United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 2004
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 No. 002-26821
BROWN-FORMAN CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 61-0143150
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
850 Dixie Highway
Louisville, Kentucky 40210
(Address of principal executive offices) (Zip Code)
(502) 585-1100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether 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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). 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: August 31, 2004
Class A Common Stock ($.15 par value, voting) 56,841,070
Class B Common Stock ($.15 par value, nonvoting) 64,955,257
BROWN-FORMAN CORPORATION
Index to Quarterly Report Form 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Condensed Consolidated Statement of Income
Three months ended July 31, 2003 and 2004 3
Condensed Consolidated Balance Sheet
April 30, 2004 and July 31, 2004 4
Condensed Consolidated Statement of Cash Flows
Three months ended July 31, 2003 and 2004 5
Notes to the Condensed Consolidated Financial Statements 6 - 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
Item 4. Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits 16
Signatures 17
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended
July 31,
2003 2004
------- -------
Net sales $ 531.7 $ 578.0
Excise taxes 71.8 82.0
Cost of sales 188.5 198.4
------- -------
Gross profit 271.4 297.6
Advertising expenses 77.6 80.6
Selling, general, and administrative expenses 127.4 133.3
Other expense (income), net 14.3 0.8
------- -------
Operating income 52.1 82.9
Interest income 0.4 0.3
Interest expense 5.4 5.2
------- -------
Income before income taxes 47.1 78.0
Taxes on income 16.0 26.1
------- -------
Net income $ 31.1 $ 51.9
======= =======
Earnings per share
- Basic $ 0.26 $ 0.43
- Diluted $ 0.26 $ 0.42
Shares (in thousands) used in the
calculation of earnings per share
- Basic 121,220 121,693
- Diluted 121,710 122,414
Cash dividends per common share
- Declared $0.3750 $0.4250
- Paid $0.1875 $0.2125
See notes to the condensed consolidated financial statements.
3
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
April 30, July 31,
2004 2004
(Unaudited)
-------- --------
Assets
- ------
Cash and cash equivalents $ 67.7 $ 84.0
Accounts receivable, net 348.6 324.3
Inventories:
Barreled whiskey 217.9 223.5
Finished goods 185.4 211.7
Work in process 111.0 92.5
Raw materials and supplies 42.9 50.6
-------- --------
Total inventories 557.2 578.3
Current portion of deferred income taxes 66.9 66.9
Other current assets 43.1 32.5
-------- --------
Total current assets 1,083.5 1,086.0
Property, plant and equipment, net 515.2 511.2
Prepaid pension cost 118.2 118.4
Investment in affiliates 44.6 45.3
Trademarks and brand names 246.6 247.1
Goodwill 314.6 315.2
Other assets 53.3 49.5
-------- --------
Total assets $2,376.0 $2,372.7
======== ========
Liabilities
- -----------
Commercial paper $ 49.5 $ 16.5
Accounts payable and accrued expenses 271.5 257.7
Dividends payable -- 25.9
Accrued taxes on income 48.0 68.1
-------- --------
Total current liabilities 369.0 368.2
Long-term debt 630.0 630.2
Deferred income taxes 122.2 110.2
Accrued pension and other postretirement benefits 136.7 139.1
Other liabilities 33.0 31.7
-------- --------
Total liabilities 1,290.9 1,279.4
Stockholders' Equity
- --------------------
Common stock:
Class A, voting
(57,000,000 shares authorized;
56,841,000 shares issued) 8.5 8.5
Class B, nonvoting
(100,000,000 shares authorized;
69,188,000 shares issued) 10.4 10.4
Retained earnings 1,236.2 1,236.4
Accumulated other comprehensive loss (14.3) (12.4)
Treasury stock
(4,441,000 and 4,233,000 Class B common shares
at April 30 and July 31, respectively) (155.7) (149.6)
-------- --------
Total stockholders' equity 1,085.1 1,093.3
-------- --------
Total liabilities and stockholders' equity $2,376.0 $2,372.7
======== ========
Note: The balance sheet at April 30, 2004, has been taken from the audited
financial statements at that date, and condensed.
See notes to the condensed consolidated financial statements.
4
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In millions; amounts in parentheses are reductions of cash)
Three Months Ended
July 31,
2003 2004
------- -------
Cash flows from operating activities:
Net income $ 31.1 $ 51.9
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Depreciation 13.1 14.1
Deferred income taxes (6.0) (12.0)
Changes in assets and liabilities:
Accounts receivable 20.0 24.3
Inventories (28.7) (21.1)
Other current assets (1.3) 10.6
Accounts payable and accrued expenses 0.5 (13.8)
Accrued taxes on income 5.5 20.1
Noncurrent assets and liabilities 4.4 6.1
------- -------
Cash provided by operating activities 38.6 80.2
Cash flows from investing activities:
Additions to property, plant, and equipment (14.5) (9.3)
Computer software expenditures (1.0) (0.4)
Trademark and patent expenditures (0.2) --
------- -------
Cash used for investing activities (15.7) (9.7)
Cash flows from financing activities:
Net change in commercial paper (3.9) (33.0)
Proceeds from exercise of stock options 3.6 4.7
Dividends paid (22.7) (25.9)
------- -------
Cash used for financing activities (23.0) (54.2)
------- -------
Net increase (decrease) in
cash and cash equivalents (0.1) 16.3
Cash and cash equivalents, beginning of period 72.0 67.7
------- -------
Cash and cash equivalents, end of period $ 71.9 $ 84.0
======= =======
See notes to the condensed consolidated financial statements.
5
BROWN-FORMAN CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In these notes, "we," "us," and "our" refer to Brown-Forman Corporation.
1. Condensed Consolidated Financial Statements
We prepared these unaudited condensed consolidated statements using our
customary accounting practices as set out in our 2004 annual report on Form 10-K
(the "2004 Annual Report"). We made all of the adjustments (which include only
normal, recurring adjustments) needed for a fair statement of this data.
We condensed or omitted some of the information found in financial statements
prepared according to generally accepted accounting principles ("GAAP"). You
should read these financial statements together with the 2004 Annual Report,
which does conform to GAAP.
2. Inventories
We use the last-in, first-out ("LIFO") method to determine the cost of most of
our inventories. If the LIFO method had not been used, inventories at current
cost would have been $145.6 million higher than reported as of April 30, 2004,
and $149.7 million higher than reported as of July 31, 2004. Changes in the LIFO
valuation reserve for interim periods are based on a proportionate allocation of
the estimated change for the entire fiscal year.
3. Taxes on Income
Our consolidated effective tax rate may differ from current statutory rates due
to the recognition of amounts for events or transactions that do not have tax
consequences. We use the estimated annual effective tax rate in determining our
interim results.
4. Earnings Per Share
Basic earnings per share is calculated as net income divided by the weighted
average number of common shares outstanding during the period. Diluted earnings
per share is calculated in the same manner, except that the denominator also
includes additional common shares that would have been issued if outstanding
stock options had been exercised during the period. The dilutive effect of
outstanding stock options is determined by application of the treasury stock
method. Approximately 1.1 million stock options have been excluded from the
calculation of diluted earnings per share because the average market price did
not exceed the exercise price.
6
The following table presents information concerning basic and diluted earnings
per share:
Three Months Ended
July 31,
2003 2004
------ ------
Basic and diluted net income (in millions) $31.1 $51.9
Share data (in thousands):
Basic average common shares outstanding 121,220 121,693
Effect of dilutive stock options 490 721
------- -------
Diluted average common shares outstanding 121,710 122,414
Basic net income per share $0.26 $0.43
Diluted net income per share $0.26 $0.42
5. Stock Options
We apply Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in accounting for stock
options. Accordingly, no stock-based employee compensation cost is reflected in
net income, as no options granted under those plans had an exercise price below
the market value of the underlying stock on the grant date. The following table
illustrates the effect on net income and earnings per share if we had instead
recognized compensation expense for stock options based on their fair value at
their grant dates consistent with the methodology prescribed under Financial
Accounting Standards Board Statement No. 123, "Accounting for Stock-Based
Compensation."
(Dollars in millions, except per share amounts)
Three Months Ended
July 31,
2003 2004
----- -----
Net income, as reported $31.1 $51.9
Stock-based employee compensation
expense determined under fair
value based method, net of tax (0.7) (0.7)
----- -----
Pro forma net income $30.4 $51.2
===== =====
Earnings per share - pro forma:
Basic $0.26 $0.42
Diluted $0.26 $0.42
Earnings per share - as reported:
Basic $0.26 $0.43
Diluted $0.26 $0.42
7
The plan requires that we purchase shares to satisfy stock option requirements,
thereby avoiding future dilution of earnings that would occur from issuing
additional shares. We acquire treasury shares from time to time in anticipation
of these requirements. We intend to hold enough treasury stock so that the
number of diluted shares is never more than the original number of shares
outstanding at inception of the stock option plan (as adjusted for any share
issuances unrelated to the plan). The extent to which the number of diluted
shares exceeds the number of basic shares is determined by how much our stock
price has appreciated since the options were granted, irrespective of how many
treasury shares we have acquired.
6. Environmental Matters
We face environmental claims resulting from the cleanup of several manufacturing
or waste disposal sites in the United States. We accrue for losses associated
with environmental cleanup obligations when such losses are probable and
reasonably estimable. At some sites, there are other potentially responsible
parties who are expected to bear part of the costs, in which cases our accrual
is based on our estimate of our share of the total costs. A portion of the
cleanup costs with respect to certain sites is expected to be paid by insurance.
The estimated recovery of cleanup costs from insurers is recorded as an asset
when receipt is deemed probable.
We do not believe that any additional environmental cleanup costs we incur will
have a material adverse effect on our consolidated financial position, results
of operations, or cash flows.
7. Contingencies
We operate in a litigious environment, and we get sued in the normal course of
business. Sometimes plaintiffs seek substantial damages. Significant judgment is
required in predicting the outcome of these suits and claims, many of which take
years to adjudicate. We accrue estimated costs for a contingency when we believe
that a loss is probable, and adjust the accrual as appropriate to reflect
changes in facts and circumstances.
Brown-Forman and many other manufacturers of spirits, wine and beer are
defendants in a series of similar class action lawsuits seeking damages and
injunctive relief over alleged marketing of beverage alcohol to underage
consumers. The suits allege that the defendants have engaged in deceptive
marketing practices and schemes targeted at underage consumers, negligently
marketed their products to the underage, and fraudulently concealed their
alleged misconduct. Brown-Forman denies that we intentionally market beverage
alcohol products to minors and denies that our advertising is illegal. We will
vigorously defend this position and it is not possible at this time to estimate
a possible loss or range of loss, if any, in these lawsuits. However, an adverse
result in these lawsuits or similar class action lawsuits could have a material
adverse effect on our business.
8
8. Business Segment Information
(Dollars in millions) Three Months Ended
July 31,
2003 2004
------ ------
Net sales:
Beverages $422.8 $474.6
Consumer Durables 108.9 103.4
------ ------
Consolidated net sales $531.7 $578.0
====== ======
Operating income (loss):
Beverages $ 64.0 $ 97.7
Consumer Durables (11.9) (14.8)
------ ------
52.1 82.9
Interest expense, net 5.0 4.9
------ ------
Consolidated income before income taxes $ 47.1 $ 78.0
====== ======
Consumer
Beverages Durables Total
--------- -------- ------
Goodwill:
Balance as of April 30, 2004 $184.3 $130.3 $314.6
Foreign currency translation adjustment 0.6 -- 0.6
------ ------ ------
Balance as of July 31, 2004 $184.9 $130.3 $315.2
====== ====== ======
9. Pension and Other Postretirement Benefits
The following table shows the components of the pension and other postretirement
benefit expense recognized during the three months ended July 31:
Pension Benefits Other Benefits
(Dollars in millions) 2003 2004 2003 2004
---- ---- ---- ----
Service cost $ 3.6 $4.2 $0.5 $0.4
Interest cost 7.1 7.5 1.2 1.0
Expected return on plan assets (11.0) (10.8) -- --
Amortization of:
Unrecognized prior service cost 0.3 0.2 0.1 0.1
Unrecognized net loss (gain) 0.2 1.1 0.3 --
Unrecognized transition asset (0.4) -- -- --
----- ---- ---- ----
Net expense (income) $(0.2) $2.2 $2.1 $1.5
===== ==== ==== ====
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("the
Act") was enacted in December 2003. The Act provides a federal subsidy to plan
sponsors for certain qualifying prescription drug benefits covered under the
sponsor's postretirement medical benefit plans. We estimate that the subsidy has
reduced our postretirement medical benefit obligation by $16 million. The
postretirement medical expense recognized during the three months ended July 31,
2004 includes a subsidy-related reduction of $0.6 million ($0.2 million of
service cost, $0.2 million of interest cost, and $0.2 million of amortization of
gain).
9
10. Comprehensive Income
Comprehensive income is a broad measure of the effects of all transactions and
events (other than investments by or distributions to shareholders) that are
recognized in stockholders' equity, regardless of whether those transactions and
events are included in net income. The following table adjusts the company's net
income for the other items included in comprehensive income:
(Dollars in millions) Three Months Ended
July 31,
2003 2004
------ ------
Net income $ 31.1 $ 51.9
Other comprehensive income (loss):
Net gain (loss) on cash flow hedges 0.8 (1.1)
Net gain on securities 0.3 0.1
Foreign currency translation adjustment 2.8 2.9
------ ------
Other comprehensive income 3.9 1.9
------ ------
Comprehensive income $ 35.0 $ 53.8
====== ======
Accumulated other comprehensive loss (income) consisted of the following:
(Dollars in millions) April 30, July 31,
2004 2004
------ ------
Pension liability adjustment $ 31.8 $ 31.8
Cumulative translation adjustment (15.5) (18.4)
Unrealized gain on cash flow hedge contracts (1.6) (0.5)
Unrealized gain on securities (0.4) (0.5)
------ ------
$ 14.3 $ 12.4
====== ======
11. Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation.
10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
You should read the following discussion and analysis along with our 2004 Annual
Report. Note that the results of operations for the three months ended July 31,
2004, do not necessarily indicate what our operating results for the full fiscal
year will be. In this Item, "we," "us," and "our" refer to Brown-Forman
Corporation.
Important Note on Forward-Looking Statements:
This report contains statements, estimates, or projections that constitute
"forward-looking statements" as defined under U.S. federal securities laws.
Generally, the words "expect," "believe," "intend," "estimate," "will,"
"anticipate," and "project," and similar expressions identify a forward-looking
statement, which speaks only as of the date the statement is made. Except as
required by law, we do not intend to update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.
We believe that the expectations and assumptions with respect to our
forward-looking statements are reasonable. But by their nature, forward-looking
statements involve known and unknown risks, uncertainties and other factors that
in some cases are out of our control. These factors could cause our actual
results to differ materially from Brown-Forman's historical experience or our
present expectations or projections. Here is a non-exclusive list of such risks
and uncertainties:
- changes in general economic conditions, particularly in the United States
where we earn the majority of our profits;
- a strengthening U.S. dollar against foreign currencies, especially the
British Pound;
- reduced bar, restaurant, hotel and travel business in wake of other terrorist
attacks, such as occurred on 9/11;
- developments in the class action lawsuits filed against Brown-Forman and
other spirits, beer and wine manufacturers alleging that our advertising
causes illegal consumption of alcohol by those under the legal drinking age,
or other attempts to limit alcohol marketing, through either litigation or
regulation;
- a dramatic change in consumer preferences, social trends or cultural trends
that results in the reduced consumption of our premium spirits brands;
- tax increases, whether at the federal or state level;
- increases in the price of grain and grapes;
- continued depressed retail prices and margins in our wine business because of
our excess wine inventories, existing grape contract obligations, and a
world-wide oversupply of grapes; and
- the effects on our Consumer Durables business of the general economy,
department store business, response rates in our direct marketing business,
and profitability of mall outlet operations.
11
Results of Operations:
First Quarter Fiscal 2005 Compared to First Quarter Fiscal 2004
Here is a summary of our operating performance (expressed in millions,
except percentage and per share amounts):
Three Months Ended
July 31,
2003 2004 Change
------ ------ ------
Net Sales:
Beverages $422.8 $474.6 12%
Consumer Durables 108.9 103.4 (5%)
------ ------
Total $531.7 $578.0 9%
Gross Profit:
Beverages $221.4 $250.5 13%
Consumer Durables 50.0 47.1 (6%)
------ ------
Total $271.4 $297.6 10%
Advertising Expenses:
Beverages $56.7 $61.2 8%
Consumer Durables 20.9 19.4 (7%)
----- ----
Total $77.6 $80.6 4%
SG&A Expenses:
Beverages $89.2 $92.2 3%
Consumer Durables 38.2 41.1 8%
----- -----
Total $127.4 $133.3 5%
Other Expense (Income):
Beverages $11.5 $(0.6)
Consumer Durables 2.8 1.4
----- -----
Total $14.3 $ 0.8
Operating Income (Loss):
Beverages $ 64.0 $ 97.7 53%
Consumer Durables (11.9) (14.8) (24%)
------ ------
Total $ 52.1 $ 82.9 59%
Net Income $ 31.1 $ 51.9 67%
Earnings per Share - Basic $ 0.26 $ 0.43 66%
Earnings per Share - Diluted $ 0.26 $ 0.42 66%
Effective Tax Rate 34.0% 33.5%
12
Diluted earnings per share for the first quarter ended July 31, 2004 was $0.42,
up 66% from the $0.26 earned in the same period last year. Earnings growth was
driven primarily by continued volume and margin improvement from the company's
premium spirits portfolio and profits from the company's introductory shipments
of its new low-carbohydrate wine brands, One.6 Chardonnay and One.9 Merlot. In
addition, this quarter benefited from the absence of an approximate $0.06 per
share charge related to last year's legal settlement with a former distributor
in the United Kingdom. Partially offsetting this first quarter earnings growth
was continued softness in the Consumer Durables segment, higher pension and post
retirement expenses, volume declines for Fetzer Premium Varietals, and a decline
in profits from Jack Daniel's Country Cocktails.
Adjusting for the $10 million of legal settlement expenses incurred in the first
quarter of the prior year, the current year's benefit from the company's new
wine brands, favorable foreign exchange, and the net effect of restructuring
charges in both segments, the company's operating income grew by 15%.
Beverages:
The Beverage segment benefited from a healthy environment for premium spirits,
particularly in the United States. Global depletion trends for the company's
most important brand, Jack Daniel's Tennessee Whiskey, accelerated in the first
quarter. Depletions are nine-liter case movements from wholesale distributors to
retailers, and are generally used in the spirits and wine industry to
approximate consumer demand. Jack Daniel's volumes increased at a double digit
rate in the United States and in half of the brand's ten largest international
markets. Southern Comfort depletions grew in the mid-single digits globally as
Continental Europe improved over its weak performance last year. Finlandia
depletions continued to increase in the United States and Poland, but were
sluggish in other global markets. Results for the company's core wine brands,
Fetzer Premium Varietals and Bolla, remained soft due to the intensely
competitive retail price environment in the United States. However, Korbel
Champagne grew its volume in the mid-single digits and strengthened its market
share leadership in the sparkling wine category.
Beverage revenue and gross profit increased by 12% and 13%, respectively, for
the quarter. Growth was driven primarily by higher global volumes and improved
pricing for both Jack Daniel's and Southern Comfort, the establishment of
initial trade inventories for One.6 Chardonnay and One.9 Merlot, and a modest
benefit from a weaker U.S. dollar.
Beverage advertising expenses increased 8% during the quarter, driven by higher
brand-building investments behind Jack Daniel's and Finlandia, and promotional
investments supporting the launch of the new low-carbohydrate wine products.
13
Consumer Durables:
The environment for the company's Lenox business remained very challenging. In
the Durables segment, net sales were down 5% and gross profit decreased 6%
during the quarter, despite increases in revenue and gross profit for Hartmann
luggage. Lenox sales to department stores were sluggish and revenues from the
company's retail outlets declined in the first quarter. As a result of lower
consumer response rates, revenues also declined in the direct-to-consumer
channel.
Consumer Durables is a seasonal business that typically reports a loss in the
first quarter. The segment reported an operating loss of $15 million this
quarter, including approximately $3 million in restructuring charges, compared
to a $12 million loss during the same period last year. The new management team
at Lenox continues to focus its efforts on rationalizing marginal and
unprofitable businesses, creating organizational efficiencies, increasing
manufacturing and operational efficiency, and introducing new products.
Outlook:
First quarter financial results were strong. Earnings estimates for the full
fiscal year, however, remain tempered by competitive pressures within the U.S.
table wine category and the difficult environment for key pieces of the Consumer
Durables segment. Also, our continuing focus on the company's worldwide beverage
distribution strategies may result in a reduction in global trade inventories.
However, due to the underlying strength in our premium spirits portfolio, we now
expect earnings in the range of $2.35 to $2.43 per share for fiscal 2005, for a
full-year growth rate of 11-15%.
Liquidity and Financial Condition
Cash and cash equivalents increased by $16.3 million during the three months
ended July 31, 2004, compared to a slight decline of $0.1 million during the
same period last year. Cash provided by operations improved by $41.6 million,
reflecting higher earnings and a more favorable working capital position. Cash
used for investments declined by $6.0 million, due primarily to lower capital
expenditures in the Consumer Durables segment. Cash used for financing
activities increased by $31.2 million, mainly reflecting an increase in net
repayments of commercial paper.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We hold debt obligations, foreign currency forward and option contracts, and
commodity futures contracts that are exposed to risk from changes in interest
rates, foreign currency exchange rates, and commodity prices, respectively.
Established procedures and internal processes govern the management of these
market risks. As of July 31, 2004, we do not consider the exposure to these
market risks to be material.
Item 4. Controls and Procedures
The Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO") of
Brown-Forman (its principal executive and principal financial officers) have
evaluated the effectiveness of the company's "disclosure controls and
procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act")) as of the end of the period covered by this report.
Based on that evaluation, the CEO and CFO concluded that the company's
disclosure controls and procedures: are effective to ensure that information
required to be disclosed by the company in the reports filed or submitted by it
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the SEC's rules and forms; and include controls
and procedures designed to ensure that information required to be disclosed by
the company in such reports is accumulated and communicated to the company's
management, including the CEO and the CFO, as appropriate, to allow timely
decisions regarding required disclosure. There has been no change in the
company's internal control over financial reporting during the most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the company's internal control over financial reporting.
14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Brown-Forman Corporation and many other manufacturers of spirits, wine and beer
are defendants in a series of essentially similar class action lawsuits seeking
damages and injunctive relief over alleged marketing of beverage alcohol to
underage consumers. Five lawsuits have been filed to date, the first three
against eight defendants, including Brown-Forman: "Hakki v. Adolph Coors
Company, et.al.," U.S. District Court for the District of Columbia, No.
1:03cv02621 (GK), filed November 2003; "Kreft v. Zima Beverage Co., et.al.,"
District Court, Jefferson County, Colorado, No. 04cv1827, filed December 2003;
and "Wilson v. Zima Company, et.al.," U.S. District Court for the Western
District of North Carolina, Charlotte Division, No. 3:04cv141, filed January
2004. Two virtually identical suits with allegations similar to those in the
first three lawsuits were filed in Cleveland, Ohio, in April and June, 2004,
respectively, against the original eight defendants as well as an additional
nine manufacturers of spirits and beer, styled "Eisenberg v. Anheuser-Busch,"
U.S. District Court for the District of Northern Ohio, No. 1:04cv1081, and
"Tully v. Anheuser-Busch," U.S. District Court for the District of Northern
Ohio, No. 1:04cv1101. In addition, Brown-Forman has received a pre-lawsuit
notice under the California Consumer Protection Act indicating that the same
lawyers intend to file a lawsuit there against many industry defendants,
including Brown-Forman, presumably on the same facts and legal theories.
The suits allege that the defendants have engaged in deceptive marketing
practices and schemes targeted at underage consumers, negligently marketed their
products to the underage, and fraudulently concealed their alleged misconduct.
Plaintiffs seek class action certification on behalf of: (a) a guardian class
consisting of all persons who were or are parents of children whose funds were
used to purchase beverage alcohol marketed by the defendants which were consumed
without their prior knowledge by their children under the age of 21 during the
period 1982 to present; and (b) an injunctive class consisting of the parents
and guardians of all children currently under the age of 21.
The lawsuits seek: (1) a finding that defendants engaged in a deceptive scheme
to market alcoholic beverages to underage persons and an injunction against such
alleged practices; (2) disgorgement and refund to the guardian class of all
proceeds resulting from sales to the underage since 1982; and (3) judgment to
each guardian class member for a trebled award of actual damages, punitive
damages, and attorneys fees. The lawsuits, either collectively or individually,
if ultimately successful, represent significant financial exposure.
Brown-Forman denies that it intentionally markets its beverage alcohol products
to minors and denies that its advertising is illegal. It will defend these cases
vigorously.
15
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders of the company held July 22, 2004, the
following matter was voted upon:
a) Votes regarding the election of the persons named below as directors until
the next annual election of directors, or until a successor has been
elected and qualified:
For Withheld
---------- ---------
Ina Brown Bond 53,396,428 412,842
Barry D. Bramley 50,963,542 2,845,728
Geo. Garvin Brown III 53,396,709 412,561
Owsley Brown II 50,536,843 3,272,427
Donald G. Calder 51,278,809 2,530,461
Owsley Brown Frazier 53,399,546 409,724
Richard P. Mayer 51,309,197 2,500,073
Stephen E. O'Neil 51,307,177 2,502,093
Matthew R. Simmons 51,320,169 2,489,101
William M. Street 50,966,665 2,842,605
Dace Brown Stubbs 53,389,067 420,203
Paul C. Varga 50,911,558 2,897,712
b) Votes regarding the approval of the Brown-Forman 2004 Omnibus
Compensation Plan:
For 47,601,945
Against 761,059
Abstentions 2,494,562
Broker Non-Votes 2,951,702
Item 6. Exhibits
10 Five-Year Credit Agreement, dated as of July 30, 2004, among
Brown-Forman Corporation, the Lenders named therein, Bank of America,
N.A., as Syndication Agent, Citicorp USA, Inc., HSBC Bank USA, and
National City Bank of Kentucky, as Documentation Agents, and JPMorgan
Chase Bank, as Administrative Agent.
31.1 CEO Certification pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.
31.2 CFO Certification pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.
32 CEO and CFO Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(not considered to be filed).
16
SIGNATURES
As required by the Securities Exchange Act of 1934, the Registrant has caused
this report to be signed on its behalf by the undersigned authorized officer.
BROWN-FORMAN CORPORATION
(Registrant)
Date: September 2, 2004 By: /s/ Phoebe A. Wood
Phoebe A. Wood
Executive Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as Principal Financial Officer)
17
Exhibit 10
FIVE-YEAR CREDIT AGREEMENT
dated as of
July 30, 2004
among
BROWN-FORMAN CORPORATION
The Lenders Party Hereto
BANK OF AMERICA, N.A.,
as Syndication Agent
CITIBANK, N.A.
HSBC BANK USA
and
NATIONAL CITY BANK OF KENTUCKY
as Documentation Agents
and
JPMORGAN CHASE BANK,
as Administrative Agent
___________________________
J.P. MORGAN SECURITIES INC.
BANC OF AMERICA SECURITIES LLC,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Defined Terms
SECTION 1.02. Classification of Loans and Borrowings
SECTION 1.03. Terms Generally
SECTION 1.04. Accounting Terms; GAAP
ARTICLE II
The Credits
SECTION 2.01. Commitments
SECTION 2.02. Loans and Borrowings
SECTION 2.03. Requests for Revolving Borrowings
SECTION 2.04. Competitive Bid Procedure
SECTION 2.05. Funding of Borrowings
SECTION 2.06. Interest Elections
SECTION 2.07. Termination and Reduction of Commitments
SECTION 2.08. Repayment of Loans; Evidence of Debt
SECTION 2.09. Prepayment of Loans
SECTION 2.10. Increase in Commitments
SECTION 2.11. Fees
SECTION 2.12. Interest
SECTION 2.13. Alternate Rate of Interest
SECTION 2.14. Increased Costs
SECTION 2.15. Break Funding Payments
SECTION 2.16. Taxes
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
SECTION 2.18. Mitigation Obligations; Replacement of Lenders
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers
SECTION 3.02. Authorization; Enforceability
SECTION 3.03. Governmental Approvals; No Conflicts
SECTION 3.04. Financial Condition; No Material Adverse Change
SECTION 3.05. Litigation and Environmental Matters
SECTION 3.06. Compliance with Laws and Agreements
SECTION 3.07. Investment and Holding Company Status
SECTION 3.08. Taxes
SECTION 3.09. ERISA
SECTION 3.10. Disclosure
ARTICLE IV
Conditions
SECTION 4.01. Effective Date
SECTION 4.02. Each Credit Event
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information
SECTION 5.02. Notices of Material Events
SECTION 5.03. Existence; Conduct of Business
SECTION 5.04. Payment of Obligations
SECTION 5.05. Maintenance of Properties; Insurance
SECTION 5.06. Books and Records; Inspection Rights
SECTION 5.07. Compliance with Laws
SECTION 5.08. Use of Proceeds
ARTICLE VI
Negative Covenants
SECTION 6.01. Subsidiary Indebtedness
SECTION 6.02. Liens
SECTION 6.03. Sale and Leaseback Transactions
SECTION 6.04. Fundamental Changes
SECTION 6.05. Transactions with Affiliates
SECTION 6.06. Ratio of Consolidated Total Debt to Consolidated Net Worth
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices
SECTION 9.02. Waivers; Amendments
SECTION 9.03. Expenses; Indemnity; Damage Waiver
SECTION 9.04. Successors and Assigns
SECTION 9.05. Survival
SECTION 9.06. Counterparts; Integration; Effectiveness
SECTION 9.07. Severability
SECTION 9.08. Right of Setoff
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process
SECTION 9.10. WAIVER OF JURY TRIAL
SECTION 9.11. Headings
SECTION 9.12. Confidentiality
SECTION 9.13. Interest Rate Limitation
SECTION 9.14. USA Patriot Act
Schedules:
Schedule 2.01 - Commitments
Schedule 3.05 - Disclosed Matters
Schedule 6.01 - Existing Subsidiary Indebtedness
Schedule 6.02 - Existing Liens
Exhibits:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Opinion of Borrower's Counsel
FIVE-YEAR CREDIT AGREEMENT dated as of July 30,
2004 (the "Agreement"), among BROWN-FORMAN
CORPORATION, a Delaware corporation, the LENDERS party
hereto, BANK OF AMERICA, N.A., as Syndication Agent,
CITIBANK, N.A., HSBC BANK USA and NATIONAL CITY
BANK OF KENTUCKY, as Documentation Agents, and
JPMORGAN CHASE BANK, as Administrative Agent.
The Borrower (such term and each other capitalized term used but not otherwise
defined herein having the meaning assigned to it in Article I) has requested the
Lenders to establish the credit facility provided for herein under which the
Borrower may obtain Revolving Loans and Competitive Loans in an aggregate
principal amount of up to $400,000,000. Such Loans will be used for working
capital and general corporate purposes and to provide liquidity in connection
with any commercial paper program of the Borrower. The Lenders are willing to
extend such credit to the Borrower on the terms and subject to the conditions
set forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means JPMorgan Chase Bank, in its capacity as
administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the greater
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender's Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day, with respect to any Eurodollar Revolving
Loan, or with respect to the facility fees payable hereunder, as the case may
be, the applicable rate per annum set forth below under the caption "LIBOR
MARGIN" or "Facility Fee", as the case may be, based upon the ratings by S&P and
Moody's, respectively, applicable on such date to the Index Debt and the
Utilization Percentage on such date:
LIBOR MARGIN LIBOR MARGIN
if Utilization if Utilization
Five Year Ratings Facility Fee Percentage<=50% Percentage>50%
Facility (S&P/Moody's) (% per annum) (% per annum) (% per annum)
Category 1 >= AA-/Aa3 0.060% 0.090% 0.140%
Category 2 A+/A1 0.070% 0.130% 0.180%
Category 3 A/A2 0.080% 0.170% 0.220%
Category 4 A-/A3 0.090% 0.210% 0.260%
Category 5 BBB+/Baa1 0.125% 0.375% 0.425%
Category 6 < BBB+/Baa1 0.150% 0.600% 0.650%
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for the Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then such rating agency
shall be deemed to have established a rating in Category 6; (ii) if the ratings
established or deemed to have been established by Moody's and S&P for the Index
Debt shall fall within different Categories, the Applicable Rate shall be based
on the higher of the two ratings unless one of the two ratings is two or more
Categories lower than the other, in which case the Applicable Rate shall be
determined by reference to the Category next above that of the lower of the two
ratings; and (iii) if the ratings established or deemed to have been established
by Moody's and S&P for the Index Debt shall be changed (other than as a result
of a change in the rating system of Moody's or S&P), such change shall be
effective as of the date on which it is first publicly announced by the
applicable rating agency. Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of Moody's or S&P shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Rate shall be determined by reference to the rating most recently in
effect prior to such change or cessation.
"Assignment and Acceptance" means an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.
"Attributable Debt" means, with respect to any Sale-Leaseback Transaction, the
present value (discounted at the rate set forth or implicit in the terms of the
lease included in such Sale-Leaseback Transaction) of the total obligations of
the lessee for rental payments (other than amounts required to be paid on
account of taxes, maintenance, repairs, insurance, assessments, utilities,
operating and labor costs and other items which do not constitute payments for
property rights) during the remaining term of the lease included in such
Sale-Leaseback Transaction (including any period for which such lease has been
extended). In the case of any lease which is terminable by the lessee upon
payment of a penalty, the Attributable Debt shall be the lesser of the
Attributable Debt determined assuming termination upon the first date such lease
may be terminated (in which case the Attributable Debt shall also include the
amount of the penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may be so
terminated) or the Attributable Debt determined assuming no such termination.
"Availability Period" means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.
"Board" means the Board of Governors of the Federal Reserve System of the United
States of America.
"Borrower" means Brown-Forman Corporation, a Delaware corporation.
"Borrowing" means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, or (b) a Competitive Loan or group of
Competitive Loans of the same Type made on the same date and as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Lease Obligations" of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower, other than descendants
of George Garvin Brown and their respective family members and descendants,
entities controlled by, or trusts for the benefit of, any of them, including
family and charitable trusts; (b) occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of the Borrower by any Person or group.
"Change in Law" means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.14(b), by any lending office of such Lender or by such Lender's
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Revolving Loans or Competitive
Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Commitment" means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans hereunder, as such commitment may be reduced or
increased from time to time pursuant to Section 2.07 or 2.10 or pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as
applicable. The initial aggregate amount of the Lenders' Commitments is
$400,000,000.
"Competitive Bid" means an offer by a Lender to make a Competitive Loan in
accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive Bid, the Margin or
the Fixed Rate, as applicable, offered by the Lender making such Competitive
Bid.
"Competitive Bid Request" means a request by the Borrower for Competitive Bids
in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Consolidated Assets" means at any time, the aggregate amount of assets (less
applicable accumulated depreciation, depletion and amortization and other
reserves and other properly deductible items) of the Borrower and its
Subsidiaries, all as set forth in the most recent consolidated balance sheet of
the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Worth" means on any date the net worth of the Borrower and the
Subsidiaries on such date, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Total Debt" means on any date all Indebtedness of the Borrower and
the Subsidiaries on such date (other than obligations referred to in clause (i)
of the definition of "Indebtedness"), determined on a consolidated basis in
accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.05.
"dollars" or "$" refers to lawful money of the United States of America.
"Effective Date" means the date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all material laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate (or, in the case of a
Competitive Loan, the LIBO Rate).
"Event of Default" has the meaning assigned to such term in Article VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.18(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 2.16(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.16(a).
"Federal Funds Effective Rate" means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
"Financial Officer" means the chief executive officer, chief financial officer,
principal accounting officer, treasurer, assistant treasurer or controller of
the Borrower.
"Fixed Rate" means, with respect to any Competitive Loan (other than a
Eurodollar Competitive Loan), the fixed rate of interest per annum specified by
the Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed Rate.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United States of
America.
"Governmental Authority" means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other similar governmental entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all debt obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding accounts payable incurred in the ordinary course of business and not
overdue by more than 60 days), (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (f)
all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, other than letters of credit arising in the ordinary course of such
Person's business supporting accounts payable and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means senior, unsecured, long-term indebtedness for borrowed money
of the Borrower that is not guaranteed by any other Person or subject to any
other credit enhancement.
"Information Memorandum" means the Confidential Information Memorandum dated
July, 2004 relating to the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last day of
each March, June, September and December, (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months' duration after
the first day of such Interest Period and (c) with respect to any Fixed Rate
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest
Period of more than 90 days' duration (unless otherwise specified in the
applicable Competitive Bid Request), each day prior to the last day of such
Interest Period that occurs at intervals of 90 days' duration after the first
day of such Interest Period, and any other dates that are specified in the
applicable Competitive Bid Request as Interest Payment Dates with respect to
such Borrowing.
"Interest Period" means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, and (b) with respect to any Fixed Rate
Borrowing, the period (which shall not be less than seven days or more than 360
days) commencing on the date of such Borrowing and ending on the date specified
in the applicable Competitive Bid Request; provided that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and, in
the case of a Revolving Borrowing, thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"Lender Affiliate" means, (a) with respect to any Lender, (i) an Affiliate of
such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Acceptance, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Telerate Service (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right (other than rights of first refusal or first offer, which shall
not be a Lien) of a third party with respect to such securities.
"Loans" means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
"Margin" means, with respect to any Competitive Loan bearing interest at a rate
based on the LIBO Rate, the marginal rate of interest, if any, to be added to or
subtracted from the LIBO Rate to determine the rate of interest applicable to
such Loan, as specified by the Lender making such Loan in its related
Competitive Bid.
"Material Adverse Effect" means a material adverse effect on (a) the financial
condition or results of operation of the Borrower and the Subsidiaries taken as
a whole or (b) the rights of or remedies available to the Lenders under this
Agreement.
"Material Indebtedness" means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$25,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Borrower or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means July 30, 2009.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
"Other Taxes" means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
"Principal Property" means all property located in the United States of America
directly engaged in the manufacturing activities of the Borrower and its
Subsidiaries, the inventory and accounts receivable of the Borrower and its
Subsidiaries wherever located and the capital stock or other equity interests
owned by the Borrower and its Subsidiaries.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Loans and unused
Commitments representing more than 50% of the sum of the total Revolving Loans
and unused Commitments at such time; provided that, for purposes of declaring
the Loans to be due and payable pursuant to Article VII, and for all purposes
after the Loans become due and payable pursuant to Article VII or the
Commitments expire or terminate, the outstanding Competitive Loans of the
Lenders shall be included in their respective Revolving Loans in determining the
Required Lenders.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Sale-Leaseback Transactions" means any arrangement whereby the Borrower or a
Subsidiary shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereinafter acquired, and thereafter rent
or lease property that it intends to use for substantially the same purpose or
purposes as the property sold or transferred; provided that any such arrangement
entered into within 180 days after the acquisition, construction or substantial
improvement of the subject property shall not be deemed to be a "Sale-Leaseback
Transaction".
"S&P" means Standard & Poor's.
"Significant Subsidiary" means each Subsidiary which is a "significant
subsidiary" as defined in Rule 1-02(w) of Regulation S-X of the Securities and
Exchange Commission as such rule may be amended or modified and in effect from
time to time.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Transactions" means the execution, delivery and performance by the Borrower of
this Agreement and the borrowing of Loans.
"Type", when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate, the Alternate Base Rate or,
in the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed Rate.
"USA Patriot Act" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.
"Utilization Percentage" means the percentage produced by dividing (i) the
aggregate amount of outstanding Loans by (ii) the total Commitments, unless the
Commitments shall have been terminated, in which case the Utilization Percentage
shall be 100%.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Revolving Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender's Revolving Loans exceeding such Lender's Commitment
or (b) the sum of the total Revolving Loans plus the aggregate principal amount
of outstanding Competitive Loans exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be made as
part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their respective Commitments. Each Competitive Loan shall be
made in accordance with the procedures set forth in Section 2.04. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments and
Competitive Bids of the Lenders are several and no Lender shall be responsible
for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, (i) each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith, and (ii) each Competitive Borrowing shall be comprised
entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower may request in
accordance herewith. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000; provided
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Commitments. Each Competitive Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $5,000,000. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be more
than a total of 10 Eurodollar Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New
York City time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the terms and conditions
set forth herein, from time to time during the Availability Period the Borrower
may request Competitive Bids and may (but shall not have any obligation to)
accept Competitive Bids and borrow Competitive Loans; provided that the sum of
the total Revolving Loans plus the aggregate principal amount of outstanding
Competitive Loans at any time shall not exceed the total Commitments. To request
Competitive Bids, the Borrower shall notify the Administrative Agent of such
request by telephone, in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, four Business Days before the date of the
proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than
10:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that the Borrower may submit up to (but not more than) three
Competitive Bid Requests on the same day, but a Competitive Bid Request shall
not be made within five Business Days after the date of any previous Competitive
Bid Request, unless any and all such previous Competitive Bid Requests shall
have been withdrawn or all Competitive Bids received in response thereto
rejected. Each such telephonic Competitive Bid Request shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Competitive Bid Request in a form approved by the Administrative Agent and
signed by the Borrower. Each such telephonic and written Competitive Bid Request
shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing or a Fixed Rate
Borrowing;
(iv) the Interest Period to be applicable to such Borrowing, which shall be a
period contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to) make one or more
Competitive Bids to the Borrower in response to a Competitive Bid Request. Each
Competitive Bid by a Lender must be in a form approved by the Administrative
Agent and must be received by the Administrative Agent by telecopy, in the case
of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., New York City
time, three Business Days before the proposed date of such Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m.,
New York City time, on the proposed date of such Competitive Borrowing.
Competitive Bids that do not conform substantially to the form approved by the
Administrative Agent may be rejected by the Administrative Agent, and the
Administrative Agent shall notify the applicable Lender as promptly as
practicable. Each Competitive Bid shall specify (i) the principal amount (which
shall be a minimum of $5,000,000 and an integral multiple of $1,000,000 and
which may equal the entire principal amount of the Competitive Borrowing
requested by the Borrower) of the Competitive Loan or Loans that the Lender is
willing to make, (ii) the Competitive Bid Rate or Rates at which the Lender is
prepared to make such Loan or Loans (expressed as a percentage rate per annum in
the form of a decimal to no more than four decimal places) and (iii) the
Interest Period applicable to each such Loan and the last day thereof.
(c) The Administrative Agent shall promptly notify the Borrower by telecopy of
the Competitive Bid Rate and the principal amount specified in each Competitive
Bid and the identity of the Lender that shall have made such Competitive Bid.
(d) Subject only to the provisions of this paragraph, the Borrower may accept or
reject any Competitive Bid. The Borrower shall notify the Administrative Agent
by telephone, confirmed by telecopy in a form approved by the Administrative
Agent, whether and to what extent it has decided to accept or reject each
Competitive Bid, in the case of a Eurodollar Competitive Borrowing, not later
than 10:30 a.m., New York City time, three Business Days before the date of the
proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not
later than 10:30 a.m., New York City time, on the proposed date of the
Competitive Borrowing; provided that (i) the failure of the Borrower to give
such notice shall be deemed to be a rejection of each Competitive Bid, (ii) the
Borrower shall not accept a Competitive Bid made at a particular Competitive Bid
Rate if the Borrower rejects a Competitive Bid made at a lower Competitive Bid
Rate, (iii) the aggregate amount of the Competitive Bids accepted by the
Borrower shall not exceed the aggregate amount of the requested Competitive
Borrowing specified in the related Competitive Bid Request, (iv) to the extent
necessary to comply with clause (iii) above, the Borrower may accept Competitive
Bids at the same Competitive Bid Rate in part, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata
in accordance with the amount of each such Competitive Bid, and (v) except
pursuant to clause (iv) above, no Competitive Bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000; provided further that if a
Competitive Loan must be in an amount less than $5,000,000 because of the
provisions of clause (iv) above, such Competitive Loan may be for a minimum of
$1,000,000 or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be
rounded to integral multiples of $1,000,000 in a manner determined by the
Borrower. A notice given by the Borrower pursuant to this paragraph shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender by
telecopy whether or not its Competitive Bid has been accepted (and, if so, the
amount and Competitive Bid Rate so accepted), and each successful bidder will
thereupon become bound, subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive Bid in its
capacity as a Lender, it shall submit such Competitive Bid directly to the
Borrower at least one quarter of an hour earlier than the time by which the
other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) of this Section.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request or
Competitive Bid Request.
(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to the relevant Loan. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a Eurodollar Revolving Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. This Section shall not apply to
Competitive Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type resulting from such election to be made on the
effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Revolving Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i)no outstanding Revolving Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end
of the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless previously
terminated, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $1,000,000 and not less than $5,000,000
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.09, the sum of the Revolving Loans plus the aggregate principal amount
of outstanding Competitive Loans would exceed the total Commitments.
(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan on the
Maturity Date, and (ii) to the Administrative Agent for the account of each
Lender the then unpaid principal amount of each Competitive Loan on the last day
of the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein absent manifest error; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with paragraph (b) of this Section; provided that
the Borrower shall not have the right to prepay any Competitive Loan without the
prior consent of the Lender thereof.
(b) The Borrower shall notify the Administrative Agent by telephone (confirmed
by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York
City time, on the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.07, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.07. Promptly
following receipt of any such notice relating to a Revolving Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Revolving Borrowing shall be in an amount that would
be permitted in the case of an advance of a Revolving Borrowing of the same Type
as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.12.
SECTION 2.10. Increase in Commitments. (a) The Borrower may, by written notice
to the Administrative Agent (which shall promptly deliver a copy to each of the
Lenders), request that the total Commitments be increased by an amount not less
than $50,000,000 for any such increase; provided that after giving effect to any
such increase the sum of the total Commitments shall not exceed $600,000,000
minus any amount by which the Commitments shall have been reduced pursuant to
Section 2.07.
Such notice shall set forth the amount of the requested increase in the total
Commitments and the date on which such increase is requested to become effective
(which shall be not less than 10 Business Days or more than 60 days after the
date of such notice), and shall offer each Lender the opportunity to increase
its Commitment by its Applicable Percentage of the proposed increased amount.
Each Lender shall, by notice to the Borrower and the Administrative Agent given
not more than 10 Business Days after the date of the Borrower's notice, either
agree to increase its Commitment by all or a portion of the offered amount (each
Lender so agreeing being an "Increasing Lender") or decline to increase its
Commitment (and any Lender that does not deliver such a notice within such
period of 10 Business Days shall be deemed to have declined to increase its
Commitment) (each Lender so declining or deemed to have declined being a "Non-
Increasing Lender"). In the event that, on the 10th Business Day after the
Borrower shall have delivered a notice pursuant to the first sentence of this
paragraph, the Lenders shall have agreed pursuant to the preceding sentence to
increase their Commitments by an aggregate amount less than the increase in the
total Commitments requested by the Borrower, the Borrower may arrange for one or
more banks or other financial institutions (any such bank or other financial
institution referred to in this clause (a) being called an "Augmenting Lender"),
which may include any Lender, to extend Commitments or increase their existing
Commitments in an aggregate amount equal to the unsubscribed amount; provided
that each Augmenting Lender, if not already a Lender hereunder, shall be subject
to the approval of the Administrative Agent (which approval shall not be
unreasonably withheld) and the Borrower and each Augmenting Lender shall execute
all such documentation as the Administrative Agent shall reasonably specify to
evidence its Commitment and/or its status as a Lender hereunder. Any increase in
the total Commitments may be made in an amount which is less than the increase
requested by the Borrower if the Borrower is unable to arrange for, or chooses
not to arrange for, Augmenting Lenders.
(b) On the effective date (the "Increase Effective Date") of any increase in the
total Commitments pursuant to this Section 2.10 (the "Commitment Increase"), (i)
the aggregate principal amount of the Loans outstanding (the "Initial Loans")
immediately prior to giving effect to the Commitment Increase on the Increase
Effective Date shall be deemed to be paid, (ii) each Increasing Lender and each
Augmenting Lender that shall have been a Lender prior to the Commitment Increase
shall pay to the Administrative Agent in same day funds an amount equal to the
difference between (A) the product of (1) such Lender's Applicable Percentage
(calculated after giving effect to the Commitment Increase) multiplied by (2)
the amount of the Subsequent Borrowings (as hereinafter defined) and (B) the
product of (1) such Lender's Applicable Percentage (calculated without giving
effect to the Commitment Increase) multiplied by (2) the amount of the Initial
Loans, (iii) each Augmenting Lender that shall not have been a Lender prior to
the Commitment Increase shall pay to Administrative Agent in same day funds an
amount equal to the product of (1) such Augmenting Lender's Applicable
Percentage (calculated after giving effect to the Commitment Increase)
multiplied by (2) the amount of the Subsequent Borrowings, and (iv) after the
Administrative Agent receives the funds specified in clauses (ii) and (iii)
above, the Administrative Agent shall pay to each Non-Increasing Lender the
portion of such funds that is equal to the difference between (A) the product of
(1) such Non-Increasing Lender's Applicable Percentage (calculated without
giving effect to the Commitment Increase) multiplied by (2) the amount of the
Initial Loans, and (B) the product of (1) such Non-Increasing Lender's
Applicable Percentage (calculated after giving effect to the Commitment
Increase) multiplied by (2) the amount of the Subsequent Borrowings, (v) after
the effectiveness of the Commitment Increase, the Borrower shall be deemed to
have made new Borrowings (the "Subsequent Borrowings") in an aggregate principal
amount equal to the aggregate principal amount of the Initial Loans and of the
types and for the Interest Periods specified in a Borrowing Request delivered to
the Administrative Agent in accordance with Section 2.04, (vi) each
Non-Increasing Lender, each Increasing Lender and each Augmenting Lender shall
be deemed to hold its Applicable Percentage of each Subsequent Borrowing (each
calculated after giving effect to the Commitment Increase) and (vii) the
Borrower shall pay each Increasing Lender and each Non-Increasing Lender any and
all accrued but unpaid interest on the Initial Loans. The deemed payments made
pursuant to clause (i) above in respect of each Eurodollar Loan shall be subject
to indemnification by the Borrower pursuant to the provisions of Section 2.15 if
the Increase Effective Date occurs other than on the last day of the Interest
Period relating thereto and breakage costs result.
(c) Increases and new Commitments created pursuant to this Section 2.10 shall
become effective on the date specified in the notice delivered by the Borrower
pursuant to the first sentence of paragraph (a) above.
(d) Notwithstanding the foregoing, no increase in the total Commitments (or in
the Commitment of any Lender) or addition of a New Lender shall become effective
under this Section unless, (i) on the date of such increase, the conditions set
forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied and the
Administrative Agent shall have received a certificate to that effect dated such
date and executed by a Financial Officer of the Borrower, and (ii) the
Administrative Agent shall have received (with sufficient copies for each of the
Lenders) documents consistent with those delivered on the Effective Date under
clauses (b) and (c) of Section 4.01 as to the corporate power and authority of
the Borrower to borrow hereunder after giving effect to such increase.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a facility fee, which shall accrue at the
Applicable Rate on the daily amount of the Commitment of such Lender (whether
used or unused) during the period from and including the date hereof to but
excluding the date on which such Commitment terminates; provided that, if such
Lender continues to have any Loans outstanding after its Commitment terminates,
then such facility fee shall continue to accrue on the daily amount of such
Lender's Loans from and including the date on which its Commitment terminates to
but excluding the date on which such Lender ceases to have any outstanding
Loans. Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year, commencing on the first such
date to occur after the date hereof, and on the date on which the Commitments
shall have terminated and the Lenders shall have no outstanding Loans. All
facility fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution to the Persons
entitled thereto. Fees paid shall not be refundable under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest (i) in
the case of a Eurodollar Revolving Loan, at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii)
in the case of a Eurodollar Competitive Loan, at the LIBO Rate for the Interest
Period in effect for such Borrowing plus (or minus, as applicable) the Margin
applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to
such Loan.
(d) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and, in the case of Revolving Loans, upon termination
of the Commitments; provided that (i) interest accrued pursuant to paragraph (d)
of this Section shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Revolving
Loan prior to the end of the current Interest Period therefor, accrued interest
on such Loan shall be payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders (or, in the case
of a Eurodollar Competitive Loan, the Lender that is required to make such Loan)
that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) any
request by the Borrower for a Eurodollar Competitive Borrowing shall be
ineffective; provided that (A) if the circumstances giving rise to such notice
do not affect all the Lenders, then requests by the Borrower for Eurodollar
Competitive Borrowings may be made to Lenders that are not affected thereby and
(B) if the circumstances giving rise to such notice affect only one Type of
Borrowings, then the other Type of Borrowings shall be permitted.
SECTION 2.14. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans or Fixed Rate Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of any Lender to demand compensation pursuant
to this Section shall not constitute a waiver of such Lender's right to demand
such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
(e) Notwithstanding the foregoing provisions of this Section, a Lender shall not
be entitled to compensation pursuant to this Section in respect of any
Competitive Loan if the Change in Law that would otherwise entitle it to such
compensation shall have been publicly announced prior to submission of the
Competitive Bid pursuant to which such Loan was made.
SECTION 2.15. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan or Fixed Rate Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date or in the amount specified in
any notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.09(b) and is revoked in accordance therewith), (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid to
make such Loan, or (e) the assignment of any Eurodollar Loan or Fixed Rate Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 2.18, then, in any such event,
the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a)
The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest or fees, or of amounts payable under Section
2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except that payments pursuant to Sections 2.14,
2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties,
and (ii) second, towards payment of principal then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal then
due to such parties.
(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Revolving Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.05(b) or 2.17(d), then the Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.14, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement
(other than any outstanding Competitive Loans held by it) to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans (other than Competitive
Loans), accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made pursuant to
Section 2.16, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions are within the
Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Borrower or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, agreement or
other instrument binding upon the Borrower or any of its Subsidiaries or its
assets, or give rise to a right thereunder to require any payment to be made by
the Borrower or any of its Subsidiaries, and (d) will not result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, agreement or other
instrument binding on the Borrower or any of its Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower
has heretofore furnished to the Lenders its consolidated balance sheet and
statements of income, stockholders equity and cash flows as of and for the
fiscal year ended April 30, 2004, reported on by PricewaterhouseCoopers LLP,
independent public accountants. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP.
(b) Since April 30, 2004 through the date of this Agreement, there has been no
material adverse change in the business, assets, liabilities, condition,
financial or otherwise, or material agreements of the Borrower and its
Subsidiaries, taken as a whole.
SECTION 3.05. Litigation and Environmental Matters. (a) There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is a
reasonable probability of an adverse determination and that, if adversely
determined, would reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
SECTION 3.06. Compliance with Laws and Agreements. Each of the Borrower and its
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, has not resulted and
would not result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.07. Investment and Holding Company Status. Neither the Borrower nor
any of its Subsidiaries is (a) an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.08. Taxes. Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it
pursuant to said Tax returns or pursuant to any assessment received by the
Borrower or any of its Subsidiaries, except (a) Taxes that are being contested
in good faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.09. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. Disclosure. Neither the Information Memorandum nor any of the
other reports, financial statements, certificates or other information furnished
by or on behalf of the Borrower to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. This Agreement shall become effective on the date
on which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of counsel for the Borrower, substantially in the form of Exhibit B, and
covering such other matters relating to the Borrower, this Agreement or the
Transactions as the Required Lenders shall reasonably request. The Borrower
hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and certificates
as the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of the Borrower, the authorization
of the Transactions and any other legal matters relating to the Borrower, this
Agreement or the Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
(e) The commitments of the lenders under (i) the Five-Year Credit Agreement
dated as of October 19, 2001 (as amended as of October 10, 2003), among the
Borrower, the lenders party thereto and JPMorgan Chase Bank (formerly known as
The Chase Manhattan Bank), as administrative agent, and (ii) the 364-Day Amended
and Restated Credit Agreement dated as of October 11, 2002 (as amended as of
October 10, 2003), among the Borrower, the lenders party thereto and JPMorgan
Chase Bank, as administrative agent, shall have been terminated and the
principal of and interest accrued on all loans, and all other amounts accrued
for the accounts of or owing to the lenders, thereunder shall have been paid.
(f) The Administrative Agent shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, this Agreement shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.02) on or
prior to August 6, 2004.
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of the Borrower set forth in this
Agreement (other than the representations set forth in Sections 3.04(b) and
3.05) shall be true and correct on and as of the date of such Borrowing.
(b) At the time of and immediately after giving effect to such Borrowing,
no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:
(a) within 120 days after the end of each fiscal year of the Borrower, a copy of
its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by PricewaterhouseCoopers LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower, a copy of its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto and (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.06;
(d) concurrently with any delivery of financial statements under clause (a)
above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials regularly filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or distributed by the Borrower to its shareholders generally, as the
case may be; and
(f) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or
any Affiliate thereof that, if adversely determined, would reasonably be
expected to result in a Material Adverse Effect; and
(c) any other development that results in, or would reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause
each of its Significant Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business
except (in the case of any such failure to do so other than with respect to
preserving, renewing and keeping in full force and effect the existence of the
Borrower) where the failure to do so would not result in a Material Adverse
Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.04.
SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, pay its Tax liabilities, that, if not paid, would result in
a Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear excepted, except where the failure to do so would not reasonably
be expected to result in a Material Adverse Effect and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will
cause each of its Significant Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities, except, in the case of
any Significant Subsidiary, where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect. The Borrower will, and will
cause each of its Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority, including Environmental Laws and ERISA, applicable to it
or its property, except where the failure to do so, individually or in the
aggregate, would not result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used only for
working capital and general corporate purposes and to provide liquidity in
connection with any commercial paper program of the Borrower. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full, the
Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Subsidiary Indebtedness. The Borrower will not permit any
Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth on Schedule 6.01 and
extensions, renewals or replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof;
(b) Indebtedness of any Subsidiary to the Borrower or any other Subsidiary;
provided that no such Indebtedness shall be assigned to, or subjected to any
Lien in favor of, a Person other than the Borrower or a Subsidiary;
(c) Indebtedness of any Subsidiary incurred to finance the acquisition,
construction or improvement by such Subsidiary of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness incurred or assumed in
connection with the acquisition, construction or improvement of any such assets,
and any Indebtedness secured by a Lien on any such assets prior to the
acquisition thereof, and extensions, renewals and replacements of any of the
foregoing Indebtedness referred to in this paragraph that do not increase the
outstanding principal amount thereof; provided that such Indebtedness is
incurred prior to or within 180 days after such acquisition or the completion of
such construction or improvement;
(d) Indebtedness of any Person that becomes a Subsidiary after the date hereof;
provided that such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary;
(e) Indebtedness of any Subsidiary as an account party in respect of letters of
credit backing obligations (other than Indebtedness) of any Subsidiary;
(f) Indebtedness consisting of industrial development, pollution control or
other revenue bonds or similar instruments issued or guaranteed by any
Governmental Authority; and
(g) Other Indebtedness not expressly permitted by clauses (a) through (f) above;
provided that the sum, without duplication, of (i) the outstanding Indebtedness
permitted by this clause (g), (ii) the aggregate principal amount of the
outstanding obligations secured by Liens permitted by Section 6.02(n) and (iii)
the Attributable Debt in respect of Sale-Leaseback Transactions permitted by
Section 6.03(b) does not at any time exceed 25% of Consolidated Assets.
SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any Principal Property
now owned or hereafter acquired by it, except:
(a) Liens imposed by law for taxes that are not yet due or are being contested
in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other
like Liens imposed by law, arising in the ordinary course of business;
(c) pledges and deposits made in the ordinary course of business in compliance
with workers' compensation, unemployment insurance and other social security
laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case made in the ordinary course of
business;
(e) judgment liens in respect of judgments that do not constitute Events of
Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value
of the affected property or materially interfere with the ordinary conduct of
business of the Borrower and the Subsidiaries taken as a whole;
(g) any Lien on any property or asset of the Borrower or any Subsidiary existing
on the date hereof (or on improvements or accessions thereto or proceeds
therefrom) and set forth on Schedule 6.02; provided that (i) such Lien shall not
apply to any other property or asset of the Borrower or any Subsidiary and (ii)
such Lien shall be permitted by this clause (g) only to the extent of the amount
of the obligations which it secures on the date hereof and extensions, renewals
and replacements thereof up to the outstanding principal amount thereof;
(h) any Lien (i) existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary, (ii) existing on any property or
asset of any Person that becomes a Subsidiary after the date hereof prior to the
time such Person becomes a Subsidiary or (iii) to the extent such Lien applies
only to the property or assets so acquired by the Borrower or any Subsidiary or
owned by a Person prior to the time such Person becomes a Subsidiary, arising
after the date of such acquisition or such Person becoming a Subsidiary pursuant
to contractual commitments entered into prior thereto; provided that (x) such
Lien is not created in contemplation of or in connection with such acquisition
or such Person becoming a Subsidiary, as the case may be, (y) such Lien shall
not apply to any other property or assets of the Borrower or any Subsidiary
other than improvements and accessions to the assets to which it originally
applies and proceeds of such assets, improvements and accessions and (z) such
Lien shall be permitted by this clause (h) only to the extent of the amount of
the obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be, and extensions, renewals
and replacements thereof up to the outstanding principal amount thereof;
(i) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Subsidiary; provided that (i) such Liens secure Indebtedness
permitted by clause (c) of Section 6.01, (ii) such Liens and the Indebtedness
secured thereby are incurred prior to or within 180 days after such acquisition
or the completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed the cost of acquiring, constructing or improving
such fixed or capital assets and (iv) such Liens shall not apply to any other
property or assets of the Borrower or any Subsidiary;
(j) Liens securing industrial development, pollution control or other revenue
bonds or similar instruments issued or guaranteed by any Governmental Authority;
(k) Liens in favor of any Governmental Authority to secure obligations pursuant
to the provisions of any contract or statute;
(l) Liens to secure obligations of a Subsidiary to the Borrower or any other
Subsidiary;
(m) Liens on equity, joint venture, partnership, or other ownership or
investment interests (collectively, the "Equity Interests") of the Borrower or
any Subsidiary in any Person arising in connection with the rights of a third
party owning Equity Interests in such Person pursuant to a joint venture,
shareholder, distribution or other agreement between the Borrower or any of its
Subsidiaries and such third party to purchase the Equity Interests owned by the
Borrower or any Subsidiary in such Person for reasonable value pursuant to
change in control provisions, noncompetition provisions, restrictions on
competing brands or other business restriction provisions in one or more of the
agreements between such parties; and
(n) Liens not expressly permitted by clauses (a) through (m) above; provided
that the sum of (i) the outstanding Indebtedness permitted by Section 6.01(g),
(ii) the aggregate principal amount of the outstanding obligations secured by
Liens permitted by this clause (n) and (iii) the Attributable Debt in respect of
Sale-Leaseback Transactions permitted by Section 6.03(b) does not at any time
exceed 25% of Consolidated Assets.
SECTION 6.03. Sale and Leaseback Transactions. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any Sale-Leaseback Transaction
relating to any Principal Property except:
(a) Sale-Leaseback Transactions to which the Borrower or any Subsidiary is a
party as of the date hereof; and
(b) other Sale-Leaseback Transactions; provided that the sum of (i) the
outstanding Indebtedness permitted by Section 6.01(g), (ii) the aggregate
principal amount of outstanding obligations secured by Liens permitted by
Section 6.02(n) and (iii) the aggregate Attributable Debt in respect of Sale-
Leaseback Transactions permitted by this clause (b) does not at any time exceed
25% of Consolidated Assets.
SECTION 6.04. Fundamental Changes. (a) The Borrower will not, and will not
permit any Significant Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) assets representing all or substantially all the aggregate
assets of the Borrower and the Subsidiaries (whether now owned or hereafter
acquired), or liquidate or dissolve, except that if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing (i) any Person may merge into the Borrower in a transaction in which
the Borrower is the surviving corporation, (ii) any Person may merge with any
Subsidiary in a transaction in which the surviving entity is a Subsidiary and
(iii) any Subsidiary may liquidate or dissolve or, so long as such transaction
does not constitute a transfer or other disposition of all or substantially all
the aggregate assets of the Borrower and the Subsidiaries, merge with or into
any other Person.
(b) The Borrower will not, and will not permit any of its Significant
Subsidiaries to, engage as its principal business in any business other than
businesses of the type collectively conducted by the Borrower and its
Subsidiaries on the date of this Agreement and businesses reasonably related
thereto.
SECTION 6.05. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties and (b)
transactions between or among the Borrower and its Subsidiaries not involving
any other Affiliate; provided that nothing contained in this Section 6.05 shall
prevent the Borrower or any Subsidiary from paying dividends to its respective
shareholders.
SECTION 6.06. Ratio of Consolidated Total Debt to Consolidated Net Worth. The
Borrower will not permit the ratio of Consolidated Total Debt to Consolidated
Net Worth at any time to be greater than 2.00 to 1.00.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been materially incorrect when made or deemed
made;
(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02, 5.03 (with respect to the Borrower's
existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the
Borrower (which notice will be given at the request of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest) in respect of any Material Indebtedness, when and as the
same shall become due and payable or within any applicable cure period;
(g) any Material Indebtedness is declared to be due prior to its scheduled
maturity or the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this clause
(g) shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Significant Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Significant Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(i) the Borrower or any Significant Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Significant Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Significant Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in
excess of $25,000,000 shall be rendered against the Borrower, any Subsidiary or
any combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively stayed, or
any action shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
would reasonably be expected to result in liability of the Company and the
Subsidiaries in an aggregate amount exceeding (i) $25,000,000 in any year or
(ii) $50,000,000 for all periods; or
(m) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative Agent by the
terms hereof, together with such actions and powers as are reasonably incidental
thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(a) the Administrative Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Administrative Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby that the Administrative Agent is required
to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent. Each party to this Agreement acknowledges that neither the
Syndication Agent nor the Documentation Agents shall have any duties,
responsibilities, obligations or authority under this Agreement in such
capacity.
The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrower. Upon any such resignation, the Borrower
shall have the right, in consultation with the Required Lenders, to appoint a
successor. If no successor shall have been so appointed by the Borrower and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to the Borrower, to it at Brown-Forman Corporation, 850 Dixie Highway,
Louisville, KY 40210, Attention of Treasurer (Telecopy No. (502) 774- 6908),
with a copy to the Attention of General Counsel (Telecopy No. (502) 774- 6650);
(b) if to the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency
Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081,
Attention of Concetta Prainito (Telecopy No. (212) 552-7500); and
(c) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative
Agent or any Lender in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent and
the Lenders hereunder are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.07(c) or Section 2.17(b) or (c) in a manner that would alter
the pro rata sharing of Commitment reductions or payments required thereby, as
the case may be, without the written consent of each Lender affected thereby, or
(v) change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses incurred by the Administrative Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of
this Agreement or any amendments, modifications or waivers of the provisions
hereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), and (ii) all out-of-pocket expenses incurred by the Administrative
Agent or any Lender, including the reasonable fees, charges and disbursements of
any counsel for the Administrative Agent or any Lender, in connection with the
lawful enforcement of its rights in connection with this Agreement, including
its rights under this Section, or in connection with the Loans made hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent and each Lender, and
each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Administrative Agent under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to the Administrative Agent such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after written
demand therefor.
SECTION 9.04. Successors and Assigns. (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 permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly contemplated hereby, the
Related Parties of each of the Administrative Agent and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided that (i) except in
the case of an assignment by a Lender to a Lender Affiliate of such Lender, the
Administrative Agent must give its prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) except in the case of
an assignment to a Lender or a Lender Affiliate, the Borrower must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (iii) except in the case of an assignment to a Lender or
a Lender Affiliate or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iv) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iv) shall not apply to rights in respect of outstanding Competitive
Loans, (v) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500, and (vi) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the Administrative
Agent, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and/or obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law and if prior written notice of the sale of the participation to the
Participant is provided to the Borrower, each Participant also shall be entitled
to the benefits of Section 9.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.17(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment under
Section 2.14 or 2.16 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement shall be construed in accordance with and governed by the law of
the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against the Borrower or its
properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in paragraph (b)
of this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any bank regulatory authority, (c) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process (but only after
giving prompt written notice to the Borrower, to the extent permitted by law, of
any such requirement or request so that the Borrower may seek a protective order
or other appropriate remedy and/or waive compliance with this Section), (d) to
any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "Information" means
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding
anything herein to the contrary, any Lender (and any employee, representative or
other agent of such Lender) may disclose to any and all persons, without
limitation of any kind, such Lender's U.S. federal income tax treatment and the
U.S. federal income tax structure of the transactions contemplated hereby
relating to such Lender and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and
tax structure. However, no disclosure of any information relating to such tax
treatment or tax structure may be made to the extent nondisclosure is reasonably
necessary in order to comply with applicable securities laws.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. USA Patriot Act. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the USA Patriot
Act.
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.
BROWN-FORMAN CORPORATION,
by /S/Meredith M. Parente
Name: Meredith M. Parente
Title: Vice President and Treasurer
by /S/Roger D. Shannon
Name: Roger D. Shannon
Title: Assistant Vice President and
Assistant Treasurer
JPMORGAN CHASE BANK, individually and as
Administrative Agent,
by /S/Thomas T. Hou
Name: Thomas T. Hou
Title: Vice President
BANK OF AMERICA, N.A., individually and as
Syndication Agent,
by /S/David L. Catherall
Name: David L. Catherall
Title: Vice President
Name of Institution: Citibank NA
by /S/Andrew Krueger
Name: Andrew Krueger
Title: Vice President
Name of Institution: HSBC Bank USA, National Association
by /S/Johan Sorensson
Name: Johan Sorensson
Title: Senior Vice President
Name of Institution: National City Bank of Kentucky
by /S/Deroy Scott
Name: Deroy Scott
Title: Senior Vice President
Name of Institution: SunTrust Bank
by /S/Anson M. Lewis
Name: Anson M. Lewis
Title: Banking Officer
Name of Institution: Wachovia Bank, National Association
by /S/Beth Rue
Name: Beth Rue
Title: AVP
Name of Institution: U.S. Bank National Association
by /S/David A. Wombwell
Name: David Wombwell
Title: Sr. Vice President
Name of Institution: Fifth Third Bank
by /S/Jeff Goodwin
Name: Jeff Goodwin
Title: Vice President
Name of Institution: Cooperative Centrale Raiffeisen-Boerenleenbank B.A.
"Rabobank International", New York Branch
by /S/Tamira Treffers Herrera
Name: Tamira Treffers Herrera
Title: Executive Director
by /S/Brett Delfino
Name: Brett Delfino
Title: Executive Director
Name of Institution: UniCredit S.p.A. New York Branch
by /S/Luciano Cenedese
Name: Luciano Cenedese
Title: First Vice President
by /S/Charles Michael
Name: Charles Michael
Title: Vice President
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Owsley Brown II, certify that:
1. I have reviewed this Quarterly report on Form 10-Q of Brown-Forman
Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: September 1, 2004 By: /s/ Owsley Brown II
Owsley Brown II
Chief Executive Officer
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Phoebe A. Wood, certify that:
1. I have reviewed this Quarterly report on Form 10-Q of Brown-Forman
Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: September 2, 2004 By: /s/ Phoebe A. Wood
Phoebe A. Wood
Chief Financial Officer
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Brown-Forman Corporation ("the
Company") on Form 10-Q for the period ended July 31, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), each of
the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in the capacity as an
officer of the Company, that:
(1) The Report fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: September 1, 2004 By: /s/ Owsley Brown II
Owsley Brown II
Chief Executive Officer
and Chairman
Date: September 2, 2004 By: /s/ Phoebe A. Wood
Phoebe A. Wood
Executive Vice President
and Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
This certificate is being furnished solely for purposes of Section 906 and is
not being filed as part of the Periodic Report.