<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, 1999
------------------
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: 42,224,395 shares of Common
----------
Stock, par value $.01 per share, were outstanding at September 30, 1999.
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Part I - Financial Information
<S> <C>
Item 1. Consolidated Financial Statements 3
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 23
Part II - Other Information 25
Item 1. Legal Proceedings 25
Item 6. Exhibits and Reports on Form 8-K 28
Exhibit Index 30
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Consolidated Financial Statements
---------------------------------
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
------------ ------------
1999 1998 1999 1998
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 344.1 $ 358.1 $ 1,058.4 $ 1,092.1
Manufacturing cost of sales 236.4 253.1 733.3 762.2
Selling and technical services 35.7 37.6 110.1 114.8
Research and process development 10.7 9.4 30.5 31.7
Administrative and general 14.4 11.3 39.0 36.0
Amortization of acquisition intangibles 2.7 2.4 8.0 6.7
----------- ---------- ----------- -----------
Earnings from operations 44.2 44.3 137.5 140.7
Other income, net 3.9 2.9 6.8 9.3
Equity in earnings (losses) of associated companies (0.8) 2.1 3.2 13.3
Interest expense, net 6.5 6.5 20.1 16.2
----------- ---------- ----------- -----------
Earnings before income taxes 40.8 42.8 127.4 147.1
Income tax provision 5.6 15.8 36.0 54.4
----------- ---------- ----------- -----------
Net earnings $ 35.2 $ 27.0 $ 91.4 $ 92.7
=========== ========== =========== ===========
Earnings per common share
Basic $ 0.82 $ 0.61 $ 2.12 $ 2.06
Diluted $ 0.79 $ 0.59 $ 2.05 $ 1.98
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<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,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 14.1 $ 1.7
Accounts receivable, less allowance for doubtful accounts
of $9.6 and $9.2 in 1999 and 1998, respectively 244.8 241.3
Inventories 130.9 140.5
Deferred income taxes 65.3 72.9
Other current assets 25.0 21.2
------------- ------------
Total current assets 480.1 477.6
Equity in net assets of and advances to associated companies 142.9 147.4
Plants, equipment and facilities, at cost 1,374.1 1,363.0
Less: accumulated depreciation (714.6) (695.5)
------------- ------------
Net plant investment 659.5 667.5
Acquisition intangibles, net of accumulated amortization 361.5 349.5
Deferred income taxes 57.6 62.6
Other assets 26.7 26.0
------------- ------------
Total assets $ 1,728.3 $ 1,730.6
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ - $ 10.3
Accounts payable 102.3 99.9
Accrued expenses 216.0 243.9
Income taxes payable 42.5 40.3
------------- ------------
Total current liabilities 360.8 394.4
Long-term debt 415.1 419.5
Other noncurrent liabilities 458.7 485.7
Stockholders' equity
Preferred stock, 20,000,000 shares authorized;
issued and outstanding 4,000 shares, Series C Cumulative,
$.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 48,132,640 in 1999 and
48,142,961 in 1998 0.5 0.5
Additional paid-in capital 160.0 162.4
Retained earnings 547.6 456.2
Unearned compensation (2.3) (1.7)
Accumulated translation adjustments (10.6) (5.1)
Treasury stock, at cost, 5,908,245 shares in 1999 and
4,952,881 shares in 1998 (201.6) (181.4)
------------- ------------
Total stockholders' equity 493.7 431.0
------------- ------------
Total liabilities and stockholders' equity $ 1,728.3 $ 1,730.6
============= ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows provided by (used for) operating activities
Net earnings $ 91.4 $ 92.7
Noncash items included in earnings:
Dividends from associated companies, greater than
(less than) equity in earnings 3.8 (9.3)
Depreciation 60.5 57.9
Amortization 9.5 6.6
Deferred income taxes 11.9 3.6
Gain on sale of assets (4.1) (2.5)
Other 0.3 (0.4)
Changes in operating assets and liabilities
Accounts receivable (7.8) (23.2)
Inventories 10.2 11.8
Accounts payable 3.0 (14.4)
Accrued expenses (23.0) (8.4)
Income taxes payable 2.2 32.1
Other assets (5.2) (10.3)
Other liabilities (22.5) (22.5)
---------- ----------
Net cash flows provided by operating activities 130.2 113.7
---------- ----------
Cash flows provided by (used for) investing activities
Additions to plants, equipment and facilities (54.4) (77.0)
Proceeds received on sale of assets 9.4 2.7
Acquisition of businesses, net of cash received (32.3) (64.7)
Change in other investments - 1.6
---------- ----------
Net cash flows used for investing activities (77.3) (137.4)
---------- ----------
Cash flows provided by (used for) financing activities
Proceeds from the exercise of stock options and warrants 1.1 2.9
Purchase of treasury stock (27.5) (80.0)
Change in short-term borrowings (10.3) -
Change in long-term debt (4.4) 130.2
Debt issuance costs - (6.9)
Proceeds received on sale of put options 1.0 1.0
---------- ----------
Net cash flows (used for) provided by financing activities (40.1) 47.2
---------- ----------
Effect of exchange rate changes on cash and cash equivalents (0.4) 0.2
---------- ----------
Increase in cash and cash equivalents 12.4 23.7
Cash and cash equivalents, beginning of period 1.7 6.4
---------- ----------
Cash and cash equivalents, end of period $ 14.1 $ 30.1
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 1998 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, 1999 and for the three and nine months ended
September 30, 1999 and 1998. Such adjustments are of a normal, recurring
nature. The consolidated statements of income for the three and nine months
ended September 30, 1999 are not necessarily indicative of the results to be
expected for the full year.
(2) Acquisitions and Dispositions
-----------------------------
On January 25, 1999, the Company acquired assets of the Nottingham Company's
industrial minerals product line for $4.0. The acquisition was recorded under
the purchase method of accounting and resulted in an excess of the purchase
price over the assets acquired of $3.5 which is included in Acquisition
Intangibles in the Consolidated Balance Sheet and will be amortized on a
straight-line basis over a period of up to 40 years. The acquired business was
integrated into the Company's existing Water and Industrial Process Chemicals
segment.
On August 11, 1999, the Company acquired assets of the BOC Gases cylinder based
phosphine fumigants product line for $3.3. The acquisition was recorded under
the purchase method of accounting and resulted in an excess of the purchase
price over the assets acquired of $3.2 which is included in Acquisition
Intangibles in the Consolidated Balance Sheet and will be amortized on a
straight-line basis over a period of up to 40 years. The terms of the
acquisition provide for an additional payment of $1.0 upon U.S. Environmental
Protection Agency approval of certain fumigant registrations and additional
consideration to be paid if the acquired product line's net sales exceed certain
targeted levels. All additional payments are payable in cash and will be
recorded as additional goodwill when paid. The acquired business was integrated
into the Company's existing Water and Industrial Process Chemicals segment.
On September 16, 1999, the Company acquired Inspec Mining Chemicals S.A. from
Laporte plc for $25.1, net of $0.8 cash received in the acquisition subject to a
possible working capital adjustment to the purchase price. The acquisition was
recorded under the purchase method of accounting and the September 30, 1999
consolidated financial statements reflect the preliminary allocation of the
purchase price to the assets received and liabilities assumed, pending final
fair value estimations. This preliminary allocation has resulted in an excess
of the purchase price over the assets acquired of $19.0 which is included in
Acquisition Intangibles in the Consolidated Balance Sheet and will be amortized
on a straight-line basis over a period of up to 40 years. The acquisition,
which included two manufacturing operations as well as an R&D
6
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
center located in Chile, was integrated into the Company's existing Water and
Industrial Process Chemicals segment.
On January 21, 1999, the Company sold substantially all of the assets of its
engineered molding compounds business excluding land, buildings and one product
line to Rogers Corporation of Manchester, Connecticut for $4.3.
During 1998 the Company acquired assets of the OrePrep minerals processing
product line, Dyno Industrier's global amino coating resins business, which
consisted primarily of Dyno's 50% interest in the former Dyno-Cytec joint
venture, and The American Materials and Technologies Corporation. All three
acquisitions have been accounted for under the purchase method of accounting and
consolidated results of operations have been included from the date of
acquisition. In addition, on November 23, 1998, the Company completed the sale
of its bulk molding compounds business. For a more detailed description of the
1998 acquisitions and dispositions, refer to Note 2 of the consolidated
financial statements, which is incorporated by reference herein and contained in
the Company's 1998 Annual Report on Form 10-K.
(3) Restructuring of Operations
---------------------------
Cash payments related to the $38.4 of pre-tax restructuring charges incurred
during 1997 were $8.3 for the nine months ended September 30, 1999 and $12.9 and
$8.4 for the years ended December 31, 1998 and 1997, respectively. At September
30, 1999, the remaining liability to be paid was $9.6, essentially all of which
is for employee related costs. The payouts and personnel reductions related to
the restructuring plan are expected to be substantially completed by the end of
1999 with the exception of certain long-term payouts for employee severance.
(4) Earnings Per Share (EPS)
------------------------
Basic earnings per common share excludes dilution and was computed by dividing
net earnings by the weighted-average number of common shares outstanding (which
includes shares outstanding, less performance and restricted shares for which
vesting criteria have not been met) plus deferred stock awards under the 1993
Stock Award and Incentive Plan, weighted for the period outstanding. Diluted
earnings per common share was computed by dividing net earnings by the sum of
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 and any
proceeds of the issuance had been used to repurchase common stock at the average
market price during the quarter. The proceeds used to repurchase common stock
are assumed to be the sum of the amount to be paid to the Company upon exercise
of options, the amount of compensation cost attributed to future services and
not yet recognized and the amount of income taxes that would be credited to or
deducted from capital upon exercise.
7
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
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 months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998
---- ----
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
- --------- $ 35.2 42,904,369 $ 0.82 $ 27.0 44,244,319 $ 0.61
Net earnings
Effect of dilutive securities - 1,502,084 - - 1,451,544 -
- ----------------------------- - 123,850 - - 131,766 -
Options - 2,324 - - - -
Performance/Restricted stock - - - - - -
Warrants
Put options
Diluted EPS
- -----------
Net earnings divided by the
weighted average shares plus $ 35.2 44,532,627 $ 0.79 $ 27.0 45,827,629 $ 0.59
assumed conversions
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 1998
---- ----
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
- --------- $ 91.4 43,042,464 $ 2.12 $ 92.7 45,043,946 $ 2.06
Net earnings
Effect of dilutive securities - 1,532,505 - - 1,774,888 -
- ----------------------------- - 90,751 - - 92,251 -
Options - 5,148 - - - -
Performance/Restricted stock - - - - 5,120 -
Warrants
Put options
Diluted EPS
- -----------
Net earnings divided by the
weighted average shares plus $ 91.4 44,670,868 $ 2.05 $ 92.7 46,916,205 $ 1.98
assumed conversions
</TABLE>
(5) Recently Issued Statements Of Financial Accounting Standards
------------------------------------------------------------
In September 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
establishes accounting and reporting standards for hedging activities and
derivative instruments, including certain derivative instruments embedded in
other contracts. As originally issued, SFAS 133 would have been effective for
the Company beginning January 1, 2000. However, in July 1999 the FASB issued
SFAS 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133,"which delays the
effective date of SFAS 133 by one year. SFAS 133 will now become effective for
the Company beginning January 1, 2001. The Company is reviewing the potential
impact, if any, of SFAS 133 on its consolidated results of operations and
financial position.
8
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(6) Inventories
-----------
The components of inventories at September 30, 1999 and December 31, 1998 were
as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Finished goods $ 82.3 $ 87.6
Work in process 16.8 16.0
Raw materials & supplies 70.3 75.4
------- -------
169.4 179.0
Less reduction in LIFO cost (38.5) (38.5)
------- -------
$ 130.9 $ 140.5
======= =======
</TABLE>
(7) Equity in Earnings (Losses) of Associated Companies
---------------------------------------------------
Summarized financial information for the Company's equity in earnings (losses)
of associated companies for the three and nine months ended September 30, 1999
and 1998 was as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 125.3 $ 139.0 $ 384.5 $ 444.6
Gross profit 20.4 44.9 77.9 127.4
Net income (loss) (1.8) 4.5 6.8 31.6
--------- --------- --------- ---------
The Company's equity in earnings
$ (0.8) $ 2.1 $ 3.2 $ 13.3
(losses) of associated companies ========= ========= ========= =========
</TABLE>
The above associated companies' information for 1998 includes the results of the
former Dyno-Cytec joint venture through July 31, 1998. On July 31, 1998, the
Company acquired Dyno's 50% interest and subsequently consolidated the results
of the former Dyno-Cytec joint venture.
(8) Long-Term Debt
--------------
At September 30, 1999 and December 31, 1998, the Company's long-term debt
consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------ ------
<S> <C> <C>
Credit Facility $ 95.5 $ 100.0
364-Day Facility - -
Public Debt 319.6 319.5
------- -------
$ 415.1 $ 419.5
======= =======
</TABLE>
On May 14, 1999, the Company entered into an interest rate swap agreement
wherein the counterparty agreed to pay Cytec a fixed interest rate of 6.2375%
and Cytec agreed to
9
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
pay the counterparty a floating interest rate equal to the six-month London
Interbank Offered Rate ("LIBOR") on a notional amount of $25.0. The swap
agreement matures in March, 2008 and effectively converts $25.0 of the Company's
6.75% fixed rate borrowings due on March 15, 2008 to a floating rate. The fair
value of the swap agreement is not recognized in the financial statements.
Interest rate differentials paid or received under this agreement are recorded
as adjustments to interest expense.
During July 1999, the Company entered into an overnight to 70 day uncommitted
credit facility, which provides up to $15.0 of unsecured revolving loans for
general corporate purposes. The uncommitted credit facility matures upon
cancellation by either party and the interest rate is based on the term of the
borrowing and is quoted at the time of borrowings.
On August 20, 1999, the Company replaced its prior 364-day credit facility with
a new 364-day credit facility, which provides up to $200.0 in unsecured
revolving loans for general corporate purposes. Three new lenders were added
while two withdrew from the consortium of U.S. and non-U.S. banks participating
in the 364-day credit facility. The 364-day credit facility matures on August
19, 2000 and contains a one-year term-out option. The interest rate on funds
borrowed floats based on LIBOR. There were no outstanding borrowings under the
364-day facility at September 30, 1999.
(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 55 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.
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
10
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
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, 1999 and December 31,
1998, the aggregate environmental related accruals were $128.5 and $136.1,
respectively, of which $25.0 was included in accrued expenses as of both dates,
with the remainder included in other noncurrent liabilities. Environmental
remediation spending for the nine months ended September 30, 1999 and 1998 was
$11.3 and $15.0, respectively. All accruals have been recorded without giving
effect to any possible future insurance proceeds.
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 that, in management's opinion, will
not have a material adverse effect on the consolidated financial position of the
Company, but could be material to the consolidated 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) Comprehensive Income
--------------------
The components of comprehensive income, which represents the change in equity
from non-owner sources, for the three and nine months ended September 30, 1999
and 1998, were as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $ 35.2 $ 27.0 $ 91.4 $ 92.7
Other comprehensive income (loss):
Foreign currency translation adjustments 4.0 4.1 (5.5) 2.0
---------- ---------- ---------- ----------
Comprehensive income $ 39.2 $ 31.1 $ 85.9 $ 94.7
========== ========== ========== ==========
</TABLE>
11
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(11) Other Financial Information
---------------------------
Taxes paid for the nine months ended September 30, 1999 and 1998 were
approximately $27.4 and $30.8, respectively. The income tax provision was $5.6
for the third quarter of 1999 and included a credit of $8.0 related to the
utilization of prior years' tax credits. Additionally, during the quarter, the
Company reduced its underlying effective tax rate for the nine months ended
September 30, 1999 to 34.5%, down from 35.0% utilized for the six months ended
June 30, 1999. This resulted in a third quarter of 1999 effective tax rate of
33.5%.
Interest paid for the nine months ended September 30, 1999 and 1998 was
approximately $22.1 and $25.8, respectively.
On January 25, 1999, the Company announced a program to spend up to $100.0 to
repurchase shares of its outstanding common stock. Through September 30, 1999,
the Company had repurchased 1,149,245 shares at a cost of $27.5 under this
program. The Company expects the timing of its share repurchase program to be
balanced with the related financing requirements of its long term growth
strategies, including research and development, global expansion, capital
expenditures and opportunities for acquisitions arising from consolidation in
the specialty chemicals industry.
In connection with the Company's stock repurchase program, during the nine
months ended September 30, 1999, the Company sold an aggregate of 600,000 put
options to two institutional investors in a series of private placements exempt
from registration under Section 4(2) of the Securities Act of 1933. Of the
600,000 put options sold, 300,000 were sold during January 1999 and entitled the
holders to sell an aggregate of 300,000 shares of the Company's common stock to
the Company at exercise prices ranging from $21.68 to $21.99 per share. During
July 1999, these put options expired unexercised. The Company received premiums
of approximately $0.6 on the sale of such options. The remaining 300,000 put
options were sold during August 1999 and entitled the holders to sell an
aggregate of 300,000 shares of the Company's common stock to the Company at an
exercise price of $21.00 per share. These put options remained outstanding as
of September 30, 1999 and are due to expire on various dates in February 2000.
The Company received premiums of approximately $0.4 on the sale of such put
options. In lieu of purchasing the shares from the put option holders, the
Company has the right to elect settlement by paying the holders of the put
options 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, (i.e., net
cash or net share settlement).
12
<PAGE>
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share amounts)
(12) Segment Information
-------------------
Summarized segment information for the Company's four segments for the three and
nine months ended September 30, 1999 and 1998 was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales
- ---------
Water and Industrial Process Chemicals $ 92.4 $ 89.2 $ 274.3 $ 259.8
Performance Products 108.1 102.9 327.5 300.6
Specialty Materials 105.3 116.6 340.0 377.0
Building Block Chemicals
Sales to external customers 38.3 49.4 116.6 154.5
Intersegment sales 8.9 9.2 29.5 30.1
------------- ------------- ------------- -------------
Net sales from segments 353.0 367.3 1,087.9 1,122.0
Other revenues - - - 0.2
Elimination of intersegment revenue (8.9) (9.2) (29.5) (30.1)
------------- ------------- -------------- -------------
Total consolidated net sales $ 344.1 $ 358.1 $ 1,058.4 $ 1,092.1
============= ============= ============== ==============
% of % of % of % of
Earnings from operations Sales Sales Sales Sales
- ------------------------ ----- ----- ----- -----
Water and Industrial Process Chemicals $ 12.2 13% $ 8.7 10% $ 34.0 12% $ 24.6 9%
Performance Products 12.4 11% 11.8 11% 39.4 12% 34.9 12%
Specialty Materials 20.2 19% 20.0 17% 64.5 19% 62.4 17%
Building Block Chemicals 2.6 6% 7.3 12% 7.7 5% 27.4 15%
------ ------ ------ ------
Earnings from segments 47.4 13% 47.8 13% 145.6 13% 149.3 13%
Corporate and Unallocated (3.2) (3.5) (8.1) (8.6)
------ ------ ------ ------
Total consolidated earnings from operations $ 44.2 13% $ 44.3 12% $137.5 13% $140.7 13%
====== ====== ====== ======
</TABLE>
(13) Subsequent Events
-----------------
On October 29, 1999, the Company acquired the amino coatings resins business of
BIP Ltd. for approximately $37.3 in cash. The acquisition will be recorded under
the purchase method of accounting. The terms of the acquisition provide for an
additional payment of approximately $6.2. The acquired business will be
integrated into the Company's existing Performance Products segment. BIP will
retain its manufacturing plant in Oldbury, UK, where it will continue to
manufacture certain amino coating resins for Cytec.
13
<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 1999 versus Third Quarter of 1998
- --------------------------------------------------
Net sales for the third quarter of 1999 were $344.1 as compared to $358.1 in the
third quarter of 1998. The decrease was due mainly to $11.3 lower sales in the
Specialty Materials segment and $11.1 lower sales in the Building Block
Chemicals segment. This decrease was partially offset by sales increases in the
Water and Industrial Process Chemicals and Performance Products segments of $3.2
and $5.2, respectively, (see Segment Results discussion below).
Net sales in the North America region, (i.e., United States and Canada) were
$211.3 for the third quarter of 1999, down 7.9% from the prior year period. The
decrease was due mainly to a 4.3% decrease in selling volumes (primarily in the
Specialty Materials and Building Block Chemicals segments) and lower selling
prices, which were down about 3.6%.
Net sales outside of the North America region for the third quarter of 1999 were
$132.8 or 38.6% of total sales as compared to $128.8 or 36.0% of total sales in
1998. Increases were recognized across all regions.
In the Europe/Mideast/Africa region net sales were $77.6 for the third quarter
of 1999, up 2.9% from the prior year period. The increase was due mainly to a
6.9% increase in selling volumes (primarily in the Water and Industrial Process
Chemicals and Performance Products segments). The increase in selling volumes
was partially offset by lower selling prices, which were down about 2.1%, and
the adverse effect of exchange rate changes, which reduced sales another 1.9%.
In the Asia/Pacific region net sales were $37.9 for the third quarter of 1999,
up 3.4% from the prior year period. The increase was due mainly to a 4.5%
increase in selling volumes (primarily in the Performance Products and Specialty
Materials segments) and the favorable effect of exchange rate changes, which
increased sales another 1.8%. This increase was partially offset by lower
selling prices, which were down about 2.9%.
In the Latin America region net sales were $17.2 for the third quarter of 1999,
up 3.5% from the prior year period. The increase was due mainly to a 6.1%
increase in selling volumes partially offset by the adverse effect of exchange
rate changes, which reduced sales about 2.4%, and lower selling prices, which
reduced sales another 0.2%.
Manufacturing cost of sales was $236.4 or 68.7% of net sales in the third
quarter of 1999 and was down when compared to $253.1 or 70.7% of net sales for
the same period last year. Manufacturing costs as a percentage of net sales
continued to benefit in 1999 from plant efficiencies, the result of
restructuring initiatives undertaken in 1997, improved product mix, and lower
raw material costs. Partially offsetting these benefits were the adverse
effects of price and selling volume decreases in the Building Block Chemicals
and Specialty Materials segments as well as price reductions in the Water and
Industrial Process Chemicals and Performance Products segments.
14
<PAGE>
(Millions of dollars, except share and per share amounts)
Selling and technical service expenses decreased $1.9 reflecting the benefits of
the Company's efforts to contain costs in this area.
Research and process development expenses increased $1.3 due mainly to higher
patent costs, which tend to fluctuate quarter to quarter depending on activity
and higher research expenses at the business unit level.
Administrative and general expenses were $14.4 for the third quarter of 1999, an
increase of $3.1 from the same period last year. Included in the third quarter
of 1999 was a charge of $2.5 for external costs associated with tax planning
that resulted in a significant reduction in tax expense.
Amortization of acquisition intangibles expense increased $0.3 due to the
additional intangibles resulting from the acquisition of the Dyno Business, AMT,
and the Nottingham industrial minerals product line.
Other income, net was $3.9 for the third quarter of 1999 primarily due to gains
from divested product lines and the sale of property, plus $0.6 from the sale of
investments in unaffiliated companies.
Equity in earnings (losses) of associated companies was down $2.9 primarily due
to lower sales and earnings by Criterion Catalyst. Increased industry capacity
and difficult economic conditions in the refining industry continue to affect
operations at Criterion Catalyst. The result has been much lower selling prices
and an adverse product mix for hydrotreating catalysts. The Company is in the
process of reviewing all alternatives for this equity investment. CYRO
Industries earnings were also down, primarily as a result of lower selling
prices. Equity earnings were also down $0.5 as a result of the purchase of the
remaining 50% ownership in and subsequent consolidation of the Dyno Business.
Interest expense, net was $6.5 for the third quarter of 1999 and was essentially
flat when compared to the same period last year.
The income tax provision was $5.6 for the third quarter of 1999 and included a
credit of $8.0 related to the utilization of prior years' tax credits.
Additionally, during the quarter, the Company reduced its underlying effective
tax rate for the nine months ended September 30, 1999 to 34.5%, down from 35.0%
utilized for the six months ended June 30, 1999. This resulted in a third
quarter of 1999 effective tax rate of 33.5%.
Net earnings increased to $35.2 for the third quarter of 1999, up 30.4% from the
$27.0 in the third quarter of 1998. Diluted earnings per share increased from
$0.59 in 1998 to $0.79 in 1999, an increase of 33.9%. Excluding the credit of
$8.0 in income tax expense related to the utilization of prior years' tax
credits, the charge of $2.5 in administrative and general expenses related to
external costs associated with tax planning and the impact of the reduction in
the third quarter effective tax rate to 33.5%, as compared to 34.5% utilized for
the nine months ended September 30, 1999, diluted earnings per share for the
third quarter of 1999 would have been $0.64.
Segment Results
Water and Industrial Process Chemicals sales increased 3.6% to $92.4 and
earnings from operations increased 40.2% to $12.2. The sales increase was
primarily in paper, water treatment and mining chemicals. Overall, selling
volumes were up 7.0%, of which approximately 2.0% is from the acquisitions of
the Inspec Mining Chemicals S.A. ("IMC") and the Nottingham industrial minerals
product lines. The increase in selling volumes was partially offset by
15
<PAGE>
(Millions of dollars, except share and per share amounts)
lower selling prices, which were down about 2.4%, and the adverse effect of
exchange rate changes, which reduced sales another 0.9%. The improved earnings
from operations were primarily the result of the leverage from the higher sales,
lower raw material prices and reduced operating costs.
Performance Products sales increased 5.1% to $108.1 and earnings from operations
increased 5.1% to $12.4. Overall, selling volumes were up 7.3%, of which
approximately 2.7% is due to amino resins sales generated as a result of the
July 31, 1998 acquisition of Dyno Industrier's global amino coatings resins
business (the "Dyno Business"), which consisted primarily of Dyno's 50% interest
in the former Dyno-Cytec joint venture. The remaining 4.6% increase in selling
volumes is due mainly to stronger sales volumes during the quarter in the
polymer additives and surfactants and specialty monomers product lines.
Specialty resins sales volumes, excluding the Dyno Business acquisition, were
down modestly as a result of lower sales in the Latin America and
Europe/Mideast/Africa regions. The increase in selling volumes was partially
offset by lower selling prices, which were down about 2.0%, and the adverse
effect of exchange rate changes, which reduced sales another 0.2%. The improved
earnings from operations were primarily the result of the higher sales volume.
Specialty Materials sales were $105.3, a decrease of 9.7% from the previous
year. Earnings from operations, however, improved slightly (1.0%) to $20.2.
Approximately 8.7% of the sales decrease was due to the divestiture of the
molding compounds and certain other product lines while the acquisition of The
American Materials and Technologies Corporation ("AMT") in the fourth quarter of
last year added approximately 4.3% to sales for the quarter. Excluding the
effect of acquisitions and divestitures, selling volumes were down 3.8% as a
result of reduced commercial aircraft build rates, partially offset by new
product introductions, new applications and new qualifications for our products.
Selling prices decreased 1.9% but the decrease was largely offset by lower raw
material costs. Earnings from operations benefited from the rationalization of
manufacturing consistent with reduced commercial aircraft build rates.
Building Block Chemicals sales to external customers were $38.3, a 22.5%
decrease. Earnings from operations were $2.6 compared to $7.3 for the same
period last year. Selling prices for acrylonitrile improved during the quarter.
However, costs for propylene, the key raw material for acrylonitrile, increased
at a faster rate, and as a result, acrylonitrile margins remained low. The
selling prices and volumes of acrylamide and melamine have been negatively
impacted by new capacity. Due to poor economics, the methanol plant remained
shut down for the quarter, and is expected to remain down for the foreseeable
future. For the segment overall, selling prices, selling volumes and the
adverse effect of exchange rate changes, reduced sales by approximately 8.8%,
12.9%, and 0.8%, respectively. Operationally, the Building Block Chemicals
facility ran well during the quarter.
Nine Months of 1999 versus Nine Months of 1998
- ----------------------------------------------
Net sales for the nine months of 1999 were $1,058.4 as compared to $1,092.1 for
the nine months of 1998. The decrease was due mainly to $37.9 lower sales in
the Building Block Chemicals segment and $37.0 lower sales in the Specialty
Materials segment. This decrease was partially offset by sales increases in the
Water and Industrial Process Chemicals and Performance Products segments of
$14.5 and $26.9, respectively, (see Segment Results discussion below).
Net sales in the North America region were $653.5 for the nine months of 1999,
down 9.4% from the prior year period. The decrease was due mainly to a 5.0%
16
<PAGE>
(Millions of dollars, except share and per share amounts)
decrease in selling volumes (primarily in the Specialty Materials and Building
Block Chemicals segments) and lower selling prices, which were down about 4.4%.
Net sales outside of the North America region for the nine months of 1999 were
$404.9 or 38.3% of total sales as compared to $370.6 or 33.9% of total sales in
1998. Increases were recognized across all regions.
In the Europe/Mideast/Africa region net sales were $244.6 for the nine months of
1999, up 9.2% from the prior year period. The increase was due mainly to a
13.6% increase in selling volumes (primarily in the Performance Products segment
and to a lesser extent in the Water and Industrial Process Chemicals segment).
The increase in selling volumes was partially offset by lower selling prices,
which were down about 3.4%, and the adverse effect of exchange rate changes,
which reduced sales another 1.0%.
In the Asia/Pacific region net sales were $107.9 for the nine months of 1999, up
7.1% from the prior year period. The increase was due mainly to a 10.6%
increase in selling volumes (primarily in the Water and Industrial Process
Chemicals and Performance Product segments) and the favorable effect of exchange
rate changes, which increased sales another 2.3%. This increase was partially
offset by lower selling prices, which were down about 5.8%.
In the Latin America region net sales were $52.4 for the nine months of 1999, up
13.9% from the prior year period. The increase was due mainly to a 18.1%
increase in selling volumes partially offset by the adverse effect of exchange
rate changes, which reduced sales about 3.0%, and lower selling prices, which
reduced sales another 1.2%.
Manufacturing cost of sales was $733.3 or 69.3% of net sales for the nine months
of 1999 and was down slightly when compared to $762.2 or 69.8% of net sales for
the same period last year. Manufacturing costs as a percentage of net sales
continued to benefit in 1999 from plant efficiencies, the result of
restructuring initiatives undertaken in 1997, improved product mix, and lower
raw material costs. Partially offsetting these benefits were the adverse
effects of price and selling volume decreases in the Building Block Chemicals
and Specialty Materials segments as well as price reductions in the Water and
Industrial Process Chemicals and Performance Products segments.
Selling and technical service expenses decreased $4.7 reflecting the benefits of
the Company's efforts to contain costs in this area.
Research and process development expenses decreased $1.2 primarily reflecting
the Company's decentralization of research to business units and restructuring
initiatives at the Stamford, Connecticut research facility. Partially
offsetting the decrease were higher patent costs for the nine months of 1999.
Administrative and general expenses were $39.0 for the nine months of 1999, an
increase of $3.0 from the same period last year. Included in the nine months of
1999 was a charge of $2.5 for external costs associated with tax planning that
resulted in a significant reduction in tax expense.
Amortization of acquisition intangibles expense increased $1.3 due to the
additional intangibles resulting from the acquisitions of the Dyno Business,
AMT, and the Nottingham industrial minerals product line.
Other income, net was $6.8 for the nine months of 1999 primarily due to gains
from divested product lines and the sale of property. Additionally, included in
the nine months of 1999 was $0.6 from the sale of investments in unaffiliated
17
<PAGE>
(Millions of dollars, except share and per share amounts)
companies. Last year other income, net was $9.3 and included gains of
approximately $6.8 from the sale of investments in unaffiliated companies.
Equity in earnings (losses) of associated companies was down $10.1 primarily due
to lower sales and earnings by Criterion Catalyst. Increased industry capacity
and difficult economic conditions in the refining industry continue to affect
operations at Criterion Catalyst. The result has been much lower selling prices
and an adverse product mix for hydrotreating catalysts. The Company is in the
process of reviewing all alternatives for this equity investment. CYRO
Industries earnings were also down, primarily as a result of lower selling
prices. Equity earnings were also down $2.1 as a result of the purchase of the
remaining 50% ownership in and subsequent consolidation of the Dyno Business.
The Company expects fourth quarter equity earnings to be well below the prior
year period.
Interest expense, net was $20.1 for the nine months of 1999 and increased $3.9
in 1999 reflecting the increase in long-term debt.
The income tax provision was $36.0 for the nine months of 1999 and included a
credit of $8.0 related to the utilization of prior years' tax credits.
Additionally, during the third quarter of 1999, the Company reduced its
underlying effective tax rate for the nine months ended September 30, 1999 to
34.5%, down from 35.0% utilized for the six months ended June 30, 1999.
Net earnings were $91.4 for the nine months of 1999, down 1.4% from the $92.7 in
the same period last year. Diluted earnings per share however, increased from
$1.98 in 1998 to $2.05 in 1999, an increase of 3.5%. Excluding the credit of
$8.0 in income tax expense related to the utilization of prior years' tax
credits and the charge of $2.5 in administrative and general expenses related to
external costs associated with tax planning, diluted earnings per share for the
nine months of 1999 would have been $1.91.
Segment Results
Water and Industrial Process Chemicals sales increased 5.6% to $274.3 and
earnings from operations increased 38.2% to $34.0. The sales increase was
primarily in mining chemicals. Overall, selling volumes were up 7.9%, of which
approximately 2.5% were from the acquisitions of IMC and the Nottingham
industrial minerals product lines. The increase in selling volumes was
partially offset by lower selling prices, which were down about 2.0%, and the
adverse effect of exchange rate changes, which reduced sales another 0.3%. The
improved earnings from operations were primarily the result of the leverage from
the higher sales, lower raw material prices and reduced operating costs.
Performance Products sales increased 8.9% to $327.5 and earnings from operations
increased 12.9% to $39.4. Overall, selling volumes were up 13.6%, of which
approximately 6.7% is due to amino resins sales generated as a result of the
July 31, 1998 acquisition of the Dyno Business. The remaining 6.9% increase in
selling volumes is due mainly to stronger sales volumes in the polymer
additives, specialty resins and surfactants and specialty monomers product
lines. The increase in selling volumes was partially offset by lower selling
prices, which were down about 4.5%, and the adverse effect of exchange rate
changes, which reduced sales another 0.2%. The improved earnings from
operations were primarily the result of the higher sales volume and to a lesser
extent lower raw material prices and reduced operating costs.
Specialty Materials sales were $340.0, a decrease of 9.8% from the previous
year. Earnings from operations, however, improved 3.4% to $64.5. Approximately
18
<PAGE>
(Millions of dollars, except share and per share amounts)
9.2% of the sales decrease was due to the divestiture of the molding compounds
and certain other product lines while the acquisition of AMT in the fourth
quarter of last year added approximately 5.6% to sales. Excluding the effect of
acquisitions and divestitures, selling volumes were down 4.8% as a result of
reduced commercial aircraft build rates, partially offset by new product
introductions, new applications and new qualifications for our products.
Selling prices decreased 1.6% but the decrease was largely offset by lower raw
material costs. Earnings from operations benefited from the rationalization of
manufacturing consistent with reduced commercial aircraft build rates.
Building Block Chemicals sales to external customers were $116.6, a 24.5%
decrease. Earnings from operations were $7.7 compared to $27.4 for the same
period last year. Selling prices for acrylonitrile, which remained weak for the
first six months of 1999, improved during the third quarter. However, costs for
propylene, the key raw material for acrylonitrile, increased at a faster rate,
and as a result, acrylonitrile margins remained low. The selling prices and
volumes of acrylamide and melamine have been negatively impacted by new
capacity. In February, the methanol plant was shut down due to poor economics,
and is expected to remain down for the foreseeable future. For the segment
overall, selling prices, selling volumes and the adverse effect of exchange rate
changes, reduced sales by approximately 13.8%, 10.4%, and 0.3%, respectively.
Liquidity and Financial Condition
- ---------------------------------
At September 30, 1999, the Company's cash balance was $14.1, an increase of
$12.4 from year-end 1998.
Net cash flows provided by operating activities totaled $130.2 for the nine
months ended September 30, 1999, compared to $113.7 for the nine months ended
September 30, 1998. The most significant factor affecting this increase was the
Company's lower working capital levels.
Net cash flows used for investing activities totaled $77.3 for the nine months
ended September 30, 1999, compared to $137.4 for the nine months ended September
30, 1998. Included in 1999 was funding for the acquisitions of the Nottingham
industrial minerals product line, BOC Gases cylinder based phosphine fumigants
product line and IMC of $4.0, $3.3 and $25.1, respectively. Also included in
1999 were proceeds received of $5.9 from the sale of the molding compounds
product lines and $3.5 from the sale of other assets. Funding for capital
additions was $54.4 for the nine months ended September 30, 1999, compared to
$77.0 in 1998. Capital additions for the nine months ended September 30, 1998
included three large construction projects in the Performance Products and Water
and Industrial Process Chemicals segments - the Benzotriazole light stabilizer
plant in Botlek, The Netherlands, the expansion of the surfactants plant in the
Willow Island, West Virginia facility and the expansion of emulsion capacity in
Mobile, Alabama. For the full year 1999, the Company estimates capital spending
to be approximately $75.0, down from the previous estimate of $80.0 to $85.0.
The Company believes that, based on internal cash generation and current levels
of liquid assets, it will be able to fund operating cash requirements and
planned capital expenditures through the end of 1999.
Net cash flows used for financing activities totaled $40.1 for the nine months
ended September 30, 1999, compared to $47.2 of net cash flows provided by
financing activities for the nine months ended September 30, 1998. In
connection with the stock repurchase program discussed below, the Company
purchased 1,149,245 shares of treasury stock at a cost of $27.5 during the first
nine months of 1999. This compares to the purchase of 2,174,100 shares of
19
<PAGE>
(Millions of dollars, except share and per share amounts)
treasury stock at a cost of $80.0 during the comparable period of 1998. Also,
during the first nine months of 1999, $10.3 of foreign currency denominated
short-term borrowings were paid-off. The first nine months of 1998 included an
increase in long-term debt of $130.2.
In connection with the Company's stock repurchase program, during the nine
months ended September 30, 1999, the Company sold an aggregate of 600,000 put
options to two institutional investors in a series of private placements exempt
from registration under Section 4(2) of the Securities Act of 1933. Of the
600,000 put options sold, 300,000 were sold during January 1999 and entitled the
holders to sell an aggregate of 300,000 shares of the Company's common stock to
the Company at exercise prices ranging from $21.68 to $21.99 per share. During
July 1999, these put options expired unexercised. The Company received premiums
of approximately $0.6 on the sale of such options. The remaining 300,000 put
options were sold during August 1999 and entitle the holders to sell an
aggregate of 300,000 shares of the Company's common stock to the Company at an
exercise price of $21.00 per share. These put options remained outstanding as
of September 30, 1999 and are due to expire on various dates in February 2000.
The Company received premiums of approximately $0.4 on the sale of such put
options. Subsequently during October 1999, the Company sold an additional
200,000 put options that expire on various dates during December 1999 and April
2000, and entitle the holder to sell an aggregate of 200,000 shares of the
Company's common stock to the Company at exercise prices ranging from $22.125 to
$22.50 per share. The Company received premiums of approximately $0.2 on the
sale of such put options. In lieu of purchasing the shares from the put option
holders, the Company has the right to elect settlement by paying the holders of
the put options 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, (i.e.,
net cash or net share settlement).
The Company on January 22, 1999 signed an agreement with American Cyanamid
Company ("Cyanamid"), which is now a wholly-owned subsidiary of American Home
Products Corporation, providing that Cyanamid would irrevocably waive certain
financial covenants contained in the Company's Series C Cumulative Preferred
Stock ("Series C Stock") so that, in addition to restricted payments otherwise
permitted under the Series C Stock, which at September 30, 1999, were limited to
$46.0, Cytec may make up to $100.0 in special restricted payments solely for the
purpose of repurchasing Cytec's common stock. On January 25, 1999, the Company
announced a program to spend up to $100.0 to repurchase shares of its
outstanding common stock. As indicated above, through September 30, 1999, the
Company had repurchased 1,149,245 shares at a cost of $27.5 under this program.
The Company expects the timing of its share repurchase program to be balanced
with the related financing requirements of its long term growth strategies,
including research and development, global expansion, capital expenditures and
opportunities for acquisitions arising from consolidation in the specialty
chemicals industry.
On May 14, 1999, the Company entered into an interest rate swap agreement
wherein the counterparty agreed to pay Cytec a fixed interest rate of 6.2375%
and Cytec agreed to pay the counterparty a floating interest rate equal to the
six-month London Interbank Offered Rate ("LIBOR") on a notional amount of $25.0.
The swap agreement matures in March 2008 and effectively converts $25.0 of the
Company's 6.75% fixed rate borrowings due on March 15, 2008 to a floating rate.
The fair value of the swap agreement is not recognized in the financial
statements. Interest rate differentials paid or received under this agreement
are recorded as adjustments to interest expense.
During July 1999, the Company entered into an overnight to 70 day uncommitted
credit facility, which provides up to $15.0 of unsecured revolving loans for
general corporate purposes. The uncommitted credit facility matures upon
20
<PAGE>
(Millions of dollars, except share and per share amounts)
cancellation by either party and the interest rate is based on the term of the
borrowing and is quoted at the time of borrowings.
On August 20, 1999, the Company replaced its prior 364-day credit facility with
a new 364-day credit facility, which provides up to $200.0 in unsecured
revolving loans for general corporate purposes. Three new lenders were added
while two withdrew from the consortium of U.S. and non-U.S. banks participating
in the 364-day credit facility. The 364-day credit facility matures on August
19, 2000 and contains a one-year term-out option. The interest rate on funds
borrowed floats based on LIBOR. There were no outstanding borrowings under the
364-day facility at September 30, 1999.
OTHER
Year 2000
- ----------
The Company has conducted a comprehensive review of its information technology
systems ("IT Systems") and its process control and other systems that use micro-
controllers ("Non-IT Systems") to identify the systems that could be affected by
the Year 2000 issue. The Year 2000 issue results from computer programs using
two digits rather than four to define the applicable year. Any of the Company's
systems that have time-sensitive software features may recognize a date using
"00" in the last two places as the year 1900 rather than the year 2000. If not
addressed, this could result in a system failure or miscalculations, and in the
case of Non-IT systems that 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, which consisted of identifying the Company's IT and Non-IT Systems,
has been completed. The second phase consisted of determining whether those
systems were Year 2000 compliant, primarily based on certifications from the
vendors of such systems, and developing cost estimates to remediate noncompliant
systems. The second phase is also complete. The Company's current estimate is
that it will incur external costs of approximately $5.5 to remediate
noncompliant systems, of which $4.0 has been spent to date, and of which the
remaining funds mostly consist of: (i) funds committed but not yet spent; (ii)
the cost of non-mission critical systems and equipment; and (iii) the cost of
completing the testing process. This estimate may change materially as the
Company completes its final testing and as the Company finalizes the required
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 consists of remediating noncompliant
systems that are critical to the Company's operations. The Company has
substantially completed the third phase, except for certain "patches" or other
upgrades which may not actually be installed until later in 1999 during plant
shut downs, or in the case of the Fortier Melamine plant during its next
scheduled plant shut down in January 2000. The mission critical systems at the
Fortier Melamine facility requiring remediation use substantially similar
software and hardware to that used in comparable systems that have already been
remediated, upgraded and tested successfully for Y2K compliance at other Company
facilities. Accordingly, the Company does not anticipate that any difficulties
will arise with respect to implementing the remediation at the Fortier Melamine
plant. Other than the Fortier Melamine facility, we currently anticipate that
all our mission critical systems at the Company's major facilities will be
substantially compliant prior to December 31, 1999.
21
<PAGE>
(Millions of dollars, except share and per share amounts)
The Company has developed contingency plans for addressing any problems in
completing implementation of all necessary remediation by the Year 2000. The
Company has been addressing 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. To date, all material
customers and suppliers have indicated that they will be Year 2000 compliant.
These efforts may need to be refined as more information becomes available. The
Company has also satisfactorily reviewed 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. Although more serious problems could occur (including but not limited
to events affecting the safety of the Company's production processes, many of
which involve hazardous materials), the Company believes that the "most
reasonably likely worst case scenario" as a result of the Company, customers,
suppliers or government agencies not being fully Year 2000 compliant includes
temporary plant closings, delays in the delivery of finished products, delays in
the receipt of raw materials and invoice and collection errors. These
consequences could have a material adverse impact on the Company's results of
operation, financial condition and cash flows. As part of its contingency plan,
the Company is addressing these potential consequences in order to mitigate the
adverse effect any such disruptions may have on the Company's operations.
Euro Conversion
- ---------------
On January 1, 1999, 11 of the 15 member countries of the European Union (the
"participating countries") established fixed conversion rates between their
existing sovereign currencies (the "legacy currencies") and the euro. The
participating countries adopted the euro as their common legal currency on that
date. Effective January 1, 1999, a newly created European Central Bank assumed
control of 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 generates sales throughout Europe. The Netherlands is a
participating country, whereas the United Kingdom and Norway are not currently
participating countries.
Since January 1, 1999, the Company has been in a position to conduct business in
euros. The Company has initiated and is evaluating on an ongoing 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
impact on cash management and treasury management functions; 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.
22
<PAGE>
(Millions of dollars, except share and per share amounts)
The Company does not believe that the introduction of the euro notes and coins
as well as the withdrawal of participating currency notes and coins, which is
scheduled to begin January 1, 2002, will result in any gains or losses since
conversion rates to the euro for participating countries were irrevocably fixed
as of January 1, 1999. The Company believes that some information systems
modifications are required in order for them to be euro compliant. The Company,
however, does not currently believe that the euro conversion will have a
material operational or financial impact.
Comments on Forward-Looking Statements
- --------------------------------------
A number of the statements made by the Company in the Quarterly Report on Form
10-Q, or in other documents, including but not limited to the Company's Annual
Report to Stockholders, its press releases and other 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 1999 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, long-term goals of the Company, the effects of and
the timing for remediation of the Year 2000 issue, and other statements of
expectation, 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; the rate of
recovery of the Asian economies from the financial crisis that began in 1997;
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'
demands for price decreases; 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; the results of associated
companies, and other unforseen circumstances. A number of these factors are
discussed in the Company's filings with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
For a discussion of market risks at year-end, refer to Item 7a of the Company's
1998 Annual Report on Form 10-K for the year ended December 31, 1998, filed with
the Securities and Exchange Commission on March 31, 1999 and incorporated by
reference herein. During 1999, the Company executed various financial
instrument transactions which do not give rise to significant market risk and
thereby do not materially alter the market risk assessment performed as of
December 31, 1998. Included among those transactions are the following:
In connection with the Company's stock repurchase program, during the nine
months ended September 30, 1999 the Company sold an aggregate of 600,000 put
options. During July 1999, 300,000 of the put options expired unexercised.
The remaining 300,000 put options are due to expire on various dates in
February 2000. Subsequently, during October 1999 the Company sold an
additional 200,000 put options that expire during December 1999 and April
23
<PAGE>
(Millions of dollars, except share and per share amounts)
2000. For a further discussion, see Note 11 of the Notes to Consolidated
Financial Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A").
On May 14, 1999, the Company entered into an interest rate swap agreement that
effectively converted $25.0 of the Company's 6.75% fixed rate borrowings to a
floating rate. For a further discussion, see Note 8 of the Notes to
Consolidated Financial Statements.
During the first quarter of 1999, the Company paid off the $10.3 of foreign
currency denominated short-term borrowings outstanding at December 31, 1998.
During July 1999, the Company entered into an overnight to 70 day uncommitted
credit facility, which provides up to $15.0 of unsecured revolving loans for
general corporate purposes. The uncommitted credit facility matures upon
cancellation by either party and the interest rate is based on the term of the
borrowing and is quoted at the time of borrowings.
As of September 30, 1999, the Company was party to several cash-settled,
natural gas swap transactions. The instruments contain both a written option-
based component and a forward-based component. The Company entered into these
transactions in accordance with Company-established hedging policies to manage
its exposure to commodity price risks and, in accordance with accounting
policies, accounts for such instruments "off balance sheet" with gains and
losses reflected in the cost of the commodity at settlement.
24
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
-----------------
In connection with the Spin-off from American Cyanamid Company ("Cyanamid"),
which is now a wholly-owned subsidiary of American Home Products Corporation,
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, NJ Facility. In
connection with its acquisition of substantially all of the assets of Fiberite,
Inc., 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 acquisition
of Fiberite, respectively, the Company is the party in interest and is herein
described as the defendant.
The Company is a defendant in twenty-one cases pending in state courts in
Brazoria, Harrison, Jefferson and Nueces 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 believes that its involvement in all
but two 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 eight suits pending in California Superior Court
in San Francisco 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
six plaintiffs (out of 32 randomly selected members of the class) was completed
in July 1998. In December, 1998 the trial court signed a Judgment recalling the
Court's prior Class Action Certification Order and dismissing all Class Action
claims in the case. The Judgment also dismissed, with prejudice, the claims of
the six named plaintiffs whose cases had been tried in July. The case continues
as a non-class action on behalf of the other named plaintiffs. Plaintiffs have
appealed the Court's Judgment.
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.
25
<PAGE>
The Company is also the defendant in six class actions filed in St. Charles
Parish Court, Louisiana on behalf of persons who allegedly sustained injury as a
result of an exotherm and fire at the Company's Fortier facility on January 5,
1999. The Company 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 nine cases pending in state and federal
courts in the states of New York, Ohio, Maryland, Rhode Island and Wisconsin.
The suits have been brought by governmental entities and individual plaintiffs,
on behalf of themselves and others. The suits variously seek damages for the
cost of removing lead-based paints from buildings; for personal injuries
allegedly caused by ingestion of lead-based paints; the cost of monitoring,
detecting and abating lead paint; the cost of educating the public about lead
paint; compensatory and punitive damages; the costs of providing health care and
special education to children harmed by lead poisoning; and plaintiffs'
attorneys' fees. The company is named a defendant as the alleged successor to
MacGregor Lead Company from which the Company purchased certain assets in 1971.
The Company denies it is a successor to MacGregor Lead Company.
The Company is one of several defendants in six suits filed in New Jersey State
Courts in Essex and Middlesex Counties 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. Two 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 third 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
26
<PAGE>
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.
The Company also has been named as one of several defendants in twenty-nine
suits filed in Louisiana State Courts in St. Bernard, Orleans and Jefferson
Parishes by individuals who claim that they, or those whom they represent, were
injured as a result of exposure to asbestos while working at various sites,
including the Company's Fortier, Louisiana plant.
In January 1999 the Company received a subpoena to testify before, and provide
documents to, a grand jury in the U.S. District Court for the Central District
of California. The subpoena relates to a Grand Jury Investigation of the carbon
fiber and prepreg industry. The Company has no reason to believe that it is a
target of a grand jury investigation. As a result of the Grand Jury
Investigation, the Company is a defendant in two antitrust class actions filed
in the U.S. District Court for the Central District of California on behalf of
purchasers of carbon fiber, which the complaints defined to include prepregs
manufactured from carbon fiber. The complaint in each case alleges that the
defendants, manufacturers of carbon fiber and/or prepregs manufactured
therefrom, conspired to fix the prices of their products.
See also the first four paragraphs of "Environmental Matters" under Item 1 of
the Company's 1998 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.
27
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a). Exhibits
--------
See Exhibit Index on page 30 for exhibits filed with this Quarterly Report on
Form 10-Q.
(b). Reports on Form 8-K
-------------------
The Company has not filed a current report on Form 8-K during the third quarter
of 1999.
28
<PAGE>
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 15, 1999
29
<PAGE>
Exhibit Index
- -------------
10.7 364-Day Credit Agreement dated August 20, 1999 among the Registrant,
the banks named therein and Citibank N.A., as Administrative Agent,
The Chase Manhatttan Bank, as Syndication Agent, and First Union
National Bank, as Documentation Agent.
10.13(k) Cytec Executive Supplemental Employees' Retirement Plan, as amended
through October 14, 1999.
10.13(v) Letter Agreement dated September 1, 1999 between the Company and
J.W. Hirsch.
12 Computation of Ratio of Earnings to Fixed Charges for the three and
nine months ended September 30, 1999 and 1998
27 Financial Data Schedule
99 Material Incorporated by reference from Annual Report on Form 10-K
30
<PAGE>
Exhibit 10.7
EXECUTION COPY
WITH EXHIBIT F AND
SHEARMAN & STERLING OPINION
AS SEPARATELY EXECUTED
U.S. $200,000,000
364-DAY CREDIT AGREEMENT
Dated as of August 20, 1999
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
-- ------------- -----
and
SALOMON SMITH BARNEY INC.
as Lead Arranger and Book Manager
-- ---- -------- --- ---- -------
<PAGE>
T A B L E O F C O N T E N T S
---------------------------------
<TABLE>
Section Page
------- ----
<S> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms 1
1.02. Computation of Time Periods 15
1.03. Accounting Terms 16
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 20
2.07. Interest Rate Determination 20
2.08. Voluntary Conversion of Revolving Advances 21
2.09. Prepayments of Revolving Advances 21
2.10. Increased Costs 22
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 28
2.16. Additional Interest on Eurocurrency Rate Advances 32
2.17. Voluntary Redenomination of Revolving Advances 32
2.18. Currency Equivalents 33
2.19. Evidence of Debt 33
2.20. Use of Proceeds 34
ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING
3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.15 34
3.02. Additional Conditions Precedent to Effectiveness 35
3.03. Conditions Precedent to Each Revolving Borrowing 36
3.04. Conditions Precedent to Each Competitive Bid Borrowing 36
3.05. Determinations Under Sections 3.01 and 3.02 37
3.06. Notice of Effective Date 37
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 45
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.03. Financial Covenants 48
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default 49
ARTICLE VII THE AGENTS
7.01. Authorization and Action 51
7.02. Administrative Agent's Reliance, Etc. 52
7.03. Citibank, Chase, First Union and Affiliates 52
7.04. Lender Credit Decision 52
7.05. Indemnification 53
7.06. Successor Administrative Agent 53
ARTICLE VIII MISCELLANEOUS
8.01. Amendments, Etc. 54
8.02. Notices, Etc. 54
8.03. No Waiver; Remedies 55
8.04. Costs and Expenses 55
8.05. Right of Setoff 56
8.06. Binding Effect 56
8.07. Assignments, Designations and Participations 57
8.08. Confidentiality 60
8.09. Governing Law 61
8.10. Execution in Counterparts 61
8.11. Jurisdiction, Etc. 61
8.12. Judgment 61
8.13. Waiver of Jury Trial 63
</TABLE>
<PAGE>
<TABLE>
Schedules
- ---------
<S> <C>
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 - Form of Opinion of General Counsel of the Borrower
</TABLE>
<PAGE>
364-DAY CREDIT AGREEMENT
Dated as of August 20, 1999
CYTEC INDUSTRIES INC., a Delaware corporation (the "Borrower"), the
--------
banks (the "Banks") listed on the signature pages hereof, SALOMON SMITH BARNEY
-----
INC. ("Salomon"), as arranger and book manager, 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:
-----------
ARTICLE
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 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,
<PAGE>
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 Applicable
Margin Prior to Margin from
the Term the Term
Loan Loan
Public Debt Rating Conversion Conversion
(S&P/Moody's) Date Date
============================================================================================================
<S> <C> <C>
Level 1 0.230% 0.675%
-------
A-/A3 or Above
------------------------------------------------------------------------------------------------------------
Level 2 0.450% 0.925%
-------
Lower than Level 1 but at least BBB+/Baa1
------------------------------------------------------------------------------------------------------------
Level 3 0.505% 1.000%
-------
Lower than Level 2 but at least BBB/Baa2
------------------------------------------------------------------------------------------------------------
Level 4 0.600% 1.250%
-------
Lower than Level 3 but at least BBB-/Baa3
------------------------------------------------------------------------------------------------------------
Level 5 1.050% 1.750%
-------
Lower than Level 4 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 0.070%
-------
A-/A3 or Above
------------------------------------------------------------------------------------------------------
Level 2 0.100%
-------
Lower than Level 1 but at least BBB+/Baa1
------------------------------------------------------------------------------------------------------
Level 3 0.120%
-------
Lower than Level 2 but at least BBB/Baa2
------------------------------------------------------------------------------------------------------
Level 4 0.150%
-------
Lower than Level 3 but at least BBB-/Baa3
------------------------------------------------------------------------------------------------------
Level 5 0.200%
-------
Lower than Level 4 or no Public Debt Rating in effect
======================================================================================================
</TABLE>
<PAGE>
"Applicable Utilization Fee" means, as of any date on which the
--------------------------
aggregate principal amount of the advances exceeds 50% of the aggregate
Commitments, 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
S&P/Moody's Applicable Utilization Fee
--------------------------------------------------------------------------------------------------------
<S> <C>
Level 1 0.125%
-------
A-/A3 or above
--------------------------------------------------------------------------------------------------------
Level 2 0.125%
-------
Lower than Level 1 but at least BBB+/Baa1
--------------------------------------------------------------------------------------------------------
Level 3 0.125%
-------
Lower than Level 2 but at least BBB/Baa2
--------------------------------------------------------------------------------------------------------
Level 4 0.250%
-------
Lower than Level 3 but at least BBB-/Baa3
--------------------------------------------------------------------------------------------------------
Level 5 0.250%
-------
Lower than Level 4 or no Public Debt Rating in effect
=======================================================================================================
</TABLE>
"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
<PAGE>
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.
"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 19, 2000 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.
<PAGE>
"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 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.
<PAGE>
"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.
"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.
<PAGE>
"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
<PAGE>
ERISA (without regard to subsection (2) of such Section) are met with
respect to a contributing sponsor, as dCytec 364-Day Credit Agreement
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 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
<PAGE>
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 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).
<PAGE>
"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;
(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
<PAGE>
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.
"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 first 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
<PAGE>
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.
"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
<PAGE>
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
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.
<PAGE>
"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.
"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".
-------
<PAGE>
"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, 1998
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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, 1999, 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
<PAGE>
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 (a) 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 and (b) the Borrower
shall have paid to the Administrative Agent for the account of each Lender
(other than the Designated Bidders) on the Term Loan Conversion Date a fee equal
to 0.085% on the aggregate amount of such Lender's Commitment.
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 plus (z) the
----
Applicable Utilization Fee, if any, 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
<PAGE>
(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
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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,
<PAGE>
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
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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).
(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
<PAGE>
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 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.
<PAGE>
(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
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.
<PAGE>
(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 (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.
<PAGE>
(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>
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
<PAGE>
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.
(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, 1998.
(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
<PAGE>
status, or financial effect on the Borrower or any of its Subsidiaries, of
the Disclosed Litigation from that described on Schedule 3.01(b).
(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 Edward F. Jackman, Esq., General
Counsel of the Borrower, substantially in the form of Exhibit F hereto
and as to such other matters as any Lender through the Administrative
Agent may reasonably request.
(vi) 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 August 21, 1998 among the
Borrower, as borrower, the lenders parties thereto and 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
<PAGE>
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>
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, 1998, 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, 1999, 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, 1999, and said statement of income and
cash flows for the six
<PAGE>
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, 1998, 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
<PAGE>
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 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.
(q) The Borrower (i) has initiated a review and assessment of all
material areas within its and each of its Subsidiaries' business and
operations that would reasonably be likely to be adversely affected by the
risk that computer applications used by the Borrower or any of its
Subsidiaries may be unable to recognize and perform properly date sensitive
functions involving certain dates prior to and any date after December 31,
1999 (the "Year 2000 Problem") and (ii) has developed and is implementing a
-----------------
plan and timetable for addressing the Year 2000 Problem on a
<PAGE>
timely basis. Based on the foregoing, the Borrower believes that all
computer applications of the Borrower and its Subsidiaries that are
material to its or any of its Subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly
date-sensitive functions for all dates before, on and after January 1,
2000, except to the extent that a failure to do so would not reasonably be
expected to have a Material Adverse Effect.
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.
(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
<PAGE>
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.
(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
<PAGE>
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:
----------------------
(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
<PAGE>
reasonable detail the calculations and other information necessary to
demonstrate compliance with Sections 5.02(a) and (b);
<PAGE>
(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 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)
<PAGE>
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
liabilitCytec 364-Day Credit Agreement y 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:
(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
<PAGE>
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,
(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,
<PAGE>
(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 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>
(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
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
(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 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.
<PAGE>
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
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
<PAGE>
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.
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,
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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.
(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.
<PAGE>
[The rest of this page intentionally left blank]
<PAGE>
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
Name:
Title:
Agents
------
CITIBANK, N.A.,
as Administrative Agent
By
Name:
Title:
THE CHASE MANHATTAN BANK,
as syndication agent
By
Name:
Title:
FIRST UNION NATIONAL BANK,
as documentation agent
By
Name:
Title:
<PAGE>
BANKS
-----
Commitment
- ----------
Administrative Agent
--------------------
$38,000,000 CITIBANK, N.A.
By
Name:
Title:
Syndication Agent
-----------------
$34,000,000 THE CHASE MANHATTAN BANK
Name:
Title:
Documentation Agent
-------------------
$34,000,000 FIRST UNION NATIONAL BANK
By
Name:
Title:
<PAGE>
Co-Agents
---------
$27,000,000 CREDIT LYONNAIS
NEW YORK BRANCH
By
Name:
Title:
$27,000,000 MELLON BANK, N.A.
By
Name:
Title:
Lenders
-------
$10,000,000 BANCA COMMERCIALE ITALIANA
By
Name:
Title:
$10,000,000 BANCA DI ROMA--NEW YORK BRANCH
By
Name:
Title:
$10,000,000 THE BANK OF NEW YORK
By
Name:
Title:
<PAGE>
$10,000,000 THE BANK OF NOVA SCOTIA
By
Name:
Title:
$200,000,000 Total of the Commitments
===========
<PAGE>
SCHEDULE I
CYTEC INDUSTRIES INC.
$200,000,000 364-DAY CREDIT AGREEMENT
APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office Eurocurrency Lending Office
- ------------ ----------------------- ---------------------------
<S> <C> <C>
Banca Commerciale Italiana One William Street One William Street
New York, NY 10004 New York, NY 10004
Attn: Charles Dougherty Attn: Charles Dougherty
Telecopier: (212) 809-2124 Telecopier: (212) 809-2124
Banca di Roma-New York Branch 34 East 51/st/ Street 34 East 51/st/ Street
New York, NY 10022 New York, NY 10022
Attn: Attn:
Telecopier: (212) 407-1740 Telecopier: (212) 407-1740
The Bank of New York 1 Wall Street 21/st/ Floor 1 Wall Street 21/st/ Floor
New York, New York 10256 New York, New York 10256
Attn: Ernest Fung Attn: Ernest Fung
Telecopier: 212 635-7978 Telecopier: 212 635-7978
The Bank of Nova Scotia One Liberty Plaza One Liberty Plaza
New York, NY 10006 New York, NY 10006
Attn: Roger Chu Attn: Roger Chu
Telecopier: (212) 225-5090 Telecopier: (212) 225-5090
The Chase Manhattan Bank 270 Park Avenue 270 Park Avenue
38/th/ Floor 38/th/ Floor
New York, NY 10017 New York, NY 10017
Attn: Mary Elizabeth Swerz Attn: Mary Elizabeth Swerz
Telecopier: (212) 270-7939 Telecopier: (212) 270-7939
Citibank, N.A. 2 Penns Way 2 Penns Way
Suite 200 Suite 200
New Castle, DE 19720 New Castle, DE 19720
Attn: John Williams Attn: John Williams
Telecopier: (302) 894-6120 Telecopier: (302) 894-6120
Credit Lyonnais 1301 Avenue of the Americas 1301 Avenue of the Americas
New York Branch New York, NY 10019 New York, NY 10019
Attn: Andre Kopenski Attn: Andre Kopenski
Telecopier: (212) 459-7696 Telecopier: (212) 459-7696
First Union National Bank 190 River Road 190 River Road
Summit, NJ 07901 Summit, NJ 07901
Attn: Maria Elena Sales Attn: Maria Elena Sales
Telecopier: (908) 489-1010 Telecopier: (908) 489-1010
Mellon Bank, N.A. One Mellon Bank Center One Mellon Bank Center
Pittsburgh, PA 15258 Pittsburgh, PA 15258
Attn: William M. Feathers Attn: William M. Feathers
Telecopier: (412) 234-8888 Telecopier: (412) 234-8888
</TABLE>
<PAGE>
Exhibit 10.13(K)
CYTEC EXECUTIVE SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
-------------------------------------------------------
(As amended October 14, 1999)
Effective as of January 1, 1994, Cytec Industries Inc. (the "Company")
hereby establishes the Cytec Executive Supplemental Employees' Retirement Plan
(the "Plan"). The Plan is intended to constitute an unfunded pension plan
maintained primarily for a select group of management or highly compensated
employees which is exempt from Parts 2, 3, and 4 of Title I of the Employee
Retirement Income Security Act of 1974, as amended. The Plan is not a qualified
plan under the Code and benefits are paid by or on behalf of the Company.
The Plan replaces the American Cyanamid Company and Subsidiaries
Supplemental Employees' Retirement Plan (the "Cyanamid SERP") for those
employees of the Company who were covered by the Cyanamid SERP on December 31,
1993. Pursuant to the Transfer and Distribution Agreement dated December 17,
1993 between American Cyanamid Company and Cytec Industries Inc., the Plan
assumes the liabilities such attributable to employees of the Company covered by
the Cyanamid SERP on December 31, 1993 who became employees of the Company on
January 1, 1994.
<PAGE>
ARTICLE I
Definitions
1.1 "Actuarial Equivalent" means an amount or benefit of equal value based
--------------------
on the interest rate used by the Pension Benefit Guaranty Corporation for
purposes of determining the present value of lump sum distributions on plan
terminations, as the same is in effect from time to time, and the 1971 TPF&C
Forecast Mortality Table (or, at the discretion of the Pension Administration
Committee, the most recent version of such table) with employee ages set back
one year and beneficiary ages set back five years.
1.2 "Company" means Cytec Industries Inc.
-------
1.3 "Board of Directors" means the Board of Directors of Cytec Industries
------------------
Inc.
1.4 "Cause" means (a) the willful and continued failure by a Member
-----
substantially to perform his duties with the Employer (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 Employer which
specifically identifies the manner in which the Employer believes that he has
not substantially performed his duties, or (b) the willful engaging by him in
conduct demonstrably injurious to the Employer. For purposes of this
definition, no act, or failure to act, on the part of the Member shall be
considered "willful" unless done, or omitted to be done, by him without
reasonable
-2-
<PAGE>
belief that his action or omission was in the best interests of the
Employer and was lawful.
1.5 "Change in Control" has the same meaning as under the Employees'
-----------------
Retirement Plan.
1.6 "Compensation Committee" means the Compensation and Management
----------------------
Development Committee of the Board of Directors.
1.7 "Compensation" means base compensation as defined in the Employees'
------------
Retirement Plan plus actual cash bonuses paid to a Member pursuant to the IC
Plan up to 1/3 of base Compensation, except to the extent Section 3.1 requires
use of Target ICP, without consideration of the limit on compensation under
Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, and
including all Compensation which would have otherwise been paid but for the fact
that receipt is deferred to a subsequent year; provided, however, that deferred
Compensation paid in a subsequent year shall not again be included as
Compensation for purposes of computing benefits hereunder and; provided further
that for purposes of determining Compensation for the year of a Member's
termination of employment, for the year that the Member commences Plan Benefits
on account of Total and Permanent Disability, and for any projected Years of
Service, reference to a Member's "salary or wages" (in Section 1.14 of the
Employees' Retirement Plan) at September 1 or at the "prior September 1" shall
be deemed to refer, instead, to a Member's final salary rate immediately prior
to termination of employment.
-3-
<PAGE>
1.8 "Cyanamid Excess Plan" means the American Cyanamid Company and
--------------------
Subsidiaries ERISA Excess Retirement Plan as in effect on December 31, 1993.
1.9 "Cyanamid SERP" means the American Cyanamid Company and Subsidiaries
-------------
Supplemental Employees Retirement Plan as in effect on December 31, 1993.
1.10 "Eligible Employee" means any officer or other key employee employed
-----------------
by an Employer who is a participant in the Employees' Retirement Plan and has at
least ten Years of Service.
1.11 "Employees" Retirement Plan' means the Cytec Salaried and
--------------------------
Nonbargaining Employees' Retirement Plan, as amended from time to time.
1.12 "Employer" means the Company, D Aircraft Products, Inc., Cytec
--------
Fiberite Inc., any successor thereto, and any of the Company's subsidiaries
which adopts the Plan with the consent of the Board of Directors.
1.13 "Excess Plan" means the Cytec Excess Retirement Benefit Plan.
-----------
1.14 "Executive Committee" means the Executive Committee of the Company as
-------------------
provided for in the resolutions adopted by the Board of Directors.
1.15 "Good Reason" has the same meaning as under the Executive Income
-----------
Continuity Plan.
-4-
<PAGE>
1.16 "Grandfathered Participant" means an Eligible Employee included on the
-------------------------
Grandfathered Participant Schedule adopted by the Compensation Committee who (a)
had an accrued benefit under the Cyanamid SERP on December 31, 1993, or (b) the
Compensation Committee elects to grandfather status and grants an accrued
benefit under this Plan equal to the benefit the Eligible Employee would have
had under the Cyanamid SERP on December 31, 1993 if the Eligible Employee had
been a member of the Cyanamid SERP on such date.
1.17 "IC Plan" means the existing system of annual cash bonuses payable to
-------
Company employees 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.
1.18 "Member" means an Eligible Employee who becomes a Member pursuant to
------
Article II.
1.19 "Normal Retirement Date" means the Normal Retirement Date as defined
----------------------
in the Employees' Retirement Plan.
1.20 "Officer" means the Chairman, any Vice Chairman, President, and any
-------
Vice President, Treasurer and Controller of Cytec Industries Inc. chosen by its
Board of Directors.
1.21 "Past Service Plan" means the Cytec Past Service Retirement Plan.
-----------------
-5-
<PAGE>
1.22 "Pension Administration Committee" means the Pension Administration
--------------------------------
Committee created by the Board of Directors, and any successor thereto.
1.23 "Pension Plan Benefit" means the aggregate annual retirement benefit
--------------------
payable to or on account of a Member from the Retirement Plans.
1.24 "Plan" means this Cytec Executive Supplemental Employees' Retirement
----
Plan, as set forth herein, as amended from time to time.
1.25 "Plan Benefit" means the amount of a Member's annual retirement
------------
benefit computed in accordance with the terms of this Plan.
1.26 "Plan Year" means each twelve (12) consecutive month period commencing
---------
each January 1 and ending on the following December 31.
1.27 "Retirement Plans" means the Past Service Plan and the Employees'
----------------
Retirement Plan.
1.28 "SERP" means the Cytec Supplemental Employees' Retirement Plan.
----
1.29 "Special Change in Control" shall have the same meaning as "Change in
-------------------------
Control", except that the reference to "20%" in subsection (i) of the definition
of "Change in Control" in the Employees' Retirement Plan shall be replaced with
"50%".
-6-
<PAGE>
1.30 "Specified Non-Officer" shall mean an Eligible Employee (determined
---------------------
without regard to the "ten Years of Service" requirement of Section 1.10) who
has been specifically designated (and remains specifically designated) by the
Executive Committee, as evidenced by written minutes of a meeting or a unanimous
written consent, as eligible under Section 2.2 to become a full Member upon the
occurrence of a Change in Control. For purposes of eliminating doubt, a person
who ceases to be an employee of an Employer, or who has ceased performing
regular services while remaining in employee status pending termination of
employment under a signed termination agreement, shall cease to be a Specified
Non-Officer or an Officer, as the case may be, without any further action by the
Executive Committee.
1.31 "Target ICP" shall mean target incentive compensation under the IC
------------
Plan applicable to the job level of such Member, irrespective of the amount, if
any, of such compensation actually received by the Member, utilizing target
incentive compensation as of the date the Member retires (in lieu of the prior
September 1 rate) for purposes of determining compensation for the year of a
Member's termination of employment, for the year a Member commences Plan
Benefits on account of Total and Permanent Disability, and for any projected
Years of Service.
1.32 "Total and Permanent Disability" means that a Member has been found
------------------------------
Totally and Permanently Disabled under the Past
-7-
<PAGE>
Service Plan and/or the Employees' Retirement Plan.
1.33 "Years of Service" means Years of Service as defined under the
----------------
Employees' Retirement Plan, which includes Years of Service credited for
purposes of the Past Service Plan.
1.34 For purposes of this Plan, unless the context requires otherwise, the
masculine includes the feminine, the singular the plural, and vice-versa. Any
reference to a "Section" or "Article" shall mean the indicated section or
article of this Plan unless otherwise specified.
[Remainder of page intentionally left blank.]
-8-
<PAGE>
ARTICLE II
Participation
2.1 Election
--------
An Eligible Employee will become a Member effective as of the date the
Compensation Committee approves the election of the Eligible Employee to
participate in the Plan. A Grandfathered Participant will become a Member
effective as of the date the Compensation Committee approves his election to
Grandfathered Participant status; provided, however, a Grandfathered Participant
-------- -------
will not accrue any benefits under this Plan in excess of those set forth on the
Grandfathered Participant Schedule. If the Compensation Committee approves the
election of a Grandfathered Participant to participate in the Plan as a full
Member, the Grandfathered Participant shall cease to be a Grandfathered
Participant and shall not be entitled to the benefit set forth on the
Grandfathered Participant Schedule, but shall instead accrue benefits in
accordance with the formula set forth in Section 3.1 for Members who are not
Grandfathered Participants.
2.2 Change in Control
-----------------
Upon the occurrence of a Change in Control, each Officer and each Specified Non-
Officer (including an Officer or Specified Non-Officer who has not yet completed
ten (10) Years of Service) shall become, automatically, a full Member, and any
Officer who was previously a Grandfathered Participant shall cease to be a
-9-
<PAGE>
Grandfathered Participant and shall be entitled to the Plan Benefit paid under
Section 3.1 to Members who are not Grandfathered Participants.
2.3 Continuance of Participation
----------------------------
After an individual becomes a Member of this Plan, his membership shall
continue until his death, the termination by the Member of his employment other
than by retirement hereunder, the termination by the Company of his employment
for Cause, or the date his Employer ceases to be a member of the controlled
group of corporations which includes the Company; provided that after a Change
in Control his membership shall continue until his death or until the
termination of his employment for Cause.
ARTICLE III
Plan Benefit
3.1 Amount of Plan Benefit
----------------------
The amount of a Member's Plan Benefit shall be equal to A plus B plus C,
except that a Member who is only a Grandfathered Participant shall be entitled
only to the Plan Benefit specified in D, as follows:
A. 1.33% x the Member's Compensation for each Year of Service after
December 31, 1993, including (subject to E, below) Target ICP for
those years that Target ICP exceeded 1/3 of base Compensation,
and which is in excess of the amount payable under
-10-
<PAGE>
Section 3.1(b)(2) of the Employees' Retirement Plan and under the
provisions of the Excess Plan and the SERP which provide for the
related excess and supplemental benefits; plus
B. 1.33% x the number of projected Years of Service to age 65 (not
to exceed 5) x the Member's final year of Compensation, including
(subject to E, below) Target ICP; plus
C. 1.67% x Years of Service credited under the American Cyanamid
Company Employees' Retirement Plan as of December 31, 1993 x
final average Compensation, including (subject to E, below)
Target ICP, where final average Compensation equals the Member's
average annual Compensation including (subject to E, below)
Target ICP based on the three calendar years out of the last ten
calendar years prior to January 1, 2004 which yields the highest
average; minus the sum of the Member's accrued benefits under the
Past Service Plan and under the "roll-up" formula of Section
3.1(b)(1) of the Employees' Retirement Plan (including any
portion of such "roll-up" benefit which is payable under the
Excess Plan and/or the SERP), before Social Security offset; or
D. In the case of a Member who is only a
-11-
<PAGE>
Grandfathered Participant, the Grandfathered Participant's
accrued benefit, if any, as reflected on the Grandfathered
Participant Schedule.
E. In the case of a Member whose employment terminates on or after
January 1, 1999, if for any year (commencing with the year which
is five years prior to the later of the year in which the Member
(x) first becomes a Member, including a Grandfathered
Participant, or (y) attains [or, but for his death would have
attained] age 55) Target ICP is less than 1/3 of base
Compensation, the ICP-based component of the Plan Benefit for
such year under paragraph A, B and C above, shall be computed
using the higher of (x) Target ICP or (y) actual ICP up to 1/3 of
base Compensation.
There is no reduction under paragraphs A, B, C or D above for early
commencement for benefits commencing on or after a Member's attainment of age 60
or commencing at any earlier date if a Member's employment is terminated within
two years after a "Change in Control" as defined in the Employees' Retirement
Plan; provided that such Member's employment is terminated either (i) by the
--------
Employer or (ii) by the Member for Good Reason. The amounts payable pursuant to
paragraphs A, B, C or D are subject
-12-
<PAGE>
to reduction for commencement prior to age 60 in accordance with the terms of
the Employees' Retirement Plan, except as provided in the prior sentence in the
case of a Change in Control, or unless the Committee, in its discretion, decides
not to apply the early retirement reduction factors to all or any component of
the Member's benefit.
For purposes of preventing a reduction for early commencement of benefits
when and as provided above, there shall be added to the amounts payable to a
Member (other than a Grandfathered Participant) under paragraph A, B, or C
above, or to the amounts payable to a Grandfathered Participant under Paragraph
D, above, respectively, the amount of any reduction for early commencement in
such Member's benefits under the related provisions of the Past Service Plan,
the Employees' Retirement Plan, the Excess Plan and the SERP, as the case may
be, which occurs at an age where such a reduction does not occur under this
Section 3.1.
For purposes of Paragraph B above, a Member shall have five projected Years
of Service (except that service shall not be projected beyond age 65), except
that prior to a "Change in Control", in the case of a Member who is an executive
officer of the Company at the time of his retirement, the Compensation Committee
may, in its discretion, decrease the number of projected Years of Service to be
taken into account, and in the case of any other Member, the Executive Committee
may, in its discretion, decrease the number of projected Years of Service to
-13-
<PAGE>
be taken into account.
3.2 Benefits Upon Reemployment
--------------------------
If a Member is rehired after he is entitled to a Plan Benefit, his Plan
Benefit shall not be paid during such period of reemployment prior to Normal
Retirement Date, but shall commence or resume not sooner than the first day of
the month following his subsequent retirement or separation and the Plan Benefit
payable after his subsequent retirement or separation shall be the benefits
earlier applicable, plus any additional benefits computed in accordance with
Section 3.1 insofar as additional employment entitled him to additional
benefits.
3.3 Total and Permanent Disability Benefit
--------------------------------------
An Officer who ceases active employment as a result of Total and Permanent
Disability shall automatically become a Member hereunder. A Member who ceases
active employment as a result of Total and Permanent Disability shall be
entitled to a Plan Benefit computed in accordance with Section 3.1(A), (B), and
(C) if applicable, reduced by the amount of any loss-of-time payments to which
the Member might be entitled under workers' compensation laws, and excluding any
portion of a Plan Benefit based on projected Years of Service unless approved by
the Committee or after a Change in Control. Plan Benefits hereunder shall not be
reduced on account of early commencement. The Plan Benefit under this Section
3.3 shall be paid beginning at the same time and in the same form as the
Member's disability retirement benefit under the Employees' Retirement Plan;
provided, however, that upon the
-14-
<PAGE>
later of the Member's (i) date of retirement or (ii) the first day of the month
following the Member's attainment of age 60, the Member may select an optional
form of payment as set forth in Section 6.2 of this Plan.
ARTICLE IV
Vesting
A Member's Plan Benefit shall be fully vested at all times; provided,
however, that Plan Benefits hereunder are subject to divestment and shall be
forfeited if the Member's employment with the Employer is terminated for Cause.
ARTICLE V
Death Benefits
5.1 Standard Death Benefit
----------------------
A Member may elect any preretirement survivor annuity option pursuant to
Article VII of the Employees' Retirement Plan. If a Member does not make a
separate preretirement annuity election under this Plan, the preretirement
survivor annuity election of the Member under the Employees' Retirement Plan
shall determine how the Plan Benefit hereunder is paid in the event of the
Member's death prior to retirement.
If a Member dies prior to retiring and at such time has a preretirement
survivor annuity election in effect under this Plan, (or under the Employees'
Retirement Plan if no election is made under this Plan), the Member's surviving
spouse or
-15-
<PAGE>
contingent annuitant as designated in the preretirement survivor annuity
election shall receive a benefit calculated pursuant to Section 3.1 adjusted in
accordance with the option elected by the Member, as if such Member had retired
on the date of his death (irrespective of whether such Member was eligible to
retire on such date) and had survived to the first day of the month immediately
following his 60/th/ birthday (if such date is subsequent to his actual date of
death).
5.2 Special Death Benefit
---------------------
If a Grandfathered Participant, an Officer or an Eligible Employee
designated by the Compensation Committee or the Executive Committee as eligible
for benefits pursuant to this Section dies, and if, on the date of the death of
such Employee, (i) the sum of his age and Years of Service under the Employees'
Retirement Plan equal 65, (ii) there is in effect with respect to such Employee
a payment option under the Employees' Retirement Plan pursuant to which payments
are to be made, on account of the death of such Employee while an Employee, to
the surviving spouse of such Employee, and (iii) such spouse survives such
Employee, there shall be payable to such surviving spouse a benefit calculated
in accordance with Section 3.1 as if the Employee had elected a joint and 50%
survivor annuity option under the Employees' Retirement Plan, had retired on the
date of his death (irrespective of whether such Employee was eligible to retire
on such date) and had survived to the first day of the month immediately
following his 60/th/ birthday (if such date is
-16-
<PAGE>
subsequent to his actual date of death).
ARTICLE VI
Form and Time of Payment
6.1 Time of Payment
---------------
A Member's Plan Benefit payable under Sections 3.1 or 3.2 of this Plan will
be paid beginning at the same time as the Member's Pension Plan Benefit under
the Employees' Retirement Plan, except as provided in Section 6.3. A Member may
retire under this Plan on the first day of any month following the date he
becomes a Member, provided that his employment with the Employer has been
terminated for other than Cause. Except as provided in Section 6.3, payment of
the Member's Plan Benefit shall commence on the later of (i) the date of his
retirement, or (ii) the first day of the month following his 60/th/ birthday
(55/th/ birthday if the Member's employment is terminated within two years after
a Change in Control, either by the Member for Good Reason or by the Employer) or
such earlier date (but not prior to attainment of age 55) as shall have been
approved by the Compensation Committee for any Member who is an executive
officer of the Company at any time during the calendar year in which he retires
or by the Executive Committee for any other Member.
6.2 Form of Payment
---------------
Except as provided in Section 6.3, a Member may elect to have his Plan
Benefit paid in any of the optional forms offered under Article VI of the
Employees' Retirement Plan. For such purpose, the Member may designate a
different form of payment,
-17-
<PAGE>
joint annuitant and/or beneficiary under this Plan than under the Employees'
Retirement Plan. The amount of the Plan Benefit shall be adjusted and determined
in accordance with those provisions of the Employees' Retirement Plan governing
optional forms.
6.3 Special Change in Control
-------------------------
If there occurs a Special Change in Control, then notwithstanding any
election hereunder or under the Employees' Retirement Plan, the Company shall
pay forthwith to the Member in a single lump sum an amount equal to the full
amount of the Actuarial Equivalent as of the date of such payment of such
Member's (i) Plan Benefit hereunder, (ii) SERP Benefit under the SERP, and (iii)
Excess Benefit under the Excess Plan, such payments under clause (ii) and (iii)
being made in consideration of the relinquishment by the Member of the related
benefits under the SERP and the Excess Plan. Notwithstanding Section 1.1 of
this Plan, or of the SERP or of the Excess Plan, as the case may be, "Actuarial
Equivalent," for purposes of this Section 6.3 shall be based on a single life
using (A) an interest rate (on the day preceding the Member's last day of
employment) equal to sixty (60%) percent of the average of (i) the 10-year
Treasury Bond yield plus eight-tenths of one percent per annum, and (ii) the 30-
year Treasury Bond yield plus 1.5% per annum; and (B) the mortality table
(including the set back of ages) specified in Section 1.1.
-18-
<PAGE>
ARTICLE VII
Administration
7.1 Pension Administration Committee
--------------------------------
The Pension Administration Committee shall supervise the daily management
and administration of the Plan. The members of the Pension Administration
Committee shall serve without compensation.
7.2 Responsibilities and Powers of the Pension Administration Committee and
-----------------------------------------------------------------------
Compensation Committee
- ----------------------
(a) The Pension Administration Committee shall have the responsibility:
(i) To administer the Plan in accordance with the terms hereof, and to
exercise all powers specifically conferred upon the Pension Administration
Committee hereby or necessary to carry out the provisions thereof; and
(ii) To keep all records relating to Members of the Plan and such other
records as are necessary for proper operation of the Plan.
(b) The Compensation Committee shall be responsible for construing this
Plan, which construction shall be conclusive, correcting any defects, supplying
omissions, and reconciling inconsistencies to the extent necessary to effectuate
the Plan.
7.3 Operation of the Pension Administration Committee
-------------------------------------------------
In carrying out the Pension Administration Committee's functions hereunder:
(a) The Pension Administration Committee may adopt rules and regulations
necessary for the administration of the Plan and which are consistent with the
provisions hereof.
-19-
<PAGE>
(b) All acts and decisions of the Pension Administration Committee shall be
approved by a majority of the members of the Pension Administration Committee
and shall apply uniformly to all Members in like circumstances. Written records
shall be kept of all acts and decisions.
(c) The Pension Administration Committee may authorize one or more of its
members to act on its behalf. The Pension Administration Committee may also
delegate, in writing, any of its responsibilities and powers to an individual(s)
who is not a Pension Administration Committee member.
(d) The Pension Administration Committee shall have the right to hire, at
the expense of the Employer, such professional assistants and consultants as it,
in its sole discretion, deems necessary or advisable, including, but not limited
to, accountants, actuaries, consultants, counsel and such clerical assistance as
is necessary for proper discharge of its duties.
7.4 Indemnification
---------------
In addition to any other indemnification that a fiduciary, including but
not limited to a member of the Pension Administration Committee, the
Compensation Committee or the Executive Committee, is entitled to, the Employer
shall indemnify such fiduciary from all claims for liability, loss or damage
(including payment of expenses in connection with defense against such claim)
arising from any act or failure to act which constitutes a breach of such
individual's fiduciary responsibilities with respect to this Plan under any
aspects of
-20-
<PAGE>
the law.
ARTICLE VIII
Miscellaneous
8.1 Benefits Payable by the Employer
--------------------------------
All benefits payable under this Plan constitute an unfunded obligation of
the Employer. Payments shall be made, as due, from the general funds of the
Employer. The Employer, at its option, may maintain one or more bookkeeping
reserve accounts to reflect its obligations under the Plan and may make such
investments as it may deem desirable to assist it in meeting with obligations.
Nothing contained in this Section 8.1 shall limit the ability of the Employer to
pay benefits hereunder through a Rabbi Trust. Any such investments shall be
assets of the Employer subject to claims of its general creditors. No person
eligible for a benefit under this Plan shall have any right, title to interest
in any such investments.
8.2 Amendment or Termination
------------------------
(a) The Board of Directors reserves the right to amend, modify, or restate
or terminate the Plan; provided, however, that no such action by the Board of
Directors shall reduce a Member's Plan Benefit accrued as of the time thereof.
The provisions of this Section prohibiting an action by the Board of Directors
which would reduce a Member's accrued Plan Benefit cannot be amended without the
consent of all Members (including those who have retired). Any amendment to the
Plan shall be made in
-21-
<PAGE>
writing by the Board of Directors, with or without a meeting, or shall be made
in writing by the Pension Administration Committee, the Compensation Committee,
or the Executive Committee, to the extent that Board of Directors has
specifically delegated the authority to make such amendment to the Plan the
Pension Administration Committee, the Compensation Committee or the Executive
Committee.
(b) If the Plan is terminated, a determination shall be made of each
Member's Plan Benefit as of the Plan termination date (determined in accordance
with Section 8.2(a)). The amount of such benefits shall be payable to the Member
at the time it would have been payable under Article VI if the Plan had not been
terminated. No interest shall be credited on a Plan Benefit.
(c) No amendment or termination made within one year before a Change in
Control and made while a Prospective Change in Control is pending may adversely
affect any benefit that might at any time be or become owing hereunder to a
person who, immediately prior to the commencement of such Prospective Change in
Control, was an Officer, a Grandfathered Participant or a Member without the
consent of such person (other than a benefit to any such person who is the
person, or part of the group, making the offer, or negotiating to make the
offer, which constitutes the Prospective Change in Control).
As used herein, the term "Prospective Change in Control" means (i) any
offer presented, directly or indirectly, to the Board of Directors of the
Company which, if consummated, would
-22-
<PAGE>
constitute a Change in Control or (ii) any negotiation with the Board of
Directors or any committee or representative thereof to make such an offer
(including the unilateral announcement of the terms on which such an offer would
be made).
8.3 Status of Employment
--------------------
Nothing herein contained shall be construed as conferring any rights upon
any Member or any person for a continuation of employment, nor shall it be
construed as limiting in any way the right of the Employer to discharge any
Member or to treat him without regard to the effect which such treatment might
have upon him as a Member of the Plan.
8.4 Payments to Minors and Incompetents
-----------------------------------
If a Member or beneficiary entitled to receive any benefits hereunder is a
minor or is deemed by the Pension Administration Committee or is adjudged to be
legally incapable of giving valid receipt and discharge for such benefits, they
will be paid to the duly appointed guardian of such minor or incompetent or to
such other legally appointed person as the Pension Administration Committee
might designate. Such payment shall, to the extent made, be deemed a complete
discharge of any liability for such payment under the Plan.
8.5 Authorized Payments
-------------------
The Pension Administration Committee may at any time and from time to time
require, as a condition precedent to making or authorizing the payment of any
benefit hereunder, evidence of the prospective payee's right to receive such
payment. Without
-23-
<PAGE>
limiting the generality of the foregoing, the Pension Administration Committee
may require evidence of the date of birth of any Member, contingent annuitant or
beneficiary, or of survival of a contingent annuitant or beneficiary.
8.6 Inalienability of Benefits
--------------------------
The right of any person to any benefit or payment under the Plan shall not
be subject to voluntary or involuntary transfer, alienation or assignment, and,
to the fullest extent permitted by law, shall not be subject to attachment,
execution, garnishment, sequestration or other legal or equitable process. In
the event a person who is receiving or is entitled to receive benefits under the
Plan attempts to assign, transfer or dispose of such right, or if an attempt is
made to subject said right to such process, such assignment, transfer or
disposition shall be null and void.
8.7 Adjustment of Benefits
----------------------
If the date of birth or other data deemed by the Pension Administration
Committee to be vital, with respect to any Member, contingent annuitant or
beneficiary shall be misstated, the Pension Administration Committee may limit
the amount and date of payment of benefits to any such person, his contingent
annuitant and/or other beneficiary (whether or not such person shall have
theretofore retired in accordance with the Plan) to the reduced benefits which
would be payable in accordance with the correct information. In such case,
payments of benefits made subsequent to the date of discovery of any such
misstatement shall be
-24-
<PAGE>
adjusted for any excess or deficiency (based upon the correct facts) in the
amount of benefits theretofore paid to such person, his contingent annuitant
and/or other beneficiary.
8.8 Commuting of Benefits
---------------------
Notwithstanding any other provision of the Plan, the Pension Administration
Committee may, in its sole discretion, commute into one or more payments the
Plan Benefit of any Member (i) the present value of which, calculated by using
the interest rate then used by the Pension Benefit Guaranty Corporation for
purposes of determining the present value of the lump sum distribution on plan
terminations, is not more than $3,500, or (ii) to any Member's contingent
annuitant or other beneficiary upon the request of and the showing of need by
such contingent annuitant or other beneficiary.
8.9 Governing Law
-------------
Except to the extent pre-empted by federal law, the provisions of the Plan
will be construed according to the laws of the State of New Jersey.
-25-
<PAGE>
Exhibit 10.13(V)
July 15, 1999
Mr. James W. Hirsch
248 Brookside Avenue
Wyckoff, NJ 07481
Dear Jim:
This letter is to confirm the terms of the arrangements that were discussed with
you concerning the termination of your employment on August 31, 1999. I am also
providing you a separate letter, dated today, summarizing benefits to which you
are entitled after termination of employment under the terms of Cytec's employee
benefit and compensation plans.
The Company will provide the following subject to your continuing compliance
with the confidentiality provisions of your employment agreement:
Executive Income Continuity Plan:
- --------------------------------
The Compensation and Management Development Committee of the Board of Directors
("the Committee") has determined that you will receive an income continuation
benefit of $259,399 (equivalent to one year's salary and target bonus) payable
as a lump-sum immediately following termination of employment and that you will
receive the other post-employment non-income continuation benefits under the
plan (e.g., financial/tax planning and welfare benefits).
Consulting Agreement:
- --------------------
The Company will enter into a two-year consulting agreement (9/1/99 - 8/31/01)
with you providing for payments of $24,687.50 at the beginning of each quarter
($98,750/yr) in return for you providing up to 60 days of consulting time/year
and signing a two-year non-compete agreement (a copy of the proposed agreement
is attached).
1999 Incentive Compensation Paid 2000:
- -------------------------------------
You will be eligible to receive 1999 Incentive Compensation, payable in the
first quarter of 2000, (prorated for the eight months you will have worked in
1999). Payment of incentive compensation depends on Company and individual
performance, and is not guaranteed.
Pension Plan:
- ------------
The Committee will not take any steps to reduce the five projected years of
service to which you are otherwise entitled under Section 3.1 of the Executive
Supplemental Employees' Retirement Plan.
<PAGE>
Page 2
Mr. J. W. Hirsch
July 15, 1999
Outplacement:
- ------------
The Company will provide you with Executive Outplacement through
Manchester/Diversified.
Computer:
- --------
The Company has agreed that you may purchase, at book value, the computer and
related equipment currently assigned to you.
The benefits briefly described in the related summary of post-employment
benefits are subject to the terms of the plan documents, which control. In
addition, certain of those post-employment benefits are provided only under the
Company's welfare benefit plans, which the Company can amend or terminate at any
time. The continuing availability of these benefits is subject to the Company's
right to amend or terminate these Plans.
If this agreement accords with your understanding, please so indicate by signing
and returning a copy of this letter.
Very truly yours,
EFJ:cm
Att.
3919.doc
Accepted and Agreed:
________________________
Name:
Social Security No.
Date:
<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,
----------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings before income taxes and equity in
earnings of associated companies 41.6 40.7 124.2 133.8
Add:
Distributed income of associated companies 0.9 0.9 5.8 6.1
Amortization of capitalized interest - - 0.1 -
Fixed Charges 8.3 8.9 25.7 22.7
Less:
Capitalized interest (0.2) (0.6) (0.5) (0.9)
---------- ---------- ---------- ----------
Earnings as adjusted 50.6 49.9 155.3 161.7
Fixed Charges:
Interest on indebtedness including
amortized premiums, discounts and
deferred financing costs 7.1 7.5 22.1 18.5
Portion of rents representative of the
interest factor 1.2 1.4 3.6 4.2
---------- ---------- ---------- ----------
Fixed charges 8.3 8.9 25.7 22.7
---------- ---------- ---------- ----------
Ratio of earnings to fixed charges 6.1 5.6 6.0 7.1
========== ========== ========== ==========
</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 STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-1999
<PERIOD-START> DEC-31-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 14,100
<SECURITIES> 0
<RECEIVABLES> 254,400
<ALLOWANCES> 9,600
<INVENTORY> 130,900
<CURRENT-ASSETS> 480,100
<PP&E> 1,374,100
<DEPRECIATION> (714,600)
<TOTAL-ASSETS> 1,728,300
<CURRENT-LIABILITIES> 360,800
<BONDS> 319,600
0
100
<COMMON> 500
<OTHER-SE> 493,100
<TOTAL-LIABILITY-AND-EQUITY> 1,728,300
<SALES> 1,058,400
<TOTAL-REVENUES> 1,058,400
<CGS> 733,300
<TOTAL-COSTS> 920,900
<OTHER-EXPENSES> (6,800)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,100<F1>
<INCOME-PRETAX> 127,400<F2>
<INCOME-TAX> 36,000
<INCOME-CONTINUING> 91,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,400
<EPS-BASIC> 2.12
<EPS-DILUTED> 2.05
<FN>
<F1>THIS NUMBER REPRESENTS INTEREST EXPENSE, NET
<F2>THIS NUMBER INCLUDES EQUITY IN NET INCOME OF ASSOCIATED COMPANIES OF $3,200 FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1999.
</FN>
</TABLE>
<PAGE>
Exhibit 99
Pursuant to Rule 12b-23 under the Securities and Exchange Act, the text below
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 ability 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
<PAGE>
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 and equipment which contains or is contaminated by polychlorinated
biphenyls.
Pursuant to Rule 12b-23 under the Securities and Exchange Act, the text below
from the Company's Annual Report on Form 10-K is filed as to matters
incorporated by reference in footnote 2 to Part I, Item 1 ("Notes to
Consolidated Financial Statements").
During 1998 the Company completed the following acquisitions and dispositions:
On June 24, 1998, the Company acquired assets of the OrePrep minerals processing
product line ("OrePrep") from Baker Petrolite Corporation for approximately
$9.0. The acquisition resulted in an excess of the purchase price over the
assets acquired of $8.3, which is included in Acquisition Intangibles in the
Consolidated Balance Sheet and will be amortized on a straight-line basis over a
period of up to 40 years. OrePrep supplies mineral processing reagents and
services to the mining industry. The acquired product line 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 $55.7. Payment of the purchase price
was funded under the Company's Credit Facility. The acquisition resulted in an
excess of the purchase price over the assets acquired of $40.7, which is
included in Acquisition Intangibles in the Consolidated Balance Sheet and will
be amortized on a straight-line basis over a period of up to 40 years. The
acquired business produces and sells cross-linking resins for coating
applications primarily in Europe from a single manufacturing plant in
Lillestrom, Norway. The acquired business was integrated into the Company's
existing specialty resins product line.
On October 9, 1998, the Company completed its 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 was converted into the right to receive 0.3098 of a share of Cytec
common stock. In the transaction, the Company issued from Treasury 1,248,620
shares of common stock. In addition, outstanding options and warrants to acquire
AMT stock were converted into a total of 259,308 incentive and non-qualified
stock options, at a weighted average exercise price of $10.07 per share, and
75,901 warrants that allow the holders to purchase the Company's common stock at
a weighted average price of $25.14 per share. The cost of the acquisition was
approximately $26.8, including the shares issued, options and
<PAGE>
warrants converted and previous shares acquired, plus the assumption of
approximately $5.4 in debt. AMT manufactures and markets advanced composite
materials for customers in the aerospace, defense, transportation and other
industries. The acquisition resulted in an excess of the purchase price over the
assets acquired of $23.6, which is included in Acquisition Intangibles in the
Consolidated Balance Sheet and will be amortized on a straight-line basis over a
period of up to 40 years. The acquired business was integrated into the
Company's existing specialty materials product line. On October 26, 1998, the
Company sold the assets of the AMT graphite golf shaft business for
approximately $6.2 in cash.
All three acquisitions have been accounted for under the purchase method of
accounting. Consolidated results of operations have been included from the date
of acquisition. Consolidated results of operations for 1998 or 1997 would not
have been materially different if any of the acquisitions had occurred on
January 1, 1997. Accordingly, pro forma sales, net earnings and earnings per
share disclosures have not been provided.
On November 23, 1998, the Company completed the sale of its bulk molding
compounds business to Bulk Molding Compounds, Inc. of West Chicago, Illinois for
$17.0 in cash, resulting in a pretax gain of $4.4. The business acquired by Bulk
Molding Compounds, Inc. included Cytec's manufacturing, laboratory and sales
facility located at Perrysburg, Ohio.
Pursuant to Rule 12b-23 under the Securities and Exchange Act, the text below
from the Company's Annual Report on Form 10-K is filed as to matters
incorporated by reference in Part I, Item 3 ("Quantitative and Qualitative
Disclosures About Market Risk").
The following discussion provides forward-looking quantitative and qualitative
information about the Company's potential exposures to market risk arising from
changes in foreign currency rates, commodity prices and interest rates. Actual
results could differ materially from those projected in this forward-looking
analysis. The Company's exposure to market risk from equity price changes was
immaterial at December 31, 1998.
Market risk represents the potential loss arising from adverse changes in the
value of financial instruments. The risk of loss is assessed based on the
likelihood of adverse changes in fair values, cash flows or future earnings.
In the ordinary course of business, the Company is exposed to various market
risks, including fluctuations in foreign currency rates, commodity prices and
interest rates. To manage the exposure related to these risks, the Company may
engage in various derivative transactions in accordance with Company-established
policies. The Company neither holds nor issues financial instruments for trading
purposes. Moreover, the Company enters into financial instrument transactions
either through regulated future exchanges or with major financial
<PAGE>
institutions, thereby limiting exposure to credit- and performance-related
risks.
Foreign Exchange Rate Risk
- --------------------------
The risk of adverse exchange rate fluctuations is mitigated by the fact that
there is no concentration of foreign currency exposure. In addition, the Company
enters into foreign exchange forward contracts primarily to hedge currency
fluctuations of transactions denominated in foreign currencies. At December 31,
1998, the principal transaction hedged were short-term intercompany loans an
intercomany trade accounts receivable and payable. The maturity dates of the
foreign exchange contracts are less than six months and strongly correlate to
the maturity date of the underlying transaction. The foreign exchange gains or
losses ad the offsetting losses or gains of the hedged transaction are marked to
market and reflected in net earnings.
At December 31, 1998, the Company had net foreign exchange contracts to purchase
various currencies, principally British pounds and Dutch guilders, for $21.4 and
to sell various currencies, principally British pounds and German marks for
$11.3. The differences between fair value of all outstanding contracts at
year-end and the contract amounts were immaterial. Assuming that year-end
exchange rates between the underlying currencies of all outstanding foreign
exchanges contracts an the various hedged currencies were to adversely change by
a hypothetical 10%, the change in the fair value of all outstanding contracts at
year-end would be a decrease of approximately $2.8. However, since these
contracts hedge foreign currency denominated transactions, any change in the
fair value of he contracts would be offset by changes in the underlying value of
the transaction being hedged.
At December 31, 1998, non-derivative financial instruments subject to foreign
exchange rate risk consisted primarily of $10.3 in foreign currency denominated
short-term debt. Assuming that year-end exchange rates were to adversely change
by a hypothetical 10%, the increase in the fair value would be approximately
$1.0.
Commodity Price Risk
- --------------------
Occasionally, the Company utilizes futures contracts, predominately involving
natural gas, to manage its exposure to price risk associated with the production
of ammonia, methanol and other building block chemical products. The maturity of
these contracts correlate highly to the actual purchases of the commodity. The
contracts are principally settled through actual delivery of the physical
commodity and have the effect of securing predetermined prices that the Company
pays for the underlying commodity. Accordingly, while these contracts limit the
Company's exposure to increases in commodity prices, they also limit the
potential benefit the Company might have otherwise received from decreases in
commodity prices.
At December 31, 1998, the Company had $4.6 net natural gas futures contracts
with January, February and March 1999 delivery dates outstanding. Based on
year-end prices, the Company had a
<PAGE>
net unrealized loss of $1.0. Assuming that year-end prices were to adversely
change by a hypothetical 10%, the incremental increase in cost of goods sold
would be approximately $0.4.
Interest Rate Risk
- ------------------
At December 31, 1998, the financial liabilities of the Company exposed to
changes in interest rates consisted mainly of $10.3 in foreign currency
denominated short-term borrowings and $100.0 variable rate borrowings
outstanding under the Credit Facility. The Company is also party to an interest
rate swap agreement that converts $20.0 of variable rate interest obligations on
the Company's Credit Facility to fixed rate interest obligations. Assuming that
a hypothetical increase of 1% in interest rates and all other variables, i.e.,
foreign exchange rates and debt levels, were to remain constant, interest
expense would increase $0.9 per year. Included in long-term debt is also $319.5
of fixed rate public debt, which is not subject to interest rate risk.
