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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED JULY 4, 1999, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO
_______________.
Commission file number: 1-4682
THOMAS & BETTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Tennessee 22-1326940
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
8155 T & B Boulevard
Memphis, Tennessee 38125
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(901) 252-8000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock - $0.10 Par Value Outstanding Shares at August 3, 1999
(TITLE OF EACH CLASS) 56,903,545
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 4, January 3,
1999 1999
----------- -----------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 72,321 $ 64,028
Marketable securities 19,001 42,478
Receivables, net 454,916 404,784
Inventories:
Finished goods 203,078 202,368
Work-in-process 96,231 95,436
Raw materials 186,863 171,837
--------- ---------
486,172 469,641
Deferred income taxes 54,442 61,829
Prepaid expenses 24,355 15,642
--------- ---------
Total Current Assets 1,111,207 1,058,402
Property, plant and equipment 1,234,016 1,162,942
Less accumulated depreciation 587,398 531,920
--------- ---------
Property, plant and equipment - net 646,618 631,022
Intangible assets - net 619,729 621,487
Investments in unconsolidated companies 150,474 142,251
Other assets 50,572 46,425
--------- ---------
TOTAL ASSETS $2,578,600 $2,499,587
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 62,046 $ 75,068
Current maturities of long-term debt 5,123 22,589
Accounts payable 280,159 262,483
Accrued liabilities 162,978 155,815
Income taxes 44,778 55,674
Dividends payable 15,960 15,920
--------- ---------
Total Current Liabilities 571,044 587,549
Long-term debt 840,905 790,963
Other long-term liabilities 96,853 93,788
Deferred income taxes 19,603 12,182
Shareholders' Equity:
Common stock 5,690 5,678
Additional paid-in capital 326,746 322,018
Retained earnings 759,843 710,474
Unearned compensation - restricted stock ( 5,586) ( 4,534)
Accumulated other comprehensive income (36,498) (18,531)
--------- ---------
Total Shareholders' Equity 1,050,195 1,015,105
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,578,600 $2,499,587
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
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THOMAS & BETTS CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
---------------------------- ---------------------------
July 4, July 5, July 4, July 5,
1999 1998 1999 1998
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $640,181 $553,170 $1,241,699 $1,097,678
Costs and expenses:
Cost of sales 454,004 384,842 877,359 768,269
Marketing, general and
administrative 102,898 82,340 204,991 167,654
Research and development 12,256 12,508 24,559 25,812
Amortization of intangibles 4,728 4,115 9,300 8,497
-------- -------- ---------- ----------
573,886 483,805 1,116,209 970,232
-------- -------- ---------- ----------
Earnings from operations 66,295 69,365 125,490 127,446
Income from unconsolidated
companies 7,718 6,125 16,716 14,652
Other expense - net 16,297 16,605 31,013 29,461
-------- -------- ---------- ----------
Earnings before income taxes 57,716 58,885 111,193 112,637
Income taxes 14,423 17,342 29,930 33,791
-------- -------- ---------- ----------
Net earnings $ 43,293 $ 41,543 $ 81,263 $ 78,846
======== ======== ========== ==========
Net earnings per share:
Basic $ 0.76 $ 0.73 $ 1.43 $ 1.39
======== ======== ========== ==========
Diluted $ 0.76 $ 0.73 $ 1.42 $ 1.38
======== ======== ========== ==========
Average shares outstanding:
Basic 56,873 56,709 56,832 56,615
======== ======== ========== ==========
Diluted 57,109 57,191 57,045 57,091
======== ======== ========== ==========
Cash dividends declared
per share $ 0.28 $ 0.28 $ 0.56 $ 0.56
======== ======== ========== ==========
</TABLE>
Note: Certain prior-year amounts have been reclassified to conform to the
current-year presentation.
See accompanying notes to consolidated financial statements.
3
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THOMAS & BETTS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
July 4, July 5,
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 81,263 $ 78,846
Adjustments:
Depreciation and amortization 51,429 48,785
Undistributed earnings from unconsolidated
companies (8,216) (3,473)
Deferred income taxes 16,037 6,127
Changes in operating assets and liabilities, net:
Receivables (56,612) (76,243)
Inventories (15,731) (32,366)
Accounts payable 16,819 ( 7,746)
Accrued liabilities 3,944 (11,607)
Income taxes payable (10,631) (12,360)
Other (12,024) (12,461)
-------- --------
Net cash provided by (used in) operating activities 66,278 (22,498)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of and investments in businesses, net of
$7,220 cash in 1999 (13,080) (68,695)
Purchases of property, plant and equipment (66,326) (66,985)
Proceeds from sale of property, plant and equipment 5,099 4,664
Marketable securities acquired - (25,252)
Proceeds from matured marketable securities 23,466 11,585
-------- --------
Net cash used in investing activities (50,841) (144,683)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in borrowings with
original maturities less than 90 days (12,890) 1,894
Proceeds from long-term debt and other
borrowings 149,000 199,082
Repayment of long-term debt and other
borrowings (116,524) (13,288)
Stock options exercised 4,740 5,621
Cash dividends paid ( 31,808) (49,926)
-------- --------
Net cash provided by (used in) financing activities ( 7,482) 143,383
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 338 (280)
-------- --------
Net increase (decrease) in cash and cash
equivalents 8,293 (24,078)
Cash and cash equivalents at beginning of period 64,028 45,225
-------- --------
Cash and cash equivalents at end of period $ 72,321 $ 21,147
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
THOMAS & BETTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary for the fair presentation of the financial position of the
Corporation as of July 4, 1999 and January 3, 1999, and the results of
operations and cash flows for the periods ended July 4, 1999 and July 5, 1998.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Corporation's Annual Report on Form 10-K for the fiscal
year ended January 3, 1999. The results of operations for the periods ended July
4, 1999 and July 5, 1998 are not necessarily indicative of the operating results
for the full year.
2. EARNINGS PER SHARE ("EPS")
Basic EPS for each period are computed by dividing net earnings by
the weighted-average number of shares of common stock outstanding during the
period. Diluted EPS for each period are computed by dividing net earnings by the
sum of (1) the weighted-average number of shares outstanding during the period
and (2) the dilutive effect of the assumed exercise of stock options using the
treasury stock method.
The following is a reconciliation of the numerators and denominators of
the per share computations:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
-------------------- --------------------
July 4, July 5, July 4, July 5,
(In thousands except per share data) 1999 1998 1999 1998
------- -------- ------- -------
<S> <C> <C> <C> <C>
Net earnings $43,293 $41,543 $81,263 $78,846
------- ------- ------- -------
Average shares outstanding 56,873 56,709 56,832 56,615
------- ------- ------- -------
Basic EPS $ 0.76 $ 0.73 $ 1.43 $ 1.39
======= ======= ======= =======
Average shares outstanding 56,873 56,709 56,832 56,615
Plus assumed exercise of
stock options 236 482 213 476
------- ------- ------- -------
57,109 57,191 57,045 57,091
------- ------- ------- -------
Diluted EPS $ 0.76 $ 0.73 $ 1.42 $ 1.38
======= ======= ======= =======
</TABLE>
5
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3. COMPREHENSIVE INCOME
Total comprehensive income and its components are as follows:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
--------------------- ---------------------
July 4, July 5, July 4, July 5,
(In thousands) 1999 1998 1999 1998
------- -------- -------- -------
<S> <C> <C> <C> <C>
Net earnings $43,293 $41,543 $81,263 $78,846
Foreign currency translation
adjustments (3,724) (6,023) (17,409) (7,783)
Minimum pension liability adjustment - - (551) -
Unrealized holding gains (losses)
on securities 5 117 (7) 117
------- ------- ------- -------
Comprehensive income $39,574 $35,637 $63,296 $71,180
======= ======= ======= =======
</TABLE>
4. ACQUISITIONS
The Corporation completed one acquisition during the first six months
of 1999 for total consideration of approximately $20 million in cash. The
acquisition was accounted for under the purchase method of accounting;
accordingly, its results of operations have been included in the consolidated
statement of earnings since the date of acquisition. The aggregate purchase
price has been allocated to the assets and liabilities based on estimated fair
values at the date of acquisition and the excess of approximately $5.9 million
was allocated to goodwill. The goodwill is being amortized on a straight-line
basis over 40 years.
6
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5. RESTRUCTURING AND SPECIAL CHARGES
During the third quarter of 1998, the Corporation recorded pretax
restructuring and special charges of $108.5 million primarily related to a
program to reduce costs by consolidating several facilities and product-line
operations, terminating employees at affected locations, downsizing
administrative functions and writing down idle facilities. The charges were
comprised of a $62.1 million provision for restructuring operations and $46.4
million of other special charges, of which $30.3 million was charged to cost of
sales and $16.1 million to marketing, general and administrative expense. The
components of those charges and usage through July 4, 1999 were:
<TABLE>
<CAPTION>
Charges to Remaining
Charges to Reserves During Balance at
Original Reserves Six Months Ended July 4,
(in millions) Provision During 1998 July 4, 1999 1999
--------- ----------- ---------------- ----------
<S> <C> <C> <C> <C>
Severance and employee-related cost $ 26.6 $( 5.1) $( 6.0) $15.5
Property, plant and equipment write-offs 25.7 ( 7.0) ( 0.4) 18.3
Other facility exit costs 9.8 (2.3) (0.6) 6.9
------ ------ ------ -----
Provision for restructured operations 62.1 (14.4) ( 7.0) 40.7
------ ------ ------ -----
Inventory write-offs related to restructuring 25.6(1) (14.4) ( 5.2) 6.0
Costs related to previously idled facilities:
Write-downs 4.7(1) (1.5) (0.1) 3.1
Carrying costs 10.4(2) (0.7) - 9.7
Other 5.7(2) - (3.3) 2.4
------ ------ ------ -----
Special charge 46.4 (16.6) (8.6) 21.2
------ ------ ------ -----
Total $108.5 $(31.0) $(15.6) $61.9
====== ====== ====== =====
Charged to (1) cost of sales and (2) marketing, general and administrative
expense.
</TABLE>
Severance and other employee-related costs involve actions that will
result in a net reduction of approximately 400 jobs, including administrative
positions at plants and corporate headquarters. As of July 4, 1999, the
Corporation had realized a net reduction of approximately 249 jobs. The
property, plant and equipment write-downs reduced the carrying value of fixed
assets not relocated in conjunction with their associated manufacturing
processes to fair value. Assets written down as part of the cost-reduction
program remain classified as property, plant and equipment until idled; the
adjusted carrying value of the assets still in use was $26.7 million. The effect
of suspending depreciation on facilities idled was $0.1 million of depreciation
expense reduction in the first six months of 1999.
Inventory write-offs primarily relate to items that became obsolete due
to modifications of manufacturing processes for product lines being relocated;
items not cost-effective to relocate; and, to a lesser degree, inventory
associated with discontinued products.
Costs related to previously idled and written-down facilities were
based on management's current estimates of costs necessary to ultimately dispose
of, and satisfy obligations related to, such facilities. The majority of those
costs are lease-related, and will generally be incurred ratably over an
eight-year period.
The cost-reduction program commenced in 1998 is expected to be
substantially completed by year-end 1999, with disposal of idle facilities
anticipated by the end of 2000. Certain other costs, primarily relating to
7
<PAGE>
the relocation of inventory, equipment and personnel, are not accruable until
incurred. Such costs, which were not included in the $108.5 million
provision, amounted to $7.0 million in the first six months of 1999. Future
revenues are not expected to be significantly affected, since the
cost-reduction program is primarily intended to relocate operations rather
than discontinue operations.
6. SEGMENT AND OTHER RELATED DISCLOSURES
The Corporation has three reportable segments: Electrical, Electronic
Original Equipment Manufacturers (Electronic OEM) and Communications. Some
business activities cannot be classified in the aforementioned segments and are
shown under "All other." The Corporation's reportable segments are based on
channels to market, and represent the primary mode used to assess allocation of
resources and performance. Management evaluates each segment's profit or loss
performance based on earnings before interest, taxes, loss on sale of accounts
receivable, restructure and special charges, foreign exchange gains and losses
and acquisition-related transaction expenses.
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
-------------------- --------------------------
SEGMENT INFORMATION July 4, July 5, July 4, July 5,
(In thousands) 1999 1998 1999 1998
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Net Sales:
Electrical $351,356 $274,953 $ 673,166 $ 535,933
Electronic OEM 168,971 157,537 326,987 328,837
Communications 68,592 69,103 130,985 137,344
All other 51,262 51,577 110,561 95,564
------- ------- --------- ---------
Total $640,181 $553,170 $1,241,699 $1,097,678
======= ======= ========= =========
Segment Earnings:
Electrical $ 51,772 $ 48,982 $ 99,553 93,623
Electronic OEM 15,190 14,325 29,197 30,396
Communications 1,512 5,744 1,663 11,095
Related to all other sales 6,178 6,053 12,297 6,253
------- ------- --------- ---------
Total $ 74,652 $ 75,104 $ 142,710 $ 141,367
======= ======= ========= =========
</TABLE>
The following are reconciliations of the total of reportable segments
to the consolidated Corporation:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------------------- ------------------------
RECONCILIATION TO TOTAL CORPORATION July 4, July 5, July 4, July 5,
(In thousands) 1999 1998 1999 1998
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Net Sales:
Total reportable segment net sales $588,919 $501,593 $1,131,138 $1,002,114
Other sales 51,262 51,577 110,561 95,564
------- ------- --------- ---------
Total $640,181 $553,170 $1,241,699 $1,097,678
======= ======= ========= =========
Earnings Before Income Taxes:
Total reportable segment earnings $ 68,474 $ 69,051 $ 130,413 $ 135,114
Earnings on other sales 6,178 6,053 12,297 6,253
Interest expense (16,336) (12,380) (32,076) (23,307)
Loss on sale of receivables ( 2,248) ( 2,200) ( 4,513) ( 4,587)
Interest income 898 1,926 4,190 3,254
Foreign currency exchange gains (losses) 750 ( 1,521) 882 ( 2,046)
Acquisition-related transaction expenses - ( 2,044) - ( 2,044)
------- ------- --------- ---------
Total $ 57,716 $ 58,885 $ 111,193 $ 112,637
======= ======= ========= =========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Thomas & Betts Corporation's financial results for the quarter ended
July 4, 1999 topped those of the prior-year quarter, with Thomas & Betts earning
net income of $43.3 million compared with $41.5 million in the same 1998 period.
Diluted earnings per share (EPS) were $0.76, compared with 1998's diluted EPS of
$0.73.
Second-quarter net sales grew 15.7% to $640.2 million from 1998's
$553.2 million. In addition to improvement from the late-1998 Kaufel
acquisition, higher core sales in the Corporation's Electrical and Electronic
OEM segments contributed to the sales increase.
On a geographic basis, sales to Canadian customers improved in the
quarter on account of a sizeable increase in demand for new electronics
components as well as a slight recovery of that natural-resource-price-
sensitive economy. Sales to Mexican and Latin American customers continued to
show significant growth as Thomas & Betts further expanded its sales and
marketing presence in those developing regions. Sales in Europe were up
marginally as negative currency translations essentially offset volume gains in
that market. The Corporation recorded its third consecutive quarter of sales
increases in the Asia/Pacific region to return sales to the level of the prior
year's quarter.
Profitability in 1999's second quarter was negatively impacted by
alleged wrongdoing by former employees of the Corporation's battery pack
operation in Scotland and a sales mix that favored lower-margin products. The
consolidated gross margin was 29.1%, compared with 1998's level of 30.4%, while
the consolidated operating margin was 10.4% versus 12.5%.
Second-quarter income from unconsolidated companies increased 26.0%
from the prior year as a result of gains from the Corporation's investments in
the ET&B and Elastimold joint ventures. Other expense-net was slightly lower
than last year's quarter as the additional acquisition-related interest expense
in the 1999 second quarter was lower than acquisition-related transaction
expense in 1998's quarter. Year over year interest expense increased to $16.3
million from $12.4 million.
The tax rate on operating income for the second quarter remained at
29%, as experienced in the past three quarters. However, the provision included
a one-time $2.3 million reduction in taxes resulting from approvals of
previously filed state income tax refund claims and by a better-than-expected
settlement of a European tax examination. The effective tax rate for 1999's
second quarter was 25.0% versus 29.5% in the prior-year quarter.
9
<PAGE>
Through six months, consolidated sales were $1,241.7 million, 13.1%
above 1998's level for the same period, primarily due to the acquisition of
Kaufel, and higher volumes. The consolidated gross margin through six months of
1999 reflected a sales mix of lower-margin products than in the prior-year
period. The six-month 1999 operating margin was 10.1% versus 1998's 11.6% as
acquisition-related marketing, general and administrative expenses and expansion
of the Corporation's presence in Latin America caused 1999 marketing, general
and administrative expense to rise as a percent of sales. Six-month income from
unconsolidated companies increased 14.1% as a result of higher earnings from all
of the Corporation's equity investments. Other expense-net rose from the
year-earlier period due to acquisition-related interest expense. Net earnings
for the first half were $81.3 million, an increase of 3.1% from last year, and
diluted EPS were $1.42, 2.9% higher than the same period of 1998.
COST-REDUCTION PROGRAM
Net savings in the six months ended July 4, 1999 exceeded net savings
anticipated at the outset of the cost-reduction program initiated in 1998 due to
lower-than-anticipated project expenses, as shown in the following table:
<TABLE>
<CAPTION>
Six Months Ended
July 4, 1999
-----------------------
Originally
(In millions) Anticipated Actual
----------- ----------
<S> <C> <C>
Savings:
Salaries $ 5.8 $ 4.6
Manufacturing labor 14.6 12.3
Depreciation 0.3 0.2
Overhead ( 2.5) ( 1.8)
----- -----
Total 18.2 15.3
----- -----
Related project expenses (16.6) ( 7.0)
----- -----
Net savings $ 1.6 $ 8.3
===== =====
</TABLE>
Project expenses are primarily relocation and training costs which must
be expensed as incurred because they are expected to provide future value. The
lower level of project expenses actually incurred in the first six months of
1999 reflects re-sequencing of the particular projects undertaken to obtain a
greater initial benefit. Net savings for the third quarter are expected to be
approximately $8 million, reflecting lower project expenses than originally
anticipated. The Corporation expects the net savings for the fourth quarter to
be lower than originally anticipated due to incurrence during the fourth quarter
of the previously delayed project expenses. Full-year 1999 net savings are
expected to be substantially the same as originally anticipated at the outset
of the program.
10
<PAGE>
Cash disbursements which were charged against reserves for severance and
facility exit costs in the six months ended July 4, 1999 were approximately $7.7
million compared to $13.9 million originally anticipated. The lower expenditure
reflects the later timing of facility closures in the six months ended July 4,
1999.
Asset write-downs in the six months ended July 4, 1999 were less than
originally anticipated because sales of facilities to be idled, and therefore
their related write-downs, have not occurred as rapidly as originally planned.
SEGMENT RESULTS
Sales of the Electrical segment grew 27.8% to $351.4 million for the
quarter, and segment earnings rose 5.7% to $51.8 million. Sales from
acquisitions, together with solid demand from end-users in commercial
construction, industrial and utility markets, accounted for the segment's
increases. Earnings growth was less than the increase in sales due to the mix of
products sold. Through six months, sales increased 25.6% from the prior-year
period to $673.2 million with most of the gain resulting from the Kaufel
acquisition and solid improvements in volumes sold to utility customers. Segment
earnings for the six months were 6.3% higher at $99.6 million. As in the
second-quarter comparison, earnings grew at a slower rate than sales due to the
mix of products sold.
Second-quarter sales of the Electronic OEM segment were $169.0 million,
7.3% higher than the same 1998 quarter. Higher year-over-year volumes of battery
packs and automotive electronics more than offset modest pricing pressure in the
segment. Electronic OEM earnings for the second quarter were $15.2 million, up
6.0%, compared with 1998's results. During the first six months of 1999, price
decreases in products sold to computer and automotive OEMs more than offset a
moderate improvement in volumes resulting in sales of $327.0 million, 0.6% lower
than 1998's first half. Year-to-date segment earnings were $29.2 million, a 3.9%
decrease compared with 1998. Profitability of the segment in both the second
quarter and first half of 1999 was negatively impacted by alleged wrongdoing
within the battery pack operation.
During the second quarter Thomas & Betts uncovered what appears to be
wrongdoing on the part of several former employees of its Dundee, Scotland
battery pack operation. Scottish authorities are involved, and the Corporation
has sought injunctive relief in Scotland against those employees and the
competing operation they started while still employed by Thomas & Betts. The
alleged activity involved theft of intellectual property, use of confidential
customer and supplier information, disruption of supply chain and quality
processes and misleading suppliers, customers and employees regarding the future
of that business. These activities are believed to have resulted in
approximately $6 million of lost sales and $3 million of operating income
shortfall recognized during the second quarter. Investigation into the conduct
of the former employees continues, and the Corporation is pursuing vigorously
all legal remedies against these individuals. Thomas & Betts believes that it
has overcome disruptions of the supply chain in that business caused by the
alleged activity, and is again fully servicing its customers with quality
product.
11
<PAGE>
Sales of the Communications segment were $68.6 million in 1999's second
quarter and $131.0 million in the first half, or 0.7% and 4.6% lower than the
respective 1998 periods. Weak international demand for telecommunications
products and depressed sales to U.S. customers involved in telecommunications
industry consolidation reversed gains in data communications and cable
television markets. Second-quarter segment earnings were $1.5 million, 73.7%
below 1998's levels, but improved from the $0.2 million posted by the segment in
the first quarter of 1999. For the first half, earnings were $1.7 million,
versus $11.1 million in the 1998 period. The year-over-year change in
profitability of the segment is due primarily to an unfavorable shift of sales
to lower-margin cable television amplifier products and the lower sales to
telecommunications customers.
In late July, the Corporation announced that it had executed a letter
of intent for Scientific-Atlanta to purchase certain of Thomas & Betts'
broadband product lines. That transaction is expected to close in late August
1999, and will allow Thomas & Betts to return its focus within the cable
television business to its core hardware product lines. The product lines to be
sold had 1998 sales of $8.8 million and are expected to have $19.1 million in
sales through the first nine months of 1999.
Other sales in the second quarter were $51.3 million, a decrease of
0.6% from 1998's second-quarter level. Through six months of 1999, other sales
totaled $110.6 million, 15.7% greater than the same 1998 period, as demand from
traditional utility customers' projects returned to more normal levels and sales
of wind-generation towers surged in the first quarter before concluding in the
second quarter. Earnings on other sales increased 2.1% to $6.2 million in 1999's
second quarter and 96.7% to $12.3 million in the first half due to manufacturing
efficiencies.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided cash of $66.3 million through the first
six months of 1999. Net receivables increased only $11.3 million during the
second quarter on an increase in sales of $38.7 million over the first quarter's
level of sales. Through six months accounts receivable rose $50.1 million
primarily as a result of:
- higher sales volumes;
- temporary increases associated with conversions of the
Corporation's various financial systems;
- payment of volume incentive discounts to customers for their 1998
purchases, reducing accruals for discounts which are recorded as
contra assets offsetting gross receivables; and
- the acquisition of Ocal.
The Corporation's inventory levels declined $1.6 million during the
second quarter due primarily to lower safety stocks of inventory that the
Corporation held to avoid customer service disruptions as it moved product lines
from one plant to another as part of its ongoing cost-reduction program. As of
July 4, 1999, inventory levels were $16.5 million higher than year-end levels
due to two factors:
12
<PAGE>
- increases to support higher sales volumes; and
- the acquisition of Ocal.
Accounts payable increased $17.7 million from year-end 1998 with $10.1
million of that increase in the second quarter, reflecting:
- additional purchases in support of higher sales and inventory
levels; and
- extension of payment terms.
Capital expenditures for the first six months of 1999 totaled $66.3
million, just slightly less than the same period of 1998. Dividends paid during
the six months of 1999 totaled $31.8 million for dividends declared in 1998's
fourth quarter and 1999's first quarter.
13
<PAGE>
As of July 4, 1999, marketable securities, cash and equivalents totaled
$91.3 million, compared with $106.5 million as of January 4, 1999. The cash
balance was reduced as a result of two factors:
- reduced cash balance requirements in Puerto Rico while still
retaining the same tax benefits related to those funds ; and
- improved banking and cash management arrangements related to
recent acquisitions.
Thomas & Betts maintains a $500 million commercial paper program, which
is backed by revolving-credit agreements. At July 4, 1999, $94.6 million of
commercial paper was outstanding. In June 1999, the Corporation replaced an
expiring $200 million, 364-day revolving-credit agreement with a new $260
million, 364-day revolving-credit agreement with a group of banks. The
revolving-credit agreement will be used primarily as a backup facility for the
commercial paper program. Management believes that its external financial
resources and internally generated funds are sufficient to meet the
Corporation's short-term capital needs. Longer term, Thomas & Betts will
continue to finance future acquisitions through issuance of private or public
debt, common stock, other equity instruments, internally generated funds or a
combination of those sources.
In February 1999, the Corporation issued $150 million of 10-year
medium-term notes at par with a coupon of 6.39%. The Corporation used the
proceeds from that sale to reduce borrowings under its commercial paper program
and under uncommitted lines of credit and for other general corporate purposes.
OTHER EVENTS
On January 27, 1999, the Corporation entered into an agreement to
acquire the outstanding common stock of AFC Cable Systems, Inc. (AFC) in a
stock-for-stock merger valued at approximately $490 million. AFC is a Rhode
Island-based manufacturer of electrical and communications products and systems
for commercial and industrial buildings. This transaction must be approved by
the shareholders of Thomas & Betts and AFC. The proxy materials for the
necessary meetings are under review at the SEC. The Corporation cannot predict
when the materials will be cleared by the SEC, but Thomas & Betts remains
hopeful that this transaction will be completed in the third quarter of 1999.
The transaction is expected to be accounted for as a pooling of interests.
YEAR-2000 READINESS PROGRAM
Thomas & Betts is actively engaged in a corporate-wide program to
ensure that its systems and products are Year-2000 compliant. The Year-2000
issue is the result of computer programs being written using two digits rather
than four to define the applicable year. As a result, computer programs that
have time-sensitive software are at risk to recognize a date using "00" as the
year 1900 rather than the year 2000. Thomas & Betts is taking steps that it
believes will ensure no disruption to its operations. In 1997, the Corporation
began a worldwide-technology upgrade of its order-entry and financial-reporting
computer systems. As part of that project, Thomas & Betts has completed an
assessment of its Year-2000 issue and is modifying or replacing portions of its
software so that its computer systems will function properly with respect to
dates in the year 2000 and thereafter.
14
<PAGE>
Thomas & Betts' plan to resolve the Year-2000 issue involves four
phases: assessment, remediation, testing and implementation. In 1998, Thomas &
Betts had completed its assessment of all significant computer systems that
could be affected by the Year-2000 issue. The assessment indicated that many of
the Corporation's important information technology systems could be affected,
and that software used in certain manufacturing equipment was at risk. Thomas &
Betts is currently completing correction of those systems and manufacturing
equipment that present a risk.
At July 4, 1999, Thomas & Betts had completed the remediation phase for
all non-compliant legacy programs. The Corporation's plans now call for
completion of testing and implementing its information technology systems.
Thomas & Betts has implemented core order entry, distribution, pricing, plant
and financial systems that are Year-2000 compliant. The Corporation expects to
complete the testing phase before September 1, 1999, with all remediated systems
fully implemented by September 1, 1999.
With respect to operating equipment, at July 4, 1999 Thomas & Betts had
completed an assessment of equipment that could be affected by the Year-2000
issue, had completed 90% of the remediation phase and had completed 90% of the
testing of that equipment. Once testing is completed, the operating equipment
will be ready for immediate use. Thomas & Betts expects to complete its
equipment remediation efforts by September 1, 1999, and testing and implementing
of all affected equipment by September 1, 1999.
Thomas & Betts has surveyed its important suppliers, vendors and
customers, either by mail or telephone, to assess their Year-2000 readiness. To
date, the Corporation is not aware of any problems within those groups that
would materially affect results of Thomas & Betts' operations.
The Corporation is utilizing both internal and external resources to
reprogram or replace, test and implement the software and operating equipment
for Year-2000 modifications. As part of the previously mentioned
worldwide-technology upgrade that began in 1997, the Corporation has been and is
installing new systems with greatly enhanced functionality that will also solve
potential Year-2000 problems in those areas. Management anticipates that its
costs to modify existing software for Year-2000 compliance will approximate $2
million, and to date, Thomas & Betts has spent approximately 90% of that amount.
Thomas & Betts' plans to complete Year-2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources and
other factors. Estimates of the status of completion and the expected completion
dates are based on hours expended to date compared to total expected hours.
However, there can be no guarantee that those estimates will be achieved, and
actual results could differ materially from those anticipated. Specific factors
that might cause material differences include, but are not limited to, the
availability and cost of personnel training in this area, and the ability to
locate and correct all relevant computer codes and similar uncertainties.
15
<PAGE>
The Corporation has contingency plans to address situations that may
result if the Corporation is unable to achieve Year-2000 readiness of its
critical operating systems. Those contingency plans cover the critical order
processing and distribution systems, as well as plant operating systems. A
majority of those plans involve redundant systems. For example, the Corporation
is remediating existing systems in parallel with development of Year-2000
compliant replacement systems for order processing and distribution.
In the event that the Corporation's actions to correct potential
Year-2000 issues are incomplete and its contingency plans fail, the incorrect
recognition of the year 2000 by time-sensitive software could result in a system
failure or miscalculations causing disruptions of operations -- including, among
other things, a temporary inability to process orders, prepare invoices or
engage in normal business activities. The Corporation expects that any such
disruption would be temporary and likely not material, as any previously
undetected root cause for such disruption could likely be identified and fixed
in a relatively short period of time. However, if both the Corporation's
Year-2000 solution and contingency plans fail for a critical system for a
prolonged period, the impact on the Corporation would be material.
Despite assurances from outside parties of their timely readiness, the
Corporation cannot ensure that its suppliers, vendors and customers will resolve
all Year-2000 issues. Given the responses to date from its suppliers, vendors
and customers, Thomas & Betts believes it is unlikely that a large number of
them will experience significant problems due to unresolved Year-2000 issues.
Should such an event occur, the Corporation can adjust its order processing
cycle to accommodate manual orders from its customers while those third parties
resolve outstanding issues. Consequently, the failure by some parties to
complete their Year-2000 readiness process would not likely have a material
impact on the Corporation. In the event that a large number of customers suffer
Year-2000 compliance issues over a prolonged period, the impact on the
Corporation would be material.
EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed-conversion rates between their existing sovereign currencies
and the euro, and began a three-and-one-half-year effort to fully adopt the euro
as their common legal currency.
Thomas & Betts is continuing to assess the potential impact on the
Corporation that may result from the euro conversion. In addition to tax and
accounting considerations, the Corporation is assessing the potential impact
from the euro conversion in a number of areas, including: (1) the technical
challenges to adapt information technology and other systems to accommodate
euro-denominated transactions; (2) the competitive impact of cross-border price
transparency, which may make it more difficult for businesses to charge
different prices for the same products on a country-by-country basis; and (3)
the impact on currency exchange costs and currency exchange-rate risks. Thomas &
Betts cannot yet predict the long-term impact of the euro conversion on its
operations, but to date the impact has not been material.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The matters which were voted upon at the Annual Meeting of
Shareholders held on May 5, 1999, and the results of the voting
are set forth below:
<TABLE>
<CAPTION>
1. Nominees for Director For Withheld
---------------------- ---------- --------
<S> <C> <C>
Ernest H. Drew 51,113,248 715,695
T. Kevin Dunnigan 51,100,341 728,602
Jeananne K. Hauswald 51,116,335 712,608
Ronald B. Kalich, Sr. 51,112,184 716,759
Robert A. Kenkel 51,106,502 722,441
Kenneth R. Masterson 51,108,580 720,363
Thomas C. McDermott 51,108,025 720,918
Clyde R. Moore 51,073,870 755,073
Jean-Paul Richard 51,108,559 720,384
Jerre L. Stead 51,108,749 720,194
William H. Waltrip 51,109,678 719,265
2. A proposal to approve the Thomas & Betts Corporation
Executive Incentive Plan, as amended, received
46,295,628 votes for and 5,241,867 votes against, with
291,448 abstentions and no broker
non-votes.
3. A proposal to ratify the appointment of KPMG
LLP as independent public accountants
received 51,580,509 votes for and 80,002
votes against, with 168,432 abstentions and
no broker non-votes.
</TABLE>
ITEM 5. OTHER INFORMATION
(a) Forward-Looking Statements May Prove Inaccurate
This document includes various forward-looking statements
about Thomas & Betts which are subject to risks and
uncertainties. Forward-looking statements include information
concerning future results of operations and cost savings.
Statements that contain words such as "believes," "expects,"
"anticipates," "intends," "estimates" or similar expressions
are forward-looking statements. These forward-looking
statements are subject to risks and uncertainties, and many
factors could affect the future financial results of
Thomas & Betts. Accordingly, actual results may differ
materially from those expressed or implied by the
forward-looking statements contained in this document. For
these statements, the Corporation claims the protection of
the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995.
17
<PAGE>
There are many important factors that could cause actual results to differ
materially from those in forward-looking statements, some of which are beyond
the control of Thomas & Betts. These factors include, but are not limited to:
- - Negative economic conditions in the countries where Thomas & Betts sells
its products which may affect performance;
- - Materially adverse changes in economic or industry conditions generally
or in the specific markets served by Thomas & Betts, and economic
slowdown in the U.S. or economic slowdowns in Thomas & Betts' major
offshore markets, including Europe (particularly Germany and the
United Kingdom), Canada, Japan and Taiwan;
- - Adverse regulatory, environmental, monetary or other governmental
policies in the U.S. and abroad which could result in currency
fluctuations -- including fluctuations in the Canadian dollar,
German mark, Japanese yen, Swiss franc and British pound -- which,
in turn, could adversely affect Thomas & Betts' revenues and cost
of sales;
- - Significant changes in any number of governmental policies domestically
and abroad which could create trade restrictions, patent enforcement
issues, adverse tax-rate changes and changes to tax treatment of items
such as tax credits, withholding taxes, transfer pricing and other
income and expense recognition for tax purposes, including changes in
taxation on income generated in Puerto Rico;
- - Changes in environmental regulations, including emissions to air,
discharge to waters and the generation and handling of waste, which
could impact expectations of remediation expenses, and potentially
significant expenditures required to comply with environmental
regulations and policies that may be adopted or imposed in the future;
- - Rapid expansion through acquisitions and joint ventures which may
result in integration difficulties;
- - Inflationary pressures which could raise interest rates and consequently
Thomas & Betts' cost of funds;
- - Disagreements and changes in Thomas & Betts' relationships with its
joint venture partners and changes in financial results from its
joint ventures and other equity investments, including ventures in
Taiwan, Japan, Belgium, Egypt and the U.S.;
- - Strain on management resources and on other resources because of continued
rapid growth of Thomas & Betts;
- - Undiscovered liabilities arising from acquired businesses;
- - Future acquisitions which could result in potentially dilutive
18
<PAGE>
issuances of equity securities, the incurrence of debt and contingent
liabilities and amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect operating
results and financial condition;
- - Competition which may negatively affect financial performance;
- - Increased downward pressure on the selling prices for Thomas & Betts'
products;
- - Unforeseeable changes in customer demand for various products of Thomas
& Betts, which could affect Thomas & Betts' overall product mix, margins,
plant utilization levels and asset valuations;
- - Availability of raw materials (especially steel, copper, zinc, aluminum,
gold and plastic resins) and significant price fluctuations in the cost
of raw materials which could adversely affect Thomas & Betts' financial
results;
- - Delayed cost-reduction initiatives or unforeseen difficulties in
completing cost-reduction actions, including disposal of idle facilities,
geographic shifts of production locations and closure of redundant
administrative facilities; and
- - Failure of Year 2000 date-sensitive logic in computer programs and
equipment within Thomas & Betts or third parties with whom Thomas & Betts
does business which may disrupt business activities and operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this form:
(10.1) Amended and Restated 364-Day $260,000,000 Credit
Agreement dated as of June 30, 1999 among
Registrant, the Banks listed on the signature
pages thereof and Wachovia Bank, N.A., as Agent.
(27.1) Financial Data Schedule (for SEC use only)
(27.2) Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
On June 15, 1999, the Corporation filed a current report on
Form 8-K, Items 5 and 7, announcing updated information
regarding its pending merger with AFC Cable Systems, Inc.
On May 4, 1999, the Corporation filed a current report on
Form 8-K, Items 5 and 7, announcing the Corporation's
financial results for the fiscal quarter ended April 4, 1999.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THOMAS & BETTS CORPORATION
(Registrant)
DATE: August 12, 1999 /s/ Fred R. Jones
---------------------- -------------------------------------------
Fred R. Jones
Vice President-Chief Financial Officer
DATE: August 12, 1999 /s/ Jerry Kronenberg
---------------------- -------------------------------------------
Jerry Kronenberg
Vice President-General Counsel and Secretary
<PAGE>
$260,000,000
AMENDED AND RESTATED 364-DAY
CREDIT AGREEMENT
dated as of
JUNE 30, 1999
among
THOMAS & BETTS CORPORATION
THE BANKS PARTY HERETO
and
WACHOVIA BANK, N.A.,
AS AGENT
--------------------
WACHOVIA SECURITIES, INC.
ARRANGER
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
AS SYNDICATION AGENT
ABN AMRO BANK N.V.,
AS DOCUMENTATION AGENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS . . . . . . . . . . . . . . . 14
SECTION 1.03. TYPES OF BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.02. NOTICE OF COMMITTED BORROWING . . . . . . . . . . . . . . . . . . 15
SECTION 2.03. MONEY MARKET BORROWINGS . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS . . . . . . . . . . . . . . . . 20
SECTION 2.05. NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.06. MATURITY OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.07. INTEREST RATES. . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.08. METHOD OF ELECTING INTEREST RATES . . . . . . . . . . . . . . . . 24
SECTION 2.09. FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.10. TERMINATION OR REDUCTION OF COMMITMENTS . . . . . . . . . . . . . 26
SECTION 2.11. OPTIONAL PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS . . . . . . . . . . . . . . . . 27
SECTION 2.13. FUNDING LOSSES. . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.14. COMPUTATION OF INTEREST AND FEES. . . . . . . . . . . . . . . . . 28
SECTION 2.15. REGULATION D COMPENSATION . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 3
CONDITIONS
SECTION 3.01. EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.02. BORROWINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. CORPORATE EXISTENCE AND POWER . . . . . . . . . . . . . . . . . . 30
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION. . . . 30
SECTION 4.03. BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.04. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.05. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.06. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 4.07. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.08. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.09. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.10. NO REGULATORY RESTRICTIONS ON BORROWING . . . . . . . . . . . . . 33
SECTION 4.11. FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.12. YEAR 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 5
COVENANTS
SECTION 5.01. INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.02. PAYMENT OF TAXES. . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. . . . . . . . . . . . . . . . 36
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. . . . . . . . . 36
SECTION 5.05. COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS . . . . . . . . . . . . 36
SECTION 5.07. OPERATING CASH FLOW RATIO . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.08. DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.09. NEGATIVE PLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.10. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS . . . . . . . . . . . 38
SECTION 5.11. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.12. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . . 38
ARTICLE 6
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.02. NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 7
THE AGENT
SECTION 7.01. APPOINTMENT POWERS AND IMMUNITIES. . . . . . . . . . . . . . . . 42
SECTION 7.02. RELIANCE BY AGENT. . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.03. DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.04. RIGHTS OF AGENT AND ITS AFFILIATES AS A BANK. . . . . . . . . . . 43
SECTION 7.05. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.06. CONSEQUENTIAL DAMAGES. . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.07. PAYEE OF NOTE TREATED AS OWNER. . . . . . . . . . . . . . . . . . 44
SECTION 7.08. NON-RELIANCE ON AGENT AND OTHER BANKS. . . . . . . . . . . . . . 44
SECTION 7.09. FAILURE TO ACT. . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.10. RESIGNATION OR REMOVAL OF AGENT. . . . . . . . . . . . . . . . . 45
SECTION 7.11. SYNDICATION AGENT AND DOCUMENTATION AGENT.. . . . . . . . . . . . 45
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. . . . . 45
SECTION 8.02. ILLEGALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.03. INCREASED COST AND REDUCED RETURN . . . . . . . . . . . . . . . . 47
SECTION 8.04. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS . . . . 50
SECTION 8.06. SUBSTITUTION OF BANK. . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.02. NO WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.03. EXPENSES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.04. SET-OFFS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.05. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.06. SUCCESSORS; PARTICIPATIONS AND ASSIGNMENTS. . . . . . . . . . . . 53
SECTION 9.07. DESIGNATED LENDERS. . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.08. NO RELIANCE ON MARGIN STOCK . . . . . . . . . . . . . . . . . . . 56
SECTION 9.09. GOVERNING LAW; SUBMISSION TO JURISDICTION . . . . . . . . . . . . 56
SECTION 9.10. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. . . . . . . . . . . . . 56
SECTION 9.11. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . 57
SCHEDULE 1 - COMMITMENT SCHEDULE
EXHIBIT A - Note
EXHIBIT B - Money Market Quote Request
EXHIBIT C - Invitation for Money Market Quotes
EXHIBIT D - Money Market Quote
EXHIBIT E - Opinion of Counsel for the Borrower
EXHIBIT F - Opinion of Special Counsel for the Agent
EXHIBIT G - Assignment and Assumption Agreement
EXHIBIT H - Designation Agreement
</TABLE>
<PAGE>
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT dated as of June 30, 1999
among THOMAS & BETTS CORPORATION, the BANKS party hereto, WACHOVIA BANK,
N.A., as Agent, WACHOVIA SECURITIES, INC., as Arranger, BANK OF AMERICA
NATIONAL TRUST and SAVINGS ASSOCIATION, as Syndication Agent, and ABN AMRO
BANK N.V., as Documentation Agent.
The Borrower, Morgan Guaranty Trust Company of New York, as Agent (the
"Existing Agent") and as a Bank, and the Banks have entered into a certain
364-Day Credit Agreement dated as of July 1, 1998 (the "Existing Credit
Agreement").
The Borrower, the Existing Agent and the Banks have entered into a
certain Amendment No. 1 dated as of January 4, 1999 to the Existing Credit
Agreement.
The Borrower has requested that the Existing Credit Agreement be amended
and restated to (i) increase the aggregate amount of the Commitments of all
of the Banks from $200,000,000 to $260,000,000, (ii) allow the Existing Agent
to resign and appoint the Agent as successor agent, (iii) reallocate the
Commitment of the Existing Agent to the other Banks, and (iv) make such other
changes as the parties hereunder deem appropriate.
The parties hereto agree that the Existing Credit Agreement shall be
amended and restated in its entirety, effective as of the Effective Date, as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"ACQUISITION RELATED SPECIAL CHARGES" means charges to income related
specifically to acquisitions accounted for during the relevant period,
including such items as (i) transaction costs, including fees of investment
bankers, accounting fees, costs of appraisals, legal fees, loan syndication
fees, debt refinancing and extinguishment costs, printing, filing fees,
environmental assessment fees, change of control payments, hedging costs and
due diligence costs, (ii) changes to accruals of the acquired company for
such reserves as warranty, workers compensation, environmental, litigation,
excess and obsolete inventory, idle assets, sales returns and allowances,
retirement plans, retiree medical liability and the like and (iii) planned
restructuring actions of the acquired
<PAGE>
company for such items as plant or product line relocation, plant closure,
consolidation of manufacturing facilities with those of the Borrower or
another Subsidiary of Borrower, consolidation of sales and administrative
offices with those of the Borrower or another Subsidiary of the Borrower and
the like. Other special charges not related to the acquisition shall be
specifically excluded from this definition, including costs and accruals for
restructuring or accrual charges of the Borrower for its operations other
than those related to the acquisition.
"ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b).
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent, completed by
such Bank and returned to the Agent (with a copy to the Borrower).
"AFFILIATE" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "CONTROLLING PERSON") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled
by or is under common control with a Controlling Person. As used herein, the
term "CONTROL" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"AGENT" means Wachovia Bank, N.A. in its capacity as agent for the Banks
hereunder, and its successors in such capacity.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"ASSESSMENT RATE" has the meaning set forth in Section 2.07(b).
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means (i) each bank listed on the Commitment Schedule, (ii) each
Assignee which becomes a Bank pursuant to Section 9.06(c) and (iii) their
respective successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"BASE RATE LOAN" means a Committed Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.08(a) or Article 8.
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"BORROWER" means Thomas & Betts Corporation, a Tennessee corporation,
and its successors.
"BORROWER'S 1998 FORM 10-K" means the Borrower's annual report on Form
10-K for 1998, as filed with the SEC pursuant to the Exchange Act.
"BORROWER'S LATEST FORM 10-Q" means the Borrower's quarterly report on
Form 10-Q for the quarter ended April 4, 1999, as filed with the SEC pursuant
to the Exchange Act.
"BORROWING" has the meaning set forth in Section 1.03.
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election.
"CD MARGIN" means (a) on any day on which the aggregate outstanding
principal amount of Loans is less than 33% of the aggregate amount of the
Commitments, a rate per annum equal to 0.645%, and (b) on any day on which
the aggregate outstanding principal amount of Loans is equal to or greater
than 33% of the aggregate amount of the Commitments, a rate per annum equal
to 0.77%.
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means Bank of America National Trust and Savings
Association, Wachovia Bank, N.A., and ABN AMRO Bank N.V.
"COMMITMENT" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite such Bank's name on the
Commitment Schedule and (ii) with respect to any Assignee or other Person
which becomes a Bank pursuant to Section 9.06(c), the amount of the
transferor Bank's Commitment assigned to it pursuant to Section 9.06(c), in
each case as such amount may be changed from time to time pursuant to Section
2.10 or 9.06(c); PROVIDED that, if the context so requires, the term
"COMMITMENT" means the obligation of a Bank to extend credit up to such
amount to the Borrower hereunder.
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto as
Schedule 1.
"COMMITTED LOAN" means a loan made by a Bank pursuant to Section 2.01;
PROVIDED that, if any such loan or loans (or portions thereof) are combined or
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subdivided pursuant to a Notice of Interest Rate Election, the term
"Committed Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.
"CONSOLIDATED DEBT" means, at any date, the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"CONSOLIDATED NET WORTH" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries,
determined as of such date.
"CONSOLIDATED OPERATING CASH FLOW" means, for any fiscal quarter, the
sum of the consolidated net income of the Borrower and its Consolidated
Subsidiaries for such fiscal quarter plus, to the extent deducted in
determining such consolidated net income for such fiscal quarter,
depreciation and amortization; PROVIDED that Consolidated Operating Cash Flow
for any period shall be adjusted to eliminate the effect of any Acquisition
Related Special Charges during such period.
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower
in its consolidated financial statements if such statements were prepared as
of such date.
"CONSOLIDATED TOTAL CAPITAL" means at any date Consolidated Debt plus
Consolidated Net Worth, each determined as of such date.
"CREDIT EXPOSURE" means, with respect to any Bank at any time, (i) the
amount of its Commitment (whether used or unused) at such time or (ii) if the
Commitments have terminated in their entirety, the aggregate outstanding
principal amount of its Loans at such time.
"DEBT" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, including reimbursement
obligations of such Person in respect of drawn letters of credit, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising
in the ordinary course of business, (iv) all obligations of such Person as
lessee which are capitalized in accordance with GAAP, (v) all Debt secured by
a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, and (vi) all Debt of others Guaranteed by such
Person; PROVIDED that in determining the amount of any item of Debt of such
Person pursuant to this clause (vi), the amount of such Debt shall be equal
to the lesser of (x) the amount of Debt of others that is Guaranteed and (y)
the amount of such Guarantee, and provided
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further, that Debt shall not include any amount obtained by that Person by
way of securitization of its accounts receivable.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DESIGNATED LENDER" means, with respect to any Designating Bank, an
Eligible Designee designated by it pursuant to Section 9.07(a) as a
Designated Lender for purposes of this Agreement.
"DESIGNATING BANK" means, with respect to each Designated Lender, the
Bank that designated such Designated Lender pursuant to Section 9.07(a).
"DOCUMENTATION AGENT" means ABN AMRO Bank N.V. and its successors.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City or Atlanta, Georgia are
authorized or required by law to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Agent; PROVIDED that any Bank may so
designate separate Domestic Lending Offices for its Base Rate Loans, on the
one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer
to either or both of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section
2.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ELIGIBLE DESIGNEE" means a special purpose corporation that (i) is
organized under the laws of the United States or any state thereof, (ii) is
engaged in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business and (iii) issues (or the parent of which
issues) commercial paper rated at least A-1 or the equivalent thereof by S&P
or P-1 or the equivalent thereof by Moody's.
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"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment or the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including (without limitation)
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Agent.
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election.
"EURO-DOLLAR MARGIN" means (a) on any day on which the aggregate
outstanding principal amount of Loans is less than 33% of the aggregate
amount of the Commitments, a rate per annum equal to 0.52%, and (b) on any
day on which the aggregate outstanding principal amount of Loans is equal to
or greater than 33% of the aggregate amount of the Commitments, a rate per
annum equal to 0.645%.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of a London Interbank Offered Rate.
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"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of Bank
of America National Trust and Savings Association, Wachovia Bank, N.A. and
ABN AMRO Bank N.V.
"EURO-DOLLAR RESERVE PERCENTAGE" means, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the interest
rate on Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"EVENTS OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business
Day next succeeding such day, PROVIDED that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to Wachovia Bank, N.A. on
such day on such transactions as determined by the Agent.
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01) or any combination of the foregoing.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred in
by the Borrower's independent public accountants) with the most recent
audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks.
"GROUP OF LOANS" means, at any time, a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time, (ii) all
Euro-Dollar Loans having the same Interest Period at such time or (iii) all
CD Loans having
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<PAGE>
the same Interest Period at such time, PROVIDED that, if a Committed Loan of
any particular Bank is converted to or made as a Base Rate Loan pursuant to
Article 8, such Loan shall be included in the same Group or Groups of Loans
from time to time as it would have been in if it had not been so converted or
made.
"GUARANTEE" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements, by virtue of an
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise),
(ii) to reimburse a bank for amounts drawn under a letter of credit for the
purpose of paying such Debt or (iii) entered into for the purpose of assuring
in any other manner the holder of such Debt of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
PROVIDED that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term
"GUARANTEE" used as a verb has a corresponding meaning.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives and
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTEREST PERIOD" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice
of Borrowing or on the date specified in an applicable Notice of Interest
Rate Election and ending (i) one, two, three or six months thereafter or (ii)
if each Bank shall have consented to the election by the Borrower of a longer
period, which consent may be withheld by any Bank in its sole discretion,
such longer period, in each case, as the Borrower may elect in such notice;
PROVIDED that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
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, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
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(c) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date;
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending (i)
30, 60, 90 or 180 days thereafter or (ii) if each Bank shall have consented
to the election by the Borrower of a longer period, which consent may be
withheld by any Bank in its sole discretion, such longer period, in each
case, as the Borrower may elect in such notice; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Maturity shall end on the Maturity Date;
(3) with respect to each Money Market LIBOR Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing and
ending such whole number of months thereafter as the Borrower may elect in
accordance with Section 2.03; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
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, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; and
(4) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 7
days) as the Borrower may elect in accordance with Section 2.03; PROVIDED
that:
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(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise (other
than demand deposits).
"LIBOR AUCTION" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For purposes hereof, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset; PROVIDED
that any transaction (including, without limitation, any sale of accounts
receivable) which is treated as a sale of assets under GAAP shall be so
treated hereunder and any asset which is so sold shall not be deemed subject
to a Lien. It is understood that a contractual grant of a right of set-off
does not create a Lien in the absence of an agreement to maintain a balance
against which such right may be exercised.
"LOAN" means a Committed Loan or a Money Market Loan and "LOANS" means
Committed Loans or Money Market Loans or any combination of the foregoing.
All Loans made under the Existing Credit Agreement shall be deemed Loans
hereunder for all purposes.
"LONDON INTERBANK OFFERED RATE" means, for any Interest Period, (i) the
rate for deposits in Dollars for a period of time comparable to such Interest
Period which appears on the Telerate Page 3750 as of 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such Interest Period or
(ii) if the rate set forth in (i) does not appear on the Telerate Page 3750,
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of
the respective rates per annum at which deposits in Dollars are offered to
each of the Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day
of such Interest Period in an amount approximately equal to the Reference
Amount for a period of time comparable to such Interest Period. As used in
this definition, the term
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"REFERENCE AMOUNT" shall mean (a) for purposes of determining the rate
applicable to a Euro-Dollar Loan, the principal amount of the Euro-Dollar
Loan of such Reference Bank to which such rate is to apply and (b) for
purposes of determining the rate applicable to a Money Market LIBOR Loan, the
principal amount of the Money Market LIBOR Borrowing to which such rate is to
apply.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, financial position or results of operations of the Borrower and its
Consolidated Subsidiaries taken as a whole, (ii) the ability of the Borrower
to perform its obligations under this Agreement and the Notes, or (iii) the
validity or enforceability of this Agreement or any Note or the rights or
remedies of the Agent or the Banks hereunder and thereunder.
"MATERIAL DEBT" means Debt (other than the Notes) of the Borrower and/or
one or more of its Significant Subsidiaries, arising in one or more related
or unrelated transactions, in an outstanding aggregate principal amount
exceeding $20,000,000.
"MATERIAL PLAN" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $20,000,000.
"MATURITY DATE" means the first anniversary of the Termination Date or,
if such day is not a Euro-Dollar Business Day, then the next preceding
Euro-Dollar Business Day.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan made or to be made by a
Bank pursuant to an Absolute Rate Auction.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it
may hereafter designate as its Money Market Lending Office by notice to the
Borrower and the Agent; PROVIDED that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case all references
herein to the Money Market Lending Office of such Bank shall be deemed to
refer to either or both of such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan made or to be made by a Bank
pursuant to a LIBOR Auction (including any such loan bearing interest at the
Base Rate pursuant to Section 8.01).
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"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section
2.03(d)(ii)(C).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means, at any time, an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"NOTES" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the Borrower's obligation to repay the
Loans, and "NOTE" means any one of such promissory notes issued hereunder.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.08.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PLAN" means, at any time, an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the
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preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"PRIME RATE" means that rate of interest so denominated and announced by
Wachovia Bank, N.A. from time to time as an interest rate basis for
borrowings. The Prime Rate is one of several interest rate bases used by
Wachovia Bank, N.A. Wachovia Bank, N.A. lends at interest rates above and
below the Prime Rate.
"QUARTERLY PAYMENT DATES" means each April 15, July 15, October 15 and
January 15.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any
one of such Reference Banks.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REQUIRED BANKS" means, at any time, Banks having more than 50% in
aggregate amount of the Credit Exposures at such time.
"REVOLVING CREDIT PERIOD" means the period from and including the
Effective Date to but not including the Termination Date.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which would constitute a
"SIGNIFICANT SUBSIDIARY" of the Borrower under Rule 1-02 of Regulation S-X
promulgated by the SEC.
"SYNDICATION AGENT" means Bank of America National Trust and Savings
Association and its successors.
"SUBSIDIARY" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such
Person. Unless otherwise specified, "Subsidiary" means a Subsidiary of the
Borrower.
"TERMINATION DATE" means June 28, 2000, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
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"TOTAL BORROWED FUNDS" means, at any date, the aggregate principal
amount of Debt of the Borrower and its Consolidated Subsidiaries of the type
referred to in clauses (i), (ii) and (iv) of the definition thereof,
determined on a consolidated basis as of such date.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair
market value of all Plan assets allocable to such liabilities under Title IV
of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"UNITED STATES" means the United States of America.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with GAAP; PROVIDED that, if the Borrower notifies the Agent that the
Borrower wishes to amend any provision hereof to eliminate the effect of any
change in GAAP (or if the Agent notifies the Borrower that the Required Banks
wish to amend any provision hereof for such purpose), then such provision
shall be applied on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is
withdrawn or such provision is amended in a manner satisfactory to the
Borrower and the Required Banks.
SECTION 1.03. TYPES OF BORROWINGS. The term "BORROWING" denotes (i) the
aggregation of Loans made or to be made to the Borrower by one or more Banks
pursuant to Article 2 on the same day, all of which Loans are of the same
type (subject to Article 8) and, except in the case of Base Rate Loans, have
the same initial Interest Period or (ii) if the context so requires, the
borrowing of such Loans. Borrowings are classified for purposes hereof
either (i) by reference to the pricing of Loans comprising such Borrowing
(E.G., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar
Loans) or (ii) by reference to the provisions of Article 2 under which
participation therein is determined (I.E., a "Committed Borrowing" is a
Borrowing under Section 2.01 in which all Banks participate in proportion to
their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which one or more Banks participate on the basis of their
bids).
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ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time during the Revolving
Credit Period; PROVIDED that, immediately after each such loan is made, (i)
the aggregate outstanding principal amount of such Bank's Committed Loans
shall not exceed its Commitment and (ii) the aggregate outstanding principal
amount of all the Loans shall not exceed the aggregate amount of the
Commitments. Each Borrowing under this Section shall be in an aggregate
principal amount of $10,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be in the aggregate amount available within the
limitations in the foregoing proviso) and shall be made from the several
Banks ratably in proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this Section, prepay Loans to
the extent permitted by Section 2.11 and reborrow at any time during the
Revolving Credit Period under this Section.
SECTION 2.02. NOTICE OF COMMITTED BORROWING. The Borrower shall give
the Agent notice (a "NOTICE OF COMMITTED BORROWING") not later than 10:30
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y)
the second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business
Day in the case of a Euro-Dollar Borrowing;
(b) the aggregate amount of such Borrowing;
(c) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate, a CD Rate or a Euro-Dollar Rate; and
(d) in the case of a CD Borrowing or a Euro-Dollar Borrowing,
the duration of the initial Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
SECTION 2.03. MONEY MARKET BORROWINGS. (a) THE MONEY MARKET OPTION. In
addition to Committed Borrowings pursuant to Section 2.01, the Borrower may,
as set forth in this Section, request the Banks to make offers to make Money
Market Loans to the Borrower from time to time during the Revolving Credit
Period. The Banks may, but shall have no obligation to, make such offers and
the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.
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(b) MONEY MARKET QUOTE REQUEST. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to
the Agent by telex or facsimile a Money Market Quote Request substantially in
the form of Exhibit B hereto so as to be received not later than 10:30 A.M.
(New York City time) on (x) the fourth Euro-Dollar Business Day before the
date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the
Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time
or date as the Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the Money Market Quote
Request for the first LIBOR Auction or Absolute Rate Auction for which such
change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$10,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth
a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market
Quote Request shall be given within five Euro-Dollar Business Days (or such
other number of days as the Borrower and the Agent may agree) of any other
Money Market Quote Request.
(c) INVITATION FOR MONEY MARKET QUOTES. Promptly after receiving a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile an Invitation for Money Market Quotes substantially in the form of
Exhibit C hereto, which shall constitute an invitation by the Borrower to
each Bank to submit Money Market Quotes offering to make the Money Market
Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) SUBMISSION AND CONTENTS OF MONEY MARKET QUOTES. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this Section 2.03(d)
and must be submitted to the Agent by telex or facsimile at its address
specified in or pursuant to Section 9.01 not later than (x) 4:00 P.M. (New
York City time) on
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the fourth Euro-Dollar Business Day before the proposed date of Borrowing, in
the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); PROVIDED that Money Market
Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity
of a Bank may be submitted, and may only be submitted, if the Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour before the deadline for the other Banks, in
the case of a LIBOR Auction or (y) 15 minutes before the deadline for the other
Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and 6,
any Money Market Quote so made shall not be revocable except with the written
consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be substantially in the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed
the principal amount of Money Market Loans for which offers were
requested and (z) may be subject to an aggregate limitation as to the
principal amount of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate (the "MONEY
MARKET MARGIN") offered for each such Money Market Loan, expressed as
a percentage (specified to the nearest 1/10,000 of 1%) to be added to
or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate
of interest per annum (specified to the nearest 1/10,000 of 1%) (the
"MONEY MARKET ABSOLUTE RATE") offered for each such Money Market Loan,
and
(E) the identity of the quoting Bank.
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A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii) above;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
2.03(d)(i).
(e) NOTICE TO BORROWER. The Agent shall promptly notify the Borrower
of the terms of (i) any Money Market Quote submitted by a Bank that is in
accordance with Section 2.03(d) and (ii) any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request.
Any such subsequent Money Market Quote shall be disregarded by the Agent
unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest Period specified
in the related Money Market Quote Request,(B) the respective principal
amounts and Money Market Margins or Money Market Absolute Rates, as the case
may be, so offered and (C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers in any single Money
Market Quote may be accepted.
(f) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 10:30 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day before the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money
Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective), the Borrower shall notify the Agent of
its acceptance or non-acceptance of the offers so notified to it pursuant to
Section 2.03(e). In the case of acceptance, such notice (a "NOTICE OF MONEY
MARKET BORROWING") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; PROVIDED that:
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(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the principal amount of each Money Market Borrowing must
be $10,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the case
may be;
(iv) the Borrower may not accept any offer that is described in
subsection 2.03(d)(iii) or that otherwise fails to comply with the
requirements of this Agreement; and
(v) immediately after such Money Market Borrowing is made, the
aggregate outstanding principal amount of the Loans shall not exceed the
aggregate amount of the Commitments.
(g) ALLOCATION BY AGENT. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted
shall be allocated by the Agent among such Banks as nearly as possible (in
multiples of $1,000,000, as the Agent may deem appropriate) in proportion to
the aggregate principal amounts of such offers. Determinations by the Agent
of the amounts of Money Market Loans shall be conclusive in the absence of
manifest error.
SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS. (a) Promptly after
receiving a Notice of Borrowing, the Agent shall notify each Bank of the
contents thereof and of such Bank's share (if any) of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in Atlanta,
Georgia, to the Agent at its address specified in or pursuant to Section
9.01. Unless the Agent determines that any applicable condition specified in
Article 3 has not been satisfied, the Agent will make the funds so received
from the Banks available to the Borrower at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank before the
date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made
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such share available to the Agent on the date of such Borrowing in accordance
with Section 2.04(b) and the Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and
to the extent that such Bank shall not have so made such share available to
the Agent, such Bank and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent, at (i) if such amount is
repaid by the Borrower, a rate per annum equal to the higher of the Federal
Funds Rate and the interest rate applicable to such Borrowing pursuant to
Section 2.07 and (ii) if such amount is repaid by such Bank, the Federal
Funds Rate. If such Bank shall repay to the Agent such corresponding amount,
the Borrower shall not be required to repay such amount and the amount so
repaid by such Bank shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.05. NOTES. (a) The Borrower's obligation to repay the Loans of
each Bank shall be evidenced by a single Note payable to the order of such
Bank for the account of its Applicable Lending Office in an amount equal to
the aggregate unpaid principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that the Borrower's obligation to repay such Bank's Loans of a particular
type be evidenced by a separate Note in an amount equal to the aggregate
unpaid principal amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate modifications to
reflect the fact that it relates solely to Loans of the relevant type. Each
reference in this Agreement to the "Note" of such Bank shall be deemed to
refer to and include any or all of such Notes, as the context may require.
(c) Promptly after it receives each Bank's Note pursuant to Section
3.01(a), the Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and type of each Loan made by it and the date and
amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding; PROVIDED that a Bank's failure to make (or
any error in making) any such recordation or endorsement shall not affect the
Borrower's obligations hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Note and to attach
to and make a part of its Note a continuation of any such schedule as and
when required.
SECTION 2.06. MATURITY OF LOANS. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Maturity Date.
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(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable (together
with interest accrued thereon), on the last day of the Interest Period
applicable to such Borrowing.
SECTION 2.07. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day. Such interest shall be payable quarterly in arrears
on each Quarterly Payment Date. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the Base Rate for such
day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto,
at a rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; PROVIDED that if any CD
Loan shall, as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such CD Loan shall bear
interest for each day during such Interest Period at the Base Rate for such
day. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than 90 days, at intervals of
90 days after the first day thereof. Any overdue principal of or interest on
any CD Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the higher of (i) the Base
Rate for such day and (ii) the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Loan on the day before such payment was
due.
The "ADJUSTED CD RATE" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[CDBR]*
ACDR = ---------- + AR
[1.00-DRP]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
* The amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00
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A.M. (New York City time) (or as soon thereafter as practicable) on the first
day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such
Interest Period applies and having a maturity comparable to such Interest
Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount
of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Domestic Reserve Percentage.
"ASSESSMENT RATE" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or
a comparable successor assessment risk classification) within the meaning of
12 C.F.R. Section 327.4(a) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for such Corporation's (or
such successor's) insuring time deposits at offices of such institution in
the United States. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the London Interbank Offered Rate applicable to such Loan on the day
before such payment was due and (ii) the sum of 2% plus the Euro-Dollar
Margin for such day plus a rate per annum equal to the quotient obtained
(rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing
(x) the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which one day (or, if such amount due
remains unpaid more than three Euro-Dollar Business Days, then for such other
period of time not longer than
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three months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
interbank market for the applicable period determined as provided above by
(y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause 8.01(a) or 8.01(b) shall exist, at a rate per annum equal
to the sum of 2% plus the Base Rate for such day).
(e) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance
with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin
quoted by the Bank making such Loan. Each Money Market Absolute Rate Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Bank making such Loan. Such interest
shall be payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than three months, at intervals of three
months after the first day thereof. Any overdue principal of or interest on
any Money Market Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the Base Rate for
such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall promptly notify the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference
Bank does not furnish a timely quotation, the Agent shall determine the
relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. METHOD OF ELECTING INTEREST RATES. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue
the type of interest rate borne by each Group of Loans (subject to Section
2.08(d) and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
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(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans as of any Domestic Business Day or
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day
or continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.13 if any such conversion is effective on any day
other than the last day of an Interest Period applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans as of any Domestic Business
Day or convert such Loans to CD Loans as of any Euro-Dollar Business Day
or elect to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, subject to Section 2.13 if any such conversion is
effective on any day other than the last day of an Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "NOTICE OF
INTEREST RATE ELECTION") to the Agent not later than 10:30 A.M. (New York
City time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective (unless the relevant
Loans are to be converted from Domestic Loans of one type to Domestic Loans
of the other type or are CD Loans to be continued as CD Loans for an
additional Interest Period, in which case such notice shall be delivered to
the Agent not later than 10:30 A.M. (New York City time) on the second
Domestic Business Day before such conversion or continuation is to be
effective). A Notice of Interest Rate Election may, if it so specifies,
apply to only a portion of the aggregate principal amount of the relevant
Group of Loans; PROVIDED that (i) such portion is allocated ratably among the
Loans comprising such Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not apply, are each at
least $10,000,000 (unless such portion is comprised of Base Rate Loans). If
no such notice is timely received before the end of an Interest Period for
any Group of CD Loans or Euro-Dollar Loans, the Borrower shall be deemed to
have elected that such Group of Loans be converted to Base Rate Loans at the
end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the applicable
clause of Section 2.08(a) above;
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(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans resulting from such conversion are
to be CD Loans or Euro-Dollar Loans, the duration of the next succeeding
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to Section 2.08(a) above, the Agent shall notify each
Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional
Interest Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate
principal amount of any Group of CD Loans or Euro-Dollar Loans created or
continued as a result of such election would be less than $10,000,000 or (ii)
a Default shall have occurred and be continuing when the Borrower delivers
notice of such election to the Agent.
(e) If any Committed Loan is converted to a different type of Loan, the
Borrower shall pay, on the date of such conversion, the interest accrued to
such date on the principal amount being converted.
(f) A conversion or continuation pursuant to this Section 2.08 is not
a Borrowing.
SECTION 2.09. FEES. The Borrower shall pay to the Agent, for the
account of the Banks ratably in proportion to their Credit Exposures, a
facility fee at the rate of 0.105% per annum. Such facility fee shall accrue
for each day from and including the Effective Date to but excluding the day
on which the Credit Exposures are reduced to zero. Fees accrued for the
account of the Banks under this Section shall be payable quarterly in arrears
on each Quarterly Payment Date and on the day on which the Commitments
terminate in their entirety (and, if later, on the day on which the Credit
Exposures are reduced to zero). The Borrower will pay to each Bank an
up-front fee of 5.0 b.p. for its Commitment at the Effective Date.
SECTION 2.10. TERMINATION OR REDUCTION OF COMMITMENTS. (a) The Borrower
may, upon at least three Domestic Business Days' notice to the Agent, (i)
terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce from time to time by an aggregate amount of
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$10,000,000 or a larger multiple of $1,000,000, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. Promptly after receiving a notice pursuant to this subsection, the
Agent shall notify each Bank of the contents thereof.
(b) Unless previously terminated, the Commitments shall terminate in
their entirety on the Termination Date.
SECTION 2.11. OPTIONAL PREPAYMENTS. (a) Subject in the case of Fixed
Rate Loans to Section 2.13, the Borrower may (i) upon at least one Domestic
Business Day's notice to the Agent, prepay the Group of Base Rate Loans (or
any Money Market Borrowing bearing interest at the Base Rate pursuant to
Section 8.01) , (ii) upon at least two Domestic Business Days' notice to the
Agent, prepay any Group of CD Loans or (iii) upon at least three Euro-Dollar
Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in
each case in whole at any time, or from time to time in part in amounts
aggregating $10,000,000 or any larger multiple of $1,000,000, by paying the
principal amount to be prepaid together with interest accrued thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Group of Loans (or
such Money Market Borrowing).
(b) Except as provided in Section 2.11(a) above, the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan
before the maturity thereof.
(c) Promptly after receiving a notice of prepayment pursuant to this
Section, the Agent shall notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment, and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder not later than 12:00 Noon (New York City time) on the date when
due, in Federal or other funds immediately available in Atlanta, Georgia, to
the Agent at its address specified in or pursuant to Section 9.01. The Agent
will promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or any payment of fees shall
be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. Whenever any
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payment of principal of, or interest on, the Money Market Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar Business Day.
If the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Borrower notifies the Agent before the date on which any
payment is due to the Banks hereunder that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has made such payment
in full to the Agent on such date and the Agent may, in reliance on such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent that the
Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to the Agent, at the
Federal Funds Rate.
SECTION 2.13. FUNDING LOSSES. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a different type of Loan (whether such payment or conversion is
pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last
day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.07(d), or if the Borrower fails
to borrow, prepay, convert or continue any Fixed Rate Loan after notice has
been given to any Bank in accordance with Section 2.04(a), 2.08(c) or
2.11(c), the Borrower shall reimburse each Bank within 15 days after demand
for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after such payment or
conversion or failure to borrow, prepay, convert or continue; PROVIDED that
such Bank shall have delivered to the Borrower a certificate as to the amount
of such loss or expense, which certificate shall be conclusive in the absence
of clearly demonstrable error.
SECTION 2.14. COMPUTATION OF INTEREST AND FEES. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. REGULATION D COMPENSATION. If and so long as a reserve
requirement of the type described in the definition of "Euro-Dollar Reserve
Percentage" is prescribed by the Board of Governors of the Federal Reserve
System (or any successor), each Bank subject to such requirement may require
the Borrower to pay, contemporaneously with each payment of interest on each
of
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such Bank's Euro-Dollar Loans, additional interest on such Euro-Dollar Loan
at a rate per annum determined by such Bank up to but not exceeding the
excess of (i)(A) the applicable London Interbank Offered Rate divided by (B)
one MINUS the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such
additional interest (x) shall so notify the Borrower and the Agent, in which
case such additional interest on the Euro-Dollar Loans of such Bank shall be
payable to such Bank at the place indicated in such notice with respect to
each Interest Period commencing at least three Euro-Dollar Business Days
after such Bank gives such notice and (y) shall notify the Borrower at least
five Euro-Dollar Business Days before each date on which interest is payable
on the Euro-Dollar Loans of the amount then due it under this Section. It is
understood that (x) no additional interest is payable under this Section in
respect of Euro-Dollar Loans not paid when due and (y) amounts claimed by any
Bank under this Section shall be based on an assumed level of reserves
maintained by it which is consistent with such Bank's good faith estimate of
the actual level at which the related reserves are required to be maintained
by it over time.
ARTICLE 3
CONDITIONS
SECTION 3.01. EFFECTIVENESS. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Bank of a duly
executed Note dated on or before the Effective Date complying with the
provisions of Section 2.05 against delivery of the Notes outstanding under
the Existing Credit Agreement marked canceled;
(c) receipt by the Agent of an opinion of Milbank, Tweed, Hadley &
McCloy LLP, special counsel for the Borrower, substantially in the form of
Exhibit E-1 hereto, and of an opinion of the Borrower's Vice
President-General Counsel and Secretary or its Assistant Secretary and
Corporate Counsel, substantially in the form of Exhibit E-2 hereto;
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(d) receipt by the Agent of an opinion of Womble Carlyle Sandridge &
Rice, PLLC, special counsel for the Agent, substantially in the form of
Exhibit F hereto; and
(e) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Borrower, the corporate authority for and
the validity of this Agreement and the Notes, and any other matters relevant
hereto, all in form and substance reasonably satisfactory to the Agent;
PROVIDED that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later
than June 30, 1999. The Agent shall promptly notify the Borrower and the
Banks of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto.
SECTION 3.02. BORROWINGS. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement shall be true on and as of the date of such
Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty
by the Borrower on the date of such Borrowing as to the facts specified in
clauses 3.02(b), 3.02(c) and 3.02(d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
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laws of Tennessee, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by the Borrower of this Agreement and
the Notes are within the Borrower's corporate powers, have been duly authorized
by proper corporate action on the part of the Borrower, require no action by or
in respect of, or filing with, any governmental body, agency or official (other
than as may be required of any particular Bank) and do not contravene, or
constitute a default under, any provision of law or regulation applicable to
the Borrower or of the charter or by-laws of the Borrower, any instrument or
agreement evidencing or governing Debt of the Borrower or any of its Significant
Subsidiaries or of any other material agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Borrower and the Notes, when executed and delivered
in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally and subject to the availability of equitable
remedies if equitable remedies are sought.
SECTION 4.04. FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of January 3, 1999 and the related consolidated statements of
earnings, cash flows and shareholders' equity for the fiscal year then ended,
reported on by KPMG LLP, and set forth in the Borrower's 1998 Form 10-K, as
amended by Borrower's Form 10-K/A filed June 7, 1999 with the SEC, copies of
which have been made available to each of the Banks, fairly present, in
conformity with generally accepted accounting principles, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for
such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of April 4, 1999 and the related unaudited
consolidated statements of earnings, cash flows and shareholders' equity for
the three months then ended, set forth in the Borrower's latest Form 10-Q, as
amended by Borrower's Form 10-Q/A filed June 7, 1999 with the SEC, copies of
which have been made available to each of the Banks, fairly present, in
conformity with generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in subsection 4.04(a) of
this
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Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such three month period (subject to normal
year-end adjustments).
(c) Since April 4, 1999, there has been no material adverse change in
the business, financial position or results of operations of the Borrower and
its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. LITIGATION. Except as disclosed in Borrower's 1998 Form
10-K, as amended, there is no action, suit or proceeding pending against, or
to the knowledge of the Borrower threatened against or affecting, the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to
materially adversely affect the business, consolidated financial position or
consolidated results of operations of the Borrower and its Consolidated
Subsidiaries or which in any manner draws into question the validity of this
Agreement or the Notes.
SECTION 4.06. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Section
412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make
any contribution or payment to any Plan or Multiemployer Plan or in respect
of any benefit arrangement, or made any amendment to any Plan or benefit
arrangement, which has resulted or could result in the imposition of a Lien
or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA within
the preceding five years.
SECTION 4.07. ENVIRONMENTAL MATTERS. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Significant Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs. On the basis of this review, the
Borrower has reasonably concluded that such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are unlikely to
have a material adverse effect on the business, financial condition or
results of operations of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
SECTION 4.08. TAXES. United States federal income tax returns of the
Borrower and its Consolidated Subsidiaries have been examined and closed
through the fiscal year ended January 3, 1992. The Borrower and its
Significant Subsidiaries have filed all United States federal income tax
returns and all other
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material tax returns which are required to be filed by them and have paid all
material taxes due pursuant to such returns or pursuant to any material
assessment received by the Borrower or any Significant Subsidiary. The
charges, accruals and reserves on the books of the Borrower and its
Consolidated Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate in all material respects.
SECTION 4.09. SUBSIDIARIES. Each of the Borrower's Significant
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.10. NO REGULATORY RESTRICTIONS ON BORROWING. The Borrower is
not (i) an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company"
of a holding company within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (iii) otherwise subject to any regulatory scheme
which restricts its ability to incur debt.
SECTION 4.11. FULL DISCLOSURE. All information heretofore furnished by
the Borrower to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent or any Bank will
be, when taken together, true and accurate in all material respects on the
date as of which such information is stated or certified or in the case of
projections, based upon reasonable estimates.
SECTION 4.12. YEAR 2000. The measures taken by the Borrower and its
Significant Subsidiaries to address the impact of the year 2000 on its
computer systems and related matters are described in the Borrower's periodic
reports filed with the SEC. The Borrower has reasonably concluded that the
cost of such measures and of the reasonably foreseeable consequences of year
2000 will not have a material adverse effect on the business, financial
condition or results of operations of the Borrower and its Consolidated
Subsidiaries considered as a whole.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
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SECTION 5.01. INFORMATION. The Borrower will make available to each of
the Banks:
(a) as soon as available and in any event within 100 days after the end
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of earnings, cash flows and
shareholders' equity for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on,
in a manner acceptable to the SEC, by KPMG LLP or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 55 days after the end
of each of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such quarter and the related consolidated statements of
earnings and cash flows for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and
the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief financial officer, the chief accounting officer or the Treasurer of the
Borrower;
(c) no later than 10 Domestic Business Days after the filing with the
SEC of each set of financial statements referred to in clauses 5.01(a) and
5.01(b) above, a certificate of the chief financial officer, the chief
accounting officer or the Treasurer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 5.07 to 5.08, inclusive,
and Section 5.10 on the date of such financial statements and (ii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;
(d) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate
of the chief financial officer, the chief accounting officer or the Treasurer
of the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the public filing via EDGAR thereof, copies of all
registration statements (other than the exhibits thereto and any registration
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statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and
8-K (or their equivalents) which the Borrower shall have filed with the SEC;
(g) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "REPORTABLE EVENT" (as defined in Section
4043 of ERISA) with respect to any Plan which may reasonably be expected to
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is in reorganization, is insolvent or has
been terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer Plan
or in respect of any benefit arrangement or makes any amendment to any Plan
or benefit arrangement which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security, a certificate of the
chief financial officer, the chief accounting officer or the Treasurer of the
Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take;
(h) promptly upon obtaining knowledge of any change in the long-term
debt rating assigned to the Borrower by Moody's or S&P, notice of such
change; and
(i) from time to time such additional information regarding the
financial position or business of the Borrower and its Consolidated
Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
Information required to be delivered pursuant to Sections 5.01(a), 5.01(b),
5.01(e) or 5.01(f) above shall be deemed to have been delivered on the date
on which such information has been posted on the SEC website on the Internet.
SECTION 5.02. PAYMENT OF TAXES. The Borrower will pay and discharge,
and will cause each Significant Subsidiary to pay and discharge, at or before
the due date, all material taxes, assessments and governmental charges or
levies upon it or its property or assets, except where the same may be
contested in good faith by appropriate proceedings, and will maintain for the
Borrower and its
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Consolidated Subsidiaries as a whole appropriate reserves for the accrual of
any of the same.
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower will
keep, and will cause each Significant Subsidiary to keep, all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.
(b) The Borrower will, and will cause each of its Significant
Subsidiaries to, maintain (either in the name of the Borrower or in such
Subsidiary's own name) with financially sound and responsible insurance
companies, insurance on all their respective properties in at least such
amounts and against at least such risks (and with such risk retention) as are
usually insured against in the same general area by companies of established
repute engaged in the same or a similar business; and will furnish to the
Banks, upon request from the Agent, information presented in reasonable
detail as to the insurance so carried.
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Borrower will continue, and will cause each Significant Subsidiary to
continue, to engage in business of the same general type as now conducted by
the Borrower and its Subsidiaries, and will preserve, renew and keep in full
force and effect, and will cause each Significant Subsidiary to preserve,
renew and keep in full force and effect their respective corporate existence
and their respective rights, privileges and franchises material to the normal
conduct of business; PROVIDED that nothing in this Section 5.04 shall
prohibit the sale, disposition, merger, consolidation or termination of the
corporate existence of any Subsidiary if (i) the Borrower in good faith
reasonably determines that such sale, disposition, merger, consolidation or
termination is in the best interest of the Borrower AND (ii) such sale,
disposition, merger, consolidation or termination is otherwise permitted
under this Agreement.
SECTION 5.05. COMPLIANCE WITH LAWS. The Borrower will comply, and cause
each Significant Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith or the failure
to be in compliance is not materially adverse to the business, financial
condition or results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which complete and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank at such
Bank's
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expense to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such
reasonable times, upon reasonable prior notice as often as may reasonably be
desired.
SECTION 5.07. OPERATING CASH FLOW RATIO. At no date shall the ratio of
(i) Consolidated Operating Cash Flow for the four most recent consecutive
fiscal quarters of the Borrower ended on or most recently prior to such date
to (ii) Total Borrowed Funds as of such date, be less than .2.
The calculation of Consolidated Operating Cash Flow for the period of
four consecutive fiscal quarters ending July 4, 1999 shall exclude the
restructuring and special charges totaling $108.5 million incurred by the
Borrower in, and reflected in the Borrower's consolidated statement of income
for, the fiscal quarter ended October 4, 1998.
SECTION 5.08. DEBT. Consolidated Debt will at no time exceed 55% of
Consolidated Total Capital.
SECTION 5.09. NEGATIVE PLEDGE. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $60,000,000;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring or
constructing such asset, PROVIDED that such Lien attaches to such asset
concurrently with or within 180 days after the acquisition or
construction thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the
Borrower or a Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in contemplation
of such acquisition;
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(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, PROVIDED that such Debt is not
increased and is not secured by any additional assets;
(g) Liens arising in the ordinary course of its business which
(i) do not secure Debt and (ii)do not secure any single obligation (or
class of obligations having a common cause) in an amount exceeding
$50,000,000; and
(h) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal amount at any time
outstanding not exceeding 10% of Consolidated Net Worth.
SECTION 5.10. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. (a) The
Borrower will not (i) consolidate or merge with or into any other Person or
(ii) sell, lease or otherwise transfer, directly or indirectly, all or any
substantial part of the assets of the Borrower and its Subsidiaries, taken as
a whole, to any other Person; PROVIDED that the Borrower may merge with
another Person if (1) either (x) the Borrower is the corporation surviving
such merger or (y) the Person (if other than the Borrower) formed by such
consolidation or into which the Borrower is merged or to which properties and
assets of the Borrower are transferred shall be a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume (by an instrument reasonably
satisfactory in form to the Required Banks, accompanied by such legal
opinions with respect thereto as the Required Banks may reasonably request)
the due and punctual payment of the principal of and interest on the Loans
and of all other amounts payable by the Borrower hereunder, and the due and
punctual performance and observance of all the terms, covenants, agreements
and conditions of this Agreement to be performed or observed by the Borrower
to the same extent as if such surviving or acquiring corporation had been the
original issuer of the Notes and (2) immediately after giving effect to such
transaction, no Default shall have occurred and be continuing.
(b) Neither the Borrower nor any Subsidiary will sell or otherwise
transfer any accounts receivable or other rights to receive income, except
pursuant to one or more accounts receivable purchase facilities provided that
the aggregate unreimbursed purchase price under all such facilities does not
at any time exceed $250,000,000.
SECTION 5.11. USE OF PROCEEDS. The proceeds of the Loans made under
this Agreement will be used by the Borrower for the Borrower's general
corporate purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "MARGIN STOCK" within the meaning of Regulation U.
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SECTION 5.12. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to
or for the account of, make any investment (whether by acquisition of stock
or indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; PROVIDED, HOWEVER, that the foregoing provisions of this Section
shall not prohibit (a)the Borrower from declaring or paying any lawful
dividend,(b) the Borrower or any Subsidiary from making sales to or purchases
from any Affiliate and, in connection therewith, extending credit or making
payments, or from making payments for services rendered by any Affiliate, if
such sales or purchases are made or such services are rendered in the
ordinary course of business and on terms and conditions at least as favorable
to the Borrower or such Subsidiary as the terms and conditions which would
apply in a similar transaction with a Person not an Affiliate,(c) the
Borrower or any Subsidiary from making payments of principal, interest and
premium on any Debt of the Borrower or such Subsidiary held by an Affiliate
if the terms of such Debt are substantially as favorable to the Borrower or
such Subsidiary as the terms which could have been obtained at the time of
the creation of such Debt from a lender which was not an Affiliate,(d) the
Borrower or any Subsidiary from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint
arrangement with any Affiliate if the Borrower or such Subsidiary
participates in the ordinary course of its business and on a basis no less
advantageous than the basis on which such Affiliate participates and (e) the
Borrower or any Subsidiary from making payments to their respective directors
and executive officers in the ordinary course of business.
ARTICLE 6
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or shall fail to pay within five days of the due date thereof any interest on
any Loan, any fees or any other amount payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.12, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
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6.01(a) or 6.01(b) above) for 30 days after written notice thereof has been
given to the Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) the Borrower or any Significant Subsidiary shall fail to make any
payment in respect of any Material Debt when due (including any applicable
grace period);
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables the holder of
such Material Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(g) the Borrower or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Borrower or any Significant Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $20,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any Material
Plan; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree
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adjudicating that any Material Plan must be terminated; or there shall occur
a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $20,000,000;
(j) a judgment or order for the payment of money in excess of
$20,000,000 shall be rendered against the Borrower or any Significant
Subsidiary and such judgment or order shall continue unsatisfied and unstayed
for a period of 30 days; or
(k) any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC
under said Act) of 20% or more of the outstanding shares of common stock of
the Borrower; or, during any period of twelve consecutive calendar months,
individuals who were directors of the Borrower on the first day of such
period shall cease to constitute a majority of the board of directors of the
Borrower or who were recommended for election or elected to succeed such
directors by a majority of such directors;
then, and in every such event, the Agent shall (i) if requested by Banks
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding Notes evidencing more than 50% in
aggregate principal amount of the Loans, by notice to the Borrower declare
the Notes (together with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; PROVIDED that in the case of any of the Events of Default specified
in clause 6.01(g) or 6.01(h) above with respect to the Borrower, without any
notice to the Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof. Failure of any Bank
to request or of the Agent to give such notice to the Borrower pursuant to
this Section shall not constitute a waiver of any failure of the Borrower to
observe or perform any of its covenants or agreements hereunder.
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ARTICLE 7
THE AGENT
SECTION 7.01. APPOINTMENT POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement with such powers as are specifically delegated to the Agent by the
terms hereof, together with such other powers as are reasonably incidental
thereto. The Agent: (a) shall have no duties or responsibilities except as
expressly set forth in this Agreement, and shall not by reason of this
Agreement be a trustee for any Bank; (b) shall not be responsible to the
Banks for any recitals, statements, representations or warranties contained
in this Agreement, or in any certificate or other document referred to or
provided for in, or received by any Bank under, this Agreement, or for the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other document referred to or provided for herein or therein
or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder except to the extent requested
by the Required Banks, and then only on terms and conditions reasonably
satisfactory to the Agent, and (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of
this Article 7 are solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Borrower. The duties of the
Agent shall be ministerial and administrative in nature, and the Agent shall
not have by reason of this Agreement a fiduciary relationship in respect of
any Bank.
SECTION 7.02. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof
by telephone, telefax, telegram or cable) believed by it in good faith to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement, the Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
and thereunder in accordance with instructions signed by the Required Banks,
and such instructions of the Required Banks in any action taken or failure to
act pursuant thereto shall be binding on all of the Banks.
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SECTION 7.03. DEFAULTS. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than
the non-payment of principal of or interest on the Loans) unless the Agent
has received notice from a Bank or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice of the occurrence of a
Default or an Event of Default, the Agent shall give prompt notice thereof to
the Banks. The Agent shall (subject to Section 9.05) take such action with
respect to such Default or Event of Default as shall be directed by the
Required Banks, provided that, unless and until the Agent shall have received
such directions, 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 in the best interests of the
Banks.
SECTION 7.04. RIGHTS OF AGENT AND ITS AFFILIATES AS A BANK. With
respect to any Loan made by Wachovia Bank, N.A. or an affiliate of Wachovia
Bank, N.A., such affiliate and Wachovia Bank N.A. in their capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank
and may exercise the same as though it were not an affiliate of Wachovia
Bank, N.A.(or in the case of Wachovia Bank, N.A. acting as the Agent), and
the term "Bank" or "Banks" shall, unless the context otherwise indicates,
include such affiliate of Wachovia Bank, N.A. or Wachovia Bank, N.A. in its
individual capacity. Such affiliate and Wachovia Bank, N.A. may (without
having to account therefor to any Bank) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with the
Borrower (and any of its Affiliates) as if they were not an affiliate of the
Agent or the Agent, respectively; and such affiliate and Wachovia Bank, N.A.
may accept fees and other consideration from the Borrower (in addition to any
agency fees and arrangement fees heretofore agreed to between the Borrower
and Wachovia Bank, N.A.) for services in connection with this Agreement or
otherwise without having to account for the same to the Banks.
SECTION 7.05. INDEMNIFICATION. Each Bank severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed
by the Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, counsel fees and
disbursements) or disbursements of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in any way relating
to or arising out of this Agreement or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is
continuing, the normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or any such other documents; PROVIDED, HOWEVER, that
no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent. If
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any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY BANK OR ANY OTHER PERSON FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. PAYEE OF NOTE TREATED AS OWNER. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with the Agent and the provisions of Section 9.06(c) have
been satisfied. Any requests, authority or consent of any Person who at the
time of making such request or giving such authority or consent is the holder
of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in
exchange therefor or replacement thereof.
SECTION 7.08. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees
that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed
appropriate, conducted its own credit analysis of the Borrower and made a
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own analysis and decisions in taking or not taking action under
this Agreement. The Agent shall not be required to keep itself (or any Bank)
informed as to the performance or observance by the Borrower of this
Agreement or any other document referred to or provided for herein or therein
or to inspect the properties or books of the Borrower or any other Person.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or
other information concerning the affairs, financial condition or business of
the Borrower or any other Person which may come into the possession of the
Agent.
SECTION 7.09. FAILURE TO ACT. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Banks of their indemnification
obligations under Section 7.05 against any and all liability and expense
which may be incurred by the Agent by reason of taking, continuing to take,
or failing to take any such action.
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SECTION 7.10. RESIGNATION OR REMOVAL OF AGENT. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Borrower
and the Agent may be removed at any time with or without cause by the
Required Banks. Upon any such resignation or removal, the Required Banks,
subject to the approval of the Borrower, or the Borrower shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks or the Borrower and shall have accepted such
appointment within 30 days after the retiring Agent's notice of resignation
or the Required Banks' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Banks and subject to the approval of the Borrower as
long as no event of default has occurred or is continuing, appoint a
successor Agent. Any successor Agent shall be a bank organized or licensed
under the laws of the United States or of any state thereof and which has a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article 7 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent hereunder.
SECTION 7.11. SYNDICATION AGENT AND DOCUMENTATION AGENT. Nothing in
this Agreement shall impose any liability or obligation whatsoever on any
Syndication Agent or Documentation Agent acting in such capacity.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If on or before the first day of any Interest Period for any CD Loans,
Euro-Dollar Loans or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars in the applicable amounts are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having
more than 50% in aggregate amount of the Commitments advise the Agent that
the Adjusted CD Rate or the London Interbank Offered Rate, as the case may
be, as determined by the Agent will not adequately and fairly reflect the
cost to such Banks of funding their CD Loans or Euro-Dollar Loans, as the
case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
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rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the
case may be, shall be suspended and (ii) each outstanding CD Loan or
Euro-Dollar Loan, as the case may be, shall be converted into a Base Rate
Loan on the last day of the then current Interest Period applicable thereto.
Unless the Borrower notifies the Agent at least two Domestic Business Days
before the date of any affected Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, (i) if such
affected Borrowing is a CD Borrowing or Euro-Dollar Borrowing, such Borrowing
shall instead be made as a Base Rate Borrowing and (ii) if such affected
Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day from and including
the first day to but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
SECTION 8.02. ILLEGALITY. If, on or after the date hereof, the adoption
of any applicable law, rule or regulation, or any change in any applicable
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the
Agent shall forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert outstanding
Loans into Euro-Dollar Loans or continue outstanding Loans as Euro-Dollar
Loans, shall be suspended. Before giving any notice to the Agent pursuant to
this Section, such Bank shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice and
will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (i) on the last day
of the then current Interest Period applicable to such Euro-Dollar Loan if
such Bank may lawfully continue to maintain and fund such Loan as a
Euro-Dollar Loan to such day or (ii) immediately if such Bank shall determine
that it may not lawfully continue to maintain and fund such Loan as a
Euro-Dollar Loan to such day. Interest and principal on any such Base Rate
Loan shall be payable on the same dates as, and on a pro rata basis with, the
interest and principal payable on the related Euro-Dollar Loans of the other
Banks.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or after (x)
the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
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of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency, shall
impose, modify or deem applicable any reserve (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding (i) with respect to any CD Loan any such requirement
included in an applicable Domestic Reserve Percentage and (ii) with respect
to any Euro-Dollar Loan any such requirement with respect to which such Bank
is entitled to compensation during the relevant Interest Period under Section
2.15), special deposit, insurance assessment (excluding, with respect to any
CD Loan, any such requirement reflected in an applicable Assessment Rate) or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Applicable Lending Office) or shall
impose on any Bank (or its Applicable Lending Office) or on the United States
market for certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its obligation to make
Fixed Rate Loans and the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of making or maintaining
any Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Applicable Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency (including any determination by any such
authority, central bank or comparable agency that, for purposes of capital
adequacy requirements, the Commitments hereunder do not constitute
commitments with an original maturity of one year or less), has or would have
the effect of reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder to a level
below that which such Bank (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
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(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Bank, be otherwise disadvantageous to it. A certificate of any Bank
claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the
absence of clearly demonstrable error. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.
(d) If any Bank fails to give the notice required by subsection 8.03(c)
above within 90 days after it obtains actual knowledge of any event entitling
such Bank to compensation pursuant to this Section 8.03, such Bank shall,
with respect to compensation payable pursuant to this Section 8.03 in respect
of any costs resulting from such event, only be entitled to payment under
this Section 8.03 for costs incurred from and after the date 90 days prior to
the date that such Bank does give such notice.
SECTION 8.04. TAXES. (a) For the purposes of this Section, the following
terms have the following meanings:
"TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by
the Borrower pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, EXCLUDING (i) in the case of each Bank and
the Agent, taxes imposed on its net income, and franchise or similar taxes
imposed on it, by a jurisdiction under the laws of which it is organized or
in which its principal executive office is located or, in the case of a Bank,
in which its Applicable Lending Office is located and (ii) in the case of
each Bank, any United States withholding tax imposed on such payment, but not
excluding any portion of such tax that exceeds the United States withholding
tax which would have been imposed on such a payment to such Bank under the
laws and treaties in effect when such Bank first becomes a party to this
Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from
the execution, delivery, registration or enforcement of, or otherwise with
respect to, this Agreement or any Note.
(b) All payments by the Borrower to or for the account of any Bank or
the Agent hereunder or under any Note shall be made without deduction for any
Taxes or Other Taxes; PROVIDED that, if the Borrower shall be required by law
to deduct any Taxes or Other Taxes from any such payment, (i) the sum payable
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shall be increased as necessary so that after making all required deductions
(including deductions 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 been made,(ii) the
Borrower shall make such deductions,(iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall promptly furnish
to the Agent, at its address specified in or pursuant to Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this Section) paid by such Bank or the Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be paid within
15 days after such Bank or the Agent (as the case may be) makes demand
therefor. Notwithstanding this Section 8.04, if a Bank or the Agent receives
any notice from the relevant taxing authority asserting the imposition of any
Taxes or Other Taxes or otherwise becomes aware of any assertion or
imposition of Taxes or Other Taxes and fails to notify the Borrower promptly
of such assertion or imposition, the Borrower shall have no obligation to
indemnify such Bank or the Agent for any penalties, interest or expenses
arising from such Taxes or Other Taxes incurred during the period before such
Bank or the Agent so notifies the Borrower and after such Bank or the Agent
receives notification from the relevant taxing authority or becomes aware of
such assertion or imposition.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, before it signs and delivers this Agreement in the case of
each Bank listed on the signature pages hereof and before it becomes a Bank
in the case of each other Bank, and from time to time thereafter if requested
in writing by the Borrower (but only so long as such Bank remains lawfully
able to do so), shall provide each of the Borrower and the Agent with
Internal Revenue Service form 1001 or 4224, as appropriate, or any successor
form prescribed by the Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which the United States is
a party which exempts such Bank from United States withholding tax or reduces
the rate of withholding tax on payments of interest for the account of such
Bank or certifying that the income receivable by it pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Agent with the appropriate form referred to in Section
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring after the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or 8.04(c) with
48
<PAGE>
respect to Taxes imposed by the United States; PROVIDED that if a Bank, that
is otherwise exempt from or subject to a reduced rate of withholding tax,
becomes subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall furnish such information and documents as such
Bank shall reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section as a result of a change in law
or treaty occurring after such Bank first became a party to this Agreement,
then such Bank will, at the Borrower's request, change the jurisdiction of
its Applicable Lending Office if, in the judgment of such Bank, such change
(i) will eliminate or reduce any such additional payment which may thereafter
accrue and (ii) is not otherwise disadvantageous to such Bank.
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS.
If (i) the obligation of any Bank to make, or to continue or convert
outstanding Loans as or to, Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its CD Loans or Euro-Dollar Loans, and in any such case
the Borrower shall, by at least five Euro-Dollar Business Days' prior notice
to such Bank through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies
the Borrower that the circumstances giving rise to such suspension or demand
for compensation no longer exist, all Loans which would otherwise be made by
such Bank as (or continued as or converted to) CD Loans or Euro-Dollar Loans,
as the case may be, shall instead be Base Rate Loans on which interest and
principal shall be payable contemporaneously with the related CD Loans or
Euro-Dollar Loans of the other Banks. If such Bank notifies the Borrower
that the circumstances giving rise to such suspension or demand for
compensation no longer exist, the principal amount of each such Base Rate
Loan shall be converted into a CD Loan or Euro-Dollar Loan, as the case may
be, on the first day of the next succeeding Interest Period applicable to any
related CD Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. SUBSTITUTION OF BANK. If (i) the obligation of any Bank
to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii)
any Bank has demanded compensation under Section 8.03 or 8.04, the Borrower
shall have the right, with the assistance of the Agent, to seek a mutually
satisfactory substitute bank or banks (which may be one or more of the Banks)
to purchase the Note and assume the Commitment of such Bank.
49
<PAGE>
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile or similar writing) and shall be given to such party: (a) in the
case of the Borrower or the Agent, at its address, facsimile number or telex
number set forth on the signature pages hereof,(b) in the case of any Bank,
at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (c) in the case of any party, at such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by telex, when
transmitted to the telex number referred to in this Section and the
appropriate answerback is received,(ii) if given by facsimile, when
transmitted to the facsimile number referred to in this Section and
confirmation of receipt is received,(iii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iv) if given by any other means, when
delivered at the address referred to in this Section; PROVIDED that notices
to the Agent under Article 2 or Article 8 shall not be effective until
received.
SECTION 9.02. NO WAIVERS. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. EXPENSES; INDEMNIFICATION. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including the fees and disbursements of
counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "INDEMNITEE") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought
or threatened relating to or
50
<PAGE>
arising out of this Agreement or any actual or proposed use of proceeds of
Loans hereunder; PROVIDED that no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. SET-OFFS. (a) If (i) an Event of Default has occurred and
is continuing and (ii) Banks holding more than 50% in aggregate unpaid
principal amount of the Loans have requested the Agent to declare the Loans
to be immediately due and payable pursuant to Section 6.01, or the Loans have
become immediately due and payable without notice as provided in Section
6.01, then each Bank is hereby authorized by the Borrower at any time and
from time to time, to the extent permitted by applicable law, without notice
to the Borrower (any such notice being expressly waived by the Borrower), to
set off and apply all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Bank to or for the account of the Borrower against any
obligations of the Borrower to such Bank now or hereafter existing under this
Agreement, regardless of whether any such deposit or other obligation is then
due and payable or is in the same currency or is booked or otherwise payable
at the same office as the obligation against which it is set off and
regardless of whether such Bank shall have made any demand for payment under
this Agreement. Each Bank agrees promptly to notify the Borrower after any
such set-off and application made by such Bank; PROVIDED that any failure to
give such notice shall not affect the validity of such setoff and
application. The rights of the Banks under this subsection are in addition
to any other rights and remedies which the Banks may have.
(b) Each Bank agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest then due with respect to the Loans
held by it which is greater than the proportion received by any other Bank in
respect of the aggregate amount of principal and interest then due with
respect to the Loans held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Loans held by the other Banks, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with
respect to the Loans held by the Banks shall be shared by the Banks pro rata;
PROVIDED that nothing in this Section shall impair the right of any Bank to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness in respect of the Loans. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Loan, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of the Borrower in
the amount of such participation.
51
<PAGE>
SECTION 9.05. AMENDMENTS AND WAIVERS. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the
Agent); PROVIDED that no such amendment or waiver shall:
(a) unless signed by all the Banks,(i) increase or decrease the
Commitment of any Bank (except (x) as contemplated by Section 8.06 and
(y) for a ratable decrease in the Commitments of all the Banks) or
subject any Bank to any additional obligation,(ii) reduce the principal
of or rate of interest on any Loan or any fees hereunder,(iii) postpone
the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder or for the termination of any Commitment or (iv)
change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement; or
(b) unless signed by a Designated Lender or its Designating Bank,
subject such Designated Lender to any additional obligation or affect
its rights hereunder (unless the rights of all the Banks hereunder are
similarly affected).
SECTION 9.06. SUCCESSORS; PARTICIPATIONS AND ASSIGNMENTS. (a) 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 Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment
or any or all of its Loans. If a Bank grants any such participating interest
to a Participant, whether or not upon notice to the Borrower and the Agent,
such Bank shall remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement pursuant to which any Bank may grant such
a participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; PROVIDED that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clause (i),
(ii) or (iii) of Section 9.05 without the consent of the Participant. An
assignment or other transfer which is not permitted by Section 9.06(c) or
9.06(d) below shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this
subsection.
52
<PAGE>
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to
an initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and its Note, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption
Agreement substantially in the form of Exhibit G hereto signed by such
Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower (which shall not be unreasonably withheld) and the
Agent; PROVIDED that (i) if an Assignee is an affiliate of such transferor
Bank or was a Bank immediately before such assignment, no such consent shall
be required but notice of such assignment shall be promptly provided to the
Borrower and (ii) such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. When such
instrument has been signed and delivered by the parties thereto and such
Assignee has paid to such transferor Bank the purchase price agreed between
them, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection, the transferor Bank, the Agent and
the Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing
such assignment in the amount of $2,500. If the Assignee is not incorporated
under the laws of the United States or a State thereof, it shall deliver to
the Borrower and the Agent certification as to exemption from deduction or
withholding of United States federal income taxes in accordance with Section
8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
and no Designated Lender designated by any Designating Bank shall be entitled
to receive any greater payment under Section 8.03 or 8.04 than such Bank or
Designating Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances.
SECTION 9.07. DESIGNATED LENDERS. (a) Subject to the provisions of this
Section 9.07(a), any Bank may from time to time elect to designate an
Eligible Designee to provide all or a portion of the Loans to be made by such
Bank pursuant to this Agreement; PROVIDED that such designation shall not be
effective
53
<PAGE>
unless the Borrower and the Agent consent thereto. When a Bank and its
Eligible Designee shall have signed an agreement substantially in the form of
Exhibit H hereto (a "DESIGNATION AGREEMENT") and the Borrower and the Agent
shall have signed their respective consents thereto, such Eligible Designee
shall become a Designated Lender for purposes of this Agreement. The
Designating Bank shall thereafter have the right to permit such Designated
Lender to provide all or a portion of the Loans to be made by such
Designating Bank pursuant to Section 2.01 or 2.03, and the making of such
Loans or portions thereof shall satisfy the obligation of the Designating
Bank to the same extent, and as if, such Loans or portion thereof were made
by the Designating Bank. As to any Loans or portion thereof made by it, each
Designated Lender shall have all the rights that a Bank making such Loans or
portion thereof would have had under this Agreement and otherwise; PROVIDED
that (x) its voting rights under this Agreement shall be exercised solely by
the Designating Bank and (y) its Designating Bank shall remain solely
responsible to the other parties hereto for the performance of its
obligations under this Agreement, including its obligations in respect of the
Loans or portion thereof made by it. No additional Note shall be required to
evidence Loans or portions thereof made by a Designated Lender; and the
Designating Bank shall be deemed to hold its Note as agent for its Designated
Lender to the extent of the Loans or portion thereof funded by such
Designated Lender. Each Designating Bank shall act as administrative agent
for its Designated Lender and give and receive notices and other
communications on its behalf. Any payments for the account of any Designated
Lender shall be paid to its Designating Bank as administrative agent for such
Designated Lender and neither the Borrower nor the Agent shall be responsible
for any Designating Bank's application of such payments. In addition, any
Designated Lender may (i) with notice to, but without the prior written
consent of the Borrower or the Agent, assign all or portions of its interest
in any Loans to its Designating Bank or to any financial institutions
consented to by the Borrower and the Agent providing liquidity and/or credit
facilities to or for the account of such Designated Lender to support the
funding of Loans or portions thereof made by such Designated Lender and (ii)
disclose any non-public information relating to its Loans or portions thereof
to any rating agency, commercial paper dealer or provider of any guarantee,
surety, credit or liquidity enhancement to such Designated Lender; PROVIDED
that the recipient shall have agreed to comply with the provisions of Section
9.11 hereof.
(b) Each party to this Agreement agrees that it will not institute
against, or join any other person in instituting against, any Designated
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or
similar law, for one year and a day after all outstanding senior indebtedness
of such Designated Lender is paid in full. The Designating Bank for each
Designated Lender agrees to indemnify, save, and hold harmless each other
party hereto for any loss, cost, damage and expense arising out of its
inability to institute any such proceeding against such Designated Lender.
This Section 9.07(b) shall survive the termination of this Agreement.
54
<PAGE>
SECTION 9.08. NO RELIANCE ON MARGIN STOCK. Each of the Banks represents
to the Agent and each of the other Banks that it in good faith is not relying
upon any "margin stock" (as defined in Regulation U) as collateral in the
extension or maintenance of the credit provided for in this Agreement.
SECTION 9.09. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
and each Note shall be governed by and construed in accordance with the laws
of the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for
purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby.
SECTION 9.10. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject
matter hereof. This Agreement shall become effective when the Agent has
received, from each of the parties listed on the signature pages hereof, a
counterpart hereof signed by such party or facsimile or other written
confirmation satisfactory to the Agent confirming that such party has signed
a counterpart hereof.
SECTION 9.11. CONFIDENTIALITY. The Agent and each Bank agrees to keep
any information delivered or made available by the Borrower pursuant to this
Agreement confidential from anyone other than persons employed or retained by
such Bank who are engaged in evaluating, approving, structuring or
administering the credit facility contemplated hereby; PROVIDED that nothing
herein shall prevent any Bank from disclosing such information (a) to any
other Bank or to the Agent,(b) to any other Person if reasonably incidental
to the administration of the credit facility contemplated hereby,(c) upon the
order of any court or administrative agency,(d) upon the request or demand of
any regulatory agency or authority,(e) which had been publicly disclosed
other than as a result of a disclosure by the Agent or any Bank prohibited by
this Agreement,(f) in connection with any litigation to which the Agent, any
Bank or its subsidiaries or Parent may be a party,(g) to the extent necessary
in connection with the exercise of any remedy hereunder,(h) to such Bank's or
Agent's legal counsel and independent auditors and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed Participant or Assignee.
55
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THOMAS & BETTS CORPORATION
By:
----------------------------------------
Tom C. Oviatt
Title: Treasurer
Address: 8155 T&B Boulevard
Memphis, Tennessee 38125
Facsimile number: 901-252-1354
WACHOVIA BANK, N.A., as Agent and a Bank
By:
----------------------------------------
Title:
Address: 191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndication Services
Facsimile: (404) 332-1394
WITH A COPY TO:
Address: 191 Peachtree Street, N.A.
Atlanta, Georgia 30303-1757
Attention: Karin Reel
Facsimile: (404) 332-5016
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
----------------------------------------
Title:
ABN AMRO BANK N.V.
<PAGE>
By:
----------------------------------------
Title:
By:
----------------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
----------------------------------------
Title:
CIBC INC.
By:
----------------------------------------
Title:
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCH
By:
----------------------------------------
By:
----------------------------------------
Title:
FIRST UNION NATIONAL BANK
By:
----------------------------------------
Title:
SUNTRUST BANK, NASHVILLE, N.A.
<PAGE>
By:
----------------------------------------
Title:
THE NORTHERN TRUST COMPANY
By:
----------------------------------------
Title:
BANCA NAZIONALE DEL LAVORO S.P.A.,
NEW YORK BRANCH
By:
----------------------------------------
Title:
By:
----------------------------------------
Title:
THE BANK OF NEW YORK
By:
----------------------------------------
Title:
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By:
----------------------------------------
Title:
FIRST AMERICAN NATIONAL BANK
<PAGE>
By:
----------------------------------------
Title:
KBC BANK N.V.
By:
----------------------------------------
Title:
By:
----------------------------------------
Title:
THE SUMITOMO BANK, LTD.
By:
----------------------------------------
Title:
UNION PLANTERS BANK, N.A.
By:
----------------------------------------
Title:
Consented to:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Existing Agent and a Bank
under the Existing Credit Agreement
By:
----------------------------------------
Title:
<PAGE>
SCHEDULE 1
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
Wachovia Bank, N.A. $23,500,000
------------
Bank of America National Trust and Savings Association $22,000,000
------------
ABN AMRO Bank N.V. $22,000,000
------------
The Bank of Nova Scotia $17,500,000
------------
CIBC Inc. $13,000,000
------------
Deutsche Bank AG, New York and/or Cayman Islands Branch $20,000,000
------------
First Union National Bank $13,000,000
------------
SunTrust Bank, Nashville, N.A. $17,500,000
------------
The Northern Trust Company $17,500,000
------------
Banca Nazionale del Lavoro S.p.A, New York Branch $15,000,000
------------
The Bank of New York $15,000,000
------------
Bank of Tokyo-Mitsubishi Trust Company $17,500,000
------------
First American National Bank $13,000,000
------------
KBC Bank N.V. $8,000,000
------------
The Sumitomo Bank, Ltd. $8,000,000
------------
Union Planters Bank, N.A. $17,500,000
------------
TOTAL $260,000,000
------------
------------
</TABLE>
<PAGE>
EXHIBIT A
NOTE
New York, New York
June 30, 1999
For value received, Thomas & Betts Corporation, a Tennessee corporation
(the "BORROWER"), promises to pay to the order of
___________________________________ (the "BANK"), for the account of its
Applicable Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below
on the maturity date provided for in the Credit Agreement. The Borrower
promises to pay interest on the unpaid principal amount of each such Loan on
the dates and at the rate or rates provided for in the Credit Agreement. All
such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office
of Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank
and, if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the Bank on the
schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; PROVIDED that the failure of the Bank to make any
such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Credit Agreement to make a payment when due
in respect of the Loans evidenced hereby.
This note is one of the Notes referred to in the Amended and Restated
364-Day Credit Agreement dated as of June 30, 1999 among the Borrower, the
banks listed on the signature pages thereof, Wachovia Bank, N.A., as Agent,
Wachovia Securities, Inc., as Arranger, Bank of America National Trust and
Savings Association, as Syndication Agent, and ABN AMRO Bank N.V., as
Documentation Agent (as the same may be amended from time to time, the
"CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein
A-1
<PAGE>
with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
THOMAS & BETTS CORPORATION
By:
----------------------------------------
Name:
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Type of Amount of
Date Amount of Loan Loan Principal Repaid Maturity Date Notation Made By
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE>
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Wachovia Bank, N.A.
(the "AGENT")
From: Thomas & Betts Corporation
Re: Amended and Restated 364-Day Credit Agreement (the "CREDIT AGREEMENT")
dated as of June 30, 1999 among the Borrower, the Banks listed on the
signature pages thereof , the Agent, the Arranger, the Syndication Agent,
and the Documentation Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing:
------------------
B-1
<PAGE>
<TABLE>
<CAPTION>
Principal Amount (1) Interest Period (2)
-------------------- --------------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
THOMAS & BETTS CORPORATION
By:
----------------------------------
Name:
Title:
- ----------------
(1) Amount must be $10,000,000 or a larger multiple of $1,000,000.
(2) Not less than one month (LIBOR Auction) or not less than 7 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
B-2
<PAGE>
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Thomas & Betts Corporation (the
"BORROWER")
Pursuant to Section 2.03 of the Amended and Restated 364-Day Credit
Agreement dated as of June 30, 1999 among the Borrower, the Banks parties
thereto and the undersigned, as Agent, the Arranger, the Syndication Agent,
and the Documentation Agent, we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing:
------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST PERIOD
---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Please respond to this invitation by no later than [2:00 P.M.]
[9:30 A.M.](New York City time) on [date].
WACHOVIA BANK, N.A.
By:
------------------------------
Authorized Officer
C-1
<PAGE>
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: Wachovia Bank, N.A., as Agent
Re: Money Market Quote to Thomas & Betts Corporation (the "BORROWER")
In response to your invitation on behalf of the Borrower dated
_____________, ____, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank:
---------------------------------
2. Person to contact at Quoting Bank:
--------------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- --------- --------- ---------------------------------
<S> <C> <C>
$
$
</TABLE>
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $________.]**
-------------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend.
Bids must be made for $5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Amended and Restated
D-1
<PAGE>
364-Day Credit Agreement dated as of June 30, 1999 among the Borrower, the Banks
listed on the signature pages thereof and yourselves, as Agent, the Arranger,
the Syndication Agent, and the Documentation Agent irrevocably obligates us
to make the Money Market Loan(s) for which any offer(s) are accepted, in
whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By:
------------------ --------------------------------
Authorized Officer
- -------------
*** Not less than one month or not less than 7 days, as specified in the
related Invitation. No more than five bids are permitted for each
Interest Period.
**** Margin over or under the London Interbank Offered Rate determined for
the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
D-2
<PAGE>
EXHIBIT E-1
OPINION OF
MILBANK, TWEED, HADLEY & MCCLOY LLP
SPECIAL NEW YORK COUNSEL
FOR BORROWER
[Effective Date]
Each of the Banks party
to the Credit Agreement
referred to below
Wachovia Bank, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia
Ladies and Gentlemen:
We have acted as special New York counsel to Thomas & Betts Corporation,
a corporation organized under the laws of Tennessee (the "BORROWER"), in
connection with the Amended and Restated 364-Day Credit Agreement dated as of
June 30, 1999 (the "CREDIT AGREEMENT") among the Borrower, the lenders named
therein, Wachovia Bank, N.A., as Agent (in such capacity, the "AGENT"),
Wachovia Securities, Inc., as Arranger, Bank of America National Trust and
Savings Association, as Syndication Agent, and ABN AMRO Bank N.V., as
Documentation Agent, providing for loans to be made by said lenders to the
Borrower in an aggregate principal amount at any time outstanding not
exceeding $260,000,000. Terms defined in the Credit Agreement are used herein
as defined therein. This opinion is being delivered pursuant to Section
3.01(c) of the Credit Agreement.
In rendering the opinions expressed below, we have examined the Credit
Agreement and the Notes (collectively, the "CREDIT DOCUMENTS") and such
corporate records of the Borrower and such other documents as we have deemed
necessary as a basis for the opinions expressed below. In our examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity with authentic
original documents of all documents submitted to us as copies. When relevant
facts were not independently established, we have relied upon representations
made in or pursuant to the Credit Agreement or certificates of appropriate
representatives of the Borrower.
E-1-1
<PAGE>
In rendering the opinions expressed below, we have assumed, with respect
to the Credit Documents, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except, to the extent provided
below, as to the Borrower) constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate or other) to
execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth below, and having considered such questions of
law as we have deemed necessary as a basis for the opinions expressed below,
we are of the opinion that each Credit Document constitutes a legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally and except as the enforceability
of the Credit Documents is subject to the application of general principles
of equity (regardless of whether considered in a proceeding in equity or at
law), including, without limitation, (a) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 9.03(b) of the Credit Agreement may be
limited by laws limiting the enforceability of provisions exculpating or
exempting a party from, or requiring indemnification of a party for, its own
action or inaction, to the extent such action or inaction involves gross
negligence, recklessness or wilful or unlawful conduct.
(B) The enforceability of provisions in the Credit Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to the second sentence of Section 9.09 of
the Credit Agreement, insofar as such sentence relates to the subject matter
jurisdiction of the United States District Court for the Southern District of
New York to adjudicate any controversy related to the Credit Documents.
E-1-2
<PAGE>
The foregoing opinions are limited to matters involving the Federal laws
of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction.
This opinion letter is, pursuant to Section 3.01(c) of the Credit
Agreement, provided to you by us in our capacity as special New York counsel
to the Borrower and may not be relied upon by any Person for any purpose
other than in connection with the transactions contemplated by the Credit
Agreement without, in each instance, our prior written consent.
Very truly yours,
E-1-3
<PAGE>
EXHIBIT E-2
[Letterhead of Thomas & Betts Corporation]
[Effective Date]
Each of the Banks party
to the Credit Agreement
referred to below
Wachovia Bank, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia
Ladies and Gentlemen:
I am Assistant Secretary and Corporate Counsel of Thomas & Betts
Corporation, a corporation organized under the laws of Tennessee (the
"BORROWER"), and I, or attorneys under my supervision, have acted as counsel
to the Borrower in connection with the Amended and Restated 364-Day Credit
Agreement dated as of June 30, 1999 (the "CREDIT AGREEMENT") among the
Borrower, the Banks party thereto, Wachovia Bank, N.A., in its capacity as
agent for said Banks (the "AGENT"), Wachovia Securities, Inc., as Arranger,
Bank of America National Trust and Savings Association, as Syndication Agent,
and ABN AMRO Bank N.V., as Documentation Agent, providing for, among other
things, the making of loans by the Banks in an aggregate principal amount up
to $260,000,000. All capitalized terms used but not defined herein have the
respective meanings given to such terms in the Credit Agreement.
In rendering the opinions expressed below, we have examined such
corporate records and documents as we have deemed necessary as a basis for
the opinions expressed below.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us
as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon representations
made in or pursuant to the Credit Agreement and the Notes and certificates of
appropriate representatives of the Borrower.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth below, and having considered such questions of
law as
<PAGE>
we have deemed necessary as a basis for the opinions expressed below, I am of
the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Tennessee, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
2. Each of the Credit Agreement and the Notes has been duly
authorized, executed and delivered by the Borrower. The execution,
delivery and performance by the Borrower of each Credit Document are within
the Borrower's corporate powers, (i) have been duly authorized by all
necessary corporate action on the part of the Borrower, (ii) require no
action by or in respect of, or filing with, any governmental body, agency
or official (other than as may be required of any particular Bank) and
(iii) do not contravene or constitute a default under (x) any provision of
any law or regulation applicable to the Borrower, (y) the charter or
by-laws of the Borrower or (z) any instrument or agreement evidencing or
governing Material Debt of the Borrower or any of its Significant
Subsidiaries known to me or any material agreement, judgment, injunction,
order, decree or other instrument known to me to be binding upon the
Borrower, or result in the creation or imposition of any Lien on any asset
of the Borrower or any of its Significant Subsidiaries under any of the
foregoing.
3. Except as set forth in Borrower's 1998 Form 10-K, as amended,
to the best of our knowledge, there is no action, suit or proceeding
pending against, or threatened against or affecting, the Borrower or any of
its Significant Subsidiaries before any court or arbitrator or any
governmental body, agency or official, which could reasonably be expected
to materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole or which in any manner
draws into question the validity of the Credit Agreement and the Notes.
The foregoing opinions are limited to matters involving the federal laws
of the United States and the laws of the State of Tennessee, and we do not
express any opinion as to the laws of any other jurisdiction.
This opinion letter is provided to you pursuant to Section 3.01(c) of
the Credit Agreement, and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Credit Agreement without, in each instance, my prior written consent.
Very truly yours,
E-2-2
<PAGE>
EXHIBIT F
OPINION OF
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC,
SPECIAL COUNSEL FOR THE AGENT
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Wachovia Bank, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia
Dear Sirs:
We have participated in the preparation of the Amended and Restated
364-Day Credit Agreement (the "CREDIT AGREEMENT") dated as of June 30, 1999
among Thomas & Betts Corporation, a Tennessee corporation (the "BORROWER"),
the banks listed on the signature pages thereof (the "BANKS") and Wachovia
Bank, N.A., as Agent (the "AGENT"), and have acted as special counsel for the
Agent for the purpose of rendering this opinion pursuant to Section 3.01(d)
of the Credit Agreement. Terms defined in the Credit Agreement are used
herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Credit
Agreement constitutes a valid and binding agreement of the Borrower and the
Notes constitute valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of Georgia and the foregoing
opinion is limited to the laws of the State of Georgia and the federal laws
of the United States of America. Insofar as the foregoing opinion involves
matters governed by the laws of Tennessee, we have relied, without
independent investigation, upon the opinion of Penelope Y. Turnbow, a copy of
which has
F-1
<PAGE>
been delivered to you. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of Georgia) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
by any other person without our prior written consent.
Very truly yours,
F-2
<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "ASSIGNOR"),
[ASSIGNEE] (the "ASSIGNEE") and THOMAS & BETTS CORPORATION (the "BORROWER").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT")
relates to the Amended and Restated 364-Day Credit Agreement dated as of June
30, 1999 among the Borrower, the Assignor and the other Banks party thereto,
as Banks, Wachovia Bank, N.A., as Agent, Wachovia Securities, Inc., as
Arranger, Bank of America National Trust and Savings Association, as
Syndication Agent, and ABN AMRO Bank N.V., as Documentation Agent (the
"CREDIT AGREEMENT");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at
any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $__________ (the "ASSIGNED
AMOUNT"), together with a corresponding portion of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. ASSIGNMENT. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase
<PAGE>
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon
the execution and delivery hereof by the Assignor, the Assignee, the Borrower
and the Agent and the payment of the amounts specified in Section 3 required
to be paid on the date hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a Bank
under the Credit Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the
date hereof, be reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such obligations have
been assumed by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.
SECTION 3. PAYMENTS. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between
them.(1) It is understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees accruing from
and including the date hereof are for the account of the Assignee. Each of
the Assignor and the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly pay the same
to such other party.
[SECTION 4. CONSENT OF THE BORROWER. This Agreement is conditioned upon
the consent of the Borrower pursuant to Section 9.06(c) of the Credit
Agreement. The execution of this Agreement by the Borrower is evidence of this
consent. Pursuant to Section 9.06(c) the Borrower agrees to execute and deliver
a Note payable to the order of the Assignee to evidence the assignment and
assumption provided for herein.]
SECTION 5. NON-RELIANCE ON ASSIGNOR. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance on
the Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower.
- --------------
(1) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
G-2
<PAGE>
SECTION 6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:
-------------------------------------
Name:
Title:
[ASSIGNEE]
By:
-------------------------------------
Name:
Title:
THOMAS & BETTS CORPORATION
By:
-------------------------------------
Name:
Title:
G-3
<PAGE>
EXHIBIT H
DESIGNATION AGREEMENT
dated as of ________________, _____
Reference is made to the Amended and Restated 364-Day Credit Agreement
dated as of June 30, 1999 (as amended from time to time, the "CREDIT
AGREEMENT") among Thomas & Betts Corporation, a Tennessee corporation (the
"BORROWER"), the banks party thereto (the "BANKS"), Wachovia Bank, N.A., as
Agent (the "AGENT"), Wachovia Securities, Inc., as Arranger, Bank of America
National Trust and Savings Association, as Syndication Agent, and ABN AMRO
Bank N.V., as Documentation Agent. Terms defined in the Credit Agreement are
used herein with the same meaning.
_________________ (the "DESIGNATOR") and ________________ (the
"DESIGNEE") agree as follows:
1. The Designator designates the Designee as its Designated Lender
under the Credit Agreement and the Designee accepts such designation.
2. The Designator makes no representations or warranties and assumes
no responsibility with respect to the financial condition of the Borrower or
the performance or observance by the Borrower of any of its obligations under
the Credit Agreement or any other instrument or document furnished pursuant
thereto.
3. The Designee confirms that it is an Eligible Designee; appoints and
authorizes the Designator as its administrative agent and attorney-in-fact
and grants the Designator an irrevocable power of attorney to receive
payments made for the benefit of the Designee under the Credit Agreement and
to deliver and receive all communications and notices under the Credit
Agreement, if any, that the Designee is obligated to deliver or has the right
to receive thereunder; and acknowledges that the Designator retains the sole
right and responsibility to vote under the Credit Agreement, including,
without limitation, the right to approve any amendment or waiver of any
provision of the Credit Agreement, and agrees that the Designee shall be
bound by all such votes, approvals, amendments and waivers and all other
agreements of the Designator pursuant to or in connection with the Credit
Agreement, all subject to Section 9.05(b) of the Credit Agreement.
4. The Designee confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
referred to in Article 4 or delivered pursuant to Article 5 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and
H-1
<PAGE>
decision to enter into this Designation Agreement; agrees that it will,
independently and without reliance upon the Agent, the Designator or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking any action it may be permitted to take under the Credit
Agreement. The Designee acknowledges that it is subject to and bound by the
confidentiality provisions of the Credit Agreement (except as provided in
Section 9.07(a) thereof).
5. Following the execution of this Designation Agreement by the
Designator and the Designee and the consent hereto by the Borrower, it will
be delivered to the Agent for its consent. This Designation Agreement shall
become effective when the Agent consents hereto or on any later date
specified on the signature page hereof.
6. Upon the effectiveness hereof,(a) the Designee shall have the right
to make Loans or portions thereof as a Bank pursuant to Section 2.01 or 2.03
of the Credit Agreement and the rights of a Bank related thereto and (b) the
making of any such Loans or portions thereof by the Designee shall satisfy
the obligations of the Designator under the Credit Agreement to the same
extent, and as if, such Loans or portions thereof were made by the
Designator.
7. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Designation Agreement
to be executed by their respective officers hereunto duly authorized, as of
the date first above written.
Effective Date (2):______ , ____
[NAME OF DESIGNATOR]
By:
-------------------------------------
Name:
Title:
- ----------------
(2) This date should be no earlier than the date of the Agent's consent
hereto.
H-2
<PAGE>
[NAME OF DESIGNEE]
By:
-------------------------------------
Name:
Title:
The undersigned consent to the foregoing designation.
THOMAS & BETTS CORPORATION
By:
-------------------------------------
Name:
Title:
WACHOVIA BANK, N.A., as Agent
By:
-------------------------------------
Name:
Title:
H-3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q FOR THE PERIODS ENDED JULY 4, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-02-2000 JAN-02-2000
<PERIOD-START> JAN-04-1999 JAN-04-1999
<PERIOD-END> APR-04-1999 JUL-04-1999
<CASH> 37,030 72,321
<SECURITIES> 26,666 19,001
<RECEIVABLES> 468,605 477,028
<ALLOWANCES> (24,942) (22,112)
<INVENTORY> 487,792 486,172
<CURRENT-ASSETS> 1,070,696 1,111,207
<PP&E> 1,209,814 1,234,016
<DEPRECIATION> (571,130) (587,398)
<TOTAL-ASSETS> 2,531,757 2,578,600
<CURRENT-LIABILITIES> 554,904 571,044
<BONDS> 837,162 840,905
0 0
0 0
<COMMON> 5,686 5,690
<OTHER-SE> 1,018,622 1,044,505
<TOTAL-LIABILITY-AND-EQUITY> 2,531,757 2,578,600
<SALES> 601,518 1,241,699
<TOTAL-REVENUES> 601,518 1,241,699
<CGS> 423,420 877,359
<TOTAL-COSTS> 542,321 1,116,209
<OTHER-EXPENSES> (10,019) (17,779)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 15,740 32,076
<INCOME-PRETAX> 53,476 111,193
<INCOME-TAX> 15,506 29,930
<INCOME-CONTINUING> 37,970 81,263
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 37,970 81,263
<EPS-BASIC> 0.67 1.43
<EPS-DILUTED> 0.67 1.42
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q FOR THE PERIODS ENDED JULY 5, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-03-1999 JAN-03-1999
<PERIOD-START> DEC-29-1997 DEC-29-1997
<PERIOD-END> APR-05-1998 JUL-05-1998
<CASH> 60,254 21,147
<SECURITIES> 51,692 66,268
<RECEIVABLES> 325,927 404,014
<ALLOWANCES> (41,177) (28,097)
<INVENTORY> 429,919 436,324
<CURRENT-ASSETS> 877,723 947,364
<PP&E> 1,106,863 1,134,469
<DEPRECIATION> 520,737 533,080
<TOTAL-ASSETS> 2,136,321 2,282,235
<CURRENT-LIABILITIES> 406,129 432,751
<BONDS> 585,831 692,284
0 0
0 0
<COMMON> 0 5,673
<OTHER-SE> 1,024,005 1,038,087
<TOTAL-LIABILITY-AND-EQUITY> 2,136,321 2,282,235
<SALES> 544,508 1,097,678
<TOTAL-REVENUES> 544,508 1,097,678
<CGS> 383,412 768,269
<TOTAL-COSTS> 486,427 970,232
<OTHER-EXPENSES> (6,598) (8,498)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 10,927 23,307
<INCOME-PRETAX> 53,752 112,637
<INCOME-TAX> 16,449 33,791
<INCOME-CONTINUING> 37,303 78,846
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 37,303 78,846
<EPS-BASIC> 0.66 1.39
<EPS-DILUTED> 0.65 1.38
</TABLE>
