<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
-------
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
------------------
OR
/-------/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ______ to ______
Commission file number 1-12372
-------
CYTEC INDUSTRIES INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3268660
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Five Garret Mountain Plaza
West Paterson, New Jersey 07424
------------------------------------------
(Address of principal executive offices)
973-357-3100
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 43,268,133 shares of Common
--------------
Stock, par value $.01 per share, were outstanding at September 30, 1998.
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
INDEX
Page
Part I - Financial Information
Item 1. Consolidated Financial Statements 3
Consolidated Statements of Income 3
Consolidated Statements of Comprehensive Income 4
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Part II - Other Information 24
Item 1. Legal Proceedings 24
Item 6. Exhibits and Reports on Form 8-K 27
Exhibit Index
2
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. - Consolidated Financial Statements
---------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $358.1 $309.0 $1,092.1 $931.1
Manufacturing cost of sales 253.1 211.9 762.2 666.0
Selling and technical services 37.6 34.5 114.8 103.9
Research and process development 9.4 10.5 31.7 31.6
Administrative and general 11.3 10.8 36.0 32.6
Amortization of acquisition intangibles 2.4 0.2 6.7 0.7
------ ------ -------- ------
Earnings from operations 44.3 41.1 140.7 96.3
Other income, net 2.9 3.8 9.3 30.0
Equity in earnings of associated companies 2.1 1.3 13.3 9.8
Interest expense, net 6.5 0.2 16.2 0.1
------ ------ -------- ------
Earnings before income taxes 42.8 46.0 147.1 136.0
Income tax provision 15.8 17.8 54.4 53.0
------ ------ -------- ------
Net earnings $ 27.0 $ 28.2 $ 92.7 $ 83.0
====== ====== ======== ======
Earnings per common share
Basic $ 0.61 $ 0.63 $ 2.06 $ 1.82
Diluted $ 0.59 $ 0.60 $ 1.98 $ 1.74
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Millions of dollars)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings $27.0 $28.2 $92.7 $ 83.0
Other comprehensive income:
Foreign currency translation adjustments 4.1 (3.1) 2.0 (11.4)
----- ----- ----- ------
Comprehensive income $31.1 $25.1 $94.7 $ 71.6
===== ===== ===== ======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions of dollars, except share and per share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1998 1997
-------------- -------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 30.1 $ 6.4
Accounts receivable, less allowance for doubtful accounts
of $9.4 and $10.0 in 1998 and 1997, respectively 264.6 226.9
Inventories 127.2 131.9
Deferred income taxes 79.0 70.7
Other current assets 22.6 16.9
Total current assets ----------- --------
523.5 452.8
Equity in net assets of and advances to associated companies 140.1 141.1
Plants, equipment and facilities, at cost 1,352.0 1,278.0
Less: accumulated depreciation (691.9) (648.3)
----------- --------
Net plant investment 660.1 629.7
Acquisition intangibles,
net of accumulated amortization 336.5 295.6
Deferred income taxes 70.8 82.2
Other assets 29.0 12.7
----------- --------
Total assets $ 1,760.0 $1,614.1
=========== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable 105.6 $ 116.3
Accrued expenses 238.3 239.0
Income taxes payable 46.9 19.7
----------- --------
Total current liabilities 390.8 375.0
Long-term debt 454.5 324.0
Other noncurrent liabilities 504.9 527.7
Stockholders' equity
Preferred stock, 20,000,000 shares authorized, issued and
outstanding 4,000 shares, Series C, $.01 par value, at
liquidation value of $25 per share 0.1 0.1
Common stock, $.01 par value per share, 150,000,000 shares
authorized, issued 48,143,368 in 1998 and 48,181,264 in 1997 0.5 0.5
Additional paid-in capital 193.4 203.9
Retained earnings 424.1 331.5
Unearned compensation (1.0) (3.5)
Accumulated translation adjustments (4.9) (6.9)
Treasury stock at cost, 4,875,235 shares in 1998 and 3,044,589
shares in 1997 (202.4) (138.2)
----------- --------
Total stockholders' equity 409.8 387.4
----------- --------
Total liabilities and stockholders' equity $ 1,760.0 $1,614.1
=========== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------
September 30,
-------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows provided by (used for) operating activities
Net earnings $ 92.7 $ 83.0
Non-cash items included in net earnings:
Equity in undistributed net earnings of associated companies (9.3) (0.7)
Depreciation 57.9 55.7
Amortization 6.6 3.0
Deferred income taxes 3.6 5.0
Gain on sale of assets (2.5) (22.3)
Other (0.4) -
Changes in operating assets and liabilities
Accounts receivable (23.2) (29.5)
Inventories 11.8 3.1
Accounts payable (14.4) (8.8)
Accrued expenses (8.4) 7.8
Income taxes payable 32.1 35.8
Other assets (10.3) (5.2)
Other liabilities (22.5) (38.4)
------- -------
Net cash flows provided by operating activities 113.7 88.5
------- -------
Cash flows provided by (used for) investing activities
Additions to plants, equipment and facilities (77.0) (58.9)
Proceeds from sale of assets 2.7 94.8
Acquisition of businesses (64.7) (344.0)
Change in other assets 1.6 6.9
------- -------
Net cash flows used for investing activities (137.4) (301.2)
------- -------
Cash flows provided by (used for) financing activities
Proceeds from the exercise of stock options 2.9 4.8
Purchase of treasury stock (80.0) (47.8)
Change in long-term debt 130.2 258.0
Debt issuance cost (6.9) -
Proceeds received on sale of put options 1.0 1.0
------- -------
Net cash flows provided by financing activities 47.2 216.0
------- -------
Effect of exchange rate changes on cash and cash equivalents 0.2 (1.5)
------- -------
Increase in cash and cash equivalents 23.7 1.8
Cash and cash equivalents, beginning of period 6.4 20.4
------- -------
Cash and cash equivalents, end of period $ 30.1 $ 22.2
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(1) Basis of Presentation
---------------------
The unaudited consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission for reporting on Form 10-Q. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The statements should be read in
conjunction with the consolidated financial statements and notes to the
consolidated financial statements contained in the Company's 1997 Annual Report
on Form 10-K.
In the opinion of management, the consolidated financial statements included
herein reflect all adjustments necessary for a fair statement of the information
presented as of September 30, 1998 and for the three and nine month periods
ended September 30, 1998 and 1997. Such adjustments are of a normal, recurring
nature. The consolidated statements of income for the three and nine month
periods ended September 30, 1998 are not necessarily indicative of the results
to be expected for the full year.
Certain reclassifications have been made to the consolidated statements of
income for the three and nine month periods ended September 30, 1997 to conform
to the 1998 presentation.
(2) Acquisitions
------------
On September 30, 1997, the Company acquired substantially all of the assets and
liabilities of Fiberite, Inc. ("Fiberite"), a leading worldwide supplier of
advanced composite materials for aerospace, industrial and recreational
applications, for $344.0 in cash (the "Fiberite Acquisition"). The assets and
liabilities were acquired from Stamford FHI Acquisition Corp., which acquired
the right to purchase Fiberite on April 20, 1997 from its previous owners. The
assets acquired include all of the businesses of Fiberite, except for their
satellite materials business.
On June 24, 1998, the Company acquired assets of the Oreprep minerals processing
business ("Oreprep") from Baker Petrolite Corporation. Oreprep supplies mineral
processing reagents and services to the mining industry. The acquired business
was integrated into the Company's existing Mining Chemicals product line.
On July 31, 1998, the Company completed the purchase from Dyno Industrier ASA of
Oslo, Norway of Dyno's global amino coatings resin business (the "Dyno
Business"), which consisted primarily of Dyno's 50% interest in Dyno-Cytec, a
European joint venture, for approximately $56 million. Payment of the purchase
price was funded under the Company's Credit Facility. The acquired business
produces and sells cross-linking resins for coating applications primarily in
Europe from a single manufacturing plant in Lillestrom, Norway. The Company is
integrating the acquired business into its existing Specialty Resins product
line.
All three acquisitions have been accounted for under the purchase method of
accounting.
7
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(3) Restructuring of Operations
---------------------------
Cash payments of $2.9 and $9.7 were made during the three and nine months ended
September 30, 1998, respectively, related to the restructuring charges of $38.4
(pre-tax) incurred during 1997. The accrual related to these restructurings at
September 30, 1998 was $20.9. There have been no changes in the estimated
completion date of the payouts related to the restructuring plan.
8
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(4) Earnings Per Share
------------------
Basic earnings per common share excludes dilution and was computed by dividing
net earnings by the weighted-average number of common shares outstanding for the
period. Diluted earnings per common share was computed by dividing net earnings
by the weighted-average number of common shares outstanding for the period
adjusted (i.e., increased) for all additional common shares that would have been
outstanding if potentially dilutive common shares had been issued.
The following represents the reconciliation of the numerators and denominators
of the basic and diluted EPS computations for net earnings for the three and
nine month periods ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>
Three Months Ended September 30
-------------------------------
1998 1997
----- -----
Weighted Avg Per Weighted Avg. Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------- ------------ ------ ---------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
- ---------
Net earnings $27.0 44,244,319 $0.61 $28.2 45,101,067 $0.63
Effect of dilutive securities
- -------------------------------
Options - 1,451,544 - - 1,975,891 -
Performance/Restricted stock - 131,766 - - 114,425 -
Diluted EPS
- -----------
Net earnings plus $27.0 45,827,629 $0.59 $28.2 47,191,383 $0.60
assumed conversions
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
1998 1997
---- -----
Weighted Avg Per Weighted Avg. Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------- ------------ ---------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
- ---------
Net earnings $92.7 45,043,946 $2.06 $83.0 45,528,000 $1.82
Effect of dilutive securities
- -------------------------------
Options - 1,774,888 - - 1,998,063 -
Performance/Restricted stock - 92,251 - - 100,668 -
Put Warrants - 5,120 - - 2,843 -
Diluted EPS
- -----------
Net earnings plus
assumed conversions $92.7 46,916,205 $1.98 $83.0 47,629,773 $1.74
</TABLE>
9
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(5) Recently Issued Statements Of Financial Accounting Standards
------------------------------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities." This statement, which becomes effective
for the Company beginning January 1, 2000, establishes accounting and operating
standards for hedging activities and derivative instruments, including certain
derivative instruments embedded in other contracts. The Company is reviewing
the potential impact, if any, of SFAS 133 on its financial statements.
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which became effective for the
Company for the annual period beginning January 1, 1998. SFAS No.132 requires
additional information about the changes in the benefit obligation and fair
value of plan assets during the period, while standardizing the disclosure
requirements for pensions and other postretirement benefits. The Company will
include such disclosures in its Annual Report on Form 10-K for the year ending
December 31, 1998.
In June 1997, the Financial Accounting Standards Board released Statement No.
130, "Reporting Comprehensive Income" ("SFAS 130") and Statement No. 131,
"Disclosures About Segments of an Enterprise and Related Information" ("SFAS
131"). Both statements became effective for the Company beginning January 1,
1998. These statements require disclosure of certain components of changes in
equity and certain information about operating segments and geographic areas of
operation. The Company adopted SFAS 130 in the first quarter of 1998 (See
"Consolidated Statement of Comprehensive Income"). The Company has also adopted
SFAS 131 which does not require interim period reporting in the year of
adoption. The Company is completing its evaluation of the disclosure
requirements of SFAS 131 and will begin such disclosures in its Form 10-K filing
for the year ending December 31, 1998. Implementation of these statements will
not have any effect on the results of operations or financial position of the
Company.
(6) Inventories
-----------
Components of inventories at September 30, 1998 and December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------------- -------------
<S> <C> <C>
Finished goods 73.9 $ 77.5
Work in process 21.8 19.0
Raw materials & supplies 74.5 78.4
------ ------
170.2 174.9
Less reduction in LIFO cost (43.0) (43.0)
------ ------
$127.2 $131.9
====== ======
</TABLE>
10
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(7) Equity in Earnings of Associated Companies
------------------------------------------
Summarized financial information for the associated companies is as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
------------ -----------
Ended Ended
----- -----
September 30 September 30,
------------ -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $139.0 $142.5 $444.6 $445.3
Gross profit 44.9 15.2 127.4 91.8
Net income 4.5 2.1 31.6 22.4
The Company's equity in earnings
of associated companies $ 2.1 $ 1.3 $ 13.3 $ 9.8
====== ====== ====== ======
</TABLE>
The above associated companies information includes the results of the former
Dyno-Cytec joint venture through July 31, 1998.
(8) Long-Term Debt
--------------
At September 30, 1998 and December 31, 1997, the Company's long-term debt
consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1998 1997
---- ----
<S> <C> <C>
Credit Facility $135.0 $123.0
364-Day Facility - -
Fiberite Acquisition Facility - 200.0
Public Debt 319.5 -
Other - 1.0
------ ------
$454.5 $324.0
====== ======
</TABLE>
The Company sold an aggregate of $320.0 principal amount of senior debt
securities in public offerings in the first nine months of 1998, consisting of
(i) $100.0 principal amount of 6.50% Notes due March 15, 2003,(ii) $100.0
principal amount of 6.75% Notes due March 15, 2008 and (iii) $120.0 principal
amount of 6.846% MOPPRS/SM/ due May 11, 2025. The securities were offered under
the Company's shelf registration statement which has now been fully utilized.
The Company received an aggregate of approximately $322.0 in proceeds from the
sales before deducting expenses associated with the sales. The proceeds were
used to (1) repay $160.0 of indebtedness under the Company's 364-day Credit
Agreement which originally provided financing for the acquisition of
substantially all the assets of Fiberite (the "Fiberite Acquisition Facility"),
(2) repay $141.5 of indebtedness under the Credit Facility and (3) the
remainder was used for general corporate purposes.
11
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
In connection with the Fiberite Acquisition and in contemplation of the offering
of long-term debt securities, the Company entered into a series of rate lock
agreements (the "Rate Lock Agreements") with several banks commencing in
September 1997. Pursuant to the Rate Lock Agreements, the Company hedged
against the risk of an increase in treasury rates above the rates on the dates
it entered into the rate lock agreements on an aggregate of $300.0 in debt for
periods of up to 30 years. The Company made payments aggregating approximately
$11.2 to settle Rate Lock Agreements ($9.6 of which was paid during the first
half of the year and the remainder in 1997), which payments will be amortized or
recognized over the life of the 6.50% Notes, 6.75% Notes and 6.846% MOPPRS/SM/
as an increase in interest expense of such Notes.
On August 21, 1998, the Company replaced their $200.0 364-Day Fiberite
Acquisition Facility with a new 364-Day Facility (the "364-Day Facility"). The
364-Day Facility, which provides for unsecured revolving loans for general
corporate purposes, including, without limitation, for purposes of making
acquisitions matures on August 20, 1999 and contains a two-year term-out option.
The interest rate on funds borrowed under the 364-Day Facility floats based on
LIBOR. The remaining $40.0 outstanding under the Fiberite Acquisition Facility
was paid down with borrowings from the Credit Facility.
* Service Mark of Merrill Lynch & Co., Inc.
(9) Contingent Liabilities
----------------------
The Company is subject to substantial costs arising out of environmental laws
and regulations, which include obligations to remove or limit the effects on the
environment of the disposal or release of certain wastes or substances at
various sites. Liability for investigative, removal and remedial costs under
certain federal and state laws is retroactive, strict and joint and several. The
Company is currently a party to, or otherwise involved in, legal proceedings
directed at the cleanup of approximately 60 Superfund sites. Since the laws
pertaining to these sites provide for joint and several liability, a
governmental plaintiff could seek to recover all remediation costs at a waste
disposal site from any of the potentially responsible parties ("PRPs") for such
site, including the Company, despite the involvement of other PRPs. In some
cases, the Company is one of several hundred identified PRPs, while in others it
is the only one or one of only a few. Generally, where there are a number of
financially solvent PRPs, liability has been apportioned, or the Company
believes, based on its experience with such matters, that liability will be
apportioned based on the type and amount of waste disposed by each PRP at such
disposal site and the number of financially solvent PRPs. The Company is also
conducting remediation at, or is otherwise responsible for, a number of non-
Superfund sites. Proceedings involving environmental matters, such as alleged
discharge of chemicals or waste material into the air, water or soil, are
pending against the Company in various states. In many cases, future
environmental-related expenditures cannot be quantified with a reasonable degree
of accuracy. In addition, from time to time in the ordinary course of its
business, the Company is informed of, and receives inquiries with respect to,
new sites which may contain environmental contamination for which the Company
may be responsible.
12
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
It is the Company's policy to accrue and charge against earnings, environmental
cleanup costs when it is probable that a liability has been incurred and an
amount is reasonably estimable. As assessments and cleanups proceed, these
accruals are reviewed periodically and adjusted, if necessary, as additional
information becomes available. These accruals can change substantially due to
such factors as additional information on the nature or extent of contamination,
methods of remediation required, and other actions by governmental agencies or
private parties. Cash expenditures often lag behind the period in which an
accrual is recorded by a number of years.
In accordance with the above policies, as of September 30, 1998 and December 31,
1997, the aggregate environmental related accruals were $148.2 and $161.6,
respectively, of which $25.0 was included in accrued expenses in 1998 and 1997,
with the remainder included in other noncurrent liabilities. Environmental
remediation spending for the nine months ended September 30, 1998 and 1997 was
$15.0 and $19.3, respectively. All accruals have been recorded without giving
effect to any possible future insurance proceeds. Various environmental matters
are currently being litigated and potential insurance recoveries are unknown at
this time but are considered unlikely.
While it is not feasible to predict the outcome of all pending environmental
suits and claims, it is reasonably possible that there will be a necessity for
future provisions for environmental costs which, in management's opinion, will
not have a material effect on the financial position of the Company, but could
be material to the results of operations of the Company in any one accounting
period. The Company cannot estimate any additional amount of loss or range of
loss in excess of the recorded amounts. Moreover, environmental liabilities are
paid over an extended period and the timing of such payments cannot be predicted
with any confidence.
The Company is also a party to various other claims and routine litigation
arising in the normal course of its business. Based on the advice of counsel,
management believes that the resolution of such claims and litigation will not
have a material adverse effect on the financial position of the Company, but
could be material to the results of operations of the Company in any one
accounting period.
(10) Other Financial Information
---------------------------
Taxes paid for the nine months ended September 30, 1998 and 1997 were
approximately $30.8 and $29.9, respectively. Interest paid for the nine months
ended September 30, 1998 and 1997 was approximately $15.0 and $1.6,
respectively.
The Company's ratio of earnings to fixed charges for the three and nine months
ended September 30, 1998 was 5.6 and 7.1 respectively. For purposes of
computing the ratio of earnings to fixed charges (a) earnings consist of
earnings before income taxes, plus distributed earnings of associated companies,
plus fixed charges less capitalized interest and (b) fixed charges consist of
interest on long-term debt including amortized premiums, discounts and deferred
financing costs, plus the portion of rentals representative of an interest
factor.
13
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
In April 1997, the Company began a stock repurchase program for approximately
10% of the outstanding shares, or 4.5 million shares. Through September 30,
1998, the Company had repurchased 3,112,150 shares at a cost of $116.2 under
this program. The Company expects, based on current market conditions and other
factors, to complete this repurchase program by the end of 1998. Depending on
the level, price and timing of repurchases, additional borrowings may be
required.
On June 29, 1998 the Company announced that it was considering the possible
divestiture and other strategic options for its molding thermoset compounds
product line. No assurances can be given as to the results of and assessment of
these strategic options.
(11) Subsequent Events and Other Information
---------------------------------------
On October 9, 1998 the Company completed its previously announced acquisition of
The American Materials & Technologies Corporation (AMT) in a stock transaction
designed to qualify as a tax-free reorganization. Under the terms of the
transaction, each AMT share has been converted into the right to receive 0.3098
of a share of Cytec common stock. The company is obligated to issue
approximately 1.25 million shares in the transaction. The cost of the
acquisition was approximately $26 million, including the shares issued and
previous shares acquired plus the assumption of approximately $5 million in
debt. On October 26, 1998, the Company sold the assets of the AMT graphite golf
shaft business.
AMT manufactures and markets advanced composite materials for customers in the
aerospace, defense, transportation, and other industries.
14
<PAGE>
(Millions of dollars, except share and per share amounts)
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- ---------------------
Third Quarter of 1998 versus Third Quarter of 1997
- --------------------------------------------------
Net sales for the third quarter of 1998 were $358.1 as compared to the $309.0 in
the third quarter of 1997. The increase is attributable to sales generated as a
result of acquisitions, namely, of Fiberite, of the Dyno Business, as a result
of which the Company began consolidating the operating results of the Dyno-Cytec
joint venture on August 1, 1998, and of Oreprep.
Sales for the third quarter of 1998 outside of the United States represented 40%
of total revenue compared to 41% last year. The decrease was mainly due to the
inclusion of Fiberite sales that are mostly U.S. based and the adverse effect of
exchange rate changes. Sales by the former Dyno-Cytec joint venture partially
offset this decrease.
Sales into the Asia-Pacific region represented 10% of total consolidated sales
in the third quarter. The Company's sales in the region are down 2% from the
prior year period due mainly to lower selling prices and adverse exchange rate
changes.
Specialty Chemical sales increased $2.8, or 1.5%. Sales by the Oreprep business
and the former Dyno-Cytec joint venture are included in the 1998 third quarter
results. The increase from these sales was partially offset by lower selling
prices and negative exchange rate changes. Selling prices were down 0.5%, while
the negative impact of changes in exchange rates reduced sales another 1.6%.
Paper chemical sales were down due mainly to reduced U.S. demand. Polymer
Additives sales were lower as a result of reduced Asian demand. Specialty Resins
sales were adversely impacted by the GM strike.
Specialty Material sales increased $66.6, or 122.4%. This is primarily due to
the generation of sales as a result of the Fiberite Acquisition. Including pro-
forma Fiberite sales from the third quarter of 1997, sales were down 2%. This
is attributable to the lower sales of the Molding Compounds product line due to
reduced demand as a result of the GM strike and the exiting from certain
unprofitable aerospace composite products. The Company also experienced a
slowdown in demand from its largest aerospace products customer for both
commercial and military applications. It is expected that demand from the
commercial aircraft sector will be flat to down over the next several quarters
from this large customer.
Building Block sales decreased by $20.5, or 29.3%. Reduced selling prices
resulted in a 15% decline and volume declined 14%. Acrylonitrile and methanol
accounted for almost all of the decline. Plant closures at the Fortier, LA
facilities due to Hurricane Georges also reduced sales, but the storm impacted
production volume and cost to a greater extent.
Acrylonitrile selling prices were well below the prior year and volume was down
primarily in the U.S. due to low demand from a major customer that is
experiencing very low demand for its acrylic fiber products in Asia. Some of
the excess production volume was sold into the Asia-Pacific region, although
difficult selling conditions in Asia-Pacific resulted in lower margins. This
situation is expected to continue into the next several quarters.
15
<PAGE>
(Millions of dollars, except share and per share amounts)
Primarily as a result of power curtailments of electric supply from the local
utility in July, methanol production was limited to 56 days in the quarter as
compared to 89 days in the third quarter of last year. A renegotiated power
supply contract has significantly improved this situation. However, methanol
selling prices remain at very low levels.
Manufacturing cost of sales increased from 68.6% of net sales in the third
quarter of 1997 to 70.7% in 1998. Manufacturing costs were adversely affected
by $4.8 due to severe weather conditions. Partially offsetting the above were
the benefits of lower raw material costs, particularly propylene, the results of
restructuring, reduced retiree medical liabilities and a reduction in expenses
for stock price related employee compensation plans.
The reduction in retiree medical liabilities was the result of a recent
actuarial valuation which reflected the Company's success in promoting more cost
effective health plans, plan changes, and the favorable effect of our Voluntary
Employee Benefit Association (VEBA) funding. The reduction in compensation
expense for stock price related employee compensation plans reflects both a
decline in the price of the Company's stock and a poorer earnings outlook for
the reminder of 1998 which makes it probable that certain targets for payouts
with respect to 1998 will not be achieved. The reduction of retiree medical
liabilities and stock price related employee compensation expense was $10.8 of
which $7.1 represents a reversal of expenses accrued in the first six months of
1998. The aggregate amount of the adjustment that was included in manufacturing
cost of sales was $7.0 of which $4.6 is related to the reversal of expenses
accrued in the first six months of 1998.
Selling and technical service expenses increased $3.1 due largely to the
acquisition of Fiberite and the Dyno Business and the resulting consolidation of
Dyno-Cytec. Partially offsetting this was a favorable impact of $1.2 related to
the reduction of retiree medical liabilities and stock price related employee
compensation expense of which $0.8 was accrued in the first six months of 1998.
Research and process development expenses decreased $1.1 due primarily to the
favorable impact of $0.9 related to the reduction of retiree medical liabilities
costs and stock price related employee compensation expense of which $0.6 was
accrued in the first six months of 1998.
Administrative and general expenses increased $0.5. Costs associated with
international operations and with the Fiberite and Dyno-Cytec acquisitions were
primarily responsible for the increase. These costs were partially offset by
the favorable impact of $1.7 related to the reduction of retiree medical
liabilities and stock price related employee compensation expense of which $1.1
was accrued in the first six months of 1998.
The amortization of acquisition intangibles expense increased due to the
goodwill resulting from the acquisition of Fiberite, Oreprep and the remaining
50% interest in the former Dyno-Cytec joint venture.
Equity in earnings of associated companies increased $0.8 due to improving
operations at Criterion Catalyst. Included in Criterion Catalyst results for
1997 were charges for higher than normal levels of customer returns. Partially
offsetting the increase was CYRO earnings, which are below the prior year as a
result of reduced sales reflecting the loss of two specific customer accounts
and the impact of the GM strike and the result of consolidating the operating
results of the Dyno-Cytec joint venture on August 1, 1998.
16
<PAGE>
(Millions of dollars, except share and per share amounts)
Interest expense, net increased as a result of the increase in long-term debt
associated with acquisition of Fiberite, stock buybacks and the acquisition of
the Dyno Business and the resulting consolidation of Dyno-Cytec. Interest
expense for the period was $6.9 compared to $0.8 in the same period of last
year.
The income tax provision was reduced to a rate of 37% from 39% in 1997. This
was primarily due to improved tax planning in the foreign and state tax area as
well as benefits from increased sales through the Company's foreign sales
corporation.
Net earnings decreased to $27.0 down 4% from the $28.2 for the same period last
year. Diluted earnings per share decreased to $0.59 from the prior year period
of $0.60, a 1.7% decrease.
Nine Months of 1998 versus Nine Months of 1997
- ----------------------------------------------
Net sales for the nine months of 1998 were $1,092.1 as compared to $931.1 for
the nine months of 1997. The increase is attributable to sales generated as a
result of acquisitions, namely, of Fiberite, of the Dyno Business and the
resulting consolidation of Dyno-Cytec and of Oreprep. Included in the nine
months of 1997 are sales totaling $11.9 from the Acrylic Fibers product line
which was divested on January 31, 1997.
Sales for the nine months of 1998 outside of the United States represented 38%
of total revenue compared to 41% last year. The decrease was mainly due to the
inclusion of Fiberite sales that are mostly U.S. based and the effect of adverse
exchange rate changes from all regions of the world, with the largest impact
coming from Asia-Pacific.
Specialty Chemical sales decreased $5.4, or 1.0%. The negative impact of
changes in exchange rates was 2.4% of sales with selling prices flat. In Latin
America, sales volumes were negatively impacted in the Mining Chemicals product
line where low copper prices have caused customers to reduce the use of the
Company's products. Polymer Additives sales volumes in Latin America were up
principally due to new accounts.
In the Asia-Pacific region, Paper and Mining Chemical sales volumes were up due
to new accounts. Specialty Resin sales volumes were down, principally in Korea
due to the general economic conditions and in Taiwan due to the loss of low
margin textile business. Polymer Additives sales are down principally in Korea.
In Europe, sales were up in Water Treatment Chemicals due to an increase in
sales volumes and in Specialty Resins due to new business and consolidation of
Dyno-Cytec operating results.
In the U.S., sales volumes were down in Paper Chemicals due to a weak paper
recycling market and downtime at paper mills. Water Treatment sales volumes
were also down. Specialty Resins sales volumes were down due to the effects of
the GM strike in the third quarter.
Specialty Materials sales increased $214.1, or 121%. This was primarily due to
sales generated as a result of the Fiberite Acquisition. Including pro-forma
Fiberite sales from the first nine months of 1997, sales increased $30.1 or
8.2%.
17
<PAGE>
(Millions of dollars, except share and per share amounts)
Building Block sales decreased $47.6, or 23.6%. Lower selling prices and sales
volumes each accounted for approximately half of the decrease. This was
attributable to several factors.
Acrylonitrile selling prices and volumes were significantly below the prior year
period. This was primarily due to reduced demand in the Asia-Pacific region
compounded by additional capacity brought to the marketplace. The cost of
propylene, the major raw material in acrylonitrile, was down sharply, offsetting
much of the impact of lower selling prices.
Selling prices remained low for methanol throughout the nine month period. In
addition, the methanol plant operated 101 fewer days in the first nine months of
1998 than in the same period last year. This was the result of a planned
maintenance shutdown, energy curtailments from the local utility in June and
July and high natural gas costs which when combined with low selling prices made
the economics of running the plant less favorable.
Manufacturing cost of sales were 69.8% of sales, down from 71.5% in 1997.
Included in 1997 manufacturing costs were restructuring charges of $18.6
relating primarily to manufacturing sites located in Botlek, the Netherlands and
Linden, New Jersey. Excluding this charge, manufacturing cost of sales in 1997
was 69.5%.
For the first nine months of 1998, manufacturing costs were impacted by $4.8 due
to severe weather causing facilities to be shut down or operate at a reduced
capacity and by negative exchange rate changes. In addition, new plant startups
increased expenses. Offsetting this was the favorable effect of $7.0 related to
reduced retiree medical liabilities and lower provisions for stock price related
compensation expense.
Selling and technical service expenses increased $10.9, mainly due to the impact
of the acquisition of Fiberite and of the Dyno Business and the consolidation of
Dyno-Cytec. Also included is the favorable impact of $1.2 related to the
reduction in retiree medical liabilities and stock price related employee
compensation expense. As a percent of sales, selling and technical service
decreased reflecting the lower selling and technical service spending per sales
dollar in the aerospace market.
Research and process development costs increased $0.1. Included is the
favorable impact of $0.9 related to the reduction in retiree medical liabilities
and stock price related employee compensation expense. Also included are higher
costs associated with the Fiberite operations.
Administrative and general expenses increased $3.4 with the majority due to the
acquisition of Fiberite and of the Dyno Business and the consolidation of Dyno-
Cytec. Increases have occurred in international operations partially offset by
lower domestic costs. Also, partially offsetting this increase was the
favorable impact of $1.7 related to the reduction in retiree medical liabilities
and stock price related employee compensation expense.
Other income, net decreased $20.7. Included in other income in 1997 is a gain
of $22.3 from the sale of divested product lines.
18
<PAGE>
(Millions of dollars, except share and per share amounts)
Equity in earnings of associated companies increased $3.5 primarily due to
higher sales and improved operations for the Criterion Catalyst Company
partially offset by lower earnings from the Cyro joint venture and the result of
consolidating the operating results of the Dyno-Cytec joint venture on August 1,
1998.
Interest expense, net increased as a result of the increase in long-term debt
associated with the acquisition of Fiberite, stock buybacks and the acquisition
of the Dyno Business and the resulting consolidation of Dyno-Cytec. Interest
expense for the period was $17.6, compared to $1.8 in the same period of last
year.
The income tax provision was reduced to a rate of 37% from 39% in 1997. This
was primarily due to improved tax planning in the foreign and state tax area as
well as benefits from increased sales through the Company's foreign sales
corporation.
Net earnings increased to $92.7, up 11.7% from the $83.0 million for the same
period last year. Included in the 1997 net earnings is an after tax charge of
$11.3 relating to the restructuring charges mentioned earlier and an after tax
gain of $13.6 relating to the divestitures mentioned above. Diluted earnings
per share increased to $1.98 from the prior year period of $1.74, a 14%
increase.
Liquidity and Financial Condition
- ---------------------------------
At September 30, 1998, the Company's cash balance was $30.1, an increase of
$23.7 from year-end 1997.
Net cash flows from operating activities totaled $113.7, compared to $88.5 in
the same period of 1997. The most significant factors affecting this increase
were the higher earnings in 1998 and the Company's decision to pre-fund $25.0 of
its postretirement medical benefits liability in 1997 through contributions to
its VEBA utilizing some of the proceeds from the sale of the Acrylic Fibers
product line, compared with $3.0 of such prefunding payments in 1998.
Net cash flows used for investing activities totaled $137.4 compared to the
$301.2 of net cash flows used in the like period of 1997. Included in 1997 was
funding for the Fiberite Acquisition of $344, partially offset by proceeds of
$94.8 associated with the sale of the Acrylic Fibers product line and $6.9
associated with the sale of other investments. Included in 1998 was funding of
$56 for acquisition of the Dyno Business. Capital additions were $18.1 higher
than the same period last year due to three large construction projects in the
specialty product lines - the Benzotriazole light stabilizer plant in Botlek,
the Netherlands, the expansion of the surfactants plant in Willow Island, West
Virginia and the expansion of emulsion capacity in Mobile, Alabama. For the
full year 1998, the Company estimates capital spending in the range of
approximately $90.0 to $95.0.
The Company believes that based on internal cash generation it will be able to
fund operating cash requirements and planned capital expenditures through the
balance of 1998.
19
<PAGE>
(Millions of dollars, except share and per share amounts)
Net cash flows provided by financing activities totaled $47.2 for the nine
months ended September 30, 1998. This compares to $216.0 of net cash flows
provided by financing activities for the same period in 1997. During the nine
months of 1998, 2,174,100 shares of treasury stock were purchased at a cost of
$80.0 as compared to the nine months of 1997 when 1,234,250 shares were
purchased at a cost of $47.8. In 1998, long-term debt increased $130.2 offset by
an increase in cash of $23.7 with the remaining increase in long-term debt
mainly attributable to the purchase of treasury stock and the acquisitions of
Oreprep and Dyno-Cytec. In 1997, long term debt increased $258.0 due to the
funding of the Fiberite Acquisition and the aforementioned VEBA payments partly
offset by net proceeds from the sale of the Acrylic Fibers product line.
The Company sold an aggregate of $320.0 principal amount of senior debt
securities in public offerings in the first nine months of 1998, consisting of
(i) $100.0 principal amount of 6.50% Notes due March 15, 2003,(ii) $100.0
principal amount of 6.75% Notes due March 15, 2008 and (iii) $120.0 principal
amount of 6.846% MOPPRS/SM/ due May 11, 2025. The securities were offered under
the Company's shelf registration statement which has now been fully utilized.
The Company received an aggregate of approximately $322.0 in proceeds from the
sales before deducting expenses associated with the sales. The proceeds were
used to (1) repay $160.0 of indebtedness under the Fiberite Acquisition
Facility, (2) repay $141.5 of indebtedness under the Credit Facility and (3)
the remainder was used for general corporate purposes.
In connection with the Fiberite Acquisition and in contemplation of the offering
of long-term debt securities, the Company entered into a series of rate lock
agreements (the "Rate Lock Agreements") with several banks commencing in
September 1997. Pursuant to the Rate Lock Agreements, the Company hedged
against the risk of an increase in treasury rates above the rates on the dates
it entered into the rate lock agreements on an aggregate of $300.0 in debt for
periods of up to 30 years. The Company made payments aggregating approximately
$11.2 to settle Rate Lock Agreements ($9.6 of which was paid during the first
half of the year and the remainder in 1997), which payments will be amortized or
recognized over the life of the 6.50% Notes, 6.75% Notes and 6.846% MOPPRS/SM/
as an increase in interest expense of such Notes.
During the first half of 1998, in connection with the Company's stock repurchase
program, the Company sold put options to an institutional investor in a series
of private placements exempt from registration under Section 4(2) of the
Securities Act of 1933. The put options entitled the holder to sell an
aggregate of 400,000 shares of the Company's common stock to the Company on
certain dates at specified prices, subject to the Company's right, in lieu of
purchasing such shares, to pay the holder of the put the excess of the strike
price over the then market price of the shares in either cash or additional
shares of the Company's common stock. The Company received premiums of
approximately $1.0 on the sale of such options. During the second quarter
200,000 of the put options, written in February 1998 expired unexercised. During
the third quarter, the Company purchased the remaining 200,000 shares of the
Company's common stock subject to the options for an aggregate of $11.0.
Under the Series C Cumulative Preferred Stock agreement with American Cyanamid
Company, a subsidiary of American Home Products Corporation, the Company must
maintain a debt to equity ratio of no more than 2-to-1, a minimum fixed charge
coverage ratio of not less than 3-to-1 for the average of the fixed charge
coverage ratios for the four consecutive fiscal quarters most recently ended,
and must not incur more than $150.0 of debt unless the Company's equity is in
excess of $200.0. If the Company has more than $200.0 in equity, then the
Company may incur additional debt as long as its ratio of debt to equity is not
more than 1.5-to-1. At September 30, 1998, the Company had $454.5 of debt and
$409.7 in equity as defined in the Series C Stock covenants and had the ability
to incur up to an additional $160.0 in debt.
20
<PAGE>
(Millions of dollars, except share and per share amounts)
On August 21, 1998 the Company amended and restated its Credit Facility,
primarily to add a new lender to its existing bank group. At September 30,
1998, the Company's Credit Facility provided for unsecured revolving loans
("Revolving Loans") of up to $200.0. The revolving loans are available for the
general corporate purposes of the Company and its subsidiaries, including,
without limitation, for purposes of making acquisitions permitted under the
Credit Facility. There were $135.0 of outstanding borrowings under the Credit
Facility at September 30, 1998. The Credit Facility, which is scheduled to
mature on July 28, 2002, contains covenants customary for such facilities. The
Company was in compliance with all terms, covenants and conditions of the Credit
Facility at September 30, 1998. On August 21, 1998, the Company replaced its
$200.0 364-Day Fiberite Acquisition Facility with a new 364-Day Facility (the
"364-Day Facility"). The 364 Day Facility, which provides for unsecured
revolving loans for general corporate purposes, including, without limitation,
for purposes of making acquisitions matures on August 20, 1999 and contains a
two-year term-out option. The interest rate on funds borrowed under the Credit
Facility and the 364-Day Facility floats based on LIBOR. As of September 30,
1998, the Company had $200.0 available for borrowing under the 364-Day Facility.
Other
- -----
Year 2000
- ---------
The Company is conducting a comprehensive review of its information technology
systems ("IT Systems"), its process control and other systems that include
micro-controllers ("Non-IT Systems") to identify the systems that could be
affected by the "Year 2000" Issue. The Year 2000 issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. Any of the Company's systems that have time sensitive features
may recognize a date using "00" in the last two places as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations,
and in the case of Non-IT systems which are non-compliant, could have a material
adverse impact on the integrity and safety of the Company's chemical
manufacturing processes.
The Company has developed a phased program to address its Year 2000 issues. The
first phase consisted of identifying the Company's IT and Non-IT Systems and has
been completed with the exception of four manufacturing plants, two of which
were acquired during or after the third quarter of 1998. The second phase
consists of determining whether those systems are Year 2000 compliant, primarily
based on certifications from the vendors of such systems, and developing cost
estimates to remediate non-compliant systems. The second phase is largely
complete. The Company's current estimate is that it will incur external costs
in the range of $8.0 to remediate critical non-compliant systems. This estimate
may change materially as the Company completes and then reviews the results of
its work in the first two phases on a plant by plant basis using both internal
and external resources, and as the Company continues to implement required
remediation. The Company's review process and remediation efforts to date have
resulted in modest upward revisions to the external cost of completing
remediation. The Company does not track its internal costs in connection with
Year 2000 issues but does not believe they are material. The third phase of the
Company's program is ongoing and consists of remediating non-compliant systems
that are critical to the Company's operations. The Company's goal is to
complete the third phase by the first quarter of 1999. The Company then plans
to test critical systems and to remediate, if appropriate, non-critical systems
by the end of the second quarter of 1999.
The Company has not yet developed any contingency plans for addressing any
problems in completing implementation of all necessary remediation by the Year
2000, but plans to commence development of such plans in the first quarter of
1999. The Company has begun to address the Year 2000 status of its material
customers and suppliers by seeking verification that their systems and processes
are, or by December 31, 1999 will be, Year 2000 compliant. These efforts may
need to be refined as more information becomes available. The Company also
21
<PAGE>
(Millions of dollars, except share and per share amounts)
plans to review the Year 2000 compliance efforts of the four associated
companies in which it has a 50% equity interest.
Failure to complete any necessary remediation by the Year 2000 may have a
material adverse impact on the operations of the Company. Failure of third
parties, such as customers, suppliers, or government agencies to remediate Year
2000 problems in their IT and Non-IT Systems (which cannot be controlled or
corrected by the Company) or any general economic slowdown due to Year 2000
problems could also have a material adverse impact on the operations of the
Company.
Euro Conversion
- ---------------
On January 1, 1999, eleven of the fifteen member countries of the European Union
(the "participating countries") are scheduled to establish fixed conversion
rates between their existing sovereign currencies (the "legacy currencies") and
the euro. The participating countries have agreed to adopt the euro as their
common legal currency on that date. As of January 1, 1999, a newly created
European Central Bank will control monetary policy, including money supply and
interest rates for the participating countries. The legacy currencies are
scheduled to remain legal tender in the participating countries as denominations
of the euro between January 1, 1999 and January 1, 2002 (the "transition
period"). During the transition period, public and private parties may pay for
goods and services using either the euro or the participating country's legacy
currency on a "no compulsion, no prohibition" basis. The Company's principal
plants in Europe are in the Netherlands, the United Kingdom and Norway and the
Company has sales offices and makes sales throughout Europe. The Netherlands is
a participating country and the United Kingdom and Norway are not participating
countries.
The Company has initiated and is evaluating on an on-going basis the effects, if
any, of the euro conversion upon its business. Factors being considered
include, but are not limited to; the possible impact of the euro conversion on
revenues, expenses and income from continuing operations, the competitive
implications of increased price transparency, the ability to adapt information
technology to accommodate euro-denominated transactions, the market risks with
respect to financial instruments, the continuity of material contracts, and the
potential tax consequences.
The Company does not currently believe that the euro-conversion will have a
material operational or financial impact. The Company believes that its
principal information systems do not require any material modifications.
22
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
Comments on Forward-Looking Statements
- --------------------------------------
A number of the statements made by the Company in this Management's Discussion
and Analysis, or in other documents, including but not limited to the Company's
Annual Report to Stockholders, its press releases and its periodic reports to
the Securities and Exchange Commission, may be regarded as "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.
Forward-looking statements include, among others, statements concerning the
Company's outlook for 1998 and beyond, the accretiveness of acquisitions,
pricing trends and forces within the industry, the completion dates of, and
expenditures for, capital projects, expected sales growth, cost reduction
strategies and their results, the effect of the Asian economic slowdown, the
effects of the Year 2000 issue and of euro currency conversion, long-term goals
of the Company, possible further restructurings, plans and expectations
regarding the Fiberite, AMT and Dyno-Cytec acquisitions and other statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts.
All predictions as to future results contain a measure of uncertainty and,
accordingly, actual results could differ materially. Among the factors
that could cause a difference are: changes in the general economy; changes in
demand for the Company's products or in the costs and availability of its raw
materials; the actions of competitors; the success of our customers;
technological change; changes in employee relations, including possible strikes;
government regulations; litigation, including its inherent uncertainty;
difficulties in plant operations and materials transportation; environmental
matters; difficulties in completing remediation of Year 2000 issues by the
Company, its customers, suppliers, government agencies, or others; and other
unforeseen circumstances. Specific new or enhanced uncertainties as a result of
the Fiberite Acquisition include the Company's ability to achieve, and the rate
at which it achieves, cost reductions and other planned synergies, the build
rates in the commercial and military aerospace industries, and the impact of
competitive products and pricing. A number of these factors are discussed in
the Company's filings with the Securities and Exchange Commission.
23
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
-----------------
In connection with the Spin-off, the Company assumed from Cyanamid substantially
all liabilities for legal proceedings relating to Cyanamid's chemicals
businesses, other than any legal proceedings related to remediation of
Cyanamid's Bound Brook Facility. In connection with the Fiberite Acquisition,
the Company assumed responsibility for certain liabilities relating to
Fiberite's business. As a result, although Cyanamid or Fiberite is the named
defendant in cases relating to events prior to the Spin-off or the Fiberite
Acquisition, respectively, the Company is the party in interest and is herein
described as the defendant.
The Company is a defendant in twenty-five cases pending in state courts in
Jefferson, Harris, Harrison and Tarrant counties, Texas and in the U.S. District
Court for the Eastern District of Texas in which many plaintiffs seek damages
for injuries allegedly due to exposure to benzene, butadiene, asbestos or other
chemicals. Three of the cases involve several hundred plaintiffs, while the
remainder involve substantially fewer plaintiffs. All of these cases involve
multiple defendants. The Company is also one of multiple defendants in three
cases (originally brought in Texas by multiple plaintiffs who claimed they were
injured due to exposure to asbestos) which have been transferred by the Judicial
Panel for Multi-District Litigation to the United States District Court for the
Eastern District of Pennsylvania, for coordination of pretrial activities,
primarily discovery. The Company believes that its involvement in all but six
of these cases results from its former 50% ownership of Jefferson Chemical
Company, which the Company disposed of in 1975. It is not known at this time
how many plaintiffs eventually will assert claims against the Company.
The Company is a defendant in six suits pending in California Superior Court in
San Francisco, Los Angeles and Alameda counties, which were filed by or on
behalf of individuals allegedly injured as a result of exposure to asbestos
containing products. Another suit in which the Company is a defendant has been
removed to Federal Court and transferred by the Judicial Panel for Multi-
District Litigation to the United States District Court for the Eastern District
of Pennsylvania. These cases involve multiple defendants.
The Company is the defendant in a class action filed in Jefferson Parish Court,
Louisiana on behalf of persons residing in the city of Kenner, Louisiana
claiming damages allegedly caused by a sulfur dioxide emission from the
Company's Fortier facility in 1992. Prior to consolidation and certification of
the class, the original 29 cases had been remanded to state court following a
federal court ruling that the plaintiffs did not individually assert damages in
excess of the federal jurisdictional amount of $50,000. Trial of the claims of
32 randomly selected members of the class was completed in July. Post trial
memoranda has been submitted to the court and the Company is awaiting the
court's decision.
The Company is also the defendant in two class actions filed in Jefferson Parish
Court, Louisiana, on behalf of persons who allegedly sustained injury as a
result of an explosion and fire at the Company's Fortier facility on February
21, 1996. The Company has conducted limited discovery in these cases and,
therefore, has little information on whether, or to what extent, most members of
the alleged class actually suffered any injury.
The Company is one of several alleged processors of lead, lead pigments and/or
lead-based paints named as defendants in four cases pending in state and federal
courts in the states of New York and Ohio. The first suit, filed in New York
Supreme Court, New York County, by the City of New York, the New York Housing
Authority, and the New York City Health and Hospitals Corporation, seeks damages
for the cost of removing lead-based paints from New York City-owned buildings.
The second suit, filed in New York Supreme Court, Erie County, was brought on
behalf of two minor children, who seek damages for personal injuries allegedly
caused by ingestion of lead-based paints. The third suit is a class action
24
<PAGE>
pending in the United States District Court for the Southern District of New
York in which two minor children have intervened and filed a complaint against
the Company and six other alleged processors of lead, lead pigments and/or lead-
based paints seeking injunctive relief, consisting of orders requiring the
defendants to contribute to court-administered funds to (i) pay for medical
monitoring of class members; (ii) provide abatement of lead-based paint hazards
in dwellings in the city of New York where class members reside; and (iii)
provide notification to class members. In all three cases, the Company is named
a defendant as the alleged successor to the MacGregor Lead Company, from which
the Company purchased certain assets in 1971. The fourth case is a class action
brought against the Company and ten other defendants in the Court of Common
Pleas in Cuyahoga County, Ohio on behalf of children with blood levels of lead
greater than 20 micrograms per deciliter. The plaintiffs seek compensatory and
punitive damages for injuries allegedly caused by exposure to lead-based paints.
The Company is one of several defendants in six suits filed in New Jersey State
Court in Middlesex County by, or on behalf of the estates of, individuals who
allegedly contracted cancer as a result of exposure to chemicals constituting,
or contained in products sold by the Company. Three of these cases involve
individuals who worked at the Allied Textile Printers Plant in Paterson, New
Jersey, and who allegedly contracted bladder cancer as a result of exposure to
benzidine dyes. A fourth case involving the Allied Textile site has been
brought in New Jersey Superior Court, Middlesex County, against the Company and
several other defendants on behalf of a class consisting of former employees of
Allied Textile. Plaintiffs in this action seek to compel defendants to
establish a medical monitoring program for the benefit of former employees of
Allied Textile who may have been exposed to benzidine containing dyes or other
carcinogenic chemicals in the course of their employment. Defendants are
alleged to have supplied such dyes and/or chemicals to Allied Textile.
In August 1997, the EPA issued a Notice of Violation to the Company, its
contractor and subcontractors alleging certain violations of the asbestos air
regulations which apply to the demolition activities at the Company's Marietta,
Ohio plant. The alleged violations result from the alleged failure of the
contractor and its subcontractors to perform the demolition in accordance with
the terms of the agreement between the Company and the contractor. In the third
quarter, the Company agreed to a settlement with the EPA under which the Company
is to pay a civil penalty of approximately $176,000 and to implement an internal
asbestos control program. The settlement was published in the Federal Register
on November 2, 1998 and is expected to become final in the fourth quarter.
See also the first four paragraphs of "Environmental Matters" under Item 1 of
the Company's 1997 Annual Report on Form 10-K, and Note 9 of the Notes to
Consolidated Financial Statements (unaudited) in Part I, item (1), which are
incorporated by reference herein.
In addition to liabilities with respect to the specific cases described
previously, because the production of certain chemicals involves the use,
handling, processing, storage and transportation of hazardous materials, and
because certain of the Company's products constitute or contain hazardous
materials, the Company has been subject to claims of injury from direct exposure
to such materials and from indirect exposure when such materials are
incorporated into other companies' products. There can be no assurance that, as
a result of past or future operations, there will not be additional claims of
injury by employees or members of the public due to exposure, or alleged
exposure, to such materials.
Furthermore, the Company also has exposure to present and future claims with
respect to workplace exposure, workers' compensation and other matters, arising
from events both prior to and after the spin-off. There can be no assurance as
to the actual amount of these liabilities or the timing thereof.
25
<PAGE>
Item 6.
- -------
Exhibits and Reports on Form 8-K
- --------------------------------
(a). Exhibits
--------
See Exhibit Index on page 28 for exhibits filed with this Quarterly Report on
Form 10-Q
(b). Reports on Form 8-K
-------------------
The Company filed one current report on Form 8-K during the third quarter of
1998:
Report dated September 17, 1998 reporting the issuance of a press release
announcing that the Company expects third and fourth quarter 1998 and full year
1999 diluted earnings per share to fall short of analysts' consensus estimates.
SIGNATURES
----------
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.
CYTEC INDUSTRIES INC.
By:/S/James P. Cronin
------------------------
James P. Cronin
Executive Vice President and Chief Financial Officer
November 12, 1998
26
<PAGE>
Exhibit Index
-------------
10.1 Third Amended and Restated Credit Agreement dated as of August 21, 1998
among the Company, the banks named therein and Citibank, N.A., as
Administrative Agent, The Chase Manhattan Bank, as Syndication Agent and
First Union National Bank, as Documentation Agent.
10.2 364-Day Credit Agreement dated as of August 21, 1998 among the Company,
the banks named therein and Citibank, N.A., as Administrative Agent, The
Chase Manhattan Bank, as Syndication Agent and First Union National Bank,
as Documentation Agent.
10.3 The American Materials & Technologies Corporation 1997 Stock Option Plan
as amended March 13, 1998 and as further amended effective as of
October 9, 1998.
10.4 The American Materials & Technologies Corporation 1996 Incentive and
Nonqualified Stock Option Plan as amended effective as of October 9, 1998.
10.5 Key Manager Income Continuity Plan, as amended through October 15, 1998.
12 Computation of Ratio of Earnings to Fixed Charges for the three and nine
months ended September 30, 1998 and 1997.
27 Financial Data Schedule
99 Material Incorporated by reference from Annual Report on Form 10-K
27
<PAGE>
EXHIBIT 10.1
CONFORMED
EXECUTION COPY
U.S. $200,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 21, 1998
Among
CYTEC INDUSTRIES INC.,
as Borrower,
-- --------
and
THE BANKS NAMED HEREIN,
as Banks,
-- -----
and
CITIBANK, N.A.,
as Administrative Agent,
-- -------------- -----
and
THE CHASE MANHATTAN BANK,
as Syndication Agent,
-- ----------- -----
and
FIRST UNION NATIONAL BANK,
as Documentation Agent
-- ------------- -----
<PAGE>
T A B L E O F C O N T E N T S
- --------------------------------
Section Page
------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms........................... 1
1.02. Computation of Time Periods..................... 15
1.03. Accounting Terms................................ 15
1.04. Currency Equivalents Generally.................. 16
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
2.01. The Revolving Advances.......................... 16
2.02. Making the Revolving Advances................... 17
2.03. Fees............................................ 19
2.04. Reduction or Termination of the Commitments..... 19
2.05. Repayment of Revolving Advances................. 19
2.06. Interest on Revolving Advances.................. 19
2.07. Interest Rate Determination..................... 20
2.08. Voluntary Conversion of Revolving Advances...... 20
2.09. Prepayments of Revolving Advances............... 21
2.10. Increased Costs................................. 21
2.11. Illegality...................................... 23
2.12. Payments and Computations....................... 23
2.13. Taxes........................................... 25
2.14. Sharing of Payments, Etc........................ 27
2.15. The Competitive Bid Advances.................... 27
2.17. Voluntary Redenomination of Revolving Advances.. 31
2.18. Currency Equivalents............................ 32
2.19. Evidence of Debt................................ 32
2.20. Use of Proceeds................................. 33
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
3.01. Conditions Precedent to Effectiveness of
Sections 2.01 and 2.15......................... 33
3.02. Additional Conditions Precedent to Effectiveness 35
3.03. Conditions Precedent to Each Revolving Borrowing 35
<PAGE>
3.04. Conditions Precedent to Each Competitive Bid
Borrowing...................................... 35
3.05. Determinations Under Sections 3.01 and 3.02..... 36
3.06. Notice of Effective Date........................ 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrower.. 36
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants........................... 39
5.02. Negative Covenants.............................. 44
5.03. Financial Covenants............................. 47
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default............................... 48
ARTICLE VII
THE AGENTS
7.01. Authorization and Action........................ 50
7.02. Administrative Agent's Reliance, Etc............ 51
7.03. Citibank, Chase, First Union and Affiliates..... 51
7.04. Lender Credit Decision.......................... 51
7.05. Indemnification................................. 52
7.06. Successor Administrative Agent.................. 52
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc................................. 53
8.02. Notices, Etc.................................... 53
<PAGE>
8.03. No Waiver; Remedies............................. 54
8.04. Costs and Expenses.............................. 54
8.05. Right of Setoff................................. 55
8.06. Binding Effect.................................. 55
8.07. Assignments, Designations and Participations.... 56
8.08. Confidentiality................................. 59
8.09. Governing Law................................... 60
8.10. Execution in Counterparts....................... 60
8.11. Jurisdiction, Etc............................... 60
8.12. Judgment........................................ 60
8.13. Effective Date Assignments; Etc................. 61
8.14. Waiver of Jury Trial............................ 63
Schedules
- ---------
Schedule I - List of Applicable Lending Offices
Schedule 3.01(b) - Disclosed Litigation
Schedule 4.01(h) - Environmental Laws Disclosure
Schedule 4.01(i) - Environmental Investigation and Clean-up Properties
Schedule 4.01(j) - Hazardous Materials
Schedule 5.01(j) - Transactions with Affiliates
Schedule 5.02(a) - Existing Liens
Schedule 5.02(b) - Existing Debt
Schedule 8.13 - Existing Lenders, Existing Commitments and Existing
Advances
Exhibits
- --------
Exhibit A-1 - Form of Revolving Promissory Note
Exhibit A-2 - Form of Competitive Bid Promissory Note
Exhibit B-1 - Form of Notice of Revolving Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Designation Agreement
Exhibit E - Form of Notice of Redenomination
Exhibit F-1 - Form of Opinion of Special New York Counsel to the
Borrower
Exhibit F-2 - Form of Opinion of General Counsel of the Borrower
Schedules and Exhibits have not been included with this filing. The Company
agrees to furnish supplementally to the Commission any and all of the foregoing
Schedules and Exhibits upon request.
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 21, 1998
CYTEC INDUSTRIES INC., a Delaware corporation (the "Borrower"), the
--------
banks (the "Banks") listed on the signature pages hereof and CITIBANK, N.A.
-----
("Citibank"), as administrative agent (the "Administrative Agent") for the
- ---------- --------------------
Lenders hereunder, THE CHASE MANHATTAN BANK ("Chase"), as syndication agent, and
-----
FIRST UNION NATIONAL BANK ("First Union"), as documentation agent, agree as
-----------
follows:
PRELIMINARY STATEMENTS. The Borrower entered into a Second Amended
and Restated Credit Agreement dated as of July 29, 1997 (as amended,
supplemented or otherwise modified to the date hereof, the "Existing Credit
---------------
Agreement") with certain lenders party thereto (the "Existing Lenders") and
- --------- ----------------
Citibank, as agent for the Existing Lenders. The Borrower has requested that
the Banks and the Agents amend and restate the Existing Credit Agreement as
hereinafter set forth, and the Banks and the Agents have agreed to do so.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree that as of the Effective Date, the
Existing Credit Agreement is hereby amended and restated as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Advance" means a Revolving Advance or a Competitive Bid Advance.
-------
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of Voting Stock, by contract or otherwise, or, in the case of
an Affiliate of the Borrower, to vote 20% or more of the Voting Stock of
such Person.
"Agent" means the Administrative Agent, Chase, as syndication agent,
-----
and First Union, as documentation agent.
<PAGE>
2
"Agreement Value" means, for any Hedge Agreement on any date of
---------------
determination, the amount, if any, that would be payable to the Hedge Bank
party to such Hedge Agreement in respect of "agreement value" as though
such Hedge Agreement were terminated on such date, calculated as provided
in such Hedge Agreement.
"Alternative Currency" means lawful money of Great Britain, lawful
--------------------
money of the Netherlands or lawful money of Japan, or any other lawful
currency other than Dollars that is freely transferable and convertible
into Dollars as the Borrower, with the consent of the Required Lenders and
the Administrative Agent, shall designate.
"American Home Products" means American Home Products Corporation, a
----------------------
Delaware corporation.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurocurrency Lending Office in the case of a Eurocurrency
Rate Advance and, in the case of a Competitive Bid Advance, the office of
such Lender notified by such Lender to the Administrative Agent as its
Applicable Lending Office with respect to such Competitive Bid Advance.
"Applicable Margin" means, as of any date of determination, a
-----------------
percentage per annum determined by reference to the Public Debt Rating in
effect on such date as set forth below:
PUBLIC DEBT RATING APPLICABLE MARGIN
(S&P/MOODY'S)
Level 1
------- .150%
A/A2 or Above
Level 2
------- .185%
Lower than A/A2 but at least BBB+/Baa1
Level 3
------- .215%
Lower than BBB+/Baa1 but at least BBB/Baa2
Level 4
------- .275%
Lower than BBB/Baa2 but at least BBB-/Baa3
Level 5
------- .325%
Lower than BBB-/Baa3 or no Public Debt Rating in effect
"Applicable Percentage" means, as of any date of determination, a
---------------------
percentage per annum determined by reference to the Public Debt Rating in effect
on such date as set forth below:
<PAGE>
3
PUBLIC DEBT RATING
(S&P/MOODY'S) APPLICABLE PERCENTAGE
Level 1
------- .0700%
A/A2 or Above
Level 2
------- .0900%
Lower than A/A2 but at least BBB+/Baa1
Level 3
------- .1100%
Lower than BBB+/Baa1 but at least BBB/Baa2
Level 4
------- .1250%
Lower than BBB/Baa2 but at least BBB-/Baa3
Level 5
------- .1750%
Lower than BBB-/Baa3 or no Public Debt Rating in effect
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit C hereto.
"Acquired Debt" has the meaning specified in Section 5.02(b)(vi).
-------------
"Base Rate" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 2 of 1% per annum,
plus (ii) the rate obtained by dividing (A) the latest three-week moving
----
average of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average (adjusted to the basis of a year of
360 days) being determined weekly on each Monday (or, if such day is not a
Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% minus the average
of the daily percentages specified during such three-week period by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not limited to,
any emergency, supplemental or other marginal reserve requirement) for
Citibank with respect to liabilities consisting of or including (among
other liabilities) three-month U.S. dollar non-personal time deposits in
the United States, plus (iii) the average during
----
<PAGE>
4
such three-week period of the annual assessment rates estimated by
Citibank for determining the then current annual assessment payable
by Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of Citibank in the
United States; and
(c) 2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Advance denominated in Dollars
-----------------
which bears interest as provided in Section 2.06(a)(i).
"Borrowing" means a Revolving Borrowing or a Competitive Bid
---------
Borrowing.
"Business Day" means a day of the year on which banks are not required
------------
or authorized to close in New York City and, if the applicable Business Day
relates to any Eurocurrency Rate Advances, on which dealings are carried on
in the London interbank market and banks are open for business in London
and in the country of issue of the currency of such Eurocurrency Rate
Advance.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
-------
and Liability Information System maintained by the U.S. Environmental
Protection Agency.
"Commitment" has the meaning specified in Section 2.01(a)(ii).
----------
"Competitive Bid Advance" means an advance by a Lender to the Borrower
-----------------------
as part of a Competitive Bid Borrowing resulting from the competitive
bidding procedure described in Section 2.15 and refers to a Fixed Rate
Advance or a LIBO Rate Advance.
"Competitive Bid Borrowing" means a borrowing consisting of
-------------------------
simultaneous Competitive Bid Advances from each of the Lenders whose offer
to make one or more Competitive Bid Advances as part of such borrowing has
been accepted under the competitive bidding procedure described in Section
2.15.
"Competitive Bid Note" means a promissory note of the Borrower payable
--------------------
to the order of any Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from a Competitive Bid Advance made by such Lender.
"Competitive Bid Reduction" has the meaning specified in Section
-------------------------
2.01(a)(ii).
"Confidential Information" means information that the Borrower
------------------------
furnishes to any Agent or any Lender on a confidential basis, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to such Agent or such Lender from a
source other than the Borrower.
<PAGE>
5
"Consolidated" refers to the consolidation of accounts in accordance
------------
with GAAP.
"Convert", "Conversion" and "Converted" each refers to a conversion of
------- ---------- ---------
all or any portion of Revolving Advances of one Type into Revolving
Advances of the other Type, or in the case of Eurocurrency Rate Advances,
into Revolving Advances with a different Interest Period, pursuant to
Section 2.07, 2.08 or 2.11.
"Cyanamid" means American Cyanamid Company, a Maine corporation and a
--------
wholly owned Subsidiary of American Home Products.
"Debt" of any Person means (a) all indebtedness of such Person for
----
borrowed money, (b) all obligations of such Person for the deferred
purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all obligations of such
Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person as lessee under leases that
have been or should be, in accordance with GAAP, recorded as capital leases
("Capitalized Leases"), valued at the amount that is or should be
------------------
capitalized as required by GAAP, (f) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (g) all Debt of others referred to in clauses (a) through (f)
above guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Debt or to advance or supply funds
for the payment or purchase of such Debt, (ii) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such Debt or to
assure the holder of such Debt against loss, (iii) to supply funds to or in
any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such services are rendered) or (iv) otherwise to assure a creditor against
loss, and (h) all Debt of others referred to in clauses (a) through (f)
above secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Debt, provided, however, that the amount of any Debt
-------- -------
included in this clause (h) shall be limited to the greater of the book
value and the fair market value of the property on which such Lien is
granted.
"Default" means any Event of Default or any event that would
-------
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Designated Bidder" means (a) an Eligible Assignee or (b) a special
-----------------
purpose corporation that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and
that issues (or the parent of which issues) commercial paper rated at least
"Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then
equivalent grade) by S&P that, in the case of either clause (a) or (b), (i)
is
<PAGE>
6
organized under the laws of the United States or any State thereof, (ii)
shall have become a party hereto pursuant to Section 8.07(d), (e) and (f)
and (iii) is not otherwise a Lender.
"Designation Agreement " means a designation agreement entered into by
---------------------
a Lender (other than a Designated Bidder) and a Designated Bidder, and
accepted by the Administrative Agent, in substantially the form of Exhibit
D hereto.
"Disclosed Litigation" has the meaning specified in Section 3.01(b).
--------------------
"Dollars" and the "$" sign each means lawful money of the United
------- -
States.
"Domestic Lending Office" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Administrative
Agent.
"EBITDA" means, for any period, net income (or net loss) plus the sum
------ ----
of (a) interest expense, (b) income tax expense, (c) depreciation expense,
(d) amortization expense, (e) other post-retirement benefits expense and
(f) extraordinary or non-recurring losses included in determining such net
income (or net loss), less the sum of (i) accrued interest income not
----
received in cash and (ii) extraordinary or non-recurring gains included in
determining such net income (or net loss), in each case determined in
accordance with GAAP for such period.
"Effective Date" means the first date on which the conditions set
--------------
forth in Sections 3.01 and 3.02 have been fulfilled.
"Eligible Assignee" means (i) a Lender, (ii) an Affiliate of a Lender
-----------------
and (iii) any other Person approved by the Administrative Agent and the
Borrower, such approval not to be unreasonably withheld.
"Environmental Action" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, claim, notice of non-
compliance or violation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment, including, without limitation, (a) by
any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
-----------------
statute, law, ordinance, rule, regulation, code, order, judgment, decree or
judicial or agency interpretation, policy or guidance relating to the
environment, health, safety or Hazardous Materials.
"Environmental Permit" means any permit, approval, license or other
--------------------
authorization required under any Environmental Law.
<PAGE>
7
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
---------------
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
-----------
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC or the penalty with respect to a failure to provide
notice has been waived, or (ii) the requirements of subsection (1) of
Section 4043(b) of ERISA (without regard to subsection (2) of such Section)
are met with respect to a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9),
(10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such Plan within the following 30 days; (b) the
provision by the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e)
of ERISA); (c) the cessation of operations at a facility of the Borrower or
any of its ERISA Affiliates in the circumstances described in Section
4062(e) of ERISA; (d) the withdrawal by the Borrower or any of its ERISA
Affiliates from a Multiple Employer Plan during a plan year for which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (e)
the failure by the Borrower or any of its ERISA Affiliates to make a
payment to a Plan required under Section 302(f)(1) of ERISA; (f) the
adoption of an amendment to a Plan requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the
PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA,
or the occurrence of any event or condition described in Section 4042 of
ERISA that could constitute grounds for the termination of, or the
appointment of a trustee to administer, a Plan, provided, however, that an
-------- -------
event or condition described in Section 4042(a)(4) of ERISA shall be an
ERISA Event only if the Borrower or any ERISA Affiliate knows or has reason
to know thereof.
"Eurocurrency Lending Office" means, with respect to any Lender, the
---------------------------
office of such Lender specified as its "Eurocurrency Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Administrative
Agent.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurocurrency Rate" means, for any Interest Period for each
-----------------
Eurocurrency Rate Advance comprising part of the same Revolving Borrowing,
an interest rate per annum equal to the rate per annum at which deposits in
Dollars or in the relevant Alternative Currency are offered by the
principal office of Citibank in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such
<PAGE>
8
Interest Period in an amount substantially equal to Citibank's Eurocurrency
Rate Advance comprising part of such Revolving Borrowing to be outstanding
during such Interest Period and for a period equal to such Interest Period.
"Eurocurrency Rate Advance" means a Revolving Advance denominated in
-------------------------
Dollars or in an Alternative Currency which bears interest as provided in
Section 2.06(a)(ii).
"Eurocurrency Rate Reserve Percentage" of any Lender for any Interest
------------------------------------
Period for all Eurocurrency Rate Advances or LIBO Rate Advances comprising
part of the same Borrowing means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurocurrency
Rate Advances or LIBO Rate Advances is determined) having a term equal to
such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Existing Advance" means, for each Existing Lender, all of such
----------------
Existing Lender's rights in and to, and all of its obligations under, the
Advances (as defined in the Existing Credit Agreement) owing to it under
the Existing Credit Agreement, the aggregate amount of which for each
Existing Lender is set forth opposite its name on Schedule 8.13 hereto.
"Existing Commitment" means, for each Existing Lender, all of such
-------------------
Existing Lender's rights in and to, and all of its obligations under, the
Commitment (as defined in the Existing Credit Agreement) held by it under
the Existing Credit Agreement, the aggregate amount of which for each
Existing Lender is set forth opposite its name on Schedule 8.13 hereto.
"Existing Credit Agreement" has the meaning specified in the
-------------------------
Preliminary Statements.
"Existing Lenders" has the meaning specified in the Preliminary
----------------
Statements.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
<PAGE>
9
"Fixed Charge Coverage Ratio" means, at any time, for any period, the
---------------------------
ratio of (x) the sum of (i) Consolidated EBITDA of the Borrower and its
Subsidiaries, (ii) cash expenditures for environmental remediation and
(iii) cash expenditures for benefit payments for other post-retirement
benefits made by the Borrower directly to retirees of the Borrower or any
of its Subsidiaries or to any VEBA (to the extent not expensed during such
period) to (y) the sum of (i) cash interest expense, (ii) cash expenditures
for environmental remediation, (iii) cash expenditures for benefit payments
for other post-retirement benefits made by the Borrower directly to
retirees of the Borrower or any of its Subsidiaries or to any VEBA and (iv)
dividends accrued or paid on the Series C Preferred Stock, in each case,
during such period.
"Fixed Rate Advance" has the meaning specified in Section 2.15(a)(i),
------------------
which Advance shall be denominated in Dollars.
"Foreign Currency" means lawful currency other than Dollars which is
----------------
freely transferable and convertible into Dollars.
"Funded Debt" of any Person means Debt in respect of the Advances, in
-----------
the case of the Borrower, and all other Debt of such Person that by its
terms matures more than one year after the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date, including, without limitation, all amounts of Funded Debt
of such Person required to be paid or prepaid within one year after the
date of its creation, the current portion of all long-term Debt and all
short-term Debt for borrowed money.
"GAAP" has the meaning specified in Section 1.03.
----
"Hazardous Materials" means petroleum and petroleum products,
-------------------
radioactive materials, asbestos-containing materials, radon gas and any
other chemicals, materials or substances designated, classified or
regulated as being "hazardous" or "toxic", or words of similar import,
under any federal, state, local or foreign statute, law, ordinance, rule,
regulation, code, order, judgment, decree or judicial or agency
interpretation, policy or guidance.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements (other
than non-financial commodities contracts).
"Hedge Bank" means any financial institution with which the Borrower
----------
has entered into a Hedge Agreement.
"Interest Period" means, for each Eurocurrency Rate Advance comprising
---------------
part of the same Revolving Borrowing and each LIBO Rate Advance comprising
part of the same Competitive Bid Borrowing, the period commencing on the
date of such Eurocurrency Rate Advance or LIBO Rate Advance or the date of
the Conversion of any Base Rate Advance into
<PAGE>
10
such Eurocurrency Rate Advance and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and, thereafter,
with respect to Eurocurrency Rate Advances, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be
one, two, three or six months, as the Borrower may, upon notice received by
the Administrative Agent not later than 11:00 A.M. (New York City time) on
the third Business Day prior to the first day of such Interest Period,
select; provided, however, that:
-------- -------
(i) the Borrower may not select any Interest Period which ends
after the Termination Date;
(ii) Interest Periods commencing on the same date for
Eurocurrency Rate Advances comprising part of the same Revolving
Borrowing or for LIBO Rate Advances comprising part of the same
Competitive Bid Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
-------- -------
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
(iv) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Lenders" means the Banks listed on the signature pages hereof and
-------
each Person that shall become a party hereto pursuant to Section 8.07(a),
(b) and (c) and, except when used in reference to a Revolving Advance, a
Revolving Borrowing, a Revolving Note, a Commitment or a related term, each
Designated Bidder.
"Leverage Ratio" means, at any time, the ratio of (a) Total Debt to
--------------
(b) the sum of (i) Total Debt plus (ii) gross long-term liabilities
----
incurred in connection with "expected post retirement benefit obligations"
within the meaning of Statement of Financial Accounting Standards No. 106
plus (iii) shareholders' equity of the Borrower, in each case, of the
----
Borrower and its Subsidiaries as of the last day of the immediately
preceding fiscal quarter of the Borrower as determined on a Consolidated
basis in accordance with GAAP.
<PAGE>
11
"LIBO Rate" means, for any Interest Period for all LIBO Rate Advances
---------
comprising part of the same Competitive Bid Borrowing, an interest rate per
annum equal to the rate per annum at which deposits in Dollars are offered
by the principal office of Citibank in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to the amount that would be Citibank's ratable share of such
Borrowing if such Borrowing were to be a Revolving Borrowing to be
outstanding during such Interest Period and for a period equal to such
Interest Period.
"LIBO Rate Advance" has the meaning specified in Section 2.15(a)(i),
-----------------
which Advance shall be denominated in Dollars.
"Lien" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Material Adverse Change" means any material adverse change in the
-----------------------
business, condition (financial or otherwise), operations or properties of
the Borrower and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations or properties of
the Borrower and its Subsidiaries taken as a whole, (b) the rights and
remedies of any Agent or any Lender under this Agreement or any Note or (c)
the ability of the Borrower to perform its obligations under this Agreement
or any Note.
"Material Subsidiary" means, at any time, a Subsidiary of the Borrower
-------------------
having at least 3% of the total Consolidated assets of the Borrower and its
Subsidiaries (determined as of the last day of the most recent fiscal
quarter of the Borrower) or at least 3% of the total Consolidated revenues
of the Borrower and its Subsidiaries for the twelve month period ending on
the last day of the most recent fiscal quarter of the Borrower.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a multiemployer plan, as defined in Section
------------------
4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates
(other than one considered an ERISA Affiliate only pursuant to subsection
(m) or (o) of Section 414 of the Internal Revenue Code) is making or
accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and at least one Person other than
the Borrower and its ERISA Affiliates or (b) was so maintained and in
respect of which the Borrower or any of its ERISA Affiliates
<PAGE>
12
could have liability under Section 4064 or 4069 of ERISA in the event such
plan has been or were to be terminated.
"Note" means a Revolving Note or a Competitive Bid Note.
----
"Notice of Competitive Bid Borrowing" has the meaning specified in
-----------------------------------
Section 2.15(a).
"Notice of Revolving Borrowing" has the meaning specified in Section
-----------------------------
2.02(a).
"Original Currency" has the meaning specified in Section 8.12.
-----------------
"Other Currency" has the meaning specified in Section 8.12.
--------------
"Payment Office" means, for any Alternative Currency, such office of
--------------
Citibank as shall be from time to time selected by the Administrative Agent
and notified by the Administrative Agent to the Borrower and the Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor.
"Permitted Liens" means such of the following as to which (i) (A) no
---------------
enforcement or collection proceeding shall have been commenced or, if any
such proceeding has been commenced, it is being contested in good faith and
by proper proceedings and as to which adequate reserves are being
maintained and (B) no execution, levy or foreclosure proceeding shall have
been commenced or, if any such proceeding has been commenced, it is being
contested in good faith, by proper proceedings, adequate reserves with
respect thereto are being maintained and there shall not be any period of
30 consecutive days during which a stay shall not be in effect or (ii) the
amount secured thereby does not exceed, individually or in the aggregate,
$10,000,000 (or the equivalent thereof in any Alternative Currency): (a)
Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(b) hereof; (b) Liens
imposed by law, such as materialmen's, mechanics', carriers', workmen's,
warehousemen's and repairmen's Liens and other similar Liens arising in the
ordinary course of business securing obligations that are not overdue for a
period of more than 30 days other than by reason of a contest as permitted
above; (c) pledges or deposits to secure obligations under workers'
compensation or unemployment insurance laws or other social security laws
and legislation or to secure public or statutory obligations; (d)
easements, zoning restrictions, rights of way and other encumbrances on
title to real property that do not render title to the property encumbered
thereby unmarketable or materially adversely affect the use of such
property for its present purposes; and (e) pledges or deposits to secure
the performance of bids, trade contracts, leases (other than Capitalized
Leases), surety or appeal bonds or other obligations of a like nature
incurred in the ordinary course of business.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.
<PAGE>
13
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
"Preferred Stock" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"Public Debt Rating" means, as of any date of determination, the
------------------
higher of the ratings most recently announced by S&P and Moody's for any
class of non-credit enhanced long term senior unsecured public debt issued
by the Borrower or, if no such ratings have been announced, the rating most
recently assigned by S&P or Moody's, as the case may be, to the Borrower's
"implied senior debt", as notified in writing from S&P or Moody's, as the
case may be, to the Borrower. For purposes of the foregoing, (a) if only
one of S&P and Moody's shall have in effect a Public Debt Rating, the
Applicable Margin and the Applicable Percentage shall be determined by
reference to the available rating; (b) if neither S&P nor Moody's shall
have in effect a Public Debt Rating, the Applicable Margin and Applicable
Percentage will be set in accordance with level 5 under the definition of
"Applicable Margin" or "Applicable Percentage", as the case may be; (c) if
------------------ ---------------------
the ratings established by S&P and Moody's shall fall within different
levels, the Applicable Margin and the Applicable Percentage shall be based
upon the higher rating, except that in the event that the lower of such
ratings is more than one level below the higher of such ratings, the
Applicable Margin and the Applicable Percentage will be determined based on
the level immediately above the lower of such ratings; (d) if any rating
established by S&P or Moody's shall be changed, such change shall be
effective as of the date on which such change is first announced publicly
by the rating agency making such change; and (e) if S&P or Moody's shall
change the basis on which ratings are established each reference to the
Public Debt Rating announced by S&P or Moody's, as the case may be, shall
refer to the then equivalent rating by S&P or Moody's, as the case may be.
"Redenominate", "Redenomination" and "Redenominated" each refers to
------------ -------------- -------------
the redenomination of each Revolving Advance comprising part of the same
Revolving Borrowing from Dollars into an Alternative Currency or from an
Alternative Currency into Dollars or another Alternative Currency pursuant
to Section 2.17.
"Register" has the meaning specified in Section 8.07(g).
--------
"Responsible Officer" of any corporation means any executive officer,
-------------------
treasurer or controller of such corporation and any other officer thereof
responsible for the administration of the obligations of such corporation
in respect of this Agreement.
"Required Lenders" means at any time Lenders owed at least 51% of the
----------------
then aggregate unpaid principal amount of the Revolving Advances owing to
Lenders or, if no such principal amount is then outstanding, Lenders having
at least 51% of the Commitments (provided that, for purposes hereof,
--------
neither the Borrower, nor any of its Affiliates, if a Lender, shall be
included in (i) the Lenders holding such amount of the Revolving Advances
<PAGE>
14
or having such amount of the Commitments or (ii) determining the aggregate
unpaid principal amount of the Revolving Advances or the total
Commitments).
"Revolving Advance" means an advance by a Lender to the Borrower as
-----------------
part of a Revolving Borrowing, and refers to a Base Rate Advance or a
Eurocurrency Rate Advance (each of which shall be a "Type" of Revolving
----
Advance).
"Revolving Borrowing" means a borrowing consisting of simultaneous
-------------------
Revolving Advances of the same Type made by each of the Lenders pursuant to
Section 2.01(a)(ii).
"Revolving Note" means a promissory note of the Borrower payable to
--------------
the order of any Lender, in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Advances made by such Lender.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-
---
Hill Companies, Inc.
"Series C Certificate" means the Certificate of Designations,
--------------------
Preferences and Rights of Series C Cumulative Preferred Stock of the
Borrower, dated December 17, 1993, as amended.
"Series C Preferred Stock" means the capital stock of the Borrower
------------------------
issued in accordance with the terms of the Series C Certificate.
"Single Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and no Person other than the
Borrower and its ERISA Affiliates or (b) was so maintained and in respect
of which the Borrower or any of its ERISA Affiliates could have liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Subsidiary" of any Person means any corporation, limited liability
----------
company, partnership, joint venture, trust or estate (i) that is, in
accordance with GAAP, Consolidated in the Consolidated financial statements
of the Borrower or (ii) of which (or in which) more than 50% of (a) the
issued and outstanding capital stock having ordinary voting power to elect
a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial
interest in such trust or estate is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more of its
other Subsidiaries or by one or more of such Person's other Subsidiaries.
"Termination Date" means the earlier of July 28, 2002 and the date of
----------------
termination in whole of the Commitments pursuant to Section 2.04 or 6.01.
<PAGE>
15
"Total Debt" means, at any time, the sum of, without duplication (a)
----------
Preferred Stock of the Borrower plus (b) Funded Debt plus (c) long-term
---- ----
liabilities (other than Funded Debt and long-term liabilities in respect of
benefit payments for other post-retirement benefits) plus (d) Debt of the
----
Borrower or any of its Subsidiaries of the type described in clause (g) or
(h) of the definition of "Debt" relating to Debt of Persons that are not
Subsidiaries of the Borrower in which the Borrower or any of its
Subsidiaries has an equity interest or of direct or indirect unconsolidated
Subsidiaries of the Borrower, in each case, of the Borrower and its
Subsidiaries as of the last day of the immediately preceding fiscal quarter
of the Borrower as determined on a Consolidated basis in accordance with
GAAP.
"Type" has the meaning specified in the definition of "Revolving
---- ---------
Advance".
-------
"United States" and "U.S." each means United States of America.
------------- ----
"VEBA" means any trust organized by the Borrower as a voluntary
----
employee benefits association.
"Voting Stock" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the
happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
---------------------------
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting
----------------
terms not specifically defined herein shall be construed in accordance
with generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred to in Section
4.01(e) ("GAAP"), provided, however, that, if (a) any changes in accounting
-------- -------
principles from those used in the preparation of the Borrower's financial
statements dated December 31, 1997 are required by the rules, regulations,
pronouncements or opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) and are adopted by the Borrower with the
agreement of its independent certified public accountants and (b) such changes
would affect (or result in a change in the method of calculation of) any of the
covenants set forth in Section 5.02 or 5.03, the parties hereto agree to enter
into good-faith negotiations in order to amend such provisions, in a manner
satisfactory to the Required Lenders, to equitably reflect such changes with the
intention that the criteria for evaluating compliance with such covenants by the
Borrower shall be the same after such changes as if such changes had not been
made; provided further, however, that until the amendment of such provisions
-------- ------- -------
shall be agreed upon by the Borrower and the Required Lenders, for purposes of
determining compliance with any covenant set forth in Sections 5.02 and 5.03,
such terms shall be construed in
<PAGE>
16
accordance with GAAP as in effect on the date of this Agreement applied on a
basis consistent with the application used in preparing the Borrower's audited
financial statements referred to in Section 4.01(e).
SECTION 1.04. Currency Equivalents Generally For all purposes of
------------------------------
this Agreement other than Article II, the equivalent in any Alternative Currency
or any Foreign Currency of an amount in Dollars shall be determined at the rate
of exchange quoted by Citibank in New York City, at 9:00 A.M. (New York City
time) on the date of determination, to prime banks in New York City for the spot
purchase in the New York foreign exchange market of such amount of Dollars with
such Alternative Currency or such Foreign Currency, as the case may be.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Advances
----------------------
(a) (i) Effective as of the Effective Date, each Existing Lender hereby sells
and assigns all of its rights in and to, and all of its obligations under, each
Existing Advance owing to it and the Existing Commitment held by it to the Banks
and each Bank hereby purchases and assumes, pro rata based on such Bank's
Commitment, all of the Existing Lenders' rights in and to, and obligations
under, the Existing Advances and the Existing Commitments, the amounts of which
are set forth opposite its name on Schedule 8.13 hereto.
(ii) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Revolving Advances to the Borrower
from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate amount
(determined in Dollars) not to exceed at any time outstanding the
Dollar amount set forth opposite such Lender's name on the
signature pages hereof or, if such Lender has entered into any
Assignment and Acceptance, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section
8.07(g), as such amount may be reduced pursuant to Section 2.04
(such Lender's "Commitment"), provided that the aggregate amount of
---------- --------
the Commitments of the Lenders shall be deemed used from time to
time to the extent of the aggregate amount of the Competitive Bid
Advances then outstanding and such deemed use of the aggregate
amount of the Commitments shall be allocated among the Lenders
ratably according to their respective Commitments (such deemed use
of the aggregate amount of the Commitments being a "Competitive Bid
---------------
Reduction"). Each Revolving Borrowing shall be in an aggregate
---------
amount of $5,000,000 (or in the equivalent thereof in any
Alternative Currency) or an integral multiple of $1,000,000 (or in
the equivalent thereof in any Alternative Currency) in excess
thereof (or, if less, an aggregate amount equal to the amount by
which the aggregate amount of a proposed Competitive Bid Borrowing
requested by the Borrower exceeds the aggregate amount of
Competitive Bid Advances offered to be made by the Lenders and
accepted by the Borrower in respect of such Competitive Bid
Borrowing, if such Competitive Bid Borrowing is made on the same
date as
<PAGE>
17
such Revolving Borrowing) and shall consist of Revolving Advances
of the same Type made on the same day by the Lenders ratably
according to their respective Commitments. Notwithstanding anything
herein to the contrary, no Revolving Borrowing may be made in an
Alternative Currency if, after giving effect to the making of such
Revolving Borrowing, the aggregate amount of outstanding Revolving
Advances denominated in one or more Alternative Currencies would
exceed the Dollar equivalent of $20,000,000. Within the limits of
each Lender's Commitment, the Borrower may borrow under this
Section 2.01(a)(ii), prepay pursuant to Section 2.09(b) and
reborrow under this Section 2.01(a)(ii). For purposes of this
Section 2.01(a)(ii) and all other provisions of this Article II,
the equivalent in Dollars of any Alternative Currency or the
equivalent in any Alternative Currency of Dollars or of any other
Alternative Currency shall be determined in accordance with Section
2.18.
SECTION 2.02. Making the Revolving Advances. (a) Each Revolving
-----------------------------
Borrowing shall be made on notice, given not later than (x) 10:00 A.M. (New York
City time) on the date of the proposed Revolving Borrowing, in the case of a
Revolving Borrowing consisting of Base Rate Advances, and not later than (y)
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Revolving Borrowing, in the case of a Revolving Borrowing
consisting of Eurocurrency Rate Advances denominated in Dollars, and (z) 11:00
A.M. (New York City time) on the fifth Business Day prior to the date of the
proposed Revolving Borrowing, in the case of a Revolving Borrowing consisting of
Eurocurrency Rate Advances denominated in an Alternative Currency, in each case
by the Borrower to the Administrative Agent, which shall give to each Lender
prompt notice thereof by telephone, telecopier, telex or cable. Each such
notice of a Revolving Borrowing (a "Notice of Revolving Borrowing") shall be by
-----------------------------
telephone, telecopier, telex or cable, confirmed immediately in writing, in
substantially the form of Exhibit B-1 hereto, specifying therein (i) the
requested date of such Revolving Borrowing, (ii) the requested Type of Revolving
Advances comprising such Revolving Borrowing, (iii) the requested aggregate
amount of such Revolving Borrowing and (iv) in the case of a Revolving Borrowing
comprised of Eurocurrency Rate Advances, the requested Interest Period for each
such Revolving Advance and the currency of such Revolving Borrowing.
In the case of a Revolving Borrowing comprised of Eurocurrency Rate
Advances in an Alternative Currency (other than the lawful money of Great
Britain, the lawful money of the Netherlands and the lawful money of Japan), the
obligation of each Lender to make its Eurocurrency Rate Advance in the requested
Alternative Currency as part of such Revolving Borrowing is subject to the
confirmation by such Lender to the Administrative Agent not later than the
fourth Business Day before the requested date of such Revolving Borrowing that
such Lender agrees to make its Eurocurrency Rate Advance in the requested
Alternative Currency, which confirmation shall be notified immediately by the
Administrative Agent to the Borrower. If any Lender shall not have so provided
to the Administrative Agent such confirmation, the Administrative Agent shall
promptly notify the Borrower and each Lender that a Lender has not provided such
confirmation, whereupon the Borrower may, by notice to the Administrative Agent
not later than the third Business Day before the requested date of such
Revolving Borrowing, withdraw the Notice of Revolving Borrowing relating to such
requested Borrowing. If the Borrower does so withdraw such Notice of Revolving
Borrowing, the
<PAGE>
18
Revolving Borrowing requested in such Notice of Revolving Borrowing shall not
occur and the Administrative Agent shall promptly so notify each Lender. If the
Borrower does not so withdraw such Notice of Revolving Borrowing, the
Administrative Agent shall promptly so notify each Lender and such Notice of
Revolving Borrowing shall be deemed to be a Notice of Revolving Borrowing which
requests a Revolving Borrowing comprised of Eurocurrency Rate Advances in an
aggregate amount in Dollars equivalent, on the date the Administrative Agent so
notifies each Lender, to the amount of the originally requested Revolving
Borrowing in such an Alternative Currency; and in such notice by the
Administrative Agent to each Lender the Administrative Agent shall state such
aggregate equivalent amount of such Revolving Borrowing in Dollars and such
Lender's ratable portion of such Borrowing.
(a) Each Lender shall, before 11:00 A.M. (New York City time) on the
date of such Revolving Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent (i) in the case of a
Revolving Borrowing in Dollars, at its address referred to in Section 8.02, in
same day funds, such Lender's ratable portion of such Revolving Borrowing in
Dollars, and (ii) in the case of a Revolving Borrowing in an Alternative
Currency, at such account maintained at the Payment Office for such Alternative
Currency as shall have been notified by the Administrative Agent to the Lenders
prior thereto, in same day funds, such Lender's ratable portion of such
Revolving Borrowing in such Alternative Currency. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower at the Administrative Agent's aforesaid address or at
the applicable Payment Office.
(b) Anything in subsection (a) above to the contrary notwithstanding,
the Borrower may not select Eurocurrency Rate Advances for any Revolving
Borrowing if the aggregate amount of such Revolving Borrowing is less than
$5,000,000 (or its equivalent in any Alternative Currency) or if the obligation
of the Lenders to make Eurocurrency Rate Advances shall then be suspended
pursuant to Section 2.07.
(c) Each Notice of Revolving Borrowing shall be irrevocable and
binding on the Borrower. In the case of any Revolving Borrowing which the
related Notice of Revolving Borrowing specifies is to be comprised of
Eurocurrency Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Revolving Borrowing
for such Revolving Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Revolving Advance to
be made by such Lender as part of such Revolving Borrowing when such Revolving
Advance, as a result of such failure, is not made on such date.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Revolving Borrowing that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
Revolving Borrowing, the Administrative Agent may assume that such Lender has
made such portion available to the Administrative Agent on the date of such
Revolving Borrowing in accordance with subsection (a) of this Section 2.02 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay
<PAGE>
19
to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to Revolving Advances comprising such Revolving Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender's Revolving Advance as part of such
Revolving Borrowing for purposes of this Agreement and, if the Borrower shall
repay to the Administrative Agent such corresponding amount pursuant to this
clause (d), such repayment shall not relieve such Lender from its obligations
hereunder to the Borrower.
(e) The failure of any Lender to make the Revolving Advance to be
made by it as part of any Revolving Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Revolving Advance
on the date of such Revolving Borrowing, but no Lender shall be responsible
for the failure of any other Lender to make the Revolving Advance to be
made by such other Lender on the date of any Revolving Borrowing.
SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay
---- ------------
to the Administrative Agent for the account of each Lender (other than the
Designated Bidders) a facility fee on the aggregate amount of such Lender's
Commitment from the Effective Date in the case of each Bank and from the later
of the Effective Date and the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
until the Termination Date at a rate per annum equal to the Applicable
Percentage in effect from time to time, payable in arrears quarterly on the last
day of each March, June, September and December, commencing September 30, 1998,
and on the Termination Date.
(b) Administrative Agent's Fees. The Borrower shall pay to the
---------------------------
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.04. Reduction or Termination of the Commitments. The
-------------------------------------------
Borrower shall have the right, upon at least three Business Days' notice to the
Administrative Agent, to terminate in whole or reduce ratably in part the unused
portions of the respective Commitments of the Lenders, provided that each
--------
partial reduction shall be in the aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and provided further that the aggregate
-------- -------
amount of the Commitments of the Lenders shall not be reduced to an amount that
is less than the aggregate principal amount of the Competitive Bid Advances then
outstanding.
SECTION 2.05. Repayment of Revolving Advances. The Borrower shall
-------------------------------
repay to the Administrative Agent in full for the ratable account of the Lenders
on the Termination Date the aggregate principal amount of the Revolving Advances
then outstanding.
SECTION 2.06. Interest on Revolving Advances. (a) Scheduled
------------------------------ ---------
Interest. The Borrower shall pay interest on the unpaid principal amount of
- --------
each Revolving Advance owing to each Lender from the date of such Revolving
Advance until such principal amount shall be paid in full, at the following
rates per annum:
<PAGE>
20
(i) Base Rate Advances. During such periods as such Revolving Advance
------------------
is a Base Rate Advance, a rate per annum equal at all times to the Base
Rate in effect from time to time, payable in arrears monthly on the last
day of each month during such periods and on the date such Base Rate
Advance shall be Converted or paid in full.
(ii) Eurocurrency Rate Advances. During such periods as such Revolving
--------------------------
Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times
during each Interest Period for such Revolving Advance to the sum of (x)
the Eurocurrency Rate for such Interest Period for such Revolving Advance
plus (y) the Applicable Margin in effect on the first day of such Interest
----
Period, payable on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on each day which
occurs during such Interest Period every three months from the first day of
such Interest Period and on the date such Eurocurrency Rate Advance shall
be Converted or paid in full.
(b) Default Interest. The Borrower shall pay interest on (i) the
----------------
unpaid principal amount of each Revolving Advance that is not paid when due from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Revolving Advance pursuant to clause (a)(i) or
(a)(ii) above and (ii) the amount of any interest, fee or other amount payable
hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on Base Rate
Advances pursuant to clause (a)(i) above.
SECTION 2.07. Interest Rate Determination. (a) The Administrative
---------------------------
Agent shall give prompt notice to the Borrower and the Lenders of the applicable
interest rate determined by the Administrative Agent for purposes of Section
2.06(a)(i) or (ii).
(b) If, with respect to any Eurocurrency Rate Advances, the Required
Lenders notify the Administrative Agent that the Eurocurrency Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Required Lenders of making, funding or maintaining their respective Eurocurrency
Rate Advances for such Interest Period, the Administrative Agent shall forthwith
so notify the Borrower and the Lenders, whereupon,
(i) each Eurocurrency Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and
(ii) the obligation of the Lenders to make, or to Convert Revolving
Advances into, Eurocurrency Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurocurrency Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the
<PAGE>
21
Lenders and such Revolving Advances will automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $5,000,000 (or its
equivalent in any Alternative Currency), such Revolving Advances shall
automatically Convert into Base Rate Advances at the end of the applicable
Interest Period for such Revolving Advances.
SECTION 2.08. Voluntary Conversion of Revolving Advances. The
------------------------------------------
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Sections
2.07 and 2.12, Convert, pro rata based on the Lenders' respective Commitments,
Revolving Advances of one Type denominated in Dollars comprising the same
Borrowing into Revolving Advances of the other Type denominated in Dollars or,
in the case of Eurocurrency Rate Advances (whether denominated in Dollars or in
Alternative Currency), into Revolving Advances with a different Interest Period;
provided, however, that in the event of any Conversion of Eurocurrency Rate
- -------- -------
Advances into Base Rate Advances or Eurocurrency Rate Advances with a different
Interest Period on a day other than the last day of an Interest Period for the
Eurocurrency Rate Advances being Converted, the Borrower shall reimburse the
Lenders in respect of such Eurocurrency Rate Advances to the extent required by
Section 8.04(c) and any Conversion of Base Rate Advances into Eurocurrency Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b). Each such notice of a Conversion shall, within the
restrictions specified above, specify (i) the date of such Conversion, (ii) the
Revolving Advances to be Converted and (iii) if such Conversion is into
Eurocurrency Rate Advances, the duration of the Interest Period for each such
Revolving Advance. Each notice of Conversion shall be irrevocable and binding
on the Borrower.
SECTION 2.09. Prepayments of Revolving Advances. (a) The Borrower
---------------------------------
shall have no right to prepay any principal amount of any Revolving Advances
other than as provided below.
(b) The Borrower may, upon at least three Business Days' notice in the
case of Eurocurrency Rate Advances, and one Business Day's notice given not
later than 11:00 A.M. (New York City time), in the case of Base Rate Advances,
to the Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amounts of the Revolving Advances comprising part of
the same Revolving Borrowing in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid;
provided, however, that (x) each partial prepayment shall be in an aggregate
- -------- -------
principal amount not less than $5,000,000 or the equivalent thereof in an
Alternative Currency (determined on the date notice of repayment is given in
accordance with Section 2.18) or an integral multiple of $1,000,000 or the
equivalent thereof in an Alternative Currency (determined on the date notice of
repayment is given in accordance with Section 2.18) in excess thereof and (y) in
the event of any such prepayment of a Eurocurrency Rate Advance, the Borrower
shall be obligated to reimburse the Lenders in respect thereof to the extent
required by Section 8.04(c).
<PAGE>
22
(c) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Advances comprising part of the
same Revolving Borrowings equal to the amount by which the
aggregate principal amount of the Advances then outstanding
exceeds the aggregate Commitments of the Lenders on such Business
Day. For purposes of this subsection (c), the aggregate principal
amount of Eurocurrency Rate Advances denominated in any
Alternative Currency shall be determined in Dollars as set forth
in Section 2.18. The Administrative Agent shall give prompt
notice of any prepayment required under this Section 2.09(c) to
the Borrower and the Lenders.
SECTION 2.10. Increased Costs. (a) If, due to either (i) the
---------------
introduction of or any change (including any change by way of imposition or
increase of reserve requirements included in the Eurocurrency Rate Reserve
Percentage) in or in the interpretation of any law or regulation, with respect
to any Eurocurrency Rate Advance denominated in pounds sterling, after June 1,
1995, and with respect to any other Eurocurrency Rate Advance, after the date
hereof, and with respect to any LIBO Rate Advance, after the date on which one
or more Lenders offered to make such LIBO Rate Advance pursuant to Section
2.15(a)(ii) or (ii) the compliance with any guideline or request from any
central bank or other governmental authority including, without limitation, any
agency of the European Union or similar monetary or multinational authority
(whether or not having the force of law), with respect to any Eurocurrency Rate
Advance, after the date hereof, and with respect to any LIBO Rate Advance, after
the date on which one or more Lenders offered to make such LIBO Rate Advance
pursuant to Section 2.15(a)(ii), there shall be any increase in the cost (other
than in taxes, except to the extent that the same are required to be paid
pursuant to Section 2.13) to any Lender of agreeing to make or making, funding
or maintaining any Eurocurrency Rate Advance or LIBO Rate Advance, then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost; provided, however, that, before making any such
-------- -------
demand, each Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
A certificate as to the amount of such increased cost, setting forth the basis
therefor in reasonable detail and submitted by such Lender to the Borrower and
the Administrative Agent together with any demand under this subsection (a),
shall be presumed correct absent demonstrable error.
(b) If any Lender determines that compliance with any law or regulation or any
guideline or request from any central bank or other governmental authority
including, without limitation, any agency of the European Union or similar
monetary or multinational authority (whether or not having the force of
law) after the date hereof affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by
or based upon the existence of such Lender's commitment to lend hereunder
and other commitments of this type, then, upon demand by such Lender (with
a copy of such demand to the Administrative Agent), the Borrower shall pay
to the Administrative Agent for the account of such Lender, from time to
time as specified by such Lender, additional amounts sufficient to
compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be
<PAGE>
23
allocable to the existence of such Lender's commitment to lend hereunder;
provided, however, that, before making any such demand, each Lender agrees
-------- -------
to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable Lending
Office if the making of such a designation would avoid the need for, or
reduce the amount of, such additional amounts payable under this subsection
(b) and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate as to such amounts, setting
forth the basis therefor in reasonable detail and submitted to the Borrower
and the Administrative Agent by such Lender together with any demand under
this paragraph (b) shall be presumed correct absent demonstrable error.
(c) Notwithstanding any other provision in this Section 2.10, no
Lender shall be entitled to demand compensation pursuant to this Section 2.10
unless such Lender shall certify to the Borrower that it is at the time the
general policy or practice of such Lender to demand such compensation in similar
circumstances under comparable provisions of other comparable credit agreements
with borrowers of similar credit quality. The Borrower shall pay each Lender
the amount shown as due on any certificate delivered by such Lender pursuant to
paragraph (a) or (b) above within 30 days after its receipt of the same.
(d) No Lender shall be entitled to compensation under this Section
2.10 for any costs incurred or reductions suffered with respect to any event or
circumstance unless such Lender shall have notified the Borrower, not more than
120 days after such Lender becomes aware of such event or circumstance, that it
will demand compensation for such costs or reductions in a certificate described
in the last sentence of each of paragraphs (a) and (b) above.
SECTION 2.11. Illegality. (a) Notwithstanding any other provision
----------
of this Agreement, if any Lender shall notify the Administrative Agent and the
Borrower that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for any Lender or its
Eurocurrency Lending Office to perform its obligations hereunder to make
Eurocurrency Rate Advances in Dollars or in any Alternative Currency or LIBO
Rate Advances or to fund or maintain Eurocurrency Rate Advances in Dollars or in
any Alternative Currency or LIBO Rate Advances hereunder, (i) the obligation of
such Lender to make Eurocurrency Rate Advances in Dollars or in such Alternative
Currency or LIBO Rate Advances, as the case may be, or to Convert Revolving
Advances into Eurocurrency Rate Advances shall be suspended, whereupon any
request by the Borrower for a Borrowing comprised of Eurocurrency Rate Advances
or LIBO Rate Advances shall, as to such Lender only, be deemed a request for a
Base Rate Advance until such Lender shall notify the Administrative Agent and
the Borrower that the circumstances causing such suspension no longer exist and
(ii) such Lender may require that all outstanding Eurocurrency Rate Advances in
Dollars or in such Alternative Currency and LIBO Rate Advances, as the case may
be, made by it be Converted to Base Rate Advances, in which event all such
Eurocurrency Rate Advances in Dollars or in such Alternative Currency and LIBO
Rate Advances, as the case may be, shall be automatically Converted to Base Rate
Advances as of the effective date of such notice; provided, however, that each
-------- -------
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Eurocurrency Lending
Office if the making of such a designation would enable such Lender to withdraw
its notice under this subsection (a) and would not, in the reasonable judgment
of such Lender, be otherwise disadvantageous to such Lender. In the event any
Lender shall notify the Administrative Agent and the Borrower of the occurrence
of the circumstances causing such suspension under this
<PAGE>
24
Section 2.11(a), all payments and prepayments of principal that would otherwise
have been applied to repay the Eurocurrency Rate Advances or LIBO Rate Advances
that would have been made by such Lender or the Converted Eurocurrency Rate
Advances shall instead be applied to repay the Base Rate Advances made by such
Lender in lieu of such Eurocurrency Rate Advances or LIBO Rate Advances, or
resulting from the Conversion of such Eurocurrency Rate Advances.
(b) For purposes of this Section 2.11, a notice to the Borrower by any
Lender shall be effective as to each Eurocurrency Rate Advance and LIBO Rate
Advance, if lawful, on the last day of the Interest Period currently applicable
to such Eurocurrency Rate Advance or LIBO Rate Advance, as the case may be; in
all other cases such notice shall be effective on the date of the occurrence of
the circumstances causing such suspension under subsection (a) above.
SECTION 2.12. Payments and Computations. (a) The Borrower shall
-------------------------
make each payment hereunder and under the Notes, except with respect to
principal of, interest on, and other amounts relating to, Advances denominated
in an Alternative Currency, not later than 12:00 Noon (New York City time) on
the day when due in Dollars to the Administrative Agent at its address referred
to in Section 8.02 in same day funds. The Borrower shall make each payment
hereunder and under the Notes with respect to principal of, interest on, and
other amounts relating to Advances denominated in an Alternative Currency not
later than 12:00 Noon (at the Payment Office for such Alternative Currency) on
the day when due in such Alternative Currency to the Administrative Agent in
same day funds by deposit of such funds to the Administrative Agent's account
maintained at such Payment Office. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or facility fees ratably (other than amounts payable
pursuant to Section 2.10, 2.13, 2.15 or 8.04(c)) to the Lenders for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 8.07(g), from and after the effective date specified in such
Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate shall be made
by the Administrative Agent on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the Eurocurrency Rate or
the Federal Funds Rate and of facility fees shall be made by the Administrative
Agent on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or facility fees are payable. Each determination
by the Administrative Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error.
<PAGE>
25
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, if such extension would cause payment of interest on
-------- -------
or principal of Eurocurrency Rate Advances or LIBO Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.
SECTION 2.13. Taxes. (a) Any and all payments by the Borrower
-----
hereunder or under the Notes shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Administrative
---------
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender or the Administrative Agent (as
the case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes imposed on
it, by the jurisdiction of such Lender's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
-----
or in respect of any sum payable hereunder or under any Note to any Lender or
the Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.13) paid by such Lender or the Administrative Agent
(as the case may be) and any liability (including penalties, interest and
expenses)
<PAGE>
26
arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Lender or the Administrative Agent (as the
case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing payment
thereof. In the case of any payment hereunder or under the Notes by the
Borrower through an account or branch outside the United States or on behalf of
the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Administrative Agent, at
such address, an opinion of counsel acceptable to the Administrative Agent
stating that such payment is exempt from Taxes. For purposes of this Section
2.13, the terms "United States" and "United States person" shall have the
------------- --------------------
meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower with Internal Revenue Service Form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement
or the Notes is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Lender at the time such Lender
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 2.13(a).
(f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.13(e)
(other than if such failure is due to a change in law occurring subsequent to
- ------ ----
the date on which a form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection (e) above),
such Lender shall not be entitled to indemnification under Section 2.13(a) with
respect to Taxes imposed by the United States; provided, however, that should a
-------- -------
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower, at the requesting Lender's expense, shall take such
steps as the Lender shall reasonably request to assist the Lender to recover
such Taxes.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.13 shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurocurrency Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(h) The Administrative Agent or any Lender will notify the Borrower if
it becomes aware of any circumstances that entitle the Borrower to a refund of
Taxes paid by the Borrower
<PAGE>
27
pursuant to this Section 2.13 if the Borrower would not otherwise know or have
reason to know of its entitlement to such refund. Within 30 days of the written
request of the Borrower therefor, the Lenders and the Administrative Agent, as
appropriate, shall, at the Borrower's expense, execute and deliver to the
Borrower such certificates, forms or other documents that can be furnished
consistent with the facts and that are reasonably necessary to assist the
Borrower in applying for refunds of Taxes paid by the Borrower pursuant to
either Section 2.13(a) or Section 2.13(c).
(i) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Notes.
SECTION 2.14. Sharing of Payments, Etc If any Lender shall obtain
------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) on account of the Revolving Advances owing to it (other
than pursuant to Section 2.10, 2.13 or 8.04(c)) in excess of its ratable share
of payments on account of the Revolving Advances obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such participations
in the Revolving Advances owing to them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
- -------- -------
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.15. The Competitive Bid Advances. (a) Each Lender
----------------------------
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.15 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Termination Date
in the manner set forth below; provided that, following the making of each
--------
Competitive Bid Borrowing, (x) the aggregate amount of the Competitive Bid
Advances of all Lenders then outstanding shall not exceed $100,000,000, (y) the
aggregate amount of the Competitive Bid Advances of any one Lender then
outstanding shall not exceed $50,000,000 and (z) the aggregate amount of the
Advances then outstanding shall not exceed the aggregate amount of the
Commitments of the Lenders (computed without regard to any Competitive Bid
Reduction).
(i) The Borrower may request a Competitive Bid Borrowing under this
Section 2.15 by delivering to the Administrative Agent, by telephone,
telecopier, telex or cable, a notice of a Competitive Bid Borrowing (a
"Notice of Competitive Bid Borrowing"), in substantially the form of
------------------------------------
Exhibit B-2 hereto, specifying therein the requested (v) date of such
proposed Competitive Bid Borrowing, (w) aggregate amount of such proposed
Competitive Bid Borrowing, (x) in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances, Interest Period, or in the case of a
Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity date
for repayment of each Fixed Rate Advance to be made as part
<PAGE>
28
of such Competitive Bid Borrowing (which maturity date may not be earlier
than the date occurring seven days after the date of such Competitive Bid
Borrowing or later than the earlier of (I) 180 days after the date of such
Competitive Bid Borrowing and (II) the Termination Date), (y) interest
payment date or dates relating thereto and (z) other terms (if any) to be
applicable to such Competitive Bid Borrowing, not later than 10:00 A.M.
(New York City time) (A) at least one Business Day prior to the date of the
proposed Competitive Bid Borrowing, if the Borrower shall specify in the
Notice of Competitive Bid Borrowing that the rates of interest to be
offered by the Lenders shall be fixed rates per annum (each Advance
comprising part of such Competitive Bid Borrowing being referred to herein
as a "Fixed Rate Advance") and (B) at least four Business Days prior to the
------------------
date of the proposed Competitive Bid Borrowing, if the Borrower shall
instead specify in the Notice of Competitive Bid Borrowing that the rates
of interest to be offered by the Lenders are to be based on the LIBO Rate
(each Advance comprising part of any such Competitive Bid Borrowing that is
offered by the Lenders at the LIBO Rate is referred to herein as a "LIBO
----
Rate Advance"). Subject to subsection (a)(iii)(x) below, each Notice of
------------
Competitive Bid Borrowing shall be irrevocable and binding on the Borrower.
The Administrative Agent shall in turn promptly notify each Lender of each
request for a Competitive Bid Borrowing received by it from the Borrower by
sending such Lender a copy of the related Notice of Competitive Bid
Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more Competitive Bid Advances to the
Borrower as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion, by
written notice (the "Offer") to the Administrative Agent (which shall give
-----
prompt notice thereof to the Borrower), before 9:30 A.M. (New York City
time) on the date of such proposed Competitive Bid Borrowing in the case of
a Competitive Bid Borrowing consisting of Fixed Rate Advances and before
10:00 A.M. (New York City time) three Business Days before the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of LIBO Rate Advances, of the minimum amount and
maximum amount of each Competitive Bid Advance which such Lender would be
willing to make as part of such proposed Competitive Bid Borrowing (which
amounts may, subject to the proviso to the first sentence of this Section
2.15(a), exceed such Lender's Commitment, if any), the rate or rates of
interest therefor, the interest payment schedule, the maturity date of the
proposed Competitive Bid Advance, such Lender's Applicable Lending Office
with respect to such Competitive Bid Advance and such other terms as the
Borrower may specify in the Notice of Competitive Bid Borrowing; provided
--------
that if the Administrative Agent in its capacity as a Lender shall, in its
sole discretion, elect to make any such offer, it shall notify the Borrower
of such offer at least 30 minutes before the time and on the date on which
notice of such election is to be given to the Administrative Agent by the
other Lenders. If any Lender shall elect not to make such an offer, such
Lender shall so notify the Administrative Agent, before 10:00 A.M. (New
York City time) on the date on which notice of such election is to be given
to the Administrative Agent by the other Lenders, and such Lender shall not
be obligated to, and shall not, make any Competitive Bid Advance as part of
such Competitive Bid Borrowing; provided that the failure by any Lender to
--------
give such notice shall not cause such Lender to be obligated to make any
Competitive Bid Advance as part of such proposed Competitive Bid Borrowing.
<PAGE>
29
(iii) The Borrower shall, in turn, before 10:30 A.M. (New York City
time) on the date of such proposed Competitive Bid Borrowing, in the case
of a Competitive Bid Borrowing consisting of Fixed Rate Advances and before
11:00 A.M. (New York City time) three Business Days before the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of LIBO Rate Advances, either:
(x) cancel such Competitive Bid Borrowing by giving the
Administrative Agent notice to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, by
giving written notice to the Administrative Agent of the amount of
each Competitive Bid Advance (which amount shall be equal to or
greater than the minimum amount, and equal to or less than the maximum
amount, notified to the Borrower by the Administrative Agent on behalf
of such Lender for such Competitive Bid Advance pursuant to paragraph
(ii) above) to be made by each Lender as part of such Competitive Bid
Borrowing, and reject any remaining offers made by Lenders pursuant to
paragraph (ii) above by giving the Administrative Agent notice to that
effect. The Borrower shall accept the offers made by any Lender or
Lenders to make Competitive Bid Advances in order of the lowest to the
highest rates of interest offered by such Lenders. If two or more
Lenders have offered the same interest rate, the amount to be borrowed
at such interest rate will be allocated among such Lenders in
proportion to the amount that each such Lender offered at such
interest rate.
(iv) If the Borrower notifies the Administrative Agent that such
Competitive Bid Borrowing is cancelled pursuant to paragraph (iii)(x)
above, the Administrative Agent shall give prompt notice thereof to the
Lenders and such Competitive Bid Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Administrative
Agent shall in turn promptly notify (A) each Lender that has made an offer
as described in paragraph (ii) above, of the date and aggregate amount of
such Competitive Bid Borrowing and whether or not any offer or offers made
by such Lender pursuant to paragraph (ii) above have been accepted by the
Borrower, (B) each Lender that is to make a Competitive Bid Advance as part
of such Competitive Bid Borrowing, of the amount of each Competitive Bid
Advance to be made by such Lender as part of such Competitive Bid
Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as
part of such Competitive Bid Borrowing, upon receipt, that the
Administrative Agent has received forms of documents appearing to fulfill
the applicable conditions set forth in Article III. Each Lender that is to
make a Competitive Bid Advance as part of such Competitive Bid Borrowing
shall, before 12:00 noon (New York City time) on the date of such
Competitive Bid Borrowing specified in the notice received from the
Administrative Agent pursuant to clause (A) of the preceding sentence or
any later time when such Lender shall have received notice from the
Administrative Agent pursuant to clause (C) of the preceding sentence, make
available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 8.02, in same
day funds, such
<PAGE>
30
Lender's portion of such Competitive Bid Borrowing. Upon fulfillment of the
applicable conditions set forth in Article III and after receipt by the
Administrative Agent of such funds, the Administrative Agent will make such
funds available to the Borrower at the Administrative Agent's aforesaid
address or at the applicable Payment Office. Promptly after each
Competitive Bid Borrowing the Administrative Agent will notify each Lender
of the amount of the Competitive Bid Borrowing, the consequent Competitive
Bid Reduction and the dates upon which such Competitive Bid Reduction
commenced and will terminate.
(vi) If the Borrower notifies the Administrative Agent that it accepts
one or more of the offers made by any Lender or Lenders pursuant to
paragraph (iii)(y) above, such notice of acceptance shall be irrevocable
and binding on the Borrower. The Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in the related
Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing the
applicable conditions set forth in Article III, including, without
limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such Lender to fund the Competitive Bid Advance
to be made by such Lender as part of such Competitive Bid Borrowing when
such Competitive Bid Advance, as a result of such failure, is not made on
such date.
(b) Each Competitive Bid Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each Competitive Bid Borrowing, the Borrower and each
Lender shall be in compliance with the limitations set forth in the proviso to
the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.15, the Borrower may from time to time borrow under this Section 2.15, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.15, provided that a Competitive Bid Borrowing shall not be made within three
--------
Business Days of the date of any other Competitive Bid Borrowing.
(d) The Borrower shall repay to the Administrative Agent for the
account of each Lender that has made a Competitive Bid Advance, on the maturity
date of each Competitive Bid Advance (such maturity date being that specified by
the Borrower for repayment of such Competitive Bid Advance in the related Notice
of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above), the
then unpaid principal amount of such Competitive Bid Advance. The Borrower
shall have no right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by the Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above.
(e) The Borrower shall pay interest on the unpaid principal amount of
each Competitive Bid Advance from the date of such Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in full,
at the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) above, payable on the interest payment date or
dates specified by the Borrower for such Competitive Bid Advance in the related
Notice of Competitive Bid
<PAGE>
31
Borrowing delivered pursuant to subsection (a)(i) above. The Borrower shall pay
interest on (i) the unpaid principal amount of each Competitive Bid Advance that
is not paid when due from the date such amount shall be due until such amount
shall be paid in full, payable in arrears on the date or dates interest is
payable thereon, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on such Competitive Bid Advance under the
terms of the Offer for such Competitive Bid Advance unless otherwise agreed in
such Offer and (ii) the amount of any interest on each Competitive Bid Advance
that is not paid when due, from the date such amount shall be due until such
amount shall be paid in full, payable in arrears on the date such amount shall
be paid in full and on demand, at a rate per annum equal at all times to 2% per
annum above the rate per annum required to be paid on such Competitive Bid
Advance under the terms of the Offer for such Competitive Bid Advance unless
otherwise agreed in such Offer.
(f) The indebtedness of the Borrower resulting from each Competitive
Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall,
upon the request of the Lender making such Competitive Bid Advance, be evidenced
in part by a Competitive Bid Note of the Borrower payable to the order of the
Lender making such Competitive Bid Advance, which Note shall be delivered by the
Borrower to the Administrative Agent promptly following the making of such
Competitive Bid Advance in a principal amount equal to the aggregate Commitments
of the Lenders hereunder.
(g) Upon delivery of each Notice of Competitive Bid Borrowing, the
Borrower shall pay a non-refundable fee of $1,500 to the Administrative Agent
for its own account.
SECTION 2.16 Additional Interest on Eurocurrency Rate Advances. For
-------------------------------------------------
so long as any Lender maintains reserves against Eurocurrency Liabilities, the
Borrower shall pay to the Administrative Agent for the account of each such
Lender additional interest on the unpaid principal amount of each Eurocurrency
Rate Advance of such Lender, from the date of such Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting, in the case of Revolving Advances, (a) the
Eurocurrency Rate for the Interest Period for such Advance from (b) the rate
obtained by dividing such Eurocurrency Rate by a percentage equal to 100% minus
the Eurocurrency Rate Reserve Percentage of such Lender for such Interest
Period, payable on each date on which interest is payable on such Advance. Such
additional interest shall be determined by such Lender and notified to the
Borrower through the Administrative Agent.
SECTION 2.17. Voluntary Redenomination of Revolving Advances. The
----------------------------------------------
Borrower may, upon notice given to the Administrative Agent at least five
Business Days prior to the date of the proposed Redenomination, request that all
Eurocurrency Rate Advances comprising part of the same Revolving Borrowing be
Redenominated from Dollars into an Alternative Currency or from an Alternative
Currency into Dollars or another Alternative Currency; provided, however, that
-------- -------
any Redenomination shall be made on, and only on, the last day of an Interest
Period for such Revolving Advances. Each such notice of request of a
Redenomination (a "Notice of Redenomination") shall be by telephone, telecopier,
------------------------
telex or cable, in substantially the form of Exhibit E hereto, specifying (i)
the Eurocurrency Rate Advances comprising the Revolving Borrowing to be
Redenominated, (ii) the date of the proposed Redenomination, (iii) the currency
into which such Revolving Advances are to be Redenominated and (iv) the duration
of the Interest Period for such Revolving Advances upon being so
<PAGE>
32
Redenominated. In the case of a Notice of Redenomination which requests a
Redenomination of Revolving Advances into an Alternative Currency (other than
the lawful money of Great Britain, the lawful money of the Netherlands and the
lawful money of Japan), such Redenomination is subject to the confirmation by
each Lender to the Administrative Agent not later than the fourth Business Day
before the requested date of such Redenomination that such Lender agrees to such
Redenomination, which confirmation shall be notified immediately by the
Administrative Agent to the Borrower. If any Lender shall not have so provided
to the Administrative Agent such confirmation, the requested Redenomination will
not occur and the Administrative Agent shall promptly notify the Borrower and
each Lender that a Lender has not provided such confirmation and that the
requested Redenomination will not occur. If each Lender shall have so provided
to the Administrative Agent such confirmation or if such Notice of
Redenomination requests a Redenomination of Revolving Advances into Dollars, the
lawful money of Great Britain, the lawful money of the Netherlands or the lawful
money of Japan, each Revolving Advance so requested to be Redenominated will be
Redenominated, on the date specified therefor in such Notice of Redenomination,
into an equivalent amount thereof in the currency requested in such Notice of
Redenomination, such equivalent amount to be determined on such date in
accordance with Section 2.18, and, upon being so Redenominated, will have an
initial Interest Period as requested in such Notice of Redenomination.
SECTION 2.18. Currency Equivalents. For purposes of the provisions
--------------------
of this Article II, (i) the equivalent in Dollars of any Alternative Currency
shall be determined by using the quoted spot rate at which Citibank's principal
office in London offers to exchange Dollars for such Alternative Currency in
London at 11:00 A.M. (London time) two Business Days prior to the date on which
such equivalent is to be determined, (ii) the equivalent in any Alternative
Currency of any other Alternative Currency shall be determined by using the
quoted spot rate at which Citibank's principal office in London offers to
exchange such Alternative Currency for the equivalent in Dollars of such other
Alternative Currency in London at 11:00 A.M. (London time) two Business Days
prior to the date on which such equivalent is to be determined, and (iii) the
equivalent in any Alternative Currency of Dollars shall be determined by using
the quoted spot rate at which Citibank's principal office in London offers to
exchange such Alternative Currency for Dollars in London at 11:00 A.M. (London
time) two Business Days prior to the date on which such equivalent is to be
determined. The equivalent in Dollars of each Eurocurrency Rate Advance made in
an Alternative Currency shall be recalculated hereunder on each date that it
shall be necessary to determine the unused portion of each Lender's Commitment,
or any or all Revolving Advance or Advances outstanding on such date.
SECTION 2.19. Evidence of Debt. (a) Each Lender shall maintain in
----------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower
agrees that upon notice by any Lender to the Borrower (with a copy of such
notice to the Administrative Agent) to the effect that a promissory note or
other evidence of indebtedness is required or appropriate in order for such
Lender to evidence (whether for purposes of pledge, enforcement or otherwise)
the Advances owing to, or to be made by, such Lender, the Borrower shall
promptly execute and deliver to such Lender a Revolving Note, payable to the
order of such Lender in a principal amount equal to the Commitment of such
Lender.
<PAGE>
33
(b) The Register maintained by the Administrative Agent pursuant to
Section 8.07(g) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, whether such Borrowing is composed
of Revolving Advances or Competitive Bid Advances, and, if applicable, the Type
of Advance comprising such Borrowing and, if appropriate, the Interest Period
applicable thereto, (ii) the terms of each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
and (iv) the amount of any sum received by the Administrative Agent from the
Borrower hereunder and each Lender's share thereof.
(c) Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
----- -----
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
-------- -------
Lender to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrower under this Agreement.
(d) References herein to Notes shall mean and be references to
Revolving Notes and Competitive Bid Notes to the extent issued hereunder.
SECTION 2.20. Use of Proceeds. The proceeds of the Advances shall be
---------------
available (and the Borrower agrees that it shall use such proceeds) solely for
general corporate purposes of the Borrower and its Subsidiaries, including,
without limitation, for the purposes of making acquisitions.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01
------------------------------------------------------
and 2.15. Sections 2.01 and 2.15 of this Agreement shall become effective as of
- --------
the Effective Date, subject to the conditions precedent that:
(a) There shall have occurred no Material Adverse Change since
December 31, 1997.
(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i)
would reasonably be expected to have a Material Adverse Effect other than
the matters described on Schedule 3.01(b) (the "Disclosed Litigation") or
--------------------
(ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note or the consummation of the transactions contemplated
hereby, and there shall have been no material adverse change in the status,
or financial effect on the Borrower or any of its Subsidiaries, of the
Disclosed Litigation from that described on Schedule 3.01(b).
<PAGE>
34
(c) All governmental and third party consents and approvals necessary
in connection with this Agreement or the transactions contemplated hereby
and with the execution, delivery and performance of this Agreement and the
Notes shall have been obtained (without the imposition of any conditions
that are not acceptable to the Lenders) and shall remain in effect, and no
law or regulation shall be applicable in the reasonable judgment of the
Lenders that restrains, prevents or imposes materially adverse conditions
upon the transactions contemplated hereby.
(d) The Borrower shall have paid all accrued fees and expenses of the
Administrative Agent and all accrued financing fees of the Lenders
(including the accrued fees and expenses of counsel to the Administrative
Agent); provided, however, that the Borrower shall only be obligated to pay
-------- -------
on the Effective Date those expenses for which it has received invoices at
least one Business Day prior to the Effective Date.
(e) The Administrative Agent shall have received on or before the
Effective Date the following, each dated such day, in form and substance
satisfactory to the Administrative Agent and (except for the Revolving
Notes) in sufficient copies for each Lender:
(i) The Notes to the order of those Lenders that have requested
Notes prior to the Effective Date.
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement and any Notes, and
of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and any
Notes.
(iii) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign this Agreement and any
Notes and the other documents to be delivered hereunder.
(iv) An environmental assessment update report prepared by the
Borrower, in form, scope and substance reasonably satisfactory to the
Lenders, as to any material environmental hazards or liabilities to
which the Borrower or any of its Subsidiaries may be subject, and the
Lenders shall be reasonably satisfied with the amount and nature of
any such hazards or liabilities and with the Borrower's plans with
respect thereto.
(v) A favorable opinion of Cravath, Swaine & Moore, special
counsel for the Borrower, substantially in the form of Exhibit F-1
hereto and as to such other matters as any Lender through the
Administrative Agent may reasonably request.
(vi) A favorable opinion of Edward F. Jackman, Esq., General
Counsel of the Borrower, substantially in the form of Exhibit F-2
hereto and as to such other matters as any Lender through the
Administrative Agent may reasonably request.
<PAGE>
35
(vii) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance satisfactory to the
Administrative Agent.
SECTION 3.02. Additional Conditions Precedent to Effectiveness. The
------------------------------------------------
effectiveness of Sections 2.01 and 2.15 of this Agreement shall be subject to
the further conditions precedent that on the Effective Date the following
statements shall be true and the Administrative Agent shall have received for
the account of each Lender a certificate signed by a duly authorized officer of
the Borrower, dated the Effective Date, stating that the following statements
are true:
(i) The representations and warranties contained in Section 4.01 are
correct on and as of the Effective Date, and
(ii) No event has occurred and is continuing that constitutes a
Default.
SECTION 3.03. Conditions Precedent to Each Revolving Borrowing. The
------------------------------------------------
obligation of each Lender to make a Revolving Advance on the occasion of each
Revolving Borrowing shall be subject to the further conditions precedent that on
the date of such Revolving Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Revolving Borrowing and the
acceptance by the Borrower of the proceeds of such Revolving Borrowing shall
constitute a representation and warranty by the Borrower that on the date of
such Revolving Borrowing such statements are true):
(i) The representations and warranties contained in Section 4.01
(except the representations set forth in the last sentence of subsection
(e) thereof) are correct on and as of the date of such Revolving Borrowing,
before and after giving effect to such Revolving Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date,
(ii) No event has occurred and is continuing, or would result from
such Revolving Borrowing or from the application of the proceeds therefrom,
that constitutes a Default.
SECTION 3.04. Conditions Precedent to Each Competitive Bid Borrowing.
-----------------------------------------------------
The obligation of each Lender that is to make a Competitive Bid Advance on the
occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as
part of such Competitive Bid Borrowing is subject to the conditions precedent
that (i) the Administrative Agent shall have received the written confirmatory
Notice of Competitive Bid Borrowing with respect thereto, and (ii) on the date
of such Competitive Bid Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Competitive Bid Borrowing such statements are true):
(a) the representations and warranties contained in Section 4.01 are
correct on and as of the date of such Competitive Bid Borrowing, before and
after giving effect to such Competitive Bid Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date,
<PAGE>
36
(b) no event has occurred and is continuing, or would result from such
Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default, and
(c) no event has occurred and no circumstance exists as a result of
which the information concerning the Borrower that has been provided to any
Agent or any Lender by the Borrower in connection herewith would include an
untrue statement of a material fact or omit to state any material fact or
any fact necessary to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
SECTION 3.05. Determinations Under Sections 3.01 and 3.02. For
-------------------------------------------
purposes of determining compliance with the conditions specified in Sections
3.01 and 3.02, each Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lenders unless an officer of the Administrative Agent responsible for the
transactions contemplated by this Agreement shall have received notice from such
Lender prior to the proposed Effective Date, as notified by the Borrower to the
Lenders, specifying its objection thereto.
SECTION 3.06. Notice of Effective Date. Upon the occurrence of the
------------------------
Effective Date, the Administrative Agent shall notify the Lenders that the
Effective Date has occurred in accordance with Sections 3.01 and 3.02, which
notice shall be conclusive and binding on the parties hereto for all purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
----------------------------------------------
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by the Borrower of this
Agreement and any Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's charter or by-laws (including, without
limitation, the Series C Certificate) or (ii) any law binding on or
affecting the Borrower or any contractual restriction binding on, or, to
the best of Borrower's knowledge, affecting, the Borrower.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Borrower of this
Agreement or the Notes.
<PAGE>
37
(d) This Agreement is, and each of the Notes when delivered hereunder
will be, the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with their respective terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally.
(e) The balance sheets of the Borrower and its Subsidiaries as at
December 31, 1997, and the related statements of income and cash flows of
the Borrower and its Subsidiaries for the fiscal year then ended, and the
Consolidated balance sheet of the Borrower and its Subsidiaries as at June
30, 1998, and the related Consolidated statement of income and cash flows
of the Borrower and its Subsidiaries for the six months then ended, duly
certified by the chief financial officer of the Borrower, copies of which
have been furnished to each Bank, fairly present, subject, in the case of
said balance sheet as at June 30, 1998, and said statement of income and
cash flows for the six months then ended, to year-end audit adjustments,
the financial condition of the Borrower and its Subsidiaries as at such
dates and the results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles consistently applied. As of the
Effective Date, since December 31, 1997, there has been no Material Adverse
Change.
(f) There is no pending action or proceeding against or, to the best
of the Borrower's knowledge, otherwise affecting the Borrower or any of its
Subsidiaries or, to the best of the Borrower's knowledge, threatened action
or proceeding affecting the Borrower or any of its Subsidiaries, including,
without limitation, any Environmental Action, before any court,
governmental agency or arbitrator that (i) would be reasonably likely to
have a Material Adverse Effect (other than the Disclosed Litigation) or
(ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note, and there has been no change in the status, or
financial effect on the Borrower or any of its Subsidiaries, of the
Disclosed Litigation from that described on Schedule 3.01(b) that would be
reasonably expected to have a Material Adverse Effect.
(g) Following application of the proceeds of each Advance, not more
than 25 percent of the value of the assets (either of the Borrower only or
of the Borrower and its Subsidiaries on a Consolidated basis) subject to
the provisions of Section 5.02(a) or 5.02(c) or subject to any restriction
contained in any agreement or instrument between the Borrower and any
Lender or any Affiliate of any Lender relating to Debt and within the scope
of Section 6.01(d) will be margin stock (within the meaning of Regulations
U and G issued by the Board of Governors of the Federal Reserve System).
For purposes of this Section 4.01(g), "assets" of the Borrower or any of
------
its Subsidiaries includes, without limitation, the treasury stock of the
Borrower that has not been retired.
(h) Other than as set forth on Schedule 4.01(h), the operations and
properties of the Borrower and each of its Subsidiaries comply in all
respects with all applicable Environmental Laws, all necessary
Environmental Permits have been obtained and are in effect for the
operations and properties of the Borrower and its Subsidiaries, the
Borrower and its Subsidiaries are in compliance with all such Environmental
Permits, except to the extent that any such noncompliance or failure to
obtain any necessary permits would not be reasonably expected to have a
Material Adverse Effect, and to the knowledge of the
<PAGE>
38
Borrower, no circumstances exist that would be reasonably expected to (i)
form the basis of an Environmental Action against the Borrower or any of
its Subsidiaries or any of their properties that would have a Material
Adverse Effect or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
applicable Environmental Law that would have a Material Adverse Effect.
(i) Other than the properties set forth on Schedule 4.01(i) or such
other properties as to which a Material Adverse Effect would not reasonably
be expected to result, none of the properties currently or formerly owned
or operated by the Borrower or any of its Subsidiaries is listed or, to the
knowledge of the Borrower, proposed for listing on the National Priorities
List under CERCLA or on the CERCLIS or any analogous state list.
(j) Other than the locations set forth on Schedule 4.01(j) or such
other locations as to which a Material Adverse Effect would not reasonably
be expected to result, neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or, to the knowledge of the Borrower,
proposed for listing on the National Priorities List under CERCLA or on the
CERCLIS or any analogous state list; other than as set forth on Schedule
4.01(j), Hazardous Materials have not been released or disposed of on any
property currently or formerly owned or operated by the Borrower or any of
its Subsidiaries in a manner which would reasonably be expected to result
in a Material Adverse Effect; and except to the extent failure to do so
would not reasonably be expected to result in a Material Adverse Effect,
all Hazardous Materials have been used, treated, handled, stored and
disposed of on such properties in compliance with all applicable
Environmental Laws and Environmental Permits.
(k) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan other than such ERISA Events as would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(l) Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which will have been
filed with the Internal Revenue Service and furnished to the Lenders is
complete and accurate in all material respects and fairly presents the
funding status of such Plan as of the date set forth therein, and since the
date of such Schedule B there has been no change in such funding status
that would reasonably be expected to result in a Material Adverse Effect.
(m) Neither the Borrower nor any of its ERISA Affiliates (other than
one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Internal Revenue Code) has incurred or is reasonably
expected to incur any Withdrawal Liability to any Multiemployer Plan that
would reasonably be expected to result in a Material Adverse Effect.
(n) Except as would not reasonably be expected to result in a Material
Adverse Effect, neither the Borrower nor any of its ERISA Affiliates (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Internal Revenue Code) has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan
<PAGE>
39
is in reorganization or has been terminated, within the meaning of Title IV
of ERISA, and, to the best of the Borrower's knowledge, no such
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.
(o) The Borrower and its Subsidiaries have no material liability not
reflected on the Borrower's financial statements with respect to "expected
post retirement benefit obligations" within the meaning of Statement of
Financial Accounting Standards No. 106.
(p) Neither the Borrower nor any of its Subsidiaries is an "investment
company", or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any
Advances nor the application of the proceeds or repayment thereof by the
Borrower, nor the consummation of the other transactions contemplated
hereby, will violate any provision of such Act or any rule, regulation or
order of the Securities and Exchange Commission thereunder.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
---------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Required Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA; provided, however, that neither the
-------- -------
Borrower nor any of its Subsidiaries shall be required to comply with any
applicable laws, rules, regulations or orders (i) to the extent the
applicability thereof to the Borrower is being contested in good faith and
by proper proceedings and appropriate reserves are being maintained with
respect to such circumstances in accordance with GAAP or (ii) where the
failure so to comply, either individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
----------------------
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all income and all other material taxes, assessments and governmental
charges or levies imposed upon it or upon its property and (ii) all lawful
claims that, if unpaid, might by law become a Lien upon its property except
such claims that, either individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect; provided,
--------
however, that neither the Borrower nor any of its Subsidiaries shall be
-------
required to pay or discharge any such tax, assessment, charge or claim that
is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained in accordance with GAAP.
<PAGE>
40
(c) Compliance with Environmental Laws. Comply, and cause each of its
----------------------------------
Subsidiaries and exercise its commercially reasonable efforts to cause all
lessees and other Persons occupying its properties to comply, with all
applicable Environmental Laws and Environmental Permits applicable to its
operations and properties except to the extent that the failure so to
comply would not reasonably be expected to result in a Material Adverse
Effect; obtain and renew all Environmental Permits necessary for its
operations and properties except to the extent that the failure to obtain
or renew any of such Environmental Permits would not reasonably be expected
to result in a Material Adverse Effect; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action necessary to
remove and clean up all Hazardous Materials from any of its properties, in
all material respects in accordance with the requirements of all applicable
Environmental Laws except to the extent that the failure so to comply would
not reasonably be expected to result in a Material Adverse Effect;
provided, however, that neither the Borrower nor any of its Subsidiaries
-------- -------
shall be required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and reserves appropriate in the
reasonable judgment of the Borrower and its accountants are being
maintained with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance (which may include self-insurance to
the extent consistent with prudent business practices and otherwise
customary in their respective industries and to the extent such self-
insurance would not reasonably be expected to have a Material Adverse
Effect) with responsible and reputable insurance companies or associations
in such amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which the Borrower or such Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
-----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, material rights (charter and statutory) and material franchises;
provided, however, that the Borrower and its Subsidiaries may consummate
-------- -------
any merger or consolidation or liquidation permitted under Section 5.02(c)
and provided further that neither the Borrower nor any of its Subsidiaries
-------- -------
shall be required to preserve any right or franchise if, in the good faith
business judgment of the Board of Directors or of a Responsible Officer of
the Borrower or such Subsidiary, the preservation thereof is no longer
desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not reasonably
expected to result in a Material Adverse Effect.
(f) Visitation Rights. At any reasonable time and from time to time,
-----------------
permit any of the Agents or any of the Lenders or any agents or
representatives thereof to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of, the
Borrower and any of its Subsidiaries, and to discuss the affairs, finances
and accounts of the Borrower and any of its Subsidiaries with any of their
officers or directors and with their independent certified public
accountants.
<PAGE>
41
(g) Preparation of Environmental Reports. If a Default caused by
------------------------------------
reason of breach of Section 4.01(f) with respect to environmental matters
(including, without limitation, with respect to any Environmental Action),
(h), (i) or (j) or 5.01(c) shall have occurred and be continuing, at the
reasonable request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 90 days after such request, at the
expense of the Borrower, an environmental site assessment report for the
properties described in such request, prepared by an environmental
consulting firm acceptable to the Administrative Agent, indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance, removal or remedial action in connection with any Hazardous
Materials on such properties.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
the Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause
-------------------------------
each of its Subsidiaries to maintain and preserve, all of its properties
that are material in the conduct of its business in good working order and
condition, ordinary wear and tear excepted; provided, however, that neither
-------- -------
the Borrower nor any of its Subsidiaries shall be required to maintain and
preserve any such property if, in the good faith business judgment of the
Board of Directors or of a Responsible Officer of the Borrower or such
Subsidiary, maintenance and preservation thereof is no longer desirable in
the conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not reasonably likely to result in a
Material Adverse Effect.
(j) Transactions with Affiliates. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, (i) other than with respect to transactions
between the Borrower and its wholly owned Subsidiaries or between wholly
owned Subsidiaries, all transactions otherwise permitted under this
Agreement with any of their Affiliates, Cyanamid or American Home Products
on terms that are fair and reasonable and no less favorable to the Borrower
or such Subsidiary (considered as a whole, in conjunction with all other
relationships and arrangements with such Affiliates and consistent with
prudent business practices) than it would obtain in a comparable arm's-
length transaction with a Person not an Affiliate, Cyanamid or American
Home Products, other than as described on Schedule 5.01(j), and (ii) with
respect to transactions between the Borrower and its wholly owned
Subsidiaries, all transactions otherwise permitted under this Agreement on
terms that are no less favorable to the Borrower than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate except
where failure to do so would not reasonably be expected to have a Material
Adverse Effect, provided, however, that the Borrower shall not engage in
-------- -------
any transaction with any such Subsidiary that would render such Subsidiary
insolvent or cause a default under, or a breach of, any material contract
to which such Subsidiary is a party.
(k) Reporting Requirements. Furnish to the Lenders:
----------------------
<PAGE>
42
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, Consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for the
period commencing at the end of the previous fiscal year and ending
with the end of such quarter, duly certified (subject to year-end
audit adjustments) by the chief financial officer of the Borrower and
a certificate of the chief financial officer of the Borrower as to
compliance with the terms of this Agreement, setting forth in
reasonable detail the calculations and other information necessary to
demonstrate compliance with Section 5.03 and, if requested by the
Required Lenders through the Administrative Agent, setting forth in
reasonable detail the calculations and other information necessary to
demonstrate compliance with Sections 5.02(a) and (b);
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries,
containing Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year and
Consolidated and consolidating statements of income and a Consolidated
statement of cash flows, in each case, of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an
opinion unqualified as to going concern or other matters material in
the judgment of the Required Lenders by KPMG Peat Marwick or another
"Big Six" accounting firm or other independent public accountants of
recognized national standing reasonably acceptable to the Required
Lenders and a certificate of the chief financial officer of the
Borrower as to compliance with the terms of this Agreement, setting
forth in reasonable detail the calculations and other information
necessary to demonstrate compliance with Section 5.03 and, if
requested by the Required Lenders through the Administrative Agent,
setting forth in reasonable detail the calculations and other
information necessary to demonstrate compliance with Sections 5.02(a)
and (b);
(iii) promptly and in any event within three Business Days after
an officer of the Borrower or, with respect to ERISA matters, the
employee of the Borrower responsible for such matters or, with respect
to ERISA matters of an ERISA Affiliate, the employee of such ERISA
Affiliate responsible for such matters, knows or should know of the
occurrence of each Default, continuing on the date of such statement,
a statement of the chief financial officer of the Borrower setting
forth details of such Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to its securityholders generally, and
copies of all reports and registration statements which the Borrower
or any Subsidiary files with the Securities Exchange Commission or any
national securities exchange (other than any reports on Form 11-K and
any registration statements filed on Form S-8 or their equivalents);
(v) promptly after an officer of the Borrower knows or should
know of the occurrence thereof, notice of any condition or occurrence
on any property of the
<PAGE>
43
Borrower or any of its Subsidiaries that results in a material
noncompliance by or material liability with respect to the Borrower or
any of its Subsidiaries with any applicable Environmental Law or
Environmental Permit which would reasonably be expected to (A) form
the basis of an Environmental Action against the Borrower or any of
its Subsidiaries or such property that would be reasonably expected to
have a Material Adverse Effect or (B) cause any such property to be
subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law that would be reasonably
expected to have a Material Adverse Effect;
(vi) promptly and in any event within 15 days after the employee
of the Borrower responsible for ERISA matters or the employee of an
ERISA Affiliate responsible for ERISA matters knows or has reason to
know that any ERISA Event has occurred, a statement of the chief
financial officer of the Borrower describing such ERISA Event and the
action, if any, that the Borrower or such ERISA Affiliate has taken
and proposes to take with respect thereto;
(vii) promptly and in any event within three Business Days after
receipt thereof by the Borrower or any of its ERISA Affiliates (other
than one considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Internal Revenue Code), copies of each
notice from the PBGC stating its intention to terminate any Plan or to
have a trustee appointed to administer any such Plan;
(viii) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan;
(ix) promptly and in any event within 10 Business Days after
receipt thereof by the Borrower or any of its ERISA Affiliates (other
than one considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Internal Revenue Code) from the sponsor
of a Multiemployer Plan, copies of each notice concerning (x) the
imposition of Withdrawal Liability by any such Multiemployer Plan, (y)
the reorganization or termination, within the meaning of Title IV of
ERISA, of any such Multiemployer Plan or (z) the amount of liability
incurred, or that may be incurred, by the Borrower or any of its ERISA
Affiliates in connection with any event described in clause (x) or
(y);
(x) promptly and in any event within 10 Business Days after the
effectiveness thereof, copies of each amendment to and waiver of any
provision of the Series C Certificate; and
(xi) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Administrative Agent may from
time to time reasonably request.
SECTION 5.02. Negative Covenants. So long as any Advance shall
------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Required Lenders:
<PAGE>
44
(a) Liens, Etc. Create or suffer to exist, or permit any of its
----------
Subsidiaries to create or suffer to exist, any Lien on or with respect to
any of its properties, whether now owned or hereafter acquired, or assign,
or permit any of its Subsidiaries to assign, any right to receive income,
other than:
(i) Permitted Liens,
(ii) (x) purchase money Liens upon or in any property acquired or
held by the Borrower or any Subsidiary to secure the purchase price of
such property or to secure Debt (including, without limitation,
Capitalized Leases) incurred solely for the purpose of financing the
acquisition or improvement of such property, or (y) Liens existing on
such property at the time of its acquisition or improvement (other
than any such Lien created in contemplation of such acquisition or
improvement) or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount, provided, however, that no
-------- -------
such Lien shall extend to or cover any property other than the
property being acquired or improved (except to the extent that
construction financing may result in an encumbrance on the underlying
fee or leasehold), and no such extension, renewal or replacement shall
extend to or cover any property not theretofore subject to the Lien
being extended, renewed or replaced, provided further that the
-------- -------
aggregate principal amount of the Debt secured by the Liens referred
to in subclause (x) of this clause (ii) shall not exceed at any time
outstanding $200,000,000 (or the equivalent thereof in any Foreign
Currency, determined as of the date such Debt is issued or incurred),
(iii) the Liens described on Schedule 5.02(a),
(iv) other Liens securing Debt and other monetary obligations
outstanding in an aggregate principal amount not to exceed $25,000,000
(or the equivalent thereof in any Foreign Currency, determined as of
the date such Debt is issued or incurred),
(v) Liens upon or in any property of any Person that becomes a
Subsidiary of the Borrower after the date hereof that are existing at
the time such Person becomes a Subsidiary of the Borrower (other than
any such Lien created in contemplation of such Person becoming a
Subsidiary of the Borrower),
(vi) Liens on accounts receivable and other related assets
arising solely in connection with the sale or other disposition of
such accounts receivable in the ordinary course of business (including
Liens in connection with securitization programs),
(vii) the replacement, extension or renewal of any Lien
permitted by clauses (ii), (iii), (iv) and (v) above upon or in the
same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change in any
direct or contingent obligor) of the Debt secured thereby,
<PAGE>
45
(viii) Liens on the assets of a Subsidiary of the Borrower
securing the obligations of such Subsidiary to the Borrower or to
another Subsidiary of the Borrower,
(ix) Liens on machinery and equipment of the Borrower located
in the State of Connecticut to secure performance of the Borrower's
grant obligations owing to the State of Connecticut or any political
subdivision thereof in an aggregate principal amount not to exceed
$2,500,000 from the date hereof,
(x) Liens in respect of goods consigned to the Borrower or
any of its Subsidiaries in the ordinary course of business, including,
without limitation, goods which are the subject of tolling agreements
or manufacturing and servicing agreements to which the Borrower or any
of its Subsidiaries is a party; provided that such Liens are limited
--------
to the goods so consigned and the goods which are the subject of such
agreements, and
(xi) Liens consisting of the lease by the Borrower of all or a
portion of its Stamford, Connecticut property to a third party.
(b) Debt. Permit any of its Subsidiaries to create or suffer to exist
----
any Debt other than:
(i) Debt owed to the Borrower or to a wholly owned
Subsidiary of the Borrower,
(ii) Debt of the Borrower's Subsidiaries existing on the
Effective Date and described on Schedule 5.02(b) (the "Existing
--------
Debt"), and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, the Existing Debt, provided that the
--------
terms of any such extending, refunding or refinancing Debt, and of any
agreement entered into and of any instrument issued in connection
therewith, are otherwise not prohibited by this Agreement and provided
--------
further that the principal amount of such Existing Debt shall not be
-------
increased above the principal amount thereof (plus any undrawn lending
commitments in respect thereof) outstanding immediately prior to such
extension, refunding or refinancing, and the direct and contingent
obligors therefor shall not be changed, as a result of or in
connection with such extension, refunding or refinancing,
(iii) Debt of the Borrower's Subsidiaries secured by Liens
permitted by Section 5.02(a)(ii), (iv), (vii) or (ix) subject to any
limitations set forth in such Section,
(iv) unsecured Debt of the Borrower's Subsidiaries
aggregating, on a Consolidated basis, at any one time outstanding, not
more than $150,000,000 (or the equivalent thereof in any Foreign
Currency, determined as of the date such Debt is issued or incurred),
<PAGE>
46
(v) Debt owed by any Subsidiary of the Borrower to the
Borrower or any other Subsidiary of the Borrower,
(vi) Debt ("Acquired Debt") of any Person that becomes a
-------------
Subsidiary of the Borrower after the date hereof that is existing at
the time such Person becomes a Subsidiary of the Borrower (other than
Debt incurred in contemplation of such Person becoming a Subsidiary of
the Borrower), and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, such Acquired Debt, provided that
--------
the terms of any such extending, refunding or refinancing Debt, and of
any agreement entered into and of any instrument issued in connection
therewith, are otherwise not prohibited by this Agreement and provided
--------
further that the principal amount of such Acquired Debt shall not be
-------
increased above the principal amount thereof (plus any undrawn lending
commitments in respect thereof) outstanding immediately prior to such
extension, refunding or refinancing, and the direct and contingent
obligors therefor shall not be changed, as a result of or in
connection with such extension, refunding or refinancing,
(vii) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(viii) Debt incurred in connection with the sale or other
disposition of accounts receivable in the ordinary course of business
(including Debt in connection with securitization programs), and
(ix) Debt of the Borrower's wholly owned Subsidiaries
incorporated after June 15, 1996 under the laws of Canada or any
province thereof incurred for the purpose of lending proceeds of such
Debt to other Subsidiaries of the Borrower aggregating, on a
Consolidated basis, at any one time outstanding, not more than
$60,000,000 (or the equivalent thereof in any Foreign Currency,
determined as of the date such Debt is issued or incurred).
(c) Mergers, Etc. Merge or consolidate with or into, or convey,
------------
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of the assets of the
Borrower or the Borrower and its Subsidiaries taken as a whole (whether now
owned or hereafter acquired) to any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Borrower may merge
or consolidate with or into, or dispose of assets to, or liquidate into,
any other Subsidiary of the Borrower and except that any Subsidiary of the
Borrower may merge into or dispose of assets to or liquidate into the
Borrower and the Borrower and any Subsidiary may merge or consolidate with
or into, or liquidate into, any other Person, provided in each case that,
--------
immediately after giving effect to such proposed transaction, no Default
would exist and in the case of any merger, consolidation or liquidation to
which the Borrower is a party, if the Borrower is not the surviving entity,
the Person into which the Borrower shall be merged or formed by any such
consolidation or liquidation shall assume the Borrower's obligations
hereunder and under the Notes in an agreement or instrument reasonably
satisfactory in form and substance to all of the Lenders.
<PAGE>
47
(d) Change in Nature of Business. Make, or permit any of its
----------------------------
Subsidiaries to make, any material change in the fundamental nature of the
business of the Borrower and its Subsidiaries, taken as a whole, as carried
on at the date hereof.
(e) Accounting Changes. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally accepted
accounting principles.
SECTION 5.03. Financial Covenants. So long as any Advance shall
-------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Required Lenders otherwise consent in writing:
(a) Leverage Ratio. Maintain at all times a Leverage Ratio of not
--------------
greater than 0.60:1.
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
---------------------------
Ratio of not less than 2.50:1 for each period of four fiscal quarters of
the Borrower ending on March 31, June 30, September 30 and December 31 of
each year.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
- -------------------
(a) The Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable or the Borrower shall fail to pay any
interest on any Advance or make any other payment under this Agreement or
any Note within three Business Days after the same becomes due and payable;
or
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 2.20, 5.01(e), (j) or (k)(iii),
(v), (vi), (vii) or (ix), 5.02 or 5.03, or (ii) any other term, covenant or
agreement contained in this Agreement on its part to be performed or
observed if such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by any Agent or any
Lender; or
(d) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on or any other amount payable in
respect of any Debt which is outstanding in a principal amount of at least
$20,000,000 or any Hedge Agreement the Agreement Value of which is at least
$20,000,000 (or the equivalent thereof in any Foreign Currency) in the
aggregate (but excluding Debt outstanding hereunder) of the Borrower or
<PAGE>
48
such Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt or Hedge Agreement; or any other event shall occur or condition shall
exist under any agreement or instrument relating to any such Debt or Hedge
Agreement and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Debt or Hedge Agreement; or any such Debt shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment, including, without limitation, a prepayment
required in connection with the sale of the sole asset or all assets
securing such Debt), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(e) The Borrower or any Material Subsidiary shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Borrower or any Material Subsidiary seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or any of
its Material Subsidiaries shall take any corporate action to authorize any
of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$20,000,000 (or the equivalent thereof in any Foreign Currency) shall be
rendered against the Borrower or any of its Material Subsidiaries and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of
30 consecutive days during which such judgment or order remains unpaid and
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) Any non-monetary judgment or order shall be rendered against the
Borrower or any of its Subsidiaries that could be reasonably expected to
have a Material Adverse Effect, and there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(h) (i) Any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting
<PAGE>
49
Stock of the Borrower (or other securities convertible into such Voting
Stock) representing 20% or more of the combined voting power of all Voting
Stock of the Borrower; or (ii) during any period of up to 24 consecutive
months, commencing after the Effective Date, individuals who at the
beginning of such 24-month period were directors of the Borrower shall
cease for any reason to constitute a majority of the board of directors of
the Borrower (except to the extent that individuals who were directors at
the beginning of such 24-month period were replaced by individuals (x)
elected by a majority of the remaining members of the board of directors of
the Borrower or (y) nominated for election by a majority of the remaining
members of the board of directors of the Borrower and thereafter elected as
directors by the shareholders of the Borrower), or (iii) any Person or two
or more Persons acting in concert (other than members of the Borrower's
management that have entered into employment agreements with the Borrower
solely to the extent such employment agreements require or permit them to
exercise a controlling influence over the management or policies of the
Borrower) shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation, will result
in its or their acquisition of, the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Borrower; or
(i) Any ERISA Event shall have occurred in an amount exceeding
$20,000,000; or
(j) The Borrower or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan for which the Borrower
could reasonably be expected to become liable in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower and its ERISA Affiliates as Withdrawal Liability
(determined as of the date of such notification), exceeds $20,000,000 or
requires payments exceeding $4,000,000 per annum; or
(k) The Borrower or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, the Borrower is reasonably expected to become liable in
connection with such reorganization or termination and as a result of such
reorganization or termination the aggregate annual contributions of the
Borrower and its ERISA Affiliates to all Multiemployer Plans that are then
in reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the plan years of
such Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount exceeding $4,000,000;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Advances and the Notes, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Advances, the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that in the event of an actual or deemed entry of an order
- -------- -------
for relief with respect to the Borrower under the Federal
<PAGE>
50
Bankruptcy Code, (A) the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Advances and the Notes, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender hereby appoints
------------------------
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
-------- -------
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement or applicable law. The Administrative Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 7.02. Administrative Agent's Reliance, Etc Neither the
------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender which is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Borrower or
to inspect the property (including the books and records) of the Borrower; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 7.03. Citibank, Chase, First Union and Affiliates. With
-------------------------------------------
respect to its Commitment, the Advances made by it and any Note issued to it,
each of Citibank, Chase and First
<PAGE>
51
Union shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not an Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include each
of Citibank, Chase and First Union in its individual capacity. Each of Citibank,
Chase and First Union and their respective affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower, any of its Subsidiaries and any Person who
may do business with or own securities of the Borrower or any such Subsidiary,
all as if Citibank, Chase and First Union were not Agents and without any duty
to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
----------------------
it has, independently and without reliance upon any Agent or any other Lender
and based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any 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 decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders (other than the
---------------
Designated Bidders) agree to indemnify each Agent (to the extent not reimbursed
by the Borrower), ratably according to the respective principal amounts of the
Revolving Advances then owing to them (or if no Revolving Advances are at the
time outstanding or if any Revolving Notes are held by Persons which are not
Lenders, ratably according to the respective amounts of their Commitments), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by such Agent under this Agreement, provided that no Lender
--------
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from any Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender (other than the Designated Bidders)
agrees to reimburse each Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that such Agent is not
reimbursed for such expenses by the Borrower.
SECTION 7.06. Successor Administrative Agent. The Administrative
------------------------------
Agent may resign at any time by giving written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent with the consent of the
Borrower (which consent shall not be unreasonably withheld or delayed). If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
<PAGE>
52
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article VII 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.
SECTION 7.07. Other Agents. Each Lender hereby acknowledges that
------------
none of the syndication agent, the documentation agent or any other agent
designated on the signature pages hereof has any liability hereunder other than
in its capacity as a Lender.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. (a) No amendment or waiver of any
---------------
provision of this Agreement or the Revolving Notes, nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
-------- -------
consent shall, unless in writing and signed by all the Lenders (other than the
Designated Bidders), do any of the following: (i) waive any of the conditions
specified in Section 3.01 or 3.02 (ii) increase the Commitments of the Lenders
or subject the Lenders to any additional obligations, (iii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Revolving Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder or (iv) amend this Section
8.01 and (b) no amendment, waiver or consent shall, unless in writing and signed
by the Required Lenders and each affected Lender (other than the Designated
Bidders), do any of the following: (i) reduce the principal of, or interest on,
the Revolving Notes or any fees or other amounts payable hereunder or (ii)
postpone any date fixed for any scheduled payment of principal of, or interest
on, the Revolving Notes or any fees or other amounts payable hereunder; provided
--------
further that no amendment, waiver or consent shall, unless in writing and signed
- -------
by the Administrative Agent in addition to the Lenders required above to take
such action, affect the rights or duties of the Administrative Agent under this
Agreement or any Revolving Note. No amendment or waiver of any provision of any
Competitive Bid Note or the terms and conditions of any Offer or any Competitive
Bid Advance accepted by the Borrower in writing pursuant to Section
2.15(a)(iii)(y), nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender payee of such Competitive Bid Note or the Lender which has made, or
offers to make, such Competitive Bid Advance, as the case may be, and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
(b) If a change in any Alternative Currency occurs pursuant to any
applicable law, rule or regulation of any governmental, monetary or
multinational authority, this Agreement (including, without limitation, the
definition of Eurocurrency Rate) will be amended to the extent determined by the
Administrative Agent and the Required Lenders (acting reasonably and in
consultation with the Borrower) to be necessary to reflect the change in
currency and to put the Lenders
<PAGE>
53
and the Borrower in the same position, so far as possible, that they would have
been in if no change in such Alternative Currency had occurred.
SECTION 8.02. Notices, Etc All notices and other communications
------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at Five Garret Mountain
Plaza, West Paterson, New Jersey 07424, Attention: Treasurer; if to any Bank,
at its Domestic Lending Office specified opposite its name on Schedule I hereto;
if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Administrative Agent, at its address at 399 Park Avenue, New York, New York
10043, Attention: Chemicals Department, North American Global Finance Group;
or, as to the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Administrative Agent. All
such notices and communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, except that notices and communications to
the Administrative Agent pursuant to Article II, III or VII shall not be
effective until received by the Administrative Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
-------------------
Lender or any Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on
------------------
demand all costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all reasonable due diligence, syndication
(including printing, distribution and bank meetings), transportation, computer,
duplication, consultant, and audit expenses and (B) the reasonable fees and out-
of-pocket expenses of counsel for the Administrative Agent with respect thereto
and with respect to advising the Administrative Agent as to its rights and
responsibilities under this Agreement. The Borrower further agrees to pay on
demand all costs and expenses of the Administrative Agent and the Lenders, if
any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the Notes and the other documents to be
delivered hereunder, including, without limitation, reasonable fees and expenses
of counsel for each Agent and each Lender in connection with the enforcement of
rights under this Section 8.04(a).
(b) The Borrower agrees to indemnify and hold harmless each Agent and
each Lender and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
-----------------
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or
<PAGE>
54
proceeding arising out of, related to or in connection with (i) the Notes, this
Agreement or the transactions contemplated hereby or (ii) the actual or alleged
presence of Hazardous Materials on any property of the Borrower or any of its
Subsidiaries or any Environmental Action relating in any way to the Borrower or
any of its Subsidiaries, in each case whether or not such investigation,
litigation or proceeding is brought by the Borrower, its directors, shareholders
or creditors or an Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated (but excluding any such claim, damage, loss,
liability or expense of any Indemnified Party (i) to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct or (ii) arising from a successful
claim by the Borrower against such Indemnified Party). The Borrower also agrees
not to assert any claim against any Agent, any Lender, any of their Affiliates,
or any of their respective directors, officers, employees, attorneys and agents,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of or otherwise
relating to any of the transactions contemplated herein or in any other Loan
Document or the actual or proposed use of the proceeds of the Advances.
(c) If any payment of principal of, or Conversion or Redenomination
of, any Eurocurrency Rate Advance or LIBO Rate Advance is made by the Borrower
to or for the account of a Lender other than on the last day of the Interest
Period for such Advance, as a result of a payment or Conversion or
Redenomination pursuant to Section 2.07(d), 2.08, 2.09, 2.11 or 2.17,
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, the Borrower shall, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Conversion or Redenomination, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.
SECTION 8.05. Right of Setoff. Upon (i) the occurrence and during
---------------
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advance and the Notes due and payable
pursuant to the provisions of Section 6.01, each Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to setoff and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or such Affiliate to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement and the Advance
owing to such Lender and any Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such setoff and application, provided that the failure to
--------
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which such Lender and its Affiliates may have.
<PAGE>
55
SECTION 8.06. Binding Effect. This Agreement shall become effective
--------------
(other than Sections 2.01 and 2.15, which shall only become effective upon
satisfaction of the conditions precedent set forth in Article III) when it shall
have been executed by the Borrower and each Agent and when the Administrative
Agent shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders.
SECTION 8.07. Assignments, Designations and Participations. (a)
--------------------------------------------
Each Lender (other than the Designated Bidders) may and, if demanded by the
Borrower (following a demand by such Lender pursuant to Section 2.10 or 2.13)
upon at least 10 Business Days' notice to such Lender and the Administrative
Agent, will assign to one or more Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Revolving Advances owing to it and any Revolving
Note or Notes held by it); provided, however, that (i) each such assignment
-------- -------
shall be of a constant, and not a varying, percentage of all rights and
obligations under this Agreement (other than any right to make Competitive Bid
Advances, Competitive Bid Advances owing to it and Competitive Bid Notes), (ii)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $5,000,000 and shall be an integral multiple of
$1,000,000, (iii) if the assigning Lender is assigning less than all of its
Commitment, such assigning Lender shall retain a Commitment of at least
$5,000,000, (iv) each such assignment shall be to an Eligible Assignee, (v) the
parties to each such assignment shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Revolving Note or Notes subject to such assignment
and a processing and recordation fee of $2,500, (vi) each such assignment made
as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall
be arranged by the Borrower after consultation with the Administrative Agent and
shall be either an assignment of all of the rights and obligations of the
assigning Lender under this Agreement or an assignment of a portion of such
rights and obligations made concurrently with another such assignment or other
such assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (vii) no Lender shall be obligated to
make any such assignment as a result of a demand by the Borrower pursuant to
this Section 8.07(a) unless and until such Lender shall have received one or
more payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Revolving Advances owing to such Lender, together with accrued interest
thereon to the date of payment of such principal amount and all other amounts
payable to such Lender under this Agreement and (viii) upon each such assignment
made as a result of a demand by the Borrower pursuant to this Section 8.07(a) to
an Eligible Assignee which is not, before giving effect to such assignment, a
Lender, the Borrower shall pay to the Administrative Agent a $2,500
administration fee. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this
<PAGE>
56
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 Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon any Agent, such assigning Lender 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 decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
such Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Note or Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit C hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. Promptly after its
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent, if requested by the assigning Lender or
such Eligible Assignee, (A) in exchange for the surrendered Revolving Note or
Notes a new Revolving Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained a Commitment hereunder, a new
Revolving Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder and (B) if such Eligible Assignee was not a
Lender before giving effect to such Assignment and Acceptance, a new Competitive
Bid Note to the order of such Eligible Assignee. Such new Revolving Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Revolving Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit A-1 hereto. Such new Competitive Bid Note shall be in an
aggregate principal amount equal to the aggregate Commitments of the Lenders
hereunder, shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of Exhibit A-2 hereto.
<PAGE>
57
(d) Each Lender (other than the Designated Bidders) may designate one
or more banks or other entities to have a right to make Competitive Bid Advances
as a Lender pursuant to Section 2.15; provided, however, that (i) no such Lender
-------- -------
shall be entitled to make more than 2 such designations, (ii) each such Lender
making one or more of such designations shall retain the right to make
Competitive Bid Advances as a Lender pursuant to Section 2.15, (iii) each such
designation shall be to a Designated Bidder and (iv) the parties to each such
designation shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, a Designation Agreement. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Designation Agreement, the designee thereunder shall be a
party hereto with a right to make Competitive Bid Advances as a Lender pursuant
to Section 2.15 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Designation Agreement; (iv) such designee will, independently and without
reliance upon any Agent, such designating Lender 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 decisions in taking or not taking action under
this Agreement; (v) such designee confirms that it is a Designated Bidder; (vi)
such designee appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to such Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such designee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit D hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Promptly after
its receipt of such notice, and before any Competitive Bid Advance shall be made
by such designee pursuant to Section 2.15, the Borrower, at its own expense,
shall, if requested by such designee, execute and deliver to the Administrative
Agent a new Competitive Bid Note to the order of such designee, which new
Competitive Bid Note shall be in an aggregate principal amount equal to the
aggregate Commitments of the Lenders hereunder, shall be dated the effective
date of such Designation Agreement and shall otherwise be in substantially the
form of Exhibit A-2 hereto.
<PAGE>
58
(g) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance and each Designation
Agreement delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and, with respect to Lenders other than
Designated Bidders, the Commitment of, and principal amount of the Advances
owing to, each Lender from time to time (the "Register"). The entries in the
--------
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. 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.
(h) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it and any Note or Notes held by it); provided, however,
-------- -------
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of any such Note for all purposes of this Agreement, (iv) the Borrower, each
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of this Agreement or
any Note, or any consent to any departure by the Borrower therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Advances or the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or postpone
any date fixed for any payment of principal of, or interest on, the Advance or
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation.
(i) Any Lender may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 8.07, disclose to the assignee, designee or participant or proposed
assignee, designee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that, prior
--------
to any such disclosure, the assignee, designee or participant or proposed
assignee, designee or participant shall agree to preserve the confidentiality of
any confidential information relating to the Borrower received by it from such
Lender.
(j) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
SECTION 8.08. Confidentiality. (a) Each Agent and each Lender
---------------
hereby agree not to disclose any Confidential Information to any Person without
the consent of the Borrower, other than (i) to such Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and to
actual or prospective Eligible Assignees and participants, and then only on a
confidential basis, (ii) as required by any law, rule or regulation or judicial
process, provided that such Agent or such
--------
<PAGE>
59
Lender, as the case may be, shall give prior notice thereof to the Borrower when
practicable, and (iii) as requested or required by any state, federal or foreign
authority or examiner regulating banks or banking.
(b) Each Lender agrees that it will use the Confidential Information
only in connection with this Agreement (and any refinancings hereof), the
Advances made by it hereunder, its Commitment, the transactions contemplated
hereby and other transactions with the Borrower and any of its Subsidiaries.
SECTION 8.09. Governing Law. This Agreement and the Notes shall be
-------------
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.10. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.11. Jurisdiction, Etc (a) Each of the parties hereto
-----------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement or the Notes
in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State court or federal court of the United States of America sitting in New
York City. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 8.12. Judgment. (a) If for the purposes of obtaining
--------
judgment in any court it is necessary to convert a sum due hereunder or under
the Notes in any currency (the "Original Currency") into another currency (the
-----------------
"Other 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 Original Currency with the Other Currency at 9:00 A.M. (New York
City time) on the first Business Day preceding that on which final judgment is
given.
<PAGE>
60
(b) The obligation of the Borrower in respect of any sum due in the
Original Currency from it to any Lender or any Agent hereunder or under the Note
or Notes held by such Lender shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or such Agent (as the case may be) of any sum adjudged to
be so due in such Other Currency, such Lender or such Agent (as the case may be)
may in accordance with normal banking procedures purchase Dollars with such
Other Currency; if the amount of Dollars so purchased is less than the sum
originally due to such Lender or such Agent (as the case may be) in the Original
Currency, the Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such Lender or such Agent (as the case may be)
against such loss, and if the amount of Dollars so purchased exceeds the sum
originally due to any Lender or such Agent (as the case may be) in the Original
Currency, such Lender or such Agent (as the case may be) agrees to remit to the
Borrower such excess.
SECTION 8.13. Effective Date Assignments; Etc (a) As of the
-------------------------------
Effective Date, prior to giving effect to any assignment under this Agreement as
of such date, each Existing Lender represents and warrants, as to the assignment
effected by such Existing Lender by this Agreement that as of the Effective Date
(i) its Existing Commitment is in the dollar amount specified as its Existing
Commitment on Schedule 8.13 hereto and the aggregate outstanding principal
amount of Existing Advances owing to it is in the dollar amount specified as the
aggregate outstanding principal amount of Existing Advances owing to such
Existing Lender on Schedule 8.13 hereto; and (ii) that such Existing Lender is
the legal and beneficial owner of such interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim created by such
Existing Lender.
(b) Each Existing Lender and Bank confirms to, and agrees with, each
of the other Banks as to the assignment effected by this Agreement by such
Existing Lender or Bank, as the case may be, as follows: (i) each such Existing
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Existing Credit Agreement or this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Existing Credit Agreement or this Agreement or any other instrument or
document furnished pursuant thereto or hereto; (ii) each such Existing Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any of its Subsidiaries or the
performance of observance by the Borrower or any of its Subsidiaries of any of
its obligations under the Existing Credit Agreement or this Agreement or any
other instrument or document furnished pursuant thereto or hereto; (iii) each
Bank confirms that it has received such documents and information as it has
deemed appropriate to make its own credit analysis and decision to execute and
deliver this Agreement and agrees that it shall have no recourse against any
Agent, any Existing Lender or any other Lender with respect to any matters
relating to the Existing Credit Agreement or this Agreement; and (iv) each Bank
will, independently and without reliance upon any Agent, any Existing Lender 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 decisions in taking or
not taking action under this Agreement, the Note or Notes held by it and the
other documents executed in connection herewith.
<PAGE>
(c) As of the Effective Date, (i) each Bank shall be a party to this
Agreement and, to the extent provided herein, have the rights and obligations of
a Lender hereunder and (ii) each Existing Lender shall, to the extent provided
herein, relinquish its rights and be released from its obligations under this
Agreement as to any assignment effected herein.
(d) From and after the Effective Date, the Administrative Agent shall
make all payments under this Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Banks and other Lenders hereunder.
(e) On or before the Effective Date, the Borrower shall have paid all
accrued interest, fees and other amounts payable and owing to the Existing
Lenders and the Agent (as defined in the Existing Credit Agreement) as of the
Effective Date in connection with the Existing Credit Agreement. Without
prejudice to the survival of any other agreement of the Borrower under the
Existing Credit Agreement, all amounts that would be payable under Sections
2.10, 2.13 and 8.04 of the Existing Credit Agreement shall be payable under this
Agreement to the extent that such amounts have not been paid as of the Effective
Date.
(f) As of the Effective Date, (i) the Existing Credit Agreement is
amended and restated in full as set forth in this Agreement, (ii) the Existing
Commitments are terminated, (iii) the Notes (as defined in the Existing Credit
Agreement) are cancelled and replaced by the Notes, if any have been requested
in accordance with the terms of this Agreement, (iv) all obligations which, by
the terms of the Existing Credit Agreement, are evidenced by the Notes (as
defined in the Existing Credit Agreement) are evidenced by the Notes, if any
have been requested in accordance with the terms of this Agreement, and by this
Agreement and (v) no fees shall be payable by the Borrower pursuant to Section
2.03(a) of the Existing Credit Agreement, except to the extent that such fees
become due and payable, and remain unpaid, on or prior to the Effective Date.
SECTION 8.14. Waiver of Jury Trial. Each of the Borrower, the Agents
--------------------
and the Lenders hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of any Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
CYTEC INDUSTRIES INC.
By /s/ T. P. Wozniak
------------------------------
Name: T. P. Wozniak
Title: Treasurer
<PAGE>
Agents
------
CITIBANK, N.A.,
as Administrative Agent
By /s/ William Clark
----------------------------------
Name: William Clark
Title: Attorney-In-Fact
THE CHASE MANHATTAN BANK,
as syndication agent
By /s/ Mary Elisabeth Swerz
----------------------------------
Name: Mary Elisabeth Swerz
Title: Vice President
FIRST UNION NATIONAL BANK,
as documentation agent
By /s/ Maria Elena Salas
----------------------------------
Name: Maria Elena Salas
Title: Assistant Cashier
BANKS
-----
Commitment
- ----------
Administrative Agent
--------------------
$36,000,000 CITIBANK, N.A.
By /s/ William Clark
-----------------------------------
Name: William Clark
Title: Attorney-In-Fact
Syndication Agent
-----------------
$36,000,000 THE CHASE MANHATTAN BANK
By /s/ Mary Elisabeth Swerz
-----------------------------------
Name: Mary Elisabeth Swerz
Title: Vice President
<PAGE>
Documentation Agent
-------------------
$36,000,000 FIRST UNION NATIONAL BANK
By /s/ Maria Elena Salas
-----------------------------------
Name: Maria Elena Salas
Title: Assistant Cashier
Co-Agents
---------
$28,000,000 CREDIT LYONNAIS
NEW YORK BRANCH
By /s/ Vladimir Labun
-----------------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
$28,000,000 MELLON BANK, N.A.
By /s/ Mark T. Ricci
-----------------------------------
Name: Mark T. Ricci
Title: Banking Officer
Lenders
-------
$21,000,000 PNC BANK, N.A.
By /s/ Michael Nardo
-----------------------------------
Name: Michael Nardo
Title: Vice President
<PAGE>
$7,500,000 THE BANK OF NOVA SCOTIA
By /s/ Stephen E. Lockhart
-----------------------------------
Name: Stephen E. Lockhart
Title: Vice President
$7,500,000 THE DEVELOPMENT BANK OF
SINGAPORE LTD. NEW YORK AGENCY
By /s/ Will Kim Long
-----------------------------------
Name: Will Kim Long
Title: General Manager
$200,000,000 Total of the Commitments
===========
<PAGE>
EXHIBIT 10.2
CONFORMED
EXECUTION COPY
U.S. $200,000,000
364-DAY CREDIT AGREEMENT
Dated as of August 21, 1998
Among
CYTEC INDUSTRIES INC.,
as Borrower,
-- --------
and
THE BANKS NAMED HEREIN,
as Banks,
-- -----
and
CITIBANK, N.A.,
as Administrative Agent
-- -------------- -----
and
THE CHASE MANHATTAN BANK,
as Syndication Agent
-- ----------- -----
and
FIRST UNION NATIONAL BANK,
as Documentation Agent
-- ------------- -----
<PAGE>
T A B L E O F C O N T E N T S
---------------------------------
Section Page
------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms........................................ 1
1.02. Computation of Time Periods.................................. 15
1.03. Accounting Terms............................................. 15
1.04. Currency Equivalents Generally............................... 16
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
2.01. The Revolving Advances....................................... 15
2.02. Making the Revolving Advances................................ 16
2.03. Fees......................................................... 18
2.04. Reduction or Termination of the Commitments.................. 19
2.05. Repayment of Revolving Advances.............................. 19
2.06. Interest on Revolving Advances............................... 19
2.07. Interest Rate Determination.................................. 19
2.08. Voluntary Conversion of Revolving Advances................... 20
2.09. Prepayments of Revolving Advances............................ 21
2.10. Increased Costs.............................................. 21
2.11. Illegality................................................... 23
2.12. Payments and Computations.................................... 24
2.13. Taxes........................................................ 25
2.14. Sharing of Payments, Etc..................................... 27
2.15. The Competitive Bid Advances................................. 27
2.16. Additional Interest on Eurocurrency Rate Advances............ 31
2.17. Voluntary Redenomination of Revolving Advances............... 31
2.18. Currency Equivalents......................................... 32
2.19. Evidence of Debt............................................. 32
2.20. Use of Proceeds.............................................. 33
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
3.01. Conditions Precedent to Effectiveness of
Sections 2.01 and 2.15...................................... 33
3.02. Additional Conditions Precedent to Effectiveness............. 35
3.03. Conditions Precedent to Each Revolving Borrowing............. 35
<PAGE>
3.04. Conditions Precedent to Each Competitive Bid Borrowing....... 36
3.05. Determinations Under Sections 3.01 and 3.02.................. 36
3.06. Notice of Effective Date..................................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrower............... 37
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants........................................ 40
5.02. Negative Covenants........................................... 44
5.03. Financial Covenants.......................................... 48
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default............................................ 48
ARTICLE VII
THE AGENTS
7.01. Authorization and Action..................................... 51
7.02. Administrative Agent's Reliance, Etc......................... 51
7.03. Citibank, Chase, First Union and Affiliates.................. 52
7.04. Lender Credit Decision....................................... 52
7.05. Indemnification.............................................. 52
7.06. Successor Administrative Agent............................... 52
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc.............................................. 53
8.02. Notices, Etc................................................. 54
<PAGE>
8.03. No Waiver; Remedies.......................................... 54
8.04. Costs and Expenses........................................... 54
8.05. Right of Setoff.............................................. 55
8.06. Binding Effect............................................... 56
8.07. Assignments, Designations and Participations................. 56
8.08. Confidentiality.............................................. 60
8.09. Governing Law................................................ 60
8.10. Execution in Counterparts.................................... 60
8.11. Jurisdiction, Etc............................................ 60
8.12. Judgment..................................................... 61
8.13. Waiver of Jury Trial......................................... 62
<PAGE>
Schedules
- ---------
Schedule I - List of Applicable Lending Offices
Schedule 3.01(b) - Disclosed Litigation
Schedule 4.01(h) - Environmental Laws Disclosure
Schedule 4.01(i) - Environmental Investigation and Clean-up Properties
Schedule 4.01(j) - Hazardous Materials
Schedule 5.01(j) - Transactions with Affiliates
Schedule 5.02(a) - Existing Liens
Schedule 5.02(b) - Existing Debt
Exhibits
- --------
Exhibit A-1 - Form of Revolving Promissory Note
Exhibit A-2 - Form of Competitive Bid Promissory Note
Exhibit B-1 - Form of Notice of Revolving Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Designation Agreement
Exhibit E - Form of Notice of Redenomination
Exhibit F-1 - Form of Opinion of Special New York Counsel to
the Borrower
Exhibit F-2 - Form of Opinion of General Counsel of the Borrower
Schedules and Exhibits have not been included with this filing. The Company
agrees to furnish supplementally to the Commission any and all of the foregoing
Schedules and Exhibits upon request.
<PAGE>
364-DAY CREDIT AGREEMENT
Dated as of August 21, 1998
CYTEC INDUSTRIES INC., a Delaware corporation (the "Borrower"), the
--------
banks (the "Banks") listed on the signature pages hereof, CITIBANK, N.A
-----
("Citibank"), as administrative agent (the "Administrative Agent") for the
- ---------- --------------------
Lenders hereunder, THE CHASE MANHATTAN BANK ("Chase"), as syndication agent, and
-----
FIRST UNION NATIONAL BANK ("First Union"), as documentation agent, agree as
-----------
follows:
PRELIMINARY STATEMENTS. The Borrower entered into a Second Amended
and Restated Credit Agreement dated as of July 29, 1997 (as amended,
supplemented or otherwise modified to the date hereof, the "Existing Credit
---------------
Agreement") with certain lenders party thereto (the "Existing Lenders") and
- --------- ----------------
Citibank, as agent for the Existing Lenders. The Borrower has requested that
the Banks and the Agents amend and restate the Existing Credit Agreement as
hereinafter set forth, and the Banks and the Agents have agreed to do so.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree that as of the Effective Date, the
Existing Credit Agreement is hereby amended and restated as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Advance" means a Revolving Advance or a Competitive Bid Advance.
-------
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of Voting Stock, by contract or otherwise, or, in the case of
an Affiliate of the Borrower, to vote 20% or more of the Voting Stock of
such Person.
"Agent" means the Administrative Agent, Chase, as syndication agent,
-----
and First Union, as documentation agent.
"Agreement Value" means, for any Hedge Agreement on any date of
---------------
determination, the amount, if any, that would be payable to the Hedge Bank
party to such Hedge Agreement in respect of "agreement value" as though
such Hedge Agreement were terminated on such date, calculated as provided
in such Hedge Agreement.
"Alternative Currency" means lawful money of Great Britain, lawful
--------------------
money of the Netherlands or lawful money of Japan, or any other lawful
currency other than Dollars that is
<PAGE>
2
freely transferable and convertible into Dollars as the Borrower, with the
consent of the Required Lenders and the Administrative Agent, shall
designate.
"American Home Products" means American Home Products Corporation, a
----------------------
Delaware corporation.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurocurrency Lending Office in the case of a Eurocurrency
Rate Advance and, in the case of a Competitive Bid Advance, the office of
such Lender notified by such Lender to the Administrative Agent as its
Applicable Lending Office with respect to such Competitive Bid Advance.
"Applicable Margin" means, as of any date of determination within
-----------------
either period set forth below, a percentage per annum determined by
reference to the Public Debt Rating in effect on such date during such
period as set forth below:
<TABLE>
<CAPTION>
APPLICABLE MARGIN APPLICABLE MARGIN
PRIOR TO THE TERM FROM THE TERM
LOAN LOAN
PUBLIC DEBT RATING CONVERSION CONVERSION
(S&P/MOODY'S) DATE DATE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Level 1 .170% .220%
- -------
A/A2 or Above
- --------------------------------------------------------------------------------------------------------
Level 2 .205% .275%
- -------
Lower than A/A2 but at least BBB+/Baa1
- --------------------------------------------------------------------------------------------------------
Level 3 .235% .325%
- -------
Lower than BBB+/Baa1 but at least BBB/Baa2
- --------------------------------------------------------------------------------------------------------
Level 4 .290% .400%
- -------
Lower than BBB/Baa2 but at least BBB-/Baa3
- --------------------------------------------------------------------------------------------------------
Level 5 .340% .500%
- -------
Lower than BBB-/Baa3 or no Public Debt Rating in effect
- --------------------------------------------------------------------------------------------------------
</TABLE>
"Applicable Percentage" means, as of any date of determination, a
---------------------
percentage per annum determined by reference to the Public Debt Rating in
effect on such date as set forth below:
<TABLE>
<CAPTION>
PUBLIC DEBT RATING APPLICABLE PERCENTAGE
(S&P/MOODY'S)
- -------------------------------------------------------------------------------------------------------
<S> <C>
Level 1 .050%
- -------
A/A2 or Above
- -------------------------------------------------------------------------------------------------------
Level 2 .070%
- -------
Lower than A/A2 but at least BBB+/Baa1
- -------------------------------------------------------------------------------------------------------
Level 3 .090%
- -------
Lower than BBB+/Baa1 but at least BBB/Baa2
- -------------------------------------------------------------------------------------------------------
Level 4 .110%
- -------
Lower than BBB/Baa2 but at least BBB-/Baa3
- -------------------------------------------------------------------------------------------------------
Level 5 .160%
- -------
Lower than BBB-/Baa3 or no Public Debt Rating in effect
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
3
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit C hereto.
"Acquired Debt" has the meaning specified in Section 5.02(b)(vi).
-------------
"Base Rate" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per
annum, plus (ii) the rate obtained by dividing (A) the latest three-
----
week moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average (adjusted to
the basis of a year of 360 days) being determined weekly on each
Monday (or, if such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous Friday
by Citibank on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank from three New
York certificate of deposit dealers of recognized standing selected by
Citibank, by (B) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar non-
personal time deposits in the United States, plus (iii) the average
----
during such three-week period of the annual assessment rates estimated
by Citibank for determining the then current annual assessment payable
by Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of Citibank in the United
States; and
(c) 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Advance denominated in Dollars
-----------------
which bears interest as provided in Section 2.06(a)(i).
"Borrowing" means a Revolving Borrowing or a Competitive Bid
---------
Borrowing.
"Business Day" means a day of the year on which banks are not required
------------
or authorized to close in New York City and, if the applicable Business Day
relates to any Eurocurrency Rate Advances, on which dealings are carried on
in the London interbank market and banks are open for business in London
and in the country of issue of the currency of such Eurocurrency Rate
Advance.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980.
<PAGE>
4
"CERCLIS" means the Comprehensive Environmental Response, Compensation
-------
and Liability Information System maintained by the U.S. Environmental
Protection Agency.
"Commitment" has the meaning specified in Section 2.01.
----------
"Commitment Termination Date" means the earlier of August 20, 1999 and
---------------------------
the date of termination in whole of the Commitments pursuant to Section
2.04 or 6.01.
"Competitive Bid Advance" means an advance by a Lender to the Borrower
-----------------------
as part of a Competitive Bid Borrowing resulting from the competitive
bidding procedure described in Section 2.15 and refers to a Fixed Rate
Advance or a LIBO Rate Advance.
"Competitive Bid Borrowing" means a borrowing consisting of
-------------------------
simultaneous Competitive Bid Advances from each of the Lenders whose offer
to make one or more Competitive Bid Advances as part of such borrowing has
been accepted under the competitive bidding procedure described in Section
2.15.
"Competitive Bid Note" means a promissory note of the Borrower payable
--------------------
to the order of any Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from a Competitive Bid Advance made by such Lender.
"Competitive Bid Reduction" has the meaning specified in Section 2.01.
-------------------------
"Confidential Information" means information that the Borrower
------------------------
furnishes to any Agent or any Lender on a confidential basis, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to such Agent or such Lender from a
source other than the Borrower.
"Consolidated" refers to the consolidation of accounts in accordance
------------
with GAAP.
"Convert", "Conversion" and "Converted" each refers to a conversion of
------- ---------- ---------
all or any portion of Revolving Advances of one Type into Revolving
Advances of the other Type, or in the case of Eurocurrency Rate Advances,
into Revolving Advances with a different Interest Period, pursuant to
Section 2.07, 2.08 or 2.11.
"Cyanamid" means American Cyanamid Company, a Maine corporation and a
--------
wholly owned Subsidiary of American Home Products.
"Debt" of any Person means (a) all indebtedness of such Person for
----
borrowed money, (b) all obligations of such Person for the deferred
purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all obligations of such
Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person as lessee under leases that
have been or should be, in accordance with GAAP, recorded as capital leases
("Capitalized Leases"), valued at the amount that is or should be
------------------
capitalized as required by GAAP, (f) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (g) all Debt of others referred to in clauses (a) through (f)
above guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or
<PAGE>
5
indirectly by such Person through an agreement (i) to pay or purchase such
Debt or to advance or supply funds for the payment or purchase of such
Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against
loss, (iii) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (h) all Debt of others
referred to in clauses (a) through (f) above secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt, provided, however,
-------- -------
that the amount of any Debt included in this clause (h) shall be limited to
the greater of the book value and the fair market value of the property on
which such Lien is granted.
"Default" means any Event of Default or any event that would
-------
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Designated Bidder" means (a) an Eligible Assignee or (b) a special
-----------------
purpose corporation that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and
that issues (or the parent of which issues) commercial paper rated at least
"Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then
equivalent grade) by S&P that, in the case of either clause (a) or (b), (i)
is organized under the laws of the United States or any State thereof, (ii)
shall have become a party hereto pursuant to Section 8.07(d), (e) and (f)
and (iii) is not otherwise a Lender.
"Designation Agreement " means a designation agreement entered into by
---------------------
a Lender (other than a Designated Bidder) and a Designated Bidder, and
accepted by the Administrative Agent, in substantially the form of Exhibit
D hereto.
"Disclosed Litigation" has the meaning specified in Section 3.01(b).
--------------------
"Dollars" and the "$" sign each means lawful money of the United
------- -
States.
"Domestic Lending Office" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Administrative
Agent.
"EBITDA" means, for any period, net income (or net loss) plus the sum
------ ----
of (a) interest expense, (b) income tax expense, (c) depreciation expense,
(d) amortization expense, (e) other post-retirement benefits expense and
(f) extraordinary or non-recurring losses included in determining such net
income (or net loss), less the sum of (i) accrued interest income not
----
received in cash and (ii) extraordinary or non-recurring gains included in
determining such net income (or net loss), in each case determined in
accordance with GAAP for such period.
"Effective Date" means the first date on which the conditions set
--------------
forth in Sections 3.01 and 3.02 have been fulfilled.
<PAGE>
6
"Eligible Assignee" means (i) a Lender, (ii) an Affiliate of a Lender
-----------------
and (iii) any other Person approved by the Administrative Agent and the
Borrower, such approval not to be unreasonably withheld.
"Environmental Action" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, claim, notice of non-
compliance or violation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment, including, without limitation, (a) by
any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
-----------------
statute, law, ordinance, rule, regulation, code, order, judgment, decree or
judicial or agency interpretation, policy or guidance relating to the
environment, health, safety or Hazardous Materials.
"Environmental Permit" means any permit, approval, license or other
--------------------
authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
---------------
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
-----------
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC or the penalty with respect to a failure to provide
notice has been waived, or (ii) the requirements of subsection (1) of
Section 4043(b) of ERISA (without regard to subsection (2) of such Section)
are met with respect to a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9),
(10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such Plan within the following 30 days; (b) the
provision by the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e)
of ERISA); (c) the cessation of operations at a facility of the Borrower or
any of its ERISA Affiliates in the circumstances described in Section
4062(e) of ERISA; (d) the withdrawal by the Borrower or any of its ERISA
Affiliates from a Multiple Employer Plan during a plan year for which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (e)
the failure by the Borrower or any of its ERISA Affiliates to make a
payment to a Plan required under Section 302(f)(1) of ERISA; (f) the
adoption of an amendment to a Plan requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the
PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA,
or the occurrence of any event or condition described in Section 4042 of
ERISA that could constitute grounds for the termination of, or the
appointment of a trustee to administer, a Plan, provided, however, that an
-------- -------
event or condition described in Section 4042(a)(4) of ERISA shall be an
ERISA Event only if the Borrower or any ERISA Affiliate knows or has reason
to know thereof.
<PAGE>
7
"Eurocurrency Lending Office" means, with respect to any Lender, the
---------------------------
office of such Lender specified as its "Eurocurrency Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Administrative
Agent.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurocurrency Rate" means, for any Interest Period for each
-----------------
Eurocurrency Rate Advance comprising part of the same Revolving Borrowing,
an interest rate per annum equal to the rate per annum at which deposits in
Dollars or in the relevant Alternative Currency are offered by the
principal office of Citibank in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to Citibank's Eurocurrency Rate Advance comprising part of such
Revolving Borrowing to be outstanding during such Interest Period and for a
period equal to such Interest Period.
"Eurocurrency Rate Advance" means a Revolving Advance denominated in
-------------------------
Dollars or in an Alternative Currency which bears interest as provided in
Section 2.06(a)(ii).
"Eurocurrency Rate Reserve Percentage" of any Lender for any Interest
------------------------------------
Period for all Eurocurrency Rate Advances or LIBO Rate Advances comprising
part of the same Borrowing means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurocurrency
Rate Advances or LIBO Rate Advances is determined) having a term equal to
such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Fixed Charge Coverage Ratio" means, at any time, for any period, the
---------------------------
ratio of (x) the sum of (i) Consolidated EBITDA of the Borrower and its
Subsidiaries, (ii) cash expenditures for environmental remediation and
(iii) cash expenditures for benefit payments for other post-retirement
benefits made by the Borrower directly to retirees of the Borrower or any
of its Subsidiaries or to any VEBA (to the extent not expensed during such
period) to (y) the sum of (i) cash interest expense, (ii) cash expenditures
for environmental remediation, (iii) cash expenditures for benefit payments
for other post-retirement benefits made by the Borrower
<PAGE>
8
directly to retirees of the Borrower or any of its Subsidiaries or to any
VEBA and (iv) dividends accrued or paid on the Series C Preferred Stock, in
each case, during such period.
"Fixed Rate Advance" has the meaning specified in Section 2.15(a)(i),
------------------
which Advance shall be denominated in Dollars.
"Foreign Currency" means lawful currency other than Dollars which is
----------------
freely transferable and convertible into Dollars.
"Funded Debt" of any Person means Debt in respect of the Advances, in
-----------
the case of the Borrower, and all other Debt of such Person that by its
terms matures more than one year after the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date, including, without limitation, all amounts of Funded Debt
of such Person required to be paid or prepaid within one year after the
date of its creation, the current portion of all long-term Debt and all
short-term Debt for borrowed money.
"GAAP" has the meaning specified in Section 1.03.
----
"Hazardous Materials" means petroleum and petroleum products,
-------------------
radioactive materials, asbestos-containing materials, radon gas and any
other chemicals, materials or substances designated, classified or
regulated as being "hazardous" or "toxic", or words of similar import,
under any federal, state, local or foreign statute, law, ordinance, rule,
regulation, code, order, judgment, decree or judicial or agency
interpretation, policy or guidance.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements (other
than non-financial commodities contracts).
"Hedge Bank" means any financial institution with which the Borrower
----------
has entered into a Hedge Agreement.
"Interest Period" means, for each Eurocurrency Rate Advance comprising
---------------
part of the same Revolving Borrowing and each LIBO Rate Advance comprising
part of the same Competitive Bid Borrowing, the period commencing on the
date of such Eurocurrency Rate Advance or LIBO Rate Advance or the date of
the Conversion of any Base Rate Advance into such Eurocurrency Rate Advance
and ending on the last day of the period selected by the Borrower pursuant
to the provisions below and, thereafter, with respect to Eurocurrency Rate
Advances, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the Borrower may, upon notice received by the Administrative
Agent not later than 11:00 A.M. (New York City time) on the third Business
Day prior to the first day of such Interest Period, select; provided,
--------
however, that:
-------
(i) the Borrower may not select any Interest Period which ends
after the Commitment Termination Date or, if the Borrower has
exercised its election to convert the Revolving Advances to a term
loan pursuant to Section 2.05 prior to the time of such selection,
which ends after the Maturity Date;
<PAGE>
9
(ii) Interest Periods commencing on the same date for
Eurocurrency Rate Advances comprising part of the same Revolving
Borrowing or for LIBO Rate Advances comprising part of the same
Competitive Bid Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
-------- -------
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
(iv) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Lenders" means the Banks listed on the signature pages hereof and
-------
each Person that shall become a party hereto pursuant to Section 8.07(a),
(b) and (c) and, except when used in reference to a Revolving Advance, a
Revolving Borrowing, a Revolving Note, a Commitment or a related term, each
Designated Bidder.
"Leverage Ratio" means, at any time, the ratio of (a) Total Debt to
--------------
(b) the sum of (i) Total Debt plus (ii) gross long-term liabilities
----
incurred in connection with "expected post retirement benefit obligations"
within the meaning of Statement of Financial Accounting Standards No. 106
plus (iii) shareholders' equity of the Borrower, in each case, of the
----
Borrower and its Subsidiaries as of the last day of the immediately
preceding fiscal quarter of the Borrower as determined on a Consolidated
basis in accordance with GAAP.
"LIBO Rate" means, for any Interest Period for all LIBO Rate Advances
---------
comprising part of the same Competitive Bid Borrowing, an interest rate per
annum equal to the rate per annum at which deposits in Dollars are offered
by the principal office of Citibank in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to the amount that would be Citibank's ratable share of such
Borrowing if such Borrowing were to be a Revolving Borrowing to be
outstanding during such Interest Period and for a period equal to such
Interest Period.
"LIBO Rate Advance" has the meaning specified in Section 2.15(a)(i),
-----------------
which Advance shall be denominated in Dollars.
"Lien" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
<PAGE>
10
"Material Adverse Change" means any material adverse change in the
-----------------------
business, condition (financial or otherwise), operations or properties of
the Borrower and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations or properties of
the Borrower and its Subsidiaries taken as a whole, (b) the rights and
remedies of any Agent or any Lender under this Agreement or any Note or (c)
the ability of the Borrower to perform its obligations under this Agreement
or any Note.
"Material Subsidiary" means, at any time, a Subsidiary of the Borrower
-------------------
having at least 3% of the total Consolidated assets of the Borrower and its
Subsidiaries (determined as of the last day of the most recent fiscal
quarter of the Borrower) or at least 3% of the total Consolidated revenues
of the Borrower and its Subsidiaries for the twelve month period ending on
the last day of the most recent fiscal quarter of the Borrower.
"Maturity Date" means the earlier of (a) the date specified as such in
-------------
the notice delivered by the Borrower pursuant to Section 2.05 which date
shall be no later than the second anniversary of the earlier of (i) the
Term Loan Conversion Date and (ii) the Commitment Termination Date and (b)
the date of the termination in whole of the Commitments pursuant to Section
2.04 or 6.01.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a multiemployer plan, as defined in Section
------------------
4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates
(other than one considered an ERISA Affiliate only pursuant to subsection
(m) or (o) of Section 414 of the Internal Revenue Code) is making or
accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and at least one Person other than
the Borrower and its ERISA Affiliates or (b) was so maintained and in
respect of which the Borrower or any of its ERISA Affiliates could have
liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Note" means a Revolving Note or a Competitive Bid Note.
----
"Notice of Competitive Bid Borrowing" has the meaning specified in
-----------------------------------
Section 2.15(a).
"Notice of Revolving Borrowing" has the meaning specified in Section
-----------------------------
2.02(a).
"Original Currency" has the meaning specified in Section 8.12.
-----------------
"Other Currency" has the meaning specified in Section 8.12.
--------------
"Payment Office" means, for any Alternative Currency, such office of
--------------
Citibank as shall be from time to time selected by the Administrative Agent
and notified by the Administrative Agent to the Borrower and the Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor.
<PAGE>
11
"Permitted Liens" means such of the following as to which (i) (A) no
---------------
enforcement or collection proceeding shall have been commenced or, if any
such proceeding has been commenced, it is being contested in good faith and
by proper proceedings and as to which adequate reserves are being
maintained and (B) no execution, levy or foreclosure proceeding shall have
been commenced or, if any such proceeding has been commenced, it is being
contested in good faith, by proper proceedings, adequate reserves with
respect thereto are being maintained and there shall not be any period of
30 consecutive days during which a stay shall not be in effect or (ii) the
amount secured thereby does not exceed, individually or in the aggregate,
$10,000,000 (or the equivalent thereof in any Alternative Currency): (a)
Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(b) hereof; (b) Liens
imposed by law, such as materialmen's, mechanics', carriers', workmen's,
warehousemen's and repairmen's Liens and other similar Liens arising in the
ordinary course of business securing obligations that are not overdue for a
period of more than 30 days other than by reason of a contest as permitted
above; (c) pledges or deposits to secure obligations under workers'
compensation or unemployment insurance laws or other social security laws
and legislation or to secure public or statutory obligations; (d)
easements, zoning restrictions, rights of way and other encumbrances on
title to real property that do not render title to the property encumbered
thereby unmarketable or materially adversely affect the use of such
property for its present purposes; and (e) pledges or deposits to secure
the performance of bids, trade contracts, leases (other than Capitalized
Leases), surety or appeal bonds or other obligations of a like nature
incurred in the ordinary course of business.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
"Preferred Stock" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"Public Debt Rating" means, as of any date of determination, the
------------------
higher of the ratings most recently announced by S&P and Moody's for any
class of non-credit enhanced long term senior unsecured public debt issued
by the Borrower or, if no such ratings have been announced, the rating most
recently assigned by S&P or Moody's, as the case may be, to the Borrower's
"implied senior debt", as notified in writing from S&P or Moody's, as the
case may be, to the Borrower. For purposes of the foregoing, (a) if only
one of S&P and Moody's shall have in effect a Public Debt Rating, the
Applicable Margin and the Applicable Percentage shall be determined by
reference to the available rating; (b) if neither S&P nor Moody's shall
have in effect a Public Debt Rating, the Applicable Margin and Applicable
Percentage will be set in accordance with level 5 under the definition of
"Applicable Margin" or "Applicable Percentage", as the case may be; (c) if
------------------ ---------------------
the ratings established by S&P and Moody's shall fall within different
levels, the Applicable Margin and the Applicable Percentage shall be based
upon the higher rating, except that in the event that the lower of such
ratings is more than one level below the higher of such ratings, the
Applicable Margin and the Applicable Percentage will be determined based on
the level immediately above the lower of such ratings; (d) if any rating
established by S&P or Moody's shall be changed, such change shall be
effective as of the date on which such change is first announced publicly
by the rating agency making such change; and (e) if S&P or Moody's shall
change the basis on which ratings are established each reference to the
Public Debt Rating
<PAGE>
12
announced by S&P or Moody's, as the case may be, shall refer to the then
equivalent rating by S&P or Moody's, as the case may be.
"Redenominate", "Redenomination" and "Redenominated" each refers to
------------ -------------- -------------
the redenomination of each Revolving Advance comprising part of the same
Revolving Borrowing from Dollars into an Alternative Currency or from an
Alternative Currency into Dollars or another Alternative Currency pursuant
to Section 2.17.
"Register" has the meaning specified in Section 8.07(g).
--------
"Responsible Officer" of any corporation means any executive officer,
-------------------
treasurer or controller of such corporation and any other officer thereof
responsible for the administration of the obligations of such corporation
in respect of this Agreement.
"Required Lenders" means at any time Lenders owed at least 51% of the
----------------
then aggregate unpaid principal amount of the Revolving Advances owing to
Lenders or, if no such principal amount is then outstanding, Lenders having
at least 51% of the Commitments (provided that, for purposes hereof,
--------
neither the Borrower, nor any of its Affiliates, if a Lender, shall be
included in (i) the Lenders holding such amount of the Revolving Advances
or having such amount of the Commitments or (ii) determining the aggregate
unpaid principal amount of the Revolving Advances or the total
Commitments).
"Revolving Advance" means an advance by a Lender to the Borrower as
-----------------
part of a Revolving Borrowing, and refers to a Base Rate Advance or a
Eurocurrency Rate Advance (each of which shall be a "Type" of Revolving
----
Advance). The conversion of Revolving Advances to a term loan pursuant to
the Term Loan Election shall not be construed to alter their character as
"Revolving Advances" for purposes of this Agreement, the Revolving Notes or
any Assignment and Acceptance.
"Revolving Borrowing" means a borrowing consisting of simultaneous
-------------------
Revolving Advances of the same Type made by each of the Lenders pursuant to
Section 2.01.
"Revolving Note" means a promissory note of the Borrower payable to
--------------
the order of any Lender, in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Advances made by such Lender.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-
---
Hill Companies, Inc.
"Series C Certificate" means the Certificate of Designations,
--------------------
Preferences and Rights of Series C Cumulative Preferred Stock of the
Borrower, dated December 17, 1993, as amended.
"Series C Preferred Stock" means the capital stock of the Borrower
------------------------
issued in accordance with the terms of the Series C Certificate.
"Single Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and no Person other than the
Borrower and its ERISA Affiliates or (b) was so maintained and in respect
of which the Borrower or any of its ERISA Affiliates could have liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated.
<PAGE>
13
"Subsidiary" of any Person means any corporation, limited liability
----------
company, partnership, joint venture, trust or estate (i) that is, in
accordance with GAAP, Consolidated in the Consolidated financial statements
of the Borrower or (ii) of which (or in which) more than 50% of (a) the
issued and outstanding capital stock having ordinary voting power to elect
a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial
interest in such trust or estate is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more of its
other Subsidiaries or by one or more of such Person's other Subsidiaries.
"Term Loan Conversion Date" means the date, on or prior to the
-------------------------
Commitment Termination Date, on which all Revolving Advances outstanding on
such date are converted into a term loan pursuant to Section 2.05.
"Term Loan Election" has the meaning specified in Section 2.05.
------------------
"Total Debt" means, at any time, the sum of, without duplication (a)
----------
Preferred Stock of the Borrower plus (b) Funded Debt plus (c) long-term
---- ----
liabilities (other than Funded Debt and long-term liabilities in respect of
benefit payments for other post-retirement benefits) plus (d) Debt of the
----
Borrower or any of its Subsidiaries of the type described in clause (g) or
(h) of the definition of "Debt" relating to Debt of Persons that are not
Subsidiaries of the Borrower in which the Borrower or any of its
Subsidiaries has an equity interest or of direct or indirect unconsolidated
Subsidiaries of the Borrower, in each case, of the Borrower and its
Subsidiaries as of the last day of the immediately preceding fiscal quarter
of the Borrower as determined on a Consolidated basis in accordance with
GAAP.
"Type" has the meaning specified in the definition of "Revolving
---- ---------
Advance".
-------
"United States" and "U.S." each means United States of America.
------------- ----
"VEBA" means any trust organized by the Borrower as a voluntary
----
employee benefits association.
"Voting Stock" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the
happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP"), provided,
---- --------
however, that, if (a) any changes in accounting principles from those used in
- -------
the preparation of the Borrower's financial statements dated December 31, 1997
are required by the rules, regulations,
<PAGE>
14
pronouncements or opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) and are adopted by the Borrower with the
agreement of its independent certified public accountants and (b) such changes
would affect (or result in a change in the method of calculation of) any of the
covenants set forth in Section 5.02 or 5.03, the parties hereto agree to enter
into good-faith negotiations in order to amend such provisions, in a manner
satisfactory to the Required Lenders, to equitably reflect such changes with the
intention that the criteria for evaluating compliance with such covenants by the
Borrower shall be the same after such changes as if such changes had not been
made; provided further, however, that until the amendment of such provisions
-------- ------- -------
shall be agreed upon by the Borrower and the Required Lenders, for purposes of
determining compliance with any covenant set forth in Sections 5.02 and 5.03,
such terms shall be construed in accordance with GAAP as in effect on the date
of this Agreement applied on a basis consistent with the application used in
preparing the Borrower's audited financial statements referred to in Section
4.01(e).
SECTION 1.04. Currency Equivalents Generally. For all purposes of
------------------------------
this Agreement other than Article II, the equivalent in any Alternative Currency
or any Foreign Currency of an amount in Dollars shall be determined at the rate
of exchange quoted by Citibank in New York City, at 9:00 A.M. (New York City
time) on the date of determination, to prime banks in New York City for the spot
purchase in the New York foreign exchange market of such amount of Dollars with
such Alternative Currency or such Foreign Currency, as the case may be.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Advances. Each Lender severally agrees,
----------------------
on the terms and conditions hereinafter set forth, to make Revolving Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until the Commitment Termination Date in an aggregate amount
(determined in Dollars) not to exceed at any time outstanding the Dollar amount
set forth opposite such Lender's name on the signature pages hereof or, if such
Lender has entered into any Assignment and Acceptance, set forth for such Lender
in the Register maintained by the Administrative Agent pursuant to Section
8.07(g), as such amount may be reduced pursuant to Section 2.04 (such Lender's
"Commitment"), provided that the aggregate amount of the Commitments of the
- ----------- --------
Lenders shall be deemed used from time to time to the extent of the aggregate
amount of the Competitive Bid Advances then outstanding and such deemed use of
the aggregate amount of the Commitments shall be allocated among the Lenders
ratably according to their respective Commitments (such deemed use of the
aggregate amount of the Commitments being a "Competitive Bid Reduction"). Each
-------------------------
Revolving Borrowing shall be in an aggregate amount of $5,000,000 (or the
equivalent thereof in any Alternative Currency) or an integral multiple of
$1,000,000 (or the equivalent thereof in any Alternative Currency) in excess
thereof (or, if less, an aggregate amount equal to the amount by which the
aggregate amount of a proposed Competitive Bid Borrowing requested by the
Borrower exceeds the aggregate amount of Competitive Bid Advances offered to be
made by the Lenders and accepted by the Borrower in respect of such Competitive
Bid Borrowing, if such Competitive Bid Borrowing is made on the same date as
such Revolving Borrowing) and shall consist of Revolving Advances of the same
Type made on the same day by the Lenders ratably according to their respective
Commitments. Notwithstanding anything herein to the contrary, no Revolving
Borrowing may be made in an Alternative Currency if, after giving effect to the
making of such Revolving Borrowing, the aggregate amount of outstanding
Revolving Advances denominated in one or more Alternative Currencies would
exceed the Dollar equivalent of $20,000,000. Within the limits of each Lender's
Commitment, the Borrower may borrow under this Section 2.01, prepay pursuant to
Section 2.09(b) and reborrow under this Section 2.01. For purposes of this
Section
<PAGE>
15
2.01(a)(ii) and all other provisions of this Article II, the equivalent in
Dollars of any Alternative Currency or the equivalent in any Alternative
Currency of Dollars or of any other Alternative Currency shall be determined in
accordance with Section 2.18.
SECTION 2.02. Making the Revolving Advances. (a) Each Revolving
-----------------------------
Borrowing shall be made on notice, given not later than (x) 10:00 A.M. (New York
City time) on the date of the proposed Revolving Borrowing, in the case of a
Revolving Borrowing consisting of Base Rate Advances, and not later than (y)
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Revolving Borrowing, in the case of a Revolving Borrowing
consisting of Eurocurrency Rate Advances denominated in Dollars, and (z) 11:00
A.M. (New York City time) on the fifth Business Day prior to the date of the
proposed Revolving Borrowing, in the case of a Revolving Borrowing consisting of
Eurocurrency Rate Advances denominated in an Alternative Currency, in each case
by the Borrower to the Administrative Agent, which shall give to each Lender
prompt notice thereof by telephone, telecopier, telex or cable. Each such
notice of a Revolving Borrowing (a "Notice of Revolving Borrowing") shall be by
-----------------------------
telephone, telecopier, telex or cable, confirmed immediately in writing, in
substantially the form of Exhibit B-1 hereto, specifying therein (i) the
requested date of such Revolving Borrowing, (ii) the requested Type of Revolving
Advances comprising such Revolving Borrowing, (iii) the requested aggregate
amount of such Revolving Borrowing and (iv) in the case of a Revolving Borrowing
comprised of Eurocurrency Rate Advances, the requested Interest Period for each
such Revolving Advance and the currency of such Revolving Borrowing.
In the case of a Revolving Borrowing comprised of Eurocurrency Rate
Advances in an Alternative Currency (other than the lawful money of Great
Britain, the lawful money of the Netherlands and the lawful money of Japan), the
obligation of each Lender to make its Eurocurrency Rate Advance in the requested
Alternative Currency as part of such Revolving Borrowing is subject to the
confirmation by such Lender to the Administrative Agent not later than the
fourth Business Day before the requested date of such Revolving Borrowing that
such Lender agrees to make its Eurocurrency Rate Advance in the requested
Alternative Currency, which confirmation shall be notified immediately by the
Administrative Agent to the Borrower. If any Lender shall not have so provided
to the Administrative Agent such confirmation, the Administrative Agent shall
promptly notify the Borrower and each Lender that a Lender has not provided such
confirmation, whereupon the Borrower may, by notice to the Administrative Agent
not later than the third Business Day before the requested date of such
Revolving Borrowing, withdraw the Notice of Revolving Borrowing relating to such
requested Borrowing. If the Borrower does so withdraw such Notice of Revolving
Borrowing, the Revolving Borrowing requested in such Notice of Revolving
Borrowing shall not occur and the Administrative Agent shall promptly so notify
each Lender. If the Borrower does not so withdraw such Notice of Revolving
Borrowing, the Administrative Agent shall promptly so notify each Lender and
such Notice of Revolving Borrowing shall be deemed to be a Notice of Revolving
Borrowing which requests a Revolving Borrowing comprised of Eurocurrency Rate
Advances in an aggregate amount in Dollars equivalent, on the date the
Administrative Agent so notifies each Lender, to the amount of the originally
requested Revolving Borrowing in such an Alternative Currency; and in such
notice by the Administrative Agent to each Lender the Administrative Agent shall
state such aggregate equivalent amount of such Revolving Borrowing in Dollars
and such Lender's ratable portion of such Borrowing.
Each Lender shall, before 11:00 A.M. (New York City time) on the date
of such Revolving Borrowing, make available for the account of its Applicable
Lending Office to the Administrative Agent (i) in the case of a Revolving
Borrowing in Dollars, at its address referred to in Section 8.02, in same day
funds, such Lender's ratable portion of such Revolving Borrowing in Dollars, and
(ii) in the case of a Revolving Borrowing in an Alternative Currency, at such
account maintained at the Payment Office for such Alternative Currency as shall
have been notified by the Administrative Agent to the Lenders prior thereto, in
same day funds, such Lender's ratable portion of such Revolving
<PAGE>
16
Borrowing in such Alternative Currency. After the Administrative Agent's receipt
of such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Administrative Agent will make such funds available to the
Borrower at the Administrative Agent's aforesaid address or at the applicable
Payment Office.
(b) Anything in subsection (a) above to the contrary notwithstanding,
the Borrower may not select Eurocurrency Rate Advances for any Revolving
Borrowing if the aggregate amount of such Revolving Borrowing is less than
$5,000,000 (or its equivalent in any Alternative Currency) or if the obligation
of the Lenders to make Eurocurrency Rate Advances shall then be suspended
pursuant to Section 2.07.
(c) Each Notice of Revolving Borrowing shall be irrevocable and
binding on the Borrower. In the case of any Revolving Borrowing which the
related Notice of Revolving Borrowing specifies is to be comprised of
Eurocurrency Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Revolving Borrowing
for such Revolving Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Revolving Advance to
be made by such Lender as part of such Revolving Borrowing when such Revolving
Advance, as a result of such failure, is not made on such date.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Revolving Borrowing that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
Revolving Borrowing, the Administrative Agent may assume that such Lender has
made such portion available to the Administrative Agent on the date of such
Revolving Borrowing in accordance with subsection (a) of this Section 2.02 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Revolving Advances comprising such Revolving Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Revolving Advance as part of such Revolving Borrowing
for purposes of this Agreement and, if the Borrower shall repay to the
Administrative Agent such corresponding amount pursuant to this clause (d), such
repayment shall not relieve such Lender from its obligations hereunder to the
Borrower.
(e) The failure of any Lender to make the Revolving Advance to be made
by it as part of any Revolving Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Revolving Advance on the date of
such Revolving Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Revolving Advance to be made by such other Lender
on the date of any Revolving Borrowing.
SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay
---- ------------
to the Administrative Agent for the account of each Lender (other than the
Designated Bidders) a facility fee on the aggregate amount of such Lender's
Commitment from the Effective Date in the case of each Bank and from the later
of the Effective Date and the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
until the earlier of the Term Loan
<PAGE>
17
Conversion Date and the Commitment Termination Date at a rate per annum equal to
the Applicable Percentage in effect from time to time, payable in arrears
quarterly on the last day of each March, June, September and December,
commencing September 30, 1998, and on the earlier of the Term Loan Conversion
Date and the Commitment Termination Date.
(b) Administrative Agent's Fees. The Borrower shall pay to the
---------------------------
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.04. Reduction or Termination of the Commitments. (a)
-------------------------------------------
Optional. The Borrower shall have the right, upon at least three Business Days'
- --------
notice to the Administrative Agent, to terminate in whole or reduce ratably in
part the unused portions of the respective Commitments of the Lenders, provided
--------
that each partial reduction shall be in the aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and provided further that the
-------- -------
aggregate amount of the Commitments of the Lenders shall not be reduced to an
amount that is less than the aggregate principal amount of the Competitive Bid
Advances then outstanding.
(b) Mandatory. On the Term Loan Conversion Date, and from time to
---------
time thereafter upon each prepayment of the Advances, the aggregate Commitments
of the Lenders under this Agreement shall be automatically and permanently
reduced on a pro rata basis by an amount equal to the amount by which the
aggregate Commitments of the Lenders under this Agreement immediately prior to
such reduction exceeds the aggregate unpaid principal amount of the Advances
outstanding at such time.
SECTION 2.05. Repayment of Revolving Advances. The Borrower shall,
-------------------------------
subject to the next succeeding sentence, repay to the Administrative Agent in
full for the ratable account of the Lenders on the Commitment Termination Date
the aggregate principal amount of the Revolving Advances outstanding on such
date. The Borrower may, upon not less than 15 days' notice to the
Administrative Agent, elect (the "Term Loan Election") on or prior to the
------------------
Commitment Termination Date to convert all of the Revolving Advances then
outstanding into a term loan which the Borrower shall repay to the
Administrative Agent in full for the ratable account of the Lenders on the
Maturity Date, provided that no Default has occurred and is continuing on the
--------
date of notice of the Term Loan Election or on the Term Loan Conversion Date on
which such election is to be effected.
SECTION 2.06. Interest on Revolving Advances. (a) Scheduled
------------------------------ ---------
Interest. The Borrower shall pay interest on the unpaid principal amount of
- --------
each Revolving Advance owing to each Lender from the date of such Revolving
Advance until such principal amount shall be paid in full, at the following
rates per annum:
(i) Base Rate Advances. During such periods as such Revolving Advance
------------------
is a Base Rate Advance, a rate per annum equal at all times to the Base
Rate in effect from time to time, payable in arrears monthly on the last
day of each month during such periods and on the date such Base Rate
Advance shall be Converted or paid in full.
(ii) Eurocurrency Rate Advances. During such periods as such
--------------------------
Revolving Advance is a Eurocurrency Rate Advance, a rate per annum equal at
all times during each Interest Period for such Revolving Advance to the sum
of (x) the Eurocurrency Rate for such Interest Period for such Revolving
Advance plus (y) the Applicable Margin in effect on the first day of such
----
Interest Period or, if later, the Term Loan Conversion Date, payable on the
last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day which occurs during such
Interest Period every three months from the first day of such Interest
Period and on the date such Eurocurrency Rate Advance shall be Converted or
paid in full.
<PAGE>
18
(b) Default Interest. The Borrower shall pay interest on (i) the
----------------
unpaid principal amount of each Revolving Advance that is not paid when due from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Revolving Advance pursuant to clause (a)(i) or
(a)(ii) above and (ii) the amount of any interest, fee or other amount payable
hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on Base Rate
Advances pursuant to clause (a)(i) above.
SECTION 2.07. Interest Rate Determination. (a) The Administrative
---------------------------
Agent shall give prompt notice to the Borrower and the Lenders of the applicable
interest rate determined by the Administrative Agent for purposes of Section
2.06(a)(i) or (ii).
(b) If, with respect to any Eurocurrency Rate Advances, the Required
Lenders notify the Administrative Agent that the Eurocurrency Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Required Lenders of making, funding or maintaining their respective Eurocurrency
Rate Advances for such Interest Period, the Administrative Agent shall forthwith
so notify the Borrower and the Lenders, whereupon,
(i) each Eurocurrency Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and
(ii) the obligation of the Lenders to make, or to Convert Revolving
Advances into, Eurocurrency Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurocurrency Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Revolving Advances will automatically, on the last day of the then existing
Interest Period therefor, Convert into Base Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000 (or its equivalent in any
Alternative Currency), such Revolving Advances shall automatically Convert into
Base Rate Advances at the end of the applicable Interest Period for such
Revolving Advances.
SECTION 2.08. Voluntary Conversion of Revolving Advances. The
------------------------------------------
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Sections
2.07 and 2.12, Convert, pro rata based on the Lenders' respective Commitments,
Revolving Advances of one Type denominated in Dollars comprising the same
Borrowing into Revolving Advances of the other Type denominated in Dollars or,
in the case of Eurocurrency Rate Advances (whether denominated in Dollars or in
Alternative Currency), into Revolving Advances with a different Interest Period;
provided, however, that in the event of any Conversion of Eurocurrency Rate
- -------- -------
Advances into Base Rate Advances or Eurocurrency Rate Advances with a different
Interest Period on a day other than the last day of an Interest Period for the
Eurocurrency Rate Advances being Converted, the Borrower shall reimburse the
Lenders in respect of such Eurocurrency Rate Advances to the extent required by
<PAGE>
19
Section 8.04(c) and any Conversion of Base Rate Advances into Eurocurrency Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b). Each such notice of a Conversion shall, within the
restrictions specified above, specify (i) the date of such Conversion, (ii) the
Revolving Advances to be Converted and (iii) if such Conversion is into
Eurocurrency Rate Advances, the duration of the Interest Period for each such
Revolving Advance. Each notice of Conversion shall be irrevocable and binding
on the Borrower.
SECTION 2.09. Prepayments of Revolving Advances. (a) The Borrower
---------------------------------
shall have no right to prepay any principal amount of any Revolving Advances
other than as provided below.
(b) The Borrower may, upon at least three Business Days' notice in the
case of Eurocurrency Rate Advances, and one Business Day's notice given not
later than 11:00 A.M. (New York City time), in the case of Base Rate Advances,
to the Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amounts of the Revolving Advances comprising part of
the same Revolving Borrowing in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid;
provided, however, that (x) each partial prepayment shall be in an aggregate
- -------- -------
principal amount not less than $5,000,000 or the equivalent thereof in an
Alternative Currency (determined on the date notice of repayment is given in
accordance with Section 2.18) or an integral multiple of $1,000,000 or the
equivalent thereof in an Alternative Currency (determined on the date notice of
repayment is given in accordance with Section 2.18) in excess thereof and (y) in
the event of any such prepayment of a Eurocurrency Rate Advance, the Borrower
shall be obligated to reimburse the Lenders in respect thereof to the extent
required by Section 8.04(c).
(c) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Advances comprising part of the same Revolving
Borrowings equal to the amount by which the aggregate principal amount of the
Advances then outstanding exceeds the aggregate Commitments of the Lenders on
such Business Day. For purposes of this subsection (c), the aggregate principal
amount of Eurocurrency Rate Advances denominated in any Alternative Currency
shall be determined in Dollars as set forth in Section 2.18. The Administrative
Agent shall give prompt notice of any prepayment required under this Section
2.09(c) to the Borrower and the Lenders.
SECTION 2.10. Increased Costs. (a) If, due to either (i) the
---------------
introduction of or any change (including any change by way of imposition or
increase of reserve requirements included in the Eurocurrency Rate Reserve
Percentage) in or in the interpretation of any law or regulation, with respect
to any Eurocurrency Rate Advance denominated in pounds sterling, after June 1,
1995, and with respect to any other Eurocurrency Rate Advance, after the date
hereof, and with respect to any LIBO Rate Advance, after the date on which one
or more Lenders offered to make such LIBO Rate Advance pursuant to Section
2.15(a)(ii) or (ii) the compliance with any guideline or request from any
central bank or other governmental authority including, without limitation, any
agency of the European Union or similar monetary or multinational authority
(whether or not having the force of law), with respect to any Eurocurrency Rate
Advance, after the date hereof, and with respect to any LIBO Rate Advance, after
the date on which one or more Lenders offered to make such LIBO Rate Advance
pursuant to Section 2.15(a)(ii), there shall be any increase in the cost (other
than in taxes, except to the extent that the same are required to be paid
pursuant to Section 2.13) to any Lender of agreeing to make or making, funding
or maintaining any Eurocurrency Rate Advance or LIBO Rate Advance, then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost; provided, however, that, before making any such
-------- -------
demand, each Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would
<PAGE>
20
avoid the need for, or reduce the amount of, such increased cost and would not,
in the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender. A certificate as to the amount of such increased cost, setting forth the
basis therefor in reasonable detail and submitted by such Lender to the Borrower
and the Administrative Agent together with any demand under this subsection (a),
shall be presumed correct absent demonstrable error.
(b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority including, without limitation, any agency of the European
Union or similar monetary or multinational authority (whether or not having the
force of law) after the date hereof affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, upon demand by such Lender (with a copy of such
demand to the Administrative Agent), the Borrower shall pay to the
Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender reasonably determines such increase in capital to be allocable
to the existence of such Lender's commitment to lend hereunder; provided,
--------
however, that, before making any such demand, each Lender agrees to use
- -------
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
additional amounts payable under this subsection (b) and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
A certificate as to such amounts, setting forth the basis therefor in reasonable
detail and submitted to the Borrower and the Administrative Agent by such Lender
together with any demand under this paragraph (b) shall be presumed correct
absent demonstrable error.
(c) Notwithstanding any other provision in this Section 2.10, no
Lender shall be entitled to demand compensation pursuant to this Section 2.10
unless such Lender shall certify to the Borrower that it is at the time the
general policy or practice of such Lender to demand such compensation in similar
circumstances under comparable provisions of other comparable credit agreements
with borrowers of similar credit quality. The Borrower shall pay each Lender
the amount shown as due on any certificate delivered by such Lender pursuant to
paragraph (a) or (b) above within 30 days after its receipt of the same.
(d) No Lender shall be entitled to compensation under this Section
2.10 for any costs incurred or reductions suffered with respect to any event or
circumstance unless such Lender shall have notified the Borrower, not more than
120 days after such Lender becomes aware of such event or circumstance, that it
will demand compensation for such costs or reductions in a certificate described
in the last sentence of each of paragraphs (a) and (b) above.
SECTION 2.11. Illegality. (a) Notwithstanding any other provision
----------
of this Agreement, if any Lender shall notify the Administrative Agent and the
Borrower that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for any Lender or its
Eurocurrency Lending Office to perform its obligations hereunder to make
Eurocurrency Rate Advances in Dollars or in any Alternative Currency or LIBO
Rate Advances or to fund or maintain Eurocurrency Rate Advances in Dollars or in
any Alternative Currency or LIBO Rate Advances hereunder, (i) the obligation of
such Lender to make Eurocurrency Rate Advances in Dollars or in such Alternative
Currency or LIBO Rate Advances, as the case may be, or to Convert Revolving
Advances into Eurocurrency Rate Advances shall be suspended, whereupon any
request by the Borrower for a Borrowing comprised of Eurocurrency Rate Advances
or LIBO Rate Advances shall, as to such Lender only, be deemed a request for a
Base Rate Advance until
<PAGE>
21
such Lender shall notify the Administrative Agent and the Borrower that the
circumstances causing such suspension no longer exist and (ii) such Lender may
require that all outstanding Eurocurrency Rate Advances in Dollars or in such
Alternative Currency and LIBO Rate Advances, as the case may be, made by it be
Converted to Base Rate Advances, in which event all such Eurocurrency Rate
Advances in Dollars or in such Alternative Currency and LIBO Rate Advances, as
the case may be, shall be automatically Converted to Base Rate Advances as of
the effective date of such notice; provided, however, that each Lender agrees to
-------- -------
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Eurocurrency Lending Office if
the making of such a designation would enable such Lender to withdraw its notice
under this subsection (a) and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender. In the event any Lender
shall notify the Administrative Agent and the Borrower of the occurrence of the
circumstances causing such suspension under this Section 2.11(a), all payments
and prepayments of principal that would otherwise have been applied to repay the
Eurocurrency Rate Advances or LIBO Rate Advances that would have been made by
such Lender or the Converted Eurocurrency Rate Advances shall instead be applied
to repay the Base Rate Advances made by such Lender in lieu of such Eurocurrency
Rate Advances or LIBO Rate Advances, or resulting from the Conversion of such
Eurocurrency Rate Advances.
(b) For purposes of this Section 2.11, a notice to the Borrower by any
Lender shall be effective as to each Eurocurrency Rate Advance and LIBO Rate
Advance, if lawful, on the last day of the Interest Period currently applicable
to such Eurocurrency Rate Advance or LIBO Rate Advance, as the case may be; in
all other cases such notice shall be effective on the date of the occurrence of
the circumstances causing such suspension under subsection (a) above.
SECTION 2.12. Payments and Computations. (a) The Borrower shall
-------------------------
make each payment hereunder and under the Notes , except with respect to
principal of, interest on, and other amounts relating to, Advances denominated
in an Alternative Currency, not later than 12:00 Noon (New York City time) on
the day when due in Dollars to the Administrative Agent at its address referred
to in Section 8.02 in same day funds. The Borrower shall make each payment
hereunder and under the Notes with respect to principal of, interest on, and
other amounts relating to Advances denominated in an Alternative Currency not
later than 12:00 Noon (at the Payment Office for such Alternative Currency) on
the day when due in such Alternative Currency to the Administrative Agent in
same day funds by deposit of such funds to the Administrative Agent's account
maintained at such Payment Office. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or facility fees ratably (other than amounts payable
pursuant to Section 2.10, 2.13, 2.15 or 8.04(c)) to the Lenders for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 8.07(g), from and after the effective date specified in such
Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate shall be made
by the Administrative Agent on the basis of a year of 365 or 366 days, as the
case may be, and all computations
<PAGE>
22
of interest based on the Eurocurrency Rate or the Federal Funds Rate and of
facility fees shall be made by the Administrative Agent on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Administrative Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, if such extension would cause payment of interest on
-------- -------
or principal of Eurocurrency Rate Advances or LIBO Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.
SECTION 2.13. Taxes. (a) Any and all payments by the Borrower
-----
hereunder or under the Notes shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Administrative
---------
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender or the Administrative Agent (as
the case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes imposed on
it, by the jurisdiction of such Lender's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
-----
or in respect of any sum payable hereunder or under any Note to any Lender or
the Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.13) paid by such Lender or the Administrative Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom
<PAGE>
23
or with respect thereto. This indemnification shall be made within 30 days from
the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing payment
thereof. In the case of any payment hereunder or under the Notes by the
Borrower through an account or branch outside the United States or on behalf of
the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Administrative Agent, at
such address, an opinion of counsel acceptable to the Administrative Agent
stating that such payment is exempt from Taxes. For purposes of this Section
2.13, the terms "United States" and "United States person" shall have the
------------- --------------------
meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower with Internal Revenue Service Form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement
or the Notes is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Lender at the time such Lender
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 2.13(a).
(f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.13(e)
(other than if such failure is due to a change in law occurring subsequent to
- ------ ----
the date on which a form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection (e) above),
such Lender shall not be entitled to indemnification under Section 2.13(a) with
respect to Taxes imposed by the United States; provided, however, that should a
-------- -------
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower, at the requesting Lender's expense, shall take such
steps as the Lender shall reasonably request to assist the Lender to recover
such Taxes.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.13 shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurocurrency Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(h) The Administrative Agent or any Lender will notify the Borrower if
it becomes aware of any circumstances that entitle the Borrower to a refund of
Taxes paid by the Borrower pursuant to this Section 2.13 if the Borrower would
not otherwise know or have reason to know of its entitlement to such refund.
Within 30 days of the written request of the Borrower therefor, the Lenders and
the Administrative Agent, as appropriate, shall, at the Borrower's expense,
execute and deliver to the Borrower such certificates, forms or other documents
that can be furnished consistent with the facts and that are reasonably
necessary to assist the Borrower in applying for refunds of Taxes paid by the
Borrower pursuant to either Section 2.13(a) or Section 2.13(c).
<PAGE>
24
(i) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Notes.
SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain
------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) on account of the Revolving Advances owing to it (other
than pursuant to Section 2.10, 2.13 or 8.04(c)) in excess of its ratable share
of payments on account of the Revolving Advances obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such participations
in the Revolving Advances owing to them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
- -------- -------
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.15. The Competitive Bid Advances. (a) Each Lender
----------------------------
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.15 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Commitment
Termination Date in the manner set forth below; provided that, following the
--------
making of each Competitive Bid Borrowing, (x) the aggregate amount of the
Competitive Bid Advances of all Lenders then outstanding shall not exceed
$100,000,000, (y) the aggregate amount of the Competitive Bid Advances of any
one Lender then outstanding shall not exceed $50,000,000 and (z) the aggregate
amount of the Advances then outstanding shall not exceed the aggregate amount of
the Commitments of the Lenders (computed without regard to any Competitive Bid
Reduction).
(i) The Borrower may request a Competitive Bid Borrowing under this
Section 2.15 by delivering to the Administrative Agent, by telephone,
telecopier, telex or cable, a notice of a Competitive Bid Borrowing (a
"Notice of Competitive Bid Borrowing"), in substantially the form of
------------------------------------
Exhibit B-2 hereto, specifying therein the requested (v) date of such
proposed Competitive Bid Borrowing, (w) aggregate amount of such proposed
Competitive Bid Borrowing, (x) in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances, Interest Period, or in the case of a
Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity date
for repayment of each Fixed Rate Advance to be made as part of such
Competitive Bid Borrowing (which maturity date may not be earlier than the
date occurring seven days after the date of such Competitive Bid Borrowing
or later than the earlier of (I) 180 days after the date of such
Competitive Bid Borrowing and (II) the Commitment Termination Date), (y)
interest payment date or dates relating thereto and (z) other terms (if
any) to be applicable to such Competitive Bid Borrowing, not later than
10:00 A.M. (New York City time) (A) at least one Business Day prior to the
date of the proposed Competitive Bid Borrowing, if the Borrower shall
specify in the Notice of Competitive Bid Borrowing that the rates of
interest to be offered by the Lenders shall be fixed rates per annum (each
Advance comprising part of such Competitive Bid Borrowing being referred to
herein as a "Fixed Rate Advance") and (B) at least four Business Days prior
------------------
to the date of the proposed Competitive Bid Borrowing, if the Borrower
shall instead specify in the Notice of Competitive Bid Borrowing that the
rates of interest to be offered by the Lenders are to be based on the LIBO
Rate (each Advance comprising part of any such Competitive Bid
<PAGE>
25
Borrowing that is offered by the Lenders at the LIBO Rate is referred to
herein as a "LIBO Rate Advance"). Subject to subsection (a)(iii)(x) below,
-----------------
each Notice of Competitive Bid Borrowing shall be irrevocable and binding
on the Borrower. The Administrative Agent shall in turn promptly notify
each Lender of each request for a Competitive Bid Borrowing received by it
from the Borrower by sending such Lender a copy of the related Notice of
Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more Competitive Bid Advances to the
Borrower as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion, by
written notice (the "Offer") to the Administrative Agent (which shall give
-----
prompt notice thereof to the Borrower), before 9:30 A.M. (New York City
time) on the date of such proposed Competitive Bid Borrowing in the case of
a Competitive Bid Borrowing consisting of Fixed Rate Advances and before
10:00 A.M. (New York City time) three Business Days before the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of LIBO Rate Advances, of the minimum amount and
maximum amount of each Competitive Bid Advance which such Lender would be
willing to make as part of such proposed Competitive Bid Borrowing (which
amounts may, subject to the proviso to the first sentence of this Section
2.15(a), exceed such Lender's Commitment, if any), the rate or rates of
interest therefor, the interest payment schedule, the maturity date of the
proposed Competitive Bid Advance, such Lender's Applicable Lending Office
with respect to such Competitive Bid Advance and such other terms as the
Borrower may specify in the Notice of Competitive Bid Borrowing; provided
--------
that if the Administrative Agent in its capacity as a Lender shall, in its
sole discretion, elect to make any such offer, it shall notify the Borrower
of such offer at least 30 minutes before the time and on the date on which
notice of such election is to be given to the Administrative Agent by the
other Lenders. If any Lender shall elect not to make such an offer, such
Lender shall so notify the Administrative Agent, before 10:00 A.M. (New
York City time) on the date on which notice of such election is to be given
to the Administrative Agent by the other Lenders, and such Lender shall not
be obligated to, and shall not, make any Competitive Bid Advance as part of
such Competitive Bid Borrowing; provided that the failure by any Lender to
--------
give such notice shall not cause such Lender to be obligated to make any
Competitive Bid Advance as part of such proposed Competitive Bid Borrowing.
(iii) The Borrower shall, in turn, before 10:30 A.M. (New York City
time) on the date of such proposed Competitive Bid Borrowing, in the case
of a Competitive Bid Borrowing consisting of Fixed Rate Advances and before
11:00 A.M. (New York City time) three Business Days before the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of LIBO Rate Advances, either:
(x) cancel such Competitive Bid Borrowing by giving the
Administrative Agent notice to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, by
giving written notice to the Administrative Agent of the amount of
each Competitive Bid Advance (which amount shall be equal to or
greater than the minimum amount, and equal to or less than the maximum
amount, notified to the Borrower by the Administrative Agent on behalf
of such Lender for such Competitive Bid Advance pursuant to paragraph
(ii) above) to be made by each Lender as part of such Competitive Bid
Borrowing, and reject any remaining offers made by Lenders pursuant to
paragraph (ii) above by giving the Administrative Agent notice to that
effect. The Borrower shall accept the offers made by any Lender or
Lenders to make Competitive Bid Advances in order of the lowest to the
<PAGE>
26
highest rates of interest offered by such Lenders. If two or more
Lenders have offered the same interest rate, the amount to be borrowed
at such interest rate will be allocated among such Lenders in
proportion to the amount that each such Lender offered at such
interest rate.
(iv) If the Borrower notifies the Administrative Agent that such
Competitive Bid Borrowing is cancelled pursuant to paragraph (iii)(x)
above, the Administrative Agent shall give prompt notice thereof to the
Lenders and such Competitive Bid Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Administrative
Agent shall in turn promptly notify (A) each Lender that has made an offer
as described in paragraph (ii) above, of the date and aggregate amount of
such Competitive Bid Borrowing and whether or not any offer or offers made
by such Lender pursuant to paragraph (ii) above have been accepted by the
Borrower, (B) each Lender that is to make a Competitive Bid Advance as part
of such Competitive Bid Borrowing, of the amount of each Competitive Bid
Advance to be made by such Lender as part of such Competitive Bid
Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as
part of such Competitive Bid Borrowing, upon receipt, that the
Administrative Agent has received forms of documents appearing to fulfill
the applicable conditions set forth in Article III. Each Lender that is to
make a Competitive Bid Advance as part of such Competitive Bid Borrowing
shall, before 12:00 noon (New York City time) on the date of such
Competitive Bid Borrowing specified in the notice received from the
Administrative Agent pursuant to clause (A) of the preceding sentence or
any later time when such Lender shall have received notice from the
Administrative Agent pursuant to clause (C) of the preceding sentence, make
available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 8.02, in same
day funds, such Lender's portion of such Competitive Bid Borrowing. Upon
fulfillment of the applicable conditions set forth in Article III and after
receipt by the Administrative Agent of such funds, the Administrative Agent
will make such funds available to the Borrower at the Administrative
Agent's aforesaid address or at the applicable Payment Office. Promptly
after each Competitive Bid Borrowing the Administrative Agent will notify
each Lender of the amount of the Competitive Bid Borrowing, the consequent
Competitive Bid Reduction and the dates upon which such Competitive Bid
Reduction commenced and will terminate.
(vi) If the Borrower notifies the Administrative Agent that it accepts
one or more of the offers made by any Lender or Lenders pursuant to
paragraph (iii)(y) above, such notice of acceptance shall be irrevocable
and binding on the Borrower. The Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in the related
Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing the
applicable conditions set forth in Article III, including, without
limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such Lender to fund the Competitive Bid Advance
to be made by such Lender as part of such Competitive Bid Borrowing when
such Competitive Bid Advance, as a result of such failure, is not made on
such date.
(b) Each Competitive Bid Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each Competitive Bid Borrowing, the Borrower and each
Lender shall be in compliance with the limitations set forth in the proviso to
the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.15, the Borrower may from time to time borrow under this Section 2.15, repay
or prepay pursuant to subsection
<PAGE>
27
(d) below, and reborrow under this Section 2.15, provided that a Competitive Bid
--------
Borrowing shall not be made within three Business Days of the date of any other
Competitive Bid Borrowing.
(d) The Borrower shall repay to the Administrative Agent for the
account of each Lender that has made a Competitive Bid Advance, on the maturity
date of each Competitive Bid Advance (such maturity date being that specified by
the Borrower for repayment of such Competitive Bid Advance in the related Notice
of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above), the
then unpaid principal amount of such Competitive Bid Advance. The Borrower
shall have no right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by the Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above.
(e) The Borrower shall pay interest on the unpaid principal amount of
each Competitive Bid Advance from the date of such Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in full,
at the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) above, payable on the interest payment date or
dates specified by the Borrower for such Competitive Bid Advance in the related
Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i)
above. The Borrower shall pay interest on (i) the unpaid principal amount of
each Competitive Bid Advance that is not paid when due from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date or dates interest is payable thereon, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on such
Competitive Bid Advance under the terms of the Offer for such Competitive Bid
Advance unless otherwise agreed in such Offer and (ii) the amount of any
interest on each Competitive Bid Advance that is not paid when due, from the
date such amount shall be due until such amount shall be paid in full, payable
in arrears on the date such amount shall be paid in full and on demand, at a
rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Competitive Bid Advance under the terms of the Offer
for such Competitive Bid Advance unless otherwise agreed in such Offer.
(f) The indebtedness of the Borrower resulting from each Competitive
Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall,
upon the request of the Lender making such Competitive Bid Advance, be evidenced
in part by a Competitive Bid Note of the Borrower payable to the order of the
Lender making such Competitive Bid Advance, which Note shall be delivered by the
Borrower to the Administrative Agent promptly following the making of such
Competitive Bid Advance in a principal amount equal to the aggregate Commitments
of the Lenders hereunder.
(g) Upon delivery of each Notice of Competitive Bid Borrowing, the
Borrower shall pay a non-refundable fee of $1,500 to the Administrative Agent
for its own account.
SECTION 2.16. Additional Interest on Eurocurrency Rate Advances. For
-------------------------------------------------
so long as any Lender maintains reserves against Eurocurrency Liabilities, the
Borrower shall pay to the Administrative Agent for the account of each such
Lender additional interest on the unpaid principal amount of each Eurocurrency
Rate Advance of such Lender, from the date of such Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting, in the case of Revolving Advances, (a) the
Eurocurrency Rate for the Interest Period for such Advance from (b) the rate
obtained by dividing such Eurocurrency Rate by a percentage equal to 100% minus
the Eurocurrency Rate Reserve Percentage of such Lender for such Interest
Period, payable on each date on which interest is payable on such Advance. Such
additional interest shall be determined by such Lender and notified to the
Borrower through the Administrative Agent.
<PAGE>
28
SECTION 2.17. Voluntary Redenomination of Revolving Advances. The
----------------------------------------------
Borrower may, upon notice given to the Administrative Agent at least five
Business Days prior to the date of the proposed Redenomination, request that all
Eurocurrency Rate Advances comprising part of the same Revolving Borrowing be
Redenominated from Dollars into an Alternative Currency or from an Alternative
Currency into Dollars or another Alternative Currency; provided, however, that
-------- -------
any Redenomination shall be made on, and only on, the last day of an Interest
Period for such Revolving Advances. Each such notice of request of a
Redenomination (a "Notice of Redenomination") shall be by telephone, telecopier,
------------------------
telex or cable, in substantially the form of Exhibit E hereto, specifying (i)
the Eurocurrency Rate Advances comprising the Revolving Borrowing to be
Redenominated, (ii) the date of the proposed Redenomination, (iii) the currency
into which such Revolving Advances are to be Redenominated and (iv) the duration
of the Interest Period for such Revolving Advances upon being so Redenominated.
In the case of a Notice of Redenomination which requests a Redenomination of
Revolving Advances into an Alternative Currency (other than the lawful money of
Great Britain, the lawful money of the Netherlands and the lawful money of
Japan), such Redenomination is subject to the confirmation by each Lender to the
Administrative Agent not later than the fourth Business Day before the requested
date of such Redenomination that such Lender agrees to such Redenomination,
which confirmation shall be notified immediately by the Administrative Agent to
the Borrower. If any Lender shall not have so provided to the Administrative
Agent such confirmation, the requested Redenomination will not occur and the
Administrative Agent shall promptly notify the Borrower and each Lender that a
Lender has not provided such confirmation and that the requested Redenomination
will not occur. If each Lender shall have so provided to the Administrative
Agent such confirmation or if such Notice of Redenomination requests a
Redenomination of Revolving Advances into Dollars, the lawful money of Great
Britain, the lawful money of the Netherlands or the lawful money of Japan, each
Revolving Advance so requested to be Redenominated will be Redenominated, on the
date specified therefor in such Notice of Redenomination, into an equivalent
amount thereof in the currency requested in such Notice of Redenomination, such
equivalent amount to be determined on such date in accordance with Section 2.18,
and, upon being so Redenominated, will have an initial Interest Period as
requested in such Notice of Redenomination.
SECTION 2.18. Currency Equivalents. For purposes of the provisions
--------------------
of this Article II, (i) the equivalent in Dollars of any Alternative Currency
shall be determined by using the quoted spot rate at which Citibank's principal
office in London offers to exchange Dollars for such Alternative Currency in
London at 11:00 A.M. (London time) two Business Days prior to the date on which
such equivalent is to be determined, (ii) the equivalent in any Alternative
Currency of any other Alternative Currency shall be determined by using the
quoted spot rate at which Citibank's principal office in London offers to
exchange such Alternative Currency for the equivalent in Dollars of such other
Alternative Currency in London at 11:00 A.M. (London time) two Business Days
prior to the date on which such equivalent is to be determined, and (iii) the
equivalent in any Alternative Currency of Dollars shall be determined by using
the quoted spot rate at which Citibank's principal office in London offers to
exchange such Alternative Currency for Dollars in London at 11:00 A.M. (London
time) two Business Days prior to the date on which such equivalent is to be
determined. The equivalent in Dollars of each Eurocurrency Rate Advance made in
an Alternative Currency shall be recalculated hereunder on each date that it
shall be necessary to determine the unused portion of each Lender's Commitment,
or any or all Revolving Advance or Advances outstanding on such date.
SECTION 2.19. Evidence of Debt. (a) Each Lender shall maintain in
----------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower
agrees that upon notice by any Lender to the Borrower (with a copy of such
notice to the Administrative Agent) to the effect that a promissory note or
other evidence of indebtedness is required or appropriate in order for
<PAGE>
29
such Lender to evidence (whether for purposes of pledge, enforcement or
otherwise) the Advances owing to, or to be made by, such Lender, the Borrower
shall promptly execute and deliver to such Lender a Revolving Note, payable to
the order of such Lender in a principal amount equal to the Commitment of such
Lender.
(b) The Register maintained by the Administrative Agent pursuant to
Section 8.07(g) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, whether such Borrowing is composed
of Revolving Advances or Competitive Bid Advances, and, if applicable, the Type
of Advance comprising such Borrowing and, if appropriate, the Interest Period
applicable thereto, (ii) the terms of each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
and (iv) the amount of any sum received by the Administrative Agent from the
Borrower hereunder and each Lender's share thereof.
(c) Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
----- -----
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
-------- -------
Lender to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrower under this Agreement.
(d) References herein to Notes shall mean and be references to
Revolving Notes and Competitive Bid Notes to the extent issued hereunder.
SECTION 2.20. Use of Proceeds. The proceeds of the Advances shall be
---------------
available (and the Borrower agrees that it shall use such proceeds) solely for
general corporate purposes of the Borrower and its Subsidiaries, including,
without limitation, for the purposes of making acquisitions.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01
------------------------------------------------------
and 2.15. Sections 2.01 and 2.15 of this Agreement shall become effective as of
- --------
the Effective Date, subject to the conditions precedent that:
(a) There shall have occurred no Material Adverse Change since
December 31, 1997.
(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i)
would reasonably be expected to have a Material Adverse Effect other than
the matters described on Schedule 3.01(b) (the "Disclosed Litigation") or
--------------------
(ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note or the consummation of the transactions contemplated
hereby, and there shall have been no material adverse change in the status,
or financial effect on the Borrower or any of its Subsidiaries, of the
Disclosed Litigation from that described on Schedule 3.01(b).
<PAGE>
30
(c) All governmental and third party consents and approvals necessary
in connection with this Agreement or the transactions contemplated hereby
and with the execution, delivery and performance of this Agreement and the
Notes shall have been obtained (without the imposition of any conditions
that are not acceptable to the Lenders) and shall remain in effect, and no
law or regulation shall be applicable in the reasonable judgment of the
Lenders that restrains, prevents or imposes materially adverse conditions
upon the transactions contemplated hereby.
(d) The Borrower shall have paid all accrued fees and expenses of the
Administrative Agent and all accrued financing fees of the Lenders
(including the accrued fees and expenses of counsel to the Administrative
Agent); provided, however, that the Borrower shall only be obligated to pay
-------- -------
on the Effective Date those expenses for which it has received invoices at
least one Business Day prior to the Effective Date.
(e) The Administrative Agent shall have received on or before the
Effective Date the following, each dated such day, in form and substance
satisfactory to the Administrative Agent and (except for the Revolving
Notes) in sufficient copies for each Lender:
(i) The Notes to the order of those Lenders that have requested
Notes prior to the Effective Date.
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement and any Notes, and
of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and any
Notes.
(iii) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign this Agreement and any
Notes and the other documents to be delivered hereunder.
(iv) An environmental assessment update report in form, scope and
substance reasonably satisfactory to the Lenders prepared by the
Borrower as to any material environmental hazards or liabilities to
which the Borrower or any of its Subsidiaries may be subject, and the
Lenders shall be reasonably satisfied with the amount and nature of
any such hazards or liabilities and with the Borrower's plans with
respect thereto.
(v) A favorable opinion of Cravath, Swaine & Moore, special
counsel for the Borrower, substantially in the form of Exhibit F-1
hereto and as to such other matters as any Lender through the
Administrative Agent may reasonably request.
(vi) A favorable opinion of Edward F. Jackman, Esq., General
Counsel of the Borrower, substantially in the form of Exhibit F-2
hereto and as to such other matters as any Lender through the
Administrative Agent may reasonably request.
(vii) A favorable opinion of Shearman & Sterling, counsel
for the Administrative Agent, in form and substance satisfactory to
the Administrative Agent.
(f) The Borrower shall have terminated the commitments, and paid in
full all Debt, interest, fees and other amounts outstanding, under the
$200,000,000 364-Day Credit Agreement dated as of September 23, 1997, among
the Borrower, as borrower, the lenders parties thereto and
<PAGE>
31
Citibank, as agent, and each of the Lenders that is a party to such
$200,000,000 364-Day Credit Agreement hereby waives, upon execution of this
Agreement, the three Business Days' notice required by Section 2.04 of such
Credit Agreement relating to the termination of commitments thereunder.
SECTION 3.02. Additional Conditions Precedent to Effectiveness. The
------------------------------------------------
effectiveness of Sections 2.01 and 2.15 of this Agreement shall be subject to
the further conditions precedent that on the Effective Date the following
statements shall be true and the Administrative Agent shall have received for
the account of each Lender a certificate signed by a duly authorized officer of
the Borrower, dated the Effective Date, stating that the following statements
are true:
(i) The representations and warranties contained in Section 4.01 are
correct on and as of the Effective Date, and
(ii) No event has occurred and is continuing that constitutes a
Default.
SECTION 3.03. Conditions Precedent to Each Revolving Borrowing. The
------------------------------------------------
obligation of each Lender to make a Revolving Advance on the occasion of each
Revolving Borrowing shall be subject to the further conditions precedent that on
the date of such Revolving Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Revolving Borrowing and the
acceptance by the Borrower of the proceeds of such Revolving Borrowing shall
constitute a representation and warranty by the Borrower that on the date of
such Revolving Borrowing such statements are true):
(i) The representations and warranties contained in Section 4.01
(except the representations set forth in the last sentence of subsection
(e) thereof) are correct on and as of the date of such Revolving Borrowing,
before and after giving effect to such Revolving Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date,
(ii) No event has occurred and is continuing, or would result from
such Revolving Borrowing or from the application of the proceeds therefrom,
that constitutes a Default.
SECTION 3.04. Conditions Precedent to Each Competitive Bid Borrowing.
------------------------------------------------------
The obligation of each Lender that is to make a Competitive Bid Advance on the
occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as
part of such Competitive Bid Borrowing is subject to the conditions precedent
that (i) the Administrative Agent shall have received the written confirmatory
Notice of Competitive Bid Borrowing with respect thereto, and (ii) on the date
of such Competitive Bid Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Competitive Bid Borrowing such statements are true):
(a) the representations and warranties contained in Section 4.01 are
correct on and as of the date of such Competitive Bid Borrowing, before and
after giving effect to such Competitive Bid Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date,
(b) no event has occurred and is continuing, or would result from such
Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default, and
(c) no event has occurred and no circumstance exists as a result of
which the information concerning the Borrower that has been provided to any
Agent or any Lender by the
<PAGE>
32
Borrower in connection herewith would include an untrue statement of a
material fact or omit to state any material fact or any fact necessary to
make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 3.05. Determinations Under Sections 3.01 and 3.02. For
-------------------------------------------
purposes of determining compliance with the conditions specified in Sections
3.01 and 3.02, each Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lenders unless an officer of the Administrative Agent responsible for the
transactions contemplated by this Agreement shall have received notice from such
Lender prior to the proposed Effective Date, as notified by the Borrower to the
Lenders, specifying its objection thereto.
SECTION 3.06. Notice of Effective Date. Upon the occurrence of the
------------------------
Effective Date, the Administrative Agent shall notify the Lenders that the
Effective Date has occurred in accordance with Sections 3.01 and 3.02, which
notice shall be conclusive and binding on the parties hereto for all purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
----------------------------------------------
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by the Borrower of this
Agreement and any Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's charter or by-laws (including, without
limitation, the Series C Certificate) or (ii) any law binding on or
affecting the Borrower or any contractual restriction binding on, or, to
the best of Borrower's knowledge, affecting, the Borrower.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Borrower of this
Agreement or the Notes.
(d) This Agreement is, and each of the Notes when delivered hereunder
will be, the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with their respective terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally.
(e) The balance sheets of the Borrower and its Subsidiaries as at
December 31, 1997, and the related statements of income and cash flows of
the Borrower and its Subsidiaries for the fiscal year then ended, and the
Consolidated balance sheet of the Borrower and its Subsidiaries as at June
30, 1998, and the related Consolidated statement of income and cash flows
of the Borrower and its Subsidiaries for the six months then ended, duly
certified by the chief financial officer of the Borrower, copies of which
have been furnished to each Bank, fairly present, subject, in the case of
said balance sheet as at June 30, 1998, and said statement of income and
<PAGE>
33
cash flows for the six months then ended, to year-end audit adjustments,
the financial condition of the Borrower and its Subsidiaries as at such
dates and the results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles consistently applied. As of the
Effective Date, since December 31, 1997, there has been no Material Adverse
Change.
(f) There is no pending action or proceeding against or, to the best
of the Borrower's knowledge, otherwise affecting the Borrower or any of its
Subsidiaries or, to the best of the Borrower's knowledge, threatened action
or proceeding affecting the Borrower or any of its Subsidiaries, including,
without limitation, any Environmental Action, before any court,
governmental agency or arbitrator that (i) would be reasonably likely to
have a Material Adverse Effect (other than the Disclosed Litigation) or
(ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note, and there has been no change in the status, or
financial effect on the Borrower or any of its Subsidiaries, of the
Disclosed Litigation from that described on Schedule 3.01(b) that would be
reasonably expected to have a Material Adverse Effect.
(g) Following application of the proceeds of each Advance, not more
than 25 percent of the value of the assets (either of the Borrower only or
of the Borrower and its Subsidiaries on a Consolidated basis) subject to
the provisions of Section 5.02(a) or 5.02(c) or subject to any restriction
contained in any agreement or instrument between the Borrower and any
Lender or any Affiliate of any Lender relating to Debt and within the scope
of Section 6.01(d) will be margin stock (within the meaning of Regulations
U and G issued by the Board of Governors of the Federal Reserve System).
For purposes of this Section 4.01(g), "assets" of the Borrower or any of
------
its Subsidiaries includes, without limitation, the treasury stock of the
Borrower that has not been retired.
(h) Other than as set forth on Schedule 4.01(h), the operations and
properties of the Borrower and each of its Subsidiaries comply in all
respects with all applicable Environmental Laws, all necessary
Environmental Permits have been obtained and are in effect for the
operations and properties of the Borrower and its Subsidiaries, the
Borrower and its Subsidiaries are in compliance with all such Environmental
Permits, except to the extent that any such noncompliance or failure to
obtain any necessary permits would not be reasonably expected to have a
Material Adverse Effect, and to the knowledge of the Borrower, no
circumstances exist that would be reasonably expected to (i) form the basis
of an Environmental Action against the Borrower or any of its Subsidiaries
or any of their properties that would have a Material Adverse Effect or
(ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any applicable
Environmental Law that would have a Material Adverse Effect.
(i) Other than the properties set forth on Schedule 4.01(i) or such
other properties as to which a Material Adverse Effect would not reasonably
be expected to result, none of the properties currently or formerly owned
or operated by the Borrower or any of its Subsidiaries is listed or, to the
knowledge of the Borrower, proposed for listing on the National Priorities
List under CERCLA or on the CERCLIS or any analogous state list.
(j) Other than the locations set forth on Schedule 4.01(j) or such
other locations as to which a Material Adverse Effect would not reasonably
be expected to result, neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or, to the knowledge of the Borrower,
proposed for listing on the National Priorities List under CERCLA or on the
CERCLIS or any analogous state list;
<PAGE>
34
other than as set forth on Schedule 4.01(j), Hazardous Materials have not
been released or disposed of on any property currently or formerly owned or
operated by the Borrower or any of its Subsidiaries in a manner which would
reasonably be expected to result in a Material Adverse Effect; and except
to the extent failure to do so would not reasonably be expected to result
in a Material Adverse Effect, all Hazardous Materials have been used,
treated, handled, stored and disposed of on such properties in compliance
with all applicable Environmental Laws and Environmental Permits.
(k) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan other than such ERISA Events as would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(l) Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which will have been
filed with the Internal Revenue Service and furnished to the Lenders is
complete and accurate in all material respects and fairly presents the
funding status of such Plan as of the date set forth therein, and since the
date of such Schedule B there has been no change in such funding status
that would reasonably be expected to result in a Material Adverse Effect.
(m) Neither the Borrower nor any of its ERISA Affiliates (other than
one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Internal Revenue Code) has incurred or is reasonably
expected to incur any Withdrawal Liability to any Multiemployer Plan that
would reasonably be expected to result in a Material Adverse Effect.
(n) Except as would not reasonably be expected to result in a Material
Adverse Effect, neither the Borrower nor any of its ERISA Affiliates (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Internal Revenue Code) has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and, to the best of the Borrower's knowledge, no such Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated,
within the meaning of Title IV of ERISA.
(o) The Borrower and its Subsidiaries have no material liability not
reflected on the Borrower's financial statements with respect to "expected
post retirement benefit obligations" within the meaning of Statement of
Financial Accounting Standards No. 106.
(p) Neither the Borrower nor any of its Subsidiaries is an "investment
company", or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any
Advances nor the application of the proceeds or repayment thereof by the
Borrower, nor the consummation of the other transactions contemplated
hereby, will violate any provision of such Act or any rule, regulation or
order of the Securities and Exchange Commission thereunder.
ARTICLE V
COVENANTS OF THE BORROWER
<PAGE>
35
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
---------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Required Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA; provided, however, that neither the
-------- -------
Borrower nor any of its Subsidiaries shall be required to comply with any
applicable laws, rules, regulations or orders (i) to the extent the
applicability thereof to the Borrower is being contested in good faith and
by proper proceedings and appropriate reserves are being maintained with
respect to such circumstances in accordance with GAAP or (ii) where the
failure so to comply, either individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
----------------------
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all income and all other material taxes, assessments and governmental
charges or levies imposed upon it or upon its property and (ii) all lawful
claims that, if unpaid, might by law become a Lien upon its property except
such claims that, either individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect; provided,
--------
however, that neither the Borrower nor any of its Subsidiaries shall be
-------
required to pay or discharge any such tax, assessment, charge or claim that
is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained in accordance with GAAP.
(c) Compliance with Environmental Laws. Comply, and cause each of its
----------------------------------
Subsidiaries and exercise its commercially reasonable efforts to cause all
lessees and other Persons occupying its properties to comply, with all
applicable Environmental Laws and Environmental Permits applicable to its
operations and properties except to the extent that the failure so to
comply would not reasonably be expected to result in a Material Adverse
Effect; obtain and renew all Environmental Permits necessary for its
operations and properties except to the extent that the failure to obtain
or renew any of such Environmental Permits would not reasonably be expected
to result in a Material Adverse Effect; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action necessary to
remove and clean up all Hazardous Materials from any of its properties, in
all material respects in accordance with the requirements of all applicable
Environmental Laws except to the extent that the failure so to comply would
not reasonably be expected to result in a Material Adverse Effect;
provided, however, that neither the Borrower nor any of its Subsidiaries
-------- -------
shall be required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and reserves appropriate in the
reasonable judgment of the Borrower and its accountants are being
maintained with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance (which may include self-insurance to
the extent consistent with prudent business practices and otherwise
customary in their respective industries and to the extent such self-
insurance would not reasonably be expected to have a Material Adverse
Effect) with responsible and reputable insurance companies or associations
in such amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which the Borrower or such Subsidiary operates.
<PAGE>
36
(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
-----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, material rights (charter and statutory) and material franchises;
provided, however, that the Borrower and its Subsidiaries may consummate
-------- -------
any merger or consolidation or liquidation permitted under Section 5.02(c)
and provided further that neither the Borrower nor any of its Subsidiaries
-------- -------
shall be required to preserve any right or franchise if, in the good faith
business judgment of the Board of Directors or of a Responsible Officer of
the Borrower or such Subsidiary, the preservation thereof is no longer
desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not reasonably
expected to result in a Material Adverse Effect.
(f) Visitation Rights. At any reasonable time and from time to time,
-----------------
permit any of the Agents or any of the Lenders or any agents or
representatives thereof to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of, the
Borrower and any of its Subsidiaries, and to discuss the affairs, finances
and accounts of the Borrower and any of its Subsidiaries with any of their
officers or directors and with their independent certified public
accountants.
(g) Preparation of Environmental Reports. If a Default caused by
------------------------------------
reason of breach of Section 4.01(f) with respect to environmental matters
(including, without limitation, with respect to any Environmental Action),
(h), (i) or (j) or 5.01(c) shall have occurred and be continuing, at the
reasonable request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 90 days after such request, at the
expense of the Borrower, an environmental site assessment report for the
properties described in such request, prepared by an environmental
consulting firm acceptable to the Administrative Agent, indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance, removal or remedial action in connection with any Hazardous
Materials on such properties.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
the Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause
-------------------------------
each of its Subsidiaries to maintain and preserve, all of its properties
that are material in the conduct of its business in good working order and
condition, ordinary wear and tear excepted; provided, however, that neither
-------- -------
the Borrower nor any of its Subsidiaries shall be required to maintain and
preserve any such property if, in the good faith business judgment of the
Board of Directors or of a Responsible Officer of the Borrower or such
Subsidiary, maintenance and preservation thereof is no longer desirable in
the conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not reasonably likely to result in a
Material Adverse Effect.
(j) Transactions with Affiliates. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, (i) other than with respect to transactions
between the Borrower and its wholly owned Subsidiaries or between wholly
owned Subsidiaries, all transactions otherwise permitted under this
Agreement with any of their Affiliates, Cyanamid or American Home Products
on terms that are fair and reasonable and no less favorable to the Borrower
or such Subsidiary (considered as a whole, in conjunction with all other
relationships and arrangements with such Affiliates and consistent with
prudent business practices) than it would obtain in a comparable arm's-
length transaction with a Person not an Affiliate, Cyanamid or American
Home Products, other than as described on Schedule 5.01(j), and (ii) with
respect to transactions between the Borrower and its
<PAGE>
37
wholly owned Subsidiaries, all transactions otherwise permitted under this
Agreement on terms that are no less favorable to the Borrower than it would
obtain in a comparable arm's-length transaction with a Person not an
Affiliate except where failure to do so would not reasonably be expected to
have a Material Adverse Effect, provided, however, that the Borrower shall
not engage in any transaction with any such Subsidiary that would render
such Subsidiary insolvent or cause a default under, or a breach of, any
material contract to which such Subsidiary is a party.
(k) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, Consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for the
period commencing at the end of the previous fiscal year and ending
with the end of such quarter, duly certified (subject to year-end
audit adjustments) by the chief financial officer of the Borrower and
a certificate of the chief financial officer of the Borrower as to
compliance with the terms of this Agreement, setting forth in
reasonable detail the calculations and other information necessary to
demonstrate compliance with Section 5.03 and, if requested by the
Required Lenders through the Administrative Agent, setting forth in
reasonable detail the calculations and other information necessary to
demonstrate compliance with Sections 5.02(a) and (b);
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries,
containing Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year and
Consolidated and consolidating statements of income and a Consolidated
statement of cash flows, in each case, of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an
opinion unqualified as to going concern or other matters material in
the judgment of the Required Lenders by KPMG Peat Marwick or another
"Big Six" accounting firm or other independent public accountants of
recognized national standing reasonably acceptable to the Required
Lenders and a certificate of the chief financial officer of the
Borrower as to compliance with the terms of this Agreement, setting
forth in reasonable detail the calculations and other information
necessary to demonstrate compliance with Section 5.03 and, if
requested by the Required Lenders through the Administrative Agent,
setting forth in reasonable detail the calculations and other
information necessary to demonstrate compliance with Sections 5.02(a)
and (b);
(iii) promptly and in any event within three Business Days after
an officer of the Borrower or, with respect to ERISA matters, the
employee of the Borrower responsible for such matters or, with respect
to ERISA matters of an ERISA Affiliate, the employee of such ERISA
Affiliate responsible for such matters, knows or should know of the
occurrence of each Default, continuing on the date of such statement,
a statement of the chief financial officer of the Borrower setting
forth details of such Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to its securityholders generally, and
copies of all reports and registration statements which the Borrower
or any Subsidiary files with the Securities Exchange Commission or any
national securities exchange (other than any reports on Form 11-K and
any registration statements filed on Form S-8 or their equivalents);
<PAGE>
38
(v) promptly after an officer of the Borrower knows or should
know of the occurrence thereof, notice of any condition or occurrence
on any property of the Borrower or any of its Subsidiaries that
results in a material noncompliance by or material liability with
respect to the Borrower or any of its Subsidiaries with any applicable
Environmental Law or Environmental Permit which would reasonably be
expected to (A) form the basis of an Environmental Action against the
Borrower or any of its Subsidiaries or such property that would be
reasonably expected to have a Material Adverse Effect or (B) cause any
such property to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law that
would be reasonably expected to have a Material Adverse Effect;
(vi) promptly and in any event within 15 days after the employee
of the Borrower responsible for ERISA matters or the employee of an
ERISA Affiliate responsible for ERISA matters knows or has reason to
know that any ERISA Event has occurred, a statement of the chief
financial officer of the Borrower describing such ERISA Event and the
action, if any, that the Borrower or such ERISA Affiliate has taken
and proposes to take with respect thereto;
(vii) promptly and in any event within three Business Days after
receipt thereof by the Borrower or any of its ERISA Affiliates (other
than one considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Internal Revenue Code), copies of each
notice from the PBGC stating its intention to terminate any Plan or to
have a trustee appointed to administer any such Plan;
(viii) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan;
(ix) promptly and in any event within 10 Business Days after
receipt thereof by the Borrower or any of its ERISA Affiliates (other
than one considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Internal Revenue Code) from the sponsor
of a Multiemployer Plan, copies of each notice concerning (x) the
imposition of Withdrawal Liability by any such Multiemployer Plan, (y)
the reorganization or termination, within the meaning of Title IV of
ERISA, of any such Multiemployer Plan or (z) the amount of liability
incurred, or that may be incurred, by the Borrower or any of its ERISA
Affiliates in connection with any event described in clause (x) or
(y);
(x) promptly and in any event within 10 Business Days after the
effectiveness thereof, copies of each amendment to and waiver of any
provision of the Series C Certificate; and
(xi) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Administrative Agent may from
time to time reasonably request.
SECTION 5.02. Negative Covenants. So long as any Advance shall
------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Required Lenders:
<PAGE>
39
(a) Liens, Etc. Create or suffer to exist, or permit any of its
----------
Subsidiaries to create or suffer to exist, any Lien on or with respect to
any of its properties, whether now owned or hereafter acquired, or assign,
or permit any of its Subsidiaries to assign, any right to receive income,
other than:
(i) Permitted Liens,
(ii) (x) purchase money Liens upon or in any property acquired or
held by the Borrower or any Subsidiary to secure the purchase price of
such property or to secure Debt (including, without limitation,
Capitalized Leases) incurred solely for the purpose of financing the
acquisition or improvement of such property, or (y) Liens existing on
such property at the time of its acquisition or improvement (other
than any such Lien created in contemplation of such acquisition or
improvement) or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount, provided, however, that no
-------- -------
such Lien shall extend to or cover any property other than the
property being acquired or improved (except to the extent that
construction financing may result in an encumbrance on the underlying
fee or leasehold), and no such extension, renewal or replacement shall
extend to or cover any property not theretofore subject to the Lien
being extended, renewed or replaced, provided further that the
-------- -------
aggregate principal amount of the Debt secured by the Liens referred
to in subclause (x) of this clause (ii) shall not exceed at any time
outstanding $200,000,000 (or the equivalent thereof in any Foreign
Currency, determined as of the date such Debt is issued or incurred),
(iii) the Liens described on Schedule 5.02(a),
(iv) other Liens securing Debt and other monetary obligations
outstanding in an aggregate principal amount not to exceed $25,000,000
(or the equivalent thereof in any Foreign Currency, determined as of
the date such Debt is issued or incurred),
(v) Liens upon or in any property of any Person that becomes a
Subsidiary of the Borrower after the date hereof that are existing at
the time such Person becomes a Subsidiary of the Borrower (other than
any such Lien created in contemplation of such Person becoming a
Subsidiary of the Borrower),
(vi) Liens on accounts receivable and other related assets
arising solely in connection with the sale or other disposition of
such accounts receivable in the ordinary course of business (including
Liens in connection with securitization programs),
(vii) the replacement, extension or renewal of any Lien
permitted by clauses (ii), (iii), (iv) and (v) above upon or in the
same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change in any
direct or contingent obligor) of the Debt secured thereby,
(viii) Liens on the assets of a Subsidiary of the Borrower
securing the obligations of such Subsidiary to the Borrower or to
another Subsidiary of the Borrower,
(ix) Liens on machinery and equipment of the Borrower located in
the State of Connecticut to secure performance of the Borrower's grant
obligations owing to the State of Connecticut or any political
subdivision thereof in an aggregate principal amount not to exceed
$2,500,000 from the date hereof,
<PAGE>
40
(x) Liens in respect of goods consigned to the Borrower or any of
its Subsidiaries in the ordinary course of business, including,
without limitation, goods which are the subject of tolling agreements
or manufacturing and servicing agreements to which the Borrower or any
of its Subsidiaries is a party; provided that such Liens are limited
--------
to the goods so consigned and the goods which are the subject of such
agreements, and
(xi) Liens consisting of the lease by the Borrower of all or a
portion of its Stamford, Connecticut property to a third party.
(b) Debt. Permit any of its Subsidiaries to create or suffer to exist
----
any Debt other than:
(i) Debt owed to the Borrower or to a wholly owned Subsidiary of
the Borrower,
(ii) Debt of the Borrower's Subsidiaries existing on the
Effective Date and described on Schedule 5.02(b) (the "Existing
--------
Debt"), and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, the Existing Debt, provided that the
--------
terms of any such extending, refunding or refinancing Debt, and of any
agreement entered into and of any instrument issued in connection
therewith, are otherwise not prohibited by this Agreement and provided
--------
further that the principal amount of such Existing Debt shall not be
-------
increased above the principal amount thereof (plus any undrawn lending
commitments in respect thereof) outstanding immediately prior to such
extension, refunding or refinancing, and the direct and contingent
obligors therefor shall not be changed, as a result of or in
connection with such extension, refunding or refinancing,
(iii) Debt of the Borrower's Subsidiaries secured by Liens
permitted by Section 5.02(a)(ii), (iv), (vii) or (ix) subject to any
limitations set forth in such Section,
(iv) unsecured Debt of the Borrower's Subsidiaries aggregating,
on a Consolidated basis, at any one time outstanding, not more than
$150,000,000 (or the equivalent thereof in any Foreign Currency,
determined as of the date such Debt is issued or incurred),
(v) Debt owed by any Subsidiary pof the Borrower to the
Borrower or any other Subsidiary of the Borrower,
(vi) Debt ("Acquired Debt") of any Person that becomes a
-------------
Subsidiary of the Borrower after the date hereof that is existing at
the time such Person becomes a Subsidiary of the Borrower (other than
Debt incurred in contemplation of such Person becoming a Subsidiary of
the Borrower), and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, such Acquired Debt, provided that
--------
the terms of any such extending, refunding or refinancing Debt, and of
any agreement entered into and of any instrument issued in connection
therewith, are otherwise not prohibited by this Agreement and provided
--------
further that the principal amount of such Acquired Debt shall not be
-------
increased above the principal amount thereof (plus any undrawn lending
commitments in respect thereof) outstanding immediately prior to such
extension, refunding or refinancing, and the direct and contingent
obligors therefor shall not be changed, as a result of or in
connection with such extension, refunding or refinancing,
<PAGE>
41
(vii) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(viii) Debt incurred in connection with the sale or other
disposition of accounts receivable in the ordinary course of business
(including Debt in connection with securitization programs), and
(ix) Debt of the Borrower's wholly owned Subsidiaries
incorporated after June 15, 1996 under the laws of Canada or any
province thereof incurred for the purpose of lending proceeds of such
Debt to other Subsidiaries of the Borrower aggregating, on a
Consolidated basis, at any one time outstanding, not more than
$60,000,000 (or the equivalent thereof in any Foreign Currency,
determined as of the date such Debt is issued or incurred).
(c) Mergers, Etc. Merge or consolidate with or into, or convey,
------------
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of the assets of the
Borrower or the Borrower and its Subsidiaries taken as a whole (whether now
owned or hereafter acquired) to any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Borrower may merge
or consolidate with or into, or dispose of assets to, or liquidate into,
any other Subsidiary of the Borrower and except that any Subsidiary of the
Borrower may merge into or dispose of assets to or liquidate into the
Borrower and the Borrower and any Subsidiary may merge or consolidate with
or into, or liquidate into, any other Person, provided in each case that,
--------
immediately after giving effect to such proposed transaction, no Default
would exist and in the case of any merger, consolidation or liquidation to
which the Borrower is a party, if the Borrower is not the surviving entity,
the Person into which the Borrower shall be merged or formed by any such
consolidation or liquidation shall assume the Borrower's obligations
hereunder and under the Notes in an agreement or instrument reasonably
satisfactory in form and substance to all of the Lenders.
(d) Change in Nature of Business. Make, or permit any of its
----------------------------
Subsidiaries to make, any material change in the fundamental nature of the
business of the Borrower and its Subsidiaries, taken as a whole, as carried
on at the date hereof.
(e) Accounting Changes. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally accepted
accounting principles.
SECTION 5.03. Financial Covenants. So long as any Advance shall
-------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Required Lenders otherwise consent in writing:
(a) Leverage Ratio. Maintain at all times a Leverage Ratio of not
--------------
greater than 0.60:1.
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
---------------------------
Ratio of not less than 2.50:1 for each period of four fiscal quarters of
the Borrower ending on March 31, June 30, September 30 and December 31 of
each year.
ARTICLE VI
<PAGE>
42
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
- -------------------
(a) The Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable or the Borrower shall fail to pay any
interest on any Advance or make any other payment under this Agreement or
any Note within three Business Days after the same becomes due and payable;
or
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 2.20, 5.01(e), (j) or (k)(iii),
(v), (vi), (vii) or (ix), 5.02 or 5.03, or (ii) any other term, covenant or
agreement contained in this Agreement on its part to be performed or
observed if such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by any Agent or any
Lender; or
(d) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on or any other amount payable in
respect of any Debt which is outstanding in a principal amount of at least
$20,000,000 or any Hedge Agreement the Agreement Value of which is at least
$20,000,000 (or the equivalent thereof in any Foreign Currency) in the
aggregate (but excluding Debt outstanding hereunder) of the Borrower or
such Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt or Hedge Agreement; or any other event shall occur or condition shall
exist under any agreement or instrument relating to any such Debt or Hedge
Agreement and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Debt or Hedge Agreement; or any such Debt shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment, including, without limitation, a prepayment
required in connection with the sale of the sole asset or all assets
securing such Debt), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(e) The Borrower or any Material Subsidiary shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Borrower or any Material Subsidiary seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
<PAGE>
43
substantial part of its property) shall occur; or the Borrower or any of
its Material Subsidiaries shall take any corporate action to authorize any
of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$20,000,000 (or the equivalent thereof in any Foreign Currency) shall be
rendered against the Borrower or any of its Material Subsidiaries and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of
30 consecutive days during which such judgment or order remains unpaid and
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) Any non-monetary judgment or order shall be rendered against the
Borrower or any of its Subsidiaries that could be reasonably expected to
have a Material Adverse Effect, and there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(h) (i) Any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting Stock of the Borrower (or other
securities convertible into such Voting Stock) representing 20% or more of
the combined voting power of all Voting Stock of the Borrower; or (ii)
during any period of up to 24 consecutive months, commencing after the
Effective Date, individuals who at the beginning of such 24-month period
were directors of the Borrower shall cease for any reason to constitute a
majority of the board of directors of the Borrower (except to the extent
that individuals who were directors at the beginning of such 24-month
period were replaced by individuals (x) elected by a majority of the
remaining members of the board of directors of the Borrower or (y)
nominated for election by a majority of the remaining members of the board
of directors of the Borrower and thereafter elected as directors by the
shareholders of the Borrower), or (iii) any Person or two or more Persons
acting in concert (other than members of the Borrower's management that
have entered into employment agreements with the Borrower solely to the
extent such employment agreements require or permit them to exercise a
controlling influence over the management or policies of the Borrower)
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or
their acquisition of, the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Borrower; or
(i) Any ERISA Event shall have occurred in an amount exceeding
$20,000,000; or
(j) The Borrower or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan for which the Borrower
could reasonably be expected to become liable in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower and its ERISA Affiliates as Withdrawal Liability
(determined as of the date of such notification), exceeds $20,000,000 or
requires payments exceeding $4,000,000 per annum; or
(k) The Borrower or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, the Borrower is reasonably expected to become liable in
connection with such reorganization or termination and as a result of such
reorganization or termination the aggregate annual contributions of the
Borrower and its ERISA Affiliates to all Multiemployer Plans that are then
in reorganization or being terminated have
<PAGE>
44
been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $4,000,000;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Advances and the Notes, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Advances, the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that in the event of an actual or deemed entry of an order
- -------- -------
for relief with respect to the Borrower under the Federal Bankruptcy Code, (A)
the obligation of each Lender to make Advances shall automatically be terminated
and (B) the Advances and the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender hereby appoints
------------------------
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
-------- -------
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement or applicable law. The Administrative Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the
------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender which is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Borrower or
to inspect the property (including the books and records) of the Borrower; (v)
shall not be responsible to any Lender for the due execution, legality,
<PAGE>
45
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 7.03. Citibank, Chase, First Union and Affiliates. With
-------------------------------------------
respect to its Commitment, the Advances made by it and any Note issued to it,
each of Citibank, Chase and First Union shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not an Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include each of Citibank, Chase and First Union in its
individual capacity. Each of Citibank, Chase and First Union and their
respective affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if Citibank, Chase and
First Union were not the Agents and without any duty to account therefor to the
Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
----------------------
it has, independently and without reliance upon any Agent or any other Lender
and based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any 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 decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders (other than the
---------------
Designated Bidders) agree to indemnify each Agent (to the extent not reimbursed
by the Borrower), ratably according to the respective principal amounts of the
Revolving Advances then owing to them (or if no Revolving Advances are at the
time outstanding or if any Revolving Notes are held by Persons which are not
Lenders, ratably according to the respective amounts of their Commitments), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by such Agent under this Agreement, provided that no Lender
--------
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from any Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender (other than the Designated Bidders)
agrees to reimburse each Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that such Agent is not
reimbursed for such expenses by the Borrower.
SECTION 7.06. Successor Administrative Agent. The Administrative
------------------------------
Agent may resign at any time by giving written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent with the consent of the
Borrower (which consent shall not be unreasonably withheld or delayed). If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance
<PAGE>
46
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Article VII 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.
SECTION 7.07. Other Agents. Each Lender hereby acknowledges that
------------
none of the syndication agent, the documentation agent or any other agent
designated on the signature pages hereof has any liability hereunder other than
in its capacity as a Lender.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. (a) No amendment or waiver of any
---------------
provision of this Agreement or the Revolving Notes, nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
-------- -------
consent shall, unless in writing and signed by all the Lenders (other than the
Designated Bidders), do any of the following: (i) waive any of the conditions
specified in Section 3.01 or 3.02 (ii) increase the Commitments of the Lenders
or subject the Lenders to any additional obligations, (iii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Revolving Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder or (iv) amend this Section
8.01 and (b) no amendment, waiver or consent shall, unless in writing and signed
by the Required Lenders and each affected Lender (other than the Designated
Bidders), do any of the following: (i) reduce the principal of, or interest on,
the Revolving Notes or any fees or other amounts payable hereunder or (ii)
postpone any date fixed for any scheduled payment of principal of, or interest
on, the Revolving Notes or any fees or other amounts payable hereunder; provided
--------
further that no amendment, waiver or consent shall, unless in writing and signed
- -------
by the Administrative Agent in addition to the Lenders required above to take
such action, affect the rights or duties of the Administrative Agent under this
Agreement or any Revolving Note. No amendment or waiver of any provision of any
Competitive Bid Note or the terms and conditions of any Offer or any Competitive
Bid Advance accepted by the Borrower in writing pursuant to Section
2.15(a)(iii)(y), nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender payee of such Competitive Bid Note or the Lender which has made, or
offers to make, such Competitive Bid Advance, as the case may be, and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
(b) If a change in any Alternative Currency occurs pursuant to any
applicable law, rule or regulation of any governmental, monetary or
multinational authority, this Agreement (including, without limitation, the
definition of Eurocurrency Rate) will be amended to the extent determined by the
Administrative Agent and the Required Lenders (acting reasonably and in
consultation with the Borrower) to be necessary to reflect the change in
currency and to put the Lenders and the Borrower in the same position, so far as
possible, that they would have been in if no change in such Alternative Currency
had occurred.
<PAGE>
47
SECTION 8.02. Notices, Etc. All notices and other communications
------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at Five Garret Mountain
Plaza, West Paterson, New Jersey 07424, Attention: Treasurer; if to any Bank,
at its Domestic Lending Office specified opposite its name on Schedule I hereto;
if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Administrative Agent, at its address at 399 Park Avenue, New York, New York
10043, Attention: Chemicals Department, North American Global Finance Group;
or, as to the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Administrative Agent. All
such notices and communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, except that notices and communications to
the Administrative Agent pursuant to Article II, III or VII shall not be
effective until received by the Administrative Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
-------------------
Lender or any Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on
------------------
demand all costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all reasonable due diligence, syndication
(including printing, distribution and bank meetings), transportation, computer,
duplication, consultant, and audit expenses and (B) the reasonable fees and out-
of-pocket expenses of counsel for the Administrative Agent with respect thereto
and with respect to advising the Administrative Agent as to its rights and
responsibilities under this Agreement. The Borrower further agrees to pay on
demand all costs and expenses of the Administrative Agent and the Lenders, if
any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the Notes and the other documents to be
delivered hereunder, including, without limitation, reasonable fees and expenses
of counsel for each Agent and each Lender in connection with the enforcement of
rights under this Section 8.04(a).
(b) The Borrower agrees to indemnify and hold harmless each Agent and
each Lender and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
-----------------
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the Notes, this Agreement
or the transactions contemplated hereby or (ii) the actual or alleged presence
of Hazardous Materials on any property of the Borrower or any of its
Subsidiaries or any Environmental Action relating in any way to the Borrower or
any of its Subsidiaries, in each case whether or not such investigation,
litigation or proceeding is brought by the Borrower, its directors, shareholders
or creditors or an Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated (but excluding any such claim, damage, loss,
liability or expense of any Indemnified Party (i) to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's
<PAGE>
48
gross negligence or willful misconduct or (ii) arising from a successful claim
by the Borrower against such Indemnified Party). The Borrower also agrees not to
assert any claim against any Agent, any Lender, any of their Affiliates, or any
of their respective directors, officers, employees, attorneys and agents, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of or otherwise relating to
any of the transactions contemplated herein or in any other Loan Document or the
actual or proposed use of the proceeds of the Advances.
(c) If any payment of principal of, or Conversion or Redenomination
of, any Eurocurrency Rate Advance or LIBO Rate Advance is made by the Borrower
to or for the account of a Lender other than on the last day of the Interest
Period for such Advance, as a result of a payment or Conversion or
Redenomination pursuant to Section 2.07(d), 2.08, 2.09, 2.11 or 2.17,
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, the Borrower shall, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Conversion or Redenomination, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.
SECTION 8.05. Right of Setoff. Upon (i) the occurrence and during
---------------
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advance and the Notes due and payable
pursuant to the provisions of Section 6.01, each Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to setoff and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or such Affiliate to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement and the Advance
owing to such Lender and any Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such setoff and application, provided that the failure to
--------
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which such Lender and its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
--------------
(other than Sections 2.01 and 2.15, which shall only become effective upon
satisfaction of the conditions precedent set forth in Article III) when it shall
have been executed by the Borrower and each Agent and when the Administrative
Agent shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders.
SECTION 8.07. Assignments, Designations and Participations. (a)
--------------------------------------------
Each Lender (other than the Designated Bidders) may and, if demanded by the
Borrower (following a demand by such Lender pursuant to Section 2.10 or 2.13)
upon at least 10 Business Days' notice to such Lender and the Administrative
Agent, will assign to one or more Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Revolving Advances owing to it and any Revolving
Note or Notes held by it); provided, however, that (i) each such assignment
-------- -------
shall be of a constant, and not a varying, percentage of all rights and
obligations under this Agreement (other than any right to make Competitive Bid
Advances, Competitive Bid Advances owing to it and Competitive Bid Notes), (ii)
except in the case of an assignment to a Person that, immediately prior
<PAGE>
49
to such assignment, was a Lender or an assignment of all of a Lender's rights
and obligations under this Agreement, the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000 and shall be an integral multiple of
$1,000,000, (iii) if the assigning Lender is assigning less than all of its
Commitment, such assigning Lender shall retain a Commitment of at least
$5,000,000, (iv) each such assignment shall be to an Eligible Assignee, (v) the
parties to each such assignment shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Revolving Note or Notes subject to such assignment
and a processing and recordation fee of $2,500, (vi) each such assignment made
as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall
be arranged by the Borrower after consultation with the Administrative Agent and
shall be either an assignment of all of the rights and obligations of the
assigning Lender under this Agreement or an assignment of a portion of such
rights and obligations made concurrently with another such assignment or other
such assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (vii) no Lender shall be obligated to
make any such assignment as a result of a demand by the Borrower pursuant to
this Section 8.07(a) unless and until such Lender shall have received one or
more payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Revolving Advances owing to such Lender, together with accrued interest
thereon to the date of payment of such principal amount and all other amounts
payable to such Lender under this Agreement and (viii) upon each such assignment
made as a result of a demand by the Borrower pursuant to this Section 8.07(a) to
an Eligible Assignee which is not, before giving effect to such assignment, a
Lender, the Borrower shall pay to the Administrative Agent a $2,500
administration fee. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and 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 Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon any Agent, such assigning Lender 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 decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
such Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their
<PAGE>
50
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Note or Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit C hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. Promptly after its
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent, if requested by the assigning Lender or
such Eligible Assignee, (A) in exchange for the surrendered Revolving Note or
Notes a new Revolving Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained a Commitment hereunder, a new
Revolving Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder and (B) if such Eligible Assignee was not a
Lender before giving effect to such Assignment and Acceptance, a new Competitive
Bid Note to the order of such Eligible Assignee. Such new Revolving Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Revolving Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit A-1 hereto. Such new Competitive Bid Note shall be in an
aggregate principal amount equal to the aggregate Commitments of the Lenders
hereunder, shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of Exhibit A-2 hereto.
(d) Each Lender (other than the Designated Bidders) may designate one
or more banks or other entities to have a right to make Competitive Bid Advances
as a Lender pursuant to Section 2.15; provided, however, that (i) no such Lender
-------- -------
shall be entitled to make more than 2 such designations, (ii) each such Lender
making one or more of such designations shall retain the right to make
Competitive Bid Advances as a Lender pursuant to Section 2.15, (iii) each such
designation shall be to a Designated Bidder and (iv) the parties to each such
designation shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, a Designation Agreement. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Designation Agreement, the designee thereunder shall be a
party hereto with a right to make Competitive Bid Advances as a Lender pursuant
to Section 2.15 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Designation Agreement; (iv) such designee will, independently and without
reliance upon any Agent, such designating Lender 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 decisions in taking or not taking action under
this Agreement; (v) such designee confirms that it is a Designated Bidder; (vi)
such designee appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to
<PAGE>
51
such Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such designee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit D hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Promptly after
its receipt of such notice, and before any Competitive Bid Advance shall be made
by such designee pursuant to Section 2.15, the Borrower, at its own expense,
shall, if requested by such designee, execute and deliver to the Administrative
Agent a new Competitive Bid Note to the order of such designee, which new
Competitive Bid Note shall be in an aggregate principal amount equal to the
aggregate Commitments of the Lenders hereunder, shall be dated the effective
date of such Designation Agreement and shall otherwise be in substantially the
form of Exhibit A-2 hereto.
(g) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance and each Designation
Agreement delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and, with respect to Lenders other than
Designated Bidders, the Commitment of, and principal amount of the Advances
owing to, each Lender from time to time (the "Register"). The entries in the
--------
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. 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.
(h) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it and any Note or Notes held by it); provided, however,
-------- -------
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of any such Note for all purposes of this Agreement, (iv) the Borrower, each
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of this Agreement or
any Note, or any consent to any departure by the Borrower therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Advances or the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or postpone
any date fixed for any payment of principal of, or interest on, the Advance or
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation.
(i) Any Lender may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 8.07, disclose to the assignee, designee or participant or proposed
assignee, designee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that, prior
--------
to any such disclosure, the assignee, designee or participant or proposed
assignee, designee or participant shall agree to preserve the confidentiality of
any confidential information relating to the Borrower received by it from such
Lender.
<PAGE>
52
(j) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
SECTION 8.08. Confidentiality. (a) Each Agent and each Lender
---------------
hereby agree not to disclose any Confidential Information to any Person without
the consent of the Borrower, other than (i) to such Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and to
actual or prospective Eligible Assignees and participants, and then only on a
confidential basis, (ii) as required by any law, rule or regulation or judicial
process, provided that such Agent or such Lender, as the case may be, shall give
--------
prior notice thereof to the Borrower when practicable, and (iii) as requested or
required by any state, federal or foreign authority or examiner regulating banks
or banking.
(b) Each Lender agrees that it will use the Confidential Information
only in connection with this Agreement (and any refinancings hereof), the
Advances made by it hereunder, its Commitment, the transactions contemplated
hereby and other transactions with the Borrower and any of its Subsidiaries.
SECTION 8.09. Governing Law. This Agreement and the Notes shall be
-------------
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.10. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto
-----------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement or the Notes
in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State court or federal court of the United States of America sitting in New
York City. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 8.12. Judgment. (a) If for the purposes of obtaining
--------
judgment in any court it is necessary to convert a sum due hereunder or under
the Notes in any currency (the "Original Currency") into another currency (the
-----------------
"Other 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 Original Currency with the Other Currency at
<PAGE>
53
9:00 A.M. (New York City time) on the first Business Day preceding that on which
final judgment is given.
(b) The obligation of the Borrower in respect of any sum due in the
Original Currency from it to any Lender or any Agent hereunder or under the Note
or Notes held by such Lender shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or such Agent (as the case may be) of any sum adjudged to
be so due in such Other Currency, such Lender or such Agent (as the case may be)
may in accordance with normal banking procedures purchase Dollars with such
Other Currency; if the amount of Dollars so purchased is less than the sum
originally due to such Lender or such Agent (as the case may be) in the Original
Currency, the Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such Lender or such Agent (as the case may be)
against such loss, and if the amount of Dollars so purchased exceeds the sum
originally due to any Lender or such Agent (as the case may be) in the Original
Currency, such Lender or such Agent (as the case may be) agrees to remit to the
Borrower such excess.
SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the Agents
--------------------
and the Lenders hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of any Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
CYTEC INDUSTRIES INC.
By /s/ T.P. Wozniak
-----------------------------
Name: T.P. Wozniak
Title: Treasurer
Agents
------
CITIBANK, N.A.,
as Administrative Agent
By /s/ William Clerk
-----------------------------
Name: William Clerk
Title: Attorney-In-Fact
THE CHASE MANHATTAN BANK,
as syndication agent
By /s/ Mary Elisabeth Swerz
-----------------------------
Name: Mary Elisabeth Swerz
Title: Vice President
<PAGE>
54
FIRST UNION NATIONAL BANK,
as documentation agent
By /s/ Maria Elena Salas
-----------------------------
Name: Maria Elena Salas
Title: Assistant Cashier
BANKS
-----
Commitment
- ----------
Administrative Agent
--------------------
$36,000,000 CITIBANK, N.A.
By /s/ William Clerk
-----------------------------
Name: William Clerk
Title: Attorney-In-Fact
Syndication Agent
-----------------
$36,000,000 THE CHASE MANHATTAN BANK
By /s/ Mary Elisabeth Swerz
-----------------------------
Name: Mary Elisabeth Swerz
Title: Vice President
Documentation Agent
-------------------
$36,000,000 FIRST UNION NATIONAL BANK
By /s/ Maria Elena Salas
-----------------------------
Name: Maria Elena Salas
Title: Assistant Cashier
Co-Agents
---------
$28,000,000 CREDIT LYONNAIS
NEW YORK BRANCH
<PAGE>
55
By /s/ Vladimir Labun
-----------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
$28,000,000 MELLON BANK, N.A.
By /s/ Mark T. Ricci
-----------------------------
Name: Mark T. Ricci
Title: Banking Officer
Lenders
-------
$21,000,000 PNC BANK, N.A.
By /s/ Michael Nardo
-----------------------------
Name: Michael Nardo
Title: Vice President
$7,500,000 THE BANK OF NOVA SCOTIA
By /s/ Stephen E. Lockhart
-----------------------------
Name: Stephen E. Lockhart
Title: Vice President
$7,500,000 THE DEVELOPMENT BANK OF
SINGAPORE LTD. NEW YORK
AGENCY
By /s/ Will Kim Long
-----------------------------
Name: Will Kim Long
Title: General Manager
$200,000,000 Total of the Commitments
===========
<PAGE>
Exhibit 10.3
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
1997 STOCK OPTION PLAN
AS AMENDED MARCH 13, 1998 AND AS FURTHER AMENDED EFFECTIVE AS OF
OCTOBER 9, 1998
SECTION 1. PURPOSE
(a) This 1997 Stock Option Plan (the "Plan") of The American
Materials & Technology Corporation, a Delaware corporation (the "Company"), is
designed to provide additional incentive to executives and other key employees
of the Company and its subsidiaries and for certain other individuals providing
services to or acting as directors of the Company or its subsidiaries. The
Company intended that this purpose would be effected by the granting of
incentive stock options ("Incentive Stock Options") as defined in Section 422 of
the Internal Revenue code of 1986, as amended (the "Code"), and nonqualified
stock options ("Nonqualified Options") under the Plan which would afford such
executives, key employees, directors and other eligible individuals an
opportunity to acquire or increase their proprietary interest in the Company
through the acquisition of shares of its Common Stock. The Company intended that
Incentive Stock Options issued under the Plan would qualify as "incentive stock
options" as defined in Section 422 of the Code and the terms of the Plan shall
be interpreted in accordance with this intention; provided, however, that no
option granted hereunder would qualify as an "incentive stock option" unless the
Plan was approved by the stockholders of the Company within twelve months prior
to or following the adoption of the Plan by the Board. The terms "parent" and
"subsidiary" shall have the respective meanings set forth in Section 424 of the
Code.
(b) Pursuant to an Agreement and Plan of Merger dated as of July
8, 1998, as amended (the "Merger Agreement"), among the Company, Cytec
Industries Inc. ("Cytec") and CAM Acquisition Corp., Cam Acquisition Corp.
merged with and into the Company on October 9, 1998 and the Company became a
wholly-owned subsidiary of Cytec. In accordance with the Merger Agreement, this
Plan has been amended and restated to reflect that all outstanding options under
the Plan have been converted into options to purchase common stock, par value
$0.01 share ("Cytec Common Stock") as provided in Section 3.1 and to make other
appropriate changes.
<PAGE>
SECTION 2 ADMINISTRATION
2.1 BOARD OF DIRECTORS. The Plan shall be administered by the
Board of Directors of the Company (the "Board").
2.2 POWERS OF THE BOARD. The Board shall not have the power to
grant any additional options under the Plan on or after October 9, 1998.
Subject to the terms and conditions of the Plan, the Board shall have the power:
(a) To construe and interpret the Plan and options granted
thereunder and to establish, amend, and revoke rules and regulations for
administration of the Plan. In this connection, the Board may correct any
defect or supply any omission, or reconcile any inconsistency in the Plan, or in
any option agreement, in the manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective. All decisions and determinations by
the Board in the exercise of this power shall be final and binding upon the
Company and optionees;
(b) To make, in its sole discretion, changes to any outstanding
option granted under the Plan, including: (i) to reduce the exercise price, (ii)
to accelerate the vesting schedule or (iii) to extend the expiration date; and
(c) Generally, to exercise such powers and to perform such acts as
are deemed necessary or expedient to promote the best interests of the Company
with respect to the Plan.
SECTION 3. STOCK
3.1 STOCK TO BE ISSUED. The stock subject to the options granted
under the Plan shall be shares of Cytec's authorized but unissued common stock,
$.01 par value per share (the"Cytec Common Stock"), or shares of Cytec Common
Stock held in treasury. Each outstanding option at October 9, 1998 to purchase
common stock of the Company has been converted into an option to purchase .3098
shares of Cytec Common Stock for each share of AMT Common Stock for which such
option was exercisable at a price per share of Cytec Common Stock equal to the
aggregate exercise price for the shares of AMT Common Stock purchasable pursuant
to such option divided by the aggregate
2
<PAGE>
number of shares of Cytec Common Stock deemed purchasable pursuant to such
option, rounded up to the nearest whole cent. The total number of shares of
Cytec Common Stock that may be issued pursuant to options granted under the Plan
shall not exceed an aggregate of 108,430 shares of Cytec Common Stock; provided,
however, that the class and aggregate number of shares which may be subject to
options granted under the Plan shall be subject to adjustment as provided in
Section 8 hereof.
3.2 Limitation on Grants. In no event may any Plan participant be
granted options with respect to more than 100,000 shares of Company Common Stock
under the Plan in any calendar year. The number of shares of Company Common
Stock issuable pursuant to an option granted to a Plan participant in a calendar
year that is subsequently forfeited, canceled or otherwise terminated shall
continue to count toward the foregoing limitation in such calendar year. In
addition, if the exercise price of an option is subsequently reduced, the
transaction shall be deemed a cancellation of the original option and the grant
of a new one so that both transactions shall count toward the maximum shares
issuable in the calendar year of each respective transaction.
SECTION 4. ELIGIBILITY. Notwithstanding anything else in this Plan to the
contrary, no person shall be eligible to receive a grant of any options under
this Plan on or after October 9, 1998. The remainder of this Section 4 remains
only for purposes of interpreting options outstanding at October 9, 1998.
4.1 PERSONS ELIGIBLE. Incentive Stock Options under the Plan may be
granted only to officers and other employees of the Company or its subsidiaries.
Nonqualified Options may be granted to officers or other employees of the
Company or its subsidiaries, to members of the Board and to consultants or other
persons who render services to the Company or its subsidiaries (regardless of
whether they are also employees).
4.2 GREATER-THAN-TEN-PERCENT STOCKHOLDERS. Except as may
otherwise be permitted by the Code or other applicable law or regulation, no
Incentive Stock Option shall be granted to an individual who, at the time the
option is granted, owns (including ownership attributed pursuant to Section 424
of the Code) more than ten percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary (a "greater-than-
ten-percent stockholder"), unless such Incentive Stock Option provides that (i)
the purchase price per share shall not be less than one hundred ten percent of
the fair market value of the common stock for which such option is exercisable
at the time such option is granted, and (ii) that such option shall not be
exercisable to any extent after the expiration of five years from the date it is
granted.
4.3 MAXIMUM AGGREGATE FAIR MARKET VALUE. The aggregate fair
market value (determined at the time the option is granted) of the common stock
with respect to which Incentive Stock Options are
3
<PAGE>
exercisable for the first time by any optionee during any calendar year (under
the Plan and any other plans of the Company or any parent or subsidiary for the
issuance of incentive stock options) shall not exceed $100,000 (or such greater
amount as may from time to time be permitted with respect to incentive stock
options by the Code or any other applicable law or regulation).
4.4 OPTION GRANTS TO NON-EMPLOYEE DIRECTORS. As compensation for
services to the Company, each director of the Company who is a "Non-Employee
Director," as that term is defined in Role 16b-3(b)(3) under the Exchange Act
shall be automatically granted a Nonqualified Option to purchase 10,000 shares
of Common Stock of the Company upon his or her election to the Board initially
on or subsequent to the date on which this Plan is approved by stockholders as
set forth in Section 12. Any director of the Company who is elected to the Board
but who is not a Non-Employee Director at the time of his or her initial
election and later becomes a Non-Employee Director shall be automatically
granted an option to purchase 10,000 shares of Common Stock of the Company upon
his or her first election to the Board as a Non-Employee Director. Each such
grant (an "Initial Option Grant") shall become exercisable in its entirety on
the first anniversary of the date of the grant and shall expire on the fifth
annual anniversary of the date of grant. At the first meeting of the Board of
Directors following each annual meeting of stockholders, commencing with the
first meeting of the Board of Directors following the Company's annual meeting
of stockholders in 1997, each Non-Employee Director (other than any Non-Employee
Director who has received an Initial Option Grant as a result of election to the
Board at such meeting) shall be automatically granted an additional Nonqualified
Option to purchase 10,000 shares of Common Stock of the Company (the "Subsequent
Option Grant"). Each Subsequent Option Grant shall become exercisable in its
entirety on the first anniversary of the date of grant and shall expire on the
fifth annual anniversary of the date of grant. The exercise price per share of
Common Stock of the Company of each Nonqualified Option granted pursuant to this
Section 4.4 shall be equal to the fair market value of the Common Stock of the
Company on the date the Nonqualified Option is granted, such fair market value
to be determined in accordance with the provisions of Section 6.3.
The rights of a Non-Employee Director in an Option granted under this
Section 4.4 shall terminate 60 days after such Director ceases to be a Director
of the Company or on the specified expiration date, if earlier; provided,
however, that if the Non-Employee ceases to be a Director for cause, as defined
in Section 5.1, the rights shall terminate immediately on the date on which he
ceases to be a Director.
4
<PAGE>
No Nonqualified Option granted under this Section 4.4 shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and such options shall be exercisable during the optionee's
lifetime only by the optionee. Any Nonqualified Option granted to a Non-
Employee Director and outstanding on the date of his or her death may be
exercised by the legal representative or legatee of the optionee for a period of
one year from the date of death or until the expiration of the stated term of
the option, if earlier.
Nonqualified Options granted under this Section 4.4 may be exercised
only by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price may be made by one or more of the
methods specified in Section 7.2. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of an option and not as
to unexercised options.
The provisions of this Section 4.4 shall apply only to options granted
or to be granted to Non-Employee Directors, and shall not be deemed to modify,
limit or otherwise apply to any other provision of this Plan or to any option
issued under this Plan to a participant who is not a Non-Employee Director of
the Company. To the extent inconsistent with the provisions of any other
Section of this Plan, the provisions of this Section 4.4 shall govern the rights
and obligations of the Company and Non-Employee Directors respecting options
granted or to be granted to Non-Employee Directors.
SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE
5.1 TERMINATION OF EMPLOYMENT. Except as may be otherwise
expressly provided in (x) the terms and conditions of the option granted to an
optionee or (y) Schedule 7.8 to the Merger Agreement, options shall terminate on
the earlier of:
(a) the date of expiration thereof,
(b) the date of termination of the optionee's employment with
or services to the Company by it for cause (as determined by the Company), or
voluntarily by the optionee; or
(c) 30 days after the date of termination of the optionee's
employment with or services to the Company by it without cause; provided that
Nonqualified Options granted to persons who are not employees of the Company
need not, unless the Board determines otherwise, be subject to the provisions
set forth in clauses (b) and (c) above.
An employment relationship between the Company and the optionee shall be
deemed to exist during any period in which the
5
<PAGE>
optionee is employed by the Company or any affiliate of the Company. Whether
authorized leave of absence, or absence on military or government service, shall
constitute termination of the employment relationship between the Company and
the optionee shall be determined by the Board at the time thereof.
As used herein, "cause" shall mean (x) any material breach by the
optionee of any agreement to which the optionee and the Company or any affiliate
of the Company are both parties, (y) any act or omission to act by the optionee
which may have a material and adverse effect on the Company's business or any of
its affiliate's businesses or on the optionee's ability to perform services for
the Company or any affiliate of the Company, including without limitation, the
commission of any crime (other than ordinary traffic violations), or (z) any
material misconduct or material neglect of duties by the optionee in connection
with the business or affairs of the Company or any affiliate of the Company.
5.2 DEATH OR PERMANENT DISABILITY OF OPTIONEE. In the event
of the death or permanent and total disability of the holder of an option prior
to termination of the optionee's employment with or services to the Company or
any affiliate of the Company and before the date of expiration of such option,
such option shall terminate on the earlier of such date of expiration or one
year following the date of such death or disability. After the death of the
optionee, his/her executors, administrators or any person or persons to whom
his/her option may be transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to such termination to
exercise the option to the extent the optionee was entitled to exercise such
option immediately prior to his/her death. An optionee is permanently and
totally disabled if he/she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than 12
months; permanent and total disability shall be determined in accordance with
Section 22(e) (3) of the Code and the regulations issued thereunder.
SECTION 6. TERMS OF THE OPTION AGREEMENTS
Each option agreement shall be in writing and shall contain such
terms, conditions, restrictions, if any, and provisions as the Board shall from
time to time deem appropriate. Such provisions or conditions may include
without limitation restrictions on transfer, repurchase rights, or such other
provisions as shall be determined by the Board, provided that such additional
provisions shall not be inconsistent with any other term or condition of the
Plan and such additional provisions shall not cause any Incentive Stock Option
granted under the Plan to fail to qualify as an incentive option within the
meaning of Section 422 of the Code. Option
6
<PAGE>
agreements need not be identical, but each option agreement by appropriate
language shall include the substance of all of the following provisions:
6.1 EXPIRATION OF OPTION. Subject to Section 4.4 hereof,
notwithstanding any other provision of the Plan or of any option agreement, each
option shall expire on the date specified in the option agreement, which date
shall not, in the case of an Incentive Stock Option, be later than the tenth
anniversary (fifth anniversary in the case of a greater-than-ten-percent
stockholder) of the date on which the option was granted, or as specified in
Section 5 of this Plan.
6.2 EXERCISE. Subject to Sections 4.4 and 7.3 hereof, each option may
be exercised, so long as it is valid and outstanding, from time to time in part
or as a whole, subject to any limitations with respect to the number of shares
for which the option may be exercised at a particular time and to such other
conditions as the Board in its discretion may specify upon granting the option.
6.3 PURCHASE PRICE. Subject to Section 4.4 hereof, the purchase price
per share under each option shall be determined by the Board, at the time the
option is granted; provided, however, that the option price of any Incentive
Stock Option shall not, unless otherwise permitted by the Code or other
applicable law or regulation, be less than the fair market value of the common
stock for which the option is exercisable on the date the option is granted
(110% of the fair market value in the case of a greater-than-ten-percent
stockholder). For the purpose of the Plan the fair market value of such common
stock shall be the closing price per share on the date of grant of the option as
reported by the NASDAQ Stock Market, Inc. ("NASDAQ"), or, if such common stock
is not quoted on NASDAQ, as reported by a nationally recognized stock exchange,
or, if such common stock is not listed on NASDAQ or such an exchange, the fair
market value as determined by the Board.
6.4 TRANSFERABILITY OF OPTIONS. Options shall not be transferable
by the optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his or her lifetime, only by him
or her.
6.5 RIGHTS OR OPTIONEES. No optionee shall be deemed for any
purpose to be the owner of any shares of Cytec Common Stock subject to any
option unless and until the option shall have been exercise pursuant to the
terms thereof, and Cytec shall have issued and delivered the shares to the
optionee.
6.6 LOCKUP AGREEMENT. The Board may in its discretion specify upon
7
<PAGE>
granting an option that the optionee shall agree for a period of time from the
effective date of any registration of securities of the Company (upon request of
the Company or the underwriters managing any underwritten offering of the
Company's securities), not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any shares issued pursuant
to the exercise of such option, without the prior written consent of the Company
of such underwriters, as the case may be.
SECTION 7. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
7.1 METHOD OF EXERCISE. Any option granted under the Plan may be
exercised by the optionee by delivering to Cytec on any business day a written
notice specifying the number of shares of Cytec Common Stock the optionee then
desires to purchase and specifying the address to which the certificates for
such shares are to be mailed (the "Notice"), accompanied by payment for such
shares.
7.2 PAYMENT OF PURCHASE PRICE. Payment for the shares of Cytec
Common Stock purchased pursuant to the exercise of an option shall be made by:
(a) cash in an amount, or a check, bank draft or postal or
express money order payable in an amount, equal to the aggregate exercise price
for the number of shares specified in the Notice;
(b) with the consent of the Board , shares of Cytec Common Stock
having a fair market value (as defined for purposes of Section 6.3 hereof) equal
to such aggregate exercise price;
(c) with the consent of the Board, a personal recourse note issued
by the optionee to Cytec, in a principal amount equal to such aggregate exercise
price and with such other terms, including interest rate and maturity, as the
Board may determine in its discretion; provided that the interest rate borne by
such note shall not be less than the lowest applicable federal rate, as defined
in Section 1274(d) of the Code;
(d) with the consent of the Board, such other consideration that
is acceptable to the Board and that has a fair market value, as determined by
the Board, equal to such aggregate exercise price including any broker-directed
cashless exercise/resale procedure adopted by the Board; or
(e) with the consent of the Board, any combination of the
foregoing.
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As promptly as practicable after receipt of the Notice and accompanying
payment, Cytec shall deliver to the optionee certificates for the number of
shares with respect to which such option has been so exercised, issued in the
optionee's name; provided, however, that such delivery shall be deemed effected
for all purposes when Cytec or a stock transfer agent of Cytec shall have
deposited such certificates in the United States mail, addressed to the
optionee, at the address specified in the Notice.
7.3 Special Limits Affecting Section 16 (b) Option Holders. Shares
issuable upon exercise of options granted to a person who in the opinion of the
Board may be deemed to be a director or officer of the Company within the
meaning of Section 16(b) of the Exchange Act and the rules and regulations
thereunder shall not be sold or disposed of until after the expiration of six
months following the date of grant.
SECTION 8. CHANGES IN CYTEC'S CAPITAL STRUCTURE
8.1 RIGHTS OF CYTEC. The existence of outstanding options shall not
affect in any way the right or power of Cytec or its stockholders to make or
authorize, without limitation, any or all adjustments, recapitalizations,
reorganizations or other changes in Cytec's capital structure or its business,
or any merger or consolidation of Cytec, or any issue of Cytec Common Stock, or
any issue of bonds, debentures, preferred or prior preference stock or other
capital stock ahead of or affecting Cytec Common Stock or the rights thereof, or
the dissolution or liquidation of Cytec, or any sale or transfer of all or any
part of Cytec's assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
8.2 RECAPITALIZATION, STOCK SPLITS AND DIVIDENDS. If Cytec
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction of
the number of shares of Cytec Common Stock outstanding, in any such case without
receiving compensation therefor in money, services or property, then (i) the
number, class, and price per share of shares of stock subject to outstanding
options hereunder shall be appropriately adjusted in such a manner as to entitle
an optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he or she would have
received as a result of the event requiring the adjustment had he or she
exercised his or her option in full immediately prior to such event; and (ii)
the number and class of shares with respect to which options may be granted
under the Plan, and the number and class of shares set forth in Sections 3.3 and
4.4, shall be adjusted by substituting for the total number of shares of Cytec
Common Stock then reserved for issuance
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under the Plan that number and class of shares of stock that the owner of an
equal number of outstanding shares of Cytec Common Stock would own as the result
of the event requiring the adjustment.
8.3 MERGER WITHOUT CHANGE OF CONTROL. After a merger of one
or more corporations into Cytec, or after a consolidation of Cytec and one or
more corporations in which (i) Cytec shall be the surviving corporation, and
(ii) the stockholders of Cytec immediately prior to such merger or consolidation
own after such merger or consolidation shares representing at least fifty
percent of the voting power of Cytec, each holder of an outstanding option
shall, at no additional cost, be entitled upon exercise of such option to
receive in lieu of the number of shares as to which such option shall then be so
exercisable, the number and class of shares of stock or other securities to
which such holder would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such merger or
consolidation, such holder had been the holder of record of a number of shares
of Cytec Common Stock equal to the number of shares for which such option was
exercisable.
8.4 SALE OR MERGER WITH CHANGE OF CONTROL. If Cytec is
merged into or consolidated with another corporation under circumstances where
Cytec is not the surviving corporation, or if there is a merger or consolidation
where Cytec is the surviving corporation but the stockholders of Cytec
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing at least fifty percent of the voting power
of Cytec, or if Cytec is liquidated, or sells or otherwise disposes of
substantially all of its assets to another corporation while unexercised options
remain outstanding under the Plan, (i) subject to the provisions of clause (iii)
below, after the effective date of such merger, consolidation, liquidation, sale
or disposition, as the case may be, each holder of an outstanding option shall
be entitled, upon exercise of such option, to receive, in lieu of shares of
Cytec Common Stock, shares of such stock or other securities, cash or property
as the holders of shares of Cytec Common Stock received pursuant to the terms of
the merger, consolidation, liquidation, sale or disposition; (ii) the Board may
accelerate the time for exercise of all unexercised and unexpired options to and
after a date prior to the effective date of such merger, consolidation,
liquidation, sale or disposition, or (iii) all outstanding options may be
cancelled by the Board as of the effective date of any such merger,
consolidation, liquidation, sale or disposition provided that (x) notice of such
cancellation shall be given to each holder of an option and (y) each holder of
an option shall have the right to exercise such option to the extent that the
same is then exercisable or, if the Board shall have accelerated the time for
exercise of all unexercised and unexpired
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options, in full during the 30-day period preceding the effective date of such
merger, consolidation, liquidation, sale or disposition.
8.5 ADJUSTMENTS TO CYTEC COMMON STOCK SUBJECT TO OPTIONS. Except as
hereinbefore expressly provided, the issue by Cytec of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of Cytec convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Cytec Common Stock then subject to outstanding
options.
8.6 MISCELLANEOUS. Adjustments under this Section 8 shall be
determined by the Board and such determinations shall be conclusive. No
fractional shares of Common Stock shall be issued under the Plan on account of
any adjustment specified above.
SECTION 9. GENERAL RESTRICTIONS
9.1 INVESTMENT REPRESENTATIONS. Cytec may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to Cytec to the effect
that such person is acquiring the Cytec Common Stock subject to the option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as Cytec
deems necessary or appropriate in order to comply with federal and applicable
state securities laws.
9.2 COMPLIANCE WITH SECURITIES LAWS. Cytec shall not be
required to sell or issue any shares under any option if the issuance of such
shares shall constitute a violation by the optionee or by Cytec or the Company
of any provisions of any law or regulation of any governmental authority. In
addition, in connection with the Securities Act of 1933, as now in effect or
hereafter amended (the "Securities Act"), upon exercise of any option, Cytec
shall not be required to issue such shares unless Cytec has received evidence
satisfactory to it to the effect that the holder of such option will not
transfer such shares except pursuant to a registration statement in effect under
such Act or unless an opinion of counsel satisfactory to Cytec has been received
by Cytec to the effect that such registration is not required. Any
determination in this connection by Cytec shall be final, binding and
conclusive. In the event the shares issuable on exercise of an option are not
registered under the Securities Act, Cytec may imprint upon any certificate
representing shares so issued the following legend or any other legend which
counsel for Cytec considers necessary or advisable to comply with the Securities
Act and with applicable state securities laws:
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The shares of stock represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933. Such securities may not be sold,
transferred, pledged or hypothecated unless the registration
provisions of said Act have been complied with or unless the
Corporation has received an opinion of its counsel that such
registration is not required, except upon such registration or
upon receipt by the Corporation of an opinion of counsel
satisfactory to the Corporation, that registration is not
required for such sale or transfer.
Cytec may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act; and in the event any
shares are so registered, Cytec may remove any legend on certificates
representing such shares. Cytec shall not be obligated to take any other
affirmative action in order to cause the exercise of an option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority.
9.3 EMPLOYMENT OBLIGATION. The granting of any option shall not
impose upon the Company or any of its affiliates any obligation to employ or
continue to employ any optionee; and the right of the Company or any of its
affiliates to terminate the employment of any officer or other employee shall
not be diminished or affected by reason of the fact that an option has been
granted to him or her.
SECTION 10. WITHHOLDING TAXES
10.1 Rights of Cytec. Cytec may require an employee exercising a
Nonqualified Option, or disposing of shares of Cytec Common stock acquired
pursuant to the exercise of an Incentive Option in a disqualifying disposition
(as defined in Section 421(b) of the Code), to reimburse Cytec for any taxes
required by any government to be withheld or otherwise deducted and paid by
Cytec in respect of the issuance of disposition of such shares. In lieu
thereof, Cytec shall have the right to withhold the amount of such taxes from
any other sums due or to become due from Cytec or any of its subsidiaries to the
employee upon such terms and conditions as Cytec may prescribe. Cytec may, in
its discretion, hold the stock certificate to which such employee is otherwise
entitled upon the exercise of an option as security for the payment of any such
withholding tax liability, until cash sufficient to pay that liability has been
received or accumulated.
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10.2 Notice of Disqualifying Disposition. Each holder of an Incentive
Option shall agree to notify the Company in writing immediately after making a
disqualifying disposition (as defined in Section 421(b) of the Code) of any
Common Stock purchase upon exercise of the Incentive option.
SECTION 11. AMENDMENT OR TERMINATION OF THE PLAN
11.1 Amendment. The Board may terminate the Plan and may amend the
Plan at any time, and from time to time, subject to the limitation that, except
as provided in Section 8 hereof, no amendment shall be effective unless approved
by the stockholders of the Company and of Cytec in accordance with applicable
law and regulations, at an annual or special meeting held within 12 months
before or after the date of adoption of such amendment, in any instance in which
such amendment would: (i) increase the number of shares of Cytec Common Stock
that may be issued under, or as to which Options may be granted pursuant to, the
Plan; or (ii) change in substance the provisions of Section 4 hereof relating to
eligibility to participate in the Plan. In addition, the provisions of Section
4.4 shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act, or the
rules thereunder. Without limiting the generality of the foregoing, the Board
is expressly authorized to amend the Plan, at any time and from time to time, to
conform it to the provisions of Rules 16b-3 under the Exchange Act, as that Rule
may be amended from time to time.
Except as provided in Section 8 hereof, the rights and obligations
under any option granted before amendment of the Plan or any unexercised portion
of such option shall not be adversely affected by amendment of the Plan or such
option without the consent of the holder of such option.
11.2 Termination. The Plan shall terminate as of the tenth
anniversary of its effective date. The Board may terminate the Plan at any
earlier time for any or no reason. No Option may be granted after the Plan has
been terminated. No Option granted while the Plan is in effect shall be altered
or impaired by termination of the Plan, except upon the consent of the holder of
such Option. The power of the Board to construe and interpret the Plan and the
Options granted prior to the termination of the Plan shall continue after such
termination.
SECTION 12. NONEXCLUSIVITY OF THE PLAN
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Neither the adoption of the Plan by the Board of Directors nor
the submission of the Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board of Directors
to adopt such other incentive arrangements as it may deem desirable, including,
with limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
SECTION 13. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective upon its adoption by the Board of
Directors provided that the stockholders of the Company shall have approved the
Plan within twelve months prior to or following the adoption of the Plan by the
Board. No option may be granted under the Plan after the tenth anniversary of
the effective date. The Plan shall terminate (i) when the total amount of the
Stock with respect to which options may be granted shall have been issued upon
the exercise of options or (ii) by action of the Board of Directors pursuant to
Section 11 hereof, whichever shall first occur.
SECTION 14. PROVISION OF GENERAL APPLICATION
14.1 Severability. The invalidity or unenforceability of any provision
of the Plan shall not affect the validity or enforceability of any other
provision of the Plan, each of which shall remain in full force and effect.
14.2 Construction. The headings in the Plan are included for
convenience only and shall not in any way effect the meaning or interpretation
of the Plan. Any term defined in the singular shall include the plural, and vice
versa. The words "herein," "hereof" and "hereunder" refer to the Plan as a whole
and not to any particular part of the Plan. The word "including" as used herein
shall not be construed so as to exclude any other thing not referred to or
described.
14.3 Further Assurances. The Company and any holder of an option shall
from time to time execute and deliver any and all further instruments, documents
and agreements and do such other and further acts and things as may be required
or useful to carry out the intent and purpose of the Plan and such option and to
assure to the Company and such option holder the benefits contemplated by the
Plan; provided, however, that neither the Company nor any option holder shall in
any event be required to take any action inconsistent with the provisions of the
Plan.
14.4 Governing Law. The Plan and each Option shall be governed by the
laws of the State of Delaware.
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Exhibit 10.4
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
AS AMENDED EFFECTIVE AS OF
OCTOBER 9, 1998
SECTION 1. PURPOSE
(a) This 1996 Incentive and Nonqualified Stock Option Plan (the
"Plan") of The American Materials & Technology Corporation, a Delaware
corporation (the "Company"), is designed to provide additional incentive to
executives and other key employees of the Company and its subsidiaries and for
certain other individuals providing services to or acting as directors of the
Company or its subsidiaries. The Company intended that this purpose would be
effected by the granting of incentive stock options ("Incentive Stock Options")
as defined in Section 422 of the Internal Revenue code of 1986, as amended (the
"Code"), and nonqualified stock options ("Nonqualified Options") under the Plan
which would afford such executives, key employees, directors and other eligible
individuals an opportunity to acquire or increase their proprietary interest in
the Company through the acquisition of shares of its Common Stock. The Company
intended that Incentive Stock Options issued under the Plan would qualify as
"incentive stock options" as defined in Section 422 of the Code and the terms of
the Plan shall be interpreted in accordance with this intention; provided,
however, that no option granted hereunder would qualify as an "incentive stock
option" unless the Plan was approved by the stockholders of the Company within
twelve months prior to or following the adoption of the Plan by the Board. The
terms "parent" and "subsidiary" shall have the respective meanings set forth in
Section 424 of the Code.
(b) Pursuant to an Agreement and Plan of Merger dated as of July
8, 1998, as amended (the "Merger Agreement"), among the Company, Cytec
Industries Inc. ("Cytec") and CAM Acquisition Corp., Cam Acquisition Corp.
merged with and into the Company on October 9, 1998 and the Company became a
wholly-owned subsidiary of Cytec. In accordance with the Merger Agreement, this
Plan has been amended and restated to reflect that all outstanding options under
the Plan have been converted into options to purchase common stock, par value
$0.01 share ("Cytec Common Stock") as provided in Section 3.1 and to make other
appropriate changes.
<PAGE>
SECTION 2 ADMINISTRATION
2.1 BOARD OF DIRECTORS. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). 2.2 POWERS OF THE BOARD. The Board shall
not have the power to grant any additional options under the Plan on or after
October 9, 1998. Subject to the terms and conditions of the Plan, the Board
shall have the power:
(a) To construe and interpret the Plan and options granted
thereunder and to establish, amend, and revoke rules and regulations for
administration of the Plan. In this connection, the Board may correct any
defect or supply any omission, or reconcile any inconsistency in the Plan, or in
any option agreement, in the manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective. All decisions and determinations by
the Board in the exercise of this power shall be final and binding upon the
Company and optionees;
(b) To make, in its sole discretion, changes to any outstanding
option granted under the Plan, including: (i) to reduce the exercise price, (ii)
to accelerate the vesting schedule or (iii) to extend the expiration date; and
(c) Generally, to exercise such powers and to perform such acts
as are deemed necessary or expedient to promote the best interests of the
Company with respect to the Plan.
SECTION 3. STOCK
3.1 STOCK TO BE ISSUED. The stock subject to the options granted
under the Plan shall be shares of Cytec's authorized but unissued common stock,
$.01 par value per share (the"Cytec Common Stock"), or shares of Cytec Common
Stock held in treasury. Each outstanding option at October 9, 1998 to purchase
common stock of the Company has been converted into an option to purchase .3098
shares of Cytec Common Stock for each share of AMT Common Stock for which such
option was exercisable at a price per share of Cytec Common Stock equal to the
aggregate exercise price for the shares of AMT Common Stock purchasable pursuant
to such option divided by the aggregate number of shares of Cytec Common Stock
deemed purchasable pursuant to such option, rounded up to the nearest whole
cent. The total number of shares of Cytec Common Stock that may be issued
pursuant to options granted under the Plan shall not exceed an aggregate of
108,430 shares of Cytec Common Stock; provided, however, that the class and
aggregate number of shares which may be subject to options granted under the
Plan shall be subject to adjustment as provided in Section 8 hereof.
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SECTION 4. ELIGIBILITY. Notwithstanding anything else in this Plan to the
contrary, no person shall be eligible to receive a grant of any options under
this Plan on or after October 9, 1998. The remainder of this Section 4 remains
only for purposes of interpreting options outstanding at October 9, 1998.
4.1 PERSONS ELIGIBLE. Incentive Stock Options under the Plan may be
granted only to officers and other employees of the Company or its subsidiaries.
Nonqualified Options may be granted to officers or other employees of the
Company or its subsidiaries, to members of the Board of Directors of the Company
or its subsidiaries, and to consultants or other persons who render services to
the Company or its subsidiaries (regardless of whether they are also employees).
4.2 GREATER-THAN-TEN-PERCENT STOCKHOLDERS. Except as may
otherwise be permitted by the Code or other applicable law or regulation, no
Incentive Stock Option shall be granted to an individual who, at the time the
option is granted, owns (including ownership attributed pursuant to Section 424
of the Code) more than ten percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary (a "greater-than-
ten-percent stockholder"), unless such Incentive Stock Option provides that (i)
the purchase price per share shall not be less than one hundred ten percent of
the fair market value of the common stock for which such option is exercisable
at the time such option is granted, and (ii) that such option shall not be
exercisable to any extent after the expiration of five years from the date it is
granted.
4.3 MAXIMUM AGGREGATE FAIR MARKET VALUE. The aggregate fair
market value (determined at the time the option is granted) of the common stock
with respect to which Incentive Stock Options are exercisable for the first time
by any optionee during any calendar year (under the Plan and any other plans of
the Company or any parent or subsidiary for the issuance of incentive stock
options) shall not exceed $100,000 (or such greater amount as may from time to
time be permitted with respect to incentive stock options by the Code or any
other applicable law or regulation).
4.4 OPTION GRANTS TO DIRECTORS. As compensation for services to
the Company, each director of the Company who is not an employee of the Company
or any subsidiary of the Company (a "Non-Employee Director") shall be
automatically granted a Nonqualified Option to purchase 5,000 shares of Common
Stock of the Company upon his or her election to the Board initially on or
subsequent to the date on which this
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Plan is approved by stockholders as set forth in Section 12. Each Non-Employee
Director shall be automatically granted an additional option to purchase 5,000
shares of Common Stock of the Company on each of the first and second
anniversaries of his or her initial election as a director of the Company,
provided that the optionee is then a director of the Company. Any director of
the Company who is elected to the Board but who is not a Non-Employee Director
at the time of his or her initial election and later becomes a Non-Employee
Director shall be automatically granted an option to purchase 5,000 shares of
Common Stock of the Company on the date on which such director becomes a Non-
Employee Director, and on each of the first and second anniversaries thereof
provided that the optionee is then a director of the Company. Each Nonqualified
Option granted to a Non-Employee Director pursuant to this Section 4.4 shall
expire on the fifth anniversary of the date of grant, provided the optionee is a
director of the Company on such first anniversary. The exercise price per share
of Common Stock of the Company of each Nonqualified Option granted pursuant to
this Section 4.4 shall be equal to the fair market value of the Common Stock of
the Company on the date the Nonqualified Option is granted, such fair market
value to be determined in accordance with the provisions of Section 6.3.
The rights of a Non-Employee Director in an Option granted under this
Section 4.4 shall terminate 60 days after such Director ceases to be a Director
of the Company or on the specified expiration date, if earlier; provided,
however, that if the Non-Employee ceases to be a Director for cause, as defined
in Section 5.1, the rights shall terminate immediately on the date on which he
ceases to be a Director.
No Nonqualified Option granted under this Section 4.4 shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and such options shall be exercisable during the optionee's
lifetime only by the optionee. Any Nonqualified Option granted to a Non-
Employee Director and outstanding on the date of his or her death may be
exercised by the legal representative or legatee of the optionee for a period of
one year from the date of death or until the expiration of the stated term of
the option, if earlier.
Nonqualified Options granted under this Section 4.4 may be exercised
only by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price may be made by one or more of the
methods specified in Section 7.2. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of an option and not as
to unexercised options.
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The provisions of this Section 4.4 shall apply only to options granted
or to be granted to Non-Employee Directors, and shall not be deemed to modify,
limit or otherwise apply to any other provision of this Plan or to any option
issued under this Plan to a participant who is not a Non-Employee Director of
the Company. To the extent inconsistent with the provisions of any other
Section of this Plan, the provisions of this Section 4.4 shall govern the rights
and obligations of the Company and Non-Employee Directors respecting options
granted or to be granted to Non-Employee Directors. The provisions of this
Section 4.4 which affect the price, date of exercisability, option period or
amount of shares under an option shall not be amended more than once in any six-
month period, other than to comport with Changes in the Code.
SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE
5.1 TERMINATION OF EMPLOYMENT. Except as may be otherwise
expressly provided in (x) the terms and conditions of the option granted to an
optionee or (y) Schedule 7.8 to the Merger Agreement, options shall terminate on
the earlier of:
(a) the date of expiration thereof,
(b) the date of termination of the optionee's employment with
or services to the Company by it for cause (as determined by the Company);
(c) the date of termination of the optionee's employment with
or services to the Company voluntarily by the optionee; or
(d) 60 days after the date of termination of the optionee's
employment with or services to the Company by it without cause; provided that
Nonqualified Options granted to persons who are not employees of the Company
need not, unless the Board determines otherwise, be subject to the provisions
set forth in clauses (b), (c) and (d) above.
An employment relationship between the Company and the optionee shall be
deemed to exist during any period in which the optionee is employed by the
Company or any affiliate of the Company. Whether authorized leave of absence,
or absence on military or government service, shall constitute termination of
the employment relationship between the Company and the optionee shall be
determined by the Board at the time thereof.
As used herein, "cause" shall mean (x) any material breach by the
optionee of any agreement to which the optionee and the Company or
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any affiliate of the Company are both parties, (y) any act or omission to act by
the optionee which may have a material and adverse effect on the Company's
business or any of its affiliate's businesses or on the optionee's ability to
perform services for the Company or any affiliate of the Company, including
without limitation, the commission of any crime (other than ordinary traffic
violations), or (z) any material misconduct or material neglect of duties by the
optionee in connection with the business or affairs of the Company or any
affiliate of the Company.
5.2 DEATH OR PERMANENT DISABILITY OF OPTIONEE. In the event
of the death or permanent and total disability of the holder of an option prior
to termination of the optionee's employment with or services to the Company or
any affiliate of the Company and before the date of expiration of such option,
such option shall terminate on the earlier of such date of expiration or one
year following the date of such death or disability. After the death of the
optionee, his/her executors, administrators or any person or persons to whom
his/her option may be transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to such termination to
exercise the option to the extent the optionee was entitled to exercise such
option immediately prior to his/her death. An optionee is permanently and
totally disabled if he/she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than 12
months; permanent and total disability shall be determined in accordance with
Section 22(e) (3) of the Code and the regulations issued thereunder.
SECTION 6. TERMS OF THE OPTION AGREEMENTS
Each option agreement shall be in writing and shall contain such
terms, conditions, restrictions, if any, and provisions as the Board shall from
time to time deem appropriate. Such provisions or conditions may include
without limitation restrictions on transfer, repurchase rights, or such other
provisions as shall be determined by the Board, provided that such additional
provisions shall not be inconsistent with any other term or condition of the
Plan and such additional provisions shall not cause any Incentive Stock Option
granted under the Plan to fail to qualify as an incentive option within the
meaning of Section 422 of the Code.
Option agreements need not be identical, but each option agreement
by appropriate language shall include the substance of all of the following
provisions:
6.1 EXPIRATION OF OPTION. Notwithstanding any other provision of
the Plan or of any option agreement, each option shall expire on the date
specified in the option agreement, which date shall not, in the case of an
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Incentive Stock Option, be later than the tenth anniversary (fifth anniversary
in the case of a greater-than-ten-percent stockholder) of the date on which the
option was granted, or as specified in Section 5 of this Plan.
6.2 EXERCISE. Each option may be exercised, so long as it is valid and
outstanding, from time to time in part or as a whole, subject to any limitations
with respect to the number of shares for which the option may be exercised at a
particular time and to such other conditions as the Board in its discretion may
specify upon granting the option.
6.3 PURCHASE PRICE. The purchase price per share under each option
shall be determined by the Board, at the time the option is granted; provided,
however, that the option price of any Incentive Stock Option shall not, unless
otherwise permitted by the Code or other applicable law or regulation, be less
than the fair market value of the common stock for which the option is
exercisable on the date the option is granted (110% of the fair market value in
the case of a greater-than-ten-percent stockholder). For the purpose of the
Plan the fair market value of such common stock shall be the closing price per
share on the date of grant of the option as reported on NASDAQ or by a
nationally recognized stock exchange, or, if such common stock is not listed on
NASDAQ or such an exchange, the fair market value as determined by the Board.
6.4 TRANSFERABILITY OF OPTIONS. Options shall not be transferable
by the optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his or her lifetime, only by him
or her.
6.5 RIGHTS OR OPTIONEES. No optionee shall be deemed for any
purpose to be the owner of any shares of Cytec Common Stock subject to any
option unless and until the option shall have been exercise pursuant to the
terms thereof, and Cytec shall have issued and delivered the shares to the
optionee.
SECTION 7. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
7.1 METHOD OF EXERCISE. Any option granted under the Plan may be
exercised by the optionee by delivering to Cytec on any business day a written
notice specifying the number of shares of Cytec Common Stock the optionee then
desires to purchase and specifying the address to which the certificates for
such shares are to be mailed (the "Notice"), accompanied by payment for such
shares.
7.2 PAYMENT OF PURCHASE PRICE. Payment for the shares of Cytec
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Common Stock purchased pursuant to the exercise of an option shall be made by:
(a) cash in an amount, or a check, bank draft or postal or
express money order payable in an amount, equal to the aggregate
exercise price for the number of shares specified in the Notice;
(b) with the consent of the Board , shares of Cytec Common
Stock having a fair market value (as defined for purposes of Section 6.3
hereof) equal to such aggregate exercise price;
(c) with the consent of the Board, a personal recourse note
issued by the optionee to Cytec, in a principal amount equal to such
aggregate exercise price and with such other terms, including interest rate
and maturity, as the Board may determine in its discretion; provided that
the interest rate borne by such note shall not be less than the lowest
applicable federal rate, as defined in Section 1274(d) of the Code;
(d) with the consent of the Board, such other consideration
that is acceptable to the Board and that has a fair market value, as
determined by the Board, equal to such aggregate exercise price; or
(e) with the consent of the Board, any combination of the
foregoing.
As promptly as practicable after receipt of the Notice and accompanying
payment, Cytec shall deliver to the optionee certificates for the number of
shares with respect to which such option has been so exercised, issued in the
optionee's name; provided, however, that such delivery shall be deemed effected
for all purposes when Cytec or a stock transfer agent of Cytec shall have
deposited such certificates in the United States mail, addressed to the
optionee, at the address specified in the Notice.
SECTION 8. CHANGES IN CYTEC'S CAPITAL STRUCTURE
8.1 RIGHTS OF CYTEC. The existence of outstanding options shall not
affect in any way the right or power of Cytec or its stockholders to make or
authorize, without limitation, any or all adjustments, recapitalizations,
reorganizations or other changes in Cytec's capital structure or its business,
or any merger or consolidation of Cytec, or any issue of Cytec
8
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Common Stock, or any issue of bonds, debentures, preferred or prior preference
stock or other capital stock ahead of or affecting Cytec Common Stock or the
rights thereof, or the dissolution or liquidation of Cytec, or any sale or
transfer of all or any part of Cytec's assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
8.2 RECAPITALIZATION, STOCK SPLITS AND DIVIDENDS. If Cytec
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction of
the number of shares of Cytec Common Stock outstanding, in any such case without
receiving compensation therefor in money, services or property, then (i) the
number, class, and price per share of shares of stock subject to outstanding
options hereunder shall be appropriately adjusted in such a manner as to entitle
an optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he or she would have
received as a result of the event requiring the adjustment had he or she
exercised his or her option in full immediately prior to such event; and (ii)
the number and class of shares with respect to which options may be granted
under the Plan shall be adjusted by substituting for the total number of shares
of Cytec Common Stock then reserved for issuance under the Plan that number and
class of shares of stock that the owner of an equal number of outstanding shares
of Cytec Common Stock would own as the result of the event requiring the
adjustment.
8.3 MERGER WITHOUT CHANGE OF CONTROL. After a merger of one
or more corporations into Cytec, or after a consolidation of Cytec and one or
more corporations in which (i) Cytec shall be the surviving corporation, and
(ii) the stockholders of Cytec immediately prior to such merger or consolidation
own after such merger or consolidation shares representing at least fifty
percent of the voting power of Cytec, each holder of an outstanding option
shall, at no additional cost, be entitled upon exercise of such option to
receive in lieu of the number of shares as to which such option shall then be so
exercisable, the number and class of shares of stock or other securities to
which such holder would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such merger or
consolidation, such holder had been the holder of record of a number of shares
of Cytec Common Stock equal to the number of shares for which such option was
exercisable.
8.4 SALE OR MERGER WITH CHANGE OF CONTROL. If Cytec is merged into or
consolidated with another corporation under circumstances where Cytec is not the
surviving corporation, or if there is a merger or consolidation where Cytec is
the surviving corporation but the
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<PAGE>
stockholders of Cytec immediately prior to such merger or consolidation do not
own after such merger or consolidation shares representing at least fifty
percent of the voting power of Cytec, or if Cytec is liquidated, or sells or
otherwise disposes of substantially all of its assets to another corporation
while unexercised options remain outstanding under the Plan, (i) subject to the
provisions of clause (iii) below, after the effective date of such merger,
consolidation, liquidation, sale or disposition, as the case may be, each holder
of an outstanding option shall be entitled, upon exercise of such option, to
receive, in lieu of shares of Cytec Common Stock, shares of such stock or other
securities, cash or property as the holders of shares of Cytec Common Stock
received pursuant to the terms of the merger, consolidation, liquidation, sale
or disposition; (ii) the Board may accelerate the time for exercise of all
unexercised and unexpired options to and after a date prior to the effective
date of such merger, consolidation, liquidation sale or disposition or (iii) all
outstanding options may be cancelled by the Board as of the effective date of
any such merger, consolidation, liquidation, sale or disposition provided that
(x) notice of such cancellation shall be given to each holder of an option and
(y) each holder of an option shall have the right to exercise such option to the
extent that the same is then exercisable or, if the Board shall have accelerated
the time for exercise of all unexercised and unexpired options, in full during
the 30-day period preceding the effective date of such merger, consolidation,
liquidation, sale or disposition.
8.5 ADJUSTMENTS TO CYTEC COMMON STOCK SUBJECT TO OPTIONS. Except as
hereinbefore expressly provided, the issue by Cytec of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of Cytec convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Cytec Common Stock then subject to outstanding
options.
8.6 MISCELLANEOUS. Adjustments under this Section 8 shall be
determined by the Board and such determinations shall be conclusive. No
fractional shares of Common Stock shall be issued under the Plan on account of
any adjustment specified above.
SECTION 9. GENERAL RESTRICTIONS
9.1 INVESTMENT REPRESENTATIONS. Cytec may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to Cytec to the effect
that such person is acquiring the Cytec Common Stock subject to the option for
his or her own account for investment and not with any
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present intention of selling or otherwise distributing the same, and to such
other effects as Cytec deems necessary or appropriate in order to comply with
federal and applicable state securities laws.
9.2 COMPLIANCE WITH SECURITIES LAWS. Cytec shall not be required to
sell or issue any shares under any option if the issuance of such shares shall
constitute a violation by the optionee or by Cytec or the Company of any
provisions of any law or regulation of any governmental authority. In addition,
in connection with the Securities Act of 1933, as now in effect or hereafter
amended (the "Securities Act"), upon exercise of any option, Cytec shall not be
required to issue such shares unless Cytec has received evidence satisfactory to
it to the effect that the holder of such option will not transfer such shares
except pursuant to a registration statement in effect under such Act or unless
an opinion of counsel satisfactory to Cytec has been received by Cytec to the
effect that such registration is not required. Any determination in this
connection by Cytec shall be final, binding and conclusive. In the event the
shares issuable on exercise of an option are not registered under the Securities
Act, Cytec may imprint upon any certificate representing shares so issued the
following legend or any other legend which counsel for Cytec considers necessary
or advisable to comply with the Securities Act and with applicable state
securities laws:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the
securities laws of any State and may not be sold or transferred
except upon such registration or upon receipt by the Corporation
of an opinion of counsel satisfactory to the Corporation, in form
and substance satisfactory to the Corporation, that registration
is not required for such sale or transfer.
Cytec may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act; and in the event any
shares are so registered, Cytec may remove any legend on certificates
representing such shares. Cytec shall not be obligated to take any other
affirmative action in order to cause the exercise of an option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority.
9.3 EMPLOYMENT OBLIGATION. The granting of any option shall not
impose upon the Company or any of its affiliates any obligation to employ or
continue to employ any optionee; and the right of the Company or
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any of its affiliates to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that an
option has been granted to him or her.
SECTION 10. WITHHOLDING TAXES
10.1 Rights of Cytec. Cytec may require an employee exercising a
Nonqualified Option, or disposing of shares of Cytec Common stock acquired
pursuant to the exercise of an Incentive Option in a disqualifying disposition
(as defined in Section 421(b) of the Code), to reimburse Cytec for any taxes
required by any government to be withheld or otherwise deducted and paid by
Cytec in respect of the issuance of disposition of such shares. In lieu
thereof, Cytec shall have the right to withhold the amount of such taxes from
any other sums due or to become due from Cytec or any of its subsidiaries to the
employee upon such terms and conditions as Cytec may prescribe. Cytec may, in
its discretion, hold the stock certificate to which such employee is otherwise
entitled upon the exercise of an option as security for the payment of any such
withholding tax liability, until cash sufficient to pay that liability has been
received or accumulated.
10.2 Notice of Disqualifying Disposition. Each holder of an Incentive
Option shall agree to notify the Company in writing immediately after making a
disqualifying disposition (as defined in Section 421(b) of the Code) of any
Common Stock purchase upon exercise of the Incentive option.
SECTION 11. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may modify, revise or terminate this Plan
at any time and from time to time, except that the class of persons eligible to
receive options and the aggregate number of shares issuable pursuant to this
Plan shall not be changed or increased, other than by operation of Section 8
hereof without the consent of Cytec and the stockholders of Cytec.
SECTION 12. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor
the submission of the Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board of Directors
to adopt such other incentive arrangements as it may deem desirable, including,
with limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
SECTION 13. EFFECTIVE DATE AND DURATION OF PLAN
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The Plan shall become effective upon its adoption by the Board of
Directors provided that the stockholders of the Company shall have approved the
Plan within twelve months prior to or following the adoption of the Plan by the
Board. No option may be granted under the Plan after the tenth anniversary of
the effective date. The Plan shall terminate (i) when the total amount of the
Stock with respect to which options may be granted shall have been issued upon
the exercise of options or (ii) by action of the Board of Directors pursuant to
Section 11 hereof, whichever shall first occur.
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EXHIBIT 10.5
CYTEC INDUSTRIES INC.
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Key Manager Income Continuity Plan
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As Revised through October 15, 1998
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1. Purpose. The purpose of this Key Manager Income Continuity Plan (this
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Plan) is to retain the services of executives in the senior management group of
Cytec Industries Inc. and its subsidiaries and to reinforce and encourage the
continuing attention, dedication and loyalty of these executives without the
distraction of concern over the possibility of involuntary or constructive
termination of employment resulting from unforeseen developments, by providing
income continuity for a limited period.
2. Definitions. Unless the context otherwise requires, the following
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terms shall have the meanings respectively indicated:
(a) "Board of Directors" shall mean the board of directors of Cytec
Industries Inc.
(b) "Cause" shall mean (A) the willful and continued failure by a Plan
Member substantially to perform his duties with the Company (other than any such
failure resulting from his incapacity due to physical or mental illness), after
a demand for substantial performance is delivered to him by the Company which
specifically identifies the manner in which the Company believes that he has not
substantially performed his duties, or (B) the willful engaging by him in
conduct demonstrably injurious to the Company. For purposes of this definition,
no act, or failure to act, on the part of a Plan Member shall be considered
"willful" unless done, or omitted to be done, by him without reasonable belief
that his action or omission was in the best interests of the Company and was
lawful.
(c) A "Change in Control" shall be deemed to have occurred if: (i) any
"person", as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more (except as specifically
provided below) of the combined voting power of the Company's then outstanding
securities; or (ii) there occurs any transaction or action which results in the
individuals who at the beginning of a period
<PAGE>
commencing 24 hours prior to the commencement of the transaction were members of
the Board of Directors, together with individuals
subsequently elected to the Board upon the recommendation of a majority of the
continuing directors, ceasing to constitute at least a majority thereof; or
(iii) the stockholders or the Board of Directors of the Company approve a
definitive agreement to merge or consolidate the Company with or into another
corporation (including any such transaction in which the Company is the
surviving corporation), or to sell or otherwise dispose of all or substantially
all of its assets, or to adopt a plan of liquidation of the Company.
Notwithstanding clause (i) above, beneficial ownership by a financial
institution of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities shall not
constitute a Change in Control if, at the first Board of Directors meeting
occurring five days or more after the Company receives written notice of such
event, and prior to the occurrence of an event described in clause (ii) above,
the Board of Directors adopts a resolution to the effect that such ownership
does not constitute a Change in Control; provided that (x) such a resolution
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shall not remain in effect for any further five percent (5%) increase in such
financial institution's beneficial ownership, unless the Board of Directors so
determines in accordance with a further resolution adopted by the Board of
Directors in accordance with the procedures set forth in this sentence, (y) such
resolution may be revoked by the Board of Directors at any time, and (z) the
Board of Directors may place any additional or more stringent conditions on its
determination that such event does not constitute a Change in Control.
(d) "Company" shall mean Cytec Industries Inc. and, except for the purposes
of paragraph (c) of this Section, shall include any of its subsidiaries which
employs members of this Plan.
(e) "Compensation Committee" shall mean the Compensation and Management
Development Committee as constituted from time to time of the Board of
Directors, or such other body as shall have similar authority and
responsibility.
(f) "Date of Termination" shall mean (A) if the employment of a Plan Member
is terminated by his death, the date of his death, (B) if such employment is
terminated by his Retirement, the date of such Retirement, (C) if such
employment is terminated for Disability, upon the expiration of his continuous
service credits as determined by the Company, (D) if his employment is
terminated by him for Good Reason, the date specified in the Notice of
Termination, and (E) if his employment is terminated for any other reason, the
date on which Notice of Termination is given; provided that if within 30 days
after any Notice of Termination is given the party receiving such notice
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a
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<PAGE>
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
(g) "Disability" shall mean inability of a Plan Member due to sickness or
injury to perform the duties pertaining to his occupation with the Company, as
determined in accordance with the Company's Long-Term Disability Plan and
personnel policies.
(h) "Executive Committee" shall mean the Executive Committee of Cytec
Industries Inc. as elected from time to time by the Board of Directors, or such
other body as shall have similar authority and responsibility.
(i) "Good Reason" shall mean:
(A) a change in assignment resulting in the assignment to a Plan Member of
substantially reduced responsibilities compared with those assigned to him
prior to such change, or any change in his status, authority or position
which represents a demotion (actual or de facto) from his status, authority
-- -----
or position immediately prior to such change, except in connection with the
termination of his employment because of death or Retirement, by the
Company for Disability or Cause, or by him other than for a Good Reason
enumerated in any of the following subparagraphs of this Paragraph (i);
(B) the assignment to a Plan Member of duties inconsistent with his
responsibilities prior to such assignment, unless such new duties are
consistent with a position of equal or greater status, authority, and
position;
(C) a reduction in the base salary of a Plan Member as the same may be
increased from time to time;
(D) a failure to continue the I.C. Plan (or a plan providing substantially
similar benefits) as the same may be modified from time to time but in a
form not less favorable than as of the date of adoption of this Plan, or a
failure to continue a Plan Member as a participant in the I.C. Plan on a
basis consistent with the basis on which the I.C. Plan is administered as
of such date;
(E) a failure to pay a Plan Member any portion of his current or deferred
compensation within seven (7) days of the date such compensation is due;
(F) the relocation of the principal executive offices of the Company to a
location more than 50 miles from the location of the present executive
offices or outside of
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<PAGE>
New Jersey, or requiring a Plan Member to be based anywhere other than the
principal executive offices (or, if a Plan Member is not based at such
executive offices, requiring such Plan Member to be based at another
location not within 50 miles of such location) except for required travel
on business to an extent substantially consistent with his duties and
responsibilities, or in the event of consent to any such relocation of the
base location of a Plan Member the failure to pay (or provide reimbursement
for) all expenses of such Plan Member incurred relating to a change of
principal residence in accordance with the applicable personnel policies of
the Company in effect as of the date of adoption of this Plan;
(G) the failure to continue in effect any benefit or compensation plan
(including but not limited to the Retirement Plan, the Long-Term Disability
Plan, the I.C. Plan, stock option and performance stock/cash features of
the 1993 Stock Award and Incentive Plan (or of any subsequent and/or
substitute plan)), the Employees Savings and Profit Sharing Plan (including
the Supplemental Savings and Profit Sharing Plan), pension plan (including
but not limited to, the Supplemental, Executive Supplemental, and Excess
Retirement Plans), life insurance plan, health and accident plan,
disability or vacation plan in which a Plan Member is participating, or the
taking of any action which would adversely affect participation (including
the Plan Member's eligibility to participate, the amount of his benefits,
and the level of his participation relative to other participants) in or
materially reduce benefits under any of such plans, or the failure to fund
any "Rabbi Trust" created for the payment of any of the foregoing benefits,
when, and to the extent, required by the terms of any such trust, unless
such action is required pursuant to law or unless substantially similar
benefits are continued in the aggregate under other plans, programs or
arrangements;
(H) the failure to obtain the assumption of or an agreement to carry out
the terms of this Plan by any successor as contemplated in Section 10; or
(I) any purported termination of a Plan Member's employment (other than in
connection with the sale or other disposition of a Plan Member's business
unit where the Plan Member becomes an employee of, or consultant to, the
acquiror, as provided in Section 4) which is not effected pursuant to a
Notice of Termination as herein defined.
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<PAGE>
(j) "I.C. Plan" means the existing system of annual cash bonuses
payable to Company employees (including Plan Members), pursuant to which annual
target bonuses are established based upon job levels and payments of bonuses as
a percentage of such targets are made based upon Company, business group and
individual performance.
(k) "Notice of Termination" shall mean a notice which indicates the
specific basis for termination of employment relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide such basis.
(l) "Plan Member" shall mean a person who is employed by the Company
on a full-time basis and for a regular fixed compensation (other than on a
retainer or compensation for temporary employment) and who is included in the
membership of this Plan as provided in Section 3.
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<PAGE>
(m) "Retirement" shall mean termination of employment in accordance
with the provisions of the Retirement Plan; provided, however, that termination
of employment by a Plan Member before his Normal Retirement Date (as defined in
such Plan) for Good Reason shall not be deemed to be Retirement for purposes of
this Plan even though such Plan Member may be eligible for and elect to receive
retirement benefits thereunder.
(n) "Retirement Plan" means any qualified defined benefit pension plan
of the Company or its subsidiaries under which the Plan Member has accrued a
retirement benefit (whether or not vested).
(o) "Service", as used in Section 5 of this Plan, shall mean service
as a full time employee of the Company or one of its subsidiaries and, in the
case of any person who became such an employee on January 1, 1994, shall include
any period of service ending December 31, 1993 as a full time employee of
American Cyanamid Company or one of its subsidiaries.
(p) "Special Change in Control" shall have the same meaning as "Change
in Control" except that the reference to "20%" in clause (i) of the definition
of "Change in Control" shall be replaced with "50%".
The masculine pronoun wherever used herein shall include the feminine
except as the context specifically indicates.
3. Membership. The Executive Committee may designate any employee who is
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not a member of the Executive Income Continuity Plan and who is grade 15 or
above as a Plan Member. Any such designation may be revoked at any time prior
to a Change in Control in the absolute discretion of the Executive Committee,
but may not be revoked thereafter for any reason. Subject to the foregoing,
after an employee becomes a Plan Member, his membership shall continue until his
death or Retirement, termination of his employment by the Company for Cause or
Disability, termination of his employment by such Plan Member other than for
Good Reason, or until such time, if any, as he becomes a member of the Executive
Income Continuity Plan.
4. Termination of Employment. Each Plan Member shall be entitled to
-------------------------
receive the income continuation payments provided for in Section 5 upon
termination of his employment, unless such termination is (a) because of his
death, Disability or Retirement, (b) by the Company for Cause, or (c) by such
Plan Member other than for Good Reason; provided that a Plan Member shall not be
entitled to any income continuation payments if the termination of his
employment occurs in connection with the sale or other disposition by the
Company of the business unit within which he is employed and he becomes, in
connection with such sale or other disposition, or within six months thereof,
either (i) an
6
<PAGE>
employee of the acquiror or (ii) a consultant to the acquiror earning consulting
fees substantially similar to (or higher than) his base salary and incentive
compensation from the Company.
5. Income Continuation. (a) Subject to the provisions of Section 6, upon
-------------------
termination of the employment pursuant to Section 4 of a Plan Member, the
Company shall pay to the Plan Member the sum of his annual base salary at the
rate in effect at the time Notice of Termination is given plus his Annual Bonus
(excluding Performance Stock/Cash Awards) under the I.C. Plan based on such
rate, in equal monthly installments over a period of 12 months following the
Date of Termination, on the first day of each month; provided that in the case
--------
of Notice of Termination given after a Change in Control, the payments shall
consist of twice his annual base salary plus twice his Annual Bonus, payable
over a 24 month period; and provided further that in the case of Notice of
----------------
Termination given after a Special Change in Control, the payments shall consist
of twice his annual base salary plus twice his Annual Bonus, payable in a single
lump sum payment at the time of the Notice of Termination. As used in this
Section 5, "Annual Bonus" means the greater of (i) the annual target bonus under
the I.C. Plan attributable to the Plan Member or (ii) said annual target bonus
times a fraction equivalent to the average percentage of said annual target
bonus paid to said Plan Member for each of the two preceding fiscal years of the
Company (or for such lesser period of time as such Plan Member participated in
the I.C. Plan).
(b) Except for the lump sum payments, which shall be paid immediately as
provided above, all payments under paragraph (a) shall be made on the first day
of each month commencing with the first day of the first month after the Date of
Termination. Notwithstanding the foregoing, (i) no payment shall be made with
respect to any period beyond the date of a Plan Member's 65th birthday, (ii) no
payment shall be made with respect to any period (A) beyond the date of a Plan
Member's 60th birthday, or (B) (if Notice of Termination is given by a Plan
Member prior to a Change in Control) beyond such earlier date as such Plan
Member retires under the Executive Supplemental Employees' Retirement Plan, if,
in either case, such Plan Member is a full member of such plan and is entitled
to retire on such date without having his benefits thereunder reduced by an
early retirement discount, and (iii) there shall be deducted from any payments
required hereunder (x) any payments made with respect to any required notice
period under any employment agreement between a Plan Member and the Company or
one of its subsidiaries and (y) any payments received by the Plan Member under
the Company's Long Term Disability Plan or under any short term disability plan
or program of the Company during the period with respect to which income
continuation is computed hereunder.
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<PAGE>
6. Competitive Employment. The Company, at its option, may discontinue
----------------------
any payments being made to any Plan Member pursuant to Section 5 if such Plan
Member engages in the operation or management of any business in the United
States of America, whether as owner, stockholder, partner, officer, consultant,
employee or otherwise, which at such time is in competition with any business of
the Company in any field with which such Plan Member was involved during the
last two years of his employment by the Company. Ownership by such Plan Member
of five percent or less of the shares of stock of any company listed on a
national securities exchange or having at least 100 stockholders shall not make
such Plan Member a "stockholder" within the meaning of that term as used in this
Section.
7. Maintenance of Other Benefit Plans. The Company shall maintain in
----------------------------------
full force and effect, for the continued benefit of each Plan Member entitled to
receive payments pursuant to Section 5, for one year following his Date of
Termination, all employee benefit plans and programs or arrangements (including
Comprehensive Medical and Dental Insurance, Group Life Insurance, and Financial
Planning and Tax Preparation and Counseling Services, but not including
disability) in which he was entitled to participate at the time the Notice of
Termination was given, provided that if his continued participation is not
permitted under the general terms and provisions of such plans and programs, the
Company shall provide equivalent benefits.
8. Outplacement. Subject to Section 6, upon termination of a Plan Member
------------
pursuant to Section 4, the Company shall, in addition to the payments provided
for in Section 5, provide, during the twelve months following the Date of
Termination, the services of a reputable outplacement organization, including
telephone and office expenses incurred in seeking new employment.
9. No Mitigation. No Plan Member shall be required to mitigate the
-------------
amount of any payment provided for under this Plan by seeking other employment
or otherwise, nor shall the amount of any payment so provided for be reduced by
any compensation earned by any Plan Member as the result of employment by
another employer, by retirement benefits or by offset against any amount claimed
to be owed by him to the Company.
10. Successors. The Company will require any successor (whether direct or
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indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company, by a written
agreement, to expressly assume and agree to carry out the provisions of this
Plan in the same manner and to the same extent that the Company would be
required to carry them out if no such succession had occurred.
11. Notice. Any notice expressly provided for under this Plan shall be in
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writing, shall be given either manually or by
8
<PAGE>
mail, telegram, telex, telefax or cable, and shall be deemed sufficiently given,
if and when received by the Company at its offices at 5 Garret Mountain Plaza,
West Paterson, New Jersey 07424 Attention: Secretary, or by any Plan Member at
---------------------
his address on the records of the Company, or if an when mailed by registered
mail, postage prepaid, return receipt requested, addressed to the Company or the
Plan Member to be notified at such address. Either the Company or any Plan
Member may, by notice to the other, change its address for receiving notices.
9
<PAGE>
12. Funding. All payments provided for under this Plan for Plan Members
-------
(including those who have retired) shall not be funded or secured, and no trust
shall be created hereunder. Payments under the Plan shall become fully vested
and nonforfeitable upon the termination of a Plan Member's employment within two
years after a Change in Control, except for a termination where the Plan Member
would not be entitled to income continuation payments as provided in Section 4.
13. Amendment and Termination. The Board of Directors may at any time or
-------------------------
from time to time amend or terminate this Plan, including but not limited to the
reduction or termination after the termination of a Plan Member's employment of
any non-vested benefit hereunder; provided, however, that no such amendment or
termination may adversely affect any vested benefits hereunder; and, provided
further, that after a Change in Control, this Plan may not be amended without
the consent of all persons who were Plan Members as of the date of such Change
in Control (including those who have retired).
14. Governing Law. This Plan, and the rights and obligations of the
-------------
Company and the Plan Members hereunder, shall be construed and governed in
accordance with the law of the State of New Jersey.
15. Partial Invalidity. If any provision of this Plan is determined to be
------------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
the remaining provisions of this Plan, which shall remain in effect in
accordance with its terms.
10
<PAGE>
Exhibit 12
Cytec Industries Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Three Months Nine Months
------------ -----------
Ended Ended
----- -----
September 30 September 30,
------------ -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings before income taxes and equity in
earnings of associated companies 40.7 44.7 133.8 126.1
Add:
Distributed income of associated companies 0.9 2.0 6.1 8.3
Fixed Charges 8.9 1.8 22.7 4.8
Less:
Capitalized interest (0.6) - (0.9) -
---- ---- ----- -----
Earnings as adjusted 49.9 48.5 161.7 139.2
Fixed Charges:
Interest on indebtedness including
amortized premiums, discounts and
deferred financing costs 7.5 0.8 18.5 1.8
Portion of rents representative of the
interest factor 1.4 1.0 4.2 3.0
---- ---- ----- -----
Fixed charges 8.9 1.8 22.7 4.8
---- ---- ----- -----
Ratio of earnings to fixed charges 5.6 26.9 7.1 29.0
---- ---- ----- -----
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Form 10Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 30,100
<SECURITIES> 0
<RECEIVABLES> 264,600
<ALLOWANCES> 9,400
<INVENTORY> 127,200
<CURRENT-ASSETS> 523,500
<PP&E> 1,352,000
<DEPRECIATION> (691,900)
<TOTAL-ASSETS> 1,760,000
<CURRENT-LIABILITIES> 390,800
<BONDS> 319,500
0
100
<COMMON> 500
<OTHER-SE> 409,200
<TOTAL-LIABILITY-AND-EQUITY> 1,760,000
<SALES> 1,092,100
<TOTAL-REVENUES> 1,092,100
<CGS> 762,200
<TOTAL-COSTS> 951,400
<OTHER-EXPENSES> (9,300)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,200<F1>
<INCOME-PRETAX> 147,100<F2>
<INCOME-TAX> 54,400
<INCOME-CONTINUING> 92,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,700
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 1.98
<FN>
<F1>This number represents interest expense, net
<F2>This number includes equity in net income of associated companies of $13,300
for the nine months end September 30, 1998.
</FN>
</TABLE>
<PAGE>
Exhibit 99
Pursuant to Rule 12b-23 under the Securities and Exchange Act, the following
exhibit containing text from the Company's Annual Report on Form 10-K is filed
as to matters incorporated by reference in Part II, Item 1 ("Legal
Proceedings").
Environmental Matters
The Company is subject to various federal, state and foreign laws and
regulations which impose stringent requirements for the control and abatement of
air and water pollutants and contaminants and the manufacture, transportation,
storage, handling and disposal of hazardous substances, hazardous wastes,
pollutants and contaminants.
In particular, under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") and various other federal and state laws, a current or
previous owner or operator of a facility may be liable for the removal or
remediation of hazardous materials at the facility. Such laws typically impose
liability without regard to whether the owner or operator knew of, or was
responsible for, the presence of such hazardous materials. In addition,
pursuant to the Resource Conservation and Recovery Act ("RCRA") and state laws
governing the generation, transportation, treatment, storage or disposal of
solid and hazardous wastes, owners and operators of facilities may be liable for
removal or remediation, or other corrective action at areas where hazardous
materials have been released at a facility. The costs of removal, remediation
or corrective action may be substantial, and the presence of hazardous materials
in the environment at any of the Company's facilities, or the failure to abate
such materials promptly or properly, may adversely affect the Company's
abilities to operate such facilities. CERCLA and analogous state laws also
impose liability for investigative, removal and remedial costs on persons who
dispose of or arrange for the disposal of hazardous substances at facilities
owned or operated by third parties. Liability for investigative, removal and
remedial costs under such laws is retroactive, strict, and joint and several.
The Clean Air Act and similar state laws govern the emission of pollutants into
the atmosphere. The Federal Water Pollution Control Act and similar state laws
govern the discharge of pollutants into the waters of the United States. RCRA
and similar state laws govern the generation, transportation, treatment,
storage, and disposal of solid and hazardous wastes. Finally, the Toxic
Substances Control Act regulates the manufacture, processing, and distribution
of chemical substances and mixtures, as well as the disposition of certain
hazardous substances. The costs of compliance with such laws and regulations
promulgated thereunder may be substantial, and regulatory standards under such
statutes tend to evolve towards more stringent requirements, which might, from
time to time, make it uneconomic or impossible to continue operating a facility.
Non-compliance with such requirements at any of the Company's facilities could
result in substantial civil penalties or the inability of the Company to operate
all or part of the facility.
In addition, certain state and federal laws govern the abatement, removal, and
disposal of asbestos-containing materials and the maintenance of underground
storage tanks equipment which contains or is contaminated by polychlorinated
biphenyls.
