SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the quarterly period ended: June 30, 1996
Commission file number: 1-11083
BOSTON SCIENTIFIC CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-2695240
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Boston Scientific Place, Natick, Massachusetts 01760-1537
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 650-8000
-------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Shares Outstanding
Class as of June 30, 1996
----- -------------------
Common Stock, $.01 Par Value 177,198,169
Page 1 of 110
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Exhibit Index on Page 28
Part I
Financial Information
Item 1. Financial Statements
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
In thousands, except share data 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 52,698 $ 117,321
Marketable securities 25,432 43,832
Trade accounts receivable, net 266,284 214,232
Inventories 190,331 148,572
Prepaid expenses and other current assets 48,581 32,688
-----------------------
Total current assets 583,326 556,645
Property, plant, equipment and leaseholds, net 287,195 256,093
Intangibles, net 295,652 137,704
Other investments and assets 91,562 149,446
-----------------------
$1,257,735 $1,099,888
=======================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (continued)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
In thousands, except share data 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Commercial paper $ 235,000
Bank obligations 25,724 $ 57,520
Accounts payable and accrued expenses 116,947 106,322
Accrual related to special charges 71,064 80,144
Other current liabilities 16,601 29,691
-----------------------
Total current liabilities 465,336 273,677
Long term liabilities 16,978 52,061
Commitments and contingencies
Contingent stock repurchase obligation 24,855
Stockholders' equity:
Preferred stock, $ .01 par value - authorized
25,000,000 shares, none issued and outstanding
Common stock, $ .01 par value - authorized
300,000,000 shares, 179,101,866 shares issued at
June 30, 1996 and 179,079,298 at December 31, 1995 1,791 1,791
Additional paid-in capital 377,795 386,610
Retained earnings 440,470 417,951
Foreign currency translation adjustment (23,297) (14,739)
Unrealized gain on available-for-sale securities, net 11,935 8,833
Treasury stock, at cost - 1,903,697 shares at
June 30, 1996 and 2,425,490 shares at
December 31, 1995 (58,128) (26,296)
-----------------------
Total stockholders' equity 750,566 774,150
-----------------------
$1,257,735 $1,099,888
=======================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
In thousands, except share and per share data 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $357,188 $277,952 $679,571 $540,861
Cost of products sold 94,884 82,077 180,518 160,859
------------------------- -------------------------
Gross profit 262,304 195,875 499,053 380,002
Selling, general and administrative expenses 118,495 91,638 222,535 172,537
Research and development expenses 28,693 22,683 54,446 44,197
Royalties 3,828 7,002 7,710 14,748
Special charges 59,666 128,341 124,749
------------------------- -------------------------
210,682 121,323 413,032 356,231
------------------------- -------------------------
Operating income 51,622 74,552 86,021 23,771
Other income (expense):
Interest and dividend income 1,071 3,121 2,840 7,640
Interest expense (3,202) (2,660) (4,492) (5,381)
Other, net (1,670) 2,716 (3,690) 6,314
------------------------- -------------------------
Income before income taxes 47,821 77,729 80,679 32,344
Income taxes 24,311 28,700 58,160 47,377
------------------------- -------------------------
Net income (loss) $23,510 $49,029 $22,519 ($15,033)
========================= =========================
Primary net income (loss) per common share $0.13 $0.27 $0.13 ($0.09)
========================= =========================
Primary weighted average number of common shares 182,662,000 179,160,000 179,857,000 174,669,000
========================= =========================
Fully diluted net income (loss) per common share $0.13 $0.27 $0.12 ($0.09)
========================= =========================
Fully diluted weighted average number of common shares 182,871,000 179,543,000 182,397,000 174,669,000
========================= =========================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholder's Equity
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
--------------------------------------------------------------------------------------------
Foreign
Common Stock Additional Currency
------------------------ Paid in Retained Translation Unrealized Treasury
Shares Issued Par Value Capital Earnings Adjustment Gain Stock Total
--------------------------------------------------------------------------------------------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 179,079,298 $1,791 $386,610 $417,951 $(14,739) $ 8,833 $(26,296) $774,150
Net income 22,519 22,519
Foreign currency translation
adjustment (8,558) (8,558)
Issuance of Common Stock under
options, warrants and stock purchase
plans 22,568 (635) 17,958 17,323
Purchase of Common Stock for treasury (52,313) (52,313)
Contingent stock repurchase obligation (24,855) 2,523 (22,332)
Tax benefit relating to stock option
and employee stock purchase plans 16,379 16,379
Net change in equity investments 3,102 3,102
Other 296 296
Balance at June 30, 1996 179,101,866 $1,791 $377,795 $440,470 $(23,297) $11,935 $(58,128) $750,566
</TABLE>
See notes to unaudited condensed consolidated financial statements.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
In thousands 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
Cash provided by operating activities $ 20,104 $ 32,381
Investing activities:
Purchases of property, plant, and equipment (44,872) (37,437)
Net maturities of marketable securities 18,400 22,857
Payment for purchase of Symbiosis Corporation,
net of cash acquired (153,907)
Payment for purchase of Cardiovascular Imaging
Systems, Inc., net of cash acquired (87,783)
Payment for purchase of MinTec Inc.,
net of cash acquired (71,160)
Payment for acquisition of minority interest ownership
in a subsidiary (16,513)
Net payments for other acquistions of certain technologies (3,229) (9,830)
Investments and other (3,720) (1,065)
--------------------
Cash used in investing activities (275,001) (113,258)
Financing actvities:
Net increase in commercial paper 235,000
Net payments on notes payable and capital leases (28,224) (19,393)
Proceeds from exercise of stock options, warrants
and stock purchase plans 17,323 21,480
Acquisitions of treasury stock, net of proceeds from
put options (49,790)
Tax benefit relating to stock option and employee
stock purchase plans 16,379 9,209
Other 704 1,167
--------------------
Cash provided by financing activities 191,392 12,463
Effect of foreign exchange rates on cash (1,118) (873)
--------------------
Net decrease in cash and cash equivalents (64,623) (69,287)
Cash and cash equivalents at beginning of period 117,321 269,282
--------------------
Cash and cash equivalents at end of period $ 52,698 $199,995
====================
Supplemental Schedule of Noncash Investing
and Financing Activities:
Payments due in connection with purchase of technology $ 10,000
</TABLE>
See notes to unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1996
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three and six-month periods ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto incorporated by reference in the Boston
Scientific Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995.
Certain prior year's amounts have been reclassified to conform to the current
year presentation.
Note B - Acquisitions
On January 22, 1996, Boston Scientific Corporation (the Company) completed its
merger of EP Technologies, Inc. (EPT) in a stock-for-stock transaction. The
transaction, which was accounted for as a pooling-of-interests, was effected
through the exchange of 0.297 shares of the Company's common stock for each
EPT share held. Approximately 3.4 million shares of the Company's common
stock were issued in conjunction with the EPT merger. The accompanying
unaudited condensed consolidated financial statements have been restated to
include the accounts and operations of EPT for all prior periods.
Separate results of the combining entities for the six months ended June 30,
1995 are as follows (in thousands):
<TABLE>
<CAPTION>
Combined
Boston Boston
Scientific EPT Scientific
----------------------------------
<S> <C> <C> <C>
Net sales $529,729 $11,132 $540,861
Net loss $(14,048) $ (985) $(15,033)
</TABLE>
Note B - Acquisitions (continued)
On March 14, 1996, the Company acquired Symbiosis Corporation (Symbiosis),
formerly a wholly-owned subsidiary of American Home Products Corporation.
Boston Scientific purchased Symbiosis, a developer and manufacturer of
specialty medical devices, for approximately $153 million in a cash
transaction. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets
acquired based on their estimated fair values. This accounting treatment
resulted in approximately $146 million of intangible assets that will be
amortized over their estimated period of benefit. Approximately $38.7 million
of the acquisition cost represented purchased research and development. The
Company also recorded a deferred tax liability of approximately $38.7 million
representing the tax effect of timing differences recorded as part of the
acquisition.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company and Symbiosis as if the
acquisition had occurred at the beginning of 1995, with pro forma adjustments
to give effect to purchased research and development, amortization of
intangibles, reduction in interest income on acquisition financing and certain
other adjustments, together with the related tax effects:
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1996 1995
---------------
<S> <C> <C>
Net sales $683,747 $573,828
Net income (loss) $ 60,826 $(53,218)
Primary net income (loss) per common share $ .34 $ (.30)
Fully diluted net income (loss) per common share $ .33 $ (.30)
</TABLE>
On May 3, 1996, Boston Scientific acquired assets from Endotech, Ltd. and
MinTec Inc., and certain related companies (Endotech/MinTec), a privately held
company dedicated to the development of stent graft technology for the repair
of diseased blood vessels. The Company purchased Endotech/MinTec's assets for
approximately $72 million in a cash transaction. The transaction, which was
accounted for under the purchase method of accounting, was financed from the
Company's available cash and borrowings under its financing arrangements (see
Notes C and D). The purchase price was allocated to the assets acquired based
on their estimated fair values. The treatment resulted in approximately $12
million of intangible assets that will be amortized over their estimated
period of benefit. Approximately $57.3 million of the acquisition cost
represented purchased research and development. The acquisition did not have
a material pro forma impact on the Company's operations.
Note C - Merger-Related Charges
In the first six months of 1996, the Company recorded special charges of
$128.3 million ($113.7 million net-of tax) which primarily related to the
merger with EPT and the acquisitions of Symbiosis and Endotech/MinTec.
Charges include $96.0 million for purchased research and development, $4.6
million in direct transaction costs, and $12.2 million of estimated costs to
be incurred in merging the separate operating businesses of EPT with
subsidiaries of the Company. Estimated costs include those typical in a
merging of operations and relate to, among other things, rationalization of
facilities, workforce reductions, unwinding of various contractual
commitments, asset writedowns and other integration costs. The majority of
the remaining $15.5 million, which is primarily non-deductible for tax
purposes, represents a change in management's estimates of the merger-related
charges recorded in 1995. The change to prior year estimates relate primarily
to the costs of unwinding various contractual obligations and the
rationalization of facilities.
The special charges are determined based on formal plans approved by Company's
management using the best information available to it at the time. The
workforce-related initiatives involve substantially all of the Company's
employee groups. The amounts the Company may ultimately incur may change as
the plans are executed.
Note D - Credit Arrangements
At December 31, 1995, the Company had line of credit agreements with two U.S.
banks (the Credit Agreements) that provided maximum worldwide borrowings of
$71 million. On April 1, the Company increased its maximum worldwide
borrowings provided under the Credit Agreements to $121 million. The term of
the increased borrowings extended through June 7, 1996, at which time, the
Credit Agreements were terminated and replaced by a new $350 million revolving
line of credit with a syndicate of U.S. and international banks (New Credit
Agreement). Under the New Credit Agreement, the Company has the option to
borrow amounts at various interest rates, payable quarterly in arrears. The
term of the borrowings extends through June 6, 2002; use of the borrowings is
unrestricted and the borrowings are unsecured. The New Credit Agreement
requires the Company to maintain a minimum consolidated tangible net worth and
a ratio of consolidated funded debt to consolidated tangible net worth. At
June 30, 1996, the Company had no outstanding borrowings under the New Credit
Agreement.
During the second quarter of 1996, the Company initiated a commercial paper
program and borrowed $236.5 million under the program. The commercial paper
is supported by the Company's New Credit Agreement; outstanding commercial
paper reduces available borrowings under the New Credit Agreement. Proceeds
from issuing the commercial paper were used for repayment of a $100 million
short term seller-financed loan associated with the acquisition of Symbiosis,
repayment of borrowings under the Credit Agreements, and repurchase of the
Company's common stock. The remaining proceeds primarily were used for
general operating purposes. At June 30, 1996, the Company had approximately
$235 million in commercial paper outstanding with interest rates ranging from
5.60% to 5.65%.
Note E - Inventories
The components of inventory consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-----------------------
<S> <C> <C>
Finished goods $103,607 $ 76,531
Work-in-process 39,138 35,179
Raw materials 47,586 36,862
-------------------
$190,331 $148,572
===================
</TABLE>
Note F - Stockholders' Equity
During the second quarter of 1996, the Company resumed its program to
repurchase stock. The Board of Directors authorized the Company to purchase
on the open market up to 15,000,000 shares of the Company's common stock in
addition to the stock repurchased during 1993. Purchases will be made at
prevailing prices as market conditions and cash availability warrant.
Repurchased stock will be used to satisfy the Company's obligations pursuant
to its employee benefit and incentive plans. During the second quarter of
1996, the Company repurchased 1,262,500 shares of its common stock at an
aggregate cost of $52.3 million.
As part of the stock repurchase program, during the second quarter of 1996,
the Company sold European equity put options to an independent broker-dealer.
Each option, if exercised, obligates the Company to purchase from the broker-
dealer a specified number of shares of the Company's common stock at a
predetermined exercise price. The put options are exercisable only on the
first anniversary of the date the options were sold. During the second
quarter of 1996, the Company sold European put options for 600,000 shares and
received proceeds of approximately $2.5 million. Proceeds are recorded as a
reduction to the cost of the Company's treasury stock. Repurchase prices
relating to put options outstanding at June 30, 1996 range from $41.10 per
share to $41.75 per share. The Company's contingent obligation to repurchase
shares upon exercise of the outstanding put options approximated $24.9 million
at June 30, 1996. At June 30, 1996, the aggregate contingent repurchase
obligation has been reclassified from permanent equity and is presented as a
contingent stock repurchase obligation.
Note G - Accounting Pronouncement
As of January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of", which establishes criteria for the
recognition and measurement of impairment loss associated with long-lived
assets. Adoption of this standard had no material impact on the Company's
financial position or results of operations.
Note H - Commitments and Contingencies
Schneider (Europe) AG and Schneider (USA) Inc. (the Schneider companies),
subsidiaries of Pfizer, Inc., have alleged that the Company's Synergy(TM)
products infringe one of their patents. On May 13, 1994, the Company filed a
lawsuit against them in the United States Federal District Court for the
District of Massachusetts seeking a declaratory judgment that this patent is
invalid and that the Company's Synergy products do not infringe the patent.
The Schneider companies filed counterclaims against the Company, alleging the
Company's willful infringement of the patent and seeking monetary and
injunctive relief. The parties have made cross motions for summary judgment
on various aspects of the case.
On May 31, 1994, SCIMED Life Systems, Inc. (SCIMED) filed a suit for patent
infringement against Advanced Cardiovascular Systems, Inc. (ACS), alleging
willful infringement of two of SCIMED's U.S. patents by ACS FLOWTRACK-40(TM)
and RX ELIPSE(TM) PTCA catheters. Suit was filed in the U.S. District Court
for the Northern District of California and seeks monetary and injunctive
relief. The case has been sent to arbitration for a threshold determination
of one issue covered by the November 27, 1991 Settlement Agreement (the
Settlement Agreement) between the parties. That arbitration is scheduled for
hearing in October 1996.
On November 17, 1995, SCIMED filed a suit for patent infringement against ACS,
alleging willful infringement of three of SCIMED's U.S. patents by the ACS RX
LIFESTREAM(TM) PTCA catheter. Suit was filed in the U.S. District Court for
the Northern District of California and seeks monetary and injunctive relief.
The case has also been sent to arbitration under the terms of the Settlement
Agreement, and has been consolidated with the arbitration hearing scheduled
to be held in October 1996.
On October 10, 1995, ACS filed a suit for patent infringement against SCIMED,
alleging willful infringement of four U.S. patents by SCIMED'S EXPRESS
PLUS(TM) and EXPRESS PLUS II(TM) PTCA catheters. Suit was filed in the U.S.
District Court for the Northern District of California and seeks monetary and
injunctive relief. SCIMED has answered, denying the allegations of the
complaint.
On December 15, 1995, the Company and SCIMED filed a suit for restraint of
trade, unfair competition and conspiracy to monopolize against ACS and the
Schneider companies, alleging certain violations of state and federal
antitrust laws arising from the improper prosecution, enforcement and cross-
licensing of U.S. patents relating to rapid exchange balloon dilatation
angioplasty catheters. Suit was filed in the U.S. District Court for the
District of Massachusetts and seeks monetary, declaratory and injunctive
relief. The defendants have moved for dismissal.
On March 12, 1996, ACS filed two suits for patent infringement against SCIMED,
alleging in one case the willful infringement of a U.S. patent by SCIMED's
EXPRESS PLUS, EXPRESS PLUS II and LEAP EXPRESS PLUS PTCA catheters, and in the
other case the willful infringement of a U.S. patent by SCIMED's BANDIT(TM)
PTCA catheter. The suits were filed in the U.S. District Court for the
Northern District of California and seek monetary and injunctive relief.
SCIMED has answered, denying the allegations of both complaints.
On November 9, 1994, Target Therapeutics, Inc. (Target) filed a lawsuit in the
U.S. District Court for the Northern District of California alleging that
SCIMED's VENTURE and VENTURE II microcatheters infringe a patent assigned to
Target. On May 2, 1996, the District Court entered an order granting a
preliminary injunction prohibiting SCIMED from marketing or selling the
accused product. On July 1, 1996, the Court of Appeals for the Federal
Circuit stayed the preliminary injunction pending a decision on SCIMED's
appeal of the District Court's order.
On April 5, 1995, C.R. Bard, Inc. (Bard) filed a lawsuit in the U.S. District
Court for the District of Delaware alleging that certain Company products,
including the Company's Max Force TTS(TM) catheter, infringes a patent
assigned to Bard. The lawsuit seeks a declaratory judgment that the Company
has infringed the Bard patent, as well as a monetary and injunctive relief.
The Company has answered, denying the allegations of the complaint.
On March 7, 1996, Cook Inc. filed suit in the Regional Court, Munich, Division
for Patent Disputes in Munich Germany against MinTec, Inc. Minimally Invasive
Technologies as named defendant alleging that the Cragg EndoPro(TM) System I
and Stentor(TM) endovascular devices infringe a certain Cook patent. Since
the purchase of the assets of the Endotech/MinTec companies by the Company,
the Company has assumed control of the litigation. The defendant's answer has
not been filed.
On March 25, 1996, Cordis Corporation, a subsidiary of Johnson & Johnson
Company, filed a suit for patent infringement against SCIMED, alleging the
infringement of five U.S. patents by SCIMED's LEAP(TM) balloon material, used
in certain models of SCIMED's BANDIT and EXPRESS PLUS products. The suit was
filed in the U.S. District Court for the District of Minnesota and seeks
monetary and injunctive relief. SCIMED has answered, denying the allegations
of the complaint.
On September 1, 1995, a purported class action lawsuit was filed in the Court
of Chancery in the State of Delaware in and for New Castle County, captioned
Kinder v. Auth, et al., alleging breaches of fiduciary duty by the Board of
Directors of Heart Technology, Heart Technology and the Company in connection
with the Agreement and Plan of Merger entered into between the Company and
Heart Technology. In January 1996, the parties agreed to settle the suit for
an amount the Company does not deem to be material.
On June 12, 1995, the Trustee in Bankruptcy for SMEC, Inc. filed a complaint
in the U.S. Bankruptcy Court in Nashville, Tennessee alleging that a
transaction between Datascope Corp. and the Company constitutes a fraudulent
settlement of prior litigation among the Trustee, Datascope Corp., IABP Corp.
and the Company. The complaint further alleges violation of the Racketeer
Influenced and Corrupt Organizations Act. The Company has answered, denying
the allegations of the complaint.
The Company is involved in various other lawsuits from time to time. In
management's opinion, the Company is not currently involved in any legal
proceedings other than those specifically identified above which, individually
or in the aggregate, could have a material effect on the financial condition,
operations or cash flows of the Company. The Company has insurance coverage
which management believes is adequate to protect against such product
liability losses as could otherwise materially affect the Company's financial
position.
The Company believes that it has meritorious defenses against claims that it
has infringed patents of others. However, there can be no assurance that the
Company will prevail in any particular case. An adverse outcome in one or
more cases in which the Company's products are accused of patent infringement
could have a material adverse effect on the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales in the second quarter of 1996 increased 28.5% to $357.2 million as
compared to $278.0 million in the second quarter of 1995. The Company
reported net income for the second quarter of 1996 of $23.5 million including
special charges ($47.2 million net-of-tax) primarily related to its recent
acquisition of Endotech/MinTec. Net income for the second quarter, excluding
special charges related to recent acquisitions, increased 44.3% to $70.7
million from $49.0 million in the second quarter of 1995.
Net sales for the six month period ended June 30, 1996 increased 25.6% to
$679.6 as compared to $540.9 million in the first half of 1995. The Company
reported net income for the six month period ended June 30, 1996 of $22.5
million including special charges ($128.3 million or $113.7 million net-of-tax)
related to recent acquisitions compared to a net loss of $15.0 million
including special charges ($124.7 million or $112.1 million net-of-tax) for
the same period in 1995. Net income for the first half of 1996, excluding
special charges related to recent acquisitions, increased 40.3% to $136.2
million from $97.1 million in the first half of 1995.
Revenues in the United States grew approximately 18.7% during the second
quarter compared to the same period of the prior year. International
revenues, including export sales, increased approximately 48.4% during the
second quarter compared to the same period in the prior year and were
negatively impacted by approximately $8.4 million due to changes in foreign
currency exchange rates. Revenues in the United States grew approximately
16.6% during the first six months of 1996 compared to the same period of the
prior year. International revenues, including export sales, increased
approximately 44.0% during the first six months of 1996 compared to the same
period in the prior year and were negatively impacted by approximately $10.1
million due to changes in foreign currency exchange rates. The increase in
international sales reflects results from the Company's strategy to build its
international organization.
Gross profit as a percentage of net sales improved from 70.5% in the three
months ended June 30, 1995 to 73.4% in the three months ended June 30, 1996,
and improved from 70.3% in the six months ended June 30, 1995 to 73.4% in the
six months ended June 30, 1996. The improvement in the Company's gross
margins is primarily due to the Company's U.S. cost containment programs, an
increase in the percentage of international sales compared to U.S. sales, and
certain benefits of converting from selling through international distributors
to direct sales operations. However, the positive impact of these initiatives
was partially offset by a slight decline in average selling prices due to
continuing efforts to contain healthcare costs and increased competition.
Uncertainty remains with regard to future changes within the health care
industry. Continued consolidation among U.S. health care providers and the
trend towards managed care in the United States may result in continued
pressure on selling prices of certain products and resulting compression on
gross margins. In addition, international markets are also being effected by
economic pressure to contain health care costs. Although these factors will
continue to impact the rate at which Boston Scientific can grow, the Company
believes that it is well positioned to take advantage of opportunities for
growth that exist in the markets it serves.
Selling, general and administrative expenses increased 29.3% from $91.6
million in the three months ended June 30, 1995 to $118.5 million in the three
months ended June 30, 1996. Selling, general and administrative expenses
increased 29.0% from $172.5 million to $222.5 million from the first six
months of 1995 to 1996, respectively. The increase in overall expense dollars
reflects continued expansion of the Company's domestic and international sales
organizations and related marketing support, an increase in legal expenses
incurred to strengthen and defend the Company's patent position, and
amortization of intangibles acquired during 1995 and 1996.
Research and development expenses increased 26.5% from $22.7 million in the
second quarter of 1995 to $28.7 million in the second quarter of 1996, and
23.2% from $44.2 million in the first six months of 1995 to $54.4 million in
the first six months of 1996. Research and development expenses remained
relatively constant as a percentage of sales (8.2% in the second quarter of
1995 and 8.0% in the second quarter of 1996). The increase in dollars
reflects increased spending in regulatory, clinical research and various other
product development programs, and reflects the Company's continued commitment
to refine existing products and procedures and to develop new technologies
that provide simpler, less traumatic, less costly and more efficient diagnosis
and treatment. The trend toward more stringent regulatory oversight in
countries around the world for product clearance and enforcement activities
has generally caused or may cause medical device manufacturers to experience
more uncertainty, greater risk and higher expenses. In addition, regulatory
approval times for new products continues to be lengthy, a concern of medical
device manufacturers generally.
Royalty expenses decreased 45.3% from $7.0 million in the second quarter of
1995 to $3.8 million in the second quarter of 1996, and 47.7% from $14.7
million in the first six months of 1995 to $7.7 million in the first six
months of 1996. Royalty expenses decreased from approximately 2.5% of net
sales in the second quarter of 1995 to 1.1% of net sales in the second quarter
of 1996. The decrease in royalties is primarily attributable to a reduction
in sales of certain of the Company's PTCA products that are subject to
royalties.
In the first six months of 1996, the Company recorded special charges of
$128.3 million ($113.7 million net-of tax) which primarily related to the
merger with EPT and the acquisitions of Symbiosis and Endotech/MinTec.
Charges include $96.0 million for purchased research and development, $4.6
million in direct transaction costs, and $12.2 million of estimated costs to
be incurred in merging the EPT business with subsidiaries of the Company.
Estimated costs include those typical in a merging of operations and relate
to, among other things, rationalization of facilities, workforce reductions,
unwinding of various contractual commitments, asset writedowns and other
integration costs. The majority of the remaining $15.5 million, which is
primarily non-deductible for tax purposes, represents a change in management's
estimates of the merger-related charges recorded in 1995. The change to prior
year estimates relate primarily to the costs of unwinding various contractual
obligations and the rationalization of facilities. In the first half of 1995,
the Company recorded special charges of $124.7 million ($112.1 million, net-
of-tax) in connection with the acquisitions of SCIMED, CVIS and Vesica.
Charges included $32.6 million for purchased research and development, $21.1
million in direct transaction costs, and $71.0 million of estimated costs to
be incurred in merging the SCIMED business with subsidiaries of the Company.
Estimated costs included those typical in a merging of operations and relate
to, among other things, rationalization of facilities, workforce reductions,
unwinding of various contractual commitments, asset writedowns and other
integration costs. The special charges are determined based on formal plans
approved by Company's management using the best information available to it at
the time. The amounts the Company may ultimately incur may change as the
plans are executed.
Interest and dividend income was $1.1 million in the second quarter of 1996
compared to $3.1 million in the second quarter of 1995, and $2.8 million in
the first six months of 1996 compared to $7.6 million in the first six months
of 1995. The decrease is primarily attributable to a decrease in the
Company's average cash and marketable securities balance resulting from the
use of cash to finance several of the Company's strategic acquisitions and
alliances during the second half of 1995 and the first half of 1996. Interest
expense increased from $2.7 million in the second quarter of 1995 to $3.2
million in the second quarter of 1996. The increase in interest expense is
primarily attributable to interest on a $100 million short term seller-
financed loan associated with the acquisition of Symbiosis and the Company's
issuance of commercial paper. Interest expense decreased from $5.4 million in
the first six months of 1995 to $4.5 million in the first six months of 1996.
The decrease in interest expense for the six month period is primarily
attributable to decreased foreign borrowings since the first quarter of 1995
partially offset by interest on the $100 million short term seller-financed
loan and the Company's issuance of commercial paper. Other income (expense),
net, decreased from $2.7 million in the second quarter of 1995 to ($1.7
million) in the second quarter of 1996, and from $6.3 million in the first six
months of 1995 to ($3.7 million) in the first six months of 1996. The
decrease is primarily attributable to approximately $3.1 million of net
foreign exchange transaction gains recorded in the second quarter of 1995, as
compared to approximately $0.8 million of net foreign exchange transaction
losses recorded in the second quarter of 1996, and approximately $6.3 million
of net foreign exchange transaction gains recorded in the first six months of
1995 as compared to approximately $2.2 million of net foreign exchange
transaction losses in the first six months of 1996.
The Company's effective tax rate, excluding the impact on special charges,
improved from approximately 36.9% in the second quarter of 1995 to 34.2% in
the second quarter of 1996. The Company's effective tax rate, excluding the
impact on special charges, was approximately 38.2% in the six months of 1995
as compared to 34.8% in the first six months of 1996. The effective tax rate
including special charges was 50.8% in the second quarter of 1996 compared to
36.9% in the second quarter of 1995, and 72.1% in the first six months of 1996
compared to 146.5% in the first six months of 1995. The reduction in the
Company's effective tax rate, excluding the impact of special charges, is
primarily due to increased business in lower tax geographies and other tax
initiatives.
On January 22, 1996, the Company completed its merger of EP Technologies, Inc.
(EPT) in a stock-for-stock transaction. The transaction, which was accounted
for as a pooling-of-interests, was effected through the exchange of 0.297
shares of the Company's common stock for each EPT share held. Approximately
3.4 million shares of the Company's common stock were issued in conjunction
with the EPT merger.
On March 14, 1996, the Company acquired Symbiosis Corporation (Symbiosis),
formerly a wholly-owned subsidiary of American Home Products Corporation.
Boston Scientific purchased Symbiosis, a developer and manufacturer of
specialty medical devices, for approximately $153 million in a cash
transaction. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets
acquired based on their estimated fair values. This accounting treatment
resulted in approximately $146 million of intangible assets that will be
amortized over their estimated period of benefit. Approximately $38.7 million
of the acquisition cost represented purchased research and development. The
Company also recorded a deferred tax liability of approximately $38.7 million
representing the tax effect of timing differences recorded as part of the
acquisition.
On May 3, 1996, Boston Scientific acquired assets from Endotech, Ltd. and
MinTec Inc. and certain related companies (Endotech/MinTec), a privately held
company dedicated to the development of stent graft technology for the repair
of diseased blood vessels. The Company purchased assets from Endotech/MinTec
for approximately $72 million in a cash transaction. The transaction, which
was accounted for under the purchase method of accounting, was financed from
the Company's available cash and borrowings under its financing arrangements.
The purchase price was allocated to the assets acquired based on their
estimated fair values. The treatment resulted in approximately $12 million of
intangible assets which will be amortized over their estimated period of
benefit. Approximately $57.3 million of the acquisition cost represented
purchased research and development.
The Company has substantially completed the integration of the businesses
acquired early in 1995, and is in the process of integrating the businesses
acquired more recently. Management believes it has developed a sound plan for
continuing and concluding the integration process, and that it will achieve
that plan. However, in view of the number of major transactions undertaken by
the Company, and the dramatic changes in the size of the Company and the
complexity of its organization resulting from these transactions, management
also believes that the successful implementation of its plan presents a
significant degree of difficulty. The failure to integrate these businesses
effectively could adversely affect the Company's ability to realize the
strategic and financial objectives of these transactions.
Liquidity and Capital Resources
Cash and marketable securities totaled $78.1 million at June 30, 1996 compared
to $161.2 million at December 31, 1995. Working capital decreased from $283.0
million at December 31, 1995 to $118.0 million at June 30, 1996. The decrease
in cash and marketable securities is primarily attributable to approximately
$225.1 million paid in conjunction with the Company's acquisitions of
Symbiosis and Endotech/MinTec, capital expenditures incurred primarily to
expand the Company's manufacturing and distribution facilities in Europe, cash
used to repurchase the Company's common stock, payment of merger related costs
and net payments on line of credit borrowings. The cash expenditures were
partially offset by proceeds received in connection with the Company's
initiation of a commercial paper program. The increase in accounts receivable
from December 31, 1995 to June 30, 1996 is primarily due to the dramatic
growth of international sales which typically have longer payment periods, the
shift from international distributors to direct sales forces and the accounts
receivable recorded in connection with the acquisitions of Symbiosis and
Endotech/MinTec. The increase in inventory during the same period is
primarily related to the Company's overall increase in sales and the shift
from international distributors to direct sales forces.
In connection with the acquisitions of SCIMED, CVIS, Meadox, Heart, EPT,
Symbiosis, and Endotech/MinTec, the Company recorded non-recurring and special
charges of approximately $237.1 million ($195.3 million net-of-tax) and $128.3
million ($113.7 million net-of tax) during 1995 and the first half of 1996,
respectively. Integration plans are expected to be substantially completed by
the end of 1997. Cash outflows to complete the balance of the Company's
initiatives to integrate the businesses relating to the business combinations
acquired are estimated to be approximately $45.1 million and $19.2 million for
the remaining of 1996 and thereafter, respectively. Additionally, the Company
expects to continue to invest aggressively in building its international
organization, global systems and worldwide manufacturing and distribution
capacity. The Company's international strategy is subject to the economic and
political risks inherent to international business, including fluctuations in
currency and exchange rates, as well as risks inherent in shifting from
international distributors to a direct sales force.
The Company is involved in various lawsuits, including product liability
suits, from time to time in the normal course of business. In management's
opinion, the Company is not currently involved in any legal proceeding other
than those specifically identified in the notes to the unaudited condensed
consolidated financial statements which, individually or in the aggregate,
could have a material effect on the financial condition, operations and cash
flows of the Company. The Company has insurance coverage which management
believes is adequate to protect against such product liability losses as could
otherwise materially affect the Company's financial position.
Over the past eighteen months, the Company has entered into several
transactions involving acquisitions and alliances, certain of which have
involved equity investments. As the health care environment continues to
undergo rapid change, management expects that it will continue focusing on
strategic initiatives. The Company expects its cash and cash equivalents,
marketable securities, cash flows from operating activities, and borrowing
capacity will be sufficient to meet its projected operating cash needs,
including integration costs at least through the end of 1996.
Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995
This report contains forward-looking statements. The Company desires to take
advantage of the new safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and is including this statement for the express
purpose of availing itself of the protections of the safe harbor with respect
to all forward-looking statements. Forward-looking statements contained in
this report include, but are not limited to, statements with respect to: a)
the Company's strategy to build its international organization; b) the
Company's plans to continue to invest aggressively in its global systems and
worldwide manufacturing and distribution capacity; c)the Company's belief that
it is well positioned to take advantage of opportunities for growth that exist
in the markets it serves; d) the Company's continued commitment to refine
existing products and procedures and to develop new technologies that provide
simpler, less traumatic, less costly and more efficient diagnosis and
treatment; e) the process and plan for the integration of businesses acquired
by the Company, and; f) the ability of the Company to meet its projected cash
needs through the end of 1996. Therefore, the Company wishes to caution each
reader of this report to consider carefully the specific factors discussed
with each forward-looking statement in this report and other factors contained
in the Company's Annual Report on Form 10-K for the year ended December 31,
1995 as such factors in some cases have affected, and in the future (together
with other factors) could affect, the ability of the Company to implement its
business strategy and may cause actual results to differ materially from those
contemplated by the statements expressed herein.
Part II
OTHER INFORMATION
Item 1: Legal Proceedings
Schneider (Europe) AG and Schneider (USA) Inc. (the Schneider companies),
subsidiaries of Pfizer, Inc., have alleged that the Company's Synergy(TM)
products infringe one of their patents. On May 13, 1994, the Company filed a
lawsuit against them in the United States Federal District Court for the
District of Massachusetts seeking a declaratory judgment that this patent is
invalid and that the Company's Synergy products do not infringe the patent.
The Schneider companies filed counterclaims against the Company, alleging the
Company's willful infringement of the patent and seeking monetary and
injunctive relief. The parties have made cross motions for summary judgment
on various aspects of the case.
On May 31, 1994, SCIMED Life Systems, Inc. (SCIMED) filed a suit for patent
infringement against Advanced Cardiovascular Systems, Inc. (ACS), alleging
willful infringement of two of SCIMED's U.S. patents by ACS FLOWTRACK-40(TM)
and RX ELIPSE(TM) PTCA catheters. Suit was filed in the U.S. District Court
for the Northern District of California and seeks monetary and injunctive
relief. The case has been sent to arbitration for a threshold determination
of one issue covered by the November 27, 1991 Settlement Agreement (the
Settlement Agreement) between the parties. That arbitration is scheduled for
hearing in October 1996.
On November 17, 1995, SCIMED filed a suit for patent infringement against ACS,
alleging willful infringement of three of SCIMED's U.S. patents by the ACS RX
LIFESTREAM(TM) PTCA catheter. Suit was filed in the U.S. District Court for
the Northern District of California and seeks monetary and injunctive relief.
The case has also been sent to arbitration under the terms of the Settlement
Agreement, and has been consolidated with the arbitration hearing scheduled
to be held in October 1996.
On October 10, 1995, ACS filed a suit for patent infringement against SCIMED,
alleging willful infringement of four U.S. patents by SCIMED'S EXPRESS
PLUS(TM) and EXPRESS PLUS II(TM) PTCA catheters. Suit was filed in the U.S.
District Court for the Northern District of California and seeks monetary and
injunctive relief. SCIMED has answered, denying the allegations of the
complaint.
On December 15, 1995, the Company and SCIMED filed a suit for restraint of
trade, unfair competition and conspiracy to monopolize against ACS and the
Schneider companies, alleging certain violations of state and federal
antitrust laws arising from the improper prosecution, enforcement and cross-
licensing of U.S. patents relating to rapid exchange balloon dilatation
angioplasty catheters. Suit was filed in the U.S. District Court for the
District of Massachusetts and seeks monetary, declaratory and injunctive
relief. The defendants have moved for dismissal.
On March 12, 1996, ACS filed two suits for patent infringement against SCIMED,
alleging in one case the willful infringement of a U.S. patent by SCIMED's
EXPRESS PLUS, EXPRESS PLUS II and LEAP EXPRESS PLUS PTCA catheters, and in the
other case the willful infringement of a U.S. patent by SCIMED's BANDIT(TM)
PTCA catheter. The suits were filed in the U.S. District Court for the
Northern District of California and seek monetary and injunctive relief.
SCIMED has answered, denying the allegations of both complaints.
On November 9, 1994, Target Therapeutics, Inc. (Target) filed a lawsuit in the
U.S. District Court for the Northern District of California alleging that
SCIMED's VENTURE and VENTURE II microcatheters infringe a patent assigned to
Target. On May 2, 1996, the District Court entered an order granting a
preliminary injunction prohibiting SCIMED from marketing or selling the
accused product. On July 1, 1996, the Court of Appeals for the Federal
Circuit stayed the preliminary injunction pending a decision on SCIMED's
appeal of the District Court's order.
On April 5, 1995, C.R. Bard, Inc. (Bard) filed a lawsuit in the U.S. District
Court for the District of Delaware alleging that certain Company products,
including the Company's Max Force TTS(TM) catheter, infringes a patent
assigned to Bard. The lawsuit seeks a declaratory judgment that the Company
has infringed the Bard patent, as well as a monetary and injunctive relief.
The Company has answered, denying the allegations of the complaint.
On March 7, 1996, Cook Inc. filed suit in the Regional Court, Munich, Division
for Patent Disputes in Munich Germany against MinTec, Inc. Minimally Invasive
Technologies as named defendant alleging that the Cragg EndoPro(TM) System I
and Stentor(TM) endovascular devices infringe a certain Cook patent. Since
the purchase of the assets of the Endotech/MinTec companies by the Company,
the Company has assumed control of the litigation. The defendant's answer has
not been filed.
On March 25, 1996, Cordis Corporation, a subsidiary of Johnson & Johnson
Company, filed a suit for patent infringement against SCIMED, alleging the
infringement of five U.S. patents by SCIMED's LEAP(TM) balloon material, used
in certain models of SCIMED's BANDIT and EXPRESS PLUS products. The suit was
filed in the U.S. District Court for the District of Minnesota and seeks
monetary and injunctive relief. SCIMED has answered, denying the allegations
of the complaint.
On September 1, 1995, a purported class action lawsuit was filed in the Court
of Chancery in the State of Delaware in and for New Castle County, captioned
Kinder v. Auth, et al., alleging breaches of fiduciary duty by the Board of
Directors of Heart Technology, Heart Technology and the Company in connection
with the Agreement and Plan of Merger entered into between the Company and
Heart Technology. In January 1996, the parties agreed to settle the suit for
an amount the Company does not deem to be material.
On June 12, 1995, the Trustee in Bankruptcy for SMEC, Inc. filed a complaint
in the U.S. Bankruptcy Court in Nashville, Tennessee alleging that a
transaction between Datascope Corp. and the Company constitutes a fraudulent
settlement of prior litigation among the Trustee, Datascope Corp., IABP Corp.
and the Company. The complaint further alleges violation of the Racketeer
Influenced and Corrupt Organizations Act. The Company has answered, denying
the allegations of the complaint.
The Company is involved in various other lawsuits from time to time. In
management's opinion, the Company is not currently involved in any legal
proceedings other than those specifically identified above which, individually
or in the aggregate, could have a material effect on the financial condition,
operations or cash flows of the Company. The Company has insurance coverage
which management believes is adequate to protect against such product
liability losses as could otherwise materially affect the Company's financial
position.
The Company believes that it has meritorious defenses against claims that it
has infringed patents of others. However, there can be no assurance that the
Company will prevail in any particular case. An adverse outcome in one or
more cases in which the Company's products are accused of patent infringement
could have a material adverse effect on the Company.
Item 4: Submissions of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on May 10, 1996, to
consider and vote upon proposals to (i) elect three Class I Directors of the
Company, to hold office until the 1999 Annual Meeting of Stockholders of the
Company, and until their respective successors are chosen and qualified or
until their earlier resignation, death or removal, (ii) approve amendments to
the Boston Scientific Corporation 1995 Long-Term Incentive Plan, (iii) approve
amendments to the Boston Scientific Corporation 1992 Non-Employee Directors'
Stock Option Plan, and (iv) approve amendments to the Boston Scientific
Corporation Employee Stock Option Plan. Charles J, Aschauer, Jr., Pete M.
Nicholas and Randall F. Bellows were elected as Class I Directors of the
Company by a vote of 155,914,808, 155,620,318, and 155,888,835 for,
respectively, and 2,410,489, 2,704,979, and 2,436,462 withheld, respectively.
The second proposal was approved by a vote of 111,501,389 for, 30,759,605
against, 159,650 abstaining, and 15,904,,653 broker nonvotes. The third
proposal was approved by a vote of 153,028,862 for, 5,020,575 against, 275,860
abstaining and no broker nonvotes. The fourth proposal was approved by a vote
of 139,998,860 for, 2,265,629 against, 156,155 abstaining and 15,904,653
broker nonvotes.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - Form of Credit Agreement dated June 7, 1996
among the Company, The Several Lenders and
certain other parties.
Exhibit 11 - Computation of Earnings Per Share
(b) The following reports were filed during the quarter ended
June 30, 1996:
Form 8-K Date of Event Description
- -------- ------------- -----------
Item 5 May 3, 1996 Completion of the Company's acquisition of
certain assets from Endotech Ltd. and MinTec,
Inc. and certain related companies.
Form 8-K/A
- ----------
Item 7 March 14, 1996 Execution of Purchase Agreement by and between
Boston Scientific Corporation and American
Home Products Corporation dated January 25,
1996; Amended to reflect withdrawal of
confidential treatment request with respect to
certain sections of the Purchase Agreement.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on August 14, 1996.
BOSTON SCIENTIFIC CORPORATION
By: /s/ Lawrence C. Best
Name: Lawrence C. Best
Title: Chief Financial Officer and
Senior Vice President -
Finance and Administration
EXECUTION COPY
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
among
BOSTON SCIENTIFIC CORPORATION,
The Several Lenders
from Time to Time Parties Hereto,
CHASE SECURITIES INC.,
as Arranger,
THE FIRST NATIONAL BANK OF BOSTON,
as Syndication Agent and Arranger,
LEHMAN COMMERCIAL PAPER INC.,
as Advisor and Arranger,
and
CHEMICAL BANK,
as Administrative Agent
Dated as of June 7, 1996
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 14
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 14
2.1 Revolving Credit Commitments 14
2.2 Procedure for Revolving Credit Borrowing 15
2.3 Facility Fee 15
2.4 Termination or Reduction of Commitments; Extension of
Termination Date 16
2.5 Repayment of Loans 17
2.6 CAF Advances 17
2.7 Procedure for CAF Advance Borrowing 18
2.8 CAF Advance Payments 21
2.9 Certain Restrictions with Respect to CAF Advances 21
2.10 Optional Prepayments 21
2.11 Conversion and Continuation Options 22
2.12 Minimum Amounts and Maximum Number of Tranches 22
2.13 Interest Rates and Payment Dates 23
2.14 Computation of Interest and Fees 23
2.15 Inability to Determine Interest Rate 24
2.16 Pro Rata Treatment and Payments 25
2.17 Illegality 26
2.18 Requirements of Law 26
2.19 Taxes 27
2.20 Indemnity 29
2.21 Change of Lending Office; Removal of Lender 29
2.22 Evidence of Debt 30
SECTION 3. REPRESENTATIONS AND WARRANTIES 31
3.1 Financial Condition 31
3.2 No Change 32
3.3 Corporate Existence; Compliance with Law 32
3.4 Corporate Power; Authorization; Enforceable Obligations 32
3.5 No Legal Bar 33
3.6 No Material Litigation 33
3.7 No Default 33
3.8 Intellectual Property 33
3.9 Taxes 34
3.10 Federal Regulations 34
3.11 ERISA 34
3.12 Investment Company Act; Other Regulations 34
3.13 Purpose of Loans 35
3.14 Environmental Matters 35
3.15 Disclosure 36
SECTION 4. CONDITIONS PRECEDENT 36
4.1 Conditions to Initial Loans 36
4.2 Conditions to Each Loan 37
SECTION 5. AFFIRMATIVE COVENANTS 37
5.1 Financial Statements 38
5.2 Certificates; Other Information 38
5.3 Payment of Obligations 39
5.4 Conduct of Business and Maintenance of Existence 39
5.5 Maintenance of Property; Insurance 39
5.6 Inspection of Property; Books and Records; Discussions 39
5.7 Notices 40
SECTION 6. NEGATIVE COVENANTS 40
6.1 Financial Condition Covenants 40
6.2 Limitation on Liens 41
6.3 Limitation on Fundamental Changes 42
SECTION 7. EVENTS OF DEFAULT 43
SECTION 8. THE ADMINISTRATIVE AGENT; THE ARRANGER; THE
SYNDICATION AGENT AND ARRANGER; THE ADVISOR
AND ARRANGER 46
8.1 Appointment 46
8.2 Delegation of Duties 46
8.3 Exculpatory Provisions 46
8.4 Reliance by Administrative Agent 47
8.5 Notice of Default 47
8.6 Non-Reliance on Administrative Agent and Other Lenders 47
8.7 Indemnification 48
8.8 Administrative Agent in Its Individual Capacity 48
8.9 Successor Administrative Agent 49
8.10 The Arranger; the Syndication Agent and Arranger;
the Advisor and Arranger. 49
SECTION 9. MISCELLANEOUS 49
9.1 Amendments and Waivers 49
9.2 Notices 50
9.3 No Waiver; Cumulative Remedies 51
9.4 Survival of Representations and Warranties 51
9.5 Payment of Expenses and Taxes 51
9.6 Successors and Assigns; Participations and Assignments 52
9.7 Adjustments; Set-off 55
9.8 Counterparts 55
9.9 Severability 56
9.10 Integration 56
9.11 GOVERNING LAW 56
9.12 Submission To Jurisdiction; Waivers 56
9.13 Acknowledgements 57
9.14 WAIVERS OF JURY TRIAL 57
9.15 Confidentiality 57
SCHEDULES
Schedule I Names, Addresses and Commitments of Lenders
Schedule 6.2 Existing Liens
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of CAF Advance Note
Exhibit C Form of CAF Advance Request
Exhibit D Form of CAF Advance Offer
Exhibit E Form of CAF Advance Confirmation
Exhibit F Form of Borrower Closing Certificate
Exhibit G Form of Opinion of Counsel to Borrower
Exhibit H Form of Assignment and Acceptance
CREDIT AGREEMENT, dated as of June 7, 1996, among (i) BOSTON SCIENTIFIC
CORPORATION, a Delaware corporation (the "Borrower"), (ii) the several banks and
other financial institutions from time to time parties to this Agreement (the
"Lenders"), (iii) CHASE SECURITIES INC., as Arranger (in such capacity, the
"Arranger"), (iv) THE FIRST NATIONAL BANK OF BOSTON, as Syndication Agent and
Arranger (in such capacity, the "Syndication Agent and Arranger"), (v) LEHMAN
COMMERCIAL PAPER INC., as Advisor and Arranger (in such capacity, the "Advisor
and Arranger") and (vi) CHEMICAL BANK, a New York banking corporation, as
administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lenders to make, and the Lenders
are willing to make, subject to the terms and conditions hereof, Loans (as
hereinafter defined) to the Borrower;
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants and agreements herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by Chemical as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by Chemical in
connection with extensions of credit to debtors); "Base CD Rate" shall mean
the sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) a fraction, the numerator of which is one and the denominator of which
is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the Federal Reserve
System (the "Board") through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate shall not
be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit
of major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Administrative
Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it; and "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by
it. Any change in the ABR due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"ABR Loans": Revolving Credit Loans bearing interest based upon the
ABR.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Administrative Agent": Chemical, together with its affiliates, as the
arranger of the Commitments and as the agent for the Lenders under this
Agreement and the other Loan Documents.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": with respect to each day for each Type of Loan,
the rate per annum based on the Ratings in effect on such day, as set forth
under the relevant column heading below:
Eurodollar
Rating Loans ABR Loans
Rating I .125% 0%
Rating II .130% 0%
Rating III .170% 0%
Rating IV .200% 0%
Rating V .225% 0%
Rating VI .400% 0%
"Assignee": as defined in subsection 9.6(c).
"Available Commitments": at any time, an amount equal to the excess,
if any, of (a) the aggregate amount of the Commitments over (b) the
aggregate principal amount of all Loans then outstanding.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2 or subsection 2.7(a) as a date on which the Borrower
requests the Lenders to make Loans hereunder.
"Business": as defined in subsection 3.14.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close; provided, that when such term is used to describe a day on which
a borrowing, payment or interest rate determination is to be made in
respect of a LIBO Rate CAF Advance, such day shall also be a day on which
dealings in foreign currencies and exchange between banks may be carried on
in London, England.
"CAF Advance": each CAF (competitive advance facility) Advance made
pursuant to subsection 2.6.
"CAF Advance Availability Period": the period from and including the
Closing Date to and including the date which is 7 days prior to the
Termination Date.
"CAF Advance Confirmation": each confirmation by the Borrower of its
acceptance of CAF Advance Offers, which confirmation shall be substantially
in the form of Exhibit E and shall be delivered to the Administrative Agent
by facsimile transmission.
"CAF Advance Interest Payment Date": as to each CAF Advance, each
interest payment date specified by the Borrower for such CAF Advance in the
related CAF Advance Request.
"CAF Advance Maturity Date": as to any CAF Advance, the date specified
by the Borrower pursuant to paragraph 2.7(d)(ii) in its acceptance of the
related CAF Advance Offer.
"CAF Advance Note": as defined in subsection 2.22 (collectively, the
"CAF Advance Notes").
"CAF Advance Offer": each offer by a Lender to make CAF Advances
pursuant to a CAF Advance Request, which offer shall contain the
information specified in Exhibit D and shall be delivered to the
Administrative Agent by telephone, immediately confirmed by facsimile
transmission.
"CAF Advance Request": each request by the Borrower for Lenders to
submit bids to make CAF Advances, which request shall contain the
information in respect of such requested CAF Advances specified in Exhibit
C and shall be delivered to the Administrative Agent in writing, by
facsimile transmission, or by telephone, immediately confirmed by facsimile
transmission.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"C/D Assessment Rate": for any day as applied to any ABR Loan, the
annual assessment rate in effect on such day which is payable by a member
of the Bank Insurance Fund maintained by the Federal Deposit Insurance
Corporation (the "FDIC") classified as well-capitalized and within
supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. Section 327.4 (or any
successor provision) to the FDIC (or any successor) for the FDIC's (or such
successor's) insuring time deposits at offices of such institution in the
United States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars having a maturity of
30 days or more.
"Chemical": Chemical Bank, a New York banking corporation.
"Closing Date": the date, on or before June 15, 1996, on which the
conditions precedent set forth in subsection 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment": as to any Lender, the obligation of such Lender to make
Revolving Credit Loans to the Borrower hereunder in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule I, as such amount may be reduced
from time to time in accordance with the provisions of this Agreement.
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Loans then outstanding constitutes of the aggregate principal
amount of the Loans then outstanding).
"Commitment Period": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Funded Debt": at any time, all Indebtedness of the
Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, which has a final maturity (or which, pursuant to the
terms of a revolving credit or similar agreement or otherwise, is renewable
or extendable at the option of the obligor to a date or for a period
ending) more than 12 months after the date of the creation thereof.
"Consolidated Intangibles": at any time, all amounts included in the
Consolidated Net Worth of the Borrower at such time which, in accordance
with GAAP, would be classified as intangible assets, net of accumulated
amortization, on a consolidated balance sheet of the Borrower and its
Subsidiaries, including, without limitation, (a) goodwill, net of
accumulated amortization, (other than negative goodwill), including any
amounts (however designated on the balance sheet) representing the cost of
acquisitions in excess of the sum of (i) underlying net tangible assets and
(ii) purchased research and development to the extent such costs will be
expensed within 12 months of such acquisition, and (b) patents, trademarks,
copyrights and other intangibles, net of accumulated amortization.
"Consolidated Net Worth": at any time, all amounts which would, in
accordance with GAAP, be included under shareholders' equity or classified
as temporary equity, as prescribed by the Financial Accounting Standards
Board or Securities and Exchange Commission (i.e. contingent stock
repurchase obligations), on a consolidated balance sheet of the Borrower
and its Subsidiaries as at such time.
"Consolidated Tangible Net Worth": at any time, the amount equal to
(a) Consolidated Net Worth at such time less (b) Consolidated Intangibles
at such time.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Environmental Laws": any and all applicable foreign, Federal, state,
local or municipal laws, rules, regulations, statutes, ordinances, codes,
decrees, or other enforceable requirements or orders of any Governmental
Authority or other Requirements of Law regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
average (rounded upward to the nearest 1/16th of 1%) of the respective
rates notified to the Administrative Agent by each of the Reference Lenders
as the rate at which such Reference Lender is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where
the eurodollar and foreign currency and exchange operations in respect of
its Eurodollar Loans are then being conducted for delivery on the first day
of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of its Eurodollar Loan to be outstanding
during such Interest Period.
"Eurodollar Loans": Revolving Credit Loans bearing interest based upon
the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7, provided
that any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Facility Fee Rate": for each day during each calculation period, the
rate per annum based on the Ratings in effect on such day, as set forth
below:
Facility
Rating Fee Rate
Rating I .065%
Rating II .070%
Rating III .080%
Rating IV .100%
Rating V .150%
Rating VI .225%
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Fixed Rate CAF Advance": any CAF Advance made pursuant to a Fixed
Rate CAF Advance Request.
"Fixed Rate CAF Advance Request": any CAF Advance Request requesting
the Lenders to offer to make CAF Advances at a fixed rate (as opposed to a
rate composed of the LIBO Rate plus (or minus) a margin).
"GAAP": generally accepted accounting principles in the United States
of America consistent with those utilized in preparing the audited
financial statements referred to in subsection 3.1.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's reasonably anticipated
liability in respect thereof as determined by the Borrower in good faith.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices and earn-outs and other similar obligations in respect of
acquisition and other similar agreements), (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Financing Leases, (d)
all obligations of such Person in respect of acceptances issued or created
for the account of such Person and (e) all liabilities secured by any Lien
on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months (or, if available to all
Lenders, nine or twelve months) thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months (or, if available to all Lenders,
nine or twelve months) thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and
(3) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"LIBO Rate": in respect of any LIBO Rate CAF Advance, the London
interbank offered rate for deposits in Dollars for the period commencing on
the date of such CAF Advance and ending on the CAF Advance Maturity Date
with respect thereto which appears on Telerate Page 3750 as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such period.
"LIBO Rate CAF Advance": any CAF Advance made pursuant to a LIBO Rate
CAF Advance Request.
"LIBO Rate CAF Advance Request": any CAF Advance Request requesting
the Lenders to offer to make CAF Advances at an interest rate equal to the
LIBO Rate plus (or minus) a margin.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing).
"Loan": any Revolving Credit Loan or CAF Advance, as the case may be.
"Loan Documents": this Agreement and any Notes.
"Majority Lenders": at any time, Lenders the Commitment Percentages of
which aggregate more than 50%.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this or any of the other Loan Documents or the rights or
remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea- formaldehyde insulation.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Non-Excluded Taxes": as defined in subsection 2.19.
"Notes": the collective reference to any Revolving Credit Notes and
any CAF Advance Notes.
"Participant": as defined in subsection 9.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Properties": as defined in subsection 3.14.
"Rating": the respective rating of each of the Rating Agencies
applicable to the long-term senior unsecured non-credit enhanced debt of
the Borrower, as announced by the Rating Agencies from time to time.
"Rating Agencies": collectively, S&P and Moody's.
"Rating Category": each of Rating I, Rating II, Rating III, Rating IV,
Rating V and Rating VI.
"Rating I, Rating II, Rating III, Rating IV, Rating V and Rating VI":
the respective Ratings set forth below:
Rating
Category S&P Moody's
Rating I greater than or greater than or
equal to AA- equal to Aa3
Rating II lower than AA- lower than Aa3
and greater than and greater than or
or equal to A equal to A2
Rating III lower than A lower than A2
and greater than and greater than or
or equal to A- equal to A3
Rating IV lower than A- lower than A3
and greater than and greater than or
or equal to BBB+ equal to Baa1
Rating V lower than BBB+ lower than Baa1
and greater than and greater than or
or equal to BBB- equal to Baa3
Rating VI lower than BBB- lower than Baa3
provided, that (i) if on any day the Ratings of the Rating Agencies do not
fall in the same Rating Category, and the lower of such Ratings (i.e., the
Rating Category designated by a numerically higher Roman numeral) is one
Rating Category lower than the higher of such Ratings, then the Rating
Category of the higher of such Ratings shall be applicable for such day,
(ii) if on any day the Ratings of the Rating Agencies do not fall in the
same Rating Category, and the lower of such Ratings is more than one Rating
Category lower than the higher of such Ratings, then the Rating Category
next higher from that of the lower of such Ratings shall be applicable for
such day, (iii) if on any day the Rating of only one of the Rating Agencies
is available, then the Rating Category of such Rating shall be applicable
for such day and (iv) if on any day a Rating is available from neither of
the Rating Agencies, then Rating VI shall be applicable for such day. Any
change in the applicable Rating Category resulting from a change in the
Rating of a Rating Agency shall become effective on the date such change is
publicly announced by such Rating Agency.
"Reference Lenders": Chemical, The First National Bank of Boston and
Morgan Guaranty Trust Company of New York.
"Register": as defined in subsection 9.6(d).
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer and the president
of the Borrower or, with respect to financial matters, the chief financial
officer of the Borrower.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.22(d).
"S&P": Standard & Poor's Ratings Services.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Termination Date": the fifth anniversary of the Closing Date or as
otherwise extended pursuant to subsection 2.4.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day); Tranches may be identified as
"Eurodollar Tranches".
"Transferee": as defined in subsection 9.6(f).
"Type": as to any Revolving Credit Loan, its nature as an ABR Loan or
a Eurodollar Loan.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Notes or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in any Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Borrower and
its Subsidiaries not defined in subsection 1.1 and accounting terms partly
defined in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("Revolving
Credit Loans") to the Borrower from time to time during the Commitment Period in
an aggregate principal amount at any one time outstanding not to exceed the
amount of such Lender's Commitment, provided, that the aggregate outstanding
principal amount of Loans shall not at any time exceed the aggregate amount of
the Commitments. During the Commitment Period the Borrower may use the
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
2.2 and 2.11, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Commitments during the Commitment Period on any Business Day, provided that
the Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 10:00 A.M., New
York City time, (a) three Business Days prior to the requested Borrowing Date,
if all or any part of the requested Revolving Credit Loans are to be initially
Eurodollar Loans or (b) one Business Day prior to the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR
Loans or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amount of such Type of Loan and the length of
the initial Interest Period therefor. Each borrowing under the Commitments shall
be in an amount equal to (x) in the case of ABR Loans, $5,000,000 or a whole
multiple of $1,000,000 in excess thereof (or, if the then Available Commitments
are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent specified in
subsection 9.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent.
2.3 Facility Fee. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a facility fee for the period from and including
the first day of the Commitment Period to the Termination Date, computed at the
Facility Fee Rate on the average daily amount of the Commitment of such Lender
(regardless of usage) during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Termination Date or such earlier date on which the Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof.
2.4 Termination or Reduction of Commitments; Extension of Termination Date.
(a) The Borrower shall have the right, upon not less than five Business Days'
notice to the Administrative Agent, to terminate the Commitments or, from time
to time, to reduce the amount of the Commitments. Any such reduction shall be in
an amount equal to $5,000,000 or a whole multiple thereof and shall reduce
permanently the Commitments then in effect.
(b)(i) The Borrower may request, in a notice given as herein provided to
the Administrative Agent and each of the Lenders not less than 90 days and not
more than 120 days prior to the second anniversary of the Closing Date, that the
Termination Date (the "Existing Termination Date") be extended. Such notice
shall specify the requested new Termination Date (the "Requested Termination
Date"), which shall be not more than 24 months after the Existing Termination
Date. Each Lender, acting in its sole discretion, shall, not later than a date
30 days after its receipt of any such notice from the Borrower, notify the
Borrower and the Administrative Agent in writing of its election to extend or
not to extend the Termination Date with respect to its Commitment. Any Lender
which shall not timely notify the Borrower and the Administrative Agent of its
election to extend the Termination Date shall be deemed to have elected not to
extend the Termination Date with respect to its Commitment (any Lender who
timely notifies the Borrower and the Administrative Agent of an election not to
extend its Commitment and any Lender so deemed to have elected not to extend its
Commitment being referred to as a "Terminating Lender"). The election of any
Lender to agree to a requested extension shall not obligate any other Lender so
to agree.
(ii) If and only if Lenders holding Commitments that aggregate at least 60%
of the aggregate amount of the Commitments on the date of the notice delivered
by the Borrower pursuant to subparagraph (i) above (including Commitments of all
Terminating Lenders on such date) shall have agreed during the 30 day period
referred to in such subparagraph (i) to extend the Existing Termination Date,
then (A) the Commitments of the Lenders other than Terminating Lenders (the
"Continuing Lenders") shall, subject to the other provisions of this Agreement,
be extended to the Requested Termination Date specified in the notice from the
Borrower, and as to such Lenders the term "Termination Date", as used herein,
shall on and after the date as of which the requested extension is effective
mean such Requested Termination Date, provided that if such date is not a
Business Day, then such Requested Termination Date shall be the next preceding
Business Day and (B) the Commitments of the Terminating Lenders shall continue
until the Existing Termination Date, and shall then terminate, and as to the
Terminating Lenders, the term "Termination Date", as used herein, shall continue
to mean the Existing Termination Date.
(c) In the event that the Termination Date shall have been extended for the
Continuing Lenders in accordance with paragraph (b) above and, in connection
with such extension, there are Terminating Lenders, the Borrower may, at its own
expense, require any Terminating Lender to transfer and assign in whole or in
part, without recourse (in accordance with subsection 9.6) all or part of its
interests, rights and obligations under this Agreement (other than any CAF
Advances owing to such Terminating Lender) to an assignee (which assignee may be
another Lender, if another Lender accepts such assignment) that shall assume
such assigned obligations and that shall agree that its Commitment will expire
on the Termination Date in effect for Continuing Lenders pursuant to such
paragraph (b); provided, however, that (i) the Borrower shall have received a
written consent of the Administrative Agent in the case of an assignee that is
not a Lender (which consent shall not unreasonably be withheld) and (ii) the
assigning Lender shall have received from the Borrower or such assignee full
payment in immediately available funds of the principal of and interest accrued
to the date of such payment on the Loans made by it hereunder to the extent that
such Loans are subject to such assignment, the facility fees accrued on such
Lender's Commitment under subsection 2.3 to the date of such payment and all
other amounts owed to it hereunder (including any amounts that would be payable
to the assigning Lender pursuant to subsection 2.20 if such assignment were,
instead, a prepayment of the Loans of such Lender). Any such assignee's
Termination Date shall be the Termination Date in effect at the time of such
assignment for the Continuing Lenders. The Borrower shall not have any right to
require a Lender to assign any part of its interests, rights and obligations
under this Agreement pursuant to this paragraph (c) unless it has notified such
Lender of its intention to require the assignment thereof at least ten days
prior to the proposed assignment date.
2.5 Repayment of Loans. The Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of each Lender the then unpaid
principal amount of each Revolving Credit Loan of such Lender on the Termination
Date (or such earlier date on which the Revolving Credit Loans become due and
payable pursuant to Section 7). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Revolving Credit Loans from time
to time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 2.13.
2.6 CAF Advances. Subject to the terms and conditions of this Agreement,
the Borrower may borrow CAF Advances from time to time on any Business Day
during the CAF Advance Availability Period. CAF Advances may be borrowed in
amounts such that the aggregate amount of Loans outstanding at any time shall
not exceed the aggregate amount of the Commitments at such time. Within the
limits and on the conditions hereinafter set forth with respect to CAF Advances,
the Borrower from time to time may borrow, repay and reborrow CAF Advances.
2.7 Procedure for CAF Advance Borrowing. (a) The Borrower shall request CAF
Advances by delivering a CAF Advance Request to the Administrative Agent, not
later than 12:00 Noon (New York City time) four Business Days prior to the
proposed Borrowing Date (in the case of a LIBO Rate CAF Advance Request), and
not later than 10:00 A.M. (New York City time) one Business Day prior to the
proposed Borrowing Date (in the case of a Fixed Rate CAF Advance Request). Each
CAF Advance Request in respect of any Borrowing Date may solicit bids for CAF
Advances on such Borrowing Date in an aggregate principal amount of $5,000,000
or an integral multiple of $1,000,000 in excess thereof and having not more than
three alternative CAF Advance Maturity Dates. The CAF Advance Maturity Date for
each CAF Advance shall be the date set forth therefor in the relevant CAF
Advance Request, which date shall be (i) not less than 7 days nor more than 360
days after the Borrowing Date therefor, in the case of a Fixed Rate CAF Advance,
(ii) not less than one month nor more than twelve months after the Borrowing
Date therefor, in the case of a LIBO CAF Advance and (iii) not later than the
Termination Date, in the case of any CAF Advance. The Administrative Agent shall
notify each Lender promptly by facsimile transmission of the contents of each
CAF Advance Request received by the Administrative Agent.
(b) In the case of a LIBO Rate CAF Advance Request, upon receipt of notice
from the Administrative Agent of the contents of such CAF Advance Request, each
Lender may elect, in its sole discretion, to offer irrevocably to make one or
more CAF Advances at the applicable LIBO Rate plus (or minus) a margin
determined by such Lender in its sole discretion for each such CAF Advance. Any
such irrevocable offer shall be made by delivering a CAF Advance Offer to the
Administrative Agent, before 10:30 A.M. (New York City time) on the day that is
three Business Days before the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF Advance Maturity
Date and the aggregate maximum amount of CAF Advances for all CAF Advance
Maturity Dates which such Lender would be willing to make (which amounts
may, subject to subsection 2.6, exceed such Lender's Commitment); and
(ii) the margin above or below the applicable LIBO Rate at which such
Lender is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 11:00 A.M. (New York
City time) on the date which is three Business Days before the proposed
Borrowing Date of the contents of each such CAF Advance Offer received by it. If
the Administrative Agent, in its capacity as a Lender, shall elect, in its sole
discretion, to make any such CAF Advance Offer, it shall advise the Borrower of
the contents of its CAF Advance Offer before 10:15 A.M. (New York City time) on
the date which is three Business Days before the proposed Borrowing Date.
(c) In the case of a Fixed Rate CAF Advance Request, upon receipt of notice
from the Administrative Agent of the contents of such CAF Advance Request, each
Lender may elect, in its sole discretion, to offer irrevocably to make one or
more CAF Advances at a rate of interest determined by such Lender in its sole
discretion for each such CAF Advance. Any such irrevocable offer shall be made
by delivering a CAF Advance Offer to the Administrative Agent before 9:30 A.M.
(New York City time) on the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF Advance Maturity
Date, and the aggregate maximum amount for all CAF Advance Maturity Dates,
which such Lender would be willing to make (which amounts may, subject to
subsection 2.6, exceed such Lender's Commitment); and
(ii) the rate of interest at which such Lender is willing to make each
such CAF Advance.
The Administrative Agent shall advise the Borrower before 10:00 A.M. (New York
City time) on the proposed Borrowing Date of the contents of each such CAF
Advance Offer received by it. If the Administrative Agent, in its capacity as a
Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer,
it shall advise the Borrower of the contents of its CAF Advance Offer before
9:15 A.M. (New York City time) on the proposed Borrowing Date.
(d) Before 11:30 A.M. (New York City time) three Business Days before the
proposed Borrowing Date (in the case of CAF Advances requested by a LIBO Rate
CAF Advance Request) and before 10:30 A.M. (New York City time) on the proposed
Borrowing Date (in the case of CAF Advances requested by a Fixed Rate CAF
Advance Request), the Borrower, in its absolute discretion, shall:
(i) cancel such CAF Advance Request by giving the Administrative Agent
telephone notice to that effect, or
(ii) by giving telephone notice to the Administrative Agent
(immediately confirmed by delivery to the Administrative Agent of a CAF
Advance Confirmation by facsimile transmission) (A) subject to the
provisions of subsection 2.7(e), accept one or more of the offers made by
any Lender or Lenders pursuant to subsection 2.7(b) or subsection 2.7(c),
as the case may be, and (B) reject any remaining offers made by Lenders
pursuant to subsection 2.7(b) or subsection 2.7(c), as the case may be.
(e) The Borrower's acceptance of CAF Advances in response to any CAF
Advance Offers shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each CAF Advance Maturity
Date specified by any Lender in its CAF Advance Offer shall not exceed the
maximum amount for such CAF Advance Maturity Date specified in such CAF
Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all CAF Advance
Maturity Dates specified by any Lender in its CAF Advance Offer shall not
exceed the aggregate maximum amount specified in such CAF Advance Offer for
all such CAF Advance Maturity Dates;
(iii) the Borrower may not accept offers for CAF Advances for any CAF
Advance Maturity Date in an aggregate principal amount in excess of the
maximum principal amount requested in the related CAF Advance Request; and
(iv) if the Borrower accepts any of such offers, it must accept offers
based solely upon pricing for each relevant CAF Advance Maturity Date and
upon no other criteria whatsoever, and if two or more Lenders submit offers
for any CAF Advance Maturity Date at identical pricing and the Borrower
accepts any of such offers but does not wish to (or, by reason of the
limitations set forth in subsection 2.6, cannot) borrow the total amount
offered by such Lenders with such identical pricing, the Borrower shall
accept offers from all of such Lenders in amounts allocated among them pro
rata according to the amounts offered by such Lenders (with appropriate
rounding, in the sole discretion of the Borrower, to assure that each
accepted CAF Advance is an integral multiple of $1,000,000); provided that
if the number of Lenders that submit offers for any CAF Advance Maturity
Date at identical pricing is such that, after the Borrower accepts such
offers pro rata in accordance with the foregoing provisions of this
paragraph, the CAF Advance to be made by any such Lender would be less than
$5,000,000 principal amount, the number of such Lenders shall be reduced by
the Administrative Agent by lot until the CAF Advances to be made by each
such remaining Lender would be in a principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof.
(f) If the Borrower notifies the Administrative Agent that a CAF Advance
Request is cancelled pursuant to subsection 2.7(d)(i), the Administrative Agent
shall give prompt telephone notice thereof to the Lenders.
(g) If the Borrower accepts pursuant to subsection 2.7(d)(ii) one or more
of the offers made by any Lender or Lenders, the Administrative Agent promptly
shall notify each Lender which has made such an offer of (i) the aggregate
amount of such CAF Advances to be made on such Borrowing Date for each CAF
Advance Maturity Date and (ii) the acceptance or rejection of any offers to make
such CAF Advances made by such Lender. Before 12:00 Noon (New York City time) on
the Borrowing Date specified in the applicable CAF Advance Request, each Lender
whose CAF Advance Offer has been accepted shall make available to the
Administrative Agent at its office set forth in subsection 9.2 the amount of CAF
Advances to be made by such Lender, in immediately available funds. The
Administrative Agent will make such funds available to the Borrower as soon as
practicable on such date at such office of the Administrative Agent. As soon as
practicable after each Borrowing Date, the Administrative Agent shall notify
each Lender of the aggregate amount of CAF Advances advanced on such Borrowing
Date and the respective CAF Advance Maturity Dates thereof.
2.8 CAF Advance Payments. (a) The Borrower hereby unconditionally promises
to pay to the Administrative Agent, for the account of each Lender which has
made a CAF Advance, on the applicable CAF Advance Maturity Date the then unpaid
principal amount of such CAF Advance. The Borrower shall have the right to
prepay any principal amount of any CAF Advance only with the consent of the
Lender to which such CAF Advance is owed.
(b) The Borrower shall pay interest on the unpaid principal amount of each
CAF Advance from the Borrowing Date to the applicable CAF Advance Maturity Date
at the rate of interest specified in the CAF Advance Offer accepted by the
Borrower in connection with such CAF Advance (calculated on the basis of a
360-day year for actual days elapsed), payable on each applicable CAF Advance
Interest Payment Date.
(c) If all or a portion of (i) any principal of any Loan, (ii) any interest
payable thereon, (iii) any facility fee or (iv) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise),each outstanding CAF Advance shall, without limiting
any rights of any Lender under this Agreement, bear interest from the date on
which such payment was due at a rate per annum which is 2% above the rate which
would otherwise be applicable to such CAF Advance until the stated CAF Advance
Maturity Date of such CAF Advance, and for each day thereafter at a rate per
annum which is 2% above the ABR, in each case until such payment is paid in full
(as well after as before judgment). Interest accruing pursuant to this paragraph
(c) shall be payable from time to time on demand.
2.9 Certain Restrictions with Respect to CAF Advances. A CAF Advance
Request may request offers for CAF Advances to be made on not more than one
Borrowing Date and to mature on not more than three CAF Advance Maturity Dates.
No CAF Advance Request may be submitted earlier than five Business Days after
submission of any other CAF Advance Request.
2.10 Optional Prepayments. The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty (other
than any amounts payable pursuant to subsection 2.20 if such prepayment of
Eurodollar Loans is made on a day other than the last day of the Interest Period
with respect thereto), upon at least four Business Days' irrevocable notice to
the Administrative Agent, specifying the date and amount of prepayment and
whether the prepayment is of Eurodollar Loans, ABR Loans or a combination
thereof, and, if of a combination thereof, the amount allocable to each. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with any
amounts payable pursuant to subsection 2.20.
2.11 Conversion and Continuation. (a) The Borrower may elect from time to
time to convert Eurodollar Loans to ABR Loans by giving the Administrative Agent
at least two Business Days' prior irrevocable notice of such election. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period therefor. Upon receipt of any
such notice the Administrative Agent shall promptly notify each Lender thereof.
All or any part of outstanding Eurodollar Loans and ABR Loans may be converted
as provided herein, provided that (i) no Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Majority Lenders have determined that such a
conversion is not appropriate and (ii) no Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in subsection 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
Loan may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Majority Lenders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to the Termination Date, and provided, further, that if
the Borrower shall fail to give such notice or if such continuation is not
permitted, such Loans shall be automatically converted to ABR Loans on the last
day of such then expiring Interest Period.
2.12 Minimum Amounts and Maximum Number of. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof. In no event shall there be more than 6
Eurodollar Tranches outstanding at any time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR
plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any interest
payable thereon, (iii) any facility fee or (iv) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Revolving Credit Loans and any
such overdue interest, commitment fee or other amount shall bear interest at a
rate per annum which is (x) in the case of principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of any such overdue interest, facility fee
or other amount, the rate described in paragraph (b) of this subsection plus 2%,
in each case from the date of such non-payment until such overdue principal,
interest, commitment fee or other amount is paid in full (as well after as
before judgment).
(d) Interest pursuant to this subsection shall be payable in arrears on
each Interest Payment Date, provided that interest accruing pursuant to
paragraph (c) of this subsection shall be payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Whenever it is calculated on the
basis of the Prime Rate, interest shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed; and, otherwise,
interest and fees shall be calculated on the basis of a 360- day year for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the ABR,
the Eurocurrency Reserve Requirements, the C/D Assessment Rate or the C/D
Reserve Percentage shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify the Borrower and the Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 2.13(a) or (c).
(c) If any Reference Lender shall for any reason no longer have a
Commitment or any Loans, such Reference Lender shall thereupon cease to be a
Reference Lender, and if, as a result, there shall only be one Reference Lender
remaining, the Administrative Agent (after consultation with the Lenders and
with the consent of the Borrower (which consent shall not be unreasonably
withheld)) shall, by notice to the Borrower and the Lenders, designate another
Lender as a Reference Lender so that there shall at all times be at least two
Reference Lenders.
(d) Each Reference Lender shall use its best efforts to furnish quotations
of rates to the Administrative Agent as contemplated hereby. If any of the
Reference Lenders shall be unable or shall otherwise fail to supply such rates
to the Administrative Agent upon its request, the rate of interest shall,
subject to the provisions of subsection 2.15, be determined on the basis of the
quotations of the remaining Reference Lenders or Reference Lender.
2.15 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, provided, that, notwithstanding the
provisions of subsection 2.2, the Borrower may cancel the request for such
Eurodollar Loan by written notice to the Administrative Agent one Business Day
prior to the first day of such Interest Period and the Borrower shall not be
subject to any liability pursuant to subsection 2.20 with respect to such
cancelled request, (y) any Loans that were to have been converted on the first
day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans
and (z) any outstanding Eurodollar Loans shall be converted, on the first day of
such Interest Period, to ABR Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Loans to Eurodollar
Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower of
Revolving Credit Loans, each payment by the Borrower on account of any facility
fee hereunder and any reduction of the Commitments of the Lenders shall be made
pro rata according to the respective Commitment Percentages of the Lenders. Each
payment (including each prepayment) by the Borrower on account of principal of
and interest on the Revolving Credit Loans shall be made pro rata according to
the respective outstanding principal amounts of the Revolving Credit Loans then
due and owing to the Lenders. All payments (including prepayments) to be made by
the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Administrative Agent's office
specified in subsection 9.2, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Borrower.
2.17 Illegality. Notwithstanding any other provision herein, if after the
date hereof the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans shall
forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 2.20.
2.18 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof (or, in the case of LIBO Rate CAF Advances, made subsequent to
acceptance by the Borrower of such LIBO Rate CAF Advance):
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Eurodollar Loan or LIBO Rate CAF
Advance made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by
subsection 2.19 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate or LIBO Rate, as the case may be; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or LIBO Rate CAF Advances or to
reduce any amount receivable hereunder in respect thereof, then, in any such
case, the Borrower shall promptly pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduced amount
receivable; provided, that the Borrower shall not be required to pay to any
Lender any amounts under this paragraph for any period prior to the date on
which such Lender gives notice to the Borrower that such amounts are payable
unless such Lender gives such notice within 180 days after it became aware or
should have become aware of the event giving rise to such payment obligation.
(b) If any Lender shall have determined that after the date hereof the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction; provided, that the Borrower shall not be required to pay to any
Lender any amounts under this paragraph for any period prior to the date on
which such Lender gives notice to the Borrower that such amounts are payable
unless such Lender gives such notice within 180 days after it became aware or
should have become aware of the event giving rise to such payment obligation.
(c) If any Lender becomes entitled to claim any additional amounts pursuant
to this subsection, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to this subsection
submitted by such Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The agreements in
this subsection shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
2.19 Taxes. (a) All payments made by the Borrower under this Agreement and
any Notes shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note). If any such non- excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Administrative Agent or any Lender hereunder or under any Note, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection. Whenever any Non-Excluded
Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Administrative Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Administrative Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be;
(ii) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to subsection 9.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
2.20 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans or CAF Advances after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans or CAF Advances or the conversion of Eurodollar Loans to ABR Loans on a
day which is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) or, in the case of CAF Advances, the applicable CAF Advance Maturity
Date (or proposed CAF Advance Maturity Date), in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin or any positive margin applicable to CAF Advances included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Bank on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.21 Change of Lending Office; Removal of Lender. Each Lender agrees that
if it makes any demand for payment under subsection 2.18 or 2.19(a), or if any
adoption or change of the type described in subsection 2.17 shall occur with
respect to it, (i) it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to designate
a different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 2.18 or
2.19(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.17 or (ii) it will, upon at least five Business Days'
notice from the Borrower to such Lender and the Administrative Agent, assign,
pursuant to and in accordance with the provisions of subsection 9.6(c), to one
or more Assignees designated by the Borrower all, but not less than all, of such
Lender's rights and obligations hereunder (other than rights in respect of such
Lender's outstanding CAF Advance), without recourse to or warranty by, or
expense to, such Lender, for a purchase price equal to the outstanding principal
amount of each Revolving Credit Loan then owing to such Lender plus any accrued
but unpaid interest thereon and any accrued but unpaid facility fees owing
thereto and, in addition, all additional costs and reimbursements, expense
reimbursements and indemnities, if any, owing in respect of such Lender's
Commitment hereunder at such time (including any amount that would be payable
under subsection 2.20 if such assignment were, instead, a prepayment in full of
all amounts owing to such Lender) shall be paid to such Lender.
2.22 Evidence of Debt. (a) Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain the Register pursuant to
subsection 9.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) in the case of Revolving Credit Loans, the amount of each Revolving
Credit Loan made hereunder, the Type thereof and each Interest Period applicable
thereto, (ii) in the case of CAF Advances, the amount of each CAF Advance made
hereunder, the CAF Advance Maturity Date thereof, the interest rate applicable
thereto and each CAF Advance Interest Payment Date applicable thereto, (iii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iv) both the amount of any sum
received by the Administrative Agent hereunder from the Borrower and each
Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.22(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Administrative Agent
by any Lender, the Borrower will execute and deliver to such Lender a promissory
note of the Borrower evidencing the Revolving Credit Loans of such Lender,
substantially in the form of Exhibit A with appropriate insertions as to date
and principal amount (a "Revolving Credit Note").
(e) The Borrower agrees that, upon the request to the Administrative Agent
by any Lender, the Borrower will execute and deliver to such Lender a promissory
note of the Borrower evidencing the CAF Advances of such Lender, substantially
in the form of Exhibit B with appropriate insertions (a "CAF Advance Note").
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
3.1 Financial Condition. The consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at December 31, 1995 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by Ernst & Young LLP, copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at March 31, 1996 and the related unaudited consolidated statements of income
and of cash flows for the three-month period ended on such date, certified by a
Responsible Officer, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the three-month period then ended (subject to normal year-end audit
adjustments). All such annual financial statements, including the related
schedules and notes thereto, were, as of the date prepared, prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants or Responsible Officer, as the case may
be, and as disclosed therein). The quarterly financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X under the Securities Act of 1933. Accordingly, such quarterly
statements do not include all of the information and footnotes required by GAAP
for complete financial statements. In the opinion of the Borrower, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Neither the Borrower nor any of its
consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, material contingent
liability or material liability for taxes, or any material long-term lease or
material unusual forward or long-term commitment, including, without limitation,
any interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto.
3.2 No Change. Since December 31, 1995 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect.
3.3 Corporate Existence; Compliance with Law. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law, except to the extent that
the failure of the foregoing clauses (c) and (d) to be true and correct could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. The Borrower
has the corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. No consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required with
respect to the Borrower or any of its Subsidiaries in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which the Borrower is a party. This
Agreement has been, and each other Loan Document to which it is a party will be,
duly executed and delivered on behalf of the Borrower. This Agreement
constitutes, and each other Loan Document to which it is a party when executed
and delivered will constitute, a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
3.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or Contractual Obligation of the Borrower or of
any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation which could reasonably be
expected to have a Material Adverse Effect.
3.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby, or (b) which could reasonably be expected to have a
Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
3.8 Intellectual Property. The Borrower and each of its Subsidiaries owns,
or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
Property"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know of
any valid basis for any such claim, except for such claims that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
The use of such Intellectual Property by the Borrower and its Subsidiaries does
not infringe on the rights of any Person, except for such claims and
infringements that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.9 Taxes. Each of the Borrower and its Subsidiaries has filed or caused to
be filed all tax returns which, to the knowledge of the Borrower, are required
to be filed and has paid all taxes shown to be due and payable on said returns
or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no material claim is being
asserted, with respect to any such tax, fee or other charge.
3.10 Federal Regulations. No part of the proceeds of any Loans will be used
in any manner which would violate Regulation G or Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect.
3.11 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan other than a
Multiemployer Plan, and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code, where the liability which could be
reasonably expected to result could have a Material Adverse Effect; provided,
however, that with respect to any Multiemployer Plan, such representation is
made only to the knowledge of the Borrower. No termination of a Single Employer
Plan pursuant to Section 4041(c) or 4042 of ERISA has occurred, and no Lien in
favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan and
to the knowledge of the Borrower, neither the Borrower nor any Commonly
Controlled Entity would become subject to any liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made which liability could be
reasonably expected to result could have a Material Adverse Effect. No such
Multiemployer Plan is in Reorganization or Insolvent.
3.12 Investment Company Act; Other Regulations. The Borrower 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. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
3.13 Purpose of Loans. The proceeds of the Loans shall be used by the
Borrower for working capital and general corporate purposes.
3.14 Environmental Matters. Except to the extent that the failure of the
following statements to be true and correct could not reasonably be expected to
have a Material Adverse Effect:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and
have not previously contained, any Materials of Environmental Concern in
amounts or concentrations which (i) constitute or constituted a violation
of, or (ii) could reasonably be expected to give rise to liability under,
any Environmental Law.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated
by the Borrower or any of its Subsidiaries (the "Business") which could
reasonably be expected to materially interfere with the continued operation
of the Properties or materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location which could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any
of the Properties in violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could reasonably be expected to give rise to
liability under Environmental Laws.
3.15 Disclosure. The statements and information contained herein and in any
of the information provided to the Administrative Agent or the Lenders in
writing (other than financial projections) in connection with this Agreement,
taken as a whole, do not contain any untrue statement of any material fact, or
omit to state a fact necessary in order to make such statements or information
not misleading in any material respect, in each case in light of the
circumstances under which such statements were made or information provided as
of the date so provided. The financial projections dated May, 1996, furnished to
the Administrative Agent and the Lenders in writing in connection with this
Agreement have been prepared in good faith based upon assumptions which were
reasonable when such projections were made, it being acknowledged that such
projections are subject to the uncertainty inherent in all projections of future
results and that there can be no assurance that the results set forth in such
projections will in fact be realized.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The agreement of each Lender to make the
initial Loan requested to be made by it is subject to the satisfaction on the
Closing Date of the following conditions precedent:
(a) Credit Agreement. The Administrative Agent shall have received
this Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender.
(b) Borrower Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit F,
with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(c) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of the Closing Date
as if made on and as of the Closing Date.
(d) Legal Opinion. The Administrative Agent shall have received, with
a counterpart for each Lender, the executed legal opinion of counsel to the
Borrower (which opinion may be delivered in part by in-house counsel to the
Borrower), substantially in the form of Exhibit G. Such legal opinion shall
cover such other matters incident to the transactions contemplated by this
Agreement as the Administrative Agent may reasonably require.
4.2 Conditions to Each Loan. The agreement of each Lender to make any Loan
requested to be made by it on any date (including, without limitation, its
initial Loan) is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to the Loan Documents (other
than, in the case of any Loan made after the Closing Date, the
representation and warranty in subsection 3.2) shall be true and correct in
all material respects on and as of such date as if made on and as of such
date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loans requested to
be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this subsection have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall and (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 110 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and
stockholders equity and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Ernst & Young LLP
or other independent certified public accountants of nationally recognized
standing; and
(b) as soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income for such
quarter and the portion of the fiscal year through the end of such quarter
and of cash flows of the Borrower and its consolidated Subsidiaries for the
portion of the fiscal year through the end of such quarter, setting forth
in each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein); provided, that it is hereby acknowledged that the
quarterly financial statements delivered pursuant to paragraph (b) above may not
include all of the information and footnotes required by GAAP for complete
annual financial statements.
5.2 Certificates; Other Information. Furnish to the Agent with sufficient
copies for the Lenders:
(a) concurrently with the delivery of the financial statements
referred to in subsections 5.1(a) and 5.1(b), a certificate of a
Responsible Officer stating that such Officer has obtained no knowledge of
any Default or Event of Default that has occurred and is continuing except
as specified in such certificate, and including calculations demonstrating
compliance with subsection 6.1 hereof;
(b) within ten days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority, and promptly after the same are issued, copies of
all press releases issued by the Borrower; and
(c) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence. Continue to engage in
business of the same general type as now conducted by it and preserve, renew and
keep in full force and effect its corporate existence and (except as could not
in the aggregate be reasonably expected to have a Material Adverse Effect) take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to subsection 6.3; comply with all Contractual Obligations
and Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
5.5 Maintenance of Property; Insurance. Keep all property necessary in its
business in good working order and condition except to the extent that failure
to do so could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are adequate for conducting its business; and furnish to
each Lender, upon written request, full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
5.7 Notices. Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time involving the
Borrower or any of its Subsidiaries, which in either case, could reasonably
be expected to have a Material Adverse Effect; and
(c) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan, other than the termination of
any Single Employer Plan pursuant to Section 4041(b) of ERISA where, in
connection with any of the foregoing, the amount of liability the Borrower
or any Commonly Controlled Entity could reasonably be expected to incur
would be material.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall not, and (except
with respect to subsection 6.1) shall not permit any of its Subsidiaries to,
directly or indirectly:
6.1 Financial Condition Covenants.
(a) Maintenance of Consolidated Tangible Net Worth. Permit
Consolidated Tangible Net Worth at any time to be less than $450,000,000.
(b) Funded Debt Ratio. Permit the ratio of (i) Consolidated Funded
Debt to (ii) the sum of (A) Consolidated Tangible Net Worth and (B)
Consolidated Funded Debt, to be at any time greater than .50 to 1.0.
6.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 6.2,
provided that no such Lien is spread to cover any additional property after
the Closing Date and that the amount of Indebtedness secured thereby is not
increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
incurred to finance the acquisition of fixed or capital assets, provided
that (i) such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;
(h) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof, provided that (i) such Liens existed at
the time such corporation became a Subsidiary and were not created in
anticipation thereof, (ii) any such Lien is not spread to cover any
property or assets of such corporation after the time such corporation
becomes a Subsidiary, and (iii) the amount of Indebtedness secured thereby
is not increased;
(i) Liens (not otherwise permitted hereunder) which secure obligations
not exceeding (as to the Borrower and all Subsidiaries) $75,000,000 in
aggregate amount at any time outstanding.
6.3 Limitation on Fundamental Changes. Enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation);
(b) The Borrower or any wholly owned Subsidiary of the Borrower may
sell, lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or any other
wholly owned Subsidiary of the Borrower or may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to any non-wholly owned Subsidiary of the Borrower for fair
market value;
(c) any non-wholly owned Subsidiary of the Borrower may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any wholly owned Subsidiary of
the Borrower for fair market value or may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to any other non-wholly owned Subsidiary of the Borrower; and
(d) the Borrower or any Subsidiary of the Borrower may be merged or
consolidated with or into another Person; provided that the Borrower or
such Subsidiary shall be the continuing or surviving corporation and no
Default or Event of Default shall have occurred and be continuing or would
occur as a result thereof; and provided further that the Borrower may not
be merged or consolidated with or into any Subsidiary.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder,
within five days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
herein or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement shall prove to have been incorrect in any material respect
on or as of the date made or deemed made; or
(c) (i) The Borrower shall default in the observance or performance of
any covenant contained in Section 6; or (ii) the Borrower shall default in
the observance or performance of any other agreement contained in this
Agreement (other than as provided above in this Section), and such default
described in this clause (ii) shall continue unremedied for a period of 30
days; or
(d) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to
any such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; provided, however, that no
Default or Event of Default shall exist under this paragraph unless the
aggregate amount of Indebtedness and/or Guarantee Obligations in respect of
which any default or other event or condition referred to in this paragraph
shall have occurred shall be equal to at least $50,000,000; or
(e) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not or shall admit in writing its inability to, pay its debts as
they become due; or
(f) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(g) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $50,000,000 (net of any related
tax benefit) or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(h) (i) Any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) (A) shall have
acquired beneficial ownership of 30% or more of any outstanding class of
Capital Stock having ordinary voting power in the election of directors of
the Borrower or (B) shall obtain the power (whether or not exercised) to
elect a majority of the Borrower's directors or (ii) the Board of Directors
of the Borrower shall not consist of a majority of Continuing Directors;
"Continuing Directors" shall mean the directors of the Borrower on the
Closing Date and each other director, if such other director's nomination
for election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (e) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Majority Lenders, the Administrative Agent
may, or upon the request of the Majority Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as expressly
provided above in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
SECTION 8. THE ADMINISTRATIVE AGENT; THE ARRANGER;
SYNDICATION AGENT AND ARRANGER; THE ADVISOR
AND ARRANGER
8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes the Administrative
Agent, in such capacity, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent by
the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
8.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Majority Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Majority Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other. Each Lender expressly
acknowledges that neither the Administrative Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Administrative Agent
hereinafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this subsection shall survive the payment of the Loans and all other amounts
payable hereunder.
8.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Administrative
Agent were not the Administrative Agent hereunder and under the other Loan
Documents. With respect to the Loans made by it, the Administrative Agent shall
have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Majority Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent (provided that it shall
have been approved by the Borrower), shall succeed to the rights, powers and
duties of the Administrative Agent hereunder. Effective upon such appointment
and approval, the term "Administrative Agent" shall mean such successor agent,
and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Section 8
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
8.10 The Arranger; the Syndication Agent and Arranger; the Advisor and
Arranger. None of the Arranger, the Syndication Agent and Arranger or the
Advisor and Arranger shall have any duties or responsibilities, or shall incur
any liabilities, under this Agreement or any Loan Document.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Majority Lenders may, or, with the written consent of the Majority Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Majority Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) reduce the amount or extend the scheduled date of
maturity of any Loan, or reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof or increase the
amount or extend the expiration date of any Lender's Commitment, in each case
without the consent of each Lender affected thereby, or (ii) amend, modify or
waive any provision of this subsection or reduce the percentage specified in the
definition of Majority Lenders, or consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents, in each case without the written consent of all the Lenders, or
(iii) amend, modify or waive any provision of Section 8 without the written
consent of the then Administrative Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Borrower, the Lenders, the Administrative Agent
and all future holders of the Loans. In the case of any waiver, the Borrower,
the Lenders and the Administrative Agent shall be restored to their former
positions and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three days after being deposited
in the mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been confirmed, addressed as follows in
the case of the Borrower and the Administrative Agent, and as set forth in
Schedule I in the case of the other parties hereto, or to such other address as
may be hereafter notified by the respective parties hereto:
The Borrower: Boston Scientific Corporation
One Boston Scientific Place
Natick, Massachusetts 01760
Attention: Lawrence C. Best
Chief Financial Officer and
Senior Vice President,
Finance & Administration
Fax: 508-650-8951
with a copy to:
General Counsel's Office
Fax: 508-650-8960
The Administrative
Agent: Chemical Bank Agency Services
Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Sandra Miklave
Fax: 212-622-0002
with a copy to:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Michael Bayley
Fax: 212-270-3279
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.7, 2.10, 2.11 or 2.16 shall
not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, provided, that the Borrower shall
pay the fees and disbursements of only one counsel to the Administrative Agent
and the Lenders in connection with any workout or restructuring, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided that the Borrower shall
have no obligation hereunder to the Administrative Agent or any Lender with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of the Administrative Agent or any such Lender. The agreements in
this subsection shall survive repayment of the Loans and all other amounts
payable hereunder.
9.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. No Lender shall be entitled to create in
favor of any Participant, in the participation agreement pursuant to which such
Participant's participating interest shall be created or otherwise, any right to
vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those specified in clauses (i) and (ii) of the
proviso to subsection 9.1. The Borrower agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 9.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.18, 2.19 and 2.20 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of subsection 2.19, such
Participant shall have complied with the requirements of said subsection and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof of comparable credit-
worthiness or, with the consent of the Borrower and the Administrative Agent
(which in each case shall not be unreasonably withheld), to an additional bank
or financial institution (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit H, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, in the case of any such
assignment to an additional bank or financial institution, the sum of the
aggregate principal amount of the Loans and the aggregate amount of the unused
Commitment being assigned shall be not less than $10,000,000 and, if such
assignment is of less than all of the rights and obligations of the assigning
Lender, the sum of the aggregate principal amount of the Revolving Credit Loans
and the aggregate amount of the unused Commitment remaining with the assigning
Lender shall be not less than $20,000,000 (or such lesser amount as may be
agreed to by the Borrower and the Administrative Agent). Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Administrative Agent, on behalf of the Borrower, shall maintain at
the address of the Administrative Agent referred to in subsection 9.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the Commitment
of, and principal amount of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Administrative Agent and the Lenders may (and, in
the case of any Loan or other obligation hereunder not evidenced by a Note,
shall) treat each Person whose name is recorded in the Register as the owner of
a Loan or other obligation hereunder as the owner thereof for all purposes of
this Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder not evidenced
by a Note shall be effective only upon appropriate entries with respect thereto
being made in the Register. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $3000, the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give notice
of such acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, subject to the
provisions of subsection 9.15, any and all financial information in such
Lender's possession concerning the Borrower and its Affiliates which has been
delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
9.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7(e), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set- off and application.
9.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
9.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Borrower, the Administrative Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
9.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE Administrative Agent AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
9.15 Confidentiality. Each Lender agrees to keep confidential any written
or oral information (a) provided to it by or on behalf of the Borrower or any of
its Subsidiaries pursuant to or in connection with this Agreement or (b)
obtained by such Lender based on a review of the books and records of the
Borrower or any of its Subsidiaries; provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Administrative Agent
or any other Lender, (ii) to any Transferee which receives such information
having been made aware of the confidential nature thereof and having agreed to
abide by the provisions of this subsection 9.15, (iii) to its employees,
directors, agents, attorneys, accountants and other professional advisors, (iv)
upon the request or demand of any Governmental Authority having jurisdiction
over such Lender, (v) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
BOSTON SCIENTIFIC CORPORATION
By: _________________________
Name:
Title:
CHEMICAL BANK, as Administrative
Agent and as a Lender
By: _________________________
Name:
Title:
CHASE SECURITIES INC.,
as Arranger
By: _________________________
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as Syndication Agent, Arranger
and a Lender
By: _________________________
Name:
Title:
LEHMAN PAPER COMMERCIAL PAPER INC.,
as Advisor and Arranger
By: _________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: _________________________
Name:
Title:
ABN AMRO BANK N.V.
By: ABN AMRO NORTH AMERICA,
INC., as Agent
By: _________________________
Name:
Title:
By: _________________________
Name:
Title:
ALLIED IRISH BANKS, P.L.C.
By: _________________________
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: _________________________
Name:
Title:
COMMERZBANK AKTIENGESELLSCHAFT
By: _________________________
Name:
Title:
CORESTATES BANK, N.A.
By: _________________________
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By: _________________________
Name:
Title:
THE FUJI BANK, LIMITED
By: _________________________
Name:
Title:
MELLON BANK
By: _________________________
Name:
Title:
THE SANWA BANK LIMITED
By: _________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED
By: _________________________
Name:
Title:
U.S. NATIONAL BANK OF OREGON
By: _________________________
Name:
Title:
Exhibit 11
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Computation of Earnings Per Share
(In thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
- -----------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
Weighted average shares outstanding 178,000 175,426 177,526 174,669
Net effect of dilutive stock options - based on
the treasury stock method using average
market price 4,662 3,734 2,331
- -----------------------------------------------------------------------------------------------------
Total 182,662 179,160 179,857 174,669
=====================================================================================================
Net income (loss) $ 23,510 $ 49,029 $ 22,519 $(15,033)
=====================================================================================================
Per share amount $ 0.13 $ 0.27 $ 0.13 $ (0.09)
=====================================================================================================
Fully Diluted:
Weighted average shares outstanding 178,000 175,426 177,526 174,669
Net effect of dilutive stock options - based on
the treasury stock method using quarter
end market price, if higher than average
market price 4,871 4,117 4,871
- -----------------------------------------------------------------------------------------------------
Total 182,871 179,543 182,397 174,669
=====================================================================================================
Net income (loss) $ 23,510 $ 49,029 $ 22,519 $(15,033)
=====================================================================================================
Per share amount $ 0.13 $ 0.27 $ 0.12 $ (0.09)
=====================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 52,698
<SECURITIES> 25,432
<RECEIVABLES> 266,284
<ALLOWANCES> 0
<INVENTORY> 190,331
<CURRENT-ASSETS> 583,326
<PP&E> 287,195
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,257,735
<CURRENT-LIABILITIES> 465,336
<BONDS> 0
0
0
<COMMON> 1,791
<OTHER-SE> 748,775
<TOTAL-LIABILITY-AND-EQUITY> 1,257,735
<SALES> 679,571
<TOTAL-REVENUES> 679,571
<CGS> 180,518
<TOTAL-COSTS> 180,518
<OTHER-EXPENSES> 413,032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,492
<INCOME-PRETAX> 80,679
<INCOME-TAX> 58,160
<INCOME-CONTINUING> 22,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,519
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.12
</TABLE>
