Loans or Euro-Dollar Loans
and the Borrower shall, by at least five Euro-Dollar Business Days' prior
notice to such Bank through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as CD
Loans or Euro-Dollar Loans, as the case may be, shall be made instead as
Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other Banks),
and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case
may be, has been repaid, all payments of principal which would otherwise be
applied to repay such Fixed Rate Loans shall be applied to repay its Base
Rate Loans instead.
SECTION 8.06. HLT Classification. If, after the date hereof, the
Agent determines that, or the Agent is advised by any Bank that such Bank has
received notice from any governmental authority, central bank or comparable
agency having jurisdiction over such Bank that, Loans hereunder are classified
as a "highly leveraged transaction" (an "HLT Classification"), the Agent shall
promptly give notice of such HLT Classification to the Borrower and the
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other Banks. The Agent, the Banks and the Borrower shall commence negotiations
in good faith to agree on the extent to which fees, interest rates and/or
margins hereunder should be increased so as to reflect such HLT Classification.
If the Borrower and Banks having more than 50% in aggregate amount of the
Commitments agree on the amount of such increase or increases, this Agreement
may be amended to give effect to such increase or increases as provided in
Section 9.05. If the Borrower and Banks having more than 50% in aggregate
amount of the Commitments fail to so agree within 45 days after notice is given
by the Agent as provided above, then the Agent shall, if requested by Banks
having 50% or more in aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall thereupon terminate and the
Borrower shall repay each outstanding Loan at the end of the Interest Period
applicable thereto. The Banks acknowledge that an HLT Classification is not a
Default or an Event of Default hereunder.
SECTION 8.07. Substitution of Bank. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or 8.04, the
Borrower shall have the right, with the assistance of the Agent, to seek a
mutually satisfactory substitute bank or banks ("Substitute Banks") (which may
be one or more of the Banks) to purchase the Committed Loans and assume the
Commitment of such Bank (the "Exiting Bank"). The Exiting Bank shall, upon
reasonable notice and payment to it of the purchase price agreed between it
and the Substitute Bank or Banks (or, failing such agreement, a purchase price
equal to the outstanding principal amount of its Committed Loans and interest
accrued thereon to but excluding the date of payment), assign all of its rights
and obligations under this Agreement and the Notes (including its Commitment
but excluding its Money Market Loans, if any, unless it otherwise agrees) to
the Substitute Bank or Banks, and the Substitute Bank or Banks shall assume
such rights and obligations, in accordance with Section 9.06(c) hereof. In
connection with any such sale, the Borrower shall compensate the Exiting Bank
for any funding losses as provided in Section 2.13 and pay to the Exiting Bank
its facility and commitment fees accrued to but excluding the date of such
sale.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission
52
<PAGE> 58
or similar writing) and shall be given to such party: (x) in the case of the
Borrower or the Agent, at its address or telex number set forth on the
signature pages hereof, (y) in the case of any Bank, at its address or telex
number set forth in its Administrative Questionnaire or (z) in the case of any
party, such other address or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article II or Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent, in
connection with the preparation and administration of this Agreement, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Agent or any Bank, including fees and disbursements of
counsel (including, without limitation, the allocated costs of in-house
counsel), in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel (including, without limitation, the reasonable
allocated costs of in-house counsel), which may be incurred by such Indemnitee
in connection with any investigative,
53
<PAGE> 59
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be indemnified hereunder
for such Indemnitee's own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Notes. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the
Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, except as provided below, (iii) postpone the date
fixed for any payment of principal of or interest on any Loan or any fees
hereunder or for any reduction or termination of any Commitment or (iv) change
the percentage of the Commitments
54
<PAGE> 60
or of the aggregate unpaid principal amount of the Notes, or the number of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement; and provided,
further, that this Agreement may be amended to give effect to any increased
fees, interest rates and/or margins agreed upon pursuant to Section 8.06 or to
reduce or rescind any such increases previously agreed upon pursuant to Section
8.06, if such amendment is in writing and is signed by the Borrower and Banks
having more than 50% in aggregate amount of the Commitments.
SECTION 9.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause
(i), (ii) or (iii) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article VIII with
respect to its participating interest. An assignment or other transfer which
is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and
55
<PAGE> 61
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit H hereto executed by such Assignee and
such transferor Bank, with (and subject to) the subscribed consent of the
Borrower and the Agent; provided that if an Assignee is an affiliate of such
transferor Bank, no such consent shall be required; and provided further that
such assignment may, but need not, include rights of the transferor Bank in
respect of outstanding Money Market Loans. Upon execution and delivery of such
an instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if required, a new Note
is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing
such assignment in the amount of $2,500. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in
accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon any
Margin Stock as
56
<PAGE> 62
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 9.08. Existing Credit Agreement. Each of the parties
hereto agrees that the "Commitments" of the banks under the Existing Credit
Agreement will terminate on the Closing Date without any further notice to or
action by any of the parties thereto.
SECTION 9.09. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.10. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of
any party as to which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party).
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
57
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
ALLERGAN, INC.
By _______________________________
Title: Corporate Vice President
Chief Financial Officer
2525 Dupont Drive
Irvine, California 92715-1599
Telex Number:
58
<PAGE> 64
Commitments
<TABLE>
<S> <C>
$17,250,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By CHARLES R. PARDUE
---------------------------
Title: Associate
$15,000,000 J.P. MORGAN DELAWARE
By DAVID J. MORRIS
---------------------------
Title: Vice President
$30,750,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By YVONNE C. DENNIS
---------------------------
Title: Vice President
$30,750,000 CITICORP USA, INC.
By BARBARA A. COHEN
---------------------------
Title: Vice President
$18,750,000 ABN AMRO BANK N.V.
LOS ANGELES INTERNATIONAL
BRANCH
By
---------------------------
Title: Vice President
By
---------------------------
Title: Corporate Banking Officer
</TABLE>
59
<PAGE> 65
<TABLE>
<S> <C>
$18,750,000 UNION BANK OF SWITZERLAND
By THOMAS G. JACKSON
---------------------------
Title: Vice President
By L. SCOTT SOMMERS
---------------------------
Title: Vice President
$18,750,000 WACHOVIA BANK OF GEORGIA, N.A.
By
---------------------------
Title: Assistant Vice President
Total Commitments
$150,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By CHARLES R. PARDUE
--------------------------
Title: Associate
60 Wall Street
New York, New York 10260-0060
Attention:
Telex Number: 177615
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Co-Agent
By YVONNE C. DENNIS
---------------------------
Title: Vice President
555 S. Flower Street
11th Floor
Los Angeles, CA 90071
Attention: Yvonne C. Dennis
FAX Number: (213) 345-6550
</TABLE>
60
<PAGE> 66
EXHIBIT A
NOTE
New York, New York
, 19
For value received, Allergan, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of (the "Bank"), for the account of
its Applicable Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below on
the last day of the Interest Period relating to such Loan. The Borrower
promises to pay interest on the unpaid principal amount of each such Loan on the
dates and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of Morgan
Guaranty Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding shall be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This note is one of the Notes referred to in the $150,000,000 Credit
Agreement dated as of December __, 1993 among the Borrower, the banks listed on
the signature pages thereof, Morgan Guaranty Trust Company of New York, as Agent
and Bank of America National Trust and Savings Association, as Co-Agent (as the
same may be amended from time to time, the "Credit Agreement"). Terms defined
in the Credit
<PAGE> 67
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration
of the maturity hereof.
ALLERGAN, INC.
By_______________________
Title:
2
<PAGE> 68
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Amount of
Amount Type of Principal Maturity Notation
Date of Loan Loan Repaid Date Made by
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
</TABLE>
3
<PAGE> 69
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Allergan,Inc.
Re: Credit Agreement (the "Credit Agreement") dated as of December 22,
1993 among the Borrower, the Banks listed on the signature pages
thereof, the Agent and the Co-Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: _____________________
<TABLE>
<CAPTION>
Principal Amount* Interest Period**
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
ALLERGAN, INC.
By__________________________
Title:
__________________________________
* Amount must be $5,000,000 or a larger multiple of $1,000,000.
** Not less than one month (LIBOR Auction) or not less than 15 days
(Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
<PAGE> 70
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Allergan, Inc. (the
"Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of
December 22, 1993 among the Borrower, the Banks parties thereto and the
undersigned, as Agent, we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the following proposed Money
Market Borrowing(s):
Date of Borrowing: _________________
<TABLE>
<CAPTION>
Principal Amount Interest Period
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate for Money Market LIBOR Loan is the
London Interbank Offered Rate].
Please respond to this invitation by no later than [2:00 P.M.]
[9:15 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By___________________________
Authorized Officer
<PAGE> 71
EXHIBIT D
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
23 Wall Street
New York, New York 10015
Attention:
Re: Money Market Quote to
Allergan, Inc. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_________________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: _____________________________
2. Person to contact at Quoting Bank:
__________________________________
3. Date of Borrowing: ___________________________*
__________________________________
* As specified in the related Invitation.
<PAGE> 72
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- --------- --------- ------------ --------------------
<S> <C> <C> <C>
$
$
</TABLE>
[Provided that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $___________ .]**
We understand and agree that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Credit
Agreement dated as of December __, 1993 among the Borrower, the Banks
listed on the signature pages thereof and
__________________________________
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger
multiple of $1,000,000.
*** Not less than one month or not less than 15 days, as specified in
the related Invitation. No more than five bids are permitted for
each Interest Period.
**** Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the
nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000 of 1%).
2
<PAGE> 73
yourselves, as Agent, irrevocably obligates us to make the Money Market
Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: ____________________ By:________________________
Authorized Officer
3
<PAGE> 74
EXHIBIT E
Form of Gibson, Dunn & Crutcher Opinion
December , 1993
To the Banks and the
Agent referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Re: Allergan, Inc.
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(b)
of the $150,000,000 Credit Agreement dated as of December __, 1993 among
Allergan, Inc., a Delaware corporation (the "Borrower") and you (the "Credit
Agreement"). Capitalized terms used but not defined herein shall have the
corresponding meanings set forth in the Credit Agreement.
We have acted as counsel to the Borrower in connection with the
preparation of the Credit Agreement.
For purposes of this opinion, we have assumed with your permission
that:
(a) the signatures on all documents (other than the signatures on
behalf of the Borrower on the Credit Agreement and the Notes) examined by
us are genuine, the documents submitted to us as originals are authentic
and the documents submitted to us as certified or reproduction copies
conform to the originals; and
(b) the Agent and the Banks have all requisite power and
authority to execute, deliver and perform their obligations under the
Credit Agreement; the execution and delivery of the Credit Agreement and
the performance of such obligations has been duly
<PAGE> 75
To the Banks and the
Agent referred to below 2 December __, 1993
authorized by all necessary action by the Agent and the Banks; and the
Credit Agreement constitutes a legal, valid and binding obligation of the
Agent and the Banks.
We have made such inquiries and examined, among other things,
originals, or copies certified or otherwise identified to our satisfaction as
being true copies, of such records, agreements, certificates, instruments and
other documents as we have considered necessary or appropriate for purposes of
this opinion. As to certain factual matters, we have relied upon certificates
of officers of the Borrower or certificates obtained from public officials. We
call to your attention that with respect to the assumptions set forth in
paragraph (a) above, while we have not conducted an independent investigation
necessary to confirm the accuracy thereof, we have no reason to believe that
any such assumption is not accurate.
Except as expressly stated otherwise herein, whenever our opinion
herein with respect to the existence or absence of facts is stated to be to the
best of our knowledge, such statement is intended to signify that, during the
course of our representation of the Borrower, as herein described, no
information has come to the attention of the lawyers working on the
transactions contemplated by the Credit Agreement that would give us actual
knowledge of facts contrary to the existence or absence of the facts indicated.
However, we have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from our representation of
the Borrower.
Based on the foregoing and in reliance thereon, and subject to the
assumptions, exceptions, qualifications and limitations set forth herein, we
are of the opinion that:
1. The Borrower has been duly incorporated and is a validly
existing corporation and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to execute,
deliver and perform its obligations under the Credit Agreement and the Notes
and to conduct its business as presently conducted.
<PAGE> 76
To the Banks and the
Agent referred to below 3 December __, 1993
2. The execution and delivery of the Credit Agreement and the
Notes by the Borrower and the performance of its obligations thereunder have
been duly authorized by all necessary action of the Borrower.
3. The Credit Agreement and the Notes have each been duly
executed and delivered by the Borrower.
4. The Credit Agreement and each of the Notes constitute a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms.
5. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes do not and will not (A) violate the restated
certificate of incorporation or bylaws of the Borrower as in effect on the date
hereof and heretofore delivered to the Agent, (B) to the best of our knowledge,
violate any material law or regulation applicable to Borrower or any order,
judgment or decree of any Governmental Authority known to us to be binding on
the Borrower, (C) to the best of our knowledge based upon a review of documents
identified to us by the Borrower as being material to the Borrower and its
Subsidiaries taken as a whole, conflict with, result in a material breach of or
constitute a material default under any material indenture, mortgage, deed of
trust, agreement or other instrument to which the Borrower or any Subsidiary is
a party or by which any of their respective properties are bound or result in
or require the creation or imposition of any Lien upon any of their respective
assets, other than Permitted Liens, or (D) require any authorization, consent,
waiver or approval of any Governmental Authority.
6. To the best of our knowledge, there are no pending or
threatened actions or proceedings against the Borrower or any of its
Subsidiaries before any Governmental Authority which purport to affect the
legality, validity, binding effect or enforceability of the Credit Agreement or
any of the Notes, or which are likely to have a Materially Adverse Effect,
except as set forth in Exhibit I to the Credit Agreement.
7. Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
<PAGE> 77
To the Banks and the
Agent referred to below 4 December __, 1993
The foregoing opinions are subject to the following exceptions,
qualifications and limitations:
A. We render no opinion herein as to matters involving the laws
of any jurisdiction other than (i) the Federal laws of the United States of
America, (ii) the laws of the State of New York and (iii) the Delaware General
Corporation Law. We are not admitted to practice law in the State of Delaware;
however, we are generally familiar with the Delaware General Corporation Law as
presently in effect and have made such inquiries as we consider necessary to
render the opinions contained in paragraphs 1, 2, 3 and 5. This opinion is
limited to the effect of the present state of the foregoing laws and to the
facts as they presently exist. We assume no obligation to revise or supplement
this opinion in the event of future changes in such laws or the interpretations
thereof or such facts. The Credit Agreement provides that it shall be
construed in accordance with and governed by the laws of the State of New York.
Irrespective of such choice of law stated in the Credit Agreement, our opinions
herein rendered, subject to the assumptions, exceptions, qualifications and
limitations herein stated, are applicable only to the extent the internal law
of New York applies.
B. Our opinions set forth in paragraph 4 and (with respect to
performance by the Borrower) clauses (B) and (D) of paragraph 5 are subject to
(i) the effect of any bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws affecting the enforcement of creditors' rights
generally (including, without limitation, the effect of statutory or other laws
regarding fraudulent transfers or preferential transfers) and (ii) general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law.
C. Without limitation, we express no opinion (i) as to the
ability to obtain specific performance, injunctive relief or other equitable
relief (whether sought in a proceeding at law or in equity) as a remedy for
noncompliance with Credit Agreement or the Notes, and (ii) regarding the rights
or remedies available to any party insofar as such party may take discretionary
action that is arbitrary, unreasonable or capricious, or is not taken in good
faith or in a commercially reasonable manner, whether
<PAGE> 78
To the Banks and the
Agent referred to below 5 December __, 1993
or not such action is permitted under the Credit Agreement or the Notes.
D. We express no opinion with respect to the legality, validity,
binding nature or enforceability of any provision of the Credit Agreement or
the Notes to the effect that rights or remedies are not exclusive, that every
right or remedy is cumulative and may be exercised in addition to any other
right or remedy, that the election of some particular remedy does not preclude
recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy.
E. We express no opinion with respect to the legality, validity,
binding nature or enforceability of (i) any waiver under the Credit Agreement
or the Notes or any consents thereunder relating to the rights of the Borrower
or duties owing to it existing as a matter of law, except to the extent the
Borrower may so waive or consent under applicable law, (ii) provisions in the
Credit Agreement or the Notes imposing an increase in interest rate upon
delinquency in payment, or (iii) any rights of setoff, other than as provided
by Section 151 of the Debtor and Creditor Law of the State of New York, as
interpreted by applicable judicial decisions.
F. We express no opinion as to any provision of the Credit
Agreement or the Notes requiring written amendments or waivers of such
documents insofar as it suggests that oral or other modifications, amendments
or waivers could not be effectively agreed upon by the parties or that the
doctrine of promissory estoppel might not apply.
G. We express no opinion as to the applicability or effect of any
Bank's compliance with any state or Federal laws applicable to the transactions
contemplated by the Credit Agreement.
H. With respect to actions or proceedings referred to in
paragraph 6, we call to your attention that the Borrower and its Subsidiaries
are continuously involved in various proceedings before or filings with the
U.S. Food and Drug Administration and other Governmental Authorities regarding
the manufacture, use and sale of certain of their products. Such proceedings
and filings, with which we are
<PAGE> 79
To the Banks and the
Agent referred to below 6 December __, 1993
generally not involved, are specifically excluded from the scope of our opinion
in paragraph 6.
This opinion is rendered to you in connection with the Credit
Agreement and may not be relied upon by any person other than you (or permitted
assignees under the Credit Agreement) or by you (or any such assignee) in any
other context, provided that you may provide this opinion (i) to bank examiners
and other regulatory authorities should they so request or in connection with
their normal examinations, (ii) to your independent auditors and attorneys,
(iii) pursuant to order or legal process of any court or governmental agency,
or (iv) in connection with any legal action to which you are a party arising
out of the transactions contemplated by the Credit Agreement. This opinion may
not be quoted without the prior written consent of this Firm. We consent to
the delivery of this opinion to the Agent's special counsel, Davis Polk &
Wardwell, and to the reliance by such Firm on this opinion for purposes of
rendering their opinion in connection with closing under the Credit Agreement.
Very truly yours,
Gibson, Dunn & Crutcher
EMG/dsp
8156K
<PAGE> 80
EXHIBIT F
Form of Francis R. Tunney, Jr., Esq. Opinion
December __, 1993
To the Banks and the
Agent referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Re: Allergan, Inc.
Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(b)
of the $150,000,000 Credit Agreement dated as of December __, 1993 among
Allergan, Inc., a Delaware corporation (the "Borrower"), and you (the "Credit
Agreement"). Capitalized terms used but not defined herein shall have the
corresponding meanings set forth in the Credit Agreement.
I am the General Counsel of the Borrower and, in such capacity, I
am generally familiar with the corporate and legal matters concerning the
Borrower and its Subsidiaries.
I have made such inquiries and examined, among other things,
originals, or copies certified or otherwise identified to my satisfaction as
being true copies, of such records, agreements, certificates, instruments and
other documents as we have considered necessary or appropriate for purposes of
this opinion.
Based on the foregoing and in reliance thereon, I am of the
opinion that:
1. The Borrower is duly qualified to transact business and is in
good standing in each jurisdiction in which the character of its business or
the location of its properties makes such qualification necessary, except where
the failure to be so qualified would not have a Materially Adverse Effect.
<PAGE> 81
To the Banks and the
Agent referred to below 2 December __, 1993
2. To the best of my knowledge, the Borrower and each Subsidiary
have all governmental licenses, authorizations, consents, and approvals
required to carry on their respective businesses as presently conducted, except
where the failure to have any of the foregoing would not have a Materially
Adverse Effect.
3. Neither the Borrower nor any Subsidiary is in violation of (a)
its charter or bylaws or (b) to the best of my knowledge, any law, statute,
rule, regulation, order, writ, injunction or decree of any Governmental
Authority applicable to them or their respective properties or assets, except
(in the case of clause (b)) where any such violation would, singly or in the
aggregate with other such violations, not have a Materially Adverse Effect.
4. There are no pending or, to the best of my knowledge,
threatened actions or proceedings against the Borrower or any of its
Subsidiaries before any Governmental Authority which purport to affect the
legality, validity, binding effect or enforceability of the Credit Agreement or
the Notes, or which are likely to have a Materially Adverse Effect except as
set forth on Exhibit I to the Credit Agreement.
5. The Credit Agreement and the Notes have each been duly
executed and delivered by the Borrower.
This opinion is rendered to you in connection with the Credit
Agreement and may not be relied upon by any person other than you (or permitted
assignees under the Credit Agreement) or by you (or any such permitted
assignee) in any other context, provided that you may provide this opinion (i)
to bank examiners and other regulatory authorities should they so request or in
connection with their normal examinations, (ii) to your independent auditors
and attorneys, (iii) pursuant to order or legal process of any court or
governmental agency, or (iv) in connection with any legal action to which you
are a party arising out of the transactions contemplated by the Credit
Agreement. This opinion may not be quoted without my prior written consent.
<PAGE> 82
To the Banks and the
Agent referred to below 3 December __, 1993
I consent to the delivery of this opinion to the Agent's special counsel, Davis
Polk & Wardwell, and to their reliance on this opinion in connection with
closing under the Credit Agreement.
Very truly yours,
Francis R. Tunney, Jr., Esq.
General Counsel
Allergan, Inc.
<PAGE> 83
EXHIBIT G
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
TO THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the $150,000,000 Credit
Agreement (the "Credit Agreement") dated as of December __, 1993 among
Allergan, Inc., a Delaware corporation (the "Borrower"), the banks listed
therein (the "Banks"), Morgan Guaranty Trust Company of New York, as Agent (the
"Agent") and Bank of America National Trust and Savings Association, as
Co-Agent (the "Co-Agent"), and have acted as special counsel to the Agent for
the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and the Notes constitute valid and binding obligations of the
Borrower.
<PAGE> 84
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion as
to the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 85
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), Allergan, Inc., a Delaware
corporation (the "Borrower"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $150,000,000 Credit Agreement dated as of December
__, 1993 among the Borrower, the Assignor and the other Banks party thereto, as
Banks, and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans to the Borrower in an aggregate principal amount at
any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.
<PAGE> 86
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Committed Loans made by the Assignor outstanding at the date hereof.
Upon the execution and delivery hereof by the Assignor, the Assignee, the
Borrower and the Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the obligations of a
Bank under the Credit Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date
hereof, be reduced by a like amount and the Assignor shall be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor
on the date hereof in Federal funds the amount heretofore agreed between
them.(1) It is understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the same to such other
party.
SECTION 4. Consent of the Borrower and the Agent. This Agreement
is conditioned upon the consent of the Borrower and the Agent pursuant to
Section 9.06(c) of the Credit Agreement. The execution of this Agreement by
the
__________________________________
(1) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee[, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee]. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
<PAGE> 87
Borrower and the Agent is evidence of this consent. Pursuant to Section
9.06(c) the Borrower agrees to execute and deliver a Note payable to the order
of the Assignee to evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
3
<PAGE> 88
[BORROWER]
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By__________________________
Title:
4
<PAGE> 89
EXHIBIT I
Legal Proceedings
As used in this Exhibit I, references to Allergan or the Company shall mean the
Borrower.
Trademarks, Patents, etc.
1. In November 1992 Allergan's subsidiary Allergan Medical Optics
("AMO") filed suit against Staar Surgical for infringement of a patent covering
certain devices for the insertion of intraocular lenses into the eye. In
December 1992, AMO filed a similar suit against Chiron Ophthalmics, Inc. The
two cases were subsequently consolidated, and trial has been divided into two
phases. Phase I will be tried in late January 1994. The court has denied AMO's
request for a preliminary injunction against Chiron and Staar pending the
outcome of the Phase I trial.
2. In April and May 1993, Allergan and Kabi Pharmacia filed separate
actions against one another concerning whether Allergan was infringing a patent
held by Pharmacia. The patent relates to a compound found in certain
viscoelastic products used during eye surgery. The suits have been tentatively
settled, but final settlement requires certain conditions to be met, which are
not expected to occur until sometime in 1994. The tentative settlement, if made
final, would require Allergan to make certain payments to Pharmacia in 1994 and
1995, which amounts are not considered material.
3. In May 1993, Allergan was sued for patent infringement by Robert
Powell, the purported inventor of a certain type of intraocular lens. Allergan
believes Powell's claims are without merit, and is vigorously defending the
case. Allergan also believes it has no material exposure arising from the suit.
4. In September 1993, Dr. Steven Shearing sued Allergan and
approximately 14 other companies for alleged infringement of a patent
concerning a method of inserting intraocular lenses into the eye. Allergan
believes that Dr. Shearing's suit is without merit. Dr. Shearing previously
settled litigation over the same patent with Heyer-Schulte Medical Optics,
which is Allergan Medical Optics' predecessor in interest. Allergan regards Dr.
Shearing's suit as a breach of the earlier settlement agreement, and has
separately filed suit against Dr. Shearing for breach of contract.
5. In December, 1991, Staar Surgical sued Allergan, seeking to rescind
an agreement settling prior patent infringement litigation. In the earlier
suit, Staar had sued for alleged infringement of a patent relating to certain
foldable intraocular lenses. The suit was settled when the parties entered into
various cross-license agreements. In the current suit, if successful in
obtaining rescission, Staar seeks to renew its claims for infringement of the
patent involved in the earlier suit. The current suit is presently on appeal,
the lower court already having granted Allergan's motion for summary judgment.
<PAGE> 90
Securities Litigation
The Company is involved in certain Securities Litigation details of
which are set forth in Part I, Item 3 of the Company's Report on Form 10-K for
the Fiscal Year ended December 31, 1992 as updated by the Company's Report on
Form 10-Q for the Quarter ended September 30, 1993. In the case captioned In
Re Allergan Shareholders Litigation, judgment dated November 29, 1993 granting
defendants' motions for summary judgment has been entered by the Court; the
time for appeal of such motion has not yet expired.
* * * * * *
The Company and its subsidiaries are involved in a number of other
lawsuits which Allergan considers to be normal in view of the size and nature
of its business. The Company does not believe that any ultimate liability
resulting from any such lawsuits will have a material adverse effect on the
results of operations or financial position of the Company.
<PAGE> 1
EXHIBIT 10.9
EXECUTION COPY
$50,000,000
CREDIT AGREEMENT
dated as of
December 22, 1993
among
Allergan, Inc.
The Banks Listed Herein
Morgan Guaranty Trust Company of New York,
as Agent
and
Bank of America
National Trust and Savings Association,
as Co-Agent
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C> <C>
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . 13
1.03 Types of Borrowings . . . . . . . . . . . . . . . . . . . . . . 13
1.04 Basis for Ratings . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . 14
2.02 Notice of Committed Borrowings . . . . . . . . . . . . . . . . . 14
2.03 Money Market Borrowings . . . . . . . . . . . . . . . . . . . . 15
2.04 Notice to Banks; Funding of Loans . . . . . . . . . . . . . . . 19
2.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.06 Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . 21
2.07 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.08 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.09 Optional Termination or Reduction of Commitments . . . . . . . . 26
2.10 Mandatory Termination of Commitments . . . . . . . . . . . . . . 26
2.11 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . 26
2.12 General Provisions as to Payments . . . . . . . . . . . . . . . 27
2.13 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.14 Computation of Interest and Fees . . . . . . . . . . . . . . . . 28
ARTICLE III
CONDITIONS
SECTION 3.01 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
__________________________________
* The Table of Contents is not a part of this Agreement.
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<S> <C> <C> <C>
SECTION 4.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . 30
4.02 Corporate and Governmental Authorization; No Contravention . . . 30
4.03 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.04 Financial Information . . . . . . . . . . . . . . . . . . . . . 30
4.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.06 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 31
4.07 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 32
4.08 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.09 Not an Investment Company . . . . . . . . . . . . . . . . . . . 32
4.10 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 32
4.11 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.12 Good Title to Properties . . . . . . . . . . . . . . . . . . . . 33
4.13 Trademarks, Patents, etc. . . . . . . . . . . . . . . . . . . . 33
ARTICLE V
COVENANTS
SECTION 5.01 Information . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.02 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . 36
5.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . 36
5.04 Conduct of Business and Maintenance of Existence . . . . . . . . 37
5.05 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 37
5.06 Inspection of Property, Books and Records . . . . . . . . . . . 38
5.07 Subsidiary Debt . . . . . . . . . . . . . . . . . . . . . . . . 38
5.08 Debt to Capitalization . . . . . . . . . . . . . . . . . . . . . 38
5.09 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . 38
5.10 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . 38
5.11 Consolidations, Mergers and Sales of Assets . . . . . . . . . . 40
5.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 40
5.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 41
6.02 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
ARTICLE VII
THE AGENT
<S> <C> <C> <C>
SECTION 7.01 Appointment and Authorization . . . . . . . . . . . . . . . . . 44
7.02 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . 44
7.03 Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . 44
7.04 Consultation with Experts . . . . . . . . . . . . . . . . . . . 44
7.05 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . 44
7.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 45
7.07 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . 45
7.08 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 45
7.09 Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.10 Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest Rate Inadequate or Unfair . . . . 46
8.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.03 Increased Cost and Reduced Return . . . . . . . . . . . . . . . 47
8.04 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.05 Base Rate Loans Substituted for Affected Fixed Rate Loans . . . 51
8.06 HLT Classification . . . . . . . . . . . . . . . . . . . . . . . 51
8.07 Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.02 No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.03 Expenses; Documentary Taxes; Indemnification . . . . . . . . . . 53
9.04 Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . 54
9.05 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 54
9.06 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 55
9.07 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.08 Existing Credit Agreement . . . . . . . . . . . . . . . . . . . 57
9.09 Governing Law; Submission to Jurisdiction . . . . . . . . . . . 57
9.10 Counterparts; Integration; Effectiveness . . . . . . . . . . . . 57
9.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
iii
<PAGE> 5
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of General Counsel for the Borrower
Exhibit G - Opinion of Special Counsel to the Agent
Exhibit H - Assignment and Assumption Agreement
Exhibit I - Intellectual Property
iv
<PAGE> 6
CREDIT AGREEMENT
AGREEMENT dated as of December 22, 1993 among ALLERGAN, INC., the
BANKS listed on the signature pages hereof, BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Adjusted Consolidated Net Worth" means at any date Consolidated
Net Worth less (to the extent reflected in the determination thereof) all
investments in unconsolidated Subsidiaries and all equity investments in
Persons which are not Subsidiaries.
"Adjusted London Interbank Offered Rate" has the meaning set forth
in Section 2.07(c).
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Agent, duly
completed by such Bank and submitted to the Agent (with a copy to the
Borrower).
"Affiliate" means (i) any Person (other than the Borrower and its
Subsidiaries) directly or indirectly controlling, controlled by, or under
common control with the Borrower or (ii) any Person (other than the Borrower
and its Subsidiaries) that owns or controls 20% or more of any class of equity
securities of the Borrower or any of its Subsidiaries or Affiliates. For the
purposes of this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by," and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
<PAGE> 7
that Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the
case of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank as a
Base Rate Loan in accordance with the applicable Notice of Committed Borrowing
or pursuant to Article VIII.
"Borrower" means Allergan, Inc., a Delaware corporation, and its
successors.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a Bank as a CD Loan
in accordance with the applicable Notice of Committed Borrowing.
"CD Margin" has the meaning set forth in Section 2.07(b).
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<PAGE> 8
"CD Reference Banks" means Bank of America National Trust and
Savings Association, Citibank, N.A. and Morgan Guaranty Trust Company of New
York.
"Closing Date" means the date on or after the Effective Date on
which the Agent shall have received the documents specified in or pursuant to
Section 3.01.
"Co-Agent" means Bank of America National Trust and Savings
Association, in its capacity as the Co-Agent hereunder.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.09.
"Commitment Fee Rate" has the meaning set forth in Section 2.08(b).
"Committed Loan" means a loan made by a Bank pursuant to Section
2.01.
"Consolidated Debt" means at any date the Debt of the Borrower and
its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Net Income" means consolidated net income of the
Borrower and its Consolidated Subsidiaries.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries
determined as of such date less (to the extent reflected in determining such
consolidated stockholders' equity) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to September 30, 1993 in the book value of any asset owned
by the Borrower or a Consolidated Subsidiary.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
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<PAGE> 9
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all Debt secured by a Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person, (vi) all Debt of others
Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.07(b).
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 9.10.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or
4
<PAGE> 10
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary 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 Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as
a Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section 2.07(c).
"Euro-Dollar Reference Banks" means the principal London offices
of Bank of America National Trust and Savings Association, Citibank, N.A. and
Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.07(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means the $200,000,000 Credit
Agreement dated as of June 29, 1989 among the Borrower, the banks listed
therein and Morgan Guaranty Trust Company of New York, as Agent.
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<PAGE> 11
"Facility Fee Rate" has the meaning set forth in Section 2.08(a).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions as determined by the
Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money
Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base
Rate pursuant to Section 8.01(a)) or any combination of the foregoing.
"Governmental Authority" means any federal, state, local, foreign
or other governmental or administrative body, instrumentality, department or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission or other similar dispute resolving panel or body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Debt of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
6
<PAGE> 12
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Borrowing, the period commencing on
the date of such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
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<PAGE> 13
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 90 days thereafter;
provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending a minimum of one month
thereafter, as the Borrower may elect in accordance with Section 2.03; provided
that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(5) with respect to each Money Market Absolute Rate Borrowing,
the period commencing on the date of such Borrowing and ending such number of
days thereafter (but not less than 15 days) as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
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<PAGE> 14
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Irish Affiliate Cash" means an amount equal to 70% of the cash
and cash equivalents denominated in United States dollars or in any currency
which is readily exchangeable into United States dollars and which is not, at
such time, subject to any form of exchange control regulation, and which are
payable by their terms at an address within the United States and by a United
States resident or other person having an address within the United States,
such amount of cash and cash equivalents not to exceed $150,000,000 and such
cash and cash equivalents to be owned by Allergan Pharmaceuticals (Ireland)
Ltd., a branch of Allergan InterAmerica S.A., a Panamanian corporation.
"Level I Status" exists at any date if, at such date, the
Borrower's outstanding senior unsecured long-term debt securities are rated AA-
or higher by S&P and Aa3 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated A-
or higher by S&P and A3 or higher by Moody's and (ii) Level I Status does not
exist.
"Level III Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated BBB
or higher by S&P and Baa2 or higher by Moody's and (ii) neither Level I Status
nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, none of
Level I Status, Level II Status or Level III Status exists.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a
security interest in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it
9
<PAGE> 15
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money
Market Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money
Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"Margin Stock" has the meaning set forth in Regulations U and G of
the Board of Governors of the Federal Reserve System.
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount exceeding $10,000,000.
"Materially Adverse Effect" means any materially adverse change in
the business, operations, condition (financial or otherwise) or assets of the
Borrower and its Subsidiaries taken as a whole.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the
Borrower and the Agent; provided that any Bank may from time to time by notice
to the Borrower and the Agent designate separate Money Market Lending Offices
for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan
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<PAGE> 16
bearing interest at the Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum
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<PAGE> 17
funding standards under Section 412 of the Internal Revenue Code and either (i)
is maintained, or contributed to, by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has at any time within the
preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Required Banks" means at any time Banks having at least 66% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 66% of the aggregate unpaid
principal amount of the Loans.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's Corporation.
"Status" refers to Level I Status, Level II Status, Level III
Status and/or Level IV Status.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Termination Date" means December 20, 1994 or, if such day is not
a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
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<PAGE> 18
the fair market value of all Plan assets allocable to such liabilities under
Title IV of ERISA (excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such Plan, but only to
the extent that such excess represents a potential liability of a member of the
ERISA Group to the PBGC or any other Person under Title IV of ERISA.
"Wholly-Owned Subsidiary" means any Subsidiary all of the shares
of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Borrower notifies
the Agent that the Borrower wishes to amend any covenant in Article V to
eliminate the effect of any change in generally accepted accounting principles
on the operation of such covenant (or if the Agent notifies the Borrower that
the Required Banks wish to amend Article V for such purpose), then the
Borrower'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 Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of Euro-Dollar Loans) or by reference to the
provisions of Article II under which participation therein is determined (i.e.,
a "Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money Market
Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are
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<PAGE> 19
determined on the basis of their bids in accordance therewith).
SECTION 1.04. Basis for Ratings. The credit ratings to be
utilized in the determination of a Status are the ratings assigned to unsecured
obligations of the Borrower without third party credit support. Such ratings
may be pending or implied ratings assigned by the relevant rating agencies if
ratings for outstanding obligations of the foregoing type are not available.
Ratings assigned to any obligation which is secured or which has the benefit of
third party credit support shall be disregarded.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. From the Effective Date until
the day prior to the Termination Date, each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section from time to time in amounts such that the aggregate
principal amount of Committed Loans by such Bank at any one time outstanding
shall not exceed the amount of its Commitment, provided that any Money Market
Loan made by a Bank shall not reduce such Bank's Commitment with respect to its
pro rata portion of any Loan which is not a Money Market Loan. Each Borrowing
under this Section shall be in an aggregate principal amount of $5,000,000 or
any larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(c)) and shall be
made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay, or to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time prior to the Termination Date under this Section.
SECTION 2.02. Notice of Committed Borrowings. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 11:00
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business
Day in the case of a Euro-Dollar Borrowing,
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<PAGE> 20
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to be CD
Loans, Base Rate Loans or Euro-Dollar Loans, and
(d) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks to make offers to make Money Market Loans to the Borrower.
The Banks may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later
than 10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day
prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of Borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
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<PAGE> 21
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of
a Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance
with this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make
Money Market Loans in response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M.
(New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:45 A.M.
(New York City time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Agent or such affiliate notifies the Borrower of the
terms of the offer or offers contained therein not later than (x) one hour
prior to the deadline for the other Banks, in the case of a LIBOR Auction, or
(y) 15 minutes prior to the deadline for the other Banks, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any Money Market Quote
so made shall be irrevocable except with the written consent of the Agent given
on the instructions of the Borrower.
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(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w)
may be greater than or less than the Commitment of the quoting
Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000,
(y) may not exceed the principal amount of Money Market Loans for
which offers being made by such quoting Bank may be accepted, and
(z) may be subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan, expressed
as a percentage (specified to the nearest 1/10,000th of 1%) to be
added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
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<PAGE> 23
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted solely to correct
a manifest error in such former Money Market Quote. The Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Money Market Loans
for which offers have been received for each Interest Period specified in the
related Money Market Quote Request, (B) the respective principal amounts and
Money Market Margins or Money Market Absolute Rates, as the case may be, so
offered and (C) if applicable, limitations on the aggregate principal amount of
Money Market Loans for which offers in any single Money Market Quote may be
accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually
agreed and shall have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction
for which such change is to be effective), the Borrower shall notify the Agent
of its acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request,
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<PAGE> 24
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as
the case may be, and
(iv) the Borrower may not accept any offer that is described
in subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the absence of manifest
error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share (if
any) of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Bank participating therein shall (except as provided in
subsection (c) of this Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address referred to in Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower at the
Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the
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proceeds of its new Loan to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the amount being
repaid shall be made available by such Bank to the Agent as provided in
subsection (b), or remitted by the Borrower to the Agent as provided in Section
2.12, as the case may be.
(d) Unless the Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such Bank
has made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04 and the Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank and the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a),
the Agent shall forward such Note to such Bank. Each Bank shall record the
date, amount, type and maturity of each Loan made by it and the date and amount
of
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<PAGE> 26
each payment of principal made by the Borrower with respect thereto, and may,
if such Bank so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of its Note a continuation
of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin plus the applicable Adjusted CD Rate;
provided that if any CD Loan or any portion thereof shall, as a result of
clause (2)(b) of the definition of Interest Period, have an Interest Period of
less than 30 days, such portion shall bear interest during such Interest Period
at the rate applicable to Base Rate Loans during such period. Such interest
shall be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, 90 days after the first day thereof.
Any overdue principal of or interest on any CD Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the higher of (i) the sum of the CD Margin plus the Adjusted CD Rate
applicable to such Loan and (ii) the Base Rate for such day.
"CD Margin" means (i) 0.3875% for any day on which Level I Status
exists, (ii) 0.440% for any day on which Level II Status exists, (iii) 0.525%
for any day on which
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Level III Status exists and (iv) 0.5875% for any day on which Level IV Status
exists.
The "Adjusted CD Rate" applicable to any Interest Period means a
rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [----------] + AR
[1.00 - DRP]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
________________________
* The amount in brackets being rounded upward, if necessary, to
the next higher 1/100 of 1%.
The "CD Base Rate" applicable to any Interest Period is the rate
of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable)
on the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such
Interest Period applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately
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capitalized and within supervisory subgroup "A" (or a comparable successor
assessment risk classification) within the meaning of 12 C.F.R. Section
327.3(d) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States.
The Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus
the applicable Adjusted London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, three months after the first day thereof.
"Euro-Dollar Margin" means (i) 0.2625% for any day on which Level
I Status exists, (ii) 0.315% for any day on which Level II Status exists, (iii)
0.400% for any day on which Level III Status exists and (iv) 0.4625% for any
day on which Level IV Status exists.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference
Bank to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency
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<PAGE> 29
liabilities" (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to United States
residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the
date payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable
to such Loan and (ii) the Euro-Dollar Margin plus the quotient obtained
(rounded upward if necessary, to the next higher 1/100 of 1%) by dividing (x)
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of
the respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than six months as the Agent may select) deposits in dollars in
an amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in
the London interbank market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a
rate per annum equal to the sum of 2% plus the Base Rate for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof. Any
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<PAGE> 30
overdue principal of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and
the participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01 shall
apply.
SECTION 2.08. Fees.
(a) Facility Fee. The Borrower shall pay to the Agent for
the account of the Banks ratably a facility fee at the Facility Fee Rate. Such
facility fee shall accrue (i) from and including December 22, 1993 to but
excluding the Termination Date (or earlier date on which the Commitments
terminate in their entirety), on the daily aggregate amount of the Commitments
(whether used or unused) and (ii) from and including the date on which the
Commitments terminate in their entirety to but excluding the date on which the
Loans shall be repaid in their entirety, on the daily aggregate outstanding
principal amount of the Loans.
"Facility Fee Rate" means (i) 0.05% per annum for any day on which
Level I Status exists, (ii) 0.06% per annum for any day on which Level II
Status exists, (iii) 0.10% per annum for any day on which Level III Status
exists and (iv) 0.1625% per annum for any day on which Level IV Status exists.
(b) Commitment Fee. The Borrower shall pay to the Agent for
the account of the Banks ratably in proportion to their Commitments a
commitment fee at the Commitment Fee Rate on the daily amount by which the
aggregate amount of the Commitments exceeds the aggregate outstanding principal
amount of the Loans. Such commitment fee shall accrue from and including
December 22, 1993 to but excluding the Termination Date (or earlier date on
which the Commitments terminate in their entirety).
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<PAGE> 31
"Commitment Fee Rate" means (i) 0.02% per annum for any day on
which Level I Status or Level II Status exists and (ii) 0.025% per annum for
any day on which Level III Status or Level IV Status exists.
(c) Payments. Accrued fees under this Section shall be
payable quarterly, on March 15, June 15, September 15 and December 15,
commencing March 15, 1994, and upon the date on which the Commitments terminate
in their entirety (and, if later, the date the Loans shall be repaid in their
entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding
at such time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans.
SECTION 2.10. Mandatory Termination of Commitments. The
Commitments shall terminate on the Termination Date, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable
on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may (i)
upon at least one Domestic Business Day's notice to the Agent, prepay any Base
Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) and (ii) upon at least three Euro-Dollar Business
Days' notice to the Agent, subject to Section 2.13, prepay any CD Borrowing or
Euro-Dollar Borrowing, in whole at any time, or from time to time in part in
amounts aggregating $5,000,000 or any larger multiple of $1,000,000, by paying
the principal amount to be prepaid together with accrued interest thereon to
the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan
(except a Money Market Loan bearing interest at the Base Rate pursuant to
Section 8.01(a)) prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable
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<PAGE> 32
share (if any) of such prepayment and such notice shall not thereafter be
revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans
and of fees hereunder, not later than 12:00 Noon (New York City time) on the
date when due, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. The Agent will
promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business Day.
Whenever any payment of principal of, or interest on, the Money Market Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to Section
2.11, Article VI or VIII or
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<PAGE> 33
otherwise) on any day other than the last day of the Interest Period applicable
thereto, or the last day of an applicable period fixed pursuant to Section
2.07(d), or if the Borrower fails to borrow any Fixed Rate Loans after notice
has been given to any Bank in accordance with Section 2.04(a), the Borrower
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow, provided
that such Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365
days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
ARTICLE III
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon
receipt by the Agent of the following documents, each dated the Closing Date
unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date complying with the provisions of Section 2.05;
(b) an opinion of Gibson, Dunn & Crutcher, counsel for the
Borrower, substantially in the form of Exhibit E hereto and an opinion of
Francis R. Tunney, Jr., Esq., Corporate Vice President and General Counsel
of the Borrower, substantially in the form of Exhibit F hereto, each such
opinion to cover such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of
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<PAGE> 34
Exhibit G hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(d) evidence satisfactory to the Agent that the commitments of
the banks under the Existing Credit Agreement have been terminated and all
loans (if any) outstanding under the Existing Credit Agreement, together
with all interest (if any) and fees accrued thereunder, have been paid in
full or arrangements satisfactory to the Agent for such payment have been
made; and
(e) all documents the Agent may reasonably request relating to
the existence of the Borrower, the corporate authority for and the validity
of this Agreement and the Notes, and any other matters relevant hereto, all
in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Borrower and the Banks of the Closing Date,
and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) the fact that the Closing Date shall have occurred on or
prior to December 31, 1993;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments;
(d) the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the date of
such Borrowing; provided that, in the case of a Refunding Borrowing, this
clause (e) shall not apply to (i) the representations and warranties set
forth in Sections 4.04(c) and 4.05 insofar as they relate to any matter
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<PAGE> 35
which has theretofore been disclosed in writing by the Borrower to the
Banks or (ii) the representation and warranty set forth in Section 4.13
insofar as it relates to claimed rights that are not actual rights.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(c), (d) and (e) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official under any
provision of law or regulation applicable to the Borrower, and do not
contravene, or constitute a default under, any provision of law or regulation
applicable to the Borrower or of the restated certificate of incorporation or
by-laws of the Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of its Subsidiaries
or result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower and the Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1992 and the related consolidated
statements of earnings
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and cash flows for the fiscal year then ended, reported on by KPMG Peat
Marwick, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of September 30, 1993 and the related
unaudited consolidated statements of earnings and cash flows for the nine
months then ended, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
subsection (a) of this Section, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such nine-month period
(subject to normal year-end adjustments).
(c) Since September 30, 1993 there has been no material adverse
change in the business, financial position, assets, liabilities or results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any Governmental
Authority in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business or consolidated financial
position of the Borrower and its Subsidiaries, taken as a whole, or which in
any manner draws into question the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could
result in the imposition of a Lien or the posting of a bond or other
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security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course
of its business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law
or as a condition of any license, permit or contract, any related constraints
on operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site
disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a Materially Adverse Effect.
SECTION 4.08. Taxes. United States Federal income tax returns of
the Borrower and its Subsidiaries have been examined and closed through the
fiscal year ended December 31, 1986. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary, except assessments which are being contested in good faith
and as to which adequate reserves have been provided. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the reasonable opinion of the
Borrower, adequate.
SECTION 4.09. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.10. Full Disclosure. All Information (as defined
below) heretofore furnished by the Borrower is, and all Information hereafter
furnished by the Borrower will
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be, true and accurate in all material respects on the date as of which such
Information is dated or certified (except for any projections included therein,
which projections shall have provided reasonable estimations of future
performance for the periods covered thereby subject to the uncertainty and
approximation inherent in any projections) and not incomplete by omitting to
state anything necessary to make such Information not misleading at such time
except to the extent later Information could reasonably have been expected to
supersede earlier Information. As used in this Section, the term "Information"
means (i) the information set forth in the Borrower's report on Form 10-K for
its fiscal year ended December 31, 1992 and in all subsequent reports on Forms
10-K, 10-Q and 8-K (or their equivalents) and registration statements
(excluding exhibits thereto and any registration statements on Form S-8 or its
equivalent) which the Borrower shall have filed with the SEC and (ii) all other
information furnished by the Borrower to the Agent or any Bank for purposes of
or in connection with this Agreement, but only if such other information is (x)
financial information, (y) furnished in writing to all the Banks or to the
Agent for distribution to all the Banks or (z) furnished at a meeting to which
all the Banks were invited.
SECTION 4.11. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except where failures to obtain such licenses, authorizations, consents and
approvals would not, in the aggregate, have a Materially Adverse Effect.
SECTION 4.12. Good Title to Properties. The Borrower and its
Subsidiaries have good and marketable title to their respective properties and
assets (except properties and assets that, in the aggregate, are not material
to the Borrower and its Subsidiaries taken as a whole), subject to no Liens of
any kind, except such as would be permitted under Section 5.10.
SECTION 4.13. Trademarks, Patents, etc. Except as disclosed to
the Banks in Exhibit I hereto, the Borrower and its Subsidiaries possess
trademarks, trade names, copyrights, patents and licenses, or rights in any
thereof, adequate in all material respects for the conduct of their business
(taken as a whole) as now conducted, without
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material conflict with the rights or, to the best knowledge of the Borrower,
any claimed rights of others.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of
the Banks:
(a) as soon as available and in any event within 105 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of earnings and cash
flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on in a manner
acceptable to the SEC by KPMG Peat Marwick or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, an unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the related
unaudited consolidated statements of earnings and cash flows for such
quarter and for the portion of the Borrower's fiscal year ended at the end
of such quarter, setting forth in the case of such earnings and cash flows
in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections
5.07 to
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5.10, inclusive, on the date of such financial statements (including,
without limitation, the amount of Irish Affiliate Cash) and (ii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate
of the chief financial officer or the chief accounting officer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the SEC;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is
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insolvent or has been terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or makes any amendment to
any Plan or Benefit Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer
of the Borrower setting forth details as to such occurrence and action, if
any, which the Borrower or applicable member of the ERISA Group is required
or proposes to take;
(i) promptly upon any officer of the Borrower obtaining
knowledge thereof, notice of any actual or proposed change in the rating of
the Borrower's outstanding senior unsecured long term debt securities by
S&P or Moody's; and
(j) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, or will cause its Subsidiaries to pay and discharge, at or before
maturity (or the expiration of any applicable grace period, as the case may
be), all Material Debt and all other material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves (on a consolidated basis) for the
accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business
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in good working order and condition, ordinary wear and tear excepted; provided
that Borrower and its Subsidiaries shall not be required to maintain any
property or properties which are, in the reasonable opinion of the Borrower,
not material to the business of the Borrower and its Consolidated Subsidiaries
taken as a whole.
(b) The Borrower and its Subsidiaries will maintain (i) physical
damage insurance on all their real and personal properties (except properties
that, in aggregate, are not material to the Borrower and its Subsidiaries taken
as a whole) on an all risks basis (including the perils of flood and quake),
covering the repair and replacement cost of all such property and consequential
loss coverage for business interruption and extra expense, and (ii) public
liability insurance (including products/completed operations liability
coverage) in an amount not less than that which is usually insured against by
companies engaged in the same or a similar business in the same general area.
All such insurance shall be provided by insurers having an A.M. Best
policyholders rating of not less than B+ or such other insurers as the Required
Banks may approve in writing. The Borrower will deliver to the Banks, upon
request of any Bank through the Agent, from time to time full information as to
the insurance carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence.
The Borrower will continue, and will cause its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Borrower
and its Subsidiaries, and will preserve, renew and keep in full force and
effect, and will cause each Subsidiary to preserve, renew and keep in full
force and effect, their respective corporate existences and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that the foregoing shall not prevent any Subsidiary from
terminating its corporate existence or prevent the Borrower or any Subsidiary
from discontinuing any business or any right, privilege or franchise, if all
such terminations and discontinuances, in the aggregate, would not in the
reasonable opinion of the Borrower have a Materially Adverse Effect.
SECTION 5.05. Compliance with Laws. The Borrower will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA, environmental,
and food and drug, and the rules and regulations under each of the foregoing)
except where (i)
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the necessity of compliance therewith is contested in good faith by appropriate
proceedings or (ii) noncompliance therewith would not, in the aggregate, have a
Materially Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Bank
at such Bank's expense to visit and inspect any of their respective properties,
to examine and make abstracts from any of their respective books and records
and to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION 5.07. Subsidiary Debt. The Borrower will not permit any
Subsidiary to incur or suffer to exist any Debt (excluding Debt owed to the
Borrower or a Wholly-Owned Subsidiary) in excess of $50,000,000 outstanding at
any time in the aggregate for all Subsidiaries.
SECTION 5.08. Debt to Capitalization. The ratio of (i)
Consolidated Debt less Irish Affiliate Cash to (ii) Consolidated Debt less
Irish Affiliate Cash plus Adjusted Consolidated Net Worth will at no time be
greater than 0.45:1.
SECTION 5.09. Minimum Consolidated Net Worth. Consolidated Net
Worth will at no time be less than $417,000,000; provided that the foregoing
amount shall be increased (i) on December 31, 1993, by 50% of Consolidated Net
Income (if positive) for the Borrower's fiscal quarter then ended, (ii) at the
end of each of the Borrower's fiscal years ending after December 31, 1993, by
50% of Consolidated Net Income (if positive) for such fiscal year and (iii)
100% of the amount by which Consolidated Net Worth is increased from time to
time after September 30, 1993 as a result of the issuance or sale of the
Borrower's capital stock.
SECTION 5.10. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement
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in an aggregate principal amount not exceeding $20,000,000;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in contemplation
of such event;
(c) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
asset, provided that such Lien attaches to such asset concurrently with or
within 90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in contemplation of
such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not increased
and is not secured by any additional assets;
(g) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith by appropriate proceedings and as to which adequate reserves have
been provided for;
(h) Liens imposed by law, such as landlords', carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations not more
than 60 days past due;
(i) Liens arising out of statutory pledges or deposits under
applicable law relating to worker's compensation, unemployment insurance,
social security or similar obligations;
(j) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of similar nature and which do
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not in any material way adversely affect or interfere with the use thereof
in the business of the Borrower and its Subsidiaries;
(k) banker's liens in the nature of rights of set-off arising in
the ordinary course of business;
(l) Liens not otherwise permitted by the foregoing clauses of
this Section, arising in the ordinary course of its business, which (i) do
not secure Debt, (ii) do not secure any obligation in an amount
individually or in the aggregate exceeding $50,000,000 and (iii) do not in
the aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business; and
(m) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal amount at any time
outstanding not to exceed 15% of Consolidated Net Worth.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
Borrower will not consolidate or merge with or into any other Person; provided
that the Borrower may merge with a Person if (A) the Borrower is the
corporation surviving such merger and (B) immediately after giving effect to
any such merger, no Default shall have occurred and be continuing and all the
representations and warranties of the Borrower contained in this Agreement
shall be true. The Borrower will not, and will not permit its Subsidiaries to,
sell, lease or otherwise transfer, directly or indirectly, all or any
substantial part of the assets of the Borrower and its Subsidiaries, taken as a
whole, to any other Person.
SECTION 5.12. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes, including the backstop of commercial paper. None of such proceeds
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any Margin Stock.
SECTION 5.13. Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, enter into
any material transaction, whether or not in the ordinary course of business,
with any Affiliate other than on terms and conditions at least as favorable to
the Borrower, or the affected Subsidiary, as
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those that would be obtained through an arm's length negotiation with an
unaffiliated third party.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of or
interest on any Loan, any fees or any other amount payable hereunder, which
failure, in the case of interest or fees or amounts other than principal of
any Loan, continues for three Domestic Business Days;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.13, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after written notice thereof has been given
to the Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made
by the Borrower in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or deemed
made);
(e) the Borrower or any Subsidiary shall fail to make any payment
in respect of any Material Debt when due or within any applicable grace
period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or with the
giving of notice or lapse of time or both, would enable) the holder of such
Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
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insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall have
become liable to pay to the PBGC or a Plan under Title IV of ERISA; or
notice of intent to terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, 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; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219 (c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $5,000,000;
(j) a judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the
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Borrower or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or
(k) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of 25% or more of
the outstanding shares of common stock of the Borrower; or individuals who,
as of the Effective Date, constitute the board of directors of the Borrower
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Borrower's board of directors, provided that any person
becoming a director after the Effective Date whose election, or nomination
for election by the Borrower's stockholders, is approved by a vote of at
least a majority of the directors then comprising the Incumbent Directors
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election or removal of directors of the Borrower)
shall, for the purposes of this Agreement, be considered as though such
person were an Incumbent Director;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower;
provided that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
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ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as
are delegated to the Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as
though it were not the Agent, and Morgan Guaranty Trust Company of New York and
its affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii)
in the absence of its own gross negligence or willful misconduct. Neither the
Agent nor any of its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in Article III,
except receipt of items required to be
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delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent, the Co- Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time
by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the
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provisions of this Article shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent
for its own account fees in the amounts and at the times previously agreed upon
between the Borrower and the Agent.
SECTION 7.10. Co-Agent. The Co-Agent shall have no duties or
responsibilities hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Fixed
Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the Agent that the
Adjusted CD Rate or the Adjusted London Interbank Offered Rate, as the case
may be, as determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding their CD Loans or Euro-Dollar Loans, as
the case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended. Unless
the Borrower notifies the Agent at least two Domestic Business Days before the
date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously
been given that it elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a
Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to but excluding
the last day of the Interest Period applicable thereto at the Base Rate for
such day.
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SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the
Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans shall be suspended. Before giving any
notice to the Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently with prepaying each
such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the
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Board of Governors of the Federal Reserve System, but excluding (i) with
respect to any CD Loan any such requirement included in an applicable Domestic
Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage), special
deposit, insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result
of any of the foregoing is to increase the cost to such Bank (or its Applicable
Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Note with respect thereto, by
an amount deemed by such Bank to be material, then, within 15 days after demand
by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction, provided that no such demand by any Bank shall
include any period commencing earlier than 90 days prior to the date of demand.
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(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower
to or for the account of any Bank or the Agent hereunder or under any Note
shall be made free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Bank
and the Agent, taxes imposed on its income, and franchise taxes imposed on it,
by the jurisdiction under the laws of which such Bank or the Agent (as the case
may be) is organized or any political subdivision thereof and, in the case of
each Bank, taxes imposed on its income, and franchise or similar taxes imposed
on it, by the jurisdiction of such Bank's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Bank or the Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 8.04) such Bank or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions, (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section
9.01, the original or a certified copy of a receipt evidencing payment thereof,
and, if such receipt relates to Taxes in respect of a sum payable to any Bank,
the Agent shall promptly deliver such original or certified copy to such Bank.
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(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes, or
charges or similar levies which arise from any payment made hereunder or under
any Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank or the Agent (as the case may be)
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within
15 days from the date such Bank or the Agent (as the case may be) makes demand
therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the case
of each other Bank, and from time to time thereafter if requested in writing by
the Borrower (but only so long as such Bank remains lawfully able to do so),
shall provide the Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to
provide the Borrower with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Bank shall not be entitled to indemnification under Section 8.04(a) with
respect to Taxes imposed by the United States; provided, that should a Bank,
which is otherwise exempt from or subject to a reduced rate
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of withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Bank pursuant to this Section 8.04, then such Bank
will change the jurisdiction of its Applicable Lending Office so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03 or 8.04 with respect to its CD Loans or Euro-Dollar Loans
and the Borrower shall, by at least five Euro-Dollar Business Days' prior
notice to such Bank through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as CD
Loans or Euro-Dollar Loans, as the case may be, shall be made instead as
Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other Banks),
and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case
may be, has been repaid, all payments of principal which would otherwise be
applied to repay such Fixed Rate Loans shall be applied to repay its Base
Rate Loans instead.
SECTION 8.06. HLT Classification. If, after the date hereof, the
Agent determines that, or the Agent is advised by any Bank that such Bank has
received notice from any governmental authority, central bank or comparable
agency having jurisdiction over such Bank that, Loans hereunder are classified
as a "highly leveraged transaction" (an "HLT Classification"), the Agent shall
promptly give notice of such HLT Classification to the Borrower and the other
Banks. The Agent, the Banks and the Borrower shall commence negotiations in
good faith to agree on the extent to which fees, interest rates and/or margins
hereunder should be increased so as to reflect such HLT Classification. If the
Borrower and Banks having more than
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50% in aggregate amount of the Commitments agree on the amount of such increase
or increases, this Agreement may be amended to give effect to such increase or
increases as provided in Section 9.05. If the Borrower and Banks having more
than 50% in aggregate amount of the Commitments fail to so agree within 45 days
after notice is given by the Agent as provided above, then the Agent shall, if
requested by Banks having 50% or more in aggregate amount of the Commitments,
by notice to the Borrower terminate the Commitments and they shall thereupon
terminate and the Borrower shall repay each outstanding Loan at the end of the
Interest Period applicable thereto. The Banks acknowledge that an HLT
Classification is not a Default or an Event of Default hereunder.
SECTION 8.07. Substitution of Bank. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or 8.04, the
Borrower shall have the right, with the assistance of the Agent, to seek a
mutually satisfactory substitute bank or banks ("Substitute Banks") (which may
be one or more of the Banks) to purchase the Committed Loans and assume the
Commitment of such Bank (the "Exiting Bank"). The Exiting Bank shall, upon
reasonable notice and payment to it of the purchase price agreed between it
and the Substitute Bank or Banks (or, failing such agreement, a purchase price
equal to the outstanding principal amount of its Committed Loans and interest
accrued thereon to but excluding the date of payment), assign all of its rights
and obligations under this Agreement and the Notes (including its Commitment
but excluding its Money Market Loans, if any, unless it otherwise agrees) to
the Substitute Bank or Banks, and the Substitute Bank or Banks shall assume
such rights and obligations, in accordance with Section 9.06(c) hereof. In
connection with any such sale, the Borrower shall compensate the Exiting Bank
for any funding losses as provided in Section 2.13 and pay to the Exiting Bank
its facility and commitment fees accrued to but excluding the date of such
sale.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address or telex
number set forth on the signature pages hereof, (y) in the case of any Bank, at
its address or telex number set
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forth in its Administrative Questionnaire or (z) in the case of any party, such
other address or telex number as such party may hereafter specify for the
purpose by notice to the Agent and the Borrower. Each such notice, request or
other communication shall be effective (i) if given by telex, when such telex
is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article II or Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent, in
connection with the preparation and administration of this Agreement, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Agent or any Bank, including fees and disbursements of
counsel (including, without limitation, the allocated costs of in-house
counsel), in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel (including, without limitation, the reasonable
allocated costs of in-house counsel), which may be incurred by such Indemnitee
in connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder;
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provided that no Indemnitee shall have the right to be indemnified hereunder
for such Indemnitee's own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Notes. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the
Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, except as provided below, (iii) postpone the date
fixed for any payment of principal of or interest on any Loan or any fees
hereunder or for any reduction or termination of any Commitment or (iv) change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Notes, or the number of Banks, which shall be required for the Banks or
any of them to take any action under this Section or any other provision of
this Agreement; and provided, further,
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that this Agreement may be amended to give effect to any increased fees,
interest rates and/or margins agreed upon pursuant to Section 8.06 or to reduce
or rescind any such increases previously agreed upon pursuant to Section 8.06,
if such amendment is in writing and is signed by the Borrower and Banks having
more than 50% in aggregate amount of the Commitments.
SECTION 9.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause
(i), (ii) or (iii) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article VIII with
respect to its participating interest. An assignment or other transfer which
is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit H hereto executed by
such Assignee and
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such transferor Bank, with (and subject to) the subscribed consent of the
Borrower and the Agent; provided that if an Assignee is an affiliate of such
transferor Bank, no such consent shall be required; and provided further that
such assignment may, but need not, include rights of the transferor Bank in
respect of outstanding Money Market Loans. Upon execution and delivery of such
an instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if required, a new Note
is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing
such assignment in the amount of $2,500. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in
accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon any
Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
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SECTION 9.08. Existing Credit Agreement. Each of the parties
hereto agrees that the "Commitments" of the banks under the Existing Credit
Agreement will terminate on the Closing Date without any further notice to or
action by any of the parties thereto.
SECTION 9.09. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.10. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of
any party as to which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party).
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
57
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
ALLERGAN, INC.
By ????????
-----------------------------
Title: Corporate Vice President
Chief Financial Officer
2525 Dupont Drive
Irvine, California 92715-1599
Telex Number:
58
<PAGE> 64
Commitments
<TABLE>
<S> <C>
$5,750,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By CHARLES R. PARDUE
-----------------------------------------
Title: Associate
$5,000,000 J.P. MORGAN DELAWARE
By DAVID J. MORRIS
-----------------------------------------
Title: Vice President
$10,250,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By YVONNE C. DENNIS
-----------------------------------------
Title: Vice President
$10,250,000 CITICORP USA, INC.
By BARBARA A. COHEN
-----------------------------------------
Title: Vice President
$6,250,000 ABN AMRO BANK N.V.
LOS ANGELES INTERNATIONAL
BRANCH
By ??????????????????
-----------------------------------------
Title: Vice President
By ??????????????????
-----------------------------------------
Title: Corp. Banking Officer
</TABLE>
59
<PAGE> 65
<TABLE>
<S> <C>
$6,250,000 UNION BANK OF SWITZERLAND
By THOMAS G. JACKSON
-----------------------------------------
Title: Vice President
By L. SCOTT SOMMERS
-----------------------------------------
Title: Vice President
$6,250,000 WACHOVIA BANK OF GEORGIA, N.A.
By JERRY KATON
-----------------------------------------
Title: Assistant Vice President
Total Commitments
$50,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By CHARLES R. PARDUE
-----------------------------------------
Title: Associate
60 Wall Street
New York, New York 10260-0060
Attention:
Telex Number: 177615
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Co-Agent
By YVONNE C. DENNIS
-----------------------------------------
Title: Vice President
555 S. Flower Street
11th Floor
Los Angeles, CA 90071
Attention: Yvonne C. Dennis
FAX Number: (213) 345-6550
</TABLE>
60
<PAGE> 66
EXHIBIT A
NOTE
New York, New York
, 19
For value received, Allergan, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the last day of the Interest Period
relating to such Loan. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding shall be endorsed by the Bank on the
schedule attached hereto, or on a continuation of such schedule attached to and
made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the $50,000,000
Credit Agreement dated as of December __, 1993 among the Borrower, the banks
listed on the signature pages thereof, Morgan Guaranty Trust Company of New
York, as Agent and Bank of America National Trust and Savings Association, as
Co-Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit
<PAGE> 67
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration
of the maturity hereof.
ALLERGAN, INC.
By _______________________
Title:
2
<PAGE> 68
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Amount of
Amount Type of Principal Maturity Notation
Date of Loan Loan Repaid Date Made by
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
3
<PAGE> 69
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Allergan,Inc.
Re: Credit Agreement (the "Credit Agreement") dated as of December 22,
1993 among the Borrower, the Banks listed on the signature pages
thereof, the Agent and the Co-Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: _____________________
<TABLE>
<CAPTION>
Principal Amount* Interest Period**
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
ALLERGAN, INC.
By __________________________
Title:
__________________________________
* Amount must be $5,000,000 or a larger multiple of $1,000,000.
** Not less than one month (LIBOR Auction) or not less than 15 days
(Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
<PAGE> 70
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Allergan, Inc. (the
"Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of
December 22, 1993 among the Borrower, the Banks parties thereto and the
undersigned, as Agent, we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the following proposed Money
Market Borrowing(s):
Date of Borrowing: _________________
<TABLE>
<CAPTION>
Principal Amount Interest Period
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate for Money Market LIBOR Loan is the
London Interbank Offered Rate].
Please respond to this invitation by no later than [2:00 P.M.]
[9:15 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By ___________________________
Authorized Officer
<PAGE> 71
EXHIBIT D
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
23 Wall Street
New York, New York 10015
Attention:
Re: Money Market Quote to
Allergan, Inc. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_________________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: _____________________________
2. Person to contact at Quoting Bank:
__________________________________
3. Date of Borrowing: ___________________________*
__________________________________
* As specified in the related Invitation.
<PAGE> 72
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- --------- --------- ------------ --------------------
<S> <C> <C> <C>
$
$
</TABLE>
[Provided that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $___________ .]**
We understand and agree that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Credit
Agreement dated as of December __, 1993 among the Borrower, the Banks
listed on the signature pages thereof and
__________________________________
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger
multiple of $1,000,000.
*** Not less than one month or not less than 15 days, as specified in
the related Invitation. No more than five bids are permitted for
each Interest Period.
**** Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the
nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000 of 1%).
2
<PAGE> 73
yourselves, as Agent, irrevocably obligates us to make the Money Market
Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By:
-------------------- ------------------------
Authorized Officer
3
<PAGE> 74
EXHIBIT E
Form of Gibson, Dunn & Crutcher Opinion
December , 1993
To the Banks and the
Agent referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Re: Allergan, Inc.
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(b)
of the $50,000,000 Credit Agreement dated as of December __, 1993 among
Allergan, Inc., a Delaware corporation (the "Borrower") and you (the "Credit
Agreement"). Capitalized terms used but not defined herein shall have the
corresponding meanings set forth in the Credit Agreement.
We have acted as counsel to the Borrower in connection with the
preparation of the Credit Agreement.
For purposes of this opinion, we have assumed with your permission
that:
(a) the signatures on all documents (other than the signatures on
behalf of the Borrower on the Credit Agreement and the Notes) examined by
us are genuine, the documents submitted to us as originals are authentic
and the documents submitted to us as certified or reproduction copies
conform to the originals; and
(b) the Agent and the Banks have all requisite power and
authority to execute, deliver and perform their obligations under the
Credit Agreement; the execution and delivery of the Credit Agreement and
the performance of such obligations has been duly
<PAGE> 75
To the Banks and the
Agent referred to below 2 December __, 1993
authorized by all necessary action by the Agent and the Banks; and the
Credit Agreement constitutes a legal, valid and binding obligation of the
Agent and the Banks.
We have made such inquiries and examined, among other things,
originals, or copies certified or otherwise identified to our satisfaction as
being true copies, of such records, agreements, certificates, instruments and
other documents as we have considered necessary or appropriate for purposes of
this opinion. As to certain factual matters, we have relied upon certificates
of officers of the Borrower or certificates obtained from public officials. We
call to your attention that with respect to the assumptions set forth in
paragraph (a) above, while we have not conducted an independent investigation
necessary to confirm the accuracy thereof, we have no reason to believe that
any such assumption is not accurate.
Except as expressly stated otherwise herein, whenever our opinion
herein with respect to the existence or absence of facts is stated to be to the
best of our knowledge, such statement is intended to signify that, during the
course of our representation of the Borrower, as herein described, no
information has come to the attention of the lawyers working on the
transactions contemplated by the Credit Agreement that would give us actual
knowledge of facts contrary to the existence or absence of the facts indicated.
However, we have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from our representation of
the Borrower.
Based on the foregoing and in reliance thereon, and subject to the
assumptions, exceptions, qualifications and limitations set forth herein, we
are of the opinion that:
1. The Borrower has been duly incorporated and is a validly
existing corporation and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to execute,
deliver and perform its obligations under the Credit Agreement and the Notes
and to conduct its business as presently conducted.
<PAGE> 76
To the Banks and the
Agent referred to below 3 December __, 1993
2. The execution and delivery of the Credit Agreement and the
Notes by the Borrower and the performance of its obligations thereunder have
been duly authorized by all necessary action of the Borrower.
3. The Credit Agreement and the Notes have each been duly
executed and delivered by the Borrower.
4. The Credit Agreement and each of the Notes constitute a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms.
5. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes do not and will not (A) violate the restated
certificate of incorporation or bylaws of the Borrower as in effect on the date
hereof and heretofore delivered to the Agent, (B) to the best of our knowledge,
violate any material law or regulation applicable to Borrower or any order,
judgment or decree of any Governmental Authority known to us to be binding on
the Borrower, (C) to the best of our knowledge based upon a review of documents
identified to us by the Borrower as being material to the Borrower and its
Subsidiaries taken as a whole, conflict with, result in a material breach of or
constitute a material default under any material indenture, mortgage, deed of
trust, agreement or other instrument to which the Borrower or any Subsidiary is
a party or by which any of their respective properties are bound or result in
or require the creation or imposition of any Lien upon any of their respective
assets, other than Permitted Liens, or (D) require any authorization, consent,
waiver or approval of any Governmental Authority.
6. To the best of our knowledge, there are no pending or
threatened actions or proceedings against the Borrower or any of its
Subsidiaries before any Governmental Authority which purport to affect the
legality, validity, binding effect or enforceability of the Credit Agreement or
any of the Notes, or which are likely to have a Materially Adverse Effect,
except as set forth in Exhibit I to the Credit Agreement.
7. Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
<PAGE> 77
To the Banks and the
Agent referred to below 4 December __, 1993
The foregoing opinions are subject to the following exceptions,
qualifications and limitations:
A. We render no opinion herein as to matters involving the laws
of any jurisdiction other than (i) the Federal laws of the United States of
America, (ii) the laws of the State of New York and (iii) the Delaware General
Corporation Law. We are not admitted to practice law in the State of Delaware;
however, we are generally familiar with the Delaware General Corporation Law as
presently in effect and have made such inquiries as we consider necessary to
render the opinions contained in paragraphs 1, 2, 3 and 5. This opinion is
limited to the effect of the present state of the foregoing laws and to the
facts as they presently exist. We assume no obligation to revise or supplement
this opinion in the event of future changes in such laws or the interpretations
thereof or such facts. The Credit Agreement provides that it shall be
construed in accordance with and governed by the laws of the State of New York.
Irrespective of such choice of law stated in the Credit Agreement, our opinions
herein rendered, subject to the assumptions, exceptions, qualifications and
limitations herein stated, are applicable only to the extent the internal law
of New York applies.
B. Our opinions set forth in paragraph 4 and (with respect to
performance by the Borrower) clauses (B) and (D) of paragraph 5 are subject to
(i) the effect of any bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws affecting the enforcement of creditors' rights
generally (including, without limitation, the effect of statutory or other laws
regarding fraudulent transfers or preferential transfers) and (ii) general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law.
C. Without limitation, we express no opinion (i) as to the
ability to obtain specific performance, injunctive relief or other equitable
relief (whether sought in a proceeding at law or in equity) as a remedy for
noncompliance with Credit Agreement or the Notes, and (ii) regarding the rights
or remedies available to any party insofar as such party may take discretionary
action that is arbitrary, unreasonable or capricious, or is not taken in good
faith or in a commercially reasonable manner, whether
<PAGE> 78
To the Banks and the
Agent referred to below 5 December __, 1993
or not such action is permitted under the Credit Agreement or the Notes.
D. We express no opinion with respect to the legality, validity,
binding nature or enforceability of any provision of the Credit Agreement or
the Notes to the effect that rights or remedies are not exclusive, that every
right or remedy is cumulative and may be exercised in addition to any other
right or remedy, that the election of some particular remedy does not preclude
recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy.
E. We express no opinion with respect to the legality, validity,
binding nature or enforceability of (i) any waiver under the Credit Agreement
or the Notes or any consents thereunder relating to the rights of the Borrower
or duties owing to it existing as a matter of law, except to the extent the
Borrower may so waive or consent under applicable law, (ii) provisions in the
Credit Agreement or the Notes imposing an increase in interest rate upon
delinquency in payment, or (iii) any rights of setoff, other than as provided
by Section 151 of the Debtor and Creditor Law of the State of New York, as
interpreted by applicable judicial decisions.
F. We express no opinion as to any provision of the Credit
Agreement or the Notes requiring written amendments or waivers of such
documents insofar as it suggests that oral or other modifications, amendments
or waivers could not be effectively agreed upon by the parties or that the
doctrine of promissory estoppel might not apply.
G. We express no opinion as to the applicability or effect of any
Bank's compliance with any state or Federal laws applicable to the transactions
contemplated by the Credit Agreement.
H. With respect to actions or proceedings referred to in
paragraph 6, we call to your attention that the Borrower and its Subsidiaries
are continuously involved in various proceedings before or filings with the
U.S. Food and Drug Administration and other Governmental Authorities regarding
the manufacture, use and sale of certain of their products. Such proceedings
and filings, with which we are
<PAGE> 79
To the Banks and the
Agent referred to below 6 December __, 1993
generally not involved, are specifically excluded from the scope of our opinion
in paragraph 6.
This opinion is rendered to you in connection with the Credit
Agreement and may not be relied upon by any person other than you (or permitted
assignees under the Credit Agreement) or by you (or any such assignee) in any
other context, provided that you may provide this opinion (i) to bank examiners
and other regulatory authorities should they so request or in connection with
their normal examinations, (ii) to your independent auditors and attorneys,
(iii) pursuant to order or legal process of any court or governmental agency,
or (iv) in connection with any legal action to which you are a party arising
out of the transactions contemplated by the Credit Agreement. This opinion may
not be quoted without the prior written consent of this Firm. We consent to
the delivery of this opinion to the Agent's special counsel, Davis Polk &
Wardwell, and to the reliance by such Firm on this opinion for purposes of
rendering their opinion in connection with closing under the Credit Agreement.
Very truly yours,
Gibson, Dunn & Crutcher
EMG/dsp
8156K
<PAGE> 80
EXHIBIT F
Form of Francis R. Tunney, Jr., Esq. Opinion
December __, 1993
To the Banks and the
Agent referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Re: Allergan, Inc.
Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(b)
of the $50,000,000 Credit Agreement dated as of December __, 1993 among
Allergan, Inc., a Delaware corporation (the "Borrower"), and you (the "Credit
Agreement"). Capitalized terms used but not defined herein shall have the
corresponding meanings set forth in the Credit Agreement.
I am the General Counsel of the Borrower and, in such capacity, I
am generally familiar with the corporate and legal matters concerning the
Borrower and its Subsidiaries.
I have made such inquiries and examined, among other things,
originals, or copies certified or otherwise identified to my satisfaction as
being true copies, of such records, agreements, certificates, instruments and
other documents as we have considered necessary or appropriate for purposes of
this opinion.
Based on the foregoing and in reliance thereon, I am of the
opinion that:
1. The Borrower is duly qualified to transact business and is in
good standing in each jurisdiction in which the character of its business or
the location of its properties makes such qualification necessary, except where
the failure to be so qualified would not have a Materially Adverse Effect.
<PAGE> 81
To the Banks and the
Agent referred to below 2 December __, 1993
2. To the best of my knowledge, the Borrower and each Subsidiary
have all governmental licenses, authorizations, consents, and approvals
required to carry on their respective businesses as presently conducted, except
where the failure to have any of the foregoing would not have a Materially
Adverse Effect.
3. Neither the Borrower nor any Subsidiary is in violation of (a)
its charter or bylaws or (b) to the best of my knowledge, any law, statute,
rule, regulation, order, writ, injunction or decree of any Governmental
Authority applicable to them or their respective properties or assets, except
(in the case of clause (b)) where any such violation would, singly or in the
aggregate with other such violations, not have a Materially Adverse Effect.
4. There are no pending or, to the best of my knowledge,
threatened actions or proceedings against the Borrower or any of its
Subsidiaries before any Governmental Authority which purport to affect the
legality, validity, binding effect or enforceability of the Credit Agreement or
the Notes, or which are likely to have a Materially Adverse Effect except as
set forth on Exhibit I to the Credit Agreement.
6. The Credit Agreement and the Notes have each been duly
executed and delivered by the Borrower.
This opinion is rendered to you in connection with the Credit
Agreement and may not be relied upon by any person other than you (or permitted
assignees under the Credit Agreement) or by you (or any such permitted
assignee) in any other context, provided that you may provide this opinion (i)
to bank examiners and other regulatory authorities should they so request or in
connection with their normal examinations, (ii) to your independent auditors
and attorneys, (iii) pursuant to order or legal process of any court or
governmental agency, or (iv) in connection with any legal action to which you
are a party arising out of the transactions contemplated by the Credit
Agreement. This opinion may not be quoted without my prior written consent.
<PAGE> 82
To the Banks and the
Agent referred to below 3 December __, 1993
I consent to the delivery of this opinion to the Agent's special counsel, Davis
Polk & Wardwell, and to their reliance on this opinion in connection with
closing under the Credit Agreement.
Very truly yours,
Francis R. Tunney, Jr., Esq.
General Counsel
Allergan, Inc.
<PAGE> 83
EXHIBIT G
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
TO THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the $50,000,000 Credit
Agreement (the "Credit Agreement") dated as of December __, 1993 among
Allergan, Inc., a Delaware corporation (the "Borrower"), the banks listed
therein (the "Banks"), Morgan Guaranty Trust Company of New York, as Agent (the
"Agent") and Bank of America National Trust and Savings Association, as
Co-Agent (the "Co-Agent"), and have acted as special counsel to the Agent for
the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and the Notes constitute valid and binding obligations of the
Borrower.
<PAGE> 84
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion as
to the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 85
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), Allergan, Inc., a Delaware
corporation (the "Borrower"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $50,000,000 Credit Agreement dated as of December
__, 1993 among the Borrower, the Assignor and the other Banks party thereto, as
Banks, and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans to the Borrower in an aggregate principal amount at
any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.
<PAGE> 86
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Committed Loans made by the Assignor outstanding at the date hereof.
Upon the execution and delivery hereof by the Assignor, the Assignee, the
Borrower and the Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the obligations of a
Bank under the Credit Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date
hereof, be reduced by a like amount and the Assignor shall be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor
on the date hereof in Federal funds the amount heretofore agreed between
them.(1) It is understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the same to such other
party.
SECTION 4. Consent of the Borrower and the Agent. This Agreement
is conditioned upon the consent of the Borrower and the Agent pursuant to
Section 9.06(c) of the Credit Agreement. The execution of this Agreement by
the
__________________________________
(1) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee[, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee]. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
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<PAGE> 87
Borrower and the Agent is evidence of this consent. Pursuant to Section
9.06(c) the Borrower agrees to execute and deliver a Note payable to the order
of the Assignee to evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By _________________________
Title:
[ASSIGNEE]
By __________________________
Title:
3
<PAGE> 88
[BORROWER]
By __________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By __________________________
Title:
4
<PAGE> 89
EXHIBIT I
LEGAL PROCEEDINGS
As used in this Exhibit I, references to Allergan or the Company shall mean the
Borrower.
Trademarks, Patents, etc.
1. In November 1992 Allergan's subsidiary Allergan Medical Optics
("AMO") filed suit against Staar Surgical for infringement of a patent
covering certain devices for the insertion of intraocular lenses into the eye.
In December 1992, AMO filed a similar suit against Chiron Ophthalmics, Inc.
The two cases were subsequently consolidated, and trial has been divided into
two phases. Phase I will be tried in late January 1994. The court has denied
AMO's request for a preliminary injunction against Chiron and Staar pending
the outcome of the Phase I trial.
2. In April and May 1993, Allergan and Kabi Pharmacia filed separate
actions against one another concerning whether Allergan was infringing a patent
held by Pharmacia. The patent relates to a compound found in certain
viscoelastic products used during eye surgery. The suits have been tentatively
settled, but final settlement requires certain conditions to be met, which are
not expected to occur until sometime in 1994. The tentative settlement, if made
final, would require Allergan to make certain payments to Pharmacia in 1994 and
1995, which amounts are not considered material.
3. In May 1993, Allergan was sued for patent infringement by Robert
Powell, the purported inventor of a certain type of intraocular lens. Allergan
believes Powell's claims are without merit, and is vigorously defending the
case. Allergan also believes it has no material exposure arising from the suit.
4. In September 1993, Dr. Steven Shearing sued Allergan and
approximately 14 other companies for alleged infringement of a patent
concerning a method of inserting intraocular lenses into the eye. Allergan
believes that Dr. Shearing's suit is without merit. Dr. Shearing previously
settled litigation over the same patent with Heyer-Schulte Medical Optics,
which is Allergan Medical Optics' predecessor in interest. Allergan regards
Dr. Shearing's suit as a breach of the earlier settlement agreement, and has
separately filed suit against Dr. Shearing for breach of contract.
5. In December, 1991, Staar Surgical sued Allergan, seeking to rescind
an agreement settling prior patent infringement litigation. In the earlier
suit, Staar had sued for alleged infringement of a patent relating to certain
foldable intraocular lenses. The suit was settled when the parties entered
into various cross-license agreements. In the current suit, if successful in
obtaining rescission, Staar seeks to renew its claims for infringement of the
patent involved in the earlier suit. The current suit is presently on appeal,
the lower court already having granted Allergan's motion for summary judgment.
<PAGE> 90
Securities Litigation
The Company is involved in certain Securities Litigation details of
which are set forth in Part I, Item 3 of the Company's Report on Form 10-K for
the Fiscal Year ended December 31, 1992 as updated by the Company's Report on
Form 10-Q for the Quarter ended September 30, 1993. In the case captioned In
Re Allergan Shareholders Litigation, judgment dated November 29, 1993 granting
defendants' motions for summary judgment has been entered by the Court; the
time for appeal of such motion has not yet expired.
* * * * * *
The Company and its subsidiaries are involved in a number of other
lawsuits which Allergan considers to be normal in view of the size and nature
of its business. The Company does not believe that any ultimate liability
resulting from any such lawsuits will have a material adverse effect on the
results of operations or financial position of the Company.
EXHIBIT I
Page 2
<PAGE> 1
EXHIBIT 10.14
ALLERGAN, INC.
Medium-Term Notes Due
Nine Months or More from Date of Issue
DISTRIBUTION AGREEMENT
March 4, 1994
MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
J.P. MORGAN SECURITIES INC.
60 Wall Street
New York, New York 10269
Dear Sirs:
Allergan, Inc., a Delaware corporation (the "Company"), confirms its agreement
with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and J.P. Morgan Securities Inc. ("J.P. Morgan" and, together
with Merrill Lynch, the "Agents") with respect to the issue and sale by the
Company of its Medium-Term Notes described herein (the "Notes"). The Notes are
to be issued pursuant to an indenture (the "Indenture", which term as used
herein includes any instrument approved by the Company establishing the form
and terms of the Notes) dated as of March 1, 1994 between the Company and
BankAmerica National Trust Company, as trustee (the "Trustee"). As of the date
hereof, the Company has authorized the issuance and sale of up to U.S.
$200,000,000 aggregate principal amount (or its equivalent, based upon the
applicable exchange rate at the time of issuance, in such foreign or composite
currencies as the Company shall designate at the time of issuance) of Notes to
or through the Agents pursuant to the terms of this Agreement. It is
understood, however, that the Company may from time to time authorize the
issuance of additional Notes and that, at the option of the Company, such
additional Notes may be sold to or through the Agents pursuant to the terms
of this Agreement, all
<PAGE> 2
as though the issuance of such Notes were authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company to one or
more of the Agents as principal for resale to investors and other purchasers
and for the sale of Notes by the Company directly to investors (as may from
time to time be agreed to by the Company and the related Agent or Agents), in
which case the Agents will act as agents of the Company in soliciting Note
purchases.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-69746) for the
registration of $200,000,000 aggregate initial offering price of senior debt
securities, including the Notes, under the Securities Act of 1933, as amended
(the "1933 Act"), and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"). Such registration statement has been declared
effective by the Commission and the Indenture has been qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration
statement (and any further registration statements which may be filed by the
Company for the purpose of registering additional Notes and in connection with
which this Agreement is included or incorporated by reference as an exhibit)
and the prospectus constituting a part thereof, and any prospectus supplements
relating to the Notes, including all documents incorporated therein by
reference, as from time to time amended or supplemented by the filing of
documents pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the 1933 Act or otherwise, are referred to herein as the
"Registration Statement" and the "Prospectus", respectively, except that if any
revised prospectus shall be provided to the Agents by the Company for use in
connection with the offering of the Notes, whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) of
the 1933 Act Regulations, the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Agents for such
use.
SECTION 1. Appointment as Agents.
(a) Appointment. Subject to the terms and conditions stated herein and to
the reservation by the Company to sell Notes directly on its own behalf or to
appoint other agents to act on its behalf or to assist the Company in the
placement of the Notes (provided the Agents are promptly notified of any such
appointment and that any such additional agent shall execute an agreement with
the Company which contains substantially the same terms and conditions
contained herein, including, but not limited to, the commission fee schedule
set forth at Schedule A hereto), the Company hereby agrees that Notes will be
sold to or through the Agents. Each Agent is authorized to engage the services
of
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<PAGE> 3
any other broker or dealer in connection with the offer or sale of the Notes
purchased by such Agent as principal for resale to others but is not authorized
to appoint sub-agents. In connection with sales by the Agents of Notes
purchased by any Agent as principal to other brokers or dealers, such Agent may
allow any portion of the discount it has received in connection with such
purchase from the Company to such brokers or dealers.
(b) Sale of Notes. The Company shall not sell or approve the
solicitation of purchases of Notes in excess of the amount which shall be
authorized by the Company from time to time or in excess of the principal
amount of Notes registered pursuant to the Registration Statement. The Agents
will have no responsibility for maintaining records with respect to the
aggregate principal amount of Notes sold, or of otherwise monitoring the
availability of Notes for sale, under the Registration Statement.
(c) Purchases as Principal. No Agent shall have any obligation to
purchase Notes from the Company as principal, but an Agent may agree from time
to time to purchase Notes as principal. Any such purchase of Notes by an Agent
as principal shall be made in accordance with Section 3(a) hereof.
(d) Solicitations as Agents. If agreed upon by any Agent and the
Company, such Agent, acting solely as agent for the Company and not as
principal, will solicit purchases of the Notes. Each Agent will communicate to
the Company, orally or in writing, each reasonable offer to purchase Notes
solicited by such Agent on an agency basis, other than those offers rejected by
such Agent. Each Agent shall have the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes, as a whole or in part, and
any such rejection shall not be deemed a breach of the Agent's agreement
contained herein. The Company shall have the sole right to accept offers to
purchase the Notes and may reject any such offer in whole or in part, and any
such rejection shall not be deemed to be a breach of any agreement of the
Company contained herein. Each Agent shall make reasonable efforts to assist
the Company in obtaining performance by each purchaser whose offer to purchase
Notes has been solicited by such Agent and accepted by the Company. No Agent
shall have any liability to the Company in the event any such purchase is not
consummated for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser whose offer it has accepted, the Company shall (i)
hold the Agents harmless against any loss, claim or damage arising from or as a
result of such default by the Company and (ii) notwithstanding such default,
pay to each Agent any commission to which it would be entitled in
connection with such sale.
(e) Reliance. The Company and the Agents agree that any Notes
purchased by the Agents shall be purchased, and any Notes the placement of
which the Agents arrange shall be placed by the
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<PAGE> 4
Agents, in reliance on the representations, warranties, covenants and
agreements of the Company contained herein and on the terms and conditions and
in the manner provided herein.
SECTION 2. Representations and Warranties.
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether to an Agent as principal or through an Agent as
agent), as of the date of each delivery of Notes by the Company to the
purchasers (whether to an Agent as principal or through an Agent as Agent) (the
date of each such delivery to an Agent as principal being hereafter referred to
as a "Settlement Date"), and as of any time that the Registration Statement or
the Prospectus shall be amended or supplemented (other than by (i) a pricing
supplement or an amendment or other supplement providing solely for a change in
the interest rates of the Notes or changes in other terms of the Notes or (ii)
an amendment or supplement which relates exclusively to an offering of debt
securities other than the Notes) or there is filed with the Commission any
document incorporated by reference into the Prospectus (each of the times
referenced above being referred to herein as a "Representation Date") as
follows:
(i) Due Incorporation and Qualification. The Company has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify and be in good
standing would not have a material adverse effect on the
consolidated financial condition, results of operation or
business affairs of the Company and its subsidiaries
considered as one enterprise.
(ii) Subsidiaries. Each subsidiary of the Company which is a
significant subsidiary (each, a "Significant Subsidiary") as
defined in Rule 405 of Regulation C of the 1933 Act Regulations
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction
of its incorporation, has corporate power and authority to own,
lease and operate its properties and conduct its business as
described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such
4
<PAGE> 5
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify and be in good standing would not have a
material adverse effect on the consolidated financial condition,
results of operation or business affairs of the Company and its
subsidiaries considered as one enterprise; and all of the issued
and outstanding capital stock of each Significant Subsidiary has
been duly authorized and validly issued, is fully paid and
non-assessable and, except for directors' qualifying shares, is
owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(iii) Registration Statement and Prospectus. At the time the
Registration Statement became effective, the Registration
Statement complied, and as of the applicable Representation Date
will comply, in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and the 1939 Act and
the rules and regulations of the Commission promulgated
thereunder (the "1939 Act Regulations"). The Registration
Statement, at the time it became effective, did not, and at each
time thereafter at which any amendment to the Registration
Statement becomes effective or any Annual Report on Form 10-K is
filed by the Company with the Commission and as of each
Representation Date, will not, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus, as of the date hereof does not, and
as of each Representation Date will not, contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company
in writing by or on behalf of any Agent expressly for use in the
Registration Statement or Prospectus or to that part of the
Registration Statement that constitutes the Statement of
Eligibility of the Trustee under the 1939 Act filed as an exhibit
to the Registration Statement (the "Form T-1").
5
<PAGE> 6
(iv) Incorporated Documents. The documents incorporated by reference
into the Prospectus, at the time they were or hereafter are filed with the
Commission, complied or when so filed will comply, as the case may be, in all
material respects with the requirements of the 1934 Act and the rules and
regulations promulgated thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, did not and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were or are made,
not misleading.
(v) Accountants. To the best of the Company's knowledge, the
accountants who certified the financial statements and supporting schedules
included or incorporated by reference in the Registration Statement and
Prospectus are independent public accountants within the meaning of the 1933
Act and the 1933 Act Regulations.
(vi) Financial Statements. The financial statements and any
supporting schedules of the Company and its consolidated subsidiaries included
or incorporated by reference in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the consolidated
results of their operations for the periods specified; and, except as stated
in the Registration Statement and the Prospectus, said financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein; and the Company's ratios of earnings to fixed charges included in the
Prospectus under the caption "Ratios of Earnings to Fixed Charges" and in
Exhibit 12 to the Registration Statement have been calculated in compliance
with Item 503(d) of Regulation S-K of the Commission.
(vii) Authorization and Validity of this Agreement, the Indenture and
the Notes. This Agreement has been duly authorized, executed and delivered by
the Company and, upon execution and delivery by the Agents, will be a valid and
legally binding agreement of the Company; the Indenture has been duly
authorized, executed and delivered by the Company and, upon execution and
delivery by the Trustee, will be a valid and legally binding obligation of the
Company enforceable in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors' rights generally or by
general equitable principles; the Notes have been duly and validly authorized
for issuance, offer and sale pursuant to this Agreement and, when issued,
authenticated and delivered pursuant to the provisions of this Agreement and
the Indenture against payment of the consideration therefor specified in the
Prospectus or agreed upon pursuant to the provisions of this Agreement, the
Notes will constitute valid and legally binding obligations of the Company
enforceable in
6
<PAGE> 7
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting enforcement of creditors' rights generally or by
general equitable principles; the Notes and the Indenture will be substantially
in the form heretofore delivered to the Agents and conform in all material
respects to all statements relating thereto contained in the Prospectus; and
each holder of Notes will be entitled to the benefits of the Indenture intended
to apply to the Notes.
(viii) Material Changes or Material Transactions. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, except as may otherwise be stated therein or contemplated
thereby, unless the Company has notified the Agents as provided in Section 4(e)
hereof, (a) there has been no material adverse change in the consolidated
financial condition, results of operation or business affairs of the Company
and its subsidiaries considered as one enterprise nor any development
reasonably expected to cause a materially adverse change in the business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business and (b) there have
been no transactions entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business, which are material to the
Company and its subsidiaries considered as one enterprise.
(ix) No Defaults. Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or bylaws nor in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it or any of them
or their properties may be bound, which
7
<PAGE> 8
violation or default would have a material adverse effect on the
consolidated financial condition, results of operation or business affairs of
the Company and its subsidiaries considered as one enterprise; the execution
and delivery of this Agreement and the Indenture and the consummation of the
transactions contemplated herein and therein have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound or to which any of the
property or assets of the Company or any such subsidiary is subject, which
breach, default or creation of lien, singly or in the aggregate, would cause a
material adverse change in the consolidated financial condition, results of
operation or business affairs of the Company and its subsidiaries considered as
one enterprise, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any applicable law, administrative
regulation or administrative or court order or decree.
(x) No Authorization, Approval or Consent Required. No consent,
approval, authorization, order or decree of any court or governmental agency or
body is legally required for the consummation by the Company of the
transactions contemplated by this Agreement or in connection with the sale of
Notes hereunder, except such as have been obtained or rendered, as the case may
be, or as may be required under state securities ("Blue Sky") laws.
(xi) Legal Proceedings; Contracts. There is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened against
or affecting, the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement (other than as disclosed therein), or
could reasonably, if decided adversely, result in any material adverse change
in the consolidated financial condition, results of operation or business
affairs of the Company and its subsidiaries considered as one enterprise, or
could reasonably, if decided adversely, materially and adversely affect the
properties or assets thereof or could reasonably, if decided adversely,
materially and adversely affect the consummation of this Agreement or the
Indenture or any
8
<PAGE> 9
transaction contemplated hereby or thereby; all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of their property or assets is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material; and
there are no contracts or documents of the Company or any of its subsidiaries
which are required to be filed as exhibits to the Registration Statement by the
1933 Act or by the 1933 Act Regulations which have not been so filed.
(xii) Patents, Copyrights and Trademarks. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, the patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(collectively, "patent and proprietary rights") presently employed by them, in
connection with the business now operated by them, unless the failure to own,
possess or acquire such patent or proprietary rights would not cause a material
adverse change in the consolidated financial condition, results of operations
or business affairs of the Company and its subsidiaries considered as an
enterprise or could be reasonably expected to cause a material adverse change
in the business prospects of the Company and its subsidiaries considered as one
enterprise, and neither the Company nor any of its subsidiaries has received
any notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
material adverse change in the consolidated financial condition, results of
operation or business affairs of the Company and its subsidiaries considered as
one enterprise.
(xiii) Licenses and Permits. The Company and its subsidiaries possess
such certificates, authorities, licenses or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authority, license or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would materially and adversely affect the consolidated financial
condition, results of
9
<PAGE> 10
operation or business affairs of the Company and its subsidiaries considered as
one enterprise.
(xiv) Cuba Disclosure. The Company has complied with, and is and will
be in compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act"), or is exempt therefrom.
(xv) Not an Investment Company. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xvi) Commodity Exchange Act. The Notes, when issued, authenticated
and delivered pursuant to the provisions of this Agreement and the Indenture,
will be excluded or exempted under the provisions of the Commodity Exchange
Act.
(b) Additional Certifications. Any certificate signed by any director
or officer of the Company and delivered to any Agent or to counsel for the
Agents in connection with an offering of Notes through one or more Agents as
agent or the sale of Notes to one or more Agents as principal shall be deemed a
representation and warranty by the Company to the Agents as to the matters
covered thereby on the date of such certificate and at each Representation Date
subsequent thereto.
SECTION 3. Purchases as Principal; Solicitations as Agents.
(a) Purchases as Principal. Unless otherwise agreed by the related
Agent or Agents and the Company, Notes shall be purchased by the Agents as
principal. Such purchases shall be made in accordance with terms agreed upon
by the related Agent or Agents and the Company (which terms shall be agreed
upon orally, with written confirmation prepared by the related Agent or Agents
and mailed to the Company). An Agent's commitment to purchase Notes as
principal shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the
terms and conditions herein set forth. Each such purchase of Notes by an Agent
shall be made by such Agent with the intention of reselling them as soon as
practicable, in the sole judgment of such Agent. Each purchase of Notes,
unless otherwise agreed, shall be at a discount from the principal amount of
each such Note equivalent to the applicable commission set forth in Schedule A
hereto. The Agents may engage the services of any other broker or dealer in
connection with the resale of the Notes purchased as principal and may allow
any portion of the discount received in connection with such purchases from the
Company to such brokers and dealers.
10
<PAGE> 11
At the time of each purchase of Notes by an Agent as principal, such Agent
shall specify the requirements for the stand-off agreement, officer's
certificate, opinion of counsel and comfort letter pursuant to Sections 4(k),
7(b), 7(c) and 7(d) hereof.
(b) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and the related Agent or Agents, such Agent
or Agents, as an agent or agents of the Company, will use reasonable efforts to
solicit offers to purchase the Notes upon the terms and conditions set forth
herein and in the Prospectus. All Notes sold through an Agent as agent will be
sold at 100% of their principal amount unless otherwise agreed to by the
Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Notes through the Agents, as agents,
commencing at any time for any period of time or permanently. Upon receipt
of instructions from the Company, the Agents will forthwith suspend
solicitation of offers to purchase from the Company until such time as the
Company has advised the Agents that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as
set forth in Schedule A hereto.
Each Agent acknowledges and agrees that any funds which such Agent
receives in respect of a purchase of Notes, which purchase has been solicited
by such Agent, as agent of the Company, will be received, held and disposed of
by such Agent, as agent of the Company, subject to the right of such Agent to
deduct from the sale proceeds the applicable commission as set forth on
Schedule A hereto.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Notes (as applicable) specified
in Exhibit A hereto shall be agreed upon by the Company and one or more Agents
and set forth in a pricing supplement to the Prospectus to be prepared in
connection with each sale of Notes. Except as may be otherwise provided in
such supplement to the Prospectus, the Notes will be issued in denominations of
U.S. $1,000 or any larger amount that is an integral multiple of U.S. $1,000.
Administrative procedures with respect to the sale of Notes shall be agreed
upon from time to time by the Company and the Agents (the "Procedures"). The
initial Procedures, which are set forth in Exhibit B hereto, shall remain in
effect until changed by agreement among the Company and the Agents. The Agents
and the Company agree to perform the respective duties and obligations
specifically provided to be performed by them in the Procedures.
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(d) Delivery of Closing Documents. The documents required to be
delivered by Section 5 hereof shall be delivered at the offices of Brown &
Wood, 10900 Wilshire Boulevard, Los Angeles, California 90024 on the date
hereof, or at such other time or place as the Agents and the Company may agree.
SECTION 4. Covenants of the Company.
The Company covenants with each Agent as follows:
(a) Notice of Certain Events. The Company will notify the Agents
immediately (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the transmittal to the Commission for filing of any
supplement to the Prospectus (other than a pricing supplement) or any document
to be filed pursuant to the 1934 Act which will be incorporated by reference in
the Prospectus, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement or the Prospectus, (iv) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose, and (vi) of the issuance by any state securities commission or other
regulatory authority of any order suspending the qualification or the exemption
from qualification of the Notes under state securities or Blue Sky laws or the
initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof as soon as practicable;
provided, however, unless any Agent hereunder shall at such time hold any Notes
as principal for distribution or resale, the Company shall not be required to
exercise such reasonable efforts if it shall in its sole discretion determine
that it is not in its best interests to do so.
(b) Notice of Certain Proposed Filings. Except as otherwise provided
in this subsection or subsection (l) of this Section, the Company will (i) give
the Agents notice of its intention to file (a) any additional registration
statement with respect to the registration of additional Notes to be
distributed pursuant to this Agreement or (b) any amendment to the Registration
Statement or any amendment or supplement to the Prospectus, whether by the
filing of documents pursuant to the 1933 Act, the 1934 Act or otherwise; (ii)
furnish the Agents with copies of any documents referred to in clause (i) above
proposed to be filed a reasonable time in advance of filing; and (iii) make
available to the Agents copies of documents so filed promptly upon the filing
thereof. Notwithstanding the foregoing, except as set forth below, the Company
shall not be required to give any Agent notice of its intention to file, to
furnish any Agent a copy of in advance of filing, or to make available to any
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Agent (a) Quarterly Reports on Form 10-Q, any Current Report on Form
8-K that includes solely the financial and other information referred to in
subsection (f) or (g) of this Section (including a press release containing
such information) or any filings pursuant to Section 14 of the 1934 Act;
provided, that the Company shall make available to each Agent copies of such
documents promptly after the filing thereof; and provided, further, that if any
such document is to be filed in order that the Prospectus does not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in light of the
circumstances then existing, then the Company shall give immediate notice
(prior to the filing of any such document) to each Agent to cease solicitations
of offers to purchase the Notes in its capacity as agent and to cease sales of
any Notes an Agent may then own as principal; (b) any pricing supplement to the
Prospectus in connection with a sale of Notes (except that a pricing supplement
shall be provided to the Agent who solicits the Notes to which such pricing
supplement relates); (c) any amendment or supplement to the Prospectus that
relates exclusively to an offering of debt securities other than Notes; or (d)
any Current Report on Form 8-K filed solely for the purpose of incorporating an
exhibit by reference into a registration statement, except that the Company
shall make available to each Agent any such Current Report on Form 8-K promptly
after the filing thereof.
(c) Copies of the Registration Statement and the Prospectus. The
Company will deliver to the Agents one signed and as many conformed copies of
the Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as the Agents may
reasonably request. The Company will furnish to the Agents as many copies of
the Prospectus (as amended or supplemented) as the Agents shall reasonably
request so long as any Agent is required to deliver a Prospectus in connection
with sales or solicitations of offers to purchase the Notes.
(d) Preparation of Pricing Supplements. The Company will prepare,
with respect to any Notes to be sold through or to the Agents pursuant to this
Agreement, a Pricing Supplement with respect to such Notes in a form previously
approved by the Agents and will file such Pricing Supplement pursuant to Rule
424(b)(3) under the 1933 Act not later than the close of business of the
Commission on the fifth business day after the date on which such Pricing
Supplement is first used.
(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (l) of this Section and so long as the Agents are
required to deliver a Prospectus in connection with sales or solicitations of
offers to purchase the Notes, if at any time during the term of this Agreement
any event shall
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occur or condition exist as a result of which it is necessary, in the
opinion of the Company or the reasonable opinion of counsel for the Agents or
counsel for the Company, to further amend or supplement the Prospectus in order
that the Prospectus will not include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, or if it shall be necessary, in the
opinion of the Company or the reasonable opinion of either such counsel, to
amend or supplement the Registration Statement or the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations,
immediate notice shall be given, and confirmed in writing, to the Agents to
cease the solicitation of offers to purchase the Notes in the Agents' capacity
as agents and to cease sales of any Notes an Agent may then own as principal,
and the Company will promptly amend or supplement the Registration Statement
and the Prospectus, whether by filing documents pursuant to the 1934 Act, the
1933 Act or otherwise, as may be necessary to correct such untrue statement or
omission or to make the Registration Statement and Prospectus comply with such
requirements.
(f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (l) of this Section, on the date on which
there shall be released to the general public interim financial statement
information related to the Company with respect to each of the first three
quarters of any fiscal year or preliminary financial statement information with
respect to any fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing, and shall prior to the delivery of the Prospectus
to any purchaser of the Notes purchasing after the date on which such financial
information is released to the general public, by the filing of documents
pursuant to the 1934 Act, the 1933 Act or otherwise cause the Prospectus to be
amended or supplemented to include or incorporate by reference financial
information with respect thereto and corresponding information for the
comparable period of the preceding fiscal year, as well as such other
information and explanations as shall be necessary for compliance, in all
material respects, with the requirements of the 1933 Act or the 1933 Act
Regulations.
(g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (l) of this Section, on the date on which
there shall be released to the general public financial information included in
or derived from the audited financial statements of the Company for the
preceding fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing, and shall, prior to the delivery of the
Prospectus to any purchaser of the Notes purchasing after the date on which
such financial information is released to the general public, cause the
Registration Statement and the
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Prospectus to be amended, whether by the filing of documents pursuant to the
1934 Act, the 1933 Act or otherwise, to include or incorporate by reference
such audited financial statements and the report or reports, and consent or
consents to such inclusion or incorporation by reference, of the independent
accountants with respect thereto, as well as such other information and
explanations as shall be necessary for compliance, in all material respects,
with the requirements of the 1933 Act or the 1933 Act Regulations.
(h) Earnings Statements. The Company will make generally available to
its security holders and to the Agents in each case as soon as practicable but
in any event not later than 15 months after the acceptance by the Company of an
offer to purchase Notes hereunder, a consolidated earnings statement (which
need not be audited) covering the twelve-month period beginning after the
latest of (i) the effective date of the Registration Statement, (ii) the
effective date of the most recent post-effective amendment to the Registration
Statement to become effective prior to the date of such acceptance and (iii)
the date of the Company's most recent annual report on Form 10-K filed with the
Commission prior to the date of such acceptance, which earnings statement will
satisfy the provisions of Section 11(a) of the 1933 Act (and, at the option of
the Company, Rule 158 of the 1933 Act Regulations). Nothing in this Section
4(h) shall require the Company to make such earnings statement available more
frequently than once in any period of twelve months.
(i) Blue Sky Qualifications. The Company will endeavor, in
cooperation with the Agents, to qualify the Notes for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States as the Agents may reasonably designate, and will maintain such
qualifications in effect for as long as may be required for the distribution of
the Notes; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will file such statements and reports as may be required by the laws of each
jurisdiction in which the Notes have been qualified as above provided. The
Company will promptly advise the Agents of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Notes
for sale in any such state or jurisdiction or the initiating or threatening of
any proceeding for such purpose.
(j) 1934 Act Filings. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file timely all
documents required to be filed with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act. Such documents will comply in all material
respects with the requirements of the 1934 Act and the 1934 Act Regulations and
to the extent such documents are incorporated by reference in the Prospectus,
when read together with the other
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<PAGE> 16
information in or incorporated by reference into the Prospectus, will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(k) Stand-Off Agreement. If specified by an Agent in connection with
a purchase by such Agent of Notes as principal, between the date of the
agreement to purchase such Notes and the Settlement Date with respect to such
purchase, the Company will not, without such Agent's prior written consent,
directly or indirectly, offer or sell, or enter into any agreement to sell, any
debt securities of the Company which mature more than nine months from their
settlement date or are otherwise substantially similar to the Notes.
(l) Suspension of Certain Obligations. The Company shall not be
required to comply with the provisions of subsections (b), (c), (d), (e), (f),
(g), (i) or (j) of this Section or the provisions of Section 7 hereof during
any period from the time (i) the Agents shall have been notified to suspend
solicitation of purchases of the Notes in their capacity as agents pursuant to
a request from the Company and (ii) the Agents shall not then hold any Notes
purchased as principal pursuant hereto, until the time the Company shall
determine that solicitation of purchases of the Notes should be resumed or any
Agent shall subsequently purchase Notes from the Company as principal.
(m) Use of Proceeds. The Company will use the net proceeds received
by it from the sale from time to time of Notes in the manner specified in the
Prospectus under "Use of Proceeds."
SECTION 5. Conditions of Obligations.
The obligations of the Agents to purchase Notes as principal and to
solicit offers to purchase the Notes as agents of the Company, and the
obligations of any purchasers of the Notes sold through the Agents as agents,
will be subject to the accuracy, as of the applicable Representation Date, of
the representations and warranties on the part of the Company herein and to the
accuracy, as of the date made, of the statements of the Company's officers made
in any certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company of all its covenants and agreements
herein contained and to the following additional conditions precedent:
(a) Legal Opinions. On the date hereof, the Agents shall have
received the following legal opinions, dated as of the date hereof and in form
and substance satisfactory to the Agents and counsel for the Agents:
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(1) Opinion of Internal Counsel. The opinion of Francis R. Tunney,
Esq., General Counsel of the Company, to the effect that:
(i) To the best of such counsel's knowledge, the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except
where the failure to so qualify and be in good standing would not have a
material adverse effect on the consolidated financial condition, results of
operation or business affairs of the Company and its subsidiaries considered as
one enterprise.
(ii) Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and conduct its business as
described in the Registration Statement, and, to the best of such counsel's
knowledge, is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify and be in good
standing would not have a material adverse effect on the consolidated financial
condition, results of operation or business affairs of the Company and its
subsidiaries considered as one enterprise; all of the issued and outstanding
capital stock of each such Significant Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable, and, except for directors'
qualifying shares, is owned by the Company, free and clear of any mortgage,
pledge, lien, encumbrance, claim or equity.
(iii) To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened which are required to be
disclosed in the Prospectus, other than those disclosed therein, and all
pending legal or governmental proceedings to which the Company or any
subsidiary of the Company is a party or of which any of their property is the
subject which are not described in the Registration Statement (including the
documents incorporated by reference therein), including ordinary routine
litigation incidental to the business of the Company or any such subsidiary,
are, considered in the aggregate, not material.
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(iv) To the best of such counsel's knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments or
documents required to be described or referred to in the Registration Statement
or to be filed as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto, the
descriptions thereof or references thereto are correct, and no default exists
in the due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described, referred to, filed or
incorporated by reference.
(v) Each document filed pursuant to the 1934 Act and incorporated by
reference in the Prospectus (other than the financial statements and other
financial and statistical data included or incorporated by reference therein
and the Statement of Eligibility on Form T-1 filed with the Commission with
respect thereto, as to which such counsel need express no opinion) complied
when filed as to form in all material respects with the 1934 Act and the 1934
Act Regulations.
(vi) The information contained in the Prospectus through incorporation
by reference of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992 under the caption "Legal Proceedings", to the extent it
constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by such counsel and is
correct.
(2) Opinion of Company Counsel. The opinion of Gibson, Dunn &
Crutcher, counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus.
(iii) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(iv) The Indenture has been duly and validly authorized, executed and
delivered by the Company and (assuming the Indenture has been duly authorized,
executed and delivered by the Trustee) constitutes a
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legal, valid and binding agreement of the Company, enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights generally, or by general equity
principles.
(v) The Notes, in the form(s) certified by the Company as of the date
hereof, are in due and proper form and have been duly authorized by the Company
for issuance, offer and sale pursuant to this Agreement and, when issued,
authenticated and delivered pursuant to the provisions of this Agreement and
the Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee) against payment of the consideration therefor, the
Notes will constitute valid and legally binding obligations of, the Company,
enforceable in accordance with their terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting enforcement of creditors' rights generally or by
general equity principles, and each holder of Notes will be entitled to the
benefits of the Indenture applicable to the Notes.
(vi) The statements in the Prospectus Supplement under the caption
"Description of Notes" and in the Prospectus under the caption "Description of
the Debt Securities", insofar as they purport to summarize certain provisions
of documents specifically referred to therein, are in all material respects
accurate summaries of such provisions.
(vii) The Indenture has been duly qualified under the 1939 Act.
(viii) The Registration Statement has become effective under the 1933
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
or proceedings therefor initiated or threatened by the Commission.
(ix) At the time the Registration Statement became effective, the
Registration Statement (other than the financial statements and other financial
and statistical data included or incorporated by reference therein and the
Statement of Eligibility on Form T-1 filed with the Commission with respect
thereto, as to which such counsel need express no opinion) appeared on its face
to be appropriately responsive in all material respects to the requirements of
the 1933 Act and the 1933 Act Regulations.
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(x) The Notes and the Indenture conform in all material respects to
the respective descriptions thereof contained in the Prospectus.
(xi) To the best of such counsel's knowledge, neither the Company nor
any of its Significant Subsidiaries is in violation of its charter or bylaws.
The execution and delivery of this Agreement or of the Indenture, or the
consummation by the Company of the transactions contemplated herein and therein
will not conflict with or constitute a breach of, or default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Significant Subsidiaries
pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or
other instrument identified to such counsel as being material and to which the
Company or any such subsidiary is a party or by which it or any of them may be
bound or to which any of the property or assets of the Company or any such
subsidiary is subject, or any law, administrative regulation or administrative
or court decree known to such counsel to be applicable to the Company of any
court or governmental agency, authority or body or any arbitrator having
jurisdiction over the Company; nor will such action result in any violation of
the provisions of the charter or by-laws of the Company.
(xii) No consent, approval, authorization, order or decree of any court
or governmental agency or body (including the Commission) is required for the
consummation by the Company of the transactions contemplated by this Agreement
or in connection with the sale of Notes hereunder, except such as have been
obtained or rendered, as the case may be, or as may be required under state
securities laws.
(xiii) The information contained in the Prospectus Supplement under the
caption "Certain United States Federal Income Tax Considerations", to the
extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by such
counsel and is correct.
(3) Opinion of Counsel for the Agents. The opinion of Brown & Wood,
counsel for the Agents, covering the matters referred to in subparagraph (2)
under the subheadings (i) and (iii) to (ix), inclusive, above.
(4) In giving their opinions required by subsection (a)(2) and (a)(3)
of this Section, Gibson, Dunn & Crutcher and Brown & Wood shall each
additionally state that they
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have participated in conferences with officers and other representatives of the
Company, counsel employed by the Company, representatives of the independent
public accountants for the Company, representatives of the Agents and counsel
for the Agents, at which conferences the contents of the Registration Statement
and Prospectus and related matters were discussed and, although such counsel is
not passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (other than the statements in the Prospectus and
Prospectus Supplement referred to in Sections 5(a)(2)(vi) and 5(a)(2)(xiii)
hereof) and have not made any independent check or verification thereof, on the
basis of the foregoing, no facts have come to such counsel's attention that
lead them to believe that either (A) the Registration Statement (including the
documents incorporated by reference therein) at the time such Registration
Statement became effective (which, for the purposes of this paragraph, shall
have the meaning set forth in Rule 158(c) of the 1933 Act Regulations) or, if
such opinion is being delivered pursuant to Section 7(c) hereof as a result of
a purchase of notes by an Agent as principal, at the time of purchase of any of
the Notes by such Agent as principal, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (B) the
Prospectus (including the documents incorporated by reference therein) as of
the date of this Agreement (or, if the opinion is being given pursuant to
Section 7(c) hereof as a result of the purchase of Notes by an Agent as
principal, at the date of agreement by such Agent to purchase Notes as
principal and at the Settlement Date with respect to such purchase) contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that such counsel need express no
opinion with respect to (i) the financial statements, schedules and other
financial data included or incorporated by reference in the Registration
Statement or the Prospectus or (ii) the Form T-1.
(b) Officer's Certificate. At the date hereof, the Agents shall have
received a certificate of the President or Vice President and the chief
financial or chief accounting officer of the Company, dated as of the date
hereof, to the effect that (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus or since
the date of any agreement by an Agent to purchase Notes as principal, there has
not been any material adverse change in the consolidated financial condition,
results of operation or business affairs of the Company and its subsidiaries
considered as one enterprise nor any development reasonably expected to
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cause a materially adverse change in the business prospects of the Company and
its subsidiaries considered as one enterprise not reflected in or contemplated
by the Prospectus, whether or not arising in the ordinary course of business,
(ii) the other representations and warranties of the Company contained in
Section 2 hereof are true and correct with the same force and effect as though
expressly made at and as of the date of such certificate, (iii) the Company has
performed or complied with all agreements and satisfied all conditions required
by this Agreement on its part to be performed or satisfied at or prior to the
date of such certificate, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to the best of such officer's knowledge,
threatened by the Commission.
(c) Comfort Letter. On the date hereof, the Agents shall have
received a letter from KPMG Peat Marwick, dated as of the date hereof and in
form and substance satisfactory to the Agents, to the effect that:
(i) They are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the 1933 Act and the 1933
Act Regulations.
(ii) In their opinion, the consolidated financial statements and
supporting schedule(s) of the Company and its subsidiaries examined by them and
included or incorporated by reference in the Registration Statement comply as
to form in all material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations with respect to registration
statements on Form S-3 and the 1934 Act and the 1934 Act Regulations.
(iii) They have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial statements
of the Company and its indicated subsidiaries, a reading of the minute books of
the Company and such subsidiaries since the end of the most recent fiscal year
with respect to which an audit report has been issued, inquiries of and
discussions with certain officials of the Company and such subsidiaries
responsible for financial and accounting matters with respect to the unaudited
consolidated financial statements included or incorporated by reference in the
Registration Statement and Prospectus and the latest available interim
unaudited financial statements of the Company and its subsidiaries, and such
other inquiries and procedures as may be specified in such letter, and on the
basis of such inquiries and procedures nothing came to their attention that
caused them to believe that: (A) the unaudited consolidated financial
statements of the
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Company and its subsidiaries included or incorporated by reference in the
Registration Statement and Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the 1934 Act and the
1934 Act Regulations or were not fairly presented in conformity with generally
accepted accounting principles in the United States applied on a basis
substantially consistent with that of the audited financial statements included
or incorporated by reference therein, or (B) at a specified date not more than
five days prior to the date of such letter, there was any change in the
consolidated capital stock or any increase in consolidated long-term debt of
the Company and its subsidiaries or any decrease in the consolidated net assets
of the Company and its subsidiaries, in each case as compared with the amounts
shown on the most recent consolidated balance sheet of the Company and its
subsidiaries included or incorporated by reference in the Registration
Statement and Prospectus or, during the period from the date of such balance
sheet to a specified date not more than five days prior to the date of such
letter, there were any decreases, as compared with the corresponding period in
the preceding year, in consolidated revenues or net income of the Company and
its subsidiaries, except in each such case as set forth in or contemplated by
the Registration Statement and Prospectus or except for such exceptions
enumerated in such letter as shall have been agreed to by the Agents and the
Company.
(iv) In addition to the examination referred to in their report
included or incorporated by reference in the Registration Statement and the
Prospectus, and the limited procedures referred to in clause (iii) above, they
have carried out certain other specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information which
are included or incorporated by reference in the Registration Statement and
Prospectus and which are specified by the Agents, and have found such amounts,
percentages and financial information to be in agreement with the relevant
accounting, financial and other records of the Company and its subsidiaries
identified in such letter.
(d) Other Documents. On the date hereof and on each Settlement Date,
counsel for the Agents shall have been furnished with such documents and
opinions as such counsel may reasonably require for the purpose of enabling
such counsel to pass upon the issuance and sale of Notes as herein contemplated
and related proceedings, or in order to evidence the accuracy and completeness
of any of the representations and warranties, or the fulfillment of any of the
conditions, herein contained.
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If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the Agent party thereto, any applicable agreement by such Agent to
purchase Notes as principal) may be terminated by any of the Agents (as to
itself only) by notice to the Company at any time and any such termination
shall be without liability of any party to any other party, except that the
covenant regarding provision of an earnings statement set forth in Section 4(h)
hereof, the provisions concerning payment of expenses under Section 10 hereof,
the indemnity and contribution agreements set forth in Sections 8 and 9 hereof,
the provisions concerning the representations, warranties and agreements to
survive delivery set forth in Section 11 hereof, the provisions relating to
governing law set forth in Section 15 and the provisions set forth under
"Parties" of Section 16 hereof shall remain in effect.
SECTION 6. Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through an Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Note on the date
fixed for settlement, the Agent shall promptly notify the Company and deliver
the Note to the Company, and, if the Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to the Agent. If such
failure occurred for any reason other than default by the Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its loss of the use of the funds for the period such
funds were credited to the Company's account.
SECTION 7. Additional Covenants of the Company.
The Company covenants and agrees with the Agents that:
(a) Reaffirmation of Representations and Warranties. Each acceptance
by it of an offer for the purchase of Notes (whether to any Agent as principal
or through any Agent as agent), and each delivery of Notes to one or more of
the Agents (whether to any Agent as principal or through any Agent as agent),
shall be deemed to be an affirmation that the representations and warranties of
the Company contained in this Agreement and in any certificate theretofore
delivered to the Agents pursuant hereto are true and correct at the time of
such acceptance or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct at the time of delivery
to the purchaser or its agent, or to the Agent or Agents, of the Note or Notes
relating to such acceptance or sale, as the case may be, as though made at and
as of each such time (and it is
24
<PAGE> 25
understood that such representations and warranties shall relate to the
Registration Statement and Prospectus as amended and supplemented to each such
time).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by a pricing supplement or an amendment or supplement providing
solely for a change in the interest rates of Notes or similar changes, and,
unless the Agents shall otherwise specify, other than by an amendment or
supplement which relates exclusively to an offering of debt securities other
than the Notes), (ii) there is filed with the Commission any document
incorporated by reference into the Prospectus (other than any Current Report on
Form 8-K relating exclusively to the issuance of debt securities under the
Registration Statement, unless the Agents shall otherwise specify), (iii) (if
required in connection with the purchase of Notes by any Agent as principal)
the Company sells Notes to one or more Agents as principal or (iv) if the
Company issues and sells Notes in a form not previously certified to the Agents
by the Company, the Company shall furnish or cause to be furnished to the
Agents as soon as possible a certificate dated the date of filing with the
Commission of such supplement or document, the date of effectiveness of such
amendment, or the date of such sale, as the case may be, in form satisfactory
to the Agents and to counsel for the Agents to the effect that the statements
contained in the certificate referred to in Section 5(b) hereof which was last
furnished to the Agents are true and correct at the time of such amendment,
supplement, filing or sale, as the case may be, as though made at and as of
such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 5(b), modified as necessary to relate
to the Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such certificate.
(c) Subsequent Delivery of Legal Opinions. Each time that (1) the
Registration Statement or the Prospectus shall be amended or supplemented
(other than (i) by an amendment or supplement relating solely to the interest
rates, interest payment dates or maturity dates of the Notes or similar
information, (ii) solely for the inclusion of additional financial information
(including any management's discussion and analysis), or (iii) by an amendment
or supplement which is not required to be made available by the Company to any
Agent pursuant to Section 4(b), or (2) there is filed with the Commission the
Company's Annual Report on Form 10-K and such Annual Report is incorporated by
reference into the Prospectus or (3) (if required in connection with the
purchase of Notes by any Agent as principal) the Company sells Notes to one or
more Agents as principal, the Company shall furnish or cause to be furnished as
soon as practicable to the
25
<PAGE> 26
Agents and to counsel for the Agents a written opinion of Gibson, Dunn &
Crutcher, Counsel to the Company and a written opinion of the General Counsel
for the Company to the Agents dated the date of filing with the Commission of
such supplement or document, the date of effectiveness of such amendment, or
the date of such sale, as the case may be, in form and substance satisfactory
to the Agents and counsel for the Agents, of the same tenor as the opinions
referred to in Sections 5(a)(1) hereof, with respect to the Company's General
Counsel, and Sections 5(a)(2) and 5(a)(4) hereof, with respect to Gibson, Dunn
& Crutcher, but modified, as necessary, to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
opinion; or, in lieu of such opinion, counsel last furnishing such opinion to
the Agents shall furnish the Agents with a letter to the effect that the Agents
may rely on such last opinion to the same extent as though it was dated the
date of such letter authorizing reliance (except that statements in such last
opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of such letter
authorizing reliance). Notwithstanding the requirements of this subsection,
each time that the Registration Statement or the Prospectus shall be amended or
supplemented by the filing of a Quarterly Report on Form 10-Q or any Current
Report on Form 8-K, the opinions required to be delivered under Sections
5(a)(1), 5(a)(2) and 5(a)(4) hereof pursuant to the immediately preceding
sentence shall be delivered solely by the Company's General Counsel and the
opinion of Gibson, Dunn & Crutcher, counsel for the Company, shall not be
required.
(d) Subsequent Delivery of Comfort Letters. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information or there is filed with the Commission
any document incorporated by reference into the Prospectus which contains
additional financial information, or (ii) (if required in connection with the
purchase of Notes by any Agent as principal) the Company sells Notes to one or
more Agents as principal, the Company shall cause KPMG Peat Marwick or their
successors as soon as practicable to furnish the Agents a letter, dated the
date of effectiveness of such amendment, supplement or document with the
Commission, or the date of such sale, as the case may be, in form reasonably
satisfactory to the Agents, of the same tenor as the portions of the letter
referred to in clauses (i) and (ii) of Section 5(c) hereof but modified to
relate to the Registration Statement and Prospectus, as amended and
supplemented to the date of such letter, and of the same general tenor as the
portions of the letter referred to in clauses (iii) and (iv) of said Section
5(c) with such changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records of the
Company; provided, however, that if the Registration Statement or the
Prospectus is amended or supplemented solely to include financial information
as of and for a
26
<PAGE> 27
fiscal quarter, KPMG Peat Marwick or their successors may limit the scope of
such letter to the unaudited financial statements included in such amendment or
supplement unless any other information included therein of an accounting,
financial or statistical nature is of such a nature that, in the reasonable
judgment of the Agents, such letter should cover such other
information.
SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company agrees to indemnify and hold
harmless each Agent and each person, if any, who controls any Agent within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred, (including the
fees and disbursements of counsel chosen by each Agent), as incurred, reasonably
incurred in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above.
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (A) to the
27
<PAGE> 28
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by the Agents expressly for use in the
Registration Statement (or any amendment thereto), or (B) to the extent arising
out of or based upon any untrue statement or omission or alleged untrue
statement or omission made in reliance upon the Trustee's statement of
Eligibility under the 1939 Act filed as an exhibit to the Registration
Statement, or (C) to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission in the Prospectus if such
untrue statement or omission or alleged untrue statement or omission is
corrected in all material respects in an amendment or supplement to the
Prospectus, and if, having previously been furnished by or on behalf of the
Company with copies of the Prospectus, as so amended or supplemented, such
Agent thereafter failed to deliver such Prospectus, as so amended or
supplemented, prior to or concurrently with the sale of a Note or Notes to
the person asserting such loss, liability, claim damage or expense who
purchased such Note or Notes, which are the subject thereof from such Agent,
or (D) as to which such Agent may be required to indemnify the Company
pursuant to the provisions of subsection (b) of this Section 8.
(b) Indemnification of Company. Each Agent agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section 8, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto).
(c) General. Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
28
<PAGE> 29
SECTION 9. Contribution
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 8 hereof is for any
reason held to be unavailable to or insufficient to hold harmless the
indemnified parties although applicable in accordance with its terms, the
Company and the Agents shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and the Agents, as incurred, in such
proportions that each Agent is responsible for that portion represented by the
percentage that the total commissions and underwriting discounts or other
compensation or remuneration received by such Agent to the date of such
liability bears to the total sales price from the sale of Notes sold to or
through such Agent to the date of such liability, and the Company is
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls an Agent within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as such Agent, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
SECTION 10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation and filing of the Registration Statement and all
amendments thereto and the Prospectus and any amendments or supplements
thereto;
(b) The preparation, filing and reproduction of this Agreement;
(c) The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the use of book-entry notes;
(d) The fees and disbursements of the Company's accountants and counsel,
of the Trustee and its counsel, and of any Calculation Agent or Exchange
Rate Agent;
(e) The reasonable fees and disbursements of Brown & Wood (or such other
counsel as is reasonably acceptable to the Company), incurred from time to
time in connection with the transactions contemplated hereby.
29
<PAGE> 30
(f) The qualification of the Notes under state securities laws in
accordance with the provisions of Section 4(i) hereof, including filing fees
and the reasonable fees and disbursements of Brown & Wood (or such other
counsel as is reasonably acceptable to the Company), as counsel for the Agents
in connection therewith and in connection with the preparation of any Blue Sky
Survey and any Legal Investment Survey;
(g) The printing and delivery to the Agents in quantities as
hereinabove stated of copies of the Registration Statement and any amendments
thereto, and of the Prospectus and any amendments or supplements thereto, and
the delivery by the Agents of the Prospectus and any amendments or supplements
thereto in connection with solicitations or confirmations of sales of the
Notes;
(h) The preparation, printing, reproducing and delivery to the Agents
of copies of the Indenture and all supplements and amendments thereto;
(i) Any fees charged by rating agencies for the rating of the Notes;
(j) The fees and expenses incurred in connection with the listing of
the Notes on any securities exchange;
(k) The fees and expenses, if any, incurred with respect to any filing
with the National Association of Securities Dealers, Inc.;
(l) Any advertising and other out-of-pocket expenses of the Agents
incurred with the prior written approval of the Company;
(m) The cost of providing any CUSIP or other identification numbers
for the Notes; and
(n) The fees and expenses of any Depositary (as defined in the
Indenture) and any nominees thereof in connection with the Notes.
SECTION 11. Representations, Warranties and Agreements
to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
in certificates of officers of the Company submitted pursuant hereto or
thereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Agent or any controlling person
thereof, or by or on behalf of the Company, and shall survive each delivery of
and payment for any of the Notes.
SECTION 12. Termination.
30
<PAGE> 31
(a) Termination of this Agreement. This Agreement (excluding any
agreement hereunder by any Agent to purchase Notes as principal) may be
terminated for any reason, at any time by either the Company or the Agents upon
the giving of 15 days' written notice of such termination to the other party
hereto; provided, however, that the termination of this Agreement by an Agent
shall terminate this Agreement only between such Agent and the Company and the
Company's notice of termination as to any one Agent shall terminate this
Agreement only between itself and such Agent.
(b) Termination of Agreement to Purchase Notes as Principal. An Agent
may terminate any agreement hereunder by such Agent to purchase Notes as
principal, immediately upon notice to the Company, at any time prior to the
Settlement Date relating thereto (i) if there has been, since the date of such
agreement or since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the consolidated
financial condition, results of operations or business affairs of the Company
and its subsidiaries considered as one enterprise or any developments
reasonably expected to cause a material adverse change in the business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there
shall have occurred any material adverse change in the financial markets in the
United States or any outbreak or escalation of hostilities or other national or
international calamity or crisis the effect of which is such as to make it, in
the reasonable judgment of such Agent, impracticable to market the Notes or
enforce contracts for the sale of the Notes, or (iii) if trading in any
securities of the Company has been suspended by the Commission or a national
securities exchange, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange shall have been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium
shall have been declared by either Federal, New York or California authorities
or if a banking moratorium shall have been declared by the relevant authorities
in the country or countries of origin of any foreign currency or currencies in
which the Notes are denominated or payable, or (iv) if the rating assigned by
any nationally recognized securities rating agency to any debt securities of
the Company as of the date of any applicable principal purchase shall have been
lowered since that date or if any such rating agency shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any debt securities of the Company, or (v) if there
shall have come to the attention of the Agent or Agents party to such agreement
any facts that would cause such Agent or Agents, as the case may be, to
reasonably believe that the Prospectus, at the time it was required to be
delivered to a
31
<PAGE> 32
purchaser of Notes, included an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time of such delivery, not
misleading.
(c) General. In the event of any such termination, no party will have
any liability to any other party hereto, except that (i) each Agent shall be
entitled to any commission earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by such Agent as principal with the intention of reselling
them or (b) an offer to purchase any of the Notes has been accepted by the
Company but the time of delivery to the purchaser or his agent of the Note or
Notes relating thereto has not occurred, the covenants set forth in Sections 4
(subject to the provision of subsection 4(l)) and 7 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 4(h) hereof, the provisions of Section
10 hereof, the indemnity and contribution agreements set forth in Sections 8
and 9 hereof, and the provisions of Sections 11, 15 and 16 hereof shall
remain in effect.
SECTION 13. Default by an Agent Purchasing Notes as Principal.
If any Agent or Agents purchasing Notes as principal hereunder shall
fail to purchase and pay for any of the Notes agreed in such transaction to be
purchased by such Agent or Agents, and such failure to purchase shall
constitute a default in the performance of its or their obligations to purchase
such Notes in such transaction, and
(i) if the aggregate principal amount of Notes which the defaulting
Agent or Agents agreed but failed to purchase as principal does not
exceed 10% of the aggregate principal amount of Notes agreed to be
purchased in such transaction by all Agents, then the Company shall
have the right to require each nondefaulting Agent to purchase at the
applicable Settlement Date the aggregate principal amount of Notes
which such Agent agreed to purchase as principal in such transaction,
and, in addition, to require each nondefaulting Agent to purchase its
pro rata proportion of the Notes (based on the aggregate principal
amount of Notes such nondefaulting Agent agreed to purchase as
principal in such transaction) originally agreed to be purchased by
such defaulting Agent or Agents; but nothing herein shall relieve a
defaulting Agent of its liability, if any, to the Company and any
nondefaulting Agent for its default hereunder; or
(ii) if the aggregate principal amount of Notes which the
defaulting Agent or Agents agreed but failed
32
<PAGE> 33
to purchase as principal exceeds 10% of the aggregate principal amount
of Notes agreed to be purchased in such transaction by all Agents, or
if the Company shall not exercise the right described in subsection
(i) above to require nondefaulting Agents to purchase Notes of a
defaulting Agent or Agents, the nondefaulting Agent or Agents shall
have the right to purchase all, but shall not be under any obligation
to purchase any, of the Notes agreed by the Agents to be purchased as
principal in such transaction, and if such nondefaulting Agent or
Agents do not purchase all such Notes, the applicable agreement to
purchase such Notes as principal shall terminate without liability to
any nondefaulting Agent or the Company, except for the indemnity and
contribution agreements in Sections 8 and 9 hereof and the expense
provisions provided in Section 10 hereof; but nothing herein shall
relieve a defaulting Agent of its liability, if any, to the Company
and any nondefaulting Agent for its default hereunder.
In the event of a default by any Agent as set forth in this Section 13,
the Settlement Date with respect to such purchase of Notes as principal shall
be postponed for such period, not exceeding seven days, as the lead
nondefaulting Agent or, if no Agent is the lead nondefaulting Agent, the
nondefaulting Agent or Agents, shall determine in order that the required
changes in the Registration Statement and the Prospectus or Pricing Supplement
or in any other document or arrangements may be effected.
SECTION 14. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Allergan, Inc.
2525 Dupont Drive
Irvine, California 92715-1599
Attention: Vice President and
Fax: (714) 724-4162
with copies to:
Attention: General Counsel
Fax: (714) 752-4774
33
<PAGE> 34
If to Merrill Lynch:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower - 10th Floor
World Financial Center
New York, New York 10281-1310
Attention: MTN Product Management
Fax: (212) 449-2234
If to J.P. Morgan:
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Attention: Medium-Term Note Desk, Third Floor
Fax: (212) 648-5909
or at such other address as such party may designate from time to time by
notice duly given in accordance with the terms of this Section 14.
SECTION 15. Governing Law; Forum.
This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in such State. Any
suit, action or proceeding brought by the Company against the Agent in
connection with or arising under this Agreement shall be brought solely in the
state or federal court of appropriate jurisdiction located in the Borough of
Manhattan, The City of New York.
SECTION 16. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to
in Sections 8 and 9 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Notes shall be deemed
to be a successor by reason merely of such purchase.
34
<PAGE> 35
If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between the Agents and the Company in accordance with its terms.
Very truly yours,
ALLERGAN, INC.
By: _______________________________
Name:
Title:
Accepted:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: __________________________________
Name:
Title:
J.P. MORGAN SECURITIES INC.
By: __________________________________
Name:
Title:
35
<PAGE> 36
EXHIBIT A
The following terms, if applicable, shall be agreed to by
the Agents and the Company in connection with each sale of Notes:
Principal Amount: $_______
(or principal amount of foreign currency)
Interest Rate:
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable:
Optional Repayment Date(s):
Date of Maturity:
Purchase Price: ___%
Settlement Date and Time:
Currency of Denomination:
Denominations (if currency is other
than U.S. dollar):
Currency of Payment:
Additional Terms:
Also, in connection with the purchase of Notes by an Agent as principal,
agreement as to whether the following will be required:
Officer's Certificate pursuant to Section 7(b) of
the Distribution Agreement.
Legal Opinion pursuant to Section 7(c) of the Distribution
Agreement.
Comfort Letter pursuant to Section 7(d) of the Distribution
Agreement.
Stand-off Agreement pursuant to Section 4(k) of the
Distribution Agreement.
<PAGE> 37
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall
pay the related Agent, on a discount basis, a commission for the sale of
each Note by such Agent equal to the principal amount of such Note
multiplied by the appropriate percentage set forth below:
<TABLE>
<CAPTION>
<S> <C> PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
-----------------------------------------------------------------
From 9 months to less than 1 year . . . . . . . .125%
From 1 year to less than 18 months. . . . . . . .150
From 18 months to less than 2 years . . . . . . .200
From 2 years to less than 3 years . . . . . . . .250
From 3 years to less than 4 years . . . . . . . .350
From 4 years to less than 5 years . . . . . . . . .450
From 5 years to less than 6 years . . . . . . . . .500
From 6 years to less than 7 years . . . . . . . . .550
From 7 years to less than 10 years . . . . . . . .600
From 10 years to less than 15 years . . . . . . . .625
From 15 years to less than 20 years . . . . . . . .700
From 20 years to 30 years . . . . . . . . . . . . .750
More than 30 years As agreed to by the Company and the Agent at the related time of sale.
</TABLE>
<PAGE> 1
ALLERGAN, INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
Earnings per share of common stock, including common stock equivalents, have
been computed based on the following weighted average number of shares and net
earnings:
<TABLE>
<CAPTION>
For the year ended December 31,
-------------------------------
(000's, except per share amounts) 1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Weighted average number of common shares
outstanding during the period 65,953 67,310 67,191
Weighted average number of additional shares
issuable in connection with dilutive stock options
based upon use of the treasury stock method
and average market prices (A) 204 365 --
----------- ---------- ------------
Weighted average number of common shares
including common stock equivalents 66,157 67,675 67,191
========= ========= =========
Net earnings (loss) for the year $108,877 $103,583 $(59,479)
======== ======== ========
Primary earnings (loss) per common share $1.65 $1.53 ($0.89)
===== ===== ======
</TABLE>
(A) In 1991, such shares have been omitted as their effect would be
anti-dilutive.
In 1993, 1992 and 1991, the difference between shares for primary and fully
diluted earnings per share was not significant.
<PAGE> 1
EXHIBIT 13
Allergan
F I N A N C I A L O V E R V I E W
<TABLE>
<CAPTION>
Year Ended December 31,
In millions, except per share data 1993 1992 % Inc.
---------------------------------- ------ ------ -------
<S> <C> <C> <C>
Financial Highlights
Net Sales $858.9 $830.7 3%
Earnings from continuing operations before
income taxes and minority interest 143.6 131.6
Earnings from continuing operations before
cumulative effect of accounting changes 104.5 95.8 9%
Earnings from discontinued operations 4.4 10.0
Earnings before cumulative effect of
accounting changes 108.9 105.8
Cumulative effect of accounting changes - (2.2)
Net earnings 108.9 103.6 5%
Per share
Continuing operations 1.58 1.42
Discontinued operations 0.07 0.14
Cumulative effect of accounting changes - (0.03)
Net earnings 1.65 1.53
Book value $ 8.04 $ 7.48
Debt-to-equity ratio 28% 24%
Effective tax rate 26% 25%
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
In millions 1993 1992 % Inc.(Dec.)
----------- ------ ------ ------------
<S> <C> <C> <C>
Net Sales by Product Line
Specialty Pharmaceuticals
Eye Care $386.2 $359.2 8 %
Skin Care 32.4 37.3 (13)%
------ ------ -----
418.6 396.5 6 %
Surgical 115.3 111.8 3 %
Optical Lens Care 325.0 322.4 1 %
------ ------ -----
Total Net Sales $858.9 $830.7 3 %
====== ====== =====
Domestic 47.5% 47.9%
International 52.5% 52.1%
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 % (Dec.)
---- ---- --------
<S> <C> <C> <C>
Employee Data
Number of employees 4,749 5,158 (8)%
</TABLE>
1
<PAGE> 2
Allergan, Inc.
F I N A N C I A L I N F O R M A T I O N
Management's Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Earnings
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Management
Independent Auditors' Report
Quarterly Results
Summary of Selected Financial Data
2
<PAGE> 3
1993 Annual Report
M A N A G E M E N T ' S D I S C U S S I O N A N D A N A L Y S I S O F
F I N A N C I A L C O N D I T I O N A N D
R E S U L T S O F O P E R A T I O N S F O R
T H E T H R E E Y E A R P E R I O D
E N D E D D E C E M B E R 3 1 , 1 9 9 3
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Three Year Period Ended December 31, 1993
This financial review presents the Company's operating results for each of the
three years in the period ended December 31, 1993, and its financial condition
at December 31, 1993. This review should be read in connection with the
information presented in the Consolidated Financial Statements and the related
Notes to the Consolidated Financial Statements. During 1991, Allergan
implemented an organizational realignment and focused investments on
opportunities that are more closely aligned with core strengths. As a result
of these actions, four key events occurred. In the third quarter of 1991,
Allergan incurred a pretax nonrecurring charge of $164.5 million. This charge
related primarily to the Company's contact lens business and included $123.1
million of goodwill recorded in connection with the Company's acquisition of
International Hydron Corporation in 1987. In the fourth quarter of 1992, the
Company sold its North and South American contact lens business. In the third
quarter of 1993, the Company sold the remainder of the contact lens business.
The divestiture of the contact lens business, together with the prior operating
results of that division and the nonrecurring charge in the third quarter of
1991, are presented in Allergan's financial results as a discontinued
operation. See Note 2 to the Consolidated Financial Statements.
In the fourth quarter of 1991, the divestiture of the Humphrey Instruments
Division was completed. See Note 2 to the Consolidated Financial Statements.
The Humphrey divestiture, together with that Division's prior operating
results, are also presented as a discontinued operation in Allergan's financial
results.
RESULTS OF OPERATIONS
Net Sales
Net sales for 1993 were $858.9 million, which was an increase of 3% over 1992.
Net sales for 1992 were $830.7 million, which was an increase of 9% over 1991.
On a geographical basis, Company-wide sales in markets outside the United
States continue to represent an increasing portion of the Company's sales,
growing from 50% in 1991 to 52% in 1992 and 53% in 1993. Foreign currency
fluctuations in 1993 decreased sales by $38.5 million or 5% as compared to
average rates in effect throughout 1992. Foreign currency fluctuations in 1992
increased sales by $10.4 million or 1% as compared to average rates in effect
throughout 1991. Sales growth rates on a comparable exchange rate basis were
8% in both 1993 and 1992.
The following table sets forth, for the periods indicated, net sales by major
product line.
<TABLE>
<CAPTION>
Year Ended December 31,
In millions 1993 1992 1991
- ----------- ------ ------ ------
<S> <C> <C> <C>
Specialty Pharmaceuticals
Eye Care $386.2 $359.2 $317.7
Skin Care 32.4 37.3 36.5
------ ------ ------
418.6 396.5 354.2
Surgical 115.3 111.8 108.2
Optical Lens Care 325.0 322.4 299.3
------ ------ ------
TOTAL $858.9 $830.7 $761.7
====== ====== ======
Domestic 47.5% 47.9% 50.4%
International 52.5% 52.1% 49.6%
</TABLE>
Eye Care pharmaceutical sales include a broad range of products for glaucoma
therapy, ocular inflammation, muscle disorder, infection, allergy and dry eye.
Eye Care pharmaceutical sales for 1993 represented an 8% increase over 1992,
while 1992 sales represented a 13% increase over 1991. The largest sales
volume products in this Division are glaucoma therapy products, including
Betagan(R) and Propine(R) ophthalmic solutions. Future sales of Betagan(R) and
Propine(R) are anticipated to be negatively impacted by the introduction of
generic versions of these products in 1994. Sales growth in 1993 was primarily
the result of the introduction
3
<PAGE> 4
of Acular(R) solution in the United States. Price increases in the U.S. market
in 1992 and 1993 have also contributed to sales growth. Sales growth in 1992
in the U.S. market was adversely affected by the increasing cost of rebates for
Medicaid under the recently enacted federal cost containment laws. In the
international markets, expansion into new markets, continuing introductions of
new products and sales of existing products favorably impacted sales.
The Skin Care Division sales represent the Company's line of dermatological
products. Sales in 1993 declined by 13% compared to 1992 as a result of
declines in sales of most skin care products and a decline in contract
manufacturing sales, offset by an increase in sales of Elimite(R) cream.
Medicaid rebate costs also increased in 1993 compared to 1992. Sales growth in
1992 was 2% compared to 1991. Such growth was the result of continued strong
growth in promoted products led by Elimite(R) cream and Naftin(R) cream and
gel, offset by the increasing cost of Medicaid rebates and declines in sales of
other products.
Surgical sales represent products for the ophthalmic surgical market, including
intraocular lenses (IOLs), pharmaceuticals and other products related to
cataract surgery. Surgical sales increased 3% in both 1993 compared to 1992
and 1992 compared to 1991. Domestic sales declined 3% in 1993 and 5% in 1992,
while sales in international markets increased by 14% in 1993 and 21% in 1992.
The declines in U.S. sales have been primarily the result of a decline in PMMA
IOL sales offset by growth in sales of surgical adjunct products. Total IOL
unit sales in the U.S. market decreased 5% in 1993 after increasing 5% in
1992. Unit sales of PMMA IOLs decreased over 20% in 1993 and were essentially
flat from 1991 to 1992. Silicone IOL unit sales in the U.S. market increased
by 12% in 1993 and 10% in 1992, offsetting the weakness in the PMMA IOL market.
Competitive pressures in the U.S. market have resulted in declines in average
selling prices of the IOLs in both 1993 and 1992. Strong growth was achieved
in international markets in both 1993 and 1992 as the Company increased market
penetration in certain countries.
Optical Lens Care sales increased by 1% from 1992 to 1993 and by 8% from 1991
to 1992. Increased sales in international markets were offset by declines in
sales in U.S. markets in both 1993 and 1992. Domestic sales decreased by 4%
from 1992 to 1993 and 5% from 1991 to 1992. Such decreases were the result of
continuing competitive pressures within the U.S. contact lens care market
including, among other things, the introduction by Allergan's competitors of
disposable contact lenses and lens disinfection systems that are easier to use.
In 1992 the Company introduced a new contact lens disinfection system marketed
in the United States under the name UltraCare(R), which has slowed the overall
decrease in U.S. sales. International lens care product sales increased by 3%
in 1993 compared to 1992. Such sales increased by 14% in 1992 compared to
1991. International sales increases were the result of the introduction of
UltraCare(R) in 1992, introduction of Complete(R), a one-bottle disinfection
system, in 1993, and increased market penetration. Currency fluctuations had a
strong negative impact on 1993 international sales growth. Excluding currency
fluctuations, international sales increased by 12% from 1992 to 1993.
Income and Expenses
The following table sets forth the relationship to sales of various income
statement items:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 29.1 29.1 27.9
----- ----- -----
Gross margin 70.9 70.9 72.1
Other operating costs/expenses:
Selling, general/administrative 42.2 43.7 46.8
Research and development 11.9 10.8 9.2
----- ----- -----
Operating income 16.8 16.4 16.1
Nonoperating (expense) (0.1) (0.6) (0.8)
----- ----- -----
Earnings from continuing operations before
income taxes and minority interest 16.7 15.8 15.3
===== ===== =====
Earnings from continuing operations before
cumulative effect of accounting changes 12.2% 11.5% 11.6%
===== ===== =====
</TABLE>
4
<PAGE> 5
Gross Margins
The Company's gross margin percentage was unchanged at 70.9% in 1992 and 1993
as a result of various offsetting changes in prices and costs. Margins
decreased as a result of declines in the average selling price of IOLs and
lower average price increases for pharmaceutical products in 1993 in the U.S.
and various European markets compared to price increases in the prior year.
Such decreases were offset by an overall gross margin percentage increase
resulting from a shift in the mix of sales to higher margin product lines. The
gross margin percentage decreased by 1.2 percentage points to 70.9 % in 1992.
The decline in gross margin was primarily the result of increasing costs of
Medicaid rebates in the U.S. reducing the margins earned by the Company in the
U.S. on pharmaceutical products. Declines in IOL average selling prices, among
other things, also contributed to the decline.
Selling, General and Administrative
Selling, general and administrative expenses as a percentage of net sales
decreased in 1993 to 42.2% from 43.7% in 1992 and 46.8% in 1991. Such
decreases are primarily the result of continuing cost reductions and
efficiencies resulting from the realignment of the Company's organization in
1991.
Research and Development
Research and development expenses increased by 15% in 1993 to $102.5 million
compared to $89.5 million in 1992. Such expenses in 1992 were $19.1 million or
27% greater than the $70.4 million spent on research and development in 1991.
As a percentage of sales, these investments increased to 11.9% in 1993 compared
to 10.8% in 1992 and 9.2% in 1991. The increases in 1992 and 1993 in research
and development expenditures were primarily in the areas of emerging
technologies, such as Botox(R) (Botulinum Toxin Type A) purified neurotoxin
complex and receptor-selective retinoid research. The increases in 1992 and
1993 are a result of the realignment of the Company's organization in 1991 with
the intent to increase research and development and decrease selling, general
and administrative expenses as a percentage of sales. These expenditures are
allocated to each product line, with higher rates of investments allocated to
Eye Care and Skin Care pharmaceuticals.
Operating Income
Operating income in 1993 was $144.6 million or 16.8% of net sales compared to
$136.5 million or 16.4% of net sales in 1992. The increase in operating income
from 1992 to 1993 was primarily the result of the increase in sales offset by
the increase in research and development expenses. The increase in the
operating income percentage from 1992 to 1993 was primarily the result of the
decrease in the selling, general and administrative expense percentage offset
by an increase in research and development costs as a percentage of net sales.
Operating income in 1992 of $136.5 million or 16.4% of sales was $13.5 million
greater than 1991 operating income of $123.0 million or 16.1% of sales. The
increase in operating income from 1991 to 1992 was primarily the result of the
increase in sales. Such increase was offset by the decline in the gross margin
percentage from 72.1% in 1991 to 70.9% in 1992 and the increase in research and
development expenses. The increase in operating income percentage from 1991 to
1992 was primarily the result of the decrease in the selling, general and
administrative expense percentage offset by the decrease in gross margin
percentage and an increase in research and development as a percentage of net
sales.
Earnings from Continuing Operations
Earnings from continuing operations in 1993 were $104.5 million or 12.2% of net
sales compared to $95.8 million or 11.5% of net sales in 1992. The increase in
1993 was primarily the result of the increase in operating income and a $3.6
million decrease in interest expense, offset by an increase in income taxes
resulting from the increase in income before income taxes. The effective tax
rate was unchanged from 1992 at 25% in 1993. The Company anticipates that the
effective tax rate will increase to approximately 30% in 1994 as a result of
changes in the U.S. tax laws governing taxation of Puerto Rican operations
enacted in 1993.
Earnings from continuing operations in 1992 were $95.8 million or 11.5% of net
sales compared to $88.3 million or 11.6% of net sales in 1991. The increase in
earnings from continuing operations was primarily the result of the increase in
operating income in 1992 offset by an increase in income taxes. Income taxes
increased as a result of the increase in operating income and an increase in
the effective tax rate from 21% in 1991 to 25% in 1992.
5
<PAGE> 6
Net Earnings
Net earnings were $108.9 million in 1993 compared to $103.6 million in 1992.
The increase in net earnings was the result of the increase in earnings from
continuing operations offset by decreases in earnings from discontinued
operations and gain on disposal of discontinued operations. In the fourth
quarter of 1992, the Company sold its North and South American contact lens
business and recognized a gain on such sale of $2.3 million. In the third
quarter of 1993, the Company sold the remainder of the contact lens business
and recognized a gain of $0.4 million. As a result, 1992 earnings from
discontinued operations include the operation of the entire contact lens
business for substantially all of 1992. The 1993 results from discontinued
operations relate to the remaining operations outside North and South America
for the first three quarters of the year.
Net earnings in 1992 were $103.6 million compared to a loss of $59.5 million in
1991. The 1991 earnings from discontinued operations include a nonrecurring
charge of $148.6 million reflecting the write-off of $123.1 million of goodwill
resulting from the acquisition of the contact lens business in 1987 and other
charges related to the restructuring of the Company's contact lens business.
Excluding the after tax effect of the nonrecurring charge, net earnings were
$89.1 million in 1991. The increase in net earnings, excluding the
nonrecurring charge, was the result of the increase in earnings from continuing
operations, a $7.4 million increase in earnings from discontinued operations,
and the recording of two accounting changes in 1992. The 1992 results include
a charge of $4.5 million from a change in the method of accounting for
postretirement benefits, and a $2.3 million increase in earnings from a change
in the method of accounting for income taxes. Such changes are discussed
further under "Accounting Changes," below.
During 1993 the Company purchased $71.0 million of treasury stock. Such
purchases were the primary cause of a decrease in weighted average common
shares outstanding from 67.7 million in 1992 to 66.2 million in 1993. Net
earnings per common share increased by $0.12 or 8% from $1.53 in 1992 to $1.65
in 1993. The decrease in weighted average common shares outstanding resulting
primarily from the purchase of treasury stock resulted in $0.04 of the increase
in net earnings per common share from 1992 to 1993.
Liquidity and Capital Resources
Management assesses the Company's liquidity by its ability to generate cash to
fund its operations. Significant factors in the management of liquidity are:
funds generated by operations; levels of accounts receivable, inventories and
accounts payable and capital expenditures; the extent of the Company's stock
repurchase program; adequate bank lines of credit; and financial flexibility to
attract long-term capital on satisfactory terms.
Historically, the Company has generated cash from operations in excess of
working capital requirements. The net cash provided by operating activities in
1993 was $156.0 million compared to $169.5 million in 1992. The decrease in
cash provided from operations was primarily the result of increases in accounts
receivable and inventories and a decrease in accrued liabilities, offset by an
increase in income taxes payable.
Cash utilized for investing activities in 1993 includes $59.9 million of
expenditures for plant and equipment more fully described under "Capital
Expenditures," below. Cash utilized for investing activities in 1993 also
includes $27.6 million used to acquire product licenses and rights, marketing
rights and software. Offsetting such expenditures were $24.6 million in
proceeds from the sales of the contact lens businesses.
Net cash used in financing activities was $70.2 million in 1993, composed
primarily of $71.0 million for purchase of treasury stock and $26.4 million for
payments of dividends, offset by $30.2 million in net borrowings under
commercial paper obligations. Net cash used in financing activities was $66.9
million in 1992, composed primarily of $25.6 million for payments of dividends,
$24.0 million for purchases of treasury stock, and $24.0 million in reductions
in debt. Net cash used in financing activities was $61.6 million in 1991,
reflecting payment of dividends and reductions in long-term debt. Purchases of
treasury stock in 1993 and 1992 have been the primary cause of a decrease in
common stock outstanding from 67.3 million shares at December 31, 1991, to 66.8
million shares at December 31, 1992, and less than 64.0 million shares at
December 31, 1993.
As of December 31, 1993, the Company had a $200 million bank credit facility
which allows for borrowings of up to $150 million on a revolving basis over
five years ending in December 1998, and an additional $50 million over a period
ending in December 1994. Borrowings under the credit facility are subject to
certain financial and operating covenants, including a requirement that the
Company maintain certain financial ratios and other customary covenants for
credit facilities of similar kind. As of December 31, 1993, the Company had no
borrowings under this bank credit facility. As of December 31, 1993, the
Company has classified $72.9 million of its commercial paper borrowings as
long-term debt based upon the Company's ability to maintain such debt under
terms of the credit facility described above. As of December 31, 1993, the
Company had commercial paper borrowings of $102.9 million.
6
<PAGE> 7
A substantial portion of the Company's existing cash and equivalents are held
by non-U.S. subsidiaries. These funds are planned to be utilized in the
Company's operations outside the United States. Tax considerations could limit
the use of these funds for domestic purposes.
The Company believes that the net cash provided by operating activities,
supplemented as necessary with borrowings available under the Company's
existing credit facilities, will provide it with sufficient resources to meet
current and long-term working capital requirements, debt service and other cash
needs.
Capital Expenditures
Expenditures for property, plant and equipment totaled $59.9 million for 1993,
$65.6 million for 1992 and $51.0 million for 1991. Expenditures for 1993
include expansion of manufacturing facilities in Ireland and a variety of other
projects designed to improve productivity. The Company expects to invest
approximately $55.0 to $60.0 million in property, plant and equipment in 1994.
Inflation
Although at reduced levels in recent years, inflation continues to apply upward
pressure on the cost of goods and services used by the Company. The
competitive and regulatory environments in many markets substantially limit the
Company's ability to fully recover these higher costs through increased selling
prices. The Company continually seeks to mitigate the adverse effects of
inflation through cost containment and improved productivity and manufacturing
processes.
Foreign Currency Fluctuations
Approximately 53% of the Company's revenues in 1993 were derived from
operations outside the U.S., and a portion of the Company's international cost
structure is denominated in currencies other than the U.S. dollar. As a
result, the Company is subject to fluctuations in sales and earnings reported
in U.S. dollars as a result of changing currency exchange rates. The Company
routinely monitors its transaction exposure to currency rates and implements
certain hedging strategies to limit such exposure, as appropriate. The impact
of foreign currency fluctuations on the Company's sales has been as follows: a
$38.5 million decrease in 1993; a $10.4 million increase in 1992; and a $0.8
million decrease in 1991. See Note 1 to the Consolidated Financial Statements.
Accounting Changes
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." SFAS
109 generally provides that deferred tax assets and liabilities be recognized
for temporary differences between the financial reporting basis and the tax
basis of the Company's assets and liabilities and expected benefits of
utilizing net operating loss and credit carryforwards. The impact on deferred
taxes of changes in tax rates and laws, if any, are applied to the years during
which temporary differences are expected to be settled and reflected in the
financial statements in the period of enactment. The cumulative effect of the
adoption of SFAS 109 increased net earnings by $2.3 million. The effect of
adoption of SFAS 109 on 1992 earnings was not material.
In 1992 the Company adopted the provisions of Statement of Financial Accounting
Standards No. 106 ("SFAS 106"), "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The cumulative effect of adoption of the new
standard on postretirement benefits other than pensions decreased net earnings
by $4.5 million in 1992. In 1992, adoption of SFAS 106 decreased 1992
operating income and net earnings by $1.5 million and $0.9 million,
respectively.
7
<PAGE> 8
C O N S O L I D A T E D B A L A N C E S H E E T S
<TABLE>
<CAPTION>
December 31,
In millions, except share data 1993 1992
- ------------------------------ ------ ------
<S> <C> <C>
Assets
Current assets
Cash and equivalents $141.8 $121.3
Trade receivables, net 146.8 148.5
Inventories 90.2 89.7
Other current assets 65.1 63.3
------ ------
Total current assets 443.9 422.8
Investments and other assets 89.9 69.1
Property, plant and equipment, net 288.1 268.6
Goodwill and intangibles, net 117.9 125.3
------ ------
Total assets $939.8 $885.8
====== ======
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 38.0 $ 37.8
Accounts payable 59.1 54.4
Accrued compensation 42.8 40.9
Other accrued expenses 89.8 92.3
Income taxes 46.7 42.2
------ ------
Total current liabilities 276.4 267.6
Long-term debt 104.6 82.0
Other liabilities 29.6 23.4
Commitments and contingencies
Minority interest 14.7 13.0
Stockholders' equity
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued - -
Common stock, $.01 par value; authorized
150,000,000 shares; issued
67,495,000 and 67,579,000 shares 0.7 0.7
Additional paid-in capital 194.5 194.2
Foreign currency translation adjustment (5.0) 2.0
Retained earnings 403.2 320.8
------ ------
593.4 517.7
Less treasury stock, at cost
(3,512,000 and 789,000 shares) (78.9) (17.9)
------ ------
Total stockholders' equity 514.5 499.8
------ ------
Total liabilities and stockholders' equity $939.8 $885.8
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
C O N S O L I D A T E D S T A T E M E N T S O F E A R N I N G S
<TABLE>
<CAPTION>
Year Ended December 31,
In millions, except per share data 1993 1992 1991
- ---------------------------------- ------ ------ ------
<S> <C> <C> <C>
Net sales $858.9 $830.7 $761.7
Operating costs and expenses
Cost of sales 249.6 241.8 212.1
Selling, general and administrative 362.2 362.9 356.2
Research and development 102.5 89.5 70.4
------ ------ ------
714.3 694.2 638.7
------ ------ ------
Operating income 144.6 136.5 123.0
Nonoperating income (expense)
Interest income 6.7 7.7 7.4
Interest expense (8.1) (11.7) (16.3)
Other, net 0.4 (0.9) 2.3
------ ------ ------
(1.0) (4.9) (6.6)
------ ------ ------
Earnings from continuing operations
before income taxes and minority interest 143.6 131.6 116.4
Provision for income taxes 36.5 33.3 24.5
Minority interest 2.6 2.5 3.6
------ ------ ------
Earnings from continuing operations
before cumulative effect of accounting changes 104.5 95.8 88.3
Discontinued operations
Earnings (loss) from operations, net of
income taxes 4.0 7.7 (148.3)
Gain on disposal, net of income taxes 0.4 2.3 0.5
------ ------ ------
Earnings (loss) before cumulative
effect of accounting changes 108.9 105.8 (59.5)
Cumulative effect of accounting changes - (2.2) -
------ ------ -------
Net earnings (loss) $108.9 $103.6 $ (59.5)
====== ====== =======
Net earnings (loss) per common share
Continuing operations $ 1.58 $ 1.42 $ 1.31
Discontinued operations
Earnings (loss) from operations 0.06 0.11 (2.21)
Gain on disposal 0.01 0.03 0.01
Cumulative effect of accounting changes - (0.03) -
------ ------ -------
$ 1.65 $ 1.53 $ (0.89)
====== ====== =======
Weighted average common shares
outstanding 66.2 67.7 67.2
====== ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 10
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
<TABLE>
<CAPTION>
Year Ended December 31,
In millions 1993 1992 1991
- ----------- ---- ---- ------
<S> <C> <C> <C>
Cash flows provided by operating activities
Net earnings (loss) $108.9 $103.6 $ (59.5)
Non-cash items included in net earnings (loss)
Cumulative effect of accounting changes - 2.2 -
Depreciation and amortization 46.8 42.9 46.2
Deferred income taxes (6.5) (0.1) (16.4)
Gain on disposal of business (0.9) (3.7) (1.0)
Loss on sale of assets 4.1 1.0 0.6
Expense of compensation plans 6.6 4.4 2.2
Minority interest 2.6 2.5 3.6
Nonrecurring charges - - 164.5
Changes in assets and liabilities
Trade receivables (15.3) 6.7 2.4
Inventories (8.3) 0.7 (5.8)
Accounts payable 6.9 7.6 (2.5)
Income taxes 5.3 (6.1) (0.9)
Accrued liabilities 1.0 10.7 (7.5)
Other 4.8 (2.9) (4.2)
------ ------ ------
Net cash provided by operating activities 156.0 169.5 121.7
------ ------ ------
Cash flows from investing activities
Additions to property, plant and equipment (59.9) (65.6) (51.0)
Disposals 25.1 2.6 42.5
Investment in Ligand Pharmaceuticals (4.0) (20.0) -
Other (27.0) (20.9) (22.2)
------ ------ ------
Net cash used in investing activities (65.8) (103.9) (30.7)
------ ------ ------
Cash flows from financing activities
Dividends to stockholders (26.4) (25.6) (22.0)
Increase (decrease) in notes payable (2.1) (11.8) 5.8
Sale of stock to employees 3.5 6.6 3.5
Net borrowings under commercial
paper obligations 30.2 - -
Long-term debt borrowings - 0.1 1.5
Repayments of long-term debt (4.4) (12.2) (49.7)
Payments to acquire treasury stock (71.0) (24.0) (0.7)
------ ------ ------
Net cash used in financing activities (70.2) (66.9) (61.6)
------ ------ ------
Effect of exchange rates on cash and equivalents 0.5 (4.8) (2.1)
------ ------ ------
Net increase (decrease) in cash and equivalents 20.5 (6.1) 27.3
-
Effect of consolidation of joint venture on
cash and equivalents - - 15.7
Cash and equivalents at beginning of year 121.3 127.4 84.4
------ ------ ------
Cash and equivalents at end of year $141.8 $121.3 $127.4
====== ====== ======
Supplemental disclosure of cash flow information
Cash paid during the year for
Interest (net of amount capitalized) $ 6.2 $ 9.3 $ 20.8
====== ====== ======
Income taxes $ 39.9 $ 39.7 $ 36.2
====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 11
N O T E S T O C O N S O L I D A T E D F I N A N C I A L
S T A T E M E N T S O F A L L E R G A N , I N C .
Note 1: Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of Allergan and all
of its subsidiaries. Results of operations of businesses sold have been
reported as discontinued operations, and the consolidated statements of
earnings exclude sales and expenses of the businesses from results of
continuing operations. All significant transactions among the consolidated
entities have been eliminated from the financial statements. The Company's
financial position and results of operations include amounts for a joint
venture in Japan on a consolidated basis. The accounts of non-U.S.
subsidiaries are included on the basis of their fiscal years ended November 30.
Foreign Currency Translation
The financial position and results of operations of the Company's foreign
subsidiaries are generally determined using local currency as the functional
currency. Assets and liabilities of these subsidiaries are translated at the
exchange rate in effect at each year-end. Income statement accounts are
translated at the average rate of exchange prevailing during the year.
Translation adjustments arising from the use of differing exchange rates from
period to period are included in the cumulative translation adjustment account
in stockholders' equity. Gains and losses resulting from foreign currency
transactions and translation adjustments relating to foreign entities deemed to
be operating in U.S. dollar functional currency or in highly inflationary
economies are included in earnings. Foreign currency transaction and
translation losses were $3.1 million in 1993, $3.8 million in 1992 and $2.3
million in 1991.
Cash and Equivalents
The Company considers cash and equivalents to include cash in banks and
deposits with financial institutions which can be liquidated without prior
notice or penalty.
Inventories
Inventories are valued at the lower of cost or market (net realizable value).
Cost is determined by the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Additions, major renewals
and improvements are capitalized, while maintenance and repairs are expensed.
Upon disposition, the net book value of assets is relieved and resulting gains
or losses are reflected in earnings.
Depreciation
For financial reporting purposes, depreciation is generally provided on the
straight-line method over the useful life of the related asset. Accelerated
depreciation methods are generally used for income tax purposes.
Goodwill and Intangibles
Goodwill represents the excess of acquisition costs over the fair value of net
assets of purchased businesses and is being amortized on a straight-line basis
over periods from ten to thirty years. Intangibles include patents, licensing
agreements and marketing rights which are being amortized over their estimated
useful lives. Amortization expense was $9.8 million in 1993, $10.4 million in
1992 and $12.3 million in 1991.
Income Taxes
Effective January 1, 1992, Allergan adopted Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes" (see Note 5).
SFAS 109 generally provides that deferred tax assets and liabilities be
recognized for temporary differences between the financial reporting basis and
the tax basis of the Company's assets and liabilities and expected benefits of
utilizing net operating loss and credit carryforwards. The impact on deferred
taxes of changes in tax rates and laws, if any, are applied to the years during
which temporary differences are expected to be settled and reflected in the
financial statements in the period of enactment. No provision is made for
taxes on unremitted earnings of certain non-U.S. subsidiaries which are or will
be reinvested indefinitely in such operations.
11
<PAGE> 12
Pursuant to the deferred method under APB Opinion 11, which was applied in 1991
and prior years, deferred income taxes are recognized for income and expense
items that are reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for that year. Under the
deferred method, deferred taxes are not adjusted for subsequent changes in tax
rates.
Postretirement Benefits Other Than Pensions
In 1992, the Company adopted Statement of Financial Accounting Standards No.
106 ("SFAS 106"), "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which requires the Company to accrue, during the years of employee
service, the expected costs of providing postretirement benefits other than
pensions to retired employees, employees' beneficiaries and covered dependents
(see Note 7). Prior to 1992 the Company accounted for postretirement benefits
by recognizing them as a charge to earnings as claims were received.
Note 2: Discontinued Operations
In the fourth quarter of 1992, the Company sold its contact lens business in
North and South America and recognized a gain on the sale of $2.3 million, net
of $1.4 million of income taxes. In the third quarter of 1993, the Company
divested its contact lens business outside of the Americas and recognized a
gain on the sale of $0.4 million, net of income taxes of $0.5 million. In the
third quarter of 1991, the Company recognized a pretax nonrecurring charge of
$164.5 million, which included the write-off of $123.1 million of goodwill
resulting from the acquisition of the contact lens business in 1987 and other
charges related to the restructure of the Company's contact lens business.
Such charge is included in the results of operations of the contact lens
business which were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
- ----------- ------ ------ -------
<S> <C> <C> <C>
Net Sales $29.1 $67.0 $ 77.6
Earnings (loss) from operations before income taxes 6.7 8.7 (164.6)
Earnings (loss) from operations, net of income taxes 4.0 7.7 (149.7)
</TABLE>
In the fourth quarter of 1991, the Company completed the divestiture of its
Humphrey Instruments business and recognized a gain on the sale of $0.5
million, net of $0.5 million of income taxes. Results of operations in 1991 of
the Humphrey Instruments business were as follows:
<TABLE>
<CAPTION>
In millions 1991
- ----------- ------
<S> <C>
Net Sales $67.5
Earnings from operations before income taxes 3.1
Earnings from operations, net of income taxes 1.4
</TABLE>
Results of operations of the contact lens business and the Humphrey Instruments
business have been reported as discontinued operations, and the consolidated
statements of earnings exclude sales and expenses of these businesses from the
results of continuing operations for all years presented.
12
<PAGE> 13
Note 3: Composition of Certain Financial Statement Captions
<TABLE>
<CAPTION>
December 31,
In millions 1993 1992
- ----------- ------ ------
<S> <C> <C>
Trade receivables, net
Trade receivables $152.6 $155.5
Less allowance for doubtful accounts 5.8 7.0
------ ------
$146.8 $148.5
====== ======
Inventories
Finished products $ 58.7 $ 57.5
Work in process 13.8 11.7
Raw materials 17.7 20.5
------ ------
$ 90.2 $ 89.7
====== ======
Property, plant and equipment, net
Land $ 14.0 $ 14.4
Buildings 220.7 205.7
Machinery and equipment 206.3 186.1
------ ------
441.0 406.2
Less accumulated depreciation 152.9 137.6
------ ------
$288.1 $268.6
====== ======
Goodwill and intangibles, net
Goodwill $139.9 $141.5
Intangibles 30.9 35.0
------ ------
170.8 176.5
Less accumulated amortization 52.9 51.2
------ ------
$117.9 $125.3
====== ======
</TABLE>
Note 4: Notes Payable and Long-Term Debt
<TABLE>
<CAPTION>
December 31,
In millions 1993 1992
- ----------- ------ ------
<S> <C> <C>
Notes payable
Bank loans $ 4.0 $ 3.6
Commercial paper 30.0 30.0
Current maturities of long-term debt 4.0 4.2
------ ------
Total notes payable $ 38.0 $ 37.8
====== ======
Long-term debt
Commercial paper $ 72.9 $ 42.7
ESOP loan 24.6 26.5
Capitalized leases 8.7 10.3
Other 2.4 6.7
------ ------
108.6 86.2
Less current maturities 4.0 4.2
------ ------
Total long-term debt $104.6 $ 82.0
====== ======
</TABLE>
13
<PAGE> 14
In December 1993, the Company entered into a domestic $200 million revolving
credit facility with several banks. A $50 million portion of the facility
expires in December 1994 while the remaining $150 million expires in December
1998. This credit facility replaced a similar facility entered into in July
1989. The facility offers various interest rates at the Company's option based
on a percentage of prime or the London interbank borrowing rates, or other
negotiated rates, and is used to support general corporate purposes and the
issuance of commercial paper in the United States. The facility provides that
the Company will maintain certain financial and operating covenants which
include, among other provisions, maintaining minimum debt to capitalization
ratios and minimum consolidated net worth. The facility also limits subsidiary
debt and restricts dividend payments. The Company was in compliance with these
covenants as of December 31, 1993. At December 31, 1993 and 1992, there was no
debt outstanding under the revolving credit facilities. At December 31, 1993
and 1992, the Company classified $72.9 million and $42.7 million, respectively,
of commercial paper as long-term debt because the Company has the ability to
refinance this debt on a long-term basis under the terms of the revolving
credit facility. The commercial paper is issued at current market rates and
the carrying value approximates the fair value. The Employee Stock Ownership
Plan (ESOP) is discussed in Note 8.
The aggregate maturities of long-term debt are $4.0 million in 1994, $3.7
million in 1995, $2.7 million in 1996, $2.7 million in 1997, $75.8 million in
1998 and $19.7 million thereafter. For purposes of summarizing the maturities
of long-term debt, the commercial paper outstanding of $72.9 million at
December 31, 1993 was treated as maturing in 1998 upon expiration of the
current credit facility. Interest incurred of $1.3 million in 1993, $2.3
million in 1992 and $1.1 million in 1991 has been capitalized and included in
property, plant and equipment. Noncash additions to capitalized leases and
capital lease obligations of $0.6 million in 1993 and $0.2 million in 1992 were
recorded on the Company's balance sheet and excluded from the Consolidated
Statements of Cash Flows.
Note 5: Income Taxes
As discussed in Note 1, the Company adopted SFAS 109 as of January 1, 1992.
Prior years' financial statements have not been restated to apply its
provisions and the cumulative effect of the adoption of SFAS 109 increased net
earnings by $2.3 million in 1992. The effect of adoption of SFAS 109 on 1992
earnings was not material.
The components of earnings (loss) before income taxes and minority interest
were:
<TABLE>
<CAPTION>
Year Ended December 31,
In millions 1993 1992 1991
- ----------- ------ ------ ------
<S> <C> <C> <C>
Earnings from continuing operations before
income taxes and minority interest
U.S. $ 62.1 $ 57.0 $ 45.8
Non-U.S. 81.5 74.6 70.6
------ ------ -------
143.6 131.6 116.4
Discontinued operations
Earnings (loss) from operations 6.7 8.7 (161.5)
Gain on disposal 0.9 3.7 1.0
------ ------ -------
Earnings (loss) before income
taxes and minority interest $151.2 $144.0 $ (44.1)
====== ====== =======
</TABLE>
14
<PAGE> 15
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
In millions 1993 1992 1991
- ----------- ------ ------- -------
<S> <C> <C> <C>
Income tax expense (benefit)
Continuing operations $36.5 $33.3 $ 24.5
Discontinued operations 3.2 2.4 (12.7)
----- ----- -----
$39.7 $35.7 $ 11.8
===== ===== =====
Current
U.S. federal $ 9.8 $ 2.0 $ (2.4)
Non-U.S. 27.6 26.1 25.4
U.S. state and Puerto Rico 8.6 7.7 5.2
----- ----- -----
Total current 46.0 35.8 28.2
----- ----- -----
Deferred
U.S. federal (2.3) 1.1 (16.4)
Non-U.S. (0.2) (2.0) -
U.S. state and Puerto Rico (3.8) 0.8 -
----- ----- -----
Total deferred (6.3) (0.1) (16.4)
----- ----- -----
Total $39.7 $35.7 $ 11.8
===== ===== =====
</TABLE>
The balances of net current deferred tax assets and net non-current deferred
tax assets at December 31, 1993 were $29.2 million and $8.0 million,
respectively. The balances of net current deferred tax assets and net
non-current deferred tax liabilities at December 31, 1992 were $31.2 million
and $0.5 million, respectively. Such amounts are included in other current
assets, investments and other assets, and other liabilities in the consolidated
balance sheets.
Temporary differences and carryforwards which give rise to a significant
portion of deferred tax assets and liabilities at December 31, 1993 and
December 31, 1992 are as follows:
<TABLE>
<CAPTION>
In millions 1993 1992
- ----------- ------ ------
<S> <C> <C>
Deferred tax assets
Net operating loss carryforwards (foreign) $ 10.3 $ 20.6
Accrued expenses 21.9 18.5
Foreign tax credit carryforwards 14.5 9.8
Capitalized expenses 7.2 3.8
Pension expense 4.0 3.7
Medicaid rebate 4.0 3.6
Postretirement medical benefits 4.3 3.4
Intercompany profit in inventory 4.0 3.1
Alternative minimum tax credit - 1.4
All other 11.0 12.3
------ ------
81.2 80.2
Less: valuation allowance (32.6) (36.5)
------ ------
Total deferred tax asset 48.6 43.7
------ ------
Deferred tax liabilities
Depreciation 7.9 7.5
All other 3.5 5.5
------ ------
Total deferred tax liabilities 11.4 13.0
------ ------
Net deferred tax asset $ 37.2 $ 30.7
====== ======
</TABLE>
The change in the valuation allowance is comprised of a reversal of allowance
for state tax assets, an increase in the allowance related to foreign tax
credit carryforwards and the change in the allowance related to benefits for
non-U.S. net operating losses.
15
<PAGE> 16
Based on the Company's current and historical pre-tax earnings, adjusted for
significant items such as the nonrecurring charge, management believes it is
more likely than not that the Company will realize the benefit of the existing
net deferred tax asset at December 31, 1993. Management believes the existing
net deductible temporary differences will reverse during periods in which the
Company generates net taxable income, however, there can be no assurance that
the Company will generate any earnings or any specific level of continuing
earnings in future years. Certain tax planning or other strategies could be
implemented, if necessary, to supplement income from operations to fully
realize recorded tax benefits.
The reconciliations of the U.S. federal statutory tax rate to the combined
effective tax rate follow:
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Statutory tax rate 35.0% 34.0% (34.0)%
State taxes, net of U.S.
tax benefit - 1.6 1.1
Ireland and Puerto Rico
income (13.1) (14.0) (48.9)
Tax credits (6.0) (4.9) (2.5)
Non-U.S. operations 6.6 6.7 21.4
Nonrecurring charge - - 95.0
Goodwill and intangibles - - (2.8)
Other 3.8 1.4 (2.5)
----- ----- -----
Effective tax rate 26.3% 24.8% 26.8%
===== ===== =====
</TABLE>
The Company's 1991 effective tax rate, exclusive of the after tax impact of the
nonrecurring charge of $148.6 million, would have been 23% for 1991.
Certain income of subsidiaries operating in Puerto Rico and Ireland is
substantially exempt from income taxes. The exemptions reduced expected income
taxes and increased net earnings by approximately $19.8 million ($0.30 per
share) in 1993, $20.1 million ($0.30 per share) in 1992, and $21.5 million
($0.32 per share) in 1991. The Puerto Rico exemption expires December 31, 2007.
Withholding and U.S. taxes have not been provided on approximately $199.8
million of unremitted earnings of certain non-U.S. subsidiaries because such
earnings are or will be reinvested in operations or will be offset by
appropriate credits for foreign income taxes paid. Such earnings would become
taxable upon the sale or liquidation of these non-U.S. subsidiaries or upon the
remittance of dividends. It is not practicable to estimate the amount of the
deferred tax liability on such unremitted earnings. Upon remittance, certain
foreign countries impose withholding taxes that are then available, subject to
certain limitations, for use as credits against the Company's U.S. tax
liability, if any.
The Company and its former parent through July 26, 1989, SmithKline Beckman
Corporation (SmithKline), entered into a Tax Agreement dated April 11, 1989
which provides for the allocation of tax liabilities between SmithKline, the
Company, and their respective subsidiaries for the period during which
SmithKline was the parent of the Company. The Company and its domestic
subsidiaries file a consolidated U.S. federal income tax return. Such returns
have been audited and settled through the year 1986. SmithKline and its
consolidated subsidiaries (including the Company) are under examination for the
years 1987-1989. The Company and its consolidated subsidiaries are under
examination for the years 1989-90. The Company believes the additional tax
liability, if any, for such years and subsequent years will not have a material
effect on the financial position of the Company.
At December 31, 1993, the Company has foreign tax credit carryforwards for
federal income tax purposes of approximately $14.5 million which are available
to reduce future federal income taxes, if any, through 1998.
At December 31, 1993 the Company has net operating loss carryforwards of
certain non-U.S. subsidiaries, with various expiration dates, of approximately
$23.4 million.
16
<PAGE> 17
Note 6: Stockholders' Equity
An analysis of activity in stockholders' equity for the three years ended
December 31, 1993 follows:
<TABLE>
<CAPTION>
Common Stock Foreign
----------------- Additional Unearned Currency Treasury Stock
Par Paid-In Compen- Translation Retained ------------------
In millions Shares Value Capital sation Adjustment Earnings Shares Amount
- ----------- ------ ----- ------- ------ ---------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1990 67.6 $0.7 $222.8 $(34.6) $19.4 $324.3 (0.6) $ (8.7)
Net earnings (loss) (59.5)
Translation adjustment (5.2)
Dividends ($0.33 per share) (22.0)
Issuance of shares under
stock plans 0.4 (2.0) 0.3 4.4
Stock options exercised 0.4 0.1 1.6
Purchase of treasury stock (0.7)
Expense of compensation plans 3.6
---- ---- ------ ------ ------ ------ ---- ------
Balance December 31, 1991 67.6 0.7 223.6 (33.0) 14.2 242.8 (0.2) (3.4)
Net earnings 103.6
Translation adjustment (12.2)
Dividends ($0.38 per share) (25.6)
Issuance of shares under
stock plans 1.6 (2.0) 0.1 2.8
Stock options exercised 0.6 0.4 6.7
Purchase of treasury stock (1.1) (24.0)
Expense of compensation plans 3.4
---- ---- ------ ------ ------ ------ ---- ------
Balance December 31, 1992 67.6 0.7 225.8 (31.6) 2.0 320.8 (0.8) (17.9)
Net earnings 108.9
Translation adjustment (7.0)
Dividends ($0.40 per share) (26.4)
Issuance of shares under
stock plans (0.1) (1.3) (1.3) 0.3 5.3
Stock options exercised (0.9) (0.1) 0.2 4.7
Purchase of treasury stock (3.2) (71.0)
Expense of compensation plans 3.8
---- ---- ------ ------ ------ ------ ---- ------
Balance December 31, 1993 67.5 $0.7 $223.6 $(29.1) $(5.0) $403.2 (3.5) $(78.9)
==== ==== ====== ====== ====== ====== ==== ======
</TABLE>
In May 1989, the Board of Directors adopted a Stockholder Rights Plan and
declared a dividend distribution of one Right for each outstanding share of
Common Stock of the Company. Each Right entitles a holder to purchase one
one-hundredth of a share of Series A Participating Preferred Stock at an
exercise price of $115, subject to adjustment. The Rights do not become
exercisable or transferable apart from the Common Stock until the earlier of
(i) any person or group becoming the beneficial owner of 20% or more of the
voting power of the outstanding voting securities of the Company (Acquiring
Person) other than an employee benefit plan of the Company or pursuant to a
"permitted offer" (i.e., an offer for all outstanding shares at a price and
terms determined by a majority of the independent directors to be adequate and
in the best interests of the Company and its stockholders), or (ii) ten days
after the commencement of a tender or exchange offer which would result in any
person or group becoming an Acquiring Person.
17
<PAGE> 18
If any person or group becomes a 20% or more beneficial owner of Company voting
securities, except pursuant to a "permitted offer," then each Rightholder
(other than the Acquiring Person and related persons) will be entitled to
receive upon exercise Common Stock (or, in certain circumstances, other
consideration) having a value equal to two times the exercise price of the
Right. If, after the Rights have become exercisable, the Company is acquired
in a merger or other business combination in which the Company is not the
surviving corporation or in which 50% or more of the assets or earning power is
sold, each Rightholder (other than the Acquiring Person and related persons)
will then be entitled to receive, upon exercise, common stock of the acquiring
company having a value of two times the exercise price of the Right.
The Board may redeem the Rights at any time prior to a person becoming an
Acquiring Person. Pursuant to an amendment adopted by the Board in September
1993 (the "Amendment"), if, within 60 days after receiving an offer meeting
certain conditions (i.e., an offer for all outstanding shares at the same price
which is not subject to financing, funding or due diligence conditions and, if
for cash, is fully financed or, if not for cash, is for New York Stock
Exchange-listed securities and will provide tax-deferred treatment for
stockholders), the Board has not either redeemed all of the outstanding Rights
or approved a financially superior transaction,then the Board is required to
call a special meeting of stockholders for the purpose of allowing the
stockholders to vote on the acceptance of such offer.
Pursuant to the Amendment, the Rights will expire on the date of the Annual
Meeting of stockholders in 1997 unless shareholders vote at such meeting to
extend the Plan, in which case the Rights will expire at the Annual Meeting of
stockholders in 2000.
The Plan will be terminated at the 1994 Annual Meeting of stockholders unless
the Proposal set forth in the Proxy Statement, to approve the Amendment and
continue the Plan in effect, is approved.
Note 7: Employee Retirement And Other Benefit Plans
The Company sponsors qualified defined benefit pension plans covering
substantially all of its employees. In addition, the Company sponsors two
supplemental nonqualified plans, covering certain management employees and
officers. U.S. pension benefits are based on years of service and compensation
during the five highest consecutive earnings years. Combined pension expense
was $7.3 million in 1993, $5.7 million in 1992, and $4.5 million in 1991.
Components of pension expense under the Company's U.S. and major non-U.S. plans
for 1993, 1992 and 1991 were:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
- ----------- ---- ---- ----
<S> <C> <C> <C>
Service cost $ 6.2 $ 5.4 $ 5.5
Interest cost 6.4 5.7 5.0
Actual return on assets (4.5) (3.4) (6.2)
Net amortization and deferral (0.8) (2.0) 1.9
Curtailment gain - - (1.7)
----- ----- -----
Total pension expense $ 7.3 $ 5.7 $ 4.5
===== ===== =====
</TABLE>
The curtailment gain recognized in 1991 is primarily the result of headcount
reductions related to restructurings in 1991.
18
<PAGE> 19
The Company's funding policy for its U.S. qualified plan is to provide
currently for accumulated benefits, subject to federal regulations. Plan
assets of the qualified plan consist primarily of fixed income and equity
securities. Benefits for the nonqualified plans are paid as they come due.
Funded status of the Company's U.S. and major non-U.S. plans' pension
liabilities and assets at December 31 was:
<TABLE>
<CAPTION>
1993 1992
---- ----
In millions Qualified Non-Qualified Qualified Non-Qualified
- ----------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Vested benefit obligation $ 55.0 $ 5.5 $ 40.2 $ 3.8
====== ===== ====== =====
Accumulated benefit obligation $ 60.1 $ 5.6 $ 42.9 $ 3.8
Projected compensation increases 26.8 1.1 23.3 1.9
------ ----- ------ -----
Projected benefit obligation 86.9 6.7 66.2 5.7
Plan assets at fair market value 62.5 - 55.4 -
------ ----- ------ -----
Projected benefit obligation in
excess of plan assets (24.4) (6.7) (10.8) (5.7)
Unrecognized transition asset (4.3) - (5.0) -
Unrecognized net loss 20.3 0.8 7.8 0.5
Unrecognized prior service cost 1.4 0.2 1.4 0.2
------ ----- ------ -----
Accrued pension cost $ (7.0) $(5.7) $ (6.6) $(5.0)
====== ===== ====== =====
</TABLE>
The expected long-term rate of return on plan assets ranged from 6% to 9.5% in
1993 and from 6% to 11% in 1992. The discount rate used in determining
obligations ranged from 5% to 8% in 1993 and from 5.5% to 9.5% in 1992, and the
assumed average rate of increase in future compensation levels ranged from 4%
to 6% in 1993 and from 4% to 7% in 1992.
Postretirement Benefits
The Company has one retiree health plan that covers United States retirees and
dependents. As of January 1, 1992, the Company adopted SFAS 106 and recognized
the full amount of its estimated liability for postretirement benefits of $7.5
million. The recognition of such liability, net of estimated deferred tax
benefits of $3.0 million amounted to a $4.5 million charge to earnings in 1992
reflected in the Statement of Earnings as the cumulative effect of an
accounting change. The adoption of SFAS 106 resulted in additional
postretirement benefit expense in 1992 of $1.5 million.
Retiree contributions are required depending on the year of retirement and the
number of years of service at the time of retirement. Disbursements exceed
retiree contributions and the plan currently has no assets. The accounting for
the health care plan anticipates future cost-sharing changes to the written
plan that are consistent with the Company's past practice and management's
intent to manage plan costs. The Company's history of retiree medical plan
modification indicates a consistent approach to increasing the cost sharing
provisions of the plan.
The following table sets forth the plan's funded status reconciled with the
amount shown in the Company's balance sheet at December 31:
<TABLE>
<CAPTION>
In millions 1993 1992
- ----------- ----- -----
<S> <C> <C>
Retirees $ 3.7 $ 1.9
Fully eligible plan participants - 0.2
Other active plan participants 10.9 7.6
----- -----
Accumulated postretirement benefit obligation $14.6 $ 9.7
===== =====
Plan assets at fair value $ - $ -
Accumulated postretirement benefit obligation in excess of plan assets 14.6 9.7
Unrecognized net (loss) from past experience different from that assumed
and from changes in assumptions (3.8) (0.7)
----- -----
Accrued postretirement benefit cost $10.8 $ 9.0
===== =====
</TABLE>
19
<PAGE> 20
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
In millions 1993 1992
- ----------- ---- ----
<S> <C> <C>
Service cost - benefits attributed to service during the period $1.1 $0.9
Interest cost on accumulated postretirement benefit obligation 0.9 0.7
---- ----
Net periodic postretirement benefit cost $2.0 $1.6
==== ====
</TABLE>
For measurement purposes, a 10% annual rate of increase for 1993 in the per
capita cost of covered health care benefits was assumed for the medical plan
for retirees and dependents, and a 6% increase for all participants in the
dental plan. The medical trend rate was assumed to decrease gradually to 5.5%
by 2003 and remain at that level thereafter. The dental trend rate was assumed
to decrease to 5% by 1996 and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported. A
one percentage point increase in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1993 by $3.8 million and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $0.5 million. The
discount rates used in determining the accumulated postretirement benefit
obligation and the net periodic postretirement benefit cost were 7.3% and 8.5%,
respectively.
Savings and Investment Plans
In May 1989, the Company established Savings and Investment Plans, which
provide for most U.S. and Puerto Rico employees to become participants after
six months of employment. In general, participants' contributions, up to 5% of
compensation, qualify for a 50% Company match. Company contributions are
generally used to purchase Allergan common stock. Allergan's costs of the
Plans were $2.9 million in 1993, $2.1 million in 1992 and $2.3 million in 1991.
Note 8: Employee Stock Ownership Plan and Incentive Compensation Plans
In May 1989, the Company established an Employee Stock Ownership Plan (ESOP)
for U.S. employees. Participants receive an allocation of shares held in the
plan and generally become vested over five years of Company service.
The ESOP was funded by a $31.7 million loan borrowed by the ESOP in July 1989.
The loan has a fifteen year maturity ending in July 2004, with quarterly
principal and interest payments. Interest rates are determined at the
Company's option based upon a percent of prime or the London interbank
borrowing rates and the Company's consolidated debt to capitalization ratio.
The Company has entered into interest rate swap agreements with the lender to
reduce the impact that interest rate changes have on the loan. These
agreements effectively fix the interest rate on $20.0 million of the loan at
7.3%. The agreements mature in 1994 and 1996. The fair value of the interest
rate swap agreements has been determined by a quote from the lender and would
require the Company to pay $1.4 million to terminate the agreements. The
Company is exposed to credit loss in the event of nonperformance by the lender.
Management believes such risk is remote.
The ESOP trust purchased 1,334,640 shares from the Company using the proceeds
of the loan. The loan is guaranteed by the Company as to payment of principal
and interest and, accordingly, the unpaid balance of the loan is included in
the Company's financial statements as debt, offset by unearned employee
compensation included in stockholders' equity. Dividends accrued on
unallocated shares held by the ESOP are used to service the loan and totaled
$0.4 million for each of the three years presented. Interest incurred on ESOP
debt in 1993, 1992 and 1991 was $1.7 million, $1.9 million and $2.2 million,
respectively. Compensation expense is recognized based on the amortization of
the related loan. Compensation expense for 1993, 1992 and 1991 was $1.6
million, $1.4 million, and $1.3 million, respectively.
20
<PAGE> 21
Incentive Compensation Plans
The Company has an incentive compensation plan and a nonemployee director stock
plan. The incentive compensation plan provides for the issuance of
non-qualified stock options, restricted stock and other stock-based incentive
awards for officers and key employees. Options become exercisable 25% per year
beginning twelve months after the date of grant. All options expire ten years
after their original date of grant. As of December 31, 1993, a total of
425,000 shares of restricted stock and options to purchase 4,137,000 shares of
common stock were issued and outstanding.
Stock option activity in 1993, 1992 and 1991 under the Company's incentive
plans was as follows:
<TABLE>
<CAPTION>
Number of Shares
---------------------------------------------------
In thousands 1993 1992 1991
- ------------ ---- ---- ----
<S> <C> <C> <C>
Outstanding, beginning of year 3,604 3,277 2,590
Options granted at fair market value 858 857 921
Options exercised (208) (361) (131)
Options cancelled (117) (169) (103)
----- ----- -----
Outstanding, end of year 4,137 3,604 3,277
===== ===== =====
Exercisable, end of year 2,287 1,812 1,536
===== ===== =====
Price range of options outstanding, end of year $11.57 - $26.41 $11.41 - $26.41 $11.36 - $26.41
=============== =============== ===============
Price range of options exercised $11.41 - $24.83 $11.36 - $23.43 $ 3.94 - $22.01
=============== =============== ===============
</TABLE>
Options granted under the Company's incentive compensation plan provide that an
employee holding a stock option may exchange stock which the employee already
owns as payment against the exercise of their option. This provision applies
to all options outstanding at December 31, 1993.
Under the terms of the Director Plan, each eligible director received an
initial grant of restricted stock and will receive additional grants upon
re-election to the Board. As of December 31, 1993, there were 14,300 shares
issued and outstanding.
Note 9: Commitments and Contingencies
The Company leases certain facilities, equipment and automobiles. Certain of
the leases provide for payment of taxes, insurance and other charges by the
lessee. Rental expense was $12.6 million in 1993, $12.4 million in 1992 and
$10.0 million in 1991.
Minimum rentals payable under noncancelable operating leases, net of minimum
sublease rentals, as of December 31, 1993, aggregate $35.1 million and for each
of the next five years are $11.0 million in 1994, $7.2 million in 1995, $3.1
million in 1996, $1.8 million in 1997, $1.5 million in 1998 and $10.5 million
thereafter.
21
<PAGE> 22
The Company is involved in various litigation and claims arising in the normal
course of business. The Company's management believes that recovery or
liability with respect to these matters would not have a material adverse
effect on the consolidated financial position and results of operations of the
Company.
The Company (along with its directors and certain of its officers) was a
defendant in numerous shareholder class action lawsuits filed in September of
1989, consolidated in the United States District Court for the Central District
of California under the caption In re Allergan Shareholders Litigation, SACV
89-643 AHS (RWRx). Plaintiffs alleged that the Company (and certain of its
directors and officers) made untrue statements of, or omitted to state,
material facts about the Company's business and future prospects from June 20,
1989 through January 26, 1990 in violation of state and federal securities
laws. On November 29, 1993, the United States District Court granted the
Company's Motion for Summary Judgment, dismissing all of plaintiffs' claims
pending against the Company. Plaintiffs filed a Notice of Appeal in the United
States Court of Appeals for the Ninth Circuit. The Company has entered into a
tentative agreement with plaintiffs, whereby the appeal will be dismissed and
the litigation brought to an end. While no assurance can be given that an
agreement to terminate the appeal will be achieved, the Company believes that
even if an agreement to dismiss the appeal is not obtained, it will not have a
material adverse effect on the consolidated financial position of the Company.
The Company enters into forward exchange contracts to eliminate the impact that
exchange rate changes have on certain foreign currency transactions. Actual
gains and losses realized on the settlement of the forward exchange contracts
are anticipated to be offset by gains and losses on the related foreign
currency transactions. At December 31, 1993, the Company had forward exchange
contracts outstanding, with maturities not exceeding one year, which require
the Company to exchange foreign currencies for $48.2 million which approximates
fair value.
22
<PAGE> 23
Note 10: Business Segment Information
The Company operates primarily in one business segment engaged in the
development, manufacture and marketing of a broad range of eye care products
that are used to treat diseases of the eye and to correct and enhance vision.
Geographic Areas
<TABLE>
<CAPTION>
For the Year Ended December 31,
In millions 1993 1992 1991
- ----------- ------ ------ ------
<S> <C> <C> <C>
Net sales
United States $458.8 $432.0 $420.8
------ ------ ------
Europe 340.9 329.4 280.4
Other 142.7 121.5 104.7
------ ------ ------
Total international 483.6 450.9 385.1
------ ------ ------
Transfers between areas(a)
United States (43.7) (26.0) (26.2)
Europe (39.8) (26.2) (18.0)
------ ------ ------
Total transfers between areas (83.5) (52.2) (44.2)
------ ------ ------
Total net sales $858.9 $830.7 $761.7
====== ====== ======
Operating income
United States before
research and development $180.9 $169.6 $144.7
Research and development expenses(b) (87.6) (77.3) (63.5)
------ ------ ------
United States 93.3 92.3 81.2
------ ------ ------
Europe 97.9 93.2 83.2
Other 12.3 14.2 11.6
------ ------ ------
Total international 110.2 107.4 94.8
------ ------ ------
203.5 199.7 176.0
------ ------ ------
Corporate expenses (58.9) (63.2) (53.0)
------ ------ ------
Total operating income $144.6 $136.5 $123.0
====== ====== ======
Identifiable assets(c)
United States $482.6 $470.5 $377.7
------ ------ ------
Europe 242.5 236.2 277.6
Other 72.9 57.8 50.9
------ ------ ------
Total international 315.4 294.0 328.5
------ ------ ------
Corporate 141.8 121.3 127.4
------ ------ ------
Total assets $939.8 $885.8 $833.6
====== ====== ======
</TABLE>
a) Net sales include both sales to unaffiliated customers and transfers between
geographic areas. Transfers between geographic areas are made at terms that
allow for a reasonable profit to the seller.
b) The Company's principal research and development efforts are performed in
the United States.
c) Identifiable assets are those used by the operations in each geographic
location. Corporate assets consist of cash, time deposits and short-term
investments.
Note 11: Subsequent Events
On January 25, 1994, the Board of Directors declared a cash dividend of $0.10
per share, payable March 10, 1994, to stockholders of record on February 17,
1994.
23
<PAGE> 24
Note 12: Earnings Per Share
Earnings per common and common equivalent share were computed by dividing net
earnings by the weighted average number of common and common equivalent shares
outstanding during the respective year. Common equivalent shares consist of
shares issuable upon exercise of stock options, calculated using the treasury
stock method. For all years presented, fully diluted earnings per share
approximated primary earnings per share.
24
<PAGE> 25
R E P O R T O F M A N A G E M E N T
Management is responsible for the preparation and integrity of the consolidated
financial statements appearing in this Annual Report. The financial statements
were prepared in conformity with generally accepted accounting principles
appropriate in the circumstances and, accordingly, include some amounts based
on management's best judgments and estimates. Financial information in this
Annual Report is consistent with that in the financial statements.
Management is responsible for maintaining a system of internal control and
procedures to provide reasonable assurance, at an appropriate cost/benefit
relationship, that assets are safeguarded and that transactions are authorized,
recorded and reported properly. The internal control system is augmented by a
program of internal audits and appropriate reviews by management, written
policies and guidelines, careful selection and training of qualified personnel
and a written Business Ethics Policy adopted by the Board of Directors,
applicable to all employees of the Company and its subsidiaries. Management
believes that the Company's system of internal control provides reasonable
assurance that assets are safeguarded against material loss from unauthorized
use or disposition and that the financial records are reliable for preparing
financial statements and other data and maintaining accountability for assets.
The Audit Committee of the Board of Directors, composed solely of Directors who
are not officers or employees of the Company, meets with the independent
auditors, management and internal auditors periodically to discuss internal
accounting controls, auditing and financial reporting matters. The Committee
reviews with the independent auditors the scope and results of the audit
effort. The Committee also meets with the independent auditors and the chief
internal auditor without management present to ensure that the independent
auditors and the chief internal auditor have free access to the Committee.
The independent auditors, KPMG Peat Marwick, were recommended by the Audit
Committee of the Board of Directors and selected by the Board of Directors.
KPMG Peat Marwick was engaged to audit the 1993 and 1992 consolidated financial
statements of Allergan, Inc. and subsidiaries and conduct such tests and
related procedures as they deemed necessary in conformity with generally
accepted auditing standards. The opinion of the independent auditors, based
upon their audits of the consolidated financial statements, is contained in
this Annual Report.
Gavin S. Herbert
Chairman of the Board of Directors
William C. Shepherd
President and Chief Executive Officer
Edgar J. Cummins
Corporate Vice President
and Chief Financial Officer
25
<PAGE> 26
I N D E P E N D E N T A U D I T O R S ' R E P O R T
To the Stockholders and Board of Directors of Allergan, Inc.:
We have audited the consolidated balance sheets of Allergan, Inc. and
subsidiaries as of December 31, 1993 and 1992 and the related consolidated
statements of earnings and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated financial statements of Allergan, Inc. for the
year ended December 31, 1991, were audited by other auditors whose report dated
February 24, 1992, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the 1993 and 1992 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Allergan, Inc. and subsidiaries as of December 31, 1993 and 1992
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
As discussed in note 5 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1992 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." As discussed in
note 7 to the consolidated financial statements, the Company also adopted the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," in 1992.
Orange County, California
January 24, 1994
26
<PAGE> 27
Q U A R T E R L Y R E S U L T S ( U N A U D I T E D )
The following table presents net sales, gross margin, operating income,
earnings from continuing operations, earnings from discontinued operations,
cumulative effect of accounting changes and net earnings for the following
quarters:
<TABLE>
<CAPTION>
First Second Third Fourth Total
In millions, except per share data Quarter Quarter Quarter Quarter Year
- ---------------------------------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
1993
Net sales $202.8 $207.9 $216.9 $231.3 $858.9
Gross margin 145.2 146.9 153.8 163.4 609.3
Operating income 30.7 33.0 38.7 42.2 144.6
Earnings from continuing
operations 22.3 23.4 28.3 30.5 104.5
Earnings from
discontinued operations 1.4 1.2 1.8 - 4.4
Net earnings 23.7 24.6 30.1 30.5 108.9
Earnings per share
from continuing operations 0.33 0.35 0.43 0.47 1.58
Earnings per share
from discontinued operations 0.02 0.02 0.03 - 0.07
Net earnings per share $ 0.35 $ 0.37 $ 0.46 $ 0.47 $ 1.65
1992
Net sales $193.2 $202.4 $211.3 $223.8 $830.7
Gross margin 136.3 142.8 147.8 162.0 588.9
Operating income 28.3 29.8 38.0 40.4 136.5
Earnings from continuing
operations before cumulative
effect of accounting changes 19.7 20.6 27.4 28.1 95.8
Earnings from
discontinued operations 0.2 2.2 2.7 4.9 10.0
Cumulative effect of accounting
changes (2.2) - - - (2.2)
Net earnings 17.7 22.8 30.1 33.0 103.6
Earnings per share from
continuing operations 0.29 0.31 0.40 0.42 1.42
Earnings per share
from discontinued operations - 0.03 0.04 0.07 0.14
Cumulative effect per share of
accounting changes (0.03) - - - (0.03)
Net earnings per share $ 0.26 $ 0.34 $ 0.44 $ 0.49 $ 1.53
</TABLE>
Amounts previously reported on Form 10-Q for quarters ending prior to the
second quarter of 1993 have been restated to present the Company's contact lens
business as a discontinued operation.
27
<PAGE> 28
S U M M A R Y O F S E L E C T E D F I N A N C I A L D A T A
<TABLE>
<CAPTION>
Year Ended December 31,
In millions, except per share data 1993 1992 1991 1990 1989(a)
- ---------------------------------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $858.9 $830.7 $761.7 $713.5 $639.1
Operating costs and expenses:
Cost of sales 249.6 241.8 212.1 217.2 190.9
Selling, general & administrative 362.2 362.9 356.2 313.8 277.2
Research and development 102.5 89.5 70.4 62.5 58.1
Nonrecurring charges - - - - 7.4
Operating income 144.6 136.5 123.0 120.0 105.5
Nonoperating income (expense) (1.0) (4.9) (6.6) (10.2) (7.3)
Earnings from continuing
operations before income taxes and
minority interest 143.6 131.6 116.4 109.8 98.2
Earnings from
continuing operations 104.5 95.8 88.3 84.8 72.7
Earnings (loss) from
discontinued operations 4.4 10.0 (147.8) (3.4) (15.4)
Cumulative effect of
accounting changes - (2.2) - - -
Net earnings (loss) 108.9 103.6 (59.5) 81.4 57.3
Earnings per share
from continuing operations 1.58 1.42 1.31 1.26 1.09
Earnings (loss) per share
from discontinued operations 0.07 0.14 (2.20) (0.05) (0.23)
Cumulative effect per share
of accounting changes - (0.03) - - -
Net earnings (loss) per share 1.65 1.53 (0.89) 1.21 0.86
Cash dividends per share 0.40 0.38 0.33 0.28 0.05
Financial Position
Current assets $443.9 $422.8 $448.2 $431.2 $431.2
Working capital 167.5 155.2 179.1 175.4 64.7
Total assets 939.8 885.8 833.6 947.1 936.1
Long-term debt 104.6 82.0 97.2 148.0 96.3
Total stockholders' equity 514.5 499.8 444.9 523.9 445.4
</TABLE>
a) Prior to July 27, 1989, the Company was a wholly owned subsidiary of
SmithKline Beckman Corporation. Per share earnings for fiscal year 1989 has
been presented on a proforma basis under the assumption that the weighted
average outstanding shares for the period prior to July 27, 1989 were the 65.5
million shares issued on that date.
28
<PAGE> 29
S H A R E H O L D E R I N F O R M A T I O N
Allergan Common Stock is listed on the New York Stock Exchange and is traded
under the symbol "AGN." The following table shows the quarterly price range of
the common stock and the cash dividends declared per share during the period
listed.
<TABLE>
<CAPTION>
1993 1992
------------------------------------ --------------------------------------
Quarter Low High Div. Low High Div.
- ------- --- ---- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First 21 1/4 26 3/8 $.10 20 5/8 27 1/4 $.09
Second 21 1/2 25 1/4 $.10 20 3/8 25 $.09
Third 21 1/2 24 1/2 $.10 21 5/8 25 1/8 $.10
Fourth 20 3/4 23 3/4 $.10 21 3/8 27 $.10
</TABLE>
The approximate number of shareholders of record of Common Stock of the Company
as of January 31, 1994 was 16,000.
For the fourth quarter of 1993, the Board declared a cash dividend of $0.10 per
share, payable March 10, 1994 to shareholders of record on February 17, 1994.
See Note 4 to the consolidated financial statements relative to restrictions on
dividend payments.
STOCK LISTING
The common stock of the corporation is traded under the symbol "AGN" on the
New York Stock Exchange.
29
<PAGE> 1
Exhibit 22
SUBSIDIARIES OF
ALLERGAN, INC.
A DELAWARE CORPORATION
<TABLE>
<CAPTION>
PLACE OF INCORPORATION
NAME OF SUBSIDIARY OR ORGANIZATION
- ------------------ ---------------
<S> <C>
Allergan S.A.I.C. y F. Argentina
Laboratorios Oftalmol--gicos Argentinos S.A.I.C.I.F. Argentina
Allergan Australia Pty. Ltd. Australia
Allergan Holdings Pty. Ltd. Australia
Allergan Warenvertriebsgesellschaft MbH Austria
Allergan NV/SA Belgium
Allergan-Lok Produtos Farmaceuticos Ltda. Brazil
Allergan Inc. Canada
Allergan Laboratorios Limitada Chile
Allergan de Colombia S.A. Colombia
Allergan ApS Denmark
Allergan France S.A. France
Allergan Sophia S.A. France
Pharm-Allergan GmbH Germany
Allergan Optical GmbH Germany
Allergan Asia Limited Hong Kong
Allergan Botox Limited Ireland
Allergan Ireland (Sales) Limited Ireland
Allergan S.p.A. Italy
Allergan K.K. Japan
Allergan Hydron K.K. Japan
Allergan Afrasia Limited Malta
Allergan S.A. de C.V. Mexico
Laboratoires Allergan Dulcis S.A.M. Monaco
Pharmac, S.A.M. Monaco
Allergan BV Netherlands
Allergan New Zealand Limited New Zealand
Allergan A/S Norway
Allergan Pakistan (Private) Limited Pakistan
Allergan Inter America, S.A. Panama
Allergan Pharmaceuticals (Ireland) Ltd., Inc. Panama
Allergan Singapore Pte., Ltd. Singapore
Allergan South Africa (Pty.) Ltd. South Africa
Allergan Pharmaceuticals (Pty.) Ltd. South Africa
Allergan S.A.E. Spain
Corlens S.A. Spain
Allergan Norden AB Sweden
Allergan AG Switzerland
Allergan Optik Mamulleri Ve Ticaret Limited Sirketi Turkey
Allergan Limited United Kingdom
Allergan Holdings Limited United Kingdom
Allergan Farnborough Limited United Kingdom
Allergan Research Centre Ltd. United Kingdom
Allergan America United States/CA
Allergan Medical Optics United States/CA
Herbert Laboratories United States/CA
Allergan Caribe, Inc. United States/DE
Allergan Optical Inc. United States/DE
Allergan Puerto Rico, Inc. United States/DE
Allergan Retinoid Corporation United States/DE
Pacific Pharma Inc. United States/DE
Allergan International Limited U.S. Virgin Islands
Allergan de Venezuela, S.A. Venezuela
</TABLE>
<PAGE> 2
A L L E R G A N , I N C.
J O I N T V E N T U R E S
<TABLE>
<CAPTION>
PLACE OF INCORPORATION
NAME OF JOINT VENTURE: OR ORGANIZATION:
- ---------------------- ----------------
<S> <C>
Tong-Ji Hydron Corporation China
Xiguang Hydron Contact Lens Co. China
Harvin Hydron (India) Private Ltd. India
Santen-Allergan Corporation Japan
Allergan Ligand U.S/CA
</TABLE>
<PAGE> 3
CHANGES - MARCH TO DECEMBER 1993:
<TABLE>
<CAPTION>
PLACE OF INCORPORATION
NAME OF SUBSIDIARY: OR ORGANIZATION:
- ------------------- ----------------
<S> <C>
Hydron Australia Pty. Ltd. Australia
Name changed to Allergan Holdings Pty., Ltd.
Allergan Laboratorios Limitada Chile
New subsidiary
Allergan Hydron GmbH Germany
Name changed to Allergan Holdings GmbH
Allergan Botox Limited Ireland
New subsidiary
Allergan Hydron Europe Limited United Kingdom
Name changed to Allergan Farnborough Limited
Allergan Hydron Research Centre Ltd. United Kingdom
Name changed to Allergan Research Centre Ltd.
Allergan Puerto Rico, Inc. United States/DE
Dissolved
</TABLE>
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Allergan, Inc.:
We consent to the incorporation by reference in the registration
statements Nos. 33-29528, 33-29527, 33-44770, 33-48908 and 33-66874 on Form S-8
of Allergan, Inc. of our reports dated January 24, 1994, relating to the
consolidated balance sheets of Allergan, Inc. and subsidiaries as of December
31, 1993 and 1992, and the related consolidated statements of earnings, and
cash flows and related schedules for the two years ended December 31, 1993,
which reports appear in the December 31, 1993 annual report on Form 10-K of
Allergan, Inc.
KPMG PEAT MARWICK
Orange County, California
March 25, 1994
