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, 1997
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
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- -------------------------------------------------------------------------------
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, 1997
----- -------------------
Common Stock, $.01 Par Value 194,157,387
- -------------------------------------------------------------------------------
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 and per share data 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 54,141 $ 72,175
Short-term investments 32,178 45,606
Trade accounts receivable, net 361,876 321,025
Inventories 306,558 236,670
Deferred income taxes 97,865 97,364
Prepaid expenses and other current assets 56,586 43,977
-------------------------
Total current assets 909,204 816,817
Property, plant, equipment and leaseholds 608,014 529,933
Less: accumulated depreciation and amortization 186,311 167,631
-------------------------
421,703 362,302
Intangibles, net 320,104 319,762
Investments and other assets 91,041 86,164
-------------------------
$1,742,052 $1,585,045
=========================
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings due within one year $ 350,265 $ 240,556
Accounts payable and accrued expenses 210,537 163,784
Income taxes payable 27,403
Accrual related to special charges 107,781 48,144
Other current liabilities 4,892 1,929
-------------------------
Total current liabilities 673,475 481,816
Accrual related to special charges 10,166
Deferred income taxes 59,975 59,975
Other long-term liabilities 48,829 48,139
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,
195,611,491 shares issued at June 30, 1997 and at
December 31, 1996 1,956 1,956
Additional paid-in capital 451,129 437,074
Contingent stock repurchase obligation 7,095 24,855
Retained earnings 622,591 574,051
Foreign currency translation adjustment (73,747) (37,964)
Unrealized gain on available-for-sale securities, net 16,411 18,886
Treasury stock, at cost -1,454,104 shares at June 30, 1997
and 643,991 shares at December 31, 1996 (75,828) (23,743)
-------------------------
Total stockholders' equity 949,607 995,115
-------------------------
$1,742,052 $1,585,045
=========================
</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 per share data 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $473,749 $379,237 $904,280 $722,790
Cost of products sold 131,455 101,386 252,512 193,341
---------------------------------------------
Gross profit 342,294 277,851 651,768 529,449
Selling, general and administrative expenses 157,031 124,102 308,994 234,321
Royalties 5,388 4,293 11,286 8,680
Research and development expenses 41,006 33,822 79,704 63,431
Special charges 157,841 73,666 157,841 142,341
---------------------------------------------
361,266 235,883 557,825 448,773
---------------------------------------------
Operating income (loss) (18,972) 41,968 93,943 80,676
Other income (expense):
Interest and dividend income 956 1,457 1,994 3,835
Interest expense (3,353) (3,213) (6,651) (4,794)
Other, net (1,686) (1,148) 251 (3,223)
---------------------------------------------
Income (loss) before income taxes (23,055) 39,064 89,537 76,494
Income taxes 3,841 25,975 40,997 61,215
---------------------------------------------
Net income (loss) $(26,896) $ 13,089 $ 48,540 $ 15,279
=============================================
Net income (loss) per common share $ (0.14) $ 0.07 $ 0.25 $ 0.08
=============================================
Primary weighted average number of common shares 194,702 199,490 197,694 199,373
=============================================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholder's Equity
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
-------------------------------------------------------------------------------------------------
Unrealized
Gain on
Contingent Foreign Available-
Common Stock Additional Stock Currency for-Sale
----------------------- Paid-In Repurchase Retained Translation Securities, Treasury
Shares Issued Par Value Capital Obligation Earnings Adjustment Net Stock Total
-------------------------------------------------------------------------------------------------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 195,611,491 $1,956 $437,074 $ 24,855 $574,051 $(37,964) $18,886 $(23,743) $995,115
Net income 48,540 48,540
Foreign currency translation
adjustment (35,783) (35,783)
Issuance of common stock
under options, warrant and
stock purchase plans (12,486) 29,373 16,887
Purchase of common stock for
treasury (82,014) (82,014)
Sale of stock repurchase
obligation (7,095) 7,095 556 556
Expiration of stock
repurchase obligation 24,855 (24,855)
Tax benefit relating to
stock option and employee
stock purchase plans 8,781 8,781
Net change in equity
investments (2,475) (2,475)
------------------------------------------------------------------------------------------------
Balance at June 30, 1997 195,611,491 $1,956 $451,129 $ 7,095 $622,591 $(73,747) $16,411 $(75,828) $949,607
================================================================================================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
In thousands 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided by operating activities $ 67,863 $ 26,709
Investing activities:
Purchases of property, plant, and equipment, net (109,583) (50,755)
Acquisition of businesses, net of cash acquired (241,493)
Net maturities of held-to-maturity short-term investments 18,232 18,400
Net purchases of available-for-sale securities (4,399) (4,424)
Payments for acquisitions of and/or investments in
certain technologies (23,700) (3,229)
Other (13,119) (3,074)
----------------------
Cash used in investing activities (132,569) (284,575)
Financing activities:
Net increase in commercial paper 93,950 235,000
Net proceeds (payments) on notes payable and
capital leases 12,020 (28,696)
Proceeds from issuances of shares of common stock, net of
tax benefits 25,668 36,823
Acquisition of treasury stock, net of proceeds from
put options (81,458) (58,543)
Other 25 737
----------------------
Cash provided by financing activities 50,205 185,321
Effect of foreign exchange rates on cash (3,533) (1,118)
----------------------
Net decrease in cash and cash equivalents (18,034) (73,663)
Cash and cash equivalents at beginning of period 72,175 134,831
----------------------
Cash and cash equivalents at end of period $ 54,141 $ 61,168
======================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1997
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, 1997 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1997. For further information, refer to the consolidated financial
statements and footnotes thereto incorporated by reference in Boston
Scientific Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996.
Certain prior year's amounts have been reclassified to conform to the
current year presentation.
Note B - Acquisitions
On April 8, 1997, the Company completed its merger with Target Therapeutics,
Inc. (Target) in a tax-free stock-for-stock transaction accounted for as a
pooling-of-interests. As a result, the unaudited condensed consolidated
financial statements have been restated for all periods presented. In
conjunction with this merger, Target's stockholders received 1.07 shares of
the Company's common stock in exchange for each share of Target common
stock. Approximately 16.5 million shares of common stock were issued in
connection with the Target acquisition.
Separate results of the combining entities for the six months ended June 30,
1996 are as follows:
<TABLE>
<CAPTION>
Combined
Boston Boston
(In millions) Scientific Target Scientific
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net sales $680 $ 43 $ 723
Net income (loss) 23 (8) 15
</TABLE>
Target's net sales and net income for the three months ended March 31, 1997
were approximately $31 million and $2 million, respectively.
Note C - Merger-Related Charges and Expenses
In the second quarter of 1997, the Company recorded special charges of $158
million ($117 million, net-of-tax). Charges include $12 million for
purchased research and development recorded in conjunction with accounting
for the Company's additional investment in Medinol Ltd., $16 million in
direct transaction costs and $96 million of estimated costs to be incurred
in merging the separate operating businesses of Target 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 remaining amounts represent
primarily adjustments to merger-related and special charges recorded in 1996
and 1995 based on actual costs incurred or changes in estimates
(approximately $15 million) and writedowns of assets in connection with the
Company's implementation of a global information system.
The special charges are determined based on formal plans approved by the
Company's management using the best information available to it at the time.
The workforce-related initiatives have involved substantially all of the
Company's employee groups. The amounts the Company may ultimately incur may
change as the plans are executed.
The activity impacting the accrual related to special charges during the
first six months of 1997, net of reclassifications made by management in
prior years based on available information, is summarized in the following
table:
<TABLE>
<CAPTION>
Balance at Charges to Charges Balance at
(In millions) December 31, 1996 Operations Utilized June 30, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Facilities $ 19 $ 6 $ 3 $ 22
Workforce reductions 26 14 14 26
Contractual commitments 8 53 9 52
Asset writedowns 6 24 12 18
Direct transaction and other costs 6 49 18 37
------------------------------------------------
$ 65 $ 146 $ 56 $ 155
================================================
</TABLE>
Most of the plans are expected to be completed by the end of 1998. Cash
outlays to complete the balance of the Company's initiative to integrate the
businesses related to all business combinations consummated since 1994 are
estimated to be approximately $118 million.
The June 30, 1997 balance of the accrual for special charges is classified
within the balance sheet as follows:
<TABLE>
<CAPTION>
(In millions)
- --------------------------------------------------------------
<S> <C>
Accrual related to special charges - current $ 108
Property, plant, equipment and leaseholds, net 23
Accrual related to special charges - non-current 10
Inventories 13
Other 1
-----
$ 155
=====
</TABLE>
Note D - Credit Arrangements
At December 31, 1996, the Company had a $350 million revolving line of
credit with a syndicate of U.S. and international banks. In June 1997, the
Company increased its maximum worldwide borrowings provided under an amended
and restated credit agreement to $500 million with a similar syndicate of
banks (the Credit Agreement). Under the 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 2002; use of the
borrowings is unrestricted and the borrowings are unsecured. The Credit
Agreement requires the Company to maintain a specific ratio of consolidated
funded debt (as defined) to consolidated tangible net worth (as defined)
plus consolidated funded debt. At June 30, 1997, the Company did not have
any outstanding borrowings under the Credit Agreement.
The Company maintains a commercial paper program which is supported by the
Company's Credit Agreement; outstanding commercial paper reduces available
borrowings under the Credit Agreement. At June 30, 1997, the Company had
approximately $306 million in commercial paper outstanding with interest
rates ranging from 5.82% to 5.98%.
Note E - Inventories
The components of inventory consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
(In millions) 1997 1996
- -------------------------------------------------------
<S> <C> <C>
Finished goods $ 167 $ 129
Work-in-process 50 45
Raw materials 90 63
---------------------
$ 307 $ 237
=====================
</TABLE>
Note F - Stockholders' Equity
The Company is authorized to purchase on the open market up to approximately
20 million shares of the Company's common stock. Purchases will be made at
prevailing prices as market conditions and cash availability warrant. Stock
repurchased under the Company's systematic plan will be used to satisfy the
Company's obligations pursuant to its employee benefit and incentive plans.
During the second quarter of 1997, the Company repurchased approximately 1.6
million shares of its common stock under its systematic plan at a net cost
of $81 million.
As part of the stock repurchase program, the Company has been selling
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. Proceeds are recorded as a
reduction to the cost of the Company's treasury stock. During the second
quarter of 1997, put options issued in 1996 for 600,000 shares expired.
Additionally, the Company sold put options for 129,000 shares during the
second quarter and received proceeds of approximately $556,000. The
repurchase price relating to put options outstanding at June 30, 1997 is $55
per share. The Company's contingent obligation to repurchase shares upon
exercise of the outstanding put options approximated $7 million at June 30,
1997.
Note G - Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share", which
establishes new methods to compute earnings per share. The Company is
required to adopt this statement beginning in the fourth quarter of 1997.
The adoption of this standard would not have a material impact on the
Company's earnings per share.
Note H - Commitments and Contingencies
Schneider (Europe) AG and Schneider (USA) Inc., 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 U.S. 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. The Company ceased marketing its Synergy catheters in August
1996.
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's FLOWTRACK-
40(TM) and RX ELIPSE(TM) PTCA catheters. 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.
Both suits were filed in the U.S. District Court for the Northern District
of California seeking monetary and injunctive relief. The cases were sent
to consolidated arbitration for a threshold determination of one issue
covered by the November 27, 1991 settlement agreement between the parties.
On March 14, 1997, the arbitration panel reached a final determination in
the consolidated arbitration. Pursuant to this determination, the Company
is continuing its action as to the ELIPSE product and has dismissed the
actions as to the FLOWTRACK and LIFESTREAM products.
On October 10, 1995, ACS filed a suit for patent infringement against
SCIMED, alleging willful infringement of four U.S. patents licensed to ACS
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 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 the complaint.
On June 10, 1997, SCIMED filed in the U.S. District Court for the Northern
District of California a suit for patent infringement against ACS alleging
willful infringement of a SCIMED patent by ACS's COMET(TM) PTCA catheters.
SCIMED is seeking monetary and injunctive relief. ACS has moved to dismiss,
or in the alternative, to stay the action pending arbitration of a threshold
determination covered by the November 27, 1991 settlement agreement between
the parties.
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 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(R) and VENTURE II(TM) microcatheters and CORDIS
Corporation's (Cordis) TRANSIT(R) and RAPIDTRANSIT(TM) microcatheters
infringe a patent assigned to Target. On May 2, 1996, the District Court
entered an order granting a preliminary injunction to Target prohibiting
SCIMED and CORDIS from marketing or selling the accused products. 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. Upon the recent merger between the Company and Target, the lawsuit
has been dismissed as to the Company. Subsequently, the Court of Appeals
vacated the preliminary injunction. The lawsuit against Cordis will proceed
in the District Court.
On October 3, 1995, Cordis Endovascular, Inc. and Cordis filed a suit
alleging patent infringement against Target Therapeutics, Inc. (Target)
alleging that Target's DASHER(R) guidewires, FASGUIDE(R) catheters and
TRACKER(R) and FASTRACKER(R) guide microcatheters infringe three patents
owned by Cordis. Target has answered, denying the allegations of the
complaint.
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 MaxForce TTS(TM) catheter, infringe a
patent assigned to Bard. The lawsuit seeks a declaratory judgment that the
Company has infringed the Bard patent, preliminary and permanent injunctions
enjoining the manufacture, use or sale of the Max Force TTS catheter or any
other infringing product, monetary damages and expenses. After a jury trial
in June 1997, the jury returned a verdict finding that the Company infringed
the Bard patent and awarded damages to Bard in the amount of $10.8 million.
No judgment has been entered pending trial on the Company's claim that the
patent was obtained by inequitable conduct. The Company intends to appeal
any judgment entered on the jury verdict.
On February 28, 1997, C.R. Bard, Inc. (Bard) filed a suit for patent
infringement against SCIMED alleging that SCIMED's WAVE(TM) and SURPASS(TM)
catheters are infringing a patent assigned to Bard. The suit was filed in
the U.S. District Court for the District of New Jersey seeking monetary and
injunctive relief. The Company has answered, denying the allegations of the
complaint. Trial is scheduled for December 1997.
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 alleging that the Cragg EndoPro(TM) System I
and Stentor(TM) endovascular device 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 answered,
denying the allegations. Hearings were held in January and July 1997. A
decision is expected in September 1997.
On March 25, 1996, Cordis, 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
SCIMED catheter products, including SCIMED's BANDIT and EXPRESS PLUS
catheters. 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. Trial is scheduled for March
1998.
On March 13, 1997, the Company (through its subsidiaries) filed suits in The
Netherlands and the United Kingdom, and on March 17, 1997 filed suit in
France, seeking a declaration of noninfringement for the Company's LEAP(TM)
balloon in relation to a European patent owned by Cordis. On July 18, 1997,
Cordis Corporation sued various subsidiaries of the Company in the
Netherlands alleging that the Company's Leap (TM) balloon products infringed a
different, newly-issued European patent of Cordis. Cordis has requested
cross-border relief in the Netherlands, Germany, France, the United Kingdom
and Italy. A hearing has been scheduled for November 1997.
On March 27, 1997, SCIMED filed suit for patent infringement against Cordis
alleging willful infringement of four of SCIMED's U.S. patents by Cordis'
TRACKSTAR 14(TM), TRACKSTAR 18(TM), OLYMPIX(TM), POWERGRIP(TM), SLEEK(TM),
THOR(TM), TITAN(TM) and VALOR(TM) catheters. The suit was filed in U.S.
District Court for the District of Minnesota, Fourth District seeking
monetary and injunctive relief. Cordis has answered, denying the
allegations of the complaint.
On December 13, 1996, the Superior Court of the State of Arizona granted the
motion of Impra, Inc. (Impra), to add the Company as an additional defendant
in Impra's case against Endomed, Inc. Impra (now a subsidiary of C.R. Bard,
Inc.) alleges that Endomed, Inc. misappropriated certain Impra trade secrets
and that the Company acted in concert with Endomed to utilize the
technology. On the same date, Endomed and the Company were preliminarily
enjoined, among other things, from any further use or disclosure of the
technology. The Company has answered, denying the allegations of the
complaint.
On March 13, 1997, the Company (through its subsidiaries) filed suits
against Johnson & Johnson (through its subsidiaries) in The Netherlands,
United Kingdom and Belgium, and on March 17, 1997 filed suit in France,
seeking a declaration of noninfringement for the NIR(TM) stent relative to
two European patents licensed to Ethicon, Inc. (Ethicon), a Johnson &
Johnson subsidiary, as well as a declaration of invalidity with respect to
those patents. On March 18, 1997, the Company (through its subsidiary) filed
a similar suit in Germany, but seeking only a declaration of noninfringement
for the NIR stent relative to the two patents. On March 20, 21 and 22, 1997,
the Company (through its subsidiaries) filed additional suits against
Johnson & Johnson (through its subsidiaries) in Sweden, Italy and Spain,
respectively, seeking a declaration of noninfringement for the NIR stent
relative to one of the European patents licensed to Ethicon and a
declaration of invalidity in relation to that patent (in Italy and Spain
only). Ethicon and other Johnson & Johnson subsidiaries filed a cross-border
suit in The Netherlands on March 17, 1997, alleging that the NIR stent
infringes one of the European patents licensed to Ethicon. In this action,
they requested relief covering Austria, Belgium, France, Greece, Italy, The
Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom.
Johnson & Johnson has filed a similar cross-border proceeding in The
Netherlands with respect to the second European patent licensed to Ethicon.
A hearing on Johnson & Johnson's request for provisional cross-border relief
on both patents is scheduled for September 1997.
On March 13, 1997, the Company filed a Motion to Intervene in Johnson &
Johnson Interventional Systems Co. et al. v. Cook, Incorporated et al., an
action in the U.S. District Court for the Southern District of Indiana. The
motion seeks intervention for the purpose of modifying the present
protective order to direct the Clerk of Court to retain, and the parties and
their counsel not to destroy, materials and testimony assembled in that
action. In addition, the Company seeks access to such materials and
testimony, and access to materials filed by the parties in that action under
seal. On March 17, 1997, the court temporarily stayed the return of
documents from the court to the parties and ordered the parties to retain
documents relating to the proceeding. A final decision is expected later in
1997.
On June 16, 1997, BSC and SCIMED filed a suit against Johnson & Johnson,
Ethicon, Inc. and Johnson & Johnson International Systems Co. (Johnson &
Johnson) in the U.S. District Court for the District of Massachusetts
seeking a declaratory judgment of noninfringement for the NIR(TM) stent
relative to two patents licensed to Johnson & Johnson and that the two
patents are invalid and unenforceable. Johnson & Johnson has responded with
a motion to dismiss the suit.
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 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.
Further, product liability claims may be asserted in the future relative to
events not known to management at the present time. The Company has
insurance coverage which management believes is adequate to protect against
product liability losses as could otherwise materially affect the Company's
financial position.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales for the second quarter of 1997 increased 25% to $474 million as
compared to $379 million in the second quarter of 1996. International
revenues for the quarter were impacted by changes in foreign currency
exchange rates. Without the impact of changes in exchange rates, net sales
for the second quarter increased approximately 28%. The Company reported a
net loss of $27 million, or $.14 per share, in the second quarter of 1997,
inclusive of merger-related and special charges of $158 million ($117
million, net-of-tax). This compares to net income of $13 million, or $.07
per share, in the second quarter of 1996, inclusive of merger-related and
special charges of $74 million ($61 million, net-of-tax). Net income,
exclusive of merger-related and special charges, increased 22% to $90
million in the second quarter of 1997 from $74 million in the second quarter
of 1996.
Net sales for the six month period ended June 30, 1997 increased 25% to $904
million as compared to $723 million in the first half of 1996.
International revenues for the six month period ended June 30, 1997 were
impacted by changes in foreign currency exchange rates. Without the impact
of changes in exchange rates, net sales for the first half of 1997 increased
approximately 28%. The Company reported net income of $49 million for the
six month period ended June 30, 1997, inclusive of merger-related and
special charges of $158 million ($117 million, net-of-tax). This compares to
net income of $15 million in the six month period ended June 30, 1996,
inclusive of merger-related and special charges of $142 million ($128
million, net-of-tax). Net income, exclusive of merger-related and special
charges, increased 16% to $166 million in the first half of 1997 from $143
million in the first half of 1996.
During the second quarter, United States (U.S.) revenues increased
approximately 18%, while international revenues, including export sales,
increased approximately 35% compared to the same period in the prior year.
International sales as a percentage of worldwide sales increased from 40% in
the second quarter of 1996 to 43% in the second quarter of 1997. Revenues
in the United States increased approximately 19% during the first six months
of 1997 compared to the same period of the prior year. International
revenues, including export sales, increased approximately 35% during the
first six months of 1997 compared to the same period in the prior year.
Gross profit as a percentage of net sales decreased from 73.3% in the second
quarter of 1996 to 72.3% in the second quarter of 1997, and decreased from
73.3% in the six months ended June 30, 1996 to 72.1% in the six months ended
June 30, 1997. The decrease in the Company's gross margin percentage is
primarily due to a shift in the Company's product sales mix and a decline in
average selling prices due to continuing pressure on healthcare costs and
increased competition. In addition, since the second half of 1996, the
Company's gross margins and inventory levels reflect the impact of increased
inventory and reserves for inventory resulting principally from the opening
of a new distribution center in Europe, new product launches, and
transferring international manufacturing from several sites in Europe to
Ireland. However, the negative impact of the above conditions was partially
offset by the Company's U.S. cost containment programs and an increase in
the percentage of international sales compared to U.S. sales. The Company's
future gross margins may be impacted by its ability to effectively manage
its inventory levels and mix. The Company has also initiated a number of
cost savings programs which may offset, in part, other declines in gross
margin.
Uncertainty remains with regard to future changes within the healthcare
industry. The trend towards managed care and economically motivated buyers
in the U.S. may result in continued pressure on selling prices of certain
products and resulting compression on gross margins. The U.S. marketplace
is increasingly characterized by consolidation among healthcare providers
and purchasers of medical devices who prefer to limit the number of
suppliers from whom they purchase medical products. There can be no
assurance that these entities will continue to purchase products from the
Company. In addition, international markets are also being affected by
economic pressure to contain healthcare 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 27% from $124 million
in the second quarter of 1996 to $157 million in the second quarter of 1997
and remained 33% of sales. Selling, general and administrative expenses
increased 32% from $234 million to $309 million from the first six months of
1996 to 1997, respectively. The increase reflects continued expansion of
the Company's domestic and international sales organizations and related
marketing support.
Royalty expenses increased 26% from $4 million in the second quarter of 1996
to $5 million in the second quarter of 1997, and 30% from $9 million in the
first six months of 1996 to $11 million in the first six months of 1997.
Royalty expenses remained approximately 1% of net sales. The increase in
overall expense dollars is due primarily to royalties due under several
strategic alliances the Company initiated in the first half of 1997 and in
prior years.
Research and development expenses increased 21% from $34 million in the
second quarter of 1996 to $41 million in the second quarter of 1997, and 26%
from $63 million in the first six months of 1996 to $80 million in the first
six months of 1997. Research and development expenses remained 9% of sales.
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 in countries
around the world toward more stringent regulatory requirements for product
clearance and more vigorous 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 continue to be lengthy, a concern of medical device
manufacturers generally.
During 1996, the Company accelerated certain spending programs so as to be
in a position to take advantage of the expanded market opportunities it
expects in 1997 and beyond. The programs impacted the Company's
manufacturing, selling, general and administrative costs. During the second
quarter of 1997, the Company's operating income, excluding merger-related
and special charges, increased 20% from the second quarter of 1996 compared
to a 25% increase in sales. These results were in line with internal
expectations and reflect an expense infrastructure that has not yet been
absorbed by revenue growth. Management believes that it will take a number
of quarters to earn off the elevated cost structure. The Company's ability
to benefit from these accelerated spending programs may be limited by risks
and uncertainties related to competitive offerings, timing and scope of
regulatory approvals, infrastructure development, continued international
expansion, rights to intellectual property, and the ability of the Company
to implement its overall business strategy.
Interest and dividend income was $1 million in both the second quarter of
1997 and the second quarter of 1996, and $2 million in the first six months
of 1997 compared to $4 million in the first six months of 1996. 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 recent acquisitions and alliances. Interest
expense remained unchanged from $3 million in the second quarter of 1996 to
the second quarter of 1997, and increased from $5 million in the first six
months of 1996 to $7 million in the first six months of 1997. The increase
in interest expense is primarily attributable to the Company's issuance of
commercial paper. Other income (expense), net, increased from expense of $1
million in the second quarter of 1996 to expense of $2 million in the second
quarter of 1997. Other income (expense), net, changed from expense of $3
million in the first six months of 1996 to income of $251 thousand in the
first six months of 1997. The change is primarily attributable to a net
gain of approximately $6 million recognized on sales of equity investments
recorded in the first half of 1997.
As the Company has expanded its international operations, its sales and
expenses denominated in foreign currencies have expanded and that trend is
expected to continue. Thus, certain sales and expenses have been, and are
expected to be, subject to the effect of foreign currency fluctuations and
these fluctuations may have an impact on margins. The Company enters into
forward foreign exchange contracts to hedge foreign currency transactions on
a continuing basis for periods consistent with commitments. The Company
does not engage in speculation. The Company's foreign exchange contracts,
which totaled approximately $86 million at June 30, 1997, should not subject
the Company to material risk due to exchange rate movements because gains
and losses on these contracts should offset losses and gains on the assets
and liabilities being hedged. Although the Company engages in hedging
transactions that may offset the effect of fluctuations in foreign currency
exchange rates on foreign currency denominated assets and liabilities,
financial exposure may nonetheless result, primarily from the timing of
transactions and the movement of exchange rates. Further, any significant
changes in the political, regulatory or economic environments where the
Company conducts international operations may have a material impact on
revenues and profits.
The Company's effective tax rate, excluding the impact of merger-related and
special charges, improved from approximately 34% in the second quarter of
1996 to 33% in the second quarter of 1997. The Company's effective tax rate,
excluding the impact of merger-related and special charges, improved from
approximately 35% in the first six months of 1996 to 33% in the first six
months of 1997. 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 certain tax planning initiatives.
Liquidity and Capital Resources
Cash and marketable securities totaled $86 million at June 30, 1997 compared
to $118 million at December 31, 1996. Working capital was reduced from $335
million at December 31, 1996 to $236 million at June 30, 1997. The decrease
in cash and marketable securities is primarily attributable to cash used to
repurchase the Company's common stock, capital expenditures incurred to
expand the Company's manufacturing and distribution facilities, additional
strategic investments, tax payments and payments of merger-related costs.
Cash expenditures during the first half of 1997 were partially offset by
proceeds from normal operating activities and additional borrowings under
the Company's financing arrangements. The increase in accounts receivable
from December 31, 1996 to June 30, 1997 is primarily due to an increase in
international sales that tend to have longer payment periods than domestic
sales. Refer to the future cash impact of special charges as referenced in the
notes to the unaudited condensed consolidated financial statements.
Since early 1995, the Company has entered into several transactions
involving acquisitions and alliances, certain of which have involved equity
investments. As the healthcare environment continues to undergo rapid
change, management expects that it will continue focusing on strategic
initiatives and/or make additional investments in existing relationships.
In addition, the Company expects to incur capital expenditures of
approximately $100 million to $150 million during the remainder of 1997,
including construction of additional manufacturing and distribution space
and development of a global information system. During July 1997, the
Company borrowed an additional 6 billion yen (the equivalent of
approximately $52 million) under a five-year fixed rate financing
arrangement. The Company expects its cash and cash equivalents, short-term
investments, cash flows from operating activities, and projected borrowing
capacity will be sufficient to meet its projected operating cash needs,
including integration costs, at least through the end of 1997.
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 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.
Further, product liability claims may be asserted in the future relative to
events not known to management at the present time. 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.
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 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 ability to effectively manage its inventory
levels and mix; b) the Company's ability to realize benefits from its cost
savings programs; c) the potential impacts of continued consolidation among
healthcare providers, trends towards managed care, and healthcare cost
containment; d) the Company's belief that it is well positioned to take
advantage of opportunities for growth that exist in the markets it serves;
e) 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; f) the
Company's ability to absorb certain spending programs over a number of
quarters and to take advantage of expanded market opportunities; g) the
potential effect of foreign currency fluctuations on sales and expenses and
on the Company's hedge transactions; h) the process and plans for the
integration of businesses acquired by the Company; i) the Company's
continuing focus on strategic initiatives and existing relationships; j) the
Company's plans to continue to invest aggressively in its global information
system and worldwide manufacturing and distribution capacity; and, k) the
ability of the Company to meet its projected cash needs through the end of
1997. 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 filings with the Securities and Exchange Commission 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.
OTHER INFORMATION
Item 1: Legal Proceedings
Note H - Commitments and Contingencies to the Company's unaudited condensed
consolidated financial statements contained elsewhere in this
Quarterly Report is incorporated herein by reference.
Item 4: Submissions of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on May 6, 1997,
to consider and vote upon proposals to elect three Class II Directors of the
Company to hold office until the 2000 Annual Meeting of Stockholders of the
Company, and until their respective successors are chosen and qualified or
until their earlier resignation, death or removal. John E. Abele, Joel L.
Fleishman and Lawrence L. Horsch were elected as Class II Directors of the
Company by a vote of 152,729,971, 152,885,213, and 152,826,728 for,
respectively, and 1,485,537, 1,330,295, and 1,338,780 withheld,
respectively.
Item 5. Other Events
On April 8, 1997, Patriot Acquisition Corp., a wholly owned subsidiary of
the Company, was merged (the "Merger") with and into Target Therapeutics,
Inc. ("Target"). The Merger was approved by the shareholders of Target at a
special meeting on April 8, 1997. As a result of the Merger, Target became
a wholly owned subsidiary of the Company. The Merger is accounted for as a
pooling of interests and qualifies as a tax free reorganization. Target's
shareholders received 1.07 shares of the Company's common stock in exchange
for each share of Target common stock. Approximately 16.5 million shares of
the Company's common stock were issued in connection with the Merger.
A copy of the Company's press release announcing the completion of the
Merger is filed as an exhibit hereto and incorporated herein by reference.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - Form of Amended and Restated Credit Agreement
dated June 10, 1997 among the Company, The Several Lenders and
certain other parties.
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
Exhibit 99.1 - Press Release dated April 8, 1997
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, 1997.
BOSTON SCIENTIFIC CORPORATION
By: /s/ Lawrence C. Best
----------------------------------------
Name: Lawrence C. Best
Title: Chief Financial Officer and
Senior Vice President -
Finance and Administration
Exhibit 10.1
EXECUTION COPY
================================================================================
AMENDED AND RESTATED 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
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of June 10, 1997
================================================================================
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. DEFINITIONS.................................................. 1
1.1 Defined Terms.................................................. 1
1.2 Other Definitional Provisions.................................. 19
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.............................. 20
2.1 Revolving Credit Commitments................................... 20
2.2 Procedure for Revolving Credit Borrowing....................... 20
2.3 Facility Fee................................................... 21
2.4 Termination or Reduction of Commitments; Extension of
Termination Date.............................................. 21
2.5 Repayment of Revolving Credit Loans............................ 22
2.6 CAF Advances................................................... 22
2.7 Procedure for CAF Advance Borrowing............................ 23
2.8 Repayment of CAF Advances...................................... 26
2.9 Certain Restrictions with Respect to CAF Advances.............. 26
2.10 Multicurrency Commitments..................................... 26
2.11 Repayment of Multicurrency Loans;............................. 26
2.12 Procedure for Multicurrency Borrowing......................... 27
2.13 Termination or Reduction of Multicurrency Commitments......... 27
2.14 Borrowings of Revolving Credit Loans and Refunding of Loans... 27
2.15 Commitment Increases.......................................... 29
SECTION 3. CERTAIN PROVISIONS APPLICABLE TO THE LOANS................... 31
3.1 Optional and Mandatory Prepayments............................. 31
3.2 Conversion and Continuation Options............................ 32
3.3 Minimum Amounts and Maximum Number of Tranches................. 32
3.4 Interest Rates and Payment Dates............................... 33
3.5 Computation of Interest and Fees............................... 33
3.6 Inability to Determine Interest Rate........................... 34
3.7 Pro Rata Treatment and Payments................................ 35
3.8 Illegality; Unification of Currency............................ 36
3.9 Requirements of Law............................................ 37
3.10 Taxes......................................................... 38
3.11 Indemnity..................................................... 39
3.12 Change of Lending Office; Removal of Lender................... 40
3.13 Evidence of Debt.............................................. 40
SECTION 4. LOCAL CURRENCY FACILITIES.................................... 42
4.1 Terms of Local Currency Facilities............................. 42
4.2 Reporting of Local Currency Outstandings....................... 43
SECTION 5. REPRESENTATIONS AND WARRANTIES............................... 45
5.1 Financial Condition............................................ 45
5.2 No Change...................................................... 45
5.3 Corporate Existence; Compliance with Law....................... 45
5.4 Corporate Power; Authorization; Enforceable Obligations........ 46
5.5 No Legal Bar................................................... 46
5.6 No Material Litigation......................................... 46
5.7 No Default..................................................... 46
5.8 Intellectual Property.......................................... 46
5.9 Taxes.......................................................... 47
5.10 Federal Regulations........................................... 47
5.11 ERISA......................................................... 47
5.12 Investment Company Act; Other Regulations..................... 48
5.13 Purpose of Loans.............................................. 48
5.14 Environmental Matters......................................... 48
5.15 Disclosure.................................................... 49
SECTION 6. CONDITIONS PRECEDENT......................................... 50
6.1 Conditions to Initial Loans.................................... 50
6.2 Conditions to Each Loan........................................ 51
SECTION 7. AFFIRMATIVE COVENANTS........................................ 52
7.1 Financial Statements........................................... 52
7.2 Certificates; Other Information................................ 52
7.3 Payment of Obligations......................................... 53
7.4 Conduct of Business and Maintenance of Existence............... 53
7.5 Maintenance of Property; Insurance............................. 53
7.6 Inspection of Property; Books and Records; Discussions......... 53
7.7 Notices........................................................ 53
SECTION 8. NEGATIVE COVENANTS........................................... 55
8.1 Funded Debt Ratio.............................................. 55
8.2 Limitation on Liens............................................ 55
8.3 Limitation on Fundamental Changes.............................. 56
SECTION 9. EVENTS OF DEFAULT............................................ 57
SECTION 10. THE ADMINISTRATIVE AGENT; THE ARRANGER; THE SYNDICATION
AGENT;...................................................... 60
10.1 Appointment................................................... 60
10.2 Delegation of Duties.......................................... 60
10.3 Exculpatory Provisions........................................ 60
10.4 Reliance by Administrative Agent.............................. 60
10.5 Notice of Default............................................. 61
10.6 Non-Reliance on Administrative Agent and Other Lenders........ 61
10.7 Indemnification............................................... 62
10.8 Administrative Agent in Its Individual Capacity............... 62
10.9 Successor Administrative Agent................................ 62
10.10 The Arranger; the Syndication Agent.......................... 63
SECTION 11. GUARANTEE................................................... 64
11.1 Guarantee..................................................... 64
11.2 No Subrogation................................................ 64
11.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights....................................................... 64
11.4 Guarantee Absolute and Unconditional.......................... 65
11.5 Reinstatement................................................. 66
11.6 Payments...................................................... 66
SECTION 12. MISCELLANEOUS............................................... 67
12.1 Amendments and Waivers........................................ 67
12.2 Notices....................................................... 68
12.3 No Waiver; Cumulative Remedies................................ 69
12.4 Survival of Representations and Warranties.................... 69
12.5 Payment of Expenses and Taxes................................. 69
12.6 Successors and Assigns; Participations and Assignments........ 70
12.7 Adjustments; Set-off.......................................... 72
12.8 Counterparts.................................................. 72
12.9 Severability.................................................. 73
12.10 Integration.................................................. 73
12.11 GOVERNING LAW................................................ 73
12.12 Submission To Jurisdiction; Waivers.......................... 73
12.13 Acknowledgements............................................. 74
12.14 WAIVERS OF JURY TRIAL........................................ 74
12.15 Confidentiality.............................................. 74
12.16 Loan Conversion/Participations............................... 74
12.17 Judgment..................................................... 75
SCHEDULES
Schedule I Names, Addresses and Commitments of Lenders
Schedule II Information Concerning Local Currency Loans
Schedule 8.2 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 Closing Certificate
Exhibit G Form of Opinion of Counsel to Borrower
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Local Currency Facility Addendum
Exhibit J Form of New Lender Supplement
Exhibit K Form of Commitment Increase Supplement
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 10, 1997, 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 (in such capacity, the "Syndication Agent"), and
(v) THE CHASE MANHATTAN 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, certain of the Lenders, the Arranger, the
Syndication Agent and the Administrative Agent are parties to a Credit
Agreement, dated as of June 7, 1996 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed to amend and restate the Existing
Credit Agreement as set forth herein;
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 that on the Closing Date the Existing Credit Agreement will be
amended and restated in its entirety 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 Chase 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
Chase 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.
"Adjusted Aggregate Committed Outstandings": with respect to each
Lender, the Aggregate Committed Outstandings of such Lender, plus the
amount of any participating interests purchased by such Lender pursuant
to subsection 12.16, minus the amount of any participating interests sold
by such Lender pursuant to subsection 12.16.
"Administrative Agent": Chase, 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.
"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.
"Aggregate Available Multicurrency Commitments": as at any date of
determination with respect to all Multicurrency Lenders, an amount in
U.S. Dollars equal to the Available Multicurrency Commitments of all
Multicurrency Lenders on such date.
"Aggregate Available Revolving Credit Commitments": as at any date
of determination with respect to all Lenders, an amount in U.S. Dollars
equal to the Available Revolving Credit Commitments of all Lenders on
such date.
"Aggregate Committed Outstandings": as at any date of determination
with respect to any Lender, an amount in U.S. Dollars equal to the sum of
(a) the Aggregate Revolving Credit Outstandings of such Lender on such
date, (b) the U.S. Dollar Equivalent of the Aggregate Multicurrency
Outstandings of such Lender on such date and (c) the U.S. Dollar
Equivalent of the Aggregate Local Currency Outstandings of such Lender on
such date.
"Aggregate Local Currency Outstandings": as at any date of
determination with respect to any Lender, an amount in the applicable
Local Currencies equal to the aggregate unpaid principal amount of such
Lender's Local Currency Loans.
"Aggregate Multicurrency Outstandings": as at any date of
determination with respect to any Lender, an amount in the applicable
Available Foreign Currencies equal to the aggregate unpaid principal
amount of such Lender's Multicurrency Loans.
"Aggregate Revolving Credit Commitments": the aggregate amount of
the Revolving Credit Commitments of all of the Lenders.
"Aggregate Revolving Credit Outstandings": as at any date of
determination with respect to any Lender, an amount in U.S. Dollars equal
to the aggregate unpaid principal amount of such Lender's Revolving
Credit Loans on such date.
"Aggregate Total Outstandings": as at any date of determination
with respect to any Lender, an amount in U.S. Dollars equal to the sum of
(a) the Aggregate Revolving Credit Outstandings of such Lender on such
date, (b) the U.S. Dollar Equivalent of the aggregate unpaid principal
amount of such Lender's CAF Advances on such date, (c) the U.S. Dollar
Equivalent of the Aggregate Multicurrency Outstandings of such Lender on
such date and (d) the U.S. Dollar Equivalent of the Aggregate Local
Currency Outstandings of such Lender on such date.
"Agreement": this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Agreement Currency": as defined in subsection 12.17(b).
"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:
<TABLE>
<CAPTION>
Eurodollar Loans
Rating /Multicurrency Loans ABR Loans
-----------------------------------------------
<S> <C> <C>
Rating I .100% 0%
Rating II .095% 0%
Rating III .130% 0%
Rating IV .170% 0%
Rating V .175% 0%
</TABLE>
"Assignee": as defined in subsection 12.6(c).
"Available Foreign Currencies": Deutsche Marks, French Francs,
Japanese Yen, Irish Pounds and any other available and freely-convertible
non-U.S. Dollar currency selected by the Borrower and approved by the
Administrative Agent and the Multicurrency Lenders.
"Available Multicurrency Commitment": as at any date of
determination with respect to any Multicurrency Lender (after giving
effect to the making and payment of any Revolving Credit Loans required
to be made on such date pursuant to subsection 2.14), an amount in U.S.
Dollars equal to the lesser of (a) the excess, if any, of (i) the amount
of such Multicurrency Lender's Multicurrency Commitment in effect on such
date over (ii) the U.S. Dollar Equivalent of the Aggregate Multicurrency
Outstandings of such Multicurrency Lender on such date and (b) the
excess, if any, of (i) the amount of such Lender's Revolving Credit
Commitment in effect on such date over (ii) the Aggregate Committed
Outstandings of such Lender on such date.
"Available Revolving Credit Commitment": as at any date of
determination with respect to any Lender (after giving effect to the
making and payment of any Revolving Credit Loans required to be made on
such date pursuant to subsection 2.14), an amount in U.S. Dollars equal
to the excess, if any, of (a) the amount of such Lender's Revolving
Credit Commitment in effect on such date over (b) the Aggregate Committed
Outstandings of such Lender on such date.
"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified in a notice pursuant
to subsection 2.3, 2.7 or 2.12 as a date on which the Borrower requests
the Lenders to make Loans hereunder or, with respect to Local Currency
Loans, the date on which a Foreign Subsidiary Borrower requests Local
Currency Lenders to make Local Currency Loans to such Foreign Subsidiary
Borrower pursuant to the Local Currency Facility to which such Foreign
Subsidiary Borrower and Local Currency Lenders are parties.
"Business": as defined in subsection 5.14.
"Business Day": (a) when such term is used in respect of a day on
which a Loan denominated in an Available Foreign Currency or Local
Currency is to be made, a payment is to be made in respect of such Loan,
an Exchange Rate is to be set in respect of such Available Foreign
Currency or Local Currency or any other dealing in such Available Foreign
Currency or Local Currency is to be carried out pursuant to this
Agreement, such term shall mean a London Banking Day which is also a day
on which banks are open for general banking business in the city which is
the principal financial center of the country of issuance of such
Available Foreign Currency or Local Currency, (b) 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 Eurodollar Loan or a LIBO
Rate CAF Advance, such day shall be a London Banking Day and (c) when
such term is used in any context in this Agreement (including as
described in the foregoing clauses (a) and (b)), such term shall mean a
day which, in addition to complying with any applicable requirements set
forth in the foregoing clause (a) and (b), is 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.
"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 3.13 (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. ss. 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.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
"Closing Date": the date, on or before June 30, 1997, on which the
conditions precedent set forth in subsection 6.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commitments": the collective reference to the Revolving Credit
Commitments and the Multicurrency Commitments.
"Committed Outstandings Percentage": on any date with respect to
any Lender, the percentage which the Adjusted Aggregate Committed
Outstandings of such Lender constitutes of the Adjusted Aggregate
Committed Outstandings of all Lenders.
"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 or investments 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 or
investment, or within 12 months from the time identification of such
costs is required, 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 plus (c) special charges (which would be designated as
merger-related charges and expenses in the notes to the Borrower's
audited annual consolidated financial statements) incurred in merging of
operations related to acquisition of Target Therapeutics, Inc.
"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.
"Conversion Date": any date on which either (a) an Event of Default
under Section 9(e) has occurred or (b) the Commitments shall have been
terminated and/or the Loans shall have been declared immediately due and
payable pursuant to Section 9.
"Conversion Sharing Percentage": on any date with respect to any
Lender and any Loans of such Lender outstanding in any currency other
than U.S. Dollars, the percentage of such Loans such that, after giving
effect to the conversion of such Loans to U.S. Dollars and the purchase
and sale by such Lender of participating interests as contemplated by
subsection 12.16, the Committed Outstandings Percentage of such Lender
will equal such Lender's Revolving Credit Commitment Percentage on such
date (calculated immediately prior to giving effect to any termination or
expiration of the Commitments on the Conversion Date).
"Converted Loans: as defined in subsection 12.16(a).
"Default": any of the events specified in Section 9, 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 Base Rate": (a) with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, or a Multicurrency Loan
or CAF Advance denominated in any currency other than Pounds Sterling,
the rate per annum determined by the Administrative Agent to be the
offered rate for deposits in the applicable currency with a term
comparable to such Interest Period that appears on the applicable
Telerate Page at approximately 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period; provided, however, that
if at any time for any reason such offered rate for any such currency
does not appear on a Telerate Page, "Eurocurrency Base Rate" shall mean,
with respect to each day during each Interest Period pertaining to a Loan
denominated in such currency, 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 deposits in such
currency at or about 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period in the London interbank market for
delivery on the first day of such Interest Period for the number of days
comprised therein; and (b) with respect to each day during each Interest
Period pertaining to a Multicurrency Loan or CAF Advance denominated in
Pounds Sterling, 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 deposits in Pounds Sterling at or
about 11:00 A.M., London time, two Business Days prior to the beginning
of such Interest Period in the Paris interbank market for delivery on the
first day of such Interest Period for the number of days comprised
therein.
"Eurocurrency Rate": with respect to each day during each Interest
Period pertaining to a Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
Eurocurrency Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to a
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 Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the Eurocurrency Rate for Dollars.
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Exchange Rate": with respect to any non-U.S. Dollar currency on
any date, the rate at which such currency may be exchanged into U.S.
Dollars, as set forth on such date on the relevant Reuters currency page
at or about 11:00 A.M., London time, on such date. In the event that such
rate does not appear on any Reuters currency page, the "Exchange Rate"
with respect to such non-U.S. Dollar currency shall be determined by
reference to such other publicly available service for displaying
exchange rates as may be agreed upon by the Administrative Agent and the
Borrower or, in the absence of such agreement, such "Exchange Rate" shall
instead be the Administrative Agent's spot rate of exchange in the
interbank market where its foreign currency exchange operations in
respect of such non-U.S. Dollar currency are then being conducted, at or
about 10:00 A.M., local time, on such date for the purchase of U.S.
Dollars with such non-U.S. Dollar currency, for delivery two Business
Days later; provided, that if at the time of any such determination, no
such spot rate can reasonably be quoted, the Administrative Agent may use
any reasonable method as it deems applicable to determine such rate, and
such determination shall be conclusive absent manifest error.
"Existing Credit Agreement": as defined in the recitals hereto.
"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:
<TABLE>
<CAPTION>
Facility
Rating Fee Rate
------------------------
<S> <C>
Rating I .050%
Rating II .055%
Rating III .070%
Rating IV .080%
Rating V .125%
</TABLE>
"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 Eurocurrency Rate plus (or minus) a
margin).
"Foreign Subsidiary Borrower": each Subsidiary of the Borrower
organized under the laws of a jurisdiction outside the United States that
the Borrower designates as a "Foreign Subsidiary Borrower" in a Local
Currency Facility Addendum.
"Funding Commitment Percentage": as at any date of determination
(after giving effect to the making and payment of any Loans made on such
date pursuant to subsection 2.14), with respect to any Lender, that
percentage which the Available Revolving Credit Commitment of such Lender
then constitutes of the Aggregate Available Revolving Credit Commitments.
"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 5.1.
"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
unrelated 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
or Multicurrency Loan having an Interest Period of three months or less,
the last day of such Interest Period, and (c) as to any Eurodollar Loan
or Multicurrency 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": (a) with respect to any Eurodollar Loan or
Multicurrency Loan:
(i) initially, the period commencing on the Borrowing Date or
conversion date, as the case may be, with respect to such
Eurodollar Loan or Multicurrency 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 or Multicurrency 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 in respect of any Loan made by any
Lender that would otherwise extend beyond the Termination Date
applicable to such Lender shall end on such Termination Date;
(3) any Interest Period pertaining to a Multicurrency Loan
denominated in an Available Foreign Currency being replaced by the
currency of the European Monetary Union that would otherwise extend
beyond the date on which such replacement becomes effective shall
end on such date; and
(4) 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; and
(b) with respect to any LIBO Rate CAF Advance, the period beginning
on the Borrowing Date with respect thereto and ending on the CAF Advance
Maturity Date with respect thereto.
"Judgment Currency": as defined in subsection 12.17(b).
"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 Eurocurrency Rate for the currency of such CAF Advance 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, CAF Advance, Multicurrency Loan
or Local Currency Loan, as the case may be.
"Loan Documents": this Agreement, any Notes and any document or
instrument evidencing or governing any Local Currency Facility.
"Loans to be Converted": as defined in subsection 12.16(a).
"Local Currency": any available and freely convertible non-U.S.
Dollar currency selected by a Foreign Subsidiary Borrower and approved by
the Administrative Agent.
"Local Currency Facility": any Qualified Credit Facility that the
Borrower designates as a "Local Currency Facility" pursuant to a Local
Currency Facility Addendum.
"Local Currency Facility Addendum": a Local Currency Facility
Addendum received by the Administrative Agent, substantially in the form
of Exhibit I, and conforming to the requirements of Section 4.
"Local Currency Facility Agent": with respect to each Local
Currency Facility, the Local Currency Lender acting as agent for the
Local Currency Lenders parties thereto (and, in the case of any Local
Currency Facility to which only one Lender is a party, such Lender).
"Local Currency Facility Maximum Borrowing Amount": as defined in
subsection 4.1(b).
"Local Currency Lender": any Lender (or, if applicable, any
Affiliate, branch or agency thereof) party to a Local Currency Facility.
"Local Currency Lender Maximum Borrowing Amount": as defined in
subsection 4.1(b).
"Local Currency Loan": any loan made pursuant to a Local Currency
Facility.
"London Banking Day": any day on which banks in London are open for
general banking business, including dealings in foreign currency and
exchange.
"Majority Lenders": (a) at any time prior to the termination of the
Revolving Credit Commitments, Lenders, the Revolving Credit Commitment
Percentages of which aggregate more than 50%; and (b) at any time after
the termination of the Revolving Credit Commitments, Lenders whose
Aggregate Total Outstandings aggregate more than 50% of the Aggregate
Total Outstandings of all Lenders; provided that for purposes of this
definition the Aggregate Total Outstandings of each Lender shall be
adjusted up or down so as to give effect to any participations purchased
or sold pursuant to subsection 12.16.
"Majority Multicurrency Lenders": at any time, Multicurrency
Lenders the Multicurrency 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.
"Multicurrency Commitment": as to any Multicurrency Lender at any
time, its obligation to make Multicurrency Loans to the Borrower in an
aggregate amount in Available Foreign Currencies the U.S. Dollar
Equivalent of which does not exceed at any time outstanding the amount
set forth opposite such Multicurrency Lender's name in Schedule I under
the heading "Multicurrency Commitment", as such amount may be reduced
from time to time as provided in subsection 2.13 and the other applicable
provisions hereof.
"Multicurrency Commitment Percentage": as to any Multicurrency
Lender at any time, the percentage which such Multicurrency Lender's
Multicurrency Commitment at such time constitutes of the aggregate
Multicurrency Commitments of all Multicurrency Lenders at such time (or,
if the Multicurrency Commitments have terminated or expired, the
percentage which (a) the U.S. Dollar Equivalent of the Aggregate
Multicurrency Outstandings of such Multicurrency Lender at such time
constitutes of (b) the U.S. Dollar Equivalent of the Aggregate
Multicurrency Outstandings of all Multicurrency Lenders at such time).
"Multicurrency Lender": each Lender having an amount greater than
zero set forth opposite such Lender's name in Schedule I under the
heading "Multicurrency Commitment."
"Multicurrency Loans": as defined in subsection 2.10.
"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 3.10.
"Non-Multicurrency Lender": each Lender which is not a
Multicurrency Lender.
"Notes": the collective reference to any Revolving Credit Notes and
any CAF Advance Notes.
"Notice of Local Currency Outstandings": with respect to each Local
Currency Facility Agreement, a notice from the relevant Local Currency
Facility Agent containing the information, delivered to the Person, in
the manner and by the time, specified for a Notice of Local Currency
Outstandings in Schedule II.
"Notice of Multicurrency Loan Borrowing": with respect to a
Multicurrency Loan, a notice from the Borrower containing the information
in respect of such Loan, delivered to the Person, in the manner and by
the time, specified for a Notice of Multicurrency Loan Borrowing in
respect of the currency of such Loan in Schedule II.
"Notice of Multicurrency Loan Continuation": with respect to a
Multicurrency Loan, a notice from the Borrower containing the information
in respect of such Loan, delivered to the Person, in the manner and by
the time, specified for a Notice of Multicurrency Loan Continuation in
respect of the currency of such Loan in Schedule II.
"Obligations": collectively, the unpaid principal of and interest
on the Loans and all other obligations and liabilities of each Foreign
Subsidiary Borrower under this Agreement and any Local Currency Facility
and other Loan Documents to which it is a party (including, without
limitation, interest accruing at the then applicable rate provided in
this Agreement or any other applicable Loan Document after the maturity
of the Loans and interest accruing at the then applicable rate provided
in this Agreement or any other applicable Loan Document after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Foreign Subsidiary
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, the Notes, the other Loan Documents or any other document
made, delivered or given in connection therewith, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to
the Lenders that are required to be paid by any Foreign Subsidiary
Borrower pursuant to the terms of this Agreement or any other Loan
Document).
"Participant": as defined in subsection 12.6(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 5.14.
"Qualified Credit Facility": a credit facility (a) providing for
one or more Local Currency Lenders to make loans denominated in a Local
Currency to a Foreign Subsidiary Borrower, (b) providing for such loans
to bear interest at a rate or rates determined by the Borrower and such
Local Currency Lender or Local Currency Lenders and (c) otherwise
conforming to the requirements of Section 4.
"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 and Rating V.
"Rating I, Rating II, Rating III, Rating IV and Rating V": the
respective Ratings set forth below:
<TABLE>
<CAPTION>
Rating
Category S&P Moody's
------------------------------------------------
<S> <C> <C>
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
</TABLE>
; 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 V 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": Chase, 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. ss. 2615.
"Requested Local Currency Loans": as defined in subsection 2.14(b).
"Requested Multicurrency Loans": as defined in subsection
2.14(a).
"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": with respect to the Borrower, 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 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.
"Revolving Credit Commitment Percentage": as to any Lender at any
time, the percentage which such Lender's Revolving Credit Commitment at
such time constitutes of the Aggregate Revolving Credit Commitments at
such time (or, if the Revolving Credit Commitments have terminated or
expired, the percentage which (a) the Aggregate Revolving Credit
Outstandings of such Lender at such time then constitutes of (b) the
Aggregate Revolving Credit Outstandings of all Lenders at such time).
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 3.13(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 or
Multicurrency 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" or "Multicurrency
Tranches".
"Transferee": as defined in subsection 12.6(f).
"Type": as to any Revolving Credit Loan, its nature as an ABR Loan
or a Eurodollar Loan.
"U.S. Dollar Equivalent": with respect to an amount denominated in
any currency other than U.S. Dollars, the equivalent in U.S. Dollars of
such amount determined at the Exchange Rate on the date of determination
of such equivalent. In making any determination of the U.S. Dollar
Equivalent for purposes of calculating the amount of Loans to be borrowed
from the respective Lenders on any Borrowing Date, the Administrative
Agent shall use the relevant Exchange Rate in effect on the date on which
the interest rate for such Loans is determined pursuant to the provisions
of this Agreement and the other Loan Documents.
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") in U.S. Dollars to the Borrower from time to time during the
Commitment Period so long as after giving effect thereto (i) the Available
Revolving Credit Commitment of each Lender is greater than or equal to zero and
(ii) the Aggregate Total Outstandings of all Lenders do not exceed the
Aggregate Revolving Credit Commitments. During the Commitment Period the
Borrower may use the Revolving Credit 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 3.2, 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 Revolving Credit 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 Revolving Credit Commitments (other than a borrowing under subsection
2.14) 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 Aggregate
Available Revolving Credit 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.
Prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the
Borrower, each Lender will make an amount equal to its Funding Commitment
Percentage of the principal amount of the Revolving Credit Loans requested to
be made on such Borrowing Date available to the Administrative Agent for the
account of the Borrower at the New York office of the Administrative Agent
specified in subsection 12.2 in funds immediately available to the
Administrative Agent. Except as otherwise provided in subsection 2.14, 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 Revolving Credit
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 Revolving Credit 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 Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction shall be permitted
if, after giving effect thereto and to any prepayments of the Loans made on the
effective date thereof, either (a) the Aggregate Available Revolving Credit
Commitments would not be greater than or equal to zero or (b) the Available
Revolving Credit Commitments of any Lender would not be greater than or equal
to zero. Any such reduction shall be in an amount equal to $5,000,000 or a
whole multiple thereof and shall reduce permanently the Revolving Credit
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 180 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 Revolving Credit
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
Revolving Credit Commitment (any Lender who timely notifies the Borrower and
the Administrative Agent of an election not to extend its Revolving Credit
Commitment and any Lender so deemed to have elected not to extend its Revolving
Credit 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 at least 60% of the Aggregate
Revolving Credit Commitments on the date of the notice delivered by the
Borrower pursuant to subparagraph (i) above (including Revolving Credit
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 Revolving Credit 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 Revolving Credit
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 12.6) 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 Revolving
Credit 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 Revolving Credit
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 3.11 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 Revolving Credit 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 9). 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 3.4.
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. LIBO Rate CAF Advance may be
denominated in U.S. Dollars or any other available and freely-convertible
eurocurrency acceptable to the bidding Lender, and Fixed Rate CAF Advances
shall be denominated in U.S. Dollars. 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 Revolving Credit 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 (or, in the case of CAF
Advances to be denominated in a currency other than U.S. Dollars, an amount in
such currency the U.S. Dollar Equivalent of which is equal to $5,000,000 or
$1,000,000, as the case may be) 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 Eurocurrency 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
Revolving Credit Commitment); and
(ii) the margin above or below the applicable Eurocurrency 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 Revolving Credit
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 or, in the case of CAF Advances to be denominated
in a currency other than U.S. Dollars, and amount in such currency the
U.S. Dollar Equivalent of which is approximately equal to $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 (or, in the case of CAF Advances to
be denominated in a currency other than U.S. Dollars, an amount in such
currency the U.S. Dollar Equivalent of which is approximately equal to
$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 (or, in the case
of CAF Advances to be denominated in a currency other than U.S. Dollars,
an amount in such currency the U.S. Dollar Equivalent of which is
approximately equal to $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 (in
the case of CAF Advances denominated in U.S. Dollars) and before the funding
time for the relevant currency from time to time specified by the
Administrative Agent by notice to the Lenders (in the case of CAF Advances
denominated in any currency other than Dollars), each Lender whose CAF Advance
Offer has been accepted shall make available to the Administrative Agent the
amount of CAF Advances to be made by such Lender, in immediately available
funds, at the funding office for the relevant currency specified from time to
time by the Administrative Agent by notice to the Lenders. 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 Repayment of CAF Advances. 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. The Borrower hereby further
agrees to 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.
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 Multicurrency Commitments. Subject to the terms and conditions
hereof, each Multicurrency Lender severally agrees to make revolving credit
loans (each, a "Multicurrency Loan") in any Available Foreign Currency to the
Borrower from time to time during the Commitment Period so long as after giving
effect thereto (a) the Available Multicurrency Commitment of each Multicurrency
Lender is greater than or equal to zero, (b) the aggregate outstanding
principal amount of Multicurrency Loans does not exceed an amount the U.S.
Dollar Equivalent of which is $50,000,000 and (c) the Aggregate Total
Outstandings of all Lenders do not exceed the Aggregate Revolving Credit
Commitments. During the Commitment Period, the Borrower may use the
Multicurrency Commitments by borrowing, repaying the Multicurrency Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
2.11 Repayment of Multicurrency Loans;. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Multicurrency Lender the then unpaid principal amount of each
Multicurrency Loan of such Multicurrency Lender on the Termination Date and on
such other date(s) and in such other amounts as may be required from time to
time pursuant to this Agreement. The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Multicurrency Loans advanced to
it and from time to time outstanding until payment thereof in full at the rates
per annum, and on the dates, set forth in subsection 3.4.
2.12 Procedure for Multicurrency Borrowing. The Borrower may request the
Multicurrency Lenders to make Multicurrency Loans during the Commitment Period
on any Business Day by delivering a Notice of Multicurrency Loan Borrowing.
Each borrowing under the Multicurrency Commitments shall be in an amount in an
Available Foreign Currency the U.S. Dollar Equivalent of which is equal to at
least $1,000,000 (or, if the then Aggregate Available Multicurrency Commitments
are less than $1,000,000, such lesser amount). Upon receipt of any such Notice
of Multicurrency Borrowing from the Borrower, the Administrative Agent shall
promptly notify each Multicurrency Lender thereof. Not later than the funding
time for the relevant Available Foreign Currency specified from time to time by
the Administrative Agent by notice to the Borrower and the Multicurrency
Lenders each Multicurrency Lender shall make an amount equal to its
Multicurrency Commitment Percentage of the principal amount of Multicurrency
Loans requested to be made on such Borrowing Date available to the
Administrative Agent at the funding office for the relevant Available Foreign
Currency specified from time to time by the Administrative Agent by notice to
the Borrower and the Multicurrency Lenders in the relevant Available Foreign
Currency and in immediately available funds. The amounts made available by each
Multicurrency Lender will then be made available to the Borrower at such
funding office and in like funds as received by the Administrative Agent.
2.13 Termination or Reduction of Multicurrency Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Multicurrency Commitments or, from time
to time, to reduce the amount of the Multicurrency Commitments; provided that
no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date thereof,
the Available Multicurrency Commitment of any Multicurrency Lender would be
less than zero. Any such reduction shall be in an amount equal to U.S.
$1,000,000 or a whole multiple of U.S. $100,000 in excess thereof and shall
reduce permanently the Multicurrency Commitments then in effect.
2.14 Borrowings of Revolving Credit Loans and Refunding of Loans. (a) If
on any Borrowing Date on which the Borrower has requested the Multicurrency
Lenders to make Multicurrency Loans (the "Requested Multicurrency Loans"), (i)
the aggregate principal amount of the Requested Multicurrency Loans exceeds the
Aggregate Available Multicurrency Commitments on such Borrowing Date (before
giving effect to the making and payment of any Loans required to be made
pursuant to this subsection 2.14 on such Borrowing Date) and, (ii) the U.S.
Dollar Equivalent of the amount of such excess is less than or equal to the
aggregate Available Revolving Credit Commitments of all Non-Multicurrency
Lenders (before giving effect to the making and payment of any Loans pursuant
to this subsection 2.14 on such Borrowing Date), each Non-Multicurrency Lender
shall make a Revolving Credit Loan to the Borrower on such Borrowing Date, and
the proceeds of such Revolving Credit Loans shall be simultaneously applied to
repay outstanding Revolving Credit Loans and/or Local Currency Loans of the
Multicurrency Lenders (as directed by the Borrower) in each case in amounts
such that, after giving effect to (1) such borrowings and repayments and (2)
the borrowing from the Multicurrency Lenders of the Requested Multicurrency
Loans, the Committed Outstanding Percentage of each Lender will equal (as
nearly as possible) its Revolving Credit Commitment Percentage. To effect such
borrowings and repayments, (x) not later than 12:00 Noon, New York City time,
on such Borrowing Date, the proceeds of such Revolving Credit Loans shall be
made available by each Non-Multicurrency Lender to the Administrative Agent at
its New York office specified in subsection 12.2 in U.S. Dollars and in
immediately available funds and the Administrative Agent shall apply the
proceeds of such Revolving Credit Loans toward repayment of outstanding
Revolving Credit Loans and/or Local Currency Loans of the Multicurrency Lenders
(as directed by the Borrower) and (y) concurrently with the repayment of such
Loans on such Borrowing Date, (I) the Multicurrency Lenders shall, in
accordance with the applicable provisions hereof, make the Requested
Multicurrency Loans in an aggregate amount equal to the amount so requested by
the Borrower (but not in any event greater than the Aggregate Available
Multicurrency Commitments after giving effect to the making of such repayment
of any Loans on such Borrowing Date) and (II) the Borrower shall pay to the
Administrative Agent for the account of the Lenders whose Loans to the Borrower
are repaid on such Borrowing Date pursuant to this subsection 2.14 all interest
accrued on the amounts repaid to the date of repayment, together with any
amounts payable pursuant to subsection 3.11 in connection with such repayment.
(b) Subject to the limitations on borrowings contained in a given Local
Currency Facility, if on any Borrowing Date on which a Foreign Subsidiary
Borrower has requested Local Currency Lenders to make Local Currency Loans (the
"Requested Local Currency Loans") under a Local Currency Facility to which such
Foreign Subsidiary Borrower and Local Currency Lenders are parties (i) the
aggregate principal amount of the Requested Local Currency Loans exceeds the
aggregate available amount of the commitments of such Local Currency Lenders
under such Local Currency Facility on such Borrowing Date (before giving effect
to the making and payment of any Revolving Credit Loans required to be made
pursuant to this subsection 2.14 on such Borrowing Date), (ii) after giving
effect to the Requested Local Currency Loans, the U.S. Dollar Equivalent of the
aggregate outstanding principal amount of Local Currency Loans of such Foreign
Subsidiary Borrower will be less than or equal to the aggregate commitments of
such Local Currency Lenders under such Local Currency Facility and (iii) the
U.S. Dollar Equivalent of the amount of the excess described in clause (i)
above is less than or equal to the Aggregate Available Revolving Credit
Commitments of all Lenders other than such Local Currency Lenders (before
giving effect to the making and payment of any Revolving Credit Loans pursuant
to this subsection 2.14 on such Borrowing Date), each such other Lender shall
make a Revolving Credit Loan to the Borrower, on such Borrowing Date, and the
proceeds of such Revolving Credit Loans shall be simultaneously applied to
repay outstanding Revolving Credit Loans, Multicurrency Loans and/or Local
Currency Loans of such Local Currency Lenders (as directed by the Borrower) in
each case in amounts such that, after giving effect to (1) such borrowings and
repayments and (2) the borrowing from such Local Currency Lenders of the
Requested Local Currency Loans, the Committed Outstandings Percentage of each
Lender will equal (as nearly as possible) its Revolving Credit Commitment
Percentage. To effect such borrowings and repayments, (x) not later than 12:00
Noon, New York City time, on such Borrowing Date, the proceeds of such
Revolving Credit Loans shall be made available by each such other Lender to the
Administrative Agent at its New York office specified in subsection 12.2 in
U.S. Dollars and in immediately available funds and the Administrative Agent
shall apply the proceeds of such Revolving Credit Loans toward the repayment of
outstanding Revolving Credit Loans, Multicurrency Loans and/or Local Currency
Loans of such Local Currency Lenders (as directed by the Borrower) and (y)
concurrently with the repayment of such Revolving Credit Loans on such
Borrowing Date, (I) such Local Currency Lenders shall, in accordance with the
applicable provisions hereof, make the Requested Local Currency Loans in an
aggregate amount equal to the amount so requested by such Foreign Subsidiary
Borrower and (II) the relevant Foreign Subsidiary Borrower shall pay to the
Administrative Agent for the account of the Lenders whose Loans to such
Borrower are repaid on such Borrowing Date pursuant to this subsection 2.14 all
interest accrued on the amounts repaid to the date of repayment, together with
any amounts payable pursuant to subsection 3.11 in connection with such
repayment.
(c) If any borrowing of Revolving Credit Loans is required pursuant to
this subsection 2.14, the Borrower shall notify the Administrative Agent in the
manner provided for Revolving Credit Loans in subsection 2.2, except that the
minimum borrowing amounts set forth in subsection 2.2 shall not be applicable
to the extent that such minimum borrowing amounts exceed the amounts of
Revolving Credit Loans required to be made pursuant to this subsection 2.14.
2.15 Commitment Increases. (a) In the event that the Borrower wishes to
increase the aggregate Revolving Credit Commitments and/or Multicurrency
Commitments at any time that no Default or Event of Default has occurred and is
continuing, it shall notify the Administrative Agent in writing of the amount
(the "Offered Increase Amount") of such proposed increase (such notice, a
"Commitment Increase Notice"), provided that (x) increases in the aggregate
Revolving Credit Commitments shall be in increments of $50,000,000 up to
$1,000,000,000 and (y) in no event shall the Multicurrency Commitment of any
Multicurrency Lender exceed the Revolving Credit Commitment of such
Multicurrency Lender or the aggregate Multicurrency Commitments of all the
Multicurrency Lenders exceed the Aggregate Revolving Credit Commitments. The
Borrower may, at its election, (i) offer one or more of the Lenders the
opportunity to participate in all or a portion of the Offered Increase Amount
pursuant to subsection (c) below and/or (ii) with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld), offer
one or more additional banks, financial institutions or other entities the
opportunity to participate in all or a portion of the Offered Increase Amount
pursuant to paragraph (b) below, provided that no additional bank, financial
institution or other entity may obtain a Multicurrency Commitment unless such
additional bank, financial institution or other entity shall also obtain a
Revolving Credit Commitment in an amount not less than its Multicurrency
Commitment. Each Commitment Increase Notice shall specify which Lenders and/or
banks, financial institutions or other entities the Borrower desires to
participate in such commitment increase. The Borrower or, if requested by the
Borrower, the Administrative Agent will notify such Lenders, and/or banks,
financial institutions or other entities of such offer.
(b) Any additional bank, financial institution or other entity which the
Borrower selects to offer participation in the increased Revolving Credit
Commitments and, where applicable, the increased Multicurrency Commitments, and
which elects to become a party to this Agreement and obtain a Revolving Credit
Commitment and, where applicable, a Multicurrency Commitment in an amount so
offered and accepted by it pursuant to subsection 2.15(a)(ii) shall execute a
New Lender Supplement with the Borrower and the Administrative Agent,
substantially in the form of Exhibit J, whereupon such bank, financial
institution or other entity (herein called a "New Lender") shall become a
Lender for all purposes and to the same extent as if originally a party hereto
and shall be bound by and entitled to the benefits of this Agreement, and
Schedule I shall be deemed to be amended to add the name and Commitments of
such New Lender, provided that the Revolving Credit Commitment of any such new
Lender shall be in an amount not less than $10,000,000.
(c) Any Lender which accepts an offer to it by the Borrower to increase
its Revolving Credit Commitment and/or Multicurrency Commitment pursuant to
subsection 2.15(a)(i) shall, in each case, execute a Commitment Increase
Supplement with the Borrower and the Administrative Agent, substantially in the
form of Exhibit K, whereupon such Lender shall be bound by and entitled to the
benefits of this Agreement with respect to the full amount of its Revolving
Credit Commitment and/or Multicurrency Commitment as so increased, and Schedule
I shall be deemed to be amended to so increase the Revolving Credit Commitment
and/or Multicurrency Commitment of such Lender.
(d) The effectiveness of any New Lender Supplement or Commitment Increase
Supplement shall be contingent upon receipt by the Administrative Agent of such
corporate resolutions of the Borrower and legal opinions of counsel to the
Borrower as it shall reasonably request with respect thereto.
(e) Notwithstanding anything to the contrary in this subsection 2.15, (i)
in no event shall any transaction effected pursuant to this subsection 2.15
cause the aggregate Revolving Credit Commitments to exceed $1,000,000,000, and
(ii) no Lender shall have any obligation to increase its Revolving Credit
Commitment and/or Multicurrency Commitment unless it agrees to do so in its
sole discretion.
SECTION 3. CERTAIN PROVISIONS APPLICABLE TO THE LOANS
3.1 Optional and Mandatory Prepayments. (a) The Borrower may at any time
and from time to time prepay the Revolving Credit Loans, in whole or in part,
without premium or penalty (other than any amounts payable pursuant to
subsection 3.11 if such prepayment is of Eurodollar Loans and 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.
(b) The Borrower may at any time and from time to time prepay, without
premium or penalty (other than any amounts payable pursuant to subsection 3.11
if such prepayment is of Multicurrency Loans and is made on a day other than
the last day of the Interest Period with respect thereto), the Multicurrency
Loans, in whole or in part, upon at least three Business Days' irrevocable
notice to the Administrative Agent specifying the date and amount of
prepayment. Upon the receipt of any such notice, the Administrative Agent shall
promptly notify each Multicurrency Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein. Partial prepayments of Multicurrency Loans shall be in an
aggregate principal amount the U.S. Dollar Equivalent of which is at least
$1,000,000 or an integral multiple of $100,000 in excess thereof.
(c)(i) If, at any time during the Commitment Period, for any reason the
Aggregate Total Outstandings of all Lenders exceed the Aggregate Revolving
Credit Commitments then in effect, the Borrower shall, without notice or
demand, immediately prepay the Revolving Credit Loans and/or the Multicurrency
Loans in amounts such that the sum of (A) the aggregate principal amount of the
Revolving Credit Loans so prepaid and (B) the U.S. Dollar Equivalent of the
aggregate principal amount of the Multicurrency Loans so prepaid, equals or
exceeds the amount of such excess.
(ii) If, at any time during the Commitment Period, for any reason either
(x) the Aggregate Total Outstandings of all Multicurrency Lenders exceed the
Aggregate Revolving Credit Commitments of the Multicurrency Lenders or (y) the
Aggregate Multicurrency Outstandings exceed the aggregate Multicurrency
Commitments, the Borrower shall, without notice or demand, immediately prepay
the Revolving Credit Loans and/or the Multicurrency Loans in amounts such that
the sum of (A) the aggregate principal amount of the Revolving Credit Loans so
prepaid and (B) the U.S. Dollar Equivalent of the Multicurrency Loans so
prepaid, equals or exceeds the amount of such excess.
(iii) Each prepayment of Loans pursuant to this subsection 3.1(c) shall
be accompanied by any amounts payable under subsection 3.11 in connection with
such prepayment.
(iv) Notwithstanding the foregoing, mandatory prepayments of Revolving
Credit Loans or Multicurrency Loans that would otherwise be required pursuant
to this subsection 3.1(c) solely as a result of fluctuations in Exchange Rates
from time to time shall only be required to be made pursuant to this subsection
3.1(c) on the last Business Day of each month on the basis of the Exchange Rate
in effect on such Business Day.
3.2 Conversion and Continuation Options. (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.
(c) Any Multicurrency Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
a Notice of Multicurrency Loan Continuation, provided, that if the Borrower
shall fail to give such Notice of Multicurrency Loan Continuation by the
deadline specified therefor in Schedule II, such Multicurrency Loans shall
automatically be continued for an Interest Period of one month.
3.3 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Revolving Credit Loans and Multicurrency 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, (i) the aggregate principal amount of the Eurodollar Loans comprising
each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (ii) the aggregate principal amount of the
Multicurrency Loans comprising each Multicurrency Tranche shall be in an amount
the U.S. Dollar Equivalent of which is at least $5,000,000. In no event shall
there be more than 7 Tranches outstanding at any time.
3.4 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 Interest Period
plus the Applicable Margin in effect for such day.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) Each Multicurrency Loan shall bear interest for each day that it is
outstanding at a rate per annum equal to the Eurocurrency Rate plus the
Applicable Margin in effect for such day.
(d) Each CAF Advance shall bear interest at the rate determined in
accordance with subsection 2.7.
(e) 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 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).
(f) Interest pursuant to this subsection shall be payable in arrears on
each Interest Payment Date or CAF Advance Interest Payment Date, as the case
may be, provided that interest accruing pursuant to paragraph (e) of this
subsection shall be payable from time to time on demand.
3.5 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 or Eurocurrency 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 3.4(a), (b) or (d).
(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 3.6, be determined on the basis of the
quotations of the remaining Reference Lenders or Reference Lender.
3.6 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 or
Eurocurrency Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Lenders or the Majority Multicurrency Lenders, as the case may
be, that the Eurodollar Rate or Eurocurrency 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 (w) any Eurodollar Loans or Multicurrency Loans, as the case may be,
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 or
2.12, the Borrower may cancel the request for such Eurodollar Loan or
Multicurrency Loan, as the case may be, 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 3.11 with
respect to such cancelled request, (x) 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, (y) any outstanding Eurodollar Loans shall be
converted, on the first day of such Interest Period, to ABR Loans and (z) any
Multicurrency Loans to which such Interest Period relates shall be repaid on
the first day of such Interest Period. Until such notice has been withdrawn by
the Administrative Agent, no further Eurodollar Loans or Multicurrency Loans
shall be made or continued as such, nor shall the Borrower have the right to
convert ABR Loans to Eurodollar Loans.
3.7 Pro Rata Treatment and Payments. (a) Except as provided in subsection
2.14, each borrowing by the Borrower of Revolving Credit Loans from the Lenders
hereunder shall be made pro rata according to the Funding Commitment
Percentages of the Lenders in effect on the date of such borrowing. Each
payment by the Borrower on account of any facility fee hereunder and any
reduction of the Revolving Credit Commitments of the Lenders shall be allocated
by the Administrative Agent among the Lenders pro rata according to the
Revolving Credit Commitment Percentages of the Lenders. Except as provided in
subsection 2.14, 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 in respect of
amounts denominated in Dollars, 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 12.2, 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 (other than payments on the Eurodollar Loans or Multicurrency Loans)
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. If any payment on a Eurodollar Loan or a Multicurrency
Loan becomes due and payable on a day other than a Business Day, the maturity
of 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) unless the result of such extension
would be to extend such payment into another calendar month, in which event
such payment shall be made on the immediately preceding Business Day.
(b) Each borrowing of Multicurrency Loans by the Borrower shall be made,
and any reduction of the Multicurrency Commitments shall be allocated by the
Administrative Agent, pro rata according to the Multicurrency Commitment
Percentages of the Multicurrency Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on
Multicurrency Loans shall be allocated by the Administrative Agent pro rata
according to the respective principal amounts of the Multicurrency Loans then
due and owing by the Borrower to each Multicurrency Lender. All payments
(including prepayments) to be made by the Borrower on account of Multicurrency
Loans hereunder, whether on account of principal, interest, fees or otherwise,
shall be made without set-off or counterclaim and shall be made at or before
the payment time for the currency of such Multicurrency Loan from time to time
specified by the Administrative Agent by notice to the Multicurrency Lenders
and the Borrower, on the due date thereof to the Administrative Agent, for the
account of the Multicurrency Lenders, at the payment office for the currency of
such Multicurrency Loan from time to time specified by the Administrative Agent
by notice to the Multicurrency Lenders and the Borrower, in the currency of
such Multicurrency Loan and in immediately available funds. The Administrative
Agent shall distribute such payments to the Multicurrency Lenders entitled to
receive the same promptly upon receipt in like funds as received.
(c) 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 respective 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 (i) the daily average
Federal Funds Effective Rate (in the case of a borrowing of Revolving Credit
Loans or CAF Advances denominated in Dollars) and (ii) the Administrative
Agent's reasonable estimate of its average daily cost of funds (in the case of
a borrowing of Multicurrency Loans or CAF Advances denominated in a currency
other than Dollars), in each case 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 equal to (i) the rate per annum applicable to ABR
Loans hereunder (in the case of a borrowing of Revolving Credit Loans or CAF
Advances or CAF Advances denominated in Dollars) and (ii) the Administrative
Agent's reasonable estimate of its average daily cost of funds plus the
Applicable Margin applicable to Multicurrency Loans (in the case of a borrowing
of Multicurrency Loans or CAF Advances denominated in a currency other than
Dollars), on demand, from the Borrower.
3.8 Illegality; Unification of Currency. (a) 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 or
Multicurrency Loans as contemplated by this Agreement, (a) the commitment of
such Lender hereunder to make Eurodollar Loans or Multicurrency Loans, continue
Eurodollar Loans or Multicurrency Loans as such and convert ABR Loans to
Eurodollar Loans shall forthwith be cancelled, (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 and (c)
such Lender's Multicurrency Loans shall be prepaid on the last day of the then
current Interest Period with respect thereto. 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 3.11.
(b) If the "Euro" (or some other similar unit of account) shall become a
currency in its own right in connection with European monetary union
contemplated by the Maastricht Treaty and the Borrower, the Administrative
Agent and the Multicurrency Lenders or the Local Currency Lenders, as the case
may be, determine that such event shall require one or more Multicurrency
Lenders or Local Currency Lenders, as the case may be, to perform obligations
that have become incapable of performance or the performance of which is
fundamentally different in character than the nature of performance
contemplated at the time of the execution and delivery of this Agreement, then
such Multicurrency Lenders or Local Currency Lenders, as the case may be, will
not thereafter be obligated to make any Multicurrency Loan or Local Currency
Loan available in a currency included in or converted into the "Euro" and such
Multicurrency Lender or Local Currency Lender, as the case may be, shall not be
obligated to make a CAF Advance in such currency that it has offered to make.
On the date of any such conversion, any Loan denominated in a currency so
converted shall be repaid in full and may be reborrowed as a Loan denominated
in any Available Foreign Currency.
3.9 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, Multicurrency
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 3.10 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 Eurocurrency 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, Multicurrency 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.
3.10 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 12.6 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.
3.11 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, Multicurrency 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, Multicurrency 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.
3.12 Change of Lending Office; Removal of Lender. Each Lender agrees that
if it makes any demand for payment under subsection 3.9 or 3.10(a), or if any
adoption or change of the type described in subsection 3.8 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
3.9 or 3.10(a), or would eliminate or reduce the effect of any adoption or
change described in subsection 3.8 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
12.6(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 3.11 if such assignment were,
instead, a prepayment in full of all amounts owing to such Lender) shall be
paid to such Lender.
3.13 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 12.6(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 Multicurrency Loans, the amount and
currency of each Multicurrency Loans and each Interest Period applicable
thereto, (iii) in the case of CAF Advances, the amount and currency 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, (iv) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (v) 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 3.13(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 4. LOCAL CURRENCY FACILITIES
4.1 Terms of Local Currency Facilities. (a) Subject to the provisions of
this Section 4, the Borrower may in its discretion from time to time designate
any Subsidiary of the Borrower organized under the laws of any jurisdiction
outside the United States as a "Foreign Subsidiary Borrower" and any Qualified
Credit Facility to which such Foreign Subsidiary Borrower and any one or more
Lenders (or its Affiliates, agencies or branches) is a party as a "Local
Currency Facility", with the consent of each such Lender in its sole
discretion, by delivering a Local Currency Facility Addendum to the
Administrative Agent and the Lenders (through the Administrative Agent)
executed by the Borrower, each such Foreign Subsidiary Borrower and each such
Lender, provided, that on the effective date of such designation no Event of
Default shall have occurred and be continuing. Concurrently with the delivery
of a Local Currency Facility Addendum, the Borrower or the relevant Foreign
Subsidiary Borrower shall furnish to the Administrative Agent copies of all
documentation executed and delivered by such Foreign Subsidiary Borrower in
connection therewith, together with, if applicable, an English translation
thereof. Except as otherwise provided in this Section 4 or in the definition of
"Qualified Credit Facility" in subsection 1.1, the terms and conditions of each
Local Currency Facility shall be determined by mutual agreement of the relevant
Foreign Subsidiary Borrower(s) and Local Currency Lender(s). The documentation
governing each Local Currency Facility shall (i) contain an express
acknowledgement that such Local Currency Facility shall be subject to the
provisions of this Section 4, (ii) if more than one Lender is a party thereto,
designate a Local Currency Facility Agent for such Local Currency Facility and
(iii) include an opinion of counsel reasonably satisfactory to the
Administrative Agent from the jurisdiction in which such Local Currency
Facility is established that the documentation governing such Local Currency
Facility is enforceable in accordance with its terms. Each of the Borrower and,
by agreeing to any Local Currency Facility designation as contemplated hereby,
each relevant Local Currency Lender (if any) party thereto which is an
Affiliate, branch or agency of a Lender, acknowledges and agrees that each
reference in this Agreement to any Lender shall, to the extent applicable, be
deemed to be a reference to such Local Currency Lender. In the event of any
inconsistency between the terms of this Agreement and the terms of any Local
Currency Facility, the terms of this Agreement shall prevail.
(b) The documentation governing each Local Currency Facility shall set
forth (i) the maximum amount (expressed in U.S. Dollars) available to be
borrowed from all Local Currency Lenders under such Local Currency Facility (as
the same may be reduced from time to time, a "Local Currency Facility Maximum
Borrowing Amount") and (ii) with respect to each Local Currency Lender party to
such Local Currency Facility, the maximum amount (expressed in U.S. Dollars)
available to be borrowed from such Local Currency Lender thereunder (as the
same may be reduced from time to time, a "Local Currency Lender Maximum
Borrowing Amount").
(c) Except as otherwise required by applicable law, in no event shall the
Local Currency Lenders party to a Local Currency Facility have the right to
accelerate the Local Currency Loans outstanding thereunder, or to terminate
their commitments (if any) to make such Local Currency Loans prior to the
earlier of the stated termination date in respect thereof or the Termination
Date, except, in each case, in connection with an acceleration of the Loans or
a termination of the Commitments pursuant to Section 9 hereof, provided, that
nothing in this paragraph (c) shall be deemed to require any Local Currency
Lender to make a Local Currency Loan if the applicable conditions precedent to
the making of such Local Currency Loan set forth in the documentation governing
the relevant Local Currency Facility have not been satisfied. No Local Currency
Loan may be made under a Local Currency Facility if (i) after giving effect
thereto, the conditions precedent in subsection 6.2 hereof would not be
satisfied or (ii) after giving effect to the making of such Local Currency Loan
and the simultaneous application of the proceeds thereof, the Aggregate Total
Outstandings of all Lenders at any time exceeds the Aggregate Revolving Credit
Commitments.
(d) The relevant Foreign Subsidiary Borrower shall furnish to the
Administrative Agent copies of any amendment, supplement or other modification
(including any change in commitment amounts or in the Local Currency Lenders
participating in any Local Currency Facility) to the terms of any Local
Currency Facility promptly after the effectiveness thereof (together with, if
applicable, an English translation thereof). If any such amendment, supplement
or other modification to a Local Currency Facility shall (i) add a Local
Currency Lender as a Local Currency Lender thereunder or (ii) change the Local
Currency Facility Maximum Borrowing Amount or any Local Currency Lender Maximum
Borrowing Amount with respect thereto, the Borrower shall promptly furnish an
appropriately revised Local Currency Facility Addendum, executed by the
Borrower, the relevant Foreign Subsidiary Borrower and the affected Local
Currency Lenders (or any agent acting on their behalf), to the Administrative
Agent and the Lenders (through the Administrative Agent).
(e) The Borrower may terminate its designation of a facility as a Local
Currency Facility, with the consent of each Local Currency Lender party thereto
in its sole discretion, by written notice to the Administrative Agent, which
notice shall be executed by the Borrower, the relevant Foreign Subsidiary
Borrower and each Local Currency Lender party to such Local Currency Facility
(or any agent acting on their behalf). Once notice of such termination is
received by the Administrative Agent, such Local Currency Facility and the
loans and other obligations outstanding thereunder shall immediately cease to
be subject to the terms of this Agreement.
4.2 Reporting of Local Currency Outstandings. (a) On the date of the
making of any Local Currency Loan having a maturity of 30 or more days to a
Foreign Subsidiary Borrower and on the last Business Day of each month on which
a Foreign Subsidiary Borrower has any outstanding Local Currency Loans, the
Local Currency Facility Agent for such Foreign Subsidiary Borrower, shall
deliver to the Administrative Agent a Notice of Local Currency Outstandings and
the Administrative Agent shall deliver a copy of such Notice of Local Currency
Outstandings to the Lenders. The Administrative Agent will, at the request of
any Local Currency Facility Agent, advise such Local Currency Facility Agent of
the Exchange Rate used by the Administrative Agent in calculating the U.S.
Dollar Equivalent of Local Currency Loans under the related Local Currency
Facility on any date.
(b) For purposes of any calculation under this Agreement in which the
amount of the Aggregate Local Currency Outstandings of any Lender is a
component, the Administrative Agent shall make such calculation on the basis of
the Notices of Local Currency Outstanding received by it at least two Business
Days prior to the date of such calculation.
SECTION 5. 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:
5.1 Financial Condition. The consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at December 31, 1996 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, 1997 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 materially 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.
5.2 No Change. Since December 31, 1996 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect other than the one-time acquisition related charges and purchased
research and development recorded in respect of Target Therapeutics Inc. and
Medinol Ltd, respectively.
5.3 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.
5.4 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 and each other Loan Document to which the Borrower is, or is to
become, a party has been or will be, duly executed and delivered on behalf of
the Borrower. This Agreement and each other Loan Document to which the Borrower
is, or is to become, a party constitutes or 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.
5.5 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.
5.6 No Material Litigation. Except as disclosed in Note G to the
Borrower's Form 10-Q dated March 31, 1997, 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.
5.7 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.
5.8 Intellectual Property. Except as disclosed in Note G to the
Borrower's Form 10-Q dated March 31, 1997, 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"). Except as disclosed in Note G to the Borrower's Form
10-Q dated March 31, 1997, 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. Except as disclosed in Note G to the Borrower's Form 10-Q dated
March 31, 1997, 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.
5.9 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.
5.10 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.
5.11 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.
5.12 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.
5.13 Purpose of Loans. The proceeds of the Loans shall be used to finance
the working capital and general corporate needs of the Borrower and its
Subsidiaries.
5.14 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.
5.15 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, 1997, 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 6. CONDITIONS PRECEDENT
6.1 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) 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) Repayment of Existing Credit Facility. All amounts (including
principal, interest and fees) outstanding under the Existing Credit
Facility shall have been repaid in full.
(e) 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.
(f) Approvals. All governmental and third party approvals necessary
in connection with the execution, delivery and performance of this
Agreement and the other Loan Documents shall have been obtained and be in
full force and effect.
(g) Financial Statements. The Lenders shall have received (i)
satisfactory audited consolidated financial statements of the Borrower
and its consolidated Subsidiaries for the two most recent fiscal years
ended prior to the Closing Date as to which such financial statements are
available and (ii) satisfactory unaudited interim consolidated financial
statements of the Borrower and its consolidated Subsidiaries for each
quarterly period ended subsequent to the date of the latest financial
statements delivered pursuant to clause (i) of this paragraph as to which
such financial statements are available.
6.2 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 5.2) 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 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments (or any of
them) 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:
7.1 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.
7.2 Certificates; Other Information. Furnish to the Administrative Agent
with sufficient copies for the Lenders:
(a) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and 7.1(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 8.1;
(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.
7.3 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.
7.4 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 8.3; 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.
7.5 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.
7.6 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.
7.7 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 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments (or any of
them) 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 8.1) shall not permit any of
its Subsidiaries to, directly or indirectly:
8.1 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.
8.2 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 8.2,
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)
$100,000,000 in aggregate amount at any time outstanding.
8.3 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 9. 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 8; (ii) the Borrower shall default
in the observance or performance of any agreement contained in Section
11; or (iii) 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 (iii) 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 $100,000,000; 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 in excess of the amount recoverable by insurance)
of $100,000,000 (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 10. THE ADMINISTRATIVE AGENT; THE ARRANGER;
THE SYNDICATION AGENT;
10.1 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.
10.2 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.
10.3 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.
10.4 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.
10.5 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.
10.6 Non-Reliance on Administrative Agent and Other Lenders. 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.
10.7 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 Revolving Credit Commitment Percentages in effect on the date
on which indemnification is sought (or, if indemnification is sought after the
date upon which the Commitments shall have terminated and the Loans shall have
been paid in full, ratably in accordance with such percentages immediately
prior to such date), 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 which are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
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. The Administrative Agent shall have the right
to deduct any amount owed to it by any Lender under this subsection from any
payment made by it to such Lender hereunder.
10.8 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.
10.9 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 10 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.
10.10 The Arranger; the Syndication Agent. None of the Arranger or the
Syndication Agent shall have any duties or responsibilities, or shall incur any
liabilities, under this Agreement or any Loan Document.
SECTION 11. GUARANTEE
11.1 Guarantee. (a) The Borrower hereby unconditionally and irrevocably
guarantees to the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Foreign Subsidiary Borrowers when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
(b) No payment or payments made by the Borrower or any other Person or
received or collected by the Administrative Agent or any Lender from the
Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of the Borrower hereunder
which shall, notwithstanding any such payment or payments, remain liable
hereunder for the Obligations until the Obligations are paid in full and the
Commitments are terminated.
(c) The Borrower agrees that whenever, at any time, or from time to time,
it shall make any payment to the Administrative Agent or any Lender on account
of its liability hereunder, it will notify the Administrative Agent and such
Lender in writing that such payment is made under this Section for such
purpose.
11.2 No Subrogation. Notwithstanding any payment or payments made by the
Borrower hereunder, or any set-off or application of funds of the Borrower by
the Administrative Agent or any Lender, the Borrower shall not be entitled to
be subrogated to any of the rights of the Administrative Agent or any Lender
against the Foreign Subsidiary Borrowers or against any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Obligations, nor shall the Borrower seek or be entitled to
seek any contribution or reimbursement from the Foreign Subsidiary Borrowers in
respect of payments made by the Borrower hereunder, until all amounts owing to
the Administrative Agent and the Local Currency Lenders by the Foreign
Subsidiary Borrowers on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to the Borrower on
account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by the Borrower in
trust for the Administrative Agent and the Lenders, segregated from other funds
of the Borrower, and shall, forthwith upon receipt by the Borrower, be turned
over to the Administrative Agent in the exact form received by the Borrower
(duly indorsed by the Borrower to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
Administrative Agent may determine. The provisions of this paragraph shall
continue to be effective after the termination of this Agreement, the payment
in full of the Obligations and the termination of the Commitments.
11.3 Amendments, etc. with respect to the Obligations; Waiver of Rights.
The Borrower shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Borrower, and without notice to or further
assent by the Borrower, any demand for payment of any of the Obligations made
by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Obligations continued, and
the Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and any Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, in
accordance with the provisions thereof as the Administrative Agent (or the
requisite Lenders, as the case may be) may deem advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
the Administrative Agent or any Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. None of the Administrative
Agent or any Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Obligations or for
this Agreement or any property subject thereto. When making any demand
hereunder against the Borrower, the Administrative Agent or any Lender may, but
shall be under no obligation to, make a similar demand on the Foreign
Subsidiary Borrowers or any other guarantor, and any failure by the
Administrative Agent or any Lender to make any such demand or to collect any
payments from a Foreign Subsidiary Borrower or any such other guarantor or any
release of a Foreign Subsidiary Borrower or such other guarantor shall not
relieve the Borrower of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of the Administrative Agent or any Lender against the Borrower. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
11.4 Guarantee Absolute and Unconditional. The Borrower waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Agreement or acceptance of this Agreement; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Agreement; and all dealings between the Foreign Subsidiary
Borrowers and the Borrower, on the one hand, and the Administrative Agent and
the Lenders, on the other, shall likewise be conclusively presumed to have been
had or consummated in reliance upon this Agreement. The Borrower waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Foreign Subsidiary Borrowers and the Borrower with
respect to the Obligations. This Section 11 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity, regularity or enforceability of this Agreement, any other Loan
Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off
or counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Foreign Subsidiary Borrowers
against the Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Foreign Subsidiary
Borrowers or the Borrower) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Foreign Subsidiary Borrowers
for the Obligations, or of the Borrower under this Section 11, in bankruptcy or
in any other instance. When pursuing its rights and remedies hereunder against
the Borrower, the Administrative Agent and any Lender may, but shall be under
no obligation to, pursue such rights and remedies as it may have against the
Foreign Subsidiary Borrowers or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any Lender to pursue
such other rights or remedies or to collect any payments from the Borrower or
any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Foreign Subsidiary Borrowers or any such other Person or of any such collateral
security, guarantee or right of offset, shall not relieve the Borrower of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Lender against the Borrower. This Section 11 shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon the Borrower and its successors and assigns, and shall inure to the
benefit of the Administrative Agent and the Lenders, and their respective
successors, indorsees, transferees and assigns, until all the Obligations and
the obligations of the Borrower under this Agreement shall have been satisfied
by payment in full and the Commitments shall be terminated, notwithstanding
that from time to time during the term of this Agreement the Foreign Subsidiary
Borrowers may be free from any Obligations.
11.5 Reinstatement. This Section 11 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned
by the Administrative Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
11.6 Payments. The Borrower hereby agrees that all payments required to
be made by it hereunder will be made to the Administrative Agent without
set-off or counterclaim in accordance with the terms of the Obligations,
including, without limitation, in the currency in which payment is due.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. (a) Except as provided in paragraphs (b) and
(c) of this subsection 12.1, 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 Multicurrency Commitment
or Revolving Credit Commitment, in each case without the consent of each Lender
affected thereby (it being understood that increases in the Revolving Credit
Commitments and/or Multicurrency Commitments of certain Lenders pursuant to
subsection 2.15 shall not be deemed to affect any Lender whose Revolving Credit
Commitment and/or Multicurrency Commitment was not so increased), or (ii)
amend, modify or waive any provision of this subsection or reduce the
percentages specified in the definitions, of Majority Lenders or Majority
Multicurrency 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 or release the Borrower from the guarantee set forth in Section 11,
in each case without the written consent of all the Lenders, or (iii) amend,
modify or waive any provision of Section 10 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.
(b) In addition to amendments effected pursuant to the foregoing
paragraph (a), (i) Schedule II may be amended to change administrative
information contained therein with the approval of the Majority Multicurrency
Lenders, upon execution and delivery by the Borrower and the Administrative
Agent of a written amendment providing for such amendment and (ii) additional
freely-convertible eurocurrencies may be added as Available Foreign Currencies,
upon execution and delivery by the Borrower, the Administrative Agent and the
Majority Multicurrency Lenders of an amendment providing for such addition.
(c) The Administrative Agent shall give prompt notice to each Lender of
any amendment effect pursuant to subsection 12.1(b).
(d) Notwithstanding the provisions of this subsection 12.1, any Local
Currency Facility may be amended, supplemented or otherwise modified in
accordance with its terms so long as after giving effect thereto either (i)
such Local Currency Facility ceases to be an "Local Currency Facility" and the
Borrower so notifies the Administrative Agent or (ii) the Local Currency
Facility continues to meet the requirements of a Local Currency Facility set
forth herein.
12.2 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 Loan & Agency Services Group
Agent: One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Sandra Miklave
Fax: 212-552-5658
with a copy to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Joan Garvin
Fax: 212-270-5127
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, 2.12, 2.13, 2.15 or 3.2
shall not be effective until received.
12.3 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.
12.4 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.
12.5 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 in connection with
any workout or restructuring, the Borrower shall pay the fees and disbursements
of (i) one counsel for the Administrative Agent and the Lenders pursuant to
this clause (b) and (ii) one counsel to the Administrative Agent and the
Lenders in the jurisdiction of each Foreign Subsidiary Borrower pursuant to
this clause (b), (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.
12.6 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 no Borrower may 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 12.1(a). 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 12.7(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 3.9, 3.10 and 3.11
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 3.10, 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 (unless a Default or an
Event of Default shall have occurred and be continuing) 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
Revolving Credit 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 Revolving Credit
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 Commitments 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 12.2 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 Commitments 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 12.15, 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 such 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.
12.7 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 any
participation therein arising pursuant to subsection 12.16) then due and owing,
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 9(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 any participation therein arising
pursuant to subsection 12.16) then due and owing, 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.
12.8 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.
12.9 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.
12.10 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.
12.11 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.
12.12 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 12.2 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.
12.13 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.
12.14 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.
12.15 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 12.15, (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.
12.16 Loan Conversion/Participations. (a)(i) On any Conversion Date, to
the extent not otherwise prohibited by a Requirement of Law or otherwise, all
Loans (other than CAF Advances) outstanding in any currency other than U.S.
Dollars ("Loans to be Converted") shall be converted into U.S. Dollars
(calculated on the basis of the relevant Exchange Rates as of the Business Day
immediately preceding the Conversion Date) ("Converted Loans") and (ii) on the
Conversion Date (with respect to Loans described in the foregoing clause (i))
(A) each Lender severally, unconditionally and irrevocably agrees that it shall
purchase in U.S. Dollars a participating interest in such Converted Loans in an
amount equal to its Conversion Sharing Percentage of the outstanding principal
amount of the Converted Loans and (B) to the extent necessary to cause the
Committed Outstandings Percentage of each Lender to equal its Revolving Credit
Commitment Percentage (calculated immediately prior to the termination or
expiration of the Revolving Credit Loans), each Lender severally,
unconditionally and irrevocably agrees that it shall purchase or sell a
participating interest in Revolving Credit Loans then outstanding. Each Lender
will immediately transfer to the Administrative Agent, in immediately available
funds, the amounts of its participation(s), and the proceeds of such
participation(s) shall be distributed by the Administrative Agent to each
Lender from which a participating interest is being purchased in the amount(s)
provided for in the preceding sentence. All Converted Loans shall bear interest
at the rate which would otherwise be applicable to ABR Loans.
(b) If, for any reason, the Loans to be Converted may not be converted
into U.S. Dollars in the manner contemplated by paragraph (a) of this
subsection 12.16, (i) effective on such Conversion Date, each Lender severally,
unconditionally and irrevocably agrees that it shall purchase a participating
interest in such Loans to be Converted, as the case may be, in an amount equal
to its Conversion Sharing Percentage of such Loans to be Converted, and (ii)
each Lender shall purchase or sell participating interests as provided in
paragraph (a)(ii)(B) of this subsection 12.16. Each Lender will immediately
transfer to the appropriate Administrative Agent, in immediately available
funds, the amount(s) of its participation(s), and the proceeds of such
participation(s) shall be distributed by the Administrative Agent to each
relevant Lender in the amount(s) provided for in the preceding sentence.
(c) To the extent any Non-Excluded Taxes are required to be withheld from
any amounts payable by a Lender to another Lender in connection with its
participating interest in any Converted Loan, the Borrower shall be required to
pay increased amounts to the Lender receiving such payments to the same extent
they would be required under subsection 3.10 if the Borrower were making
payments directly to such Lender.
(d) Any time after the actions contemplated by paragraphs (a) or (b) of
this subsection 12.16 have been taken, upon the notice of any Lender to the
Borrower the following shall occur: (i) the Borrower (through the guarantee
contained in Section 11) shall automatically be deemed to have assumed the
Local Currency Loans which are Converted Loans in which such Lender holds a
participation, and (ii) such Local Currency Loans shall be assigned by the
relevant Lender holding such Local Currency Loans or obligations to the Lender
who gave the notice requesting such assumption by the Borrower.
12.17 Judgment. (a) If for the purpose of obtaining judgment in any court
it is necessary to convert a sum due hereunder in one currency into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of the Borrower in respect of any sum due from it to
any Lender hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment
Currency such Lender may in accordance with normal banking procedures purchase
the Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, the Borrower agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Lender, such Lender
agrees to remit to the Borrower such excess.
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: /s/ Lawrence C. Best
----------------------------------------
Name: Lawrence C. Best
Title: Chief Financial Officer and
Senior Vice President -
Finance and Administration
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a Lender
By: /s/ Joan F. Garvin
----------------------------------------
Name: Joan F. Garvin
Title: Managing Director
CHASE SECURITIES INC.,
as Arranger
By: /s/ Ruth Trangott
----------------------------------------
Name: Ruth Trangott
Title: Managing Director
BANK BOSTON, N.A.
as Syndication Agent and as a Lender
By: /s/ Gretchen Troiano
----------------------------------------
Name: Gretchen Troiano
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ James E. Condon
----------------------------------------
Name: James E. Condon
Title: Vice President
ABN AMRO BANK N.V.
By: ABN AMRO NORTH AMERICA,
INC., as Agent
By: /s/ Brian M. Horgan
----------------------------------------
Name: Brian M. Horgan
Title: Vice President
By: /s/ James E. Davis
----------------------------------------
Name: James E. Davis
Title: Group Vice President
ALLIED IRISH BANKS, P.L.C.
By: /s/ Dermot J. Duffy
----------------------------------------
Name: Dermot J. Duffy
Title: Senior Manager
BANK OF TOKYO-MITSUBISHI LIMITED
By: /s/ Robert J. Dilloff
----------------------------------------
Name: Robert J. Dilloff
Title: Attorney-in-fact
COMMERZBANK A.G.
By: /s/ Robert J. Donohue
----------------------------------------
Name: Robert J. Donohue
Title: Vice President
By: /s/ Peter T. Doyle
----------------------------------------
Name: Peter T. Doyle
Title: Assistant Treasurer
CORESTATES BANK, N.A.
By: /s/ Matthew T. Panarese
----------------------------------------
Name: Matthew T. Panarese
Title: Vice President
THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ Thomas M. Fennessey
----------------------------------------
Name: Thomas M. Fennessey
Title: Assistant Vice President
THE FUJI BANK, LIMITED
By: /s/ Toshiaki Yakura
----------------------------------------
Name: Toshiaka Yakura
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ Rita C. Long
----------------------------------------
Name: Rita C. Long
Title: Vice President
THE SANWA BANK LIMITED
By: /s/ Yutaka Higashino
----------------------------------------
Name: Yutaka Higashino
Title: Senior Vice President
Boston Scientific Corporation
-----------------------------
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
--------------------------------------------
(In thousands, except per share information)
<S> <C> <C> <C> <C>
Primary
Average shares outstanding 194,702 193,822 194,672 193,264
Net effect of dilutive stock options and warrants--based
on the treasury stock method using average market
price - 5,668 3,022 6,109
----------------------------------------------
Total 194,702 199,490 197,694 199,373
==============================================
Net income (loss) (26,896) 13,089 48,540 15,279
==============================================
Per share amount $ (0.14) $ 0.07 $ 0.25 $ 0.08
==============================================
Fully Diluted
Average shares outstanding 194,702 193,822 194,672 193,264
Net effect of dilutive stock options and warrants--based
on the treasury stock method using quarter-end market
price, if higher than average market price - 5,876 3,052 6,245
----------------------------------------------
Total 194,702 199,698 197,724 199,509
==============================================
Net income (loss) (26,896) 13,089 48,540 15,279
==============================================
Per share amount $ (0.14) $ 0.07 $ 0.25 $ 0.08
==============================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 54,141
<SECURITIES> 32,178
<RECEIVABLES> 361,876
<ALLOWANCES> 0
<INVENTORY> 306,558
<CURRENT-ASSETS> 909,204
<PP&E> 608,014
<DEPRECIATION> 186,311
<TOTAL-ASSETS> 1,742,052
<CURRENT-LIABILITIES> 673,475
<BONDS> 0
0
0
<COMMON> 1,956
<OTHER-SE> 947,651
<TOTAL-LIABILITY-AND-EQUITY> 1,742,052
<SALES> 904,280
<TOTAL-REVENUES> 904,280
<CGS> 252,512
<TOTAL-COSTS> 252,512
<OTHER-EXPENSES> 557,825
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,651
<INCOME-PRETAX> 89,537
<INCOME-TAX> 40,997
<INCOME-CONTINUING> 48,540
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,540
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
Exhibit 99.1
BOSTON SCIENTIFIC CORPORATION ANNOUNCES COMPLETION OF TARGET THERAPEUTICS,
INC. MERGER
Natick, Mass. (April 8, 1997) Boston Scientific Corporation (NYSE:BSX)
announced today that it has completed its acquisition of Target
Therapeutics, Inc. (NASDAQ:TGET).
As a result of this merger, Target Therapeutics' stockholders will receive
1.07 shares of Boston Scientific common stock in exchange for each share of
Target Therapeutics common stock.
Boston Scientific is a worldwide developer, manufacturer and marketer of
medical devices. The Company's products are used in a broad range of
Interventional medical specialties.
