FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1994
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 1-5212
TELEDYNE, INC.
______________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-2282626
________________________________________ ___________________________________
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1901 Avenue of the Stars
Los Angeles, California 90067-6046
________________________________________ ___________________________________
(Address of Principal Executive Offices) (Zip Code)
(310) 277-3311
____________________________________________________
(Registrant's Telephone Number, Including Area Code)
N/A
- ---------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether Registrant (l) 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
---------- ----------
At October 20, 1994, Registrant had outstanding 55,448,548 shares of
its Common Stock.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
TELEDYNE, INC. AND SUBSIDIARIES
-------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(In millions except share and per share amounts)
September 30, December 31,
1994 1993
------------- ------------
(Unaudited)
ASSETS
- ------
Current Assets:
Cash and marketable securities $ 62.4 $ 155.0
Receivables 379.6 332.4
Inventories 204.6 172.6
Deferred income taxes 116.0 123.0
Prepaid expenses 21.3 20.5
---------- --------
Total current assets 783.9 803.5
Property and Equipment 295.4 318.8
Prepaid Pension Cost 331.4 280.3
Deferred Income Taxes 15.7 24.0
Other Assets 76.0 51.2
---------- --------
$ 1,502.4 $1,477.8
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 102.8 $ 106.9
Current portion of long-term debt 58.9 3.3
Accrued liabilities 351.0 338.1
---------- --------
Total current liabilities 512.7 448.3
Long-Term Debt 356.7 356.6
Accrued Postretirement Benefits 276.5 277.5
Other Long-Term Liabilities 100.7 114.9
---------- --------
1,246.6 1,197.3
---------- --------
Shareholders' Equity:
Common stock, $1.00 par value, 100,000,000 shares
authorized, 55,448,548 shares at September 30,
1994 and 55,439,048 shares at December 31, 1993
issued and outstanding 55.4 55.4
Additional paid-in capital 35.1 34.9
Retained earnings 161.9 186.7
Currency translation adjustment 3.2 3.5
Net unrealized appreciation 0.2 -
---------- --------
Total shareholders' equity 255.8 280.5
---------- --------
$ 1,502.4 $1,477.8
========== ========
The accompanying notes are an integral part of these statements.
<PAGE>
TELEDYNE, INC. AND SUBSIDIARIES
-------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(In millions except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
Sales $ 578.1 $ 597.9 $1,746.8 $1,858.8
Costs and Expenses*:
Cost of sales 431.8 459.5 1,318.4 1,429.6
Selling and administrative
expenses 106.5 110.5 449.9 349.3
Interest expense 11.3 10.4 32.3 34.5
Realignment/restructure (0.3) - (2.6) 8.2
-------- -------- -------- --------
549.3 580.4 1,798.0 1,821.6
-------- -------- -------- --------
Earnings (Loss) Before Other Income 28.8 17.5 (51.2) 37.2
Other Income 2.0 2.7 9.4 51.6
-------- -------- -------- --------
Income (Loss) before Income Taxes,
Extraordinary Loss and Cumulative
Effect of Accounting Change 30.8 20.2 (41.8) 88.8
Provision (Credit) for Income Taxes 11.5 5.0 (17.0) 31.7
--------- -------- -------- --------
Income (Loss) before Extraordinary
Loss and Cumulative Effect of
Accounting Change 19.3 15.2 (24.8) 57.1
Extraordinary Loss on
Redemption of Debt - - - (3.7)
Cumulative Effect of
Accounting Change - - - (185.6)
--------- -------- -------- --------
Net Income (Loss) $ 19.3 $ 15.2 $ (24.8) $ (132.2)
========= ======== ======== ========
Income (Loss) Per Share:
Before extraordinary loss and
cumulative effect of
accounting change $ 0.35 $ 0.27 $ (0.45) $ 1.03
Extraordinary loss on
redemption of debt - - - (0.07)
Cumulative effect of
accounting change - - - (3.35)
-------- -------- -------- --------
Net Income (Loss) Per Share $ 0.35 $ 0.27 $ (0.45) $ (2.39)
======== ======== ======== ========
Cash Dividends Per Share $ - $ 0.20 $ - $ 0.60
======== ======== ======== ========
* Includes a credit of non-cash pension income of $18.9 million and $56.6
million for the third quarter and nine months of 1994 and $15.9 million and
$49.5 million for the same periods in 1993.
The accompanying notes are an intregal part of these statements.
<PAGE>
TELEDYNE, INC. AND SUBSIDIARIES
-------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In millions)
(Unaudited)
Nine Months Ended
September 30,
-----------------
1994 1993
------- --------
Operating Activities:
Net loss $ (24.8) $(132.2)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization of property and equipment 56.5 59.4
Decrease (increase) in receivables (52.2) 14.4
Increase in prepaid pension cost (51.1) (43.9)
Decrease (increase) in inventories (34.5) 0.5
Decrease (increase) in deferred income taxes 15.2 (67.3)
Increase in accounts payable and accrued liabilities 15.2 1.8
Realignment/Restructure (2.6) 8.2
Increase (decrease) in accrued postretirement benefits (1.0) 303.5
Gain on sale of Litton common stock - (40.4)
Other, net (32.5) (15.8)
------- -------
Net cash provided by (used in) operating activities (111.8) 88.2
------- -------
Investing Activities:
Proceeds from the sale of marketable securities 88.6 140.5
Net decrease in short-term investments 12.5 22.5
Purchases of marketable securities (8.0) (70.4)
------- -------
Net proceeds from sale of marketable securities 93.1 92.6
Purchases of property and equipment (41.1) (56.1)
Proceeds from the sale of businesses 7.2 -
Collection of notes receivable from
the sales of businesses 2.8 17.1
Other, net 4.8 1.9
------- -------
Net cash provided by investing activities 66.8 55.5
------- -------
Financing Activities:
Increase in long-term debt 56.7 -
Decrease in checks outstanding (6.5) (1.0)
Reduction of long-term debt (3.3) (101.1)
Cash dividends - (33.2)
Other, net 0.2 0.3
------- -------
Net cash provided by (used in) financing activities 47.1 (135.0)
------- -------
Increase in cash $ 2.1 $ 8.7
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
TELEDYNE, INC. AND SUBSIDIARIES
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Note 1. Consolidated Financial Statements -
The interim consolidated financial statements of Teledyne, Inc. and
subsidiaries have not been examined by independent public accountants; however,
in the opinion of the Company, all adjustments (which include only recurring
normal adjustments and the adjustments discussed below) required for a fair
presentation of the financial position as of September 30, 1994 and the results
of operations and cash flows for the nine months ended September 30, 1994 and
1993, have been made. These consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto
included in the Company's December 31, 1993 annual report to shareholders. The
results of operations for these interim periods are not necessarily indicative
of the operating results for a full year. Certain amounts for 1993 have been
reclassified to conform with the 1994 presentation.
Note 2. Inventories -
Inventories were as follows (in millions):
September 30, December 31,
1994 1993
------------- ------------
Raw materials and work-in process $ 314.8 $ 257.1
Finished goods 50.0 49.0
------- -------
364.8 306.1
Progress payments (160.2) (133.5)
------- -------
$ 204.6 $ 172.6
======= =======
<PAGE>
Note 3. Long-term Debt -
In 1994, the Company settled with the U.S. government two civil cases
relating to its Teledyne Relays and Systems units. In connection with the
settlement, the Company paid the U.S. government $56.25 million in the second
quarter of 1994 and agreed to pay an additional $56.25 million in two
installments in March and September 1995. The deferred payments, evidenced by
promissory notes, incur interest at 6.75% and are secured by irrevocable
letters of credit.
Effective July 13, 1994, the Company entered into a credit agreement
providing a total commitment of $135.0 million for three years which the
Company may use for borrowings or letters of credit ($75 million letters of
credit sublimit). Borrowings under the credit agreement, at the Company's
election, bear interest at either a floating rate generally based on a defined
prime rate or a fixed rate based on an interbank offered rate. A fee is
charged on the amount of the unused commitment. The agreement contains
restrictive covenants relating to net worth, investments, asset sales and
material changes in lines of business. On July 18, 1994, the Company placed
existing letters of credit of $56.25 million, which secure the principal amount
of the promissory notes to the U.S. government, under the credit agreement.
In 1993, the Company redeemed at par $100 million of its 10% Subordinated
Debenture due 2004, Series C resulting in an extraordinary loss of $6.0 million
($3.7 million, net of tax).
<PAGE>
Note 4. Supplemental Balance Sheet Information -
Cash and marketable securities were as follows (in millions):
September 30, December 31,
1994 1993
------------- ------------
Cash $ 16.8 $ 14.7
United States Treasury notes, at amortized
cost 33.7 115.3
Gross unrealized losses on
United States Treasury notes (0.6) -
Repurchase agreements, at cost, which
approximates market 12.5 25.0
------- -------
$ 62.4 $ 155.0
======= =======
On January 1, 1994, the Company changed its accounting for investments in
debt and equity securities to comply with the provisions of Statement of
Financial Accounting Standards No. 115. The statement requires that these
investments be classified as either held-to-maturity, trading or available-for-
sale. The Company's investments in debt and equity securities are classified
as available-for-sale and are reported at fair value, with unrealized gains and
losses reported as a separate component of shareholders' equity. As of
September 30, 1994, the Company's investments in debt securities mature within
four years.
Property and equipment is presented net of accumulated depreciation and
amortization of $550.7 million at September 30, 1994 and $508.5 million at
December 31, 1993.
Accounts payable included $15.6 million at September 30, 1994 and $22.1
million at December 31, 1993 for checks outstanding in excess of cash balances.
Note 5. Shareholders' Equity -
In 1994, the Company's Board of Directors approved the Teledyne, Inc. 1994
Long-Term Incentive Plan which allows for issuance of restricted stock, stock
options and stock appreciation rights cvering 2,500,000 shares of the Company's
common stock. In addtion, the Board rescinded its 1993 admendment to the 1990
Stock Option Plan increasing by 2,500,000 the number of shares available for
exercise.
Note 6. Dispositions -
During the third quarter of 1994, Teledyne signed a Letter of Intent with
Litton Industries, Inc. whereby Litton would acquire for cash substantially all
of the business and assets of Teledyne Electronic Systems. The proposed
agreement, which is subject to execution of a definitive purchase agreement,
review by government regulatory agencies, due diligence by Litton and approval
by Boards of Directors of both companies, is expected to be consummated by
the end of 1994.
<PAGE>
Note 7. Business Segments -
Information on the Company's business segments for the three and nine
months ended September 30, 1994 and 1993 was as follows (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1994 1993 1994 1993
-------- --------- -------- --------
Sales:
Aviation and electronics:
Continuing $ 222.0 $ 226.0 $ 658.2 $ 710.4
Discontinued 29.5 39.2 107.2 133.0
-------- -------- -------- --------
251.5 265.2 765.4 843.4
-------- -------- -------- --------
Specialty metals:
Continuing 166.6 155.8 504.6 480.0
Discontinued 0.4 1.6 1.3 6.4
-------- -------- -------- --------
167.0 157.4 505.9 486.4
-------- -------- -------- --------
Industrial:
Continuing 78.6 83.2 228.6 255.0
Discontinued 3.2 12.9 15.9 39.6
-------- -------- -------- --------
81.8 96.1 244.5 294.6
-------- -------- -------- --------
Consumer:
Continuing 77.8 79.2 231.0 234.4
Discontinued - - - -
-------- -------- -------- --------
77.8 79.2 231.0 234.4
-------- -------- -------- --------
Total:
Continuing 545.0 544.2 1,622.4 1,679.8
Discontinued 33.1 53.7 124.4 179.0
-------- -------- -------- --------
$ 578.1 $ 597.9 $1,746.8 $1,858.8
======== ======== ======== ========
<PAGE>
Note 7. Business Segments - (Continued)
Income (Loss) before Income Taxes, Extraordinary Loss and
Cumulative Effect of Accounting Change:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
Aviation and electronics:
Continuing $ 20.9 $ 15.8 $ (39.0) $ 48.0
Discontinued 1.4 (3.0) (38.9) (17.1)
Pension Income 3.9 3.4 11.8 10.3
-------- -------- -------- --------
26.2 16.2 (66.1) 41.2
-------- -------- -------- --------
Specialty metals:
Continuing 7.6 11.5 31.7 28.8
Discontinued - - 5.3 (0.1)
Pension Income 3.5 2.4 10.5 7.3
-------- -------- -------- --------
11.1 13.9 47.5 36.0
-------- -------- -------- --------
Industrial:
Continuing 2.5 3.3 2.5 9.8
Discontinued 0.5 0.7 2.5 4.3
Pension Income 10.5 9.3 31.5 29.2
-------- -------- -------- --------
13.5 13.3 36.5 43.3
-------- -------- -------- --------
Consumer:
Continuing 4.0 4.2 14.6 13.1
Discontinued - 0.2 (3.0) (0.7)
Pension Income 0.1 0.1 0.2 0.4
-------- -------- -------- --------
4.1 4.5 11.8 12.8
-------- -------- -------- --------
Total:
Continuing 35.0 34.8 9.8 99.7
Discontinued 1.9 (2.1) (34.1) (13.6)
-------- -------- -------- --------
36.9 32.7 (24.3) 86.1
-------- -------- -------- --------
Corporate expense:
Salaries and benefits (4.6) (4.5) (16.8) (18.8)
Other (11.1) (16.2) (34.4) (45.1)
Interest expense (11.3) (10.4) (32.3) (34.5)
Pension income 18.9 15.9 56.6 49.5
Other income 2.0 2.7 9.4 51.6
-------- -------- -------- --------
$ 30.8 $ 20.2 $ (41.8) $ 88.8
======== ======== ======== ========
<PAGE>
Note 7. Business Segments - (Continued)
Discontinued results include the estimated realignment/restructure cost
before pension income and results of operations sold at a gain, as well as
those gains. As a result of the impending sale of Teledyne Electronic Systems,
sales and operating results for the unit have been reclassified and are
presented in discontinued results of the aviation and electronics segment.
Operating results from continuing operations for the nine months of 1994
for the aviation and electronics segment were adversely impacted by charges of
$88.8 million for an agreement and preliminary agreement to resolve U.S.
government contracting matters concerning the Company's Teledyne Relays and
Thermatics units. The charges are included in selling and administrative
expenses.
Discontinued results for the nine months of 1994 and 1993 for the aviation
and electronics segment included charges of $35.0 million and $10.0 million,
respectively, for agreements and preliminary agreements to resolve U.S.
government contracting matters related to business units of Teledyne Electronic
Systems. The charges are included in selling and administrative expenses.
Other income for the nine months of 1993 included a gain on sale of Litton
Industries, Inc. common stock of $40.4 million.
Teledyne's non-cash pension income results primarily from the amortization
into income of the excess of plan assets over the estimated obligation. The
amount recorded reflects the extent to which this non-cash income exceeds the
current year's net cost of providing benefits.
Note 8. Net Income Per Share -
The weighted average number of shares of common stock used in the
computation of net income per share for the three and nine months ended
September 30, 1994 was 55,446,334 and 55,443,279 respectively, and 55,418,265
and 55,415,000, respectively, for the same periods in 1993.
Note 9. Commitments and Contingencies -
On August 15, 1990, federal agents executed a search warrant on and
removed a number of documents relating to government-furnished materials from
the Company's former Teledyne Neosho unit. In addition, several Teledyne
Neosho employees received subpoenas to testify before a federal grand jury. As
previously reported, the Company is further informed that it has been named as
a defendant in a civil action filed pursuant to the False Claims Act in the
U.S. District Court for the Western District of Missouri concerning Teledyne
Neosho. The case remains under seal. The Company does not possess sufficient
information to determine whether the Company will sustain a loss in these
matters, or to reasonably estimate the amount of any such loss. Consequently,
the Company has not been able to identify the existence of a material loss
contingency arising therefrom.
The Company is defending a civil action filed on behalf of the U.S.
government pursuant to the False Claims Act alleging generally that the
Company's Teledyne Relays and Teledyne Solid State units falsified test
certifications for
<PAGE>
Note 9 - Commitments and Contingencies - (Continued)
switching devices supplied to the government. The plaintiff seeks treble the
damages allegedly sustained by the United States together with civil penalties
of $5,000 to $10,000 for any false certification made. In addition to the
claims alleged under the False Claims Act, plaintiff alleges three causes of
action for wrongful termination under federal and state laws. The government
intervened in the action on March 4, 1994, and the matter was unsealed on
July 29, 1994. On October 4, 1994, plaintiff Charlie J. Hill and Registrant
reached a partial settlement of the matter for $1.125 million, subject to
government approval. Based on an ongoing internal review, and after
consultation with counsel, the Company does not possess sufficient information
to determine whether it will sustain a further loss in this matter, or to
reasonably estimate the amount of any such loss. Consequently, the Company has
not been able to identify the existence of a material loss contingency arising
therefrom.
On May 26, 1993, a grand jury impaneled by the United States District
Court for the Southern District of Florida returned an indictment in connection
with a U.S. government investigation of alleged violations of the U.S. export
control laws. The indictment includes charges against the Company's Teledyne
Wah Chang Albany unit and two of its employees relating to the sale of
zirconium to a South American industrialist. On March 22, 1994, the Court
dismissed five of the seven charges brought against Teledyne Wah Chang Albany.
Management believes the indictment is unwarranted, and will contest the matter
vigorously. At an arraignment on June 14, 1993, the Company entered a plea of
not guilty. If the Company were found guilty of the remaining two charges, it
could face fines totalling up to $3.55 million.
On July 13, 1994, a grand jury impaneled by the United States District
Court for the District of Columbia returned an indictment against four
corporations and two individuals, including the Company's Teledyne Wah Chang
Albany unit and one of its employees. The indictment stems from a U.S.
government investigation of alleged violations of the U.S. export control laws
relating to a 1988 sale of zirconium to Extraco, Ltd., a Greek company.
Management believes the indictment is unwarranted, and will contest the matter
vigorously. According to a press release issued by the government, "the
corporate defendants face fines in excess of $20 million" if convicted of all
charges.
As a result of the May 26, 1993, indictment, the United States Department
of State temporarily suspended Teledyne Wah Chang Albany, effective July 26,
1993, from receiving licenses for export of products and services on the
munitions list. This suspension will not have a material adverse affect on the
financial condition of the Company. However, in the event of a conviction in
either of the two cases, Teledyne Wah Chang Albany and conceivably the Company
would be subject to debarment for a period of up to three years from receiving
licenses for the export of products and services on the munitions list, and
could be suspended for up to ten years from eligibility for commercial export
licenses. The Company does not possess sufficient information to determine
whether the Company will sustain a loss in either of these matters, or to
reasonably estimate the amount of any such loss. Consequently, the Company has
not been able to identify the existence of a material loss contingency arising
therefrom.
The Company has been and is subject from time to time to various audits,
reviews and investigations relating to the Company's compliance with federal and
state laws. Should any unit involved be charged with wrongdoing, or should the
<PAGE>
Note 9 - Commitments and Contingencies - (Continued)
U.S. government determine that the unit is not a "presently responsible
contractor," that unit, and conceivably the Company, could be temporarily
suspended or, in the event of a conviction, could be debarred for up to three
years from receiving new government contracts or government-approved
subcontracts. A suspension or debarment of the Company would have a material
adverse effect on the future operating results and consolidated financial
condition of the Company. However, management is not presently aware of any
such audit, review or investigation which it expects will have a material
adverse effect on the Company's business or financial condition.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Teledyne is a diversified manufacturing corporation serving customers
worldwide through 20 operating companies focused in four business segments:
Aviation and Electronics; Specialty Metals; Industrial; and Consumer.
RESULTS OF OPERATIONS
Sales and operating profit for the Company's four business segments are
discussed below.
Aviation and Electronics
- ------------------------
Sales from continuing operations decreased $4.0 million to $222.0 million
from $226.0 million for the third quarter of 1994 compared to 1993 and
decreased $52.2 million to $658.2 million from $710.4 million for the nine
months of 1994 compared to 1993. Sales decreases were the result of declining
orders due to reduced government spending for defense, and the winding down and
restructuring of certain military programs. These sales declines primarily
affected airframe structures, ground power generators and unmanned aerial
vehicles. The overall sales declines were partially offset by increased sales
of aircraft engines for the general aviation market and tents for the U.S.
armed forces.
Operating profit from continuing operations was $20.9 million for the
third quarter of 1994 compared to $15.8 million for the same period of 1993.
The increase in 1994 third quarter operating profit was primarily due to the
sales improvement of aircraft engines and lower costs related to government
contracting issues. Excluding charges of $88.8 million for an agreement and
preliminary agreement to resolve U.S. government contracting matters concerning
the Company's Teledyne Relays and Thermatics units, operating profit was
$49.8 million for the nine months of 1994 compared to $48.0 million for the
same period of 1993. Operating results for the nine months of 1994 were
adversely affected by the decline in sales.
As previously announced, the Company has signed a Letter of Intent with
Litton Industries, Inc. whereby Litton would acquire for cash substantially all
of the business and assets of Teledyne Electronic Systems. The transaction
would not include Teledyne Electronic Systems' Lewisburg, Tenn. operations or
any real estate. Under the proposed agreement, it is anticipated that Litton
will retain most of Teledyne Electronic Systems' Los Angeles area employees.
The proposed agreement, which is subject to execution of a definitive purchase
agreement, review by government regulatory agencies, due diligence by Litton
and approval by Boards of Directors of both companies, is expected to be
consummated by the end of 1994. Therefore, operating results for Teledyne
Electronic Systems, including charges to resolve government contracting
issues, have been reclassified and are presented in discontinued results.
Discontinued results for the nine months of 1994 and 1993 included charges of
$35.0 million and $10.0 million, respectively, for agreements and preliminary
agreements to resolve U.S. government contracting matters related to business
units of Teledyne Electronic Systems.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations - (Contiuned)
- -------------
Specialty Metals
- ----------------
Sales from continuing operations increased $10.8 million to $166.6 million
from $155.8 million for the third quarter of 1994 compared to the same period
of 1993 and increased $24.6 million to $504.6 million from $480.0 million for
the nine months of 1994 compared to 1993. These improvements in sales were
primarily due to the general recovery in the economy particularly in the
land-based transportation and power generation markets.
Operating profit from continuing operations was $7.6 million for the third
quarter of 1994 compared to $11.5 million for the same period of 1993 and $31.7
million for the nine months of 1994 compared to $28.8 million for the same
period of 1993. The decrease in operating profit for the third quarter of 1994
was due primarily to lower margins on zirconium and nickel-based products, and
costs associated with increasing titanium production capacity. The increase in
operating profit for the nine months of 1994 was primarily due to the improved
sales performance discussed above partially offset by lower margins on nickel-
based products.
Industrial
- ----------
Sales from continuing operations decreased $4.6 million to $78.6 million
from $83.2 million for the third quarter of 1994 compared to the same period of
1993 and decreased $26.4 million to $228.6 million from $255.0 million for the
nine months of 1994 compared to the same period of 1993. Sales related to
military vehicle development and pressure relief valves declined, partially
offset by increased sales of crash fire rescue vehicles and tank engines. In
addition, sales of nitrogen cylinder systems for the metal stamping industry
provided strong performance throughout 1994.
Operating profit from continuing operations decreased $0.8 million to $2.5
million from $3.3 million for the third quarter of 1994 compared to the same
period of 1993 and decreased $7.3 million to $2.5 million from $9.8 million for
the nine months of 1994 compared to the same period of 1993. The decrease in
operating profit for the 1994 third quarter was due to the decline in sales
discussed above and bid and proposal costs on a new land vehicle program. In
addition, operating profit for the nine months of 1994 was adversely affected
by cost overruns on the crash fire rescue vehicle program, plant
rationalization costs at Teledyne Fluid Systems and by a $1.8 million one-time
nonoperational charge for postretirement health care and life insurance
benefits.
Consumer
- --------
Sales from continuing operations were $77.8 million for the third quarter
of 1994 compared to $79.2 million for the same period of 1993 and $231.0
million for the nine months of 1994 compared to $234.4 million for the same
period of 1993. Sales of heating elements to original equipment manufacturers
declined for the third quarter and nine months of 1994. Sales increased in
shower and laminate tube products during the same periods. Year over year,
segment sales for the third quarter and nine months would have increased but
for completion in 1993 of a distribution arrangement to sell engines for an
operation sold in 1992.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations - (Continued)
- -------------
This distribution arrangement had sales for the 1993 third quarter and nine
months of $2.0 million and $6.7 million, respectively.
Operating profit from continuing operations was $4.0 million for the third
quarter of 1994 compared to $4.2 million for the same period of 1993 and $14.6
million for the nine months of 1994 compared to $13.1 million for the same
period of 1993. Operating profit for the third quarter and nine months of 1994
was adversely impacted by new product development costs, inculding oral health,
water filter, and heater products, and plant rationalization costs at Teledyne
Water Pik.
CORPORATE EXPENSE
Corporate expense for salaries and benefits was $4.6 million for the third
quarter of 1994 compared to $4.5 million for the same period of 1993 and $16.8
million for the nine months of 1994 compared to $18.8 million for the same
period of 1993.
Other corporate expense decreased $5.1 million to $11.1 million from $16.2
million for the third quarter of 1994 compared to the same period of 1993 and
decreased $10.7 million to $34.4 million from $45.1 million for the nine months
of 1994 compared to the same period of 1993 primarily due to a decline in
insurance costs and legal expenses, partially offset by insurance recoveries
received in 1993 related to environmental matters.
PENSION INCOME
Teledyne's non-cash pension income results primarily from the amortization
into income of the excess of plan assets over the estimated obligation. The
amount recorded reflects the extent to which this non-cash income exceeds the
current year's net cost of providing benefits. Pension income before tax
increased to $18.9 million in the third quarter of 1994 from $15.9 million for
the same period of 1993 and increased to $56.6 million in the nine months of
1994 from $49.5 million for the same period of 1993. This increase in pension
income was a result of a reduction in the number of employees during 1993 and a
better than expected return on pension assets, partially offset by a decrease
in the discount rate, to seven from eight percent, used to calculate the
pension benefit obligation in accordance with Financial Accounting Standards
Board guidelines.
1993 INCOME TAX ADJUSTMENT
Net income for the 1993 third quarter includes additional income of $3.9
million related to revaluing the Company's deferred tax asset as a result of
enactment of the Omnibus Budget Reconciliation Act of 1993 which increased the
corporate Federal income tax rate to 35 percent from 34 percent.
LITTON GAIN
In 1993, the Company sold its investment in Litton common stock resulting
in a $40.4 million gain, included in other income.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations - (Continued)
- -------------
POSTRETIREMENT BENEFITS
Effective January 1, 1993, the Company changed its method of accounting
for postretirement health care and life insurance benefits, as required by SFAS
No. 106. This statement requires that the expected cost of providing
postretirement health care and life insurance benefits be charged to expense
during the years that the employees render service. Prior to 1993, the Company
expensed the cost of these benefits as they were paid. As a result of adopting
SFAS No. 106, the Company recorded a charge of $301.7 million or $185.6
million, net of tax, to recognize the accumulated postretirement benefit
obligation at the date of adoption. The new accounting method will have no
effect on the Company's cash outlays for postretirement health care and life
insurance benefits.
FINANCIAL CONDITION
The Company has been able to meet all cash requirements for the nine
months ended September 30, 1994 and 1993 with cash generated from operations
and except for the potential effects of the matters discussed below, is not
aware of any impending cash requirement or capital commitments which could not
be met by internally generated funds or, if needed, the utilization of a credit
agreement. Effective July 13, 1994, the Company entered into a credit
agreement providing a total commitment of $135 million for three years which
the Company may use for borrowings or letters of credit ($75 million letters of
credit sublimit).
In 1994, the Company settled with the U.S. government two civil cases
relating to its Teledyne Relays and Systems units. In connection with the
settlement, the Company paid the U.S. government $56.25 million in the second
quarter of 1994 and agreed to pay an additional $56.25 million in two
installments in March and September 1995. The deferred payments, evidenced by
promissory notes, incur interest at 6.75%. On July 18, 1994, the Company
placed existing letters of credit of $56.25 million, which secure the principal
amount of the promissory notes, under the credit agreement.
OTHER MATTERS
Company subsidiaries perform work on a substantial number of defense
contracts with the U.S. government. Many of these contracts include price
redetermination clauses and most are terminable at the convenience of the
government. Certain of these contracts are fixed-price or fixed-price
incentive development contracts. There is substantial risk on such contracts
that costs may exceed those expected when the contracts were negotiated.
Absent modification of these contracts, any costs incurred in excess of the
fixed or ceiling prices must be borne by the Company. In addition, virtually
all defense programs are subject to curtailment or cancellation due to the
annual nature of the government appropriations and allocation process. A
material reduction in U.S. government appropriations for defense programs may
have an adverse effect on the Company's business, depending upon the specific
defense programs affected by any such reduction.
On August 15, 1990, federal agents executed a search warrant on and
removed a number of documents relating to government-furnished materials from
the Company's former Teledyne Neosho unit. In addition, several Teledyne
Neosho
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations - (Continued)
- -------------
employees received subpoenas to testify before a federal grand jury. As
previously reported, the Company is further informed that it has been named as
a defendant in a civil action filed pursuant to the False Claims Act in the
U.S. District Court for the Western District of Missouri concerning Teledyne
Neosho. The case remains under seal. The Company does not possess sufficient
information to determine whether the Company will sustain a loss in these
matters, or to reasonably estimate the amount of any such loss. Consequently,
the Company has not been able to identify the existence of a material loss
contingency arising therefrom.
The Company is defending a civil action filed on behalf of the U.S.
government pursuant to the False Claims Act alleging generally that the
Company's Teledyne Relays and Teledyne Solid State units falsified test
certifications for switching devices supplied to the government. The plaintiff
seeks treble the damages allegedly sustained by the United States together with
civil penalties of $5,000 to $10,000 for any false certification made. In
addition to the claims alleged under the False Claims Act, plaintiff alleges
three causes of action for wrongful termination under federal and state laws.
The government intervened in the action on March 4, 1994, and the matter was
unsealed on July 29, 1994. On October 4, 1994, plaintiff Charlie J. Hill and
Registrant reached a partial settlement of the matter for $1.125 million,
subject to government approval. Based on an ongoing internal review, and after
consultation with counsel, the Company does not possess sufficient information
to determine whether it will sustain a further loss in this matter, or to
reasonably estimate the amount of any such loss. Consequently, the Company has
not been able to identify the existence of a material loss contingency arising
therefrom.
On May 26, 1993, a grand jury impaneled by the United States District
Court for the Southern District of Florida returned an indictment in connection
with a U.S. government investigation of alleged violations of the U.S.
government export control laws. The indictment includes charges against the
Company's Teledyne Wah Chang Albany unit and two of its employees relating to
the sale of zirconium to a South American industrialist. On March 22, 1994,
the Court dismissed five of the seven charges brought against Teledyne Wah
Chang Albany. Management believes the indictment is unwarranted, and will
contest the matter vigorously. At an arraignment on June 14, 1993, the
Company entered a plea of not guilty. If the Company were found guilty of
the remaining two charges, it could face fines totalling up to $3.55 million.
On July 13, 1994, a grand jury impaneled by the United States District
Court for the District of Columbia returned an indictment against four
corporations and two individuals, including the Company's Teledyne Wah Chang
Albany unit and one of its employees. The indictment stems from a U.S.
government investigation of alleged violations of the U.S. export control laws
relating to a 1988 sale of zirconium to Extraco, Ltd., a Greek company.
Management believes the indictment is unwarranted, and will contest the matter
vigorously. According to a press release issued by the government, "the
corporate defendants face fines in excess of $20 million" if convicted of all
charges.
As a result of the May 26, 1993, indictment, the United States Department
of State temporarily suspended Teledyne Wah Chang Albany, effective July 26,
1993, from receiving licenses for export of products and services on the
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations - (Continued)
- -------------
munitions list. This suspension will not have a material adverse affect on the
financial condition of the Company. However, in the event of a conviction in
either of the two cases, Teledyne Wah Chang Albany and conceivably the Company
would be subject to debarment for a period of up to three years from receiving
licenses for the export of products and services on the munitions list, and
could be suspended for up to ten years from eligibility for commercial export
licenses. The Company does not possess sufficient information to determine
whether the Company will sustain a loss in either of these matters, or to
reasonably estimate the amount of any such loss. Consequently, the Company has
not been able to identify the existence of a material loss contingency arising
therefrom.
The Company has been and is subject from time to time to various audits,
reviews and investigations relating to the Company's compliance with federal
and state laws. Should any unit involved be charged with wrongdoing, or should
the U.S. government determine that the unit is not a "presently responsible
contractor," that unit, and conceivably the Company, could be temporarily
suspended or, in the event of a conviction, could be debarred for up to three
years from receiving new government contracts or government-approved
subcontracts. A suspension or debarment of the Company would have a material
adverse effect on the future operating results and consolidated financial
condition of the Company. However, management is not presently aware of any
such audit, review or investigation which it expects will have a material
adverse effect on the Company's business or financial condition.
The Company is subject to federal, state and local laws and regulations
concerning the environment, and is currently participating in administrative
proceedings at a number of sites under these laws. Many of these proceedings
are at a preliminary stage, and it is difficult to estimate with any certainty
the total cost of remediation, the timing and extent of remedial actions
required by governmental authorities, and the amount of the Company's
liability, if any, in proportion to that of any other responsible parties.
As further discussed in Note 1 to the Company's consolidated financial
statements in the December 31, 1993 Annual Report to shareholders, when it is
possible to reasonably estimate the Company's liability with respect to these
matters, provisions are made as appropriate. Based on the facts presently
known to it, management does not believe that the outcome of any one of these
administrative proceedings will have a material adverse effect on the Company's
financial condition.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Registrant is defending a civil action filed on behalf of the U.S.
government pursuant to the False Claims Act in the United States District Court
for the Central District of California, entitled United States of America, ex
rel., Marianne D. Gendron v. Teledyne Controls and Teledyne, Inc. The action
alleges defects in the procurement and quality control systems of Registrant's
Teledyne Controls unit. The U.S. government intervened in this matter on
June 18, 1991, but withdrew following Registrant's February 18, 1993, agreement
to pay $2.15 million in partial settlement of the matter without admission of
wrongdoing. The plaintiff was granted leave to pursue the remaining
allegations in the case alone, and on April 23, 1993, filed a second amended
complaint. On March 29, 1994, the Court dismissed the second amended complaint
with leave to amend. The plaintiff filed a third amended complaint on
April 14, 1994, which was dismissed by the Court on August 25, 1994. The
dismissal was with prejudice with respect to certain issues, but allowed the
plaintiff a last opportunity to plead with sufficient particularity the
balance of her claims. By agreement dated October 7, 1994, the plaintiff
acknowledged that she was unable to state the remaining claims with the
requisite specificity, and agreed that she would not file a fourth amended
complaint in consideration of Registrant's payment of her attorney's fees in
the amount of $175,000.
Registrant is defending a civil action filed on behalf of the U.S.
government pursuant to the False Claims Act in the United States District Court
for the Central District of California, entitled United States of America ex
rel. Charlie J. Hill and Charlie J. Hill v. Teledyne, Inc., Teledyne
Industries, Inc., Teledyne Relays Division, Teledyne Solid State Division, Hall
& Phillips, Phillips, Cohen & Goldstein, Hall & Associates, John R. Phillips,
Carlyle W. Hall and Ann Carlson. The original complaint in the matter, filed
on November 21, 1991, alleged generally that the Registrant's Teledyne Relays
and Teledyne Solid State units had used improperly calibrated test equipment in
the manufacture of switching devices. The first amended complaint, filed on
November 10, 1993, adds allegations that Teledyne Relays and Teledyne Solid
State falsified test certifications for switching devices supplied to the
government, and seeks treble the damages allegedly sustained by the United
States together with civil penalties of $5,000 to $10,000 for any false
certification made. In addition to the claims alleged under the False Claims
Act, the first amended complaint states three new causes of action for wrongful
termination under federal and state laws. The government intervened in the
action on March 4, 1994, and subsequently filed a second amended complaint
alleging that Teledyne Solid State failed to conform to percent defective
allowable ("PDA") testing requirements for solid state relays delivered to the
United States, and raising several other testing issue reported by Teledyne
Solid State to the government following a self audit in 1991. On July 1, 1994,
plaintiff Charlie J. Hill filed a third amended complaint realleging the claims
alleged in the first amended complaint and the government's second amended
complaint, and raising other testing issues previously reported by Teledyne
Solid State to the government. The Court unsealed the case on July 29, 1994.
On October 4, 1994, plaintiff Charlie J. Hill and Registrant reached a
settlement for $1.125 million of the PDA claims first alleged in the second
amended complaint, subject to government approval. Based on an ongoing
internal review, and after consultation with counsel, Registrant does not
possess
<PAGE>
Item 1. Legal Proceedings - (Continued)
- --------------------------
sufficient information to determine whether it will sustain a further loss in
this matter, or to reasonably estimate the amount of any such loss.
Consequently, Registrant has not been able to identify the existence of a
material loss contingency arising therefrom.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits -
10.1 Credit Agreement dated July 12, 1994
27 Financial Data Schedule
(b) Registrant did not file any reports on Form 8-K during the quarter
ended September 30, 1994.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELEDYNE, INC.
------------------------------------
(Registrant)
Date: October 20, 1994 By /S/ Donald B. Rice
------------------------------------
Donald B. Rice
President and
Chief Operating Officer
Date: October 20, 1994 By /S/ Douglas J. Grant
-------------------------------------
Douglas J. Grant
Treasurer
<PAGE>
EXHIBIT 10.1
CREDIT AGREEMENT
Dated as of July 12, 1994
among
TELEDYNE, INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent and
a Letter of Credit Issuing Bank,
MELLON BANK, N.A.
and
NATIONSBANK OF TEXAS, N.A.,
as Co-Agents
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged By
BA SECURITIES, INC.
<PAGE>
TELEDYNE, INC.
TABLE OF CONTENTS
Section Page
SECTION 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions. . . . . . . . . . . . . . . . . . . . . 15
1.3 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . 17
2.2 Loan Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 Procedure for Borrowing. . . . . . . . . . . . . . . . . . . . . . . . 18
2.4 Conversion and Continuation Elections. . . . . . . . . . . . . . . . . 18
2.5 Voluntary Termination or Reduction of Commitments. . . . . . . . . . . 20
2.6 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . . . 20
2.8 Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.10 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.11 Computation of Fees and Interest. . . . . . . . . . . . . . . . . . . 22
2.12 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . 23
2.13 Payments by the Banks to the Agent. . . . . . . . . . . . . . . . . . 23
2.14 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3
THE LETTER OF CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 The Letter of Credit Facility. . . . . . . . . . . . . . . . . . . . . 25
3.2 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . 26
3.3 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.4 Repayment of Participations. . . . . . . . . . . . . . . . . . . . . . 31
3.5 Role of Issuing Banks. . . . . . . . . . . . . . . . . . . . . . . . . 32
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.7 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . 34
3.8 Letter of Credit Fees. . . . . . . . . . . . . . . . . . . . . . . . . 35
3.9 Uniform Customs and Practice; Conflict with L/C Applications . . . . . 35
3.10 Withdrawal of Letter of Credit under this Agreement . . . . . . . . . 35
SECTION 4
TAXES, YIELD PROTECTION AND ILLEGALITY. . . . . . . . . . . . . . . . . . . . 36
4.1 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3 Increased Costs and Reduction of Return. . . . . . . . . . . . . . . . 37
4.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
<PAGE>
Section Page
4.5 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . 39
4.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5
CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.1 Conditions of Initial Credit Extensions. . . . . . . . . . . . . . . . 39
5.2 Conditions to All Credit Extensions. . . . . . . . . . . . . . . . . 41
SECTION 6
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 Corporate Existence and Power. . . . . . . . . . . . . . . . . . . . . 42
6.2 Corporate Authorization; No Contravention. . . . . . . . . . . . . . . 42
6.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . 42
6.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.6 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.8 Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.10 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 45
6.12 Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.13 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . . 45
6.14 Copyrights, Patents, Trademarks and Licenses, etc.. . . . . . . . . . 45
6.15 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2 Certificates; Other Information. . . . . . . . . . . . . . . . . . . . 47
7.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.4 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . 48
7.5 Maintenance of Property. . . . . . . . . . . . . . . . . . . . . . . . 48
7.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.7 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . 48
7.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.9 Inspection of Property and Books and Records. . . . . . . . . . . . 49
7.10 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8
NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.1 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 Mergers; Disposition of Assets . . . . . . . . . . . . . . . . . . . . 52
8.3 Loans and Investments. . . . . . . . . . . . . . . . . . . . . . . . . 53
8.4 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . 53
8.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.6 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . 54
<PAGE>
Section Page
8.7 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.8 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(a) Non-Payment. . . . . . . . . . . . . . . . . . . . . . . . . 55
(b) Representation or Warranty . . . . . . . . . . . . . . . . . 55
(c) Specific Defaults. . . . . . . . . . . . . . . . . . . . . . 55
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . 55
(e) Cross-Default. . . . . . . . . . . . . . . . . . . . . . . . 55
(f) Insolvency; Voluntary Proceedings. . . . . . . . . . . . . . 56
(g) Involuntary Proceedings. . . . . . . . . . . . . . . . . . . 56
(h) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(i) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . 57
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . 57
(k) Change of Control. . . . . . . . . . . . . . . . . . . . . . 57
(l) Government Contracting . . . . . . . . . . . . . . . . . . . 57
(m) Governmental Proceedings . . . . . . . . . . . . . . . . . . 57
(n) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 58
9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . 59
10.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . 59
10.3 Liability of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.8 Agent in Individual Capacity. . . . . . . . . . . . . . . . . . . . . 62
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.10 Withholding Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.1 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . 65
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . . 66
11.4 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.6 Payments Set Aside. . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 68
11.8 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . . 68
11.9 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
<PAGE>
Section Page
11.10 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . 71
11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.13 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . 72
11.14 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . 72
11.15 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SCHEDULES
2.1 Commitments
8.1 Permitted Liens
11.2 Lending offices; Addresses for Notices
EXHIBITS
A Form of Notice of Borrowing
B Form of Notice of Conversion/Continuation
C Form of Compliance Certificate
D Form of Notice of Assignment and Acceptance
E Form of Opinion of Counsel
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of July 12, 1994, among
Teledyne, Inc., a Delaware corporation (the "Company"), the several financial
institutions from time to time party to this Agreement (collectively, the
"Banks"; individually, a "Bank"), and Bank of America National Trust and
Savings Association, as a letter of credit issuing bank and as agent for the
Banks.
RECITAL
The Banks have agreed to make available to the Company a revolving
credit facility with a letter of credit subfacility upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:
SECTION 1
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the
following meanings:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agent" means BofA in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 10.9.
"Agent-Related Persons" means BofA and any successor agent arising
under Section 10.9 and any successor to BofA's role as an Issuing Bank
hereunder, together with their respective Affiliates (including, in the case
<PAGE>
of BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth
on Schedule 11.2 in relation to the Agent, or such other address as the Agent
may from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Account Party" means the Company or any Subsidiary of
the Company which is the account party on any Letter of Credit, as selected by
the Company pursuant to Section 3.2.
"Arranger" means BA Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in Section 11.8(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include each Bank in its capacity as
an Issuing Bank; for purposes of clarification only, to the extent that a Bank
may have any rights or obligations in addition to those of the Banks due to
its status as an Issuing Bank, its status as such will be specifically
referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or
below such announced rate.) Any change in the reference rate announced by
BofA shall take effect at the opening of business on the day specified in the
public announcement of such change.
<PAGE>
"Base Rate Loan" means a Loan, or an L/C Advance, that bears
interest based on the Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Banks under Section 2,
and, other than in the case of Base Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
"Cash Collateralize" means to pledge and deposit with or deliver
to the Agent, for the benefit of the Agent, each Issuing Bank and the Banks,
as collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the Agent and
each Issuing Bank. Derivatives of such term shall have corresponding meaning.
The Company hereby grants the Agent, for the benefit of the Agent, each
Issuing Bank and the Banks, a security interest in all such cash and deposit
account balances. Cash collateral shall be maintained in blocked, non-
interest bearing deposit accounts at BofA.
"Change of Control" means any Person, including a "group" (within
the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act) that
includes such person, acquires, directly or indirectly (but not as the result
of the reacquisition by the Company of any of its outstanding shares),
beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of a
majority in interest of the voting power of the voting stock of the Company.
"Closing Date" means the date on which all conditions precedent
<PAGE>
set forth in Section 5.1 are satisfied or waived by all Banks (or, in the case
of Section 5.1(e), waived by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in
Section 2.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C.
"Consolidated Net Income" for any period, means the net income (or
loss) of the Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"Consolidated Total Assets" means, as at any date of
determination, all assets of the Company and its Subsidiaries on a
consolidated basis determined in conformity with GAAP.
"Consolidated Net Worth" means, as at any date of determination,
the net worth of the Company and its Subsidiaries on a consolidated basis
determined in conformity with GAAP.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement
to which such Person is a party or by which it or any of its property is
bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.4, the Company (a) converts Loans of one Type to another Type, or
(b) continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Loans
hereunder, and (b) the Issuance of any Letters of Credit hereunder.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Effective Amount" means (i) with respect to any Loans on any
date, the aggregate outstanding principal amount thereof after giving effect
to any Borrowings and prepayments or repayments of Loans occurring on such
date; and (ii) with respect to any outstanding L/C Obligations on any date,
<PAGE>
the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes in
the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any Letters
of Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
"Eligible Assignee" means (i) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
ving a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD and (iii) a Person that is primarily engaged in the
business of commercial banking and that is (A) a Subsidiary of a Bank, (B) a
Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person of
which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety or land
use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) the filing of a notice of intent to terminate, the treatment of a
plan amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the PBGC to terminate a Pension Plan; (d) a
failure by the Company to make required contributions to a Pension Plan or
other Plan subject to Section 412 of the Code; (e) an event or condition which
<PAGE>
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Company; or (g) an application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code with respect to
any Pension Plan.
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 9.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate is
not so published on any such preceding Business Day, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in Section 2.10(a).
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board
(or agencies with similar functions of comparable stature and authority within
the U.S. accounting profession). If any change in GAAP affects the
<PAGE>
computations of any covenants contained herein, such covenants will, if agreed
upon by the Company and the Majority Banks, be amended to reflect such changes
in GAAP.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the definition
of "Indebtedness."
"Honor Date" has the meaning specified in Section 3.3(c).
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to any letters of credit (including standby and commercial), banker's
acceptances, bank guaranties, shipside bonds, surety bonds and similar
instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession
or sale of such property); (f) all obligations with respect to capital leases;
(g) all indebtedness referred to in clauses (a) through (f) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness; and (i) any direct or indirect liability of that Person, whether
or not contingent, with or without recourse, with respect to indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f)
above, including any obligation of that Person (A) to purchase, repurchase or
otherwise acquire such indebtedness, (B) to advance funds to discharge such
<PAGE>
indebtedness, or to maintain the working capital, equity capital, net worth or
solvency of any Person, (C) to purchase property, or (D) otherwise to assure
or hold harmless the holder of any such indebtedness (each, a "Guaranty
Obligation") (the amount of any such Guaranty Obligation shall be deemed equal
to the stated or determinable amount of the indebtedness obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect
thereof, and in the case of other Guaranty Obligation, shall be equal to the
maximum reasonably anticipated liability in respect thereof).
"Indemnified Liabilities" has the meaning specified in Section
11.5.
"Indemnified Person" has the meaning specified in Section 11.5.
"Independent Auditor" has the meaning specified in Section 7.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion
of its creditors; undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Loan and,
as to any Base Rate Loan, the first Business Day of each calendar quarter;
provided, however, that if any Interest Period for a Offshore Rate Loan
exceeds three months, the date that falls three months after the beginning of
such Interest Period and after each Interest Payment Date thereafter is also
an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or continued
as an Offshore Rate Loan, and ending on the date one, two, three or six months
thereafter, as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be extended
to the following Business Day unless, in the case of an Offshore
<PAGE>
Rate Loan, the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate
Loan that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end
on the last Business Day of the calendar month at the end of such
Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond
the Maturity Date.
"Investment" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means of a
loan, advance creating a debt, capital contribution, guaranty or other debt or
equity participation or interest in any other Person, including any
partnership and joint venture interests of such Person. The amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions.
"Issuance Date" has the meaning specified in Section 3.1(a).
"Issue" means, with respect to any Letter of Credit, to
incorporate any existing Letters of Credit into this Agreement, or to issue or
to extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Bank" means, for any Letter of Credit, (a) BofA in its
capacity as an issuer of Letters of Credit hereunder, or (b) any other Bank
agreeing in its sole and absolute discretion to act as the Issuing Bank for
such Letter of Credit at the request of the Company pursuant to Section 3.2,
in each case together with any replacement letter of credit issuers arising
under Section 10.1(b) or Section 10.9.
"L/C Advance" means each Bank's participation in any L/C Borrowing
in accordance with its Pro Rata Share.
<PAGE>
"L/C Amendment Application" means an application form or letter
for amendment of outstanding standby letters of credit as shall at any time be
in use at the Issuing Bank for such letter of credit, as such Issuing Bank
shall request.
"L/C Application" means an application form for issuances of
standby letters of credit as shall at any time be in use at the Issuing Bank
for such letter of credit, as such Issuing Bank shall request (and which, in
the case of an existing letter of credit being incorporated herein pursuant to
Section 3.3, may, at the discretion of the Issuing Bank therefor, be the
existing application for such letter of credit).
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on the
date when made nor converted into a Borrowing of Loans under Section 3.3(c).
"L/C Commitment" means the commitment of each Issuing Bank to
Issue, and the commitment of the Banks severally to participate in Letters of
Credit from time to time Issued or outstanding under Section 3; provided, that
the L/C Commitment shall not exceed on any date the amount of $75,000,000 in
aggregate for all Issuing Banks, as the same shall be reduced as a result of a
reduction in the L/C Commitment pursuant to Section 2.5; provided, further,
that the L/C Commitment is a part of the combined Commitments, rather than a
separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount
of all unreimbursed drawings under all Letters of Credit, including all
outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating
to any Letter of Credit, including any of the applicable Issuing Bank's
standard form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 11.2, or such other
office or offices as such Bank may from time to time notify the Company and
the Agent.
<PAGE>
"Letters of Credit" means any standby letters of credit Issued by
an Issuing Bank pursuant to Section 3.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing
of any financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable law)
and any contingent or other agreement to provide any of the foregoing, but not
including the interest of a lessor under an operating lease.
"Loan" has the meaning specified in Section 2.1, and may be a Base
Rate Loan or an Offshore Rate Loan (each, a "Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Fee Letters,
the L/C-Related Documents, and all other documents delivered to the Agent or
any Bank in connection herewith.
"Majority Banks" means at any time Banks then holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans and L/C
Advances, or, if no such principal amount is then outstanding, Banks then
having at least 66-2/3% of the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means any event or series of events that
could reasonably be expected prospectively to (a) result in the Company being
in noncompliance with Section 8.6; (b) affect materially and adversely the
Company's ability to perform its obligations under this Agreement; or (c)
reduce the Company's consolidated total revenues by more than 20% on an
ongoing basis.
"Maturity Date" means the earlier to occur of: (a) July 11, 1997;
and (b) the date on which the Commitments terminate in accordance with the
provisions of this Agreement.
<PAGE>
"Net Issuance Proceeds" means, in respect of any issuance of
equity, the cash proceeds and non-cash proceeds received or receivable in
connection therewith, net of reasonable costs and expenses paid or incurred in
connection therewith in favor of any Person not an Affiliate of the Company,
excluding the exercise of stock options under the Company's stock option
plans. In the case of the issuance of debt securities after the date hereof
that are convertible into equity, "Net Issuance Proceeds" shall be deemed to
be received if and when such debt securities are converted into equity, and
the amount of such Net Issuance Proceeds shall be an amount equal to the
principal amount of the debt being converted.
"Note" means a promissory note executed by the Company in favor of
a Bank.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by the Company to
any Bank, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by the
Agent as follows:
Offshore Rate = LIBOR
-----------------------------------
1.0 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on
such day (whether or not applicable to any Bank) under regulations
issued from time to time by the FRB for determining the maximum
reserve requirement (including any emergency, supplemental or
other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities")
having a term comparable to such Interest Period; and
<PAGE>
"LIBOR" means the rate of interest per annum determined by
the Agent to be the arithmetic mean (rounded upward to the next
1/16th of 1%) of the rates of interest per annum notified to the
Agent by BofA as the rate of interest at which dollar deposits in
the approximate amount of the amount of the Loan to be made or
continued as, or converted into, an Offshore Rate Loan by BofA and
having a maturity comparable to such Interest Period would be
offered to major banks in the London interbank market at their
request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders
of such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Other Taxes" means 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 from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
"Participant" has the meaning specified in Section 11.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of ERISA)
has made contributions at any time during the immediately preceding five (5)
plan years.
"Permitted Liens" has the meaning specified in Section 8.1.
<PAGE>
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture
or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of all
Banks or, if there are no Commitments, the percentage at such time of such
Bank's Obligations divided by all Obligations of all Banks.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the Company, or any
other officer having substantially the same authority and responsibility.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Significant Subsidiary" means, as of any date of determination,
any Subsidiary of the Company that has on that date total assets constituting
10% or more of Consolidated Total Assets.
"Subsidiary" of a Person means any corporation , association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
<PAGE>
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company.
"Swap Contracts" means swap agreements (as such term is defined in
Section 101 of the Bankruptcy Code) and any other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates or commodity prices.
"Taxes" means 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 Bank and the Agent, such taxes
(including income taxes or franchise taxes or any related withholding
therefor) as are imposed on or measured by each Bank's net income, gross
receipts or capital by the jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Agent, as the case may be, is
organized or maintains a lending office.
"Type" has the meaning specified in the definition of "Loan."
"UCP" has the meaning specified in Section 3.9.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Wholly-Owned Subsidiary" means any corporation in which (other
than directors' qualifying shares required by law) 100% of the capital stock
of each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination is
being made, is owned, beneficially and of record, by the Company, or by one or
more of the other Wholly-Owned Subsidiaries, or both.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
<PAGE>
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and has been reviewed by counsel to the Agent, the
Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
<PAGE>
SECTION 2
THE CREDITS
2.1 Amounts and Terms of Commitments. Each Bank severally
agrees, on the terms and conditions set forth herein, to make loans to the
Company (each such loan, a "Loan") from time to time on any Business Day
during the period from the Closing Date to the Maturity Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth on Schedule
2.1 as such Bank's Commitment (such amount, as the same may be reduced under
Section 2.5 or as a result of one or more assignments under Section 11.8, the
Bank's "Commitment"); provided, however, that, after giving effect to any
Borrowing of Loans, the Effective Amount of all outstanding Loans and the
Effective Amount of all L/C Obligations, shall not at any time exceed the
combined Commitments; provided, further, that the Effective Amount of the
Loans of any Bank plus the participation of such Bank in the Effective Amount
of all L/C Obligations shall not at any time exceed such Bank's Commitment.
Within the limits of each Bank's Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this Section 2.1, prepay
under Section 2.6 and reborrow under this Section 2.1.
2.2 Loan Accounts. (a) The Loans made by each Bank and the
Letters of Credit Issued by the Issuing Banks shall be evidenced by one or
more accounts or records maintained by such Bank or Issuing Bank, as the case
may be, in the ordinary course of business. The accounts or records
maintained by the Agent, the Issuing Banks and each Bank shall be rebuttable
presumptive evidence of the amount of the Loans made by the Banks to the
Company and the Letters of Credit Issued hereunder, and the interest and
payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans or any Letter of
Credit.
(b) Upon the request of any Bank made through the Agent, the
Loans made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its
Note(s) the date, amount and maturity of each Loan made by it and the amount
of each payment of principal made by the Company with respect thereto. Each
such Bank is irrevocably authorized by the Company to endorse its Note(s), and
each Bank's record shall be rebuttable presumptive evidence of the amount of
Loans made by such Bank to the Company and the Letters of Credit Issued
hereunder, and the interest and payments thereon; provided, however, that the
<PAGE>
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing. (a) Each Borrowing of Loans shall
be made upon the Company's irrevocable written notice delivered to the Agent
in the form of a Notice of Borrowing (which notice must be received by the
Agent prior to 9:00 a.m. (San Francisco time) (i) three Business Days prior to
the requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) on
the requested Borrowing Date, in the case of Base Rate Loans, specifying: (A)
the amount of the Borrowing, which shall be in an aggregate minimum amount of
$5,000,000 or any multiple of $1,000,000 in excess thereof; (B) the requested
Borrowing Date, which shall be a Business Day; (C) the Type of Loans
comprising the Borrowing; and (D) the duration of the Interest Period
applicable to such Loans included in such notice. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be one month.
(b) The Agent will promptly notify each Bank of its receipt of
any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of
that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Company by the
Agent at such office by crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by the
Banks and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not be more
than seven different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company may,
upon irrevocable written notice to the Agent in accordance with Section
2.4(b): (i) elect, as of any Business Day, in the case of Base Rate Loans, or
as of the last day of the applicable Interest Period, in the case of any other
Type of Loans to convert any such Loans (or any part thereof in an amount not
less than $5,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) into Loans of any other Type; or (ii) elect as of the last day
of the applicable Interest Period, to continue any Loans having Interest
<PAGE>
Periods expiring on such day (or any part thereof in an amount not less than
$5,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof); provided, that if at any time the aggregate amount of Offshore Rate
Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less than $1,000,000, such Offshore Rate
Loans shall automatically convert into Base Rate Loans, and on and after such
date the right of the Company to continue such Loans as, and convert such
Loans into, Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 9:00 a.m.
(San Francisco time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as Offshore Rate Loans; and (ii) on the Conversion/Continuation
Date, if the Loans are to be converted into Base Rate Loans, specifying:(A)
the proposed Conversion/Continuation Date; (B) the aggregate amount of Loans
to be converted or renewed; (C) the Type of Loans resulting from the proposed
conversion or continuation; and (D) other than in the case of conversions into
Base Rate Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed by the time set forth in Section
2.4(b) to select a new Interest Period to be applicable to such Offshore Rate
Loans, or, regardless of the Company's selection, if any Default or Event of
Default then exists, the Company shall, subject to Section 2.4(e), be deemed
to have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, during the
existence of a Default or Event of Default, the Company may not elect to have
a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than seven different Interest Periods in effect.
<PAGE>
2.5 Voluntary Termination or Reduction of Commitments. The
Company may, upon not less than five Business Days' prior notice to the Agent,
terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Loans
made on the effective date thereof, the Effective Amount of all Loans, and L/C
Obligations together would exceed the amount of the combined Commitments then
in effect. Once reduced in accordance with this Section, the Commitments may
not be increased. Any reduction of the Commitments shall be applied to each
Bank according to its Pro Rata Share. If and to the extent specified by the
Company in the notice to the Agent, some or all of the reduction in the
combined Commitments shall be applied to reduce the L/C Commitment. All
accrued commitment and letter of credit fees to, but not including, the
effective date of any termination of Commitments, shall be paid on the
effective date of such termination.
2.6 Optional Prepayments. Subject to Section 4.4, the Company
may, at any time or from time to time, upon the Company's irrevocable notice
delivered to the Agent (which notice must be received by the Agent (a) not
less than three Business Days' prior to the prepayment date, in the case of
Offshore Rate Loans and (b) on the Business Day of such prepayment, in the
case of Base Rate Loans) ratably prepay Loans in whole or in part, in minimum
amounts of $1,000,000 or any multiple thereof. Such notice of prepayment
shall specify the date and amount of such prepayment and the Type(s) of Loans
to be prepaid. The Agent will promptly notify each Bank of its receipt of any
such notice, and of such Bank's Pro Rata Share of such prepayment. If such
notice is given by the Company, the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with, in the case of a prepayment of Offshore Rate
Loans, accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.4.
2.7 Mandatory Prepayments of Loans. If on any date the Effective
Amount of L/C Obligations exceeds the combined L/C Commitments, the Company
shall Cash Collateralize on such date the outstanding Letters of Credit in an
amount equal to the excess of the maximum amount then available to be drawn
under the Letters of Credit over the combined L/C Commitments. Subject to
Section 4.4, if on any date after giving effect to any Cash Collateralization
made on such date pursuant to the preceding sentence, the Effective Amount of
all Loans then outstanding plus the Effective Amount of all L/C Obligations
exceeds the combined Commitments, the Company shall immediately, and without
<PAGE>
notice or demand, prepay the outstanding principal amount of the Loans and L/C
Advances by an amount equal to the applicable excess.
2.8 Repayment. The Company shall repay to the Banks in full on
the Maturity Date the aggregate principal amount of Loans outstanding on such
date.
2.9 Interest. (a) Each Offshore Rate Loan shall bear interest on
the outstanding principal amount thereof from the applicable Borrowing Date at
a rate per annum equal to the Offshore Rate plus 0.45% per annum, and each
Base Rate Loan shall bear interest on the outstanding principal amount thereof
from the applicable Borrowing Date at a rate per annum equal to the Base Rate
(and subject to the Company's right to convert to other Types of Loans under
Section 2.4).
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Offshore Loans under Section 2.6 or 2.7 for the portion of the
Offshore Loans so prepaid and upon payment (including prepayment) in full
thereof and, during the existence of any Event of Default, interest shall be
paid on demand of the Agent at the request or with the consent of the Majority
Banks.
(c) Notwithstanding Section (a) of this Section, while any Event
of Default exists or after acceleration, the Company shall pay interest (after
as well as before entry of judgment thereon to the extent permitted by law) on
the principal amount of all outstanding Obligations, at a rate per annum which
is determined by adding 2% per annum to the interest rate then in effect for
such Obligations; provided, however, that, on and after the expiration of any
Interest Period applicable to any Offshore Rate Loan outstanding on the date
of occurrence of such Event of Default or acceleration, the principal amount
of such Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus
2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary
to the provisions of any law applicable to such Bank limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Bank, and in such event the Company shall pay such Bank interest at the
highest rate permitted by applicable law.
<PAGE>
2.10 Fees. In addition to certain fees described in Section 3.8:
(a) Arrangement, Agency, Fronting Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, shall pay an
agency fee to the Agent for the Agent's own account, and shall pay a fronting
fee to BofA as an Issuing Bank for its own account, as required by the letter
agreement ("Fee Letter") between the Company and the Arranger and Agent dated
July 12, 1994.
(b) Commitment Fees. The Company shall pay to the Agent for the
account of each Bank a commitment fee on the average daily unused portion of
such Bank's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for
that quarter as calculated by the Agent, equal to 0.1375 percent per annum.
For purposes of calculating utilization under this Section, the Commitments
shall be deemed used to the extent of the Effective Amount of Loans then
outstanding, plus the Effective Amount of L/C Obligations then outstanding.
Such commitment fee shall accrue from the Closing Date to the Maturity Date
and shall be due and payable quarterly in arrears on the first Business Day of
each January, April, July and October commencing on October 3, 1994 through
the Maturity Date, with the final payment to be made on the Maturity Date;
provided that, in connection with any termination of Commitments under Section
2.5, the accrued commitment fee calculated for the period ending on such date
shall also be paid on the date of such termination. The commitment fees
provided in this Section shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions
in Section 5 are not met.
2.11 Computation of Fees and Interest. (a) All computations of
interest for Base Rate Loans when the Base Rate is determined by BofA's
"reference rate" shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Agent shall be
rebuttable presumptive evidence of such interest rate.
<PAGE>
2.12 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than
11:00 a.m. (San Francisco time) on the date specified herein. The Agent will
promptly distribute to each Bank its Pro Rata Share (or other applicable share
as expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to
the date on which any payment is due to the Banks that the Company will not
make such payment in full as and when required, the Agent may assume that the
Company has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Company has not
made such payment in full to the Agent, each Bank shall repay to the Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed
to such Bank until the date repaid.
2.13 Payments by the Banks to the Agent. (a) Unless the Agent
receives notice from a Bank on or prior to the Closing Date or, with respect
to any Borrowing after the Closing Date, (i) at least one Business Day prior
to the date of a Borrowing of Offshore Rate Loans or (ii) upon receipt of the
Borrowing Notice in the case of Base Rate Loans, that such Bank will not make
available as and when required hereunder to the Agent for the account of the
Company the amount of that Bank's Pro Rata Share of the Borrowing, the Agent
may assume that each Bank has made such amount available to the Agent in
immediately available funds on the Borrowing Date and the Agent may (but shall
not be so required), in reliance upon such assumption, make available to the
Company on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Agent in immediately
<PAGE>
available funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Agent submitted to any Bank with respect to amounts owing under this Section
(a) shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Agent shall constitute such Bank's Loan on the
date of Borrowing for all purposes of this Agreement. If such amount is not
made available to the Agent on the Business Day following the Borrowing Date,
the Agent will notify the Company of such failure to fund and, upon demand by
the Agent, the Company shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at
the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a
Loan on such Borrowing Date, but no Bank shall be responsible for the failure
of any other Bank to make the Loan to be made by such other Bank on any
Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of the Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share, such Bank
shall immediately (a) notify the Agent of such fact, and (b) purchase from the
other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's ratable share (according to the proportion of (i)
the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.
The Company agrees that any Bank so purchasing a participation from another
Bank may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 11.9) with
respect to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation. The Agent will
keep records (which shall be conclusive and binding in the absence of manifest
<PAGE>
error) of participations purchased under this Section and will in each case
notify the Banks following any such purchases or repayments.
SECTION 3
THE LETTER OF CREDIT FACILITY
3.1 The Letter of Credit Facility. (a) On the terms and
conditions set forth herein (i) BofA and each other Bank agreeing to be an
Issuing Bank in accordance with Section 3.2(a) agrees, (A) from time to time
on any Business Day during the period from the Closing Date to the Maturity
Date to Issue Letters of Credit for the account of an Applicable Account
Party, and to amend or renew Letters of Credit previously Issued by it, in
accordance with Sections 3.2(c) and 3.2(d), and (B) to honor drafts under the
Letters of Credit; and (ii) the Banks severally agree to participate in
Letters of Credit issued for the account of an Applicable Account Party;
provided, that no Issuing Bank shall be obligated to Issue, and no Bank shall
be obligated to participate in, any Letter of Credit if as of the date of
Issuance of such Letter of Credit (the "Issuance Date") (1) the Effective
Amount of all L/C Obligations plus the Effective Amount of all Loans exceeds
the combined Commitments, (2) the participation of any Bank in the Effective
Amount of all L/C Obligations plus the Effective Amount of the Loans of such
Bank exceeds such Bank's Commitment, or (3) the Effective Amount of L/C
Obligations exceeds the L/C Commitment. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Company's ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, the
Company may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed.
(b) No Issuing Bank shall Issue, and no Bank shall be required
to participate in, any Letter of Credit if, on the date of the Issuance of
such Letter of Credit, to the knowledge of the Persons within the Issuing Bank
who are Issuing such Letter of Credit:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain such Issuing Bank from Issuing such Letter of Credit, or
any Requirement of Law applicable to such Issuing Bank or any
request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over such Issuing
<PAGE>
Bank shall prohibit, or request that such Issuing Bank refrain
from, the Issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon such Issuing Bank
with respect to such Letter of Credit any restriction, reserve or
capital requirement (for which such Issuing Bank is not otherwise
compensated hereunder) not in effect on the Closing Date, or shall
impose upon such Issuing Bank any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which
such Issuing Bank in good faith deems material to it;
(ii) such Issuing Bank has received written notice
from any Bank, the Agent or the Company, on or prior to the
Business Day prior to the requested date of Issuance of such
Letter of Credit, that one or more of the applicable conditions
contained in Section 5 is not then satisfied;
(iii) the expiry date of any requested Letter of
Credit is after the Maturity Date;
(iv) the expiry date of any requested Letter of
Credit is prior to the maturity date of any financial obligation
to be supported by the requested Letter of Credit;
(v) any requested Letter of Credit does not provide
for drafts, or is not otherwise in form and substance acceptable
to BofA and such Issuing Bank, or the Issuance of a Letter of
Credit shall violate any applicable policies of such Issuing Bank
or BofA (whether or not BofA is the Issuing Bank);
(vi) any Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other
Person;
(vii) such Letter of Credit is in a face amount less
than $500,000 or denominated in a currency other than Dollars; or
(viii) such Issuing Bank (other than BofA) has not
reached mutual agreement with the Company on the amount of any fee
for such Letter of Credit.
3.2 Issuance, Amendment and Renewal of Letters of Credit. (a)
Whenever the Company desires to have a Letter of Credit Issued hereunder
(including having an existing letter of credit incorporated as a Letter of
Credit hereunder as contemplated by Section 3.3(a)), it shall select the Bank
it wishes to be the Issuing Bank for such Letter of Credit and, if such Bank
<PAGE>
is not BofA, the Company shall directly negotiate with such Bank the fronting
fee and other terms not inconsistent with this Agreement, if any, to be
applicable to such Letter of Credit; provided, however, that no Bank other
than BofA shall be obligated to Issue any Letters of Credit hereunder unless
it agrees to do so in its sole discretion. Each Letter of Credit shall be
Issued upon the irrevocable written request of the Company received by the
applicable Issuing Bank (with a copy sent by the Company to the Agent) at
least three Business Days (or such shorter time as such Issuing Bank may agree
in a particular instance in its sole discretion) prior to the proposed date of
Issuance. Each such request for Issuance of a Letter of Credit shall be by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Application (which, in the case of an existing letter of credit, may, at the
discretion of the Issuing Bank therefor, be the existing application for such
letter of credit), and shall specify in form and detail satisfactory to the
applicable Issuing Bank: (i) the proposed date of Issuance of the Letter of
Credit (which shall be a Business Day); (ii) the face amount of the Letter of
Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and
address of the beneficiary thereof; (v) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder; (vi)
the full text of any certificate to be presented by the beneficiary in case of
any drawing thereunder; (vii) the Applicable Account Party; and (viii) such
other matters as such Issuing Bank may require.
(b) From time to time while a Letter of Credit is outstanding
and prior to the Maturity Date, the Issuing Bank Issuing such Letter of Credit
will, upon the written request of the Company received by such Issuing Bank
(with a copy sent by the Company to the Agent) at least five days (or such
shorter time as such Issuing Bank may agree in a particular instance in its
sole discretion) prior to the proposed date of amendment, amend any Letter of
Credit issued by it. Each such request for amendment of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original writing, made
in the form of an L/C Amendment Application and shall specify in form and
detail satisfactory to such Issuing Bank: (i) the Letter of Credit to be
amended; (ii) the proposed date of amendment of the Letter of Credit (which
shall be a Business Day); (iii) the nature of the proposed amendment; and (iv)
such other matters as such Issuing Bank may require. Any amendment extending
the termination date or increasing the face amount of a Letter of Credit shall
be reflected in the calculation of the Effective Amount hereunder on the date
Issued by the Issuing Bank. Any other amendment to a Letter of Credit
requiring the consent of the beneficiary thereof shall be reflected in the
<PAGE>
calculation of the Effective Amount hereunder only when so consented to by
such beneficiary. No Issuing Bank shall be under any obligation to amend any
Letter of Credit issued by it if: (A) such Issuing Bank would have no
obligation at such time to issue such Letter of Credit in its amended form
under the terms of this Agreement; or (B) the beneficiary of any such letter
of Credit does not accept the proposed amendment to the Letter of Credit. The
Agent will promptly notify the Banks upon the Issuance or amendment of any
Letter of Credit.
(c) At least two Business Days prior to the Issuance or
amendment of any Letter of Credit, the Issuing Bank issuing or amending such
Letter of Credit will confirm with the Agent (by telephone or in writing) that
the Agent has received a copy of the L/C Application or L/C Amendment
Application from the Company and if not, such Issuing Bank will provide the
Agent with a copy thereof. Unless such Issuing Bank has received notice on or
before the Business Day immediately preceding the date such Issuing Bank is to
Issue or amend a Letter of Credit from the Agent directing such Issuing Bank
not to Issue or amend such Letter of Credit because such issuance is not then
permitted under Section 3.1(a) as a result of the limitations set forth in
clauses (1) through (3) thereof or Section 3.1(b)(ii), then, subject to the
terms and conditions hereof, such Issuing Bank shall, on the requested date,
Issue or amend a Letter of Credit for the account of the Applicable Account
Party in accordance with such Issuing Bank's usual and customary business
practices.
(d) Each Issuing Bank and the Banks agree that, while a Letter
of Credit is outstanding and prior to the Maturity Date, at the option of the
Company and upon the written request of the Company received by such Issuing
Bank (with a copy sent by the Company to the Agent) at least five days (or
such shorter time as such Issuing Bank may agree in a particular instance in
its sole discretion) prior to the proposed date of notification of renewal,
such Issuing Bank shall be entitled to authorize the automatic renewal of any
Letter of Credit issued by it. Each such request for renewal of a Letter of
Credit shall be made by facsimile, confirmed immediately in an original
writing, in the form of an L/C Amendment Application and shall specify in form
and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to be
<PAGE>
renewed; (ii) the proposed date of notification of renewal of the Letter of
Credit (which shall be a Business Day), if applicable; (iii) the revised
expiry date of the Letter of Credit, if applicable; and (iv) such other
matters as such Issuing Bank may require. No Issuing Bank shall be under any
obligation to renew any Letter of Credit if: (A) such Issuing Bank would have
no obligation at such time to issue or amend such Letter of Credit in its
renewed form under the terms of this Agreement; or (B) the beneficiary of any
such Letter of Credit does not accept the proposed renewal of the Letter of
Credit if it is required to do so. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the beneficiary thereof
receives notice from such Issuing Bank that such Letter of Credit shall not be
renewed, and if at the time of renewal such Issuing Bank would be entitled to
authorize the automatic renewal of such Letter of Credit in accordance with
this Section 3.2(d) upon the request of the Company but such Issuing Bank
shall not have received any L/C Amendment Application from the Company with
respect to such renewal or other written direction by the Company with respect
thereto, such Issuing Bank shall nonetheless be permitted to allow such Letter
of Credit to renew, and the Company and the Banks hereby authorize such
renewal, and, accordingly, such Issuing Bank shall be deemed to have received
an L/C Amendment Application from the Company requesting such renewal.
(e) Each Issuing Bank may, at its election (or as required by
the Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Maturity Date.
(f) This Agreement shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).
(g) Each Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit issued
by it, or amendment to or renewal of a Letter of Credit, to an advising bank
or a beneficiary, a true and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
3.3 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements. (a) Subject to the terms and conditions of this Agreement,
from time to time on and after the Closing Date, the Company may request by
written notice to the Agent in accordance with Section 3.2(a) that any
existing standby letters of credit originally issued outside this Agreement by
an Issuing Bank for the account of an Applicable Account Party be deemed for
all purposes hereunder, including for purposes of the fees to be collected
pursuant to Sections 3.8(a) and 3.8(c), and reimbursement of costs and
<PAGE>
expenses to the extent provided herein, Letters of Credit outstanding under
this Agreement and entitled to the benefits of this Agreement and the other
Loan Documents, and shall be governed by the applications and agreements
pertaining thereto and by this Agreement. Each Bank shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Issuing
Bank(s) issuing such existing Letters of Credit a participation in each such
Letter of Credit on the date requested by the Company pursuant to Section
3.2(a), and each drawing thereunder, in an amount equal to the product of (i)
such Bank's Pro Rata Share times (ii) the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing, respectively. For
purposes of Section 2.1, such existing Letters of Credit shall be deemed to
utilize pro rata the Commitment of each Bank.
(b) Immediately upon the Issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank issuing such Letter of Credit a participation
in such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount
available to be drawn from time to time under such Letter of Credit and the
amount of such drawing, respectively. For purposes of Section 2.1, each
Issuance of a Letter of Credit shall be deemed to utilize the Commitment of
each Bank by an amount equal to the amount of such participation.
(c) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will
promptly notify the Company. Whether or not the Company is the Applicable
Account Party, the Company shall reimburse the Issuing Bank issuing such
Letter of Credit prior to 10:00 a.m. (San Francisco time), on each date that
any amount is paid by such Issuing Bank under any Letter of Credit (each such
date, an "Honor Date"), in an amount equal to the amount so paid by such
Issuing Bank. In the event the Company fails to reimburse such Issuing Bank
for the full amount of any drawing under any Letter of Credit by 10:00 a.m.
(San Francisco time) on the Honor Date, such Issuing Bank will promptly notify
the Agent, and the Agent will promptly notify each Bank thereof, and the
Company shall be deemed to have requested that Base Rate Loans be made by the
Banks to be disbursed on the Honor Date under such Letter of Credit, subject
to the amount of the unutilized portion of the combined Commitments and
subject to the conditions set forth in Sections 5.2(b) and (c). Any notice
given by such Issuing Bank or the Agent pursuant to this Section 3.3(c) may be
oral if immediately confirmed in writing (including by facsimile); provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(d) Each Bank shall upon any notice pursuant to Section 3.3(c)
make available to the Agent for the account of the applicable Issuing Bank an
amount in Dollars and in immediately available funds equal to its Pro Rata
<PAGE>
Share of the amount of the drawing, whereupon the participating Banks shall
(subject to Section 3.3(e)) each be deemed to have made a Loan consisting of a
Base Rate Loan to the Company in that amount. If any Bank so notified fails
to make available to the Agent for the account of such Issuing Bank the amount
of such Bank's Pro Rata Share of the amount of the drawing by no later than
12:00 noon (San Francisco time) on the Honor Date, then interest shall accrue
on such Bank's obligation to make such payment, from the Honor Date to the
date such Bank makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The Agent will
promptly give notice of the occurrence of the Honor Date, but failure of the
Agent to give any such notice on the Honor Date or in sufficient time to
enable any Bank to effect such payment on such date shall not relieve such
Bank from its obligations under this Section 3.3.
(e) With respect to any unreimbursed drawing that is not
converted into Loans consisting of Base Rate Loans to the Company in whole or
in part, because of the Company's failure to satisfy the conditions set forth
in Sections 5.2 (b) and (c) or for any other reason, the Company shall be
deemed to have incurred from such Issuing Bank an L/C Borrowing in the amount
of such drawing, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at a rate per annum equal to
the Base Rate plus 2% per annum, and each Bank's payment to the Issuing Bank
issuing such Letter of Credit pursuant to Section 3.3(d) shall be deemed
payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.3.
(f) Each Bank's obligation in accordance with this Agreement to
make the Loans or L/C Advances, as contemplated by this Section 3.3, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to any Issuing Bank and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against any
Issuing Bank, the Company or any other Person for any reason whatsoever; (ii)
the occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided, however,
that each Bank's obligation to make Loans and L/C Advances under this Section
3.3 is subject to the conditions set forth in Sections 5.2 (b) and (c).
3.4 Repayment of Participations. (a) Upon (and only upon)
receipt by the Agent for the account of the applicable Issuing Bank of
<PAGE>
immediately available funds from the Company (i) in reimbursement of any
payment made by such Issuing Bank under the Letter of Credit with respect to
which any Bank has paid the Agent for the account of such Issuing Bank for
such Bank's participation in the Letter of Credit pursuant to Section 3.3 or
(ii) in payment of interest thereon, the Agent will pay to each Bank, in the
same funds as those received by the Agent for the account of such Issuing
Bank, the amount of such Bank's Pro Rata Share of such funds, and such Issuing
Bank shall receive the amount of the Pro Rata Share of such funds of any Bank
that did not so pay the Agent for the account of such Issuing Bank.
ng Bank.
(b) If the Agent or any Issuing Bank is required at any time to
return to the Company or another Person, or to a trustee, receiver,
liquidator, custodian, or any official in any Insolvency Proceeding, any
portion of the payments made by the Company or another Person to the Agent for
the account of such Issuing Bank pursuant to Section 3.4(a) in reimbursement
of a payment made under the Letter of Credit or interest or fee thereon, each
Bank shall, on demand of the Agent, forthwith return to the Agent or such
Issuing Bank the amount of its Pro Rata Share of any amounts so returned by
the Agent or such Issuing Bank plus interest thereon from the date such demand
is made to the date such amounts are returned by such Bank to the Agent or
such Issuing Bank, at a rate per annum equal to the Federal Funds Rate in
effect from time to time.
3.5 Role of Issuing Banks. (a) Each Bank and the Company agree
that, in paying any drawing under a Letter of Credit, the Issuing Bank issuing
such Letter of Credit shall not have any responsibility to obtain any document
(other than any sight draft and certificates expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any
such document or the authority of the Person executing or delivering any such
document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of any Issuing Bank shall be liable
to any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Company's pursuing such rights and remedies as it
<PAGE>
may have against the beneficiary or transferee at law or any other
agreement. No Agent-Related Person, nor any of the respective correspondents,
participants or assignees of any Issuing Bank, shall be liable or responsible
for any of the matters described in clauses (i) through (vii) of Section 3.6;
provided, however, anything in such clauses to the contrary notwithstanding,
that the Company may have a claim against an Issuing Bank, and such Issuing
Bank may be liable to the Company, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by the
Company which the Company proves were caused by such Issuing Bank's willful
misconduct or gross negligence or such Issuing Bank's willful failure to pay,
or gross negligence in failing to pay, under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) each Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) no Issuing Bank shall be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Company under
this Agreement and any L/C-Related Document to reimburse each Issuing Bank for
a drawing under a Letter of Credit issued by it, and to repay any L/C
Borrowing and any drawing under a Letter of Credit converted into Loans, shall
be unconditional and irrevocable, and shall be paid strictly in accordance
with the terms of this Agreement and each such other L/C-Related Document
under all circumstances, including the following:
(i) any lack of validity or enforceability of this
Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the obligations
of the Company or any Applicable Account Party in respect of any
Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or
other right that the Company or any Applicable Account Party may
have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or
<PAGE>
any such transferee may be acting), any Issuing Bank or any other
Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related Documents
or any unrelated transaction;
(iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or
any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit;
(v) any payment by any Issuing Bank under any Letter
of Credit against presentation of a draft or certificate that does
not strictly comply with the terms of any Letter of Credit; or any
payment made by any Issuing Bank under any Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-
possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including
any arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the
obligations of the Company or any Applicable Account Party in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including any
other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company, any Applicable
Account Party or a guarantor.
3.7 Cash Collateral Pledge. Upon the request of the Agent, (a)
if any Issuing Bank has honored any full or partial drawing request on any
Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder,
or (b) if, as of the Maturity Date, any Letters of Credit may for any reason
remain outstanding and partially or wholly undrawn, then, the Company shall
immediately Cash Collateralize the L/C Obligations in an amount equal to such
L/C Obligations.
<PAGE>
3.8 Letter of Credit Fees. (a) The Company shall pay to the
Agent for the account of each of the Banks a letter of credit fee with respect
to the Letters of Credit equal to 0.45% per annum of the average daily maximum
undrawn amount of the outstanding Letters of Credit, computed on a quarterly
basis in arrears on the last Business Day of each calendar quarter based upon
Letters of Credit outstanding for that quarter as calculated by the Agent.
Such letter of credit fees shall be due and payable quarterly in arrears on
the first Business Day of each calendar quarter during which Letters of Credit
are outstanding, commencing on the first such quarterly date to occur after
the Closing Date, through the Maturity Date, with the final payment to be made
on the Maturity Date (or such later expiration date).
(b) The Company shall pay to each Bank agreeing to be an Issuing
Bank a letter of credit fronting fee for each Letter of Credit Issued by such
Issuing Bank in amount agreed upon with such Issuing Bank, payable as and when
agreed upon with such Issuing Bank.
(c) The Company shall pay to each Issuing Bank from time to time
on demand the normal issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such Issuing Bank relating to
letters of credit as from time to time in effect.
3.9 Uniform Customs and Practice; Conflict with L/C Applications.
The Uniform Customs and Practice for Documentary Credits as published by the
International Chamber of Commerce ("UCP") most recently at the time of
issuance of any Letter of Credit shall (unless otherwise expressly provided in
the Letters of Credit) apply to the Letters of Credit. Notwithstanding any
provision of any L/C Application or L/C Amendment Application to the contrary,
it is understood that in the event of any conflict between the terms of any
such L/C Application or L/C Amendment Application and the terms of this
Agreement, the terms of this Agreement shall control with respect to events of
default, representations and warranties, and covenants, except that the
Company may include in such L/C Application or L/C Amendment Application
further provisions relating specifically to the transaction or affairs
underlying such Letter of Credit.
3.10 Withdrawal of Letter of Credit under this Agreement. The
Company may, with the consent of the Issuing Bank Issuing such Letter of
Credit, which consent may be given or withheld in its sole discretion, elect
to have any undrawn Letter of Credit no longer be deemed to be a Letter of
Credit Issued hereunder. Upon notice to the Agent that the Company and the
applicable Issuing Bank have agreed to withdraw such a Letter of Credit, the
<PAGE>
Agent shall notify the Banks of such fact, and such letter of credit shall no
longer be a Letter of Credit hereunder.
SECTION 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. (a) Any and all payments by the Company to each Bank
or the Agent under this Agreement and any other Loan Document shall be made
free and clear of, and without deduction or withholding for any Taxes. In
addition, the Company shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Bank
and the Agent for the full amount of Taxes or Other Taxes (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Bank or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days
after the date the Bank or the Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then: (i) the sum payable shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Company shall make such
deductions and withholdings; and (iii) the Company shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law.
(d) Within 30 days after the date of any payment by the Company
of Taxes or Other Taxes, the Company shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Company is required to pay additional amounts to any
Bank or the Agent pursuant to Section (c) of this Section, then such Bank
shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
<PAGE>
eliminate any such additional payment by the Company which
accrue, if such change in the judgment of such Bank is not otherwise
disadvantageous to such Bank.
4.2 Illegality. (a) If any Bank determines that the introduction
of any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office to
make Offshore Rate Loans, then, on notice thereof by the Bank to the Company
through the Agent, any obligation of that Bank to make Offshore Rate Loans
shall be suspended until the Bank notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.4, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by
giving notice to the Bank through the Agent that all Loans which would
otherwise be made by the Bank as Offshore Rate Loans shall be instead Base
Rate Loans.
4.3 Increased Costs and Reduction of Return. (a) If any Bank
determines that, due to either (i) after the date hereof the introduction of
or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate or in
respect of the assessment rate payable by any Bank to the FDIC for insuring
U.S. deposits) in or in the interpretation of any law or regulation or
(ii) the compliance by that Bank with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force
of law), there shall be any increase in the cost to such Bank of agreeing to
make or making, funding or maintaining any Offshore Rate Loans or
participating in Letters of Credit, or, in the case of any Issuing Bank, any
increase in the cost to such Issuing Bank of agreeing to issue, issuing or
<PAGE>
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Company
shall be liable for, and shall from time to time, upon demand (with a copy of
such demand to be sent to the Agent), pay to the Agent for the account of such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank shall have determined that (i) the introduction
of any new Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation after the date hereof, affects
or would affect the amount of capital required or expected to be maintained by
the Bank or any corporation controlling the Bank and (taking into
consideration such Bank's or such corporation's policies with respect to
capital adequacy and such Bank's desired return on capital as of the Closing
Date) determines that the amount of such capital is increased as a consequence
of its Commitment, loans, credits or obligations under this Agreement, then,
upon demand of such Bank to the Company through the Agent, the Company shall
pay to the Bank, from time to time as specified by the Bank, additional
amounts sufficient to compensate the Bank for such increase.
4.4 Funding Losses. The Company shall reimburse each Bank and
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Company to make on a timely
basis any payment of principal of any Offshore Rate Loan; (b) the failure of
the Company to borrow, continue or convert a Loan after the Company has given
(or is deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation; (c) the failure of the Company to make any prepayment
in accordance with any notice delivered under Section 2.6; (d) the prepayment
(including pursuant to Section 2.7) or other payment (including after
acceleration thereof) of an Offshore Rate Loan on a day that is not the last
day of the relevant Interest Period; or (e) the automatic conversion under
Section 2.4 of any Offshore Rate Loan to a Base Rate Loan on a day that is not
the last day of the relevant Interest Period; including any such loss or
expense arising from the liquidation or reemployment of funds obtained by it
to maintain its Offshore Rate Loans or from fees payable to terminate the
deposits from which such funds were obtained. For purposes of calculating
amounts payable by the Company to the Banks under this Section and under
<PAGE>
Section 4.3(a), each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed
to have been funded at the LIBOR used in determining the Offshore Rate for
such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Offshore Rate Loan is in fact so funded.
4.5 Inability to Determine Rates. If BofA determines that for
any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to Section
2.9(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to such Bank of
funding such Loan, the Agent will promptly so notify the Company and each
Bank. Thereafter, the obligation of the Banks to make or maintain Offshore
Rate Loans, as the case may be, hereunder shall be suspended until the Agent
upon the instruction of the Majority Banks revokes such notice in writing.
Upon receipt of such notice, the Company may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Company does
not revoke such Notice, the Banks shall make, convert or continue the Loans,
as proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Offshore Rate Loans, as the case may be. During
any suspension pursuant to this Section, the Banks shall periodically review
the grounds for such suspension, and shall notify the Agent when the grounds
therefor no longer exist, whereupon, at the instruction of the Majority Banks,
Offshore Rate Loans shall again be available.
4.6 Survival. The agreements and obligations of the Company in
this Section 4 shall survive the payment of all other Obligations.
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions of Initial Credit Extensions. The obligation of
each Bank to make its initial Credit Extension hereunder is subject to the
condition that the Agent have received on or before the Closing Date all of
the following, in form and substance satisfactory to the Agent and each Bank,
and in sufficient copies for each Bank:
<PAGE>
(a) Credit Agreement. This Agreement executed by each party
thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company or the executive committee of the board
of directors of the Company authorizing the transactions
contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Company; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true signatures
of the officers of the Company authorized to execute, deliver and
perform, as applicable, this Agreement, and all other Loan
Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and
the bylaws of the Company as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the Company
as of the Closing Date; and
(ii) a good standing certificate for the Company from
the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation as of a recent date;
(d) Legal Opinions. An opinion of L. Michael Russell, Assistant
General Counsel of the Company, addressed to the Agent and the Banks,
substantially in the form of Exhibit E hereto;
(e) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of BofA to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute BofA's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling of
accounts between the Company and BofA); including any such costs, fees and
expenses arising under or referenced in Sections 2.10 and 11.4;
<PAGE>
(f) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Section 6 are true and correct on and as of such date, as though
made on and as of such date;
(ii) no Default or Event of Default exists or would
result from the Credit Extension; and
(iii) there has occurred since March 31, 1994, no
event or circumstance that has resulted or would reasonably be
expected to result in a Material Adverse Effect.
(g) Notes. A Note executed by the Company for any Bank
requesting a Note pursuant to Section 2.2(b).
5.2 Conditions to All Credit Extensions. The obligation of each
Bank to make any Loan to be made by it (including its initial Loan) and the
obligation of any Issuing Bank to Issue any Letter of Credit (including
incorporating any existing letter of credit hereunder) is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date or Issuance Date:
(a) Notice, Application. The Agent shall have received a Notice
of Borrowing or in the case of any Issuance of any Letter of Credit, the
applicable Issuing Bank shall have agreed to any fronting fee and the Agent
shall have received an L/C Application or L/C Amendment Application, as
required under Section 3.2;
(b) Continuation of Representations and Warranties. The
representations and warranties in Section 6 shall be true and correct on and
as of such Borrowing Date with the same effect as if made on and as of such
Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing.
Each Notice of Borrowing and L/C Application or L/C Amendment Application
submitted by the Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of each such notice and as
of each Borrowing Date, or Issuance Date, as applicable, that the conditions
in Section 5.2 are satisfied.
<PAGE>
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank
that:
6.1 Corporate Existence and Power. The Company and each of its
Significant Subsidiaries: (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation; (b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its
business and to execute, deliver, and perform its obligations under the Loan
Documents; (c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license; and (d) is in compliance with all Requirements of
Law; unless, in each case referred to in clause (c) or clause (d), the failure
to do so would not reasonably be expected to have a Material Adverse Effect.
6.2 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and each other Loan
Document to which the Company is party, have been duly authorized by all
necessary corporate action, and do not and will not: (a) contravene the terms
of any of the Company's Organization Documents; (b) conflict with or result in
any breach or contravention of, or the creation of any Lien under, any
document evidencing any Contractual Obligation to which the Company is a party
or any order, injunction, writ or decree of any Governmental Authority to
which the Company or its property is subject; or (c) violate any Requirement
of Law.
6.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document.
6.4 Binding Effect. This Agreement and each other Loan Document
to which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
<PAGE>
creditors' rights generally or by equitable principles relating to
enforceability.
6.5 Litigation. Except as disclosed in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994, there are no
actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company, or its
Subsidiaries or any of their respective properties which: (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) if determined adversely to
the Company or its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein
or therein provided.
6.6 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company. As of the
Closing Date, neither the Company nor any Subsidiary is in default under or
with respect to any Contractual Obligation in any respect which, individually
or together with all such defaults, would reasonably be expected to have a
Material Adverse Effect, or that would, if such default had occurred after the
Closing Date, create an Event of Default under Section 9.1(e).
6.7 ERISA Compliance. Each Plan is in substantial compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law. Each Plan (except for the Company's 401(k) Plan,
for which a determination letter is not yet required to be received under
applicable law and regulations, and the Ohio Steel Foundry Company's
Retirement Income Plan for Hourly Rated Patternmaker Employees Located in
Lima, Ohio (which has six participants)), each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and to the best knowledge of the Company,
nothing has occurred which would cause the loss of such qualification. There
are no pending, or to the best knowledge of Company, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan which has resulted or would reasonably be expected to result in a
Material Adverse Effect. There has been no prohibited transaction or other
violation of the fiduciary responsibility rules with respect to any Plan which
<PAGE>
would reasonably result in a Material Adverse Effect. No ERISA Event has
occurred or is reasonably expected to occur with respect to any Pension Plan.
There is no unfunded Pension Liability for all Pension Plans in the aggregate.
The Company has not incurred, nor reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA) which would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has not transferred any Unfunded Pension Liability to any person
or otherwise engaged in a transaction that could be subject to Section 4069 of
ERISA.
6.8 Title to Properties. The Company and each Subsidiary have
good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of
their respective businesses, except for such defects in title as would not,
individually or in the aggregate, have a Material Adverse Effect.
6.9 Taxes. The Company and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income
or assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have
been provided, or other appropriate disclosures have been made, in accordance
with GAAP. There is no proposed tax assessment against the Company or any
Subsidiary that would, if made, have a Material Adverse Effect.
6.10 Financial Condition. (a) The audited consolidated balance
sheet of the Company and its Subsidiaries dated December 31, 1993, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the fiscal year ended on that date: (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except
as otherwise expressly noted therein; (ii) fairly present the financial
condition of the Company and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all material indebtedness
and other liabilities, direct or contingent, of the Company and its
consolidated Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Indebtedness in accordance with GAAP
consistently applied throughout the period covered thereby.
<PAGE>
(b) Except as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, there has been no Material
Adverse Effect since December 31, 1993.
6.11 Environmental Matters. To the best of the Company's
knowledge, all operating facilities and property owned, leased, used, or
operated by the Company have been, and continue to be, owned, leased, used, or
operated in substantial compliance with applicable Environmental Laws except
where the failure to be in substantial compliance would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
There have been no Environmental Claims received by the Company which would
reasonably be expected to have a Material Adverse Effect, net of reserves
established for such matters as of December 31, 1993. To the best of the
Company's knowledge, there has been no release of a hazardous material at any
facility or property owned, leased, used, or operated by the Company which
would reasonably be expected to have a Material Adverse Effect.
6.12 Regulated Entities. Neither of the Company nor any
Subsidiary is an "Investment Company" within the meaning of the Investment
Company Act of 1940. The Company is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
6.13 No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
would reasonably be expected to have a Material Adverse Effect.
6.14 Copyrights, Patents, Trademarks and Licenses, etc. The
Company or its Subsidiaries own or are licensed or otherwise have the right to
use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, except where the failure to have such
rights would not reasonably be expected to have a Material Adverse Effect. No
claim or litigation regarding any slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary is pending or
threatened, and, to the knowledge of the Company, no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code is pending or, proposed, which, in either case, would reasonably be
expected to have a Material Adverse Effect.
<PAGE>
6.15 Full Disclosure. None of the representations or warranties
made by the Company or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection with
the Loan Documents (including the offering and disclosure materials delivered
by or on behalf of the Company to the Banks prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.
SECTION 7
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, unless the Majority Banks waive compliance in
writing:
7.1 Financial Statements. The Company shall deliver to the
Agent, in form and detail satisfactory to the Agent and the Majority Banks,
with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of
the Company and its Subsidiaries as at the end of such year and the related
consolidated statements of operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of Arthur Andersen & Co.
or another nationally-recognized independent public accounting firm
("Independent Auditor"). Such opinion shall not be qualified or limited
because of a restricted or limited examination by the Independent Auditor of
any material portion of the Company's or any Subsidiary's records; and
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy of
the unaudited consolidated balance sheet of the Company and its Subsidiaries
as of the end of such quarter and the related consolidated statements of
operations and cash flows for the period commencing on the first day and
<PAGE>
ending on the last day of such quarter, and certified by a Responsible Officer
as included in the Company's Quarterly Report on Form 10-Q for such quarter.
7.2 Certificates; Other Information. The Company shall furnish
to the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) and (b), a Compliance Certificate executed by a
Responsible Officer;
(c) promptly, copies of all financial statements and reports
that the Company sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K,
10Q and 8K) that the Company or any Subsidiary may make to, or file with, the
SEC; and
(d) promptly such other information that the Company has
customarily made available to its lenders as the Agent, at the request of any
Bank, may from time to time reasonably request, in such Bank's role as a
responsible lender to understand the Company's current financial condition.
7.3 Notices. The Company shall promptly notify the Agent, with
sufficient copies for each Bank:
(a) of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default; and
(b) of a notice from any governmental authority to the effect
that the Company or any of its Subsidiaries has become ineligible or
disqualified in any respect as a present or future contractor to a
governmental authority with respect to ongoing business.
Upon the request of the Agent or any Bank (and subject to Section
11.8(e)) the Company shall, to the extent so requested, provide a written
statement by a Responsible Officer (i) setting forth the details of any
occurrence referred to in any such notice given by the Company pursuant to
this Section 7.3, (ii) stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time, and (iii)
describing with particularity any and all clauses or provisions of this
<PAGE>
Agreement or other Loan Document that have been (or foreseeably will be)
breached or violated thereby.
7.4 Preservation of Corporate Existence, Etc. The Company shall,
and shall cause each Significant Subsidiary to: (a) preserve and maintain in
full force and effect its corporate existence and good standing under the laws
of its state or jurisdiction of incorporation except as otherwise permitted by
Section 8.2; (b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary in the normal conduct of its business except in
connection with transactions permitted by Section 8.2; (c) use reasonable
efforts, in the ordinary course of business, to preserve its business
organization and goodwill; and (d) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which would reasonably be expected to have a Material Adverse Effect.
7.5 Maintenance of Property. The Company shall maintain, and
shall cause each Significant Subsidiary to maintain, and preserve all its
property which is used or useful in its business in good working order and
condition, ordinary wear and tear excepted and make all necessary repairs
thereto and renewals and replacements thereof, and the Company and each
Significant Subsidiary shall use the standard of care typical in the industry
in the operation and maintenance of its facilities, except where the failure
to do so would not reasonably be expected to have a Material Adverse Effect.
7.6 Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; provided, that the
Company may self-insure for such risks.
7.7 Payment of Obligations. The Company shall, and shall cause
each Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect including: (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate reserves
are being maintained, or other appropriate disclosures are being made, in
<PAGE>
accordance with GAAP by the Company or such Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property; and (c) all
indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
7.8 Compliance with Laws. The Company shall comply, and shall
cause each Subsidiary to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business (including the Federal Fair Labor Standards Act), except such
as may be contested in good faith or as to which a bona fide dispute may exist
and except where the failure to do so would not reasonably be expected to have
a Material Adverse Effect.
7.9 Inspection of Property and Books and Records. The Company
shall maintain and shall cause each Subsidiary to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiary.
If the Agent or any Bank has reasonable grounds to believe that a business
segment of the Company or a Significant Subsidiary has suffered, or in the
near future will suffer, a significant decline, upon reasonable written notice
and subject to applicable laws and regulations, the Agent or any Bank may
visit various facilities of the Company and its Subsidiaries, and the Company
will make available to representatives and independent contractors of the
Agent or such Bank, such information that the Agent or such Bank, in its role
as a responsible agent or lender, may from time to time reasonably require to
understand such business segment and the Company's current financial
condition. The Company will also from time to time make available to the
Agent or any Bank for discussion members of its personnel who are
knowledgeable about the Company's business and financial condition. The Agent
and each Bank, and their respective representatives and independent
contractors, shall maintain the confidentiality of any information that it
receives from the Company and of any conversations or discussions that it has
with any of the Company's personnel in accordance with Section 11.8(e).
7.10 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, except where compliance with such
Environmental Laws is being contested in good faith or as to which a bona fide
dispute may exist and except where the failure to do so would not reasonably
be expected to have a Material Adverse Effect.
<PAGE>
SECTION 8
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, unless the Majority Banks waive compliance in
writing:
8.1 Limitation on Liens. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of
its property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date (any such Lien securing Indebtedness having a
net book amount in excess of $1,000,000 outstanding on such date is set forth
on Schedule 8.1);
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.7, provided that no
notice of lien has been filed or recorded under the Code or, if a notice has
been so filed or recorded, such Lien would not reasonably be expected to have
a Material Adverse Effect;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of staying the forfeiture or sale of the
property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, (ii) contingent
obligations on surety and appeal bonds, and (iii) other non-delinquent
<PAGE>
obligations of a like nature; in each case, incurred in the ordinary course of
business, provided all such Liens in the aggregate would not (even if
enforced) cause a Material Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, do not materially interfere with the ordinary conduct of the
businesses of the Company and its Subsidiaries;
(h) Liens on assets of corporations which become Subsidiaries
after the date of this Agreement; provided, however, that the net book amount
of the Indebtedness secured by any and all of such Liens does not exceed,
together with the aggregate net book amount of Indebtedness secured by Liens
permitted by Sections 8.1(i), 8.1(j) and 8.1(m), 25% of the Company's
Consolidated Total Assets (calculated in accordance with GAAP, as of the most
recent date for which financial statements are available);
(i) Liens securing Indebtedness incurred for the purpose of
financing all or any part of the cost of acquiring property by the Company or
its Subsidiaries in the ordinary course of business; provided, however, that
(i) any such Lien attaches to such property concurrently with or within 20
days after the acquisition thereof, (ii) such Lien attaches solely to the
property so acquired in such transaction, (iii) the principal amount of the
debt secured thereby does not exceed 100% of the cost of such property, and
(iv) the net book amount of the Indebtedness secured by any and all of such
Liens shall not at any time exceed, together with the aggregate net book
amount of Indebtedness secured by Liens permitted by Sections 8.1(h), 8.1(j)
and 8.1(m), 25% of the Company's Consolidated Total Assets (calculated in
accordance with GAAP, as of the most recent date for which financial
statements are available;
(j) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(k) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Company or
any Subsidiary to provide collateral to the depository institution;
<PAGE>
(l) Liens consisting of pledges of cash collateral or government
securities to secure obligations under Swap Contracts entered into in the
ordinary course of business as bona fide hedging transactions, provided that
the counterparty to such Swap Contract is under a similar requirement to
deliver similar collateral from time to time to the Company or the Subsidiary
party thereto; and
(m) Liens securing Indebtedness having a net book value not
exceeding 10% of the Company's Consolidated Total Assets (calculated in
accordance with GAAP, as of the most recent date for which financial
statements are available).
8.2 Mergers; Disposition of Assets. The Company shall not, nor
permit any of its Subsidiaries to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse), merge, 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 its assets (whether now owned or
hereafter acquired) to or in favor of any Person, or enter into any agreement
to do any of the foregoing, except:
(a) any Subsidiary may merge with the Company, provided that the
Company is the surviving corporation, or with any one or more Subsidiaries of
the Company, provided that in any such transaction involving a Subsidiary
wholly-owned by the Company such Subsidiary shall be the surviving
corporation;
(b) the Company or any of its Subsidiaries may acquire any
Person by merger or consolidation provided the Company or any such Subsidiary
is the surviving corporation;
(c) any Subsidiary of the Company may sell or otherwise transfer
all or substantially all of its assets (upon voluntary liquidation or
otherwise), to the Company or another Wholly-Owned Subsidiary of the Company;
(d) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(e) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment; and
<PAGE>
(f) the Company and any of its Subsidiaries may transfer, sell
or otherwise dispose of assets in one or more transactions having an aggregate
value (calculated in accordance with GAAP) for all such transactions not
exceeding 25% of the aggregate value (calculated in accordance with GAAP, as
of the most recent date for which financial statements are available) of the
Company's Consolidated Total Assets prior to such transfer, sale or
disposition;
provided, that no Event of Default or event or condition which, with the
passage of time or the giving of notice, or both, shall become an Event of
Default, shall exist prior to or after giving effect to any of the foregoing
actions.
8.3 Loans and Investments. The Company shall not make any
Investments in any Person including any Affiliate of the Company, except for:
(a) Investments in cash equivalents and short term marketable
securities;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) Investments by the Company in any of its Subsidiaries or by
any of its Subsidiaries in another of its Subsidiaries; and
(d) Investments having an aggregate net book amount (calculated
in accordance with GAAP) not at any time exceeding 5% of the Company's
Consolidated Total Assets.
8.4 Transactions with Affiliates. The Company shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of the Company, except (a) transactions between the Company and
its Subsidiaries and transactions among its Subsidiaries and (b) other
transactions upon fair and reasonable terms no less favorable to the Company
or such Subsidiary than would obtain in a comparable arm's-length transaction
with a Person not an Affiliate of the Company or such Subsidiary.
8.5 Use of Proceeds. (a) The Company shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the Loan proceeds or
any Letter of Credit, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
<PAGE>
security in any transaction that is subject to Section 13 or 14 of the
Exchange Act.
(b) The Company shall not use the proceeds of the Loans or
request any Letter of Credit for other than working capital or other general
corporate purposes not in contravention of any Requirement of Law or of any
Loan Document.
(c) The Company shall not, directly or indirectly, use any
portion of the Loan proceeds or any Letter of Credit (i) knowingly to purchase
Ineligible Securities from a Section 20 Subsidiary during any period in which
such Section 20 Subsidiary makes a market in such Ineligible Securities, (ii)
knowingly to purchase during the underwriting or placement period Ineligible
Securities being underwritten or privately placed by a Section 20 Subsidiary,
or (iii) to make payments of principal or interest on Ineligible Securities
underwritten or privately placed by a Section 20 Subsidiary and issued by or
for the benefit of the Company or any Affiliate of the Company. As used in
this Section, "Section 20 Subsidiary" means the Subsidiary of the bank holding
company controlling any Bank, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities; and "Ineligible Securities" means securities which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (as U.S.C. section 24, Seventh), as
amended.
8.6 Minimum Consolidated Net Worth. The Company shall not permit
its Consolidated Net Worth at the end of any fiscal quarter to be less than
$175,000,000 plus 75% of any Net Issuance Proceeds plus (a) as of December 31,
1994, 50% of Consolidated Net Income for the fiscal quarters ending September
30, 1994 and December 31, 1994, (but without reduction for any losses), and
(b) as of the end of each calendar year thereafter, 50% of such fiscal year's
Consolidated Net Income (but without reduction for any losses).
8.7 Change in Business. The Company shall not, and shall not
suffer or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Company
and its Subsidiaries on the date hereof, except for lines of business not
exceeding 10% of the revenues of the Company and its Subsidiaries on a
consolidated basis.
8.8 Accounting Changes. The Company shall not, and shall not
suffer or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as permitted by GAAP.
<PAGE>
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan or of any L/C
Obligation, or (ii) within five Business Days after the same becomes due, any
interest, fee or any other amount payable hereunder or under any other Loan
Document; or
(b) Representation or Warranty. Any representation or warranty
by the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Section 8.6; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 30 days after the
Agent shall have given written notice to the Company; or
(e) Cross-Default. The Company or any Subsidiary (i) fails to
make any payment in respect of any Indebtedness having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $20,000,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure continues
after the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure; or (ii) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition
exist, under any agreement or instrument relating to any such Indebtedness,
and such failure continues after the applicable grace or notice period, if
any, specified in the relevant document on the date of such failure if the
effect of such failure, event or condition is to cause, or to permit the
<PAGE>
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Guaranty Obligation to
become payable or cash collateral in respect thereof to be demanded; provided,
however, that the foregoing provisions shall not apply to any default or
defaults by one of more Subsidiaries where the aggregate assets of such
Subsidiaries do not exceed 10% of the Consolidated Total Assets of the
Company; or
(f) Insolvency; Voluntary Proceedings. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; provided, however,
that the foregoing provisions shall not apply to any such event or events
commenced by or against one or more Subsidiaries where the aggregate assets of
such Subsidiaries do not exceed 10% of the Consolidated Total Assets of the
Company; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process shall
not be released, vacated or fully bonded within 60 days after commencement,
filing or levy; (ii) the Company or any Subsidiary admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company or any Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its property or business; provided,
however, that the foregoing provisions shall not apply to any such event or
events commenced by or against one or more Subsidiaries where the aggregate
assets of such Subsidiaries do not exceed 10% of the Consolidated Total Assets
of the Company; or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension
Plan which has resulted or would reasonably be expected to result in liability
of the Company under Title IV of ERISA to the Pension Plan or the PBGC which
<PAGE>
would reasonably be expected to have a Material Adverse Effect; or (ii) the
commencement or increase of contributions to, or the adoption of or the
amendment of a Pension Plan by the Company which has resulted or could
reasonably be expected to result in an increase in Unfunded Pension Liability
among all Pension Plans in an aggregate amount which would reasonably be
expected to have a Material Adverse Effect; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $10,000,000 or more, and the same
shall remain unvacated and unstayed pending appeal for a period of 30 days
after the entry thereof; provided, however, that the foregoing provisions
shall not apply to any such events entered against one of more Subsidiaries
where the aggregate assets of such Subsidiaries do not exceed 10% of the
Consolidated Total Assets of the Company; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be
any period of 10 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
(k) Change of Control. There occurs any Change of Control; or
(l) Government Contracting. If any governmental authority shall
notify or otherwise advise the Company or any of its Subsidiaries in writing
that the Company or any of its Subsidiaries has become ineligible or
disqualified in any respect as a present or future contractor to a
governmental authority with respect to ongoing government business that for
the last calendar year would have represented 15% of the Company's and its
Subsidiaries' consolidated revenues; or
(m) Governmental Proceedings. The aggregate liability of the
Company and its Subsidiaries under (a) all judgments, orders or decrees which
are entered against the Company or any Subsidiary, and (b) all settlements or
agreements which are entered into or consented by the Company or any
Subsidiary, in connection with governmental investigations, complaints and
court, administrative and other proceedings, exceeds $200,000,000 in the
<PAGE>
aggregate since December 31, 1993 (net of reserves for such matters
established as of December 31, 1993); or
(n) Adverse Change. There occurs a Material Adverse Effect.
9.2 Remedies. If any Event of Default occurs, the Agent shall,
at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans and any
obligation of any Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing under any
outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in Section
(f) or (g) of Section 9.1 (in the case of clause (i) of Section (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each
Bank to make Loans and any obligation of any Issuing Bank to Issue Letters of
Credit shall automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent, any
Issuing Bank or any Bank.
9.3 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
<PAGE>
SECTION 10
THE AGENT
10.1 Appointment and Authorization. (a) Each Bank hereby
irrevocably appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) Each Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Majority Lenders to act for such Issuing Bank with respect
thereto; provided, however, that such Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Section 10 with
respect to any acts taken or omissions suffered by such Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent", as used in this Section 10,
included such Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to such Issuing Bank.
10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
10.3 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
<PAGE>
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.
10.4 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company), independent accountants and other experts selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Majority Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance
with a request or consent of the Majority Banks (or all Banks, where such
action would require the unanimous consent of the Banks as described in the
first proviso to Section 11.1) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
<PAGE>
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the
Agent shall have received written notice from a Bank or the Company referring
to this Agreement, describing such Default or Event of Default and stating
that such notice is a "notice of default". The Agent will promptly notify the
Banks of its receipt of any such notice. The Agent shall take such action
with respect to such Default or Event of Default as may be requested by the
Majority Banks in accordance with Section 9; provided, however, that unless
and until the Agent has received any such request, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or
in the best interest of the Banks.
10.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness of
the Company. Except for notices, reports and other documents expressly herein
required to be furnished to the Banks by the Agent, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may
come into the possession of any of the Agent-Related Persons.
<PAGE>
10.7 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the 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, any other Loan Document,
or any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.8 Agent in Individual Capacity. BofA and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Agent or an
Issuing Bank hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its Affiliates
may receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans,
BofA shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agent or an Issuing
Bank, and each Issuing Bank shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not an
Issuing Bank.
10.9 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If
the Agent resigns under this Agreement, the Majority Banks shall appoint from
among the Banks a successor agent for the Banks which successor agent shall be
approved by the Company. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
<PAGE>
consulting with the Banks and the Company, a successor agent from among the
Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 10 and Sections 11.4 and 11.5 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the
date which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above. Notwithstanding the foregoing, however, BofA may not be removed as the
Agent at the request of the Majority Banks unless BofA shall also
simultaneously be replaced as an "Issuing Bank" hereunder pursuant to
documentation in form and substance reasonably satisfactory to BofA.
10.10 Withholding Tax. (a) If any Bank is a "foreign
corporation, partnership or trust" within the meaning of the Code and such
Bank claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Bank agrees with and in favor of the
Agent, to deliver to the Agent: (i) if such Bank claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement; (ii) if such Bank claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Bank, two properly completed
and executed copies of IRS Form 4224 before the payment of any interest is due
in the first taxable year of such Bank and in each succeeding taxable year of
such Bank during which interest may be paid under this Agreement, and IRS Form
W-9; and (iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax. Such Bank agrees to promptly
notify the Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
<PAGE>
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Bank, such
Bank agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Bank. To
the extent of such percentage amount, the Agent will treat such Bank's IRS
Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of
the Company to such Bank, such Bank agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
Section (a) of this Section are not delivered to the Agent, then the Agent may
withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Bank shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Banks under this
Section shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
<PAGE>
SECTION 11
MISCELLANEOUS
11.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Banks (or by the Agent
at the written request of the Majority Banks) and the Company and acknowledged
by the Agent, and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all the Banks and the Company and acknowledged by the Agent, do
any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 9.2(a));
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;
(c) except as provided in Section 2.4(c), reduce the principal
of, or the rate of interest specified herein on any Loan, or (subject to
clause (ii) below) any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks;
provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the applicable Issuing Bank in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or duties of
such Issuing Bank under this Agreement or any L/C-Related Document relating to
any Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver
or consent shall, unless in writing and signed by the Agent in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or
duties of the Agent under this Agreement or any other Loan Document, and (iii)
<PAGE>
the Fee Letters may be amended, or rights or privileges thereunder waived, in
a writing executed by the parties thereto.
11.2 Notices. (a) All notices, requests and other communications
shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by
the Company by facsimile (i) shall be immediately confirmed by a telephone
call to the recipient at the number specified on Schedule 11.2, and (ii) shall
be followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices
on Schedule 11.2; or, as directed to the Company or the Agent, to such other
address as shall be designated by such party in a written notice to the other
parties, and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Company and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the
date deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Section 2, 3 or 10 shall not be effective until actually
received by the Agent, and notices pursuant to Section 3 to any Issuing Bank
shall not be effective until actually received by such Issuing Bank at the
address specified, in the case of BofA, for BofA as an "Issuing Bank" on
Schedule 11.2, and in the case of any other Bank, at the address specified for
such Bank in Schedule 11.2.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agent and the Banks shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans and L/C Obligations
shall not be affected in any way or to any extent by any failure by the Agent
and the Banks to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Agent and the Banks of a confirmation which is at
variance with the terms understood by the Agent and the Banks to be contained
in the telephonic or facsimile notice.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Agent or any Bank, any right,
<PAGE>
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
11.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent and an
Issuing Bank) within five Business Days after demand (subject to Section
5.1(e)) for all reasonable costs and expenses incurred by BofA (including in
its capacity as Agent and an Issuing Bank) in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Agent and an Issuing
Bank) with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand (subject to Section 5.1(e)) for all
reasonable costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
11.5 Indemnity. Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify and hold the Agent-Related
Persons, and each Bank and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges,
expenses and disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following repayment of
the Loans, the termination of the Letters of Credit and the termination,
resignation or replacement of the Agent or replacement of any Bank) be imposed
on, incurred by or asserted against any such Person to the extent it relates
to a breach or negligence by the Company in any way relating to or arising out
of this Agreement or any document contemplated by or referred to herein, or
<PAGE>
the transactions contemplated hereby, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding
or appellate proceeding) related to or arising out of this Agreement or the
Loans or Letters of Credit or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively,
the "Indemnified Liabilities"); provided, that the Company shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct
of such Indemnified Person. The agreements in this Section shall survive
payment of all other Obligations.
11.6 Payments Set Aside. To the extent that the Company makes a
payment to the Agent or the Banks, or the Agent or the Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Agent or such Bank in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such set-off had not occurred, and (b) each Bank severally agrees to
pay to the Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Agent.
11.7 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.
11.8 Assignments, Participations, etc. (a) Any Bank may, with
the written consent of the Company at all times other than during the
existence of an Event of Default and the Agent and the Issuing Banks (which
consents of the Company, unless such assignment results in additional costs to
the Company under Section 4, shall not be unreasonably withheld) at any time
assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company, the Agent or the Issuing Banks shall be
required in connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all,
or any ratable part of all, of the Loans, the Commitment, the L/C Commitment,
the L/C Obligations and the other rights and obligations of such Bank
hereunder, in a minimum amount of $5,000,000; provided, however, that the
Company and the Agent may continue to deal solely and directly with such Bank
<PAGE>
in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Agent by such Bank and the Assignee; (ii) such Bank and its
Assignee shall have delivered to the Company and the Agent a Notice of
Assignment and Acceptance in the form of Exhibit D ("Notice of Assignment and
Acceptance") and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an
executed Notice of Assignment and Acceptance and payment of the above-
referenced processing fee, (i) 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 Notice of Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Notice of Assignment
and Acceptance, relinquish its rights and be released from its obligations
under the Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Notice of Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a "Participant")
participating interests in any Loans, the Commitment of that Bank and the
other interests of that Bank (the "originating Bank") hereunder and under the
other Loan Documents; provided, however, that (i) the originating Bank's
obligations under this Agreement shall remain unchanged, (ii) the originating
Bank shall remain solely responsible for the performance of such obligations,
(iii) the Company, the Issuing Banks and the Agent shall continue to deal
solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
<PAGE>
unanimous consent of the Banks as described in the first proviso to
Section 11.1. In the case of any such participation, the Participant shall not
have any rights under this Agreement, or any of the other Loan Documents, and
all amounts payable by the Company hereunder shall be determined as if such
Bank had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to
it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Company and provided to it by
the Company or any Subsidiary, or by the Agent on such Company's or
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Agent or
any Bank, or (ii) was or becomes available on a non-confidential basis from a
source other than the Company, unless the Bank is aware that such source is
bound by a confidentiality agreement or does not have the right to disclose
such information with the Company; provided, however, that any Bank may
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Bank is subject or in connection with
an examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent,
any Bank or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Bank's independent auditors and
other professional advisors who are bound to keep such information
confidential as provided herein; (G) to any actual or potential Affiliate of
such Bank, or to any Participant or Assignee, actual or potential, provided
that such Affiliate, Participant or Assignee agrees to keep such information
confidential to the same extent required of the Banks hereunder, and (H) as
expressly permitted under the terms of any other document or agreement
regarding the confidentiality to such information; provided, that in the case
of clauses (B) through (D) above, such Bank will use best efforts to notify
<PAGE>
the Company if not prohibited by applicable law so that the Company may seek
an appropriate protective order.
(f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
11.9 Set-off. In addition to any rights and remedies of the
Banks provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the
Company to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Bank to or for
the credit or the account of the Company against any and all Obligations owing
to such Bank, now or hereafter existing, irrespective of whether or not the
Agent or such Bank shall have made demand under this Agreement or any Loan
Document. Each Bank agrees promptly to notify the Company and the Agent after
any such set-off and application made by such Bank; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.
11.10 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably
request.
11.11 Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
<PAGE>
11.13 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks, the Agent and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.
11.14 Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE
AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE
AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY CALIFORNIA LAW.
11.15 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among the
Company, the Banks and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, oral or written, relating to
the subject matter hereof and thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
TELEDYNE, INC.
By:/S/ Douglas J. Grant
-----------------------
Name: Douglas J. Grant
----------------------
Title: Treasurer
---------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By:-------------------------
James Hinson
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By:--------------------------
Lori Kannegieter
Vice President
MELLON BANK, N.A. as Co-Agent and as a
Bank
By:/S/ James W. Emison
---------------------------
Title: Senior Vice President
------------------------
NATIONSBANK OF TEXAS, N.A., as Co-Agent
and as a Bank
By:/S/ Andrea Collias
----------------------------
Title: Assistant Vice President
-------------------------
<PAGE>
(Signatures continue)
THE BANK OF NEW YORK
By:/S/ Olayinka Bamgbose
----------------------------
Title: Assistant Vice President
-------------------------
UNION BANK
By:/S/ Patrick M. Cassidy
----------------------------
Title: Vice President
-------------------------
<PAGE>
SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
Letter of
Credit Pro Rata
Bank Commitment Commitment Share
---- ----------- ----------- -------------
Bank of America
National Trust and
Savings Association $40,000,000 $22,222,222 29.6296296%
Mellon Bank, N.A. 40,000,000 22,222,222 29.6296296
NationsBank of
Texas, N.A. 30,000,000 16,666,667 22.2222222
The Bank of New York 15,000,000 8,333,334 11.1111111
Union Bank 10,000,000 5,555,555 7.4074075
============ =========== ===========
TOTAL $135,000,000 $75,000,000 100.0000000%
<PAGE>
SCHEDULE 8.1
LIENS WITH A NET BOOK AMOUNT
IN EXCESS OF $1,000,000
Obligation
Outstanding on
July 12, 1994 Description Secured Party
- -------------- --------------------- ---------------------
$1,036,625 Land and improvements Glasgow-Barren County
Capitalized Lease Industrial Authority,
Glasgow, Kentucky Kentucky
$55,248,504 * Land, improvements and Chester County,
equipment South Carolina
Teledyne Allvac Rolling Mill
Richburg, South Carolina
* At the end of each year, assets acquired by the Teledyne
Allvac Rolling Mill operations in Richburg, South Carolina
are conveyed to Chester County in exchange for notes
purchased solely by Teledyne Industries, Inc. (all notes
outstanding are owned by Teledyne Industries, Inc.). The
assets are then leased to Teledyne Allvac, a division of
Teledyne Industries, Inc., for an amount which equals the
interest payment on the notes. For financial statement
presentation, the investment in the notes is offset against
the capital lease obligation and the assets of the Richburg
Rolling Mill operations remain on the books at historical
cost, less depreciation.
<PAGE>
SCHEDULE 11.2
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
TELEDYNE, INC.
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, CA 90067-6046
Attention: Douglas J. Grant
Treasurer
Telephone: (310) 551-4300
Facsimile: (310) 551-4239
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Bank of America National Trust
and Savings Association
Global Agency #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Jim Hinson
Vice President
Telephone: (415) 622-6188
Facsimile: (415) 622-4894
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, CA 90071
Attention: Lori Kannegieter
Vice President
Telephone: (213) 228-6379
Facsimile: (213) 228-2756
<PAGE>
Notices as an Issuing Bank:
Bank of America National Trust
and Savings Association
International Trade
Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017
OTHER BANKS
THE BANK OF NEW YORK
Domestic and Offshore Lending office:
The Bank of New York
One Wall Street, 22nd Floor
New York, NY 10266
Attention: Lorna O. Alleyne
Telephone: (212) 635-6737
Facsimile: (212) 635-6399
Notices (other than borrowing notices and Notices of
Conversion/Continuation):
Bank of New York-Los Angeles
10990 Wilshire Blvd. S-1700
Los Angeles, CA 90024
Attention: Olayinka Bamgbose
Assistant Vice President
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
MELLON BANK, N.A.
Domestic and Offshore Lending office:
Mellon Bank, N.A.
Three Mellon Center, Room #2302
Pittsburgh, PA 15259-0001
Attention: Michele Sedon
Telephone: (412) 236-3242
Facsimile: (412) 236-5049
<PAGE>
Notices (other than borrowing notices and Notices of
Conversion/Continuation):
Mellon Bank, N.A.
300 S. Grand, Suite 3800
Los Angeles, CA 90071
Attention: Lawrence C. Ivey
Telephone: (213) 680-7354
Facsimile: (213) 626-3745
NATIONSBANK OF TEXAS, N.A.
Domestic and Offshore Lending office:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, TX 75202
Attention: Kay Hibbs
Credit Services Representative
Telephone: (214) 508-3089
Facsimile: (214) 508-0944
Notices (other than borrowing notices and Notices of
Conversion/Continuation):
NationsBank - Los Angeles
444 S. Flower Street, Suite 1500
Los Angeles, CA 90071
Attention: Michele M. Shafroth
Senior Vice President
Telephone: (213) 236-4907
Facsimile: (213) 624-5815
UNION BANK
Domestic and Offshore Lending office:
Union Bank - National Banking Department
445 S. Figueroa Street, 15th Floor
Los Angeles, CA 90071
Attention: Wendy Frear
Corporate Banking Operations Officer
Telephone: (213) 236-6608
Facsimile: (213) 236-6701
<PAGE>
Notices (other than borrowing notices and Notices of
Conversion/Continuation):
Union Bank - National Banking Department
445 S. Figueroa Street, 15th Floor
Los Angeles, CA 90071
Attention: Patrick Cassidy
Vice President
Telephone: (213) 236-4063
Facsimile: (213) 236-6701
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
TO: Bank of America National Trust
and Savings Association, as Agent
1415 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Jim Hinson
Vice President
Pursuant to Section 2.3 of that certain Credit Agreement dated as
of July 12, 1994 (as from time to time amended, extended, restated, modified
or supplemented, the "Credit Agreement"; capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement), among Teledyne,
Inc., a Delaware corporation (the "Company"), the Banks named therein (the
"Banks") and Bank of America National Trust and Savings Association, as Agent
(the "Agent"), this represents the Company's request to borrow on ___________
____from the Banks, according to their respective Pro Rata Shares, $_________ as
[Base Rate] [Offshore Rate] Loans. [The initial Interest period for such
Offshore Rate is requested to be a ________-month period]. The proceeds of
such Loans are to be deposited in the Company's account at the Agent.
To the best of our knowledge and belief, the undersigned
Responsible Officer hereby certifies that:
(a) the representations and warranties of the Company contained
in the Credit Agreement are true and correct on and as of the date hereof to
the same extent as though made on and as of the date hereof; and
(b) no Default or Event of Default has occurred and is continuing under
the Credit Agreement or will result from the proposed borrowing.
DATED:_____________________
TELEDYNE, INC.
By_______________________________
Title____________________________
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
Bank of America National Trust
and Savings Association, as Agent
1415 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Jim Hinson
Vice President
1. Conversion Selection. Pursuant to Section 2.4 of that
certain Credit Agreement dated as of July 12, 1994 (as from time to time
amended, extended, restated, modified or supplemented, the "Credit
Agreement"; capitalized terms used herein shall have the meanings assigned to
them in the Credit Agreement), among Teledyne, Inc., a Delaware corporation
(the "Company"), the Banks named therein (the "Banks") and Bank of America
National Trust and Savings Association, as Agent (the "Agent"), this
represents the Company's request to convert $________of existing [Base Rate]
[Offshore Rate] Loans, the final day of the current Interest Period (if
applicable) of which is __________, 19__, to [Offshore Rate] [Base Rate]
Loans, as follows:
Interest Period
(Offshore
Dollar Amount Rate loans)
$____________ ________months
Maturing on ____, 19__
2. Continuation Selection (Offshore Rate Loans). Pursuant to
Section 2.4 of the Credit Agreement, please continue $_______of existing
Offshore Rate Loans, the final day of the current Interest Period of which is
__________, 19____, as follows:
Requested
Dollar Amount Interest Period
$___________ ______ months
Maturing on ______, 19___
Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to them in the Credit Agreement.
TELEDYNE, INC.
By_________________________________
Title______________________________
<PAGE>
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
[DATE]
Bank of America National Trust
and Savings Association, as Agent
1415 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Jim Hinson
Vice President
Re: Compliance Certificate
Ladies and Gentlemen:
This Certificate is given in accordance with Section 7.2(b) of
that certain Credit Agreement dated as of July 12, 1994 (as from time to time
amended, extended, restated, modified or supplemented, the "Credit
Agreement"; capitalized terms used herein shall have the meanings assigned to
them in the Credit Agreement), among Teledyne, Inc., a Delaware corporation
(the "Company"), the Banks named therein (the "Banks") and Bank of America
National Trust and Savings Association, as Agent (the "Agent"). We hereby
certify that:
(a) I am the _____________________________ of the Company;
(b) The enclosed consolidated balance sheet, related
consolidated statements of operations, cash flows and, if required,
shareholders' equity have been filed in conformity with all rules and
regulations of the SEC, and we have reviewed such statements in
preparing this Certificate;
(c) We have reviewed the terms of the Credit Agreement and have
made or caused to be made under our supervision, a review in reasonable
detail of the transactions and financial condition of the Company
during the accounting period covered by the enclosed financial
statements;
(d) To the best of our knowledge and belief no event or
condition exists which constitutes an Event of Default or Default as of
the date of this certificate except as set forth below;
(e) To the best of our knowledge and belief the representations
<PAGE>
and warranties set forth in Section 6 of the Credit Agreement are true,
correct and complete in all material respects on and as of the date of
this Certificate to the same extent as though made on and as of the date
hereof;
and
(f) To the best of our knowledge and belief the Company is in
compliance with all of the terms and conditions of the Credit Agreement
except as set forth below.
Described below (or in a separate attachment hereto) are the
exceptions, if any, to paragraphs (d) and (f), listing in detail, the
nature of the conditions or event, the period during which it has
existed and the action which the Company has taken, is taking or
proposes to take with respect to each such condition or event:
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
The foregoing certifications are made and delivered this ____ day
of _______________, 19__.
TELEDYNE, INC.
By:______________________________
Title:___________________________
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
(This attachment is as of [_____________] and pertains to the
four-quarter period from [_______________] (the "Period"; the last day of the
Period is referred to herein as the "Period End Date"). Financial covenant
information is provided for only those covenants which are required to be
tested as of the Period End Date.) All amounts are as of the Period End Date
except as noted.
Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement dated as of July 12, 1994 (such
agreement, as it may be amended, supplemented, restated or otherwise modified
from time to time, the "Credit Agreement") by and among Teledyne, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks")
and Bank of America National Trust and Savings Association, as Agent (the
"Agent"). Section references are to the sections of the Credit Agreement.
MINIMUM CONSOLIDATED NET WORTH
1. Net Issuance Proceeds, if any,
since Closing Date: $_____________
2. Net Issuance Proceeds to be included
per covenant (Line 1 x 75%) $_____________
3. (December 31, 1994 and thereafter)
50% of Consolidated Net Income for the
fiscal quarters ending September 30, 1994
and December 31, 1994, (but without
reduction for any losses): $____________
4. (After December 31, 1994) 50% of
each fiscal year's Consolidated Net
Income (but without reduction for
any losses): $____________
5. Minimum Consolidated Net Worth
required pursuant to Section 8.7
($175,000,000 + Lines 2 + 3 + 4): $
============
6. Actual Consolidated Net Worth: $____________
<PAGE>
EXHIBIT D
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
______________, 19__
TO: Bank of America National Trust
and Savings Association, as Agent
1415 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Jim Hinson
Vice President
Reference is made to the Credit Agreement dated as of July 12,
1994, (as from time to time amended, extended, restated, modified or
supplemented, the "Credit Agreement"; capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement) among Teledyne,
Inc., a Delaware corporation, the Banks party thereto and Bank of America
National Trust and Savings Association, as Agent (the "Agent") for said
Banks.
1. We hereby give you notice of, and request your consent to,
the assignment by ________________(the "Assignor") to _________________(the
"Assignee") of % of the right, title and interest of the Assignor in and
to the Credit Agreement, including without limitation the right, title and
interest of the Assignor in and to the Commitment and the L/C Commitment of
the Assignor, and all outstanding Loans and L/C Obligations of the Assignor.
Before giving effect to such assignment:
(a) the aggregate amount of the Assignor's Commitment is
$_________;
(b) the aggregate amount of the Assignor's L/C Commitment
is $_________;
(c) the aggregate principal amount of its outstanding
Loans is $__________; and
(d) the aggregate principal amount of its outstanding L/C
Obligations is $__________;
2. The Assignee hereby represents and warrants that it has
complied with the requirements of Section 11.8(a) of the Credit Agreement in
connection with this assignment.
<PAGE>
3. The Assignee agrees that, upon receiving your consent to such
assignment and from and after _______________, the Assignee will be bound by
the terms of the Credit Agreement, with respect to the interest in the Credit
Agreement assigned to it as specified above, as fully and to the same extent
as if the Assignee were the Bank originally holding such interest in the
Credit Agreement.
4. The following administrative details apply to the Assignee:
(a) Offshore Lending Office:
Assignee name:______________________
Address:____________________________
Attention:__________________________
Telephone:__(___)___________________
Telecopier:__(___)__________________
Telex (Answerback):_________________
(b) Domestic Lending Office:
Assignee name:______________________
Address:____________________________
____________________________
____________________________
Attention:__________________________
Telephone:__(___)___________________
Telecopier:__(___)__________________
Telex (Answerback):_________________
(c) Notice Address:
Assignee name:______________________
Address:____________________________
____________________________
____________________________
Attention:__________________________
Telephone:__(___)___________________
Telecopier:__(___)__________________
Telex (Answerback):_________________
(d) Payment Instructions:
Account No.:________________________
At:_______________________
_______________________
_______________________
Ref.:________________________
Attention:________________________
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above
mentioned.
Very truly yours,
[Name of Assignor]
By:________________________________
Title:
[Name of Assignee]
By:________________________________
Title:
WE HEREBY CONSENT TO THE
FOREGOING ASSIGNMENT:
TELEDYNE, INC.
By:_________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:_________________________
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as an Issuing Bank
By:_________________________
Vice President
[Other Existing Issuing Banks]
By:_________________________
Title:______________________
<PAGE>
Exhibit E
FORM OF OPINION OF ASSOCIATE
GENERAL COUNSEL OF THE COMPANY
July 12, 1994
To each of the Banks parties to the
Credit Agreement hereinafter
referred to and to Bank of America
National Trust and Savings Association,
as Agent
Gentlemen and Mesdames:
I am the Associate General Counsel of Teledyne, Inc., a Delaware
corporation (the "Company"), and have represented the Company in connection
with the negotiation, execution and delivery of that certain Credit
Agreement dated as of July 12, 1994, (the "Agreement"; capitalized terms
used herin shall have the meanings assigned to them in the Agreement) among
the Company, the Banks party thereto and Bank of America National Trust and
Savings Association, as Agent (the "Agent") for said Banks and the
transactions contemplated thereby. This opinion is being furnished to you at
the direction of the Company pursuant to Section 5.1(d) of the Agreement.
I have made such inquiry of the officers of the Company and have
examined such records, documents, instruments and certificates of public
officials and of the Company and have considered such questions of law as I
have deemed necessary for the purpose of rendering the opinions set forth
herein. I have assumed the genuineness of all signatures other than those of
the Company and the authenticity of all items submitted to me as originals
and the conformity with originals of all items submitted to me as copies.
Based upon and subject to the foregoing, I am of the opinion that:
1. Each of the Company and Teledyne Industries, Inc. (collectively,
"Teledyne") is (a) a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (b) has the
power and authority and, to the best of my knowledge, all governmental
licenses, authorizations, consents and approvals to own its
(40~91~. 02)
7/11
<PAGE>
Page 2
assets, carry on its business and to execute, deliver, and perform its
obligations under the Agreement, and (c) is duly qualified as a foreign
corporation and is licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license; unless, in the
case referred to in clause (c) the failure to do so would not reasonably be
expected to have a Material Adverse Effect.
2. The execution, delivery and performance by the Company of the
Agreement have been duly authorized by all necessary corporate action, and do
not and will not (a) contravene the terms of any of the Company's Organization
Documents, (b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document listed under Exhibit 4.1
(instruments describing the rights of security holders) or Exhibits 10.1 and
10.2 (material contracts) to the Company's Form 10-K for the fiscal year ended
December 31, 1993 or, to the best of my knowledge, any order, injunction, writ
or decree of any Governmental Authority to which the Company or its property
is subject, or (c) violate any federal or California statutes, laws or
regulations applicable to the Company.
3. No approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority is necessary or
required in connection with the execution, delivery or performance by Teledyne
of the Agreement.
4. The Agreement constitutes the legally valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium, or similar laws affecting
creditors' rights generally and subject to the effect of general principles of
equity including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
5. Except as disclosed in the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994, to the best of my knowledge there are no
actions, suits, proceedings, claims or disputes pending at law, in equity, in
arbitration or before any Governmental Authority, against Teledyne or its
properties which (a) purport to affect or pertain to the Agreement, or any of
the transactions contemplated thereby or (b) if determined adversely to
Teledyne would reasonably be expected to have a Material Adverse Effect. No
injunction, writ,
(4029100.02) 7/14/94
<PAGE>
Page 3
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of the Agreement, or directing that the
transactions provided for herein or therein not be consummated as herein or
therein provided.
6. Teledyne is not an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other federal
or state statute or regulation limiting its ability to incur Indebtedness.
My opinion in paragraph 2 as to compliance with certain statutes,
laws, and regulations is based upon a review of those federal and
California statutes, rules and regulations which, in my experience, are
normally applicable to transactions of the type contemplated by the
Agreement.
This opinion is solely for your benefit in connection with the
Agreement and may not be relied on by you for any other purpose or by any
other Person, nor may copies be delivered to, any other Person without my
prior written consent.
Very truly yours,
(4029100.02)
7111194
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Teledyne, Inc. 10Q for the Quarterly Period Ended September 30, 1994
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 16,800
<SECURITIES> 45,600
<RECEIVABLES> 379,600
<ALLOWANCES> 0
<INVENTORY> 204,600
<CURRENT-ASSETS> 783,900
<PP&E> 846,100
<DEPRECIATION> 550,700
<TOTAL-ASSETS> 1,502,400
<CURRENT-LIABILITIES> 512,700
<BONDS> 356,700
<COMMON> 55,400
0
0
<OTHER-SE> 200,400
<TOTAL-LIABILITY-AND-EQUITY> 1,502,400
<SALES> 1,746,800
<TOTAL-REVENUES> 1,746,800
<CGS> 1,318,400
<TOTAL-COSTS> 1,318,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,300
<INCOME-PRETAX> (41,800)
<INCOME-TAX> (17,000)
<INCOME-CONTINUING> (24,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,800)
<EPS-PRIMARY> (0.45)
<EPS-DILUTED> (0.45)
</TABLE>
