Page 1
Page 1 of 201 Pages
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Transition Period from _______________ to ____________________
Commission File Number 1-12658
ALBEMARLE CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1692118
- -------------------------------- -------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 SOUTH FOURTH STREET
P. O. BOX 1335
RICHMOND, VIRGINIA 23210
- ---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (804) 788-6000
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
---- ----
Number of shares of common stock, $.01 par value, outstanding as of October 31,
2002: 41,678,326.
Page 2
ALBEMARLE CORPORATION
I N D E X
Page
Number(s)
---------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - September 30, 2002 and
December 31, 2001 3-4
Consolidated Statements of Income - Three- and Nine-
Months Ended September 30, 2002 and 2001 5
Consolidated Statements of Comprehensive Income - Three-
and Nine-Months Ended September 30, 2002 and 2001 6
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 2002 and 2001 7
Notes to the Consolidated Financial Statements 8-16
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition and Additional
Information 17-26
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 26
ITEM 4. Controls and Procedures 26
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 26
ITEM 5. Other Information 27
ITEM 6. Exhibits and Reports on Form 8-K 27
SIGNATURES 28
CERTIFICATIONS 29-32
EXHIBIT INDEX 33
Exhibit 3(ii) By-Laws as Amended 34-56
Exhibit 10.1 Credit Agreement dated September 10, 2002 57-200
Exhibit 99. List of Albemarle Corporation Officers 201
Page 3
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. Financial Statements
--------------------
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30, 2002 December 31, 2001
------------------ -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 36,093 $ 30,585
Accounts receivable, less allowance for doubtful
accounts (2002 - $2,912; 2001 - $4,193) 187,609 175,160
Inventories:
Finished goods 112,040 114,337
Raw materials 19,311 19,551
Stores, supplies and other 27,692 25,773
------------------ -----------------
159,043 159,661
Deferred income taxes and prepaid expenses 21,358 18,255
------------------ -----------------
Total current assets 404,103 383,661
------------------ -----------------
Property, plant and equipment, at cost 1,473,536 1,425,203
Less accumulated depreciation and amortization 954,720 895,531
Net property, plant and equipment 518,816 529,672
Prepaid pension assets 137,124 128,195
Other assets and deferred charges 60,877 56,199
Goodwill 28,927 26,704
Other intangibles, net of amortization 5,643 5,044
------------------ -----------------
Total assets $ 1,155,490 $ 1,129,475
================== =================
See accompanying notes to the consolidated financial statements.
Page 4
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30, 2002 December 31, 2001
------------------ -----------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 74,190 $ 63,559
Long-term debt, current portion 323 157,862
Accrued expenses 67,051 59,978
Dividends payable 5,337 5,915
Income taxes payable 28,653 16,523
------------------- -----------------
Total current liabilities 175,554 303,837
------------------- -----------------
Long-term debt 177,629 12,353
Other noncurrent liabilities 131,586 120,269
Deferred income taxes 115,573 99,714
Shareholders' equity:
Common stock, $.01 par value, issued and outstanding-
41,678,326 in 2002 and 45,498,201 in 2001 417 455
Additional paid-in capital 2,160 51,025
Accumulated other comprehensive loss (7,918) (18,453)
Retained earnings 560,489 560,275
------------------- -----------------
Total shareholders' equity 555,148 593,302
------------------- -----------------
Total liabilities and shareholders' equity $ 1,155,490 $ 1,129,475
=================== =================
See accompanying notes to the consolidated financial statements.
Page 5
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per-Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ----------------------------------
2002 2001 2002 2001
----------- ----------- ------------ -----------
Net sales $ 263,324 $ 242,017 $ 733,003 $ 677,713
Cost of goods sold 198,350 185,336 554,114 512,841
----------- ----------- ----------- -----------
Gross profit 64,974 56,681 178,889 164,872
Selling, general and administrative
expenses 29,450 25,822 84,070 70,712
Research and development
expenses 4,120 5,603 12,916 16,813
Special item - - 850 -
----------- ----------- ----------- -----------
Operating profit 31,404 25,256 81,053 77,347
----------- ----------- ----------- -----------
Interest and financing expenses (1,315) (2,013) (3,775) (4,168)
Other (expense) income, net (841) 975 2,227 3,793
----------- ----------- ----------- -----------
Income before income taxes 29,248 24,218 79,505 76,972
Income taxes 8,896 7,457 21,661 22,861
----------- ----------- ----------- -----------
Net income $ 20,352 $ 16,761 $ 57,844 $ 54,111
=========== =========== =========== ===========
Basic earnings per share $ 0.49 $ 0.37 $ 1.37 $ 1.18
Diluted earnings per share $ 0.48 $ 0.36 $ 1.34 $ 1.16
=========== =========== =========== ===========
Cash dividends declared per
share of common stock $ 0.14 $ 0.13 $ 0.40 $ 0.39
=========== =========== =========== ===========
See accompanying notes to the consolidated financial statements.
Page 6
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars In Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -----------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net income $ 20,352 $ 16,761 $ 57,844 $ 54,111
Other comprehensive (loss) income,
net of tax:
Unrealized (loss) on securities
available for sale (342) (102) (439) (341)
Foreign currency translation
adjustments (456) 7,307 10,974 806
---------- ---------- ----------- ----------
Other comprehensive (loss) income, (798) 7,205 10,535 465
---------- ---------- ----------- ----------
Comprehensive income $ 19,554 $ 23,966 $ 68,379 $ 54,576
========== ========== =========== ==========
See accompanying notes to the consolidated financial statements.
Page 7
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(Unaudited)
Nine Months Ended
September 30,
---------------------------
2002 2001
----------- -----------
Cash and cash equivalents at beginning of year $ 30,585 $ 19,300
----------- -----------
Cash flows from operating activities:
Net income 57,844 54,111
Adjustments to reconcile net income to cash flows from
operating activities:
Depreciation and amortization 60,646 55,461
Working capital decrease (increase) excluding cash
and cash equivalents 21,873 (7,303)
Increase in prepaid pension assets (8,929) (13,332)
Other, net (3,513) 13,054
------------ -----------
Net cash provided from operating activities 127,921 101,991
------------ -----------
Cash flows from investing activities:
Capital expenditures (27,906) (37,928)
Investments in joint ventures and nonmarketable securities (3,785) (6,216)
Acquisition of businesses, net of cash acquired - (113,000)
Restricted cash from industrial revenue bond proceeds 1,741 -
Other, net 3,139 767
------------- ------------
Net cash used in investing activities (26,811) (156,377)
------------- ------------
Cash flows from financing activities:
Proceeds from borrowings 103,995 122,850
Repayments of long-term debt (97,426) (36,211)
Purchases of common stock (92,943) (2,202)
Dividends paid (17,231) (18,194)
Proceeds from exercise of stock options 2,196 677
-------------- ------------
Net cash (used in) provided from financing activities (101,409) 66,920
-------------- ------------
Net effect of foreign exchange on cash and cash equivalents 5,807 2,388
-------------- ------------
Net increase in cash and cash equivalents 5,508 14,922
-------------- ------------
Cash and cash equivalents at end of period $ 36,093 $ 34,222
============== ============
See accompanying notes to the consolidated financial statements.
Page 8
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
1. In the opinion of management, the accompanying consolidated financial
statements of Albemarle Corporation and Subsidiaries ("Albemarle" or "the
Company") contain all adjustments necessary for a fair presentation, in all
material respects, of the Company's consolidated financial position as of
September 30, 2002, and December 31, 2001, the consolidated results of
operations and comprehensive income for the three- and nine-month periods
ended September 30, 2002, and 2001, and condensed consolidated cash flows
for the nine-month periods ended September 30, 2002, and 2001. All
adjustments are of a normal and recurring nature. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's 2001
Annual Report & Form 10-K as amended on May 31, 2002. The December 31, 2001
consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. The results of operations for the three-
and nine-month periods ended September 30, 2002, are not necessarily
indicative of the results to be expected for the full year. Certain amounts
in the accompanying consolidated financial statements and notes thereto
have been reclassified to conform to current presentation. Certain
revisions have been made to the nine-month pro forma amounts ended
September 30, 2001 to reflect final purchase price allocations of the
Martinswerk GmbH and the custom and fine chemicals business of ChemFirst
Inc. acquisitions.
2. Long-term debt consists of the following:
September 30, December 31,
2002 2001
------------- --------------
Variable-rate bank loans $ 158,225 $ 144,600
Foreign borrowings 7,732 13,584
Industrial revenue bonds 11,000 11,000
Miscellaneous 995 1,031
------------- --------------
Total 177,952 170,215
------------- --------------
Less amounts due within one year 323 157,862
------------- --------------
Long-term debt $ 177,629 $ 12,353
============= ==============
On September 10, 2002, the Company entered into a new three-year unsecured
Credit Agreement with a group of lenders providing for $375 million in
revolving credit facilities. Borrowing under the credit facility is
conditioned upon compliance with financial and other covenants set forth in
the related agreement, including covenants relating to leverage (measured
as the ratio of debt and interest to adjusted earnings). We currently are
in compliance with all such covenants. An increase in pricing level based
on the Company's debt to capitalization ratio would not accelerate the
maturity of our indebtedness thereunder. However, an increase in our debt
to capitalization ratio would result in an increase in the
Page 9
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
interest rate and fees payable under the credit facility. The Company's
former credit facility was to mature on September 29, 2002, which required
the short-term debt amount of $157,862 for the period ended December 31,
2001, to be included in current liabilities.
3. Cost of goods sold included foreign exchange gains of $548 and $1,622 for
the three- and nine-month periods ended September 30, 2002, respectively.
Cost of goods sold for the three- and nine-month periods ended September
30, 2001, included foreign exchange gains of $976 and $389, respectively.
4. Basic and diluted earnings per share for the three- and nine-month periods
ended September 30, 2002 and 2001, are calculated as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
Basic earnings per share 2002 2001 2002 2001
- ------------------------ -------- -------- ------- --------
Numerator:
Income available to shareholders,
as reported $ 20,352 $ 16,761 $ 57,844 $ 54,111
-------- -------- -------- --------
Denominator:
Average number of shares of
common stock outstanding 41,676 45,870 42,244 45,860
-------- -------- -------- --------
Basic earnings per share $ 0.49 $ 0.37 $ 1.37 $ 1.18
======== ======== ======= ========
Diluted earnings per share
- --------------------------
Numerator:
Income available to shareholders,
as reported $ 20,352 $ 16,761 $ 57,844 $ 54,111
-------- -------- -------- --------
Denominator:
Average number of shares of
common stock outstanding 41,676 45,870 42,244 45,860
Shares issuable upon
exercise of stock options 1,120 669 1,026 771
-------- -------- ------- --------
Total shares 42,796 46,539 43,270 46,631
-------- -------- -------- --------
Diluted earnings per share $ 0.48 $ 0.36 $ 1.34 $ 1.16
======== ======== ======== ========
Page 10
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
5. The significant differences between the U.S. Federal statutory income tax
rate on pretax income and the effective income tax rate for the three- and
nine-month periods ended September 30, 2002 and 2001, respectively, are as
follows:
% of Income Before Income Taxes
-----------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2002 2001 2002 2001
---------- ---------- ------------ ---------
Federal statutory rate 35.0% 35.0% 35.0% 35.0%
Extraterritorial income tax benefit (2.9) (0.2) (1.7) (1.8)
State taxes, net of federal tax benefit 1.0 1.2 1.0 1.1
Depletion (1.5) (2.1) (2.6) (1.8)
Reversal of valuation allowance - - - (1.4)
Other, net (1.2) (3.1) (1.4) (1.4)
---------- ---------- ----------- ---------
Effective income tax rate on operations 30.4 30.8 30.3 29.7
Federal income tax settlement - - (3.1) -
----------- ---------- ----------- ---------
Effective income tax rate 30.4% 30.8% 27.2% 29.7%
=========== ========== =========== =========
On April 25, 2002, following approval by the Congressional Joint Committee
on Taxation, the Company received a settlement of $3,777, including
interest of $2,017 ($1,285 after income taxes) from the Internal Revenue
Service on its claims for adjustment of export benefits for the years 1994
and 1995. This interest is included in other (expense) income, net in the
consolidated statements of income. Consequently, the effective tax rate for
the third quarter and first nine months of 2002 was 30.4% and 27.2%,
respectively. The Company expects to maintain its targeted income tax rate
of 30% for the last half of 2002 and a blended rate for the year of
approximately 28%.
During the first quarter of 2001, the Company released a valuation
allowance that had been required on a deferred tax asset related to the
Company's facilities in Louvain-la-Neuve, Belgium, which was established in
1996 when the Company's Olefins Business was sold.
6. On May 31, 2001, the Company acquired Martinswerk GmbH and certain U.S.
working capital for approximately $34,000 in cash plus expenses and the
assumption of approximately $63,000 in current and long-term liabilities.
The assets acquired included Martinswerk's manufacturing facilities and
headquarters in Bergheim, Germany and its 50-percent stake in Magnifin
Magnesiaprodukte GmbH, which has manufacturing facilities at St. Jakobs
Breitenau, Austria. The acquisition was financed through the Company's
previous Revolving Credit
Page 11
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
Agreement. The acquisition was accounted for by the purchase method of
accounting, and accordingly, the operating results have been included in
the Company's consolidated results of operations from the date of
acquisition. See pro forma financial information presented below. The
purchase price allocation was finalized during the quarter ended June 30,
2002. Martinswerk produces mineral-based flame retardants for the plastics
and rubber markets, brightening pigments for high-quality paper
applications and specialty aluminum oxides for polishing, catalyst and
niche ceramic applications. Magnifin produces high-purity magnesium
hydroxide flame retardant products used in applications requiring higher
processing temperatures.
On July 1, 2001, the Company acquired the custom and fine chemicals
businesses of ChemFirst Inc. for approximately $79,000 in cash, plus the
assumption of certain current liabilities and expenses associated with the
acquisition. The acquisition was financed through the Company's previous
Revolving Credit Agreement. The Asset Purchase Agreement provided for
additional contingent payments to ChemFirst Inc. which are dependant upon
the contribution margin of certain products and are not expected to exceed
$10,000. Additional payments totaling $1,138 have been added to goodwill in
2002. The acquisition was accounted for by the purchase method of
accounting, and accordingly, the operating results have been included in
the Company's consolidated results of operations from the date of
acquisition. See pro forma financial information presented below. The
assets acquired included working capital, property, plant and equipment and
certain intangibles, including goodwill and technical know how. The
purchase price allocation was finalized during the second quarter ended
June 30, 2002. The new businesses acquired focus on the manufacture of
custom and proprietary fine chemicals and chemical services for the
pharmaceutical and life sciences industries. They also include additives
for ultraviolet light-cured polymer coatings, which should broaden the
portfolio of Albemarle's polymer chemicals business. Included is a
multi-functional manufacturing plant in Tyrone, Pennsylvania, and a cGMP
(current Good Manufacturing Practices) pilot plant in Dayton, Ohio.
Pro forma information is presented as follows for the nine-month period
ended September 30, 2001, as if Martinswerk GmbH and Martinswerk's
50-percent stake in Magnifin Magnesiaprodukte GmbH, and the custom and fine
chemicals businesses of ChemFirst Inc. had been acquired on January 1,
2001.
Nine Months Ended
September 30, 2001
--------------------
Net sales $748,212
Net income $ 56,342
Basic earnings per share $ 1.23
Diluted earnings per share $ 1.21
Page 12
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
The pro forma information presented above primarily includes adjustments
for interest expense, depreciation expense and amortization of intangibles.
7. On February 13, 2002, the Company completed the purchase of 4,000,000
shares of its common stock from Bruce C. Gottwald and his related immediate
family interests for an aggregate price of $92,680. At that time, the
Company retired the shares and reduced retained earnings by $40,979 after
eliminating the balance in additional paid-in capital. The Company's
purchase price was 25 cents per share less than the weighted average
trading price from New York Stock Exchange transactions in Albemarle common
stock during the 10 business days' period beginning with the third business
day following the announcement of Albemarle's 2001 year-end earnings.
8. During the first quarter of 2002, the Company continued its efforts to
reduce operating costs through an involuntary separation program that
resulted in a special charge of $850 ($541 after income taxes or 1 cent per
share on a diluted basis). The program impacted a total of 12 salaried
employees throughout the Company. The following table summarizes the total
special charges assumed related to the involuntary separation program:
Nine Months Ended
September 30, 2002
--------------------
Total 2002 workforce reduction charge $1,114
Less: over accrual from
prior year accruals 264
--------------------
Net workforce reductions charged for 2002 $850
====================
Approximately $36 of the total 2002 workforce accrual charge was unpaid at
September 30, 2002. In addition, essentially all of the fourth quarter 2001
work force accrual was paid during the first quarter of 2002.
9. During the nine months ended September 30, 2002, the Company recorded a net
charge of $2,750 ($1,752 after income taxes or 4 cents per share on a
diluted basis) to cost of sales that related to the discontinuance of
product support for and the withdrawal from a water treatment venture. The
Company's balance sheet at September 30, 2002, included entries reflecting
the accrual of a probable insurance recovery of approximately $4,000 in
other assets and accruals totaling $276 in current liabilities, net of
payments made to date.
Page 13
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
10. The Company has recorded environmental liabilities of $31,091 and $30,245
at September 30, 2002 and December 31, 2001, respectively, which represent
management's best estimate of the Company's future remediation and other
anticipated environmental costs relating to past operations. The Company
believes that such estimates are reasonable based on available information
and that the liabilities and related loss contingencies and the expected
outcome of uncertainties have been adequately described in the Company's
consolidated financial statements at December 31, 2001. Although it is
difficult to quantify the potential financial impact of compliance with
environmental protection laws, management estimates, based on the latest
available information, that there is a reasonable possibility that future
environmental remediation costs associated with the Company's past
operations, in excess of amounts already recorded, could be up to
approximately $9,500 before income taxes, to be incurred over a period of
time. However, the Company believes that any sum it may be required to pay
in connection with environmental remediation matters in excess of the
amounts recorded should occur over a period of time and should not have a
material adverse impact on its financial condition or results of
operations, but could have a material adverse impact in a particular
quarterly reporting period.
11. The Company is a global manufacturer of specialty polymer and fine
chemicals, currently grouped into two operating segments: Polymer Chemicals
and Fine Chemicals. The operating segments were determined based on
management responsibility. The Polymer Chemicals segment is comprised of
flame retardants, organometallics and catalysts, and polymer additives and
intermediates. The Fine Chemicals operating segment is comprised of
agrichemicals and pharmachemicals, performance chemicals and fine chemistry
services. Segment data includes intersegment transfers of raw materials at
cost and foreign exchange gains and losses as well as allocations for
certain corporate costs. The corporate and other expenses include certain
corporate-related items not allocated to the reportable segments.
Page 14
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
Three Months Ended September 30,
------------------------------------------------
2002 2001
------------------------------------------------
Summary of Segment Results Revenues Income Revenues Income
--------- --------- --------- --------
Polymer Chemicals $ 145,503 $ 21,262 $ 117,558 $ 14,217
Fine Chemicals 117,821 17,622 124,459 18,065
--------- --------- --------- --------
Segment totals $ 263,324 38,884 $ 242,017 32,282
========= =========
Corporate and other expenses (7,480) (7,026)
---------- ---------
Operating Profit 31,404 25,256
Interest and financing expenses (1,315) (2,013)
Other income, net (841) 975
---------- ---------
Income before income taxes $ 29,248 $ 24,218
========== =========
Nine Months Ended September 30,
-------------------------------------------------
2002 2001
------------------------------------------------
Summary of Segment Results Revenues Income Revenues Income
--------- -------- --------- --------
Polymer Chemicals $ 398,070 $ 52,019 $ 347,430 $ 50,363
Fine Chemicals 334,933 46,314 330,283 42,155
--------- -------- --------- --------
Segment totals $ 733,003 98,333 $ 677,713 92,518
========= =========
Corporate and other expenses (17,280) (15,171)
--------- ---------
Operating profit 81,053 77,347
Interest and financing expenses (3,775) (4,168)
Other income, net 2,227 3,793
--------- ---------
Income before income taxes $ 79,505 $ 76,972
========== =========
12. During July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 142, "Goodwill and
Other Intangible Assets." SFAS No. 142 eliminates the amortization of
goodwill and instead requires a periodic review of any goodwill balance for
possible impairment. SFAS No. 142 also requires that goodwill be allocated
at the reporting unit level. This statement was effective for years
beginning after December 15, 2001, with the exception of goodwill and
intangible assets acquired after June 30, 2001, which were subject
immediately to the nonamortization and amortization provisions of the
statement. For financial reporting purposes, the Company discontinued
amortization of goodwill as of January 1, 2002, with the exception of
goodwill associated with the July 2001 acquisition of the custom and fine
chemicals businesses of ChemFirst Inc., for which amortization, in
accordance with SFAS No. 142, never began.
Page 15
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
The Company has completed its transitional goodwill impairment testing and
has determined that goodwill is not impaired at January 1, 2002. The
following schedule presents net income, basic earnings per share and
diluted earnings per share, exclusive of goodwill amortization expense,
including any related tax effects, for all periods presented in which the
standard had not been adopted.
Three Months Nine Months
Ended Ended
September 30, 2001 September 30, 2001
-------------------- --------------------
Reported net income $16,761 $54,111
Add back: goodwill amortization, net of tax 332 871
--------------------- --------------------
Adjusted net income $17,093 $54,982
===================== ====================
Basic earnings per share:
Reported net income $0.37 $1.18
Goodwill amortization, net of tax 0.01 0.02
--------------------- --------------------
Adjusted net income $0.38 $1.20
===================== ====================
Diluted earnings per share:
Reported net income $0.36 $1.16
Goodwill amortization, net of tax 0.01 0.02
--------------------- --------------------
Adjusted net income $0.37 $1.18
===================== ====================
During October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived
assets. The Company adopted SFAS No. 144 on January 1, 2002. This Statement
has not had an impact on the Company's financial statements as of September
30, 2002.
During April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements Number 4, 44, and 64, Amendment of FASB Statement Number 13, and
Technical Corrections." The provisions of this statement are generally
effective for fiscal years beginning after May 15, 2002 and are not
expected to have a material impact on the Company's financial statements.
Page 16
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity." This Statement is effective for exit or
disposal activities initiated after December 31, 2002 and is not expected
to have a material impact on the Company's financial statements.
Page 17
ITEM 2. Management's Discussion and Analysis of Results of Operations and
-----------------------------------------------------------------
Financial Condition and Additional Information
----------------------------------------------
The following is management's discussion and analysis of certain
significant factors affecting the results of operations of Albemarle
Corporation ("Albemarle" or "the Company") during the periods included in
the accompanying consolidated statements of income and changes in the
Company's financial condition since December 31, 2001.
Some of the information presented in the following discussion may
constitute forward-looking comments within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors
that could cause actual results to differ from expectations include,
without limitation, the timing of orders received from customers, the gain
or loss of significant customers, competition from other manufacturers,
changes in the demand for the Company's products, increases in the cost of
the products, changes in the market in general, fluctuations in foreign
currencies and significant changes in new product introduction resulting in
an increase in capital project requests and approvals leading to additional
capital spending.
Results of Operations
---------------------
Third Quarter 2002 Compared with Third Quarter 2001
---------------------------------------------------
Net sales for third quarter 2002 of $263.3 million were a record for the
Company since the sale of the olefins businesses in March 1996, up 8.8% or
$21.3 million from third quarter 2001 net sales of $242.0 million. The
increase in net sales was primarily due to higher shipments partially
offset by lower pricing in both flame retardants ($15.8 million) and
performance chemicals ($1.4 million), higher shipments in catalysts and
additives ($8.4 million) and the favorable impact of foreign exchange ($7.1
million) offset, in part, by lower shipments in agrichemicals and fine
chemistry services ($11.6 million).
The gross profit margin increased to 24.7% in third quarter 2002 from 23.4%
for the corresponding period in 2001. Third quarter 2002 operating profit
was up 24.3% or $6.1 million from third quarter 2001 operating profit
primarily due to higher shipments in flame retardants offset, in part, by
lower pricing, and reduced raw material and manufacturing fixed costs.
Selling, general and administrative ("SG&A")expenses and research and
development ("R&D") expenses increased 6.8% or $2.1 million in the third
quarter of 2002 versus third quarter 2001, primarily due to higher
employee- related costs in the current period versus the corresponding 2001
period. As a percentage of net sales, SG&A expenses and R&D expenses were
12.7% in 2002 versus 13.0% in the 2001 quarter.
Page 18
Operating Segments
Net sales by reportable business operating segment for the third quarter
periods ended September 30, 2002 and 2001 are as follows:
Net Sales
(In Thousands)
--------------------------------------
2002 2001
----------------- -----------------
Polymer Chemicals $145,503 $117,558
Fine Chemicals 117,821 124,459
----------------- -----------------
Segment totals $263,324 $242,017
================= =================
Polymer Chemicals' net sales for third quarter 2002 increased 23.8%, or
$27.9 million, from third quarter 2001 net sales, primarily due to higher
shipments in flame retardants partly offset by lower pricing ($15.8
million), higher shipments in catalysts and additives ($8.4 million) and
the favorable impact of foreign exchange ($3.7 million).
Fine Chemicals' net sales for third quarter 2002 decreased 5.3% or $6.6
million from third quarter 2001, primarily due to lower shipments in both
agrichemicals and fine chemistry services ($11.6 million) offset, in part,
by higher shipments in performance chemicals partly offset by lower pricing
($1.4 million) and the favorable impact of foreign exchange ($3.4 million).
Operating profit by reportable business operating segment for the third
quarter periods ended September 30, 2002, and 2001 are as follows:
Operating Profit
(In Thousands)
-----------------
2002 2001
------- -------
Polymer Chemicals $21,262 $14,217
Fine Chemicals 17,622 18,065
------- -------
Segment totals 38,884 32,282
Corporate and other expenses (7,480) (7,026)
------- -------
Operating profit $31,404 $25,256
======== ========
Polymer Chemicals' third quarter 2002 segment operating profit was up 49.6%
or $7.0 million from third quarter 2001 primarily due to higher shipments
($8.2 million), lower manufacturing costs ($2.8 million), favorable raw
material costs ($1.9 million) and the favorable net effects of foreign
exchange ($0.8 million) offset, in part, by lower pricing ($6.7 million).
Fine Chemicals' third quarter 2002 segment operating profit decreased 2.5%
or $0.4 million from third quarter 2001 primarily due to lower pricing
($4.2 million) and shipments ($1.9 million) offset, in part, by favorable
raw material costs ($2.8 million, plant utilization and production costs
($2.5 million), and the favorable net effects of foreign exchange ($0.4
million).
Corporate and other expenses for the third quarter of 2002 were up 6.5%, or
$0.5 million from third quarter 2001, primarily due to higher employee
related costs in the 2002 period.
Page 19
Interest and Financing Expenses
Interest and financing expenses for third quarter 2002 decreased $0.7
million from $2.0 million in third quarter 2001 due to lower interest
rates, offset, in part, by higher average outstanding debt in third quarter
2002.
Other (Expense) Income, Net
Other (expense) income, net for the third quarter 2002 amounted to $(0.8)
million expense, a net change of $1.8 million from $1.0 million in other
income, net for the corresponding period in 2001. Third quarter 2002
reflects the writedown of a minority interest in a joint venture amounting
to $1.0 million and the writeoff of an investment in ACTA Technology, Inc.
totaling $.5 million.
Income Taxes
The third quarter 2002 effective income tax rate was 30.4%, down from 30.8%
for the corresponding period in 2001.
Results of Operations
---------------------
Nine Months 2002 Compared with Nine Months 2001
-----------------------------------------------
Net sales for the first nine months of 2002 amounted to $733.0 million, up
8.2% or $55.3 million from net sales of $677.7 million for the
corresponding period of 2001. The increase in net sales was primarily
attributable to $63.4 million in net sales in the 2002 period from the
mid-year 2001 acquisitions of Martinswerk GmbH and the custom and fine
chemicals businesses of ChemFirst Inc., and higher shipments ($34.1
million) partially offset by lower prices ($15.9 million) in flame
retardants, offset, in part, by lower pricing and shipments of
agrichemicals and fine chemistry services ($18.0 million) and product mix
in performance chemicals ($9.2 million).
The gross profit margin was 24.4% for the first nine months of 2002, which
was relatively constant with the 24.3% margin for the corresponding period
in 2001. The first nine months of 2002 operating profit was up 4.8% or $3.7
million from the 2001 period. The first nine months of 2002 includes a
charge of approximately $2.8 million ($6.8 million, net of a probable
insurance recovery of $4.0 million) to cost of sales related to the
discontinuance of product support for and the withdrawal from a water
treatment venture as well as a $0.9 million charge for workforce reductions
as the Company continues to aggressively pursue its cost reduction efforts.
Favorable plant utilization and production costs in performance chemicals,
pharmachemicals and flame retardants and favorable raw material costs
offset lower pricing in flame retardants for the nine months of 2002 versus
the corresponding 2001 period.
SG&A expenses and R&D expenses increased 10.8% or $9.5 million in the first
nine months of 2002 versus the 2001 period, primarily due to costs related
to the businesses acquired in 2001 of $4.7 million as well as higher
employee-related costs in the current period. As a percentage of net sales,
SG&A expenses and R&D expenses were 13.2% in the first nine months 2002
versus 12.9% in the corresponding period of 2001.
Page 20
Operating Segments
Net sales by reportable business operating segment for the nine-months
periods ended September 30, 2002 and 2001 are as follows:
Net Sales
(In Thousands)
------------------------------
2002 2001
------------ -----------
Polymer Chemicals $398,070 $347,430
Fine Chemicals 334,933 330,283
------------ -----------
Segment totals $733,003 $677,713
============ ===========
Polymer Chemicals' net sales for the first nine months of 2002 increased
14.6% or $50.6 million from the corresponding period in 2001 primarily due
to the increase in net sales of $29.7 million resulting from the May 31,
2001, acquisition of Martinswerk GmbH and higher shipments ($34.1 million)
in flame retardants partially offset by lower pricing ($15.9 million) and
higher shipments ($4.2 million)in catalysts and additives partially offset
by lower pricing ($1.8 million).
Fine Chemicals' net sales for the first nine months of 2002 increased 1.4%
or $4.7 million from the corresponding period in 2001, primarily due to the
increase in net sales of $33.7 million resulting from the mid-year 2001
acquisitions of Martinswerk GmbH and the custom and fine chemicals
businesses of ChemFirst Inc. offset, in part, by lower pricing and
shipments in agrichemicals and fine chemistry services ($18.0 million),
product mix in performance chemicals ($9.2 million), and lower shipments in
pharmachemicals ($1.6 million).
Operating profit by reportable business operating segment for the
nine-months periods ended September 30, 2002, and 2001 are as follows:
Operating Profit
(In Thousands)
-----------------------------
2002 2001
--------- ----------
Polymer Chemicals $52,019 $50,363
Fine Chemicals 46,314 42,155
--------- ----------
Segment totals 98,333 92,518
Corporate and other expenses (17,280) (15,171)
--------- ----------
Operating profit $81,053 $77,347
========= ==========
Polymer Chemicals' first nine months of 2002 segment operating profit was
up 3.3% or $1.7 million from the corresponding period in 2001, primarily
due to higher shipments ($12.4 million) and favorable raw material costs
($10.1 million) offset by lower pricing ($15.0 million), higher SG&A
expenses and R&D expenses on the 2001 mid-year acquisitions ($2.6 million),
a first quarter 2002 reclassification of bad debt expense to the Polymer
Chemicals' segment from corporate and other expenses ($2.0 million), higher
manufacturing costs ($1.0 million) and the unfavorable net effects of
foreign exchange ($0.4 million).
Fine Chemicals' first nine months of 2002 segment operating profit
increased 9.9% or $4.1 million from the corresponding period in 2001
primarily due to favorable plant utilization and production costs ($17.8
million) and favorable raw material costs ($13.5 million), offset, in part,
by lower shipments ($10.6 million) and pricing ($11.8 million) and a charge
of $2.8 million
Page 21
($6.8 million, net of a probable insurance recovery of $4.0 million) that
related to the discontinuance of product support for and the withdrawal
from a water treatment venture as well as higher SG&A expenses and R&D
expenses on the 2001 mid-year acquisitions ($2.1 million).
Corporate and other expenses for the first nine months of 2002 were up
13.9%, or $2.1 million, from the corresponding period in 2001, primarily
due to higher employee related costs and a first quarter 2002 workforce
reduction charge of $0.9 million, offset, in part, by a first quarter 2002
reclassification of bad debt expense to the Polymer Chemicals segment
operating profit from corporate and other expenses ($2.0 million).
Interest and Financing Expenses
Interest and financing expenses for the first nine months of 2002 decreased
$0.4 million from $4.2 million in the corresponding period of 2001
primarily due to a lower average interest rate offset, in part, by higher
average outstanding debt in the 2002 period.
Other Income, Net
Other income, net for the first nine months of 2002 amounted to $2.2
million, down $1.6 million from the corresponding period in 2001. Nine
months 2002 reflects the writedown of a minority interest in a joint
venture amounting to $1.0 million and the writeoff of an investment in ACTA
Technology, Inc. totaling $0.5 million.
Income Taxes
Income taxes for the first nine months of 2002 were lower compared to the
same period in 2001 due to a Federal income tax settlement, amounting to
$2.5 million, that was received in April 2002, and lower income before
taxes in the 2002 period, partially offset by the reversal in 2001 of a
deferred tax valuation allowance associated with one of the Company's
foreign subsidiaries. The effective income tax rate for the first nine
months of 2002 was 27.2%, down from 29.7% in the corresponding period of
2001. Excluding the income tax settlement, the nine months 2002 effective
income tax rate was 30.3%. The Company expects to maintain its targeted
income tax rate of 30% for the fourth quarter of 2002 and a blended income
tax rate for the year of approximately 28%.
Financial Condition and Liquidity
---------------------------------
Cash and cash equivalents at September 30, 2002, were $36.1 million,
representing an increase of $5.5 million from $30.6 million at year-end
2001.
Cash flows provided from operating activities of $127.9 million, together
with $104.0 million of proceeds from borrowings, primarily from the
Company's primary credit agreements, were used primarily to cover repayment
of debt, the purchase of approximately 4 million shares of the Company's
common stock, capital expenditures, payment of dividends and increase cash
and cash equivalents by $5.5 million. The Company anticipates that cash
provided from operations in the future will be sufficient to pay its
operating expenses, satisfy debt-service obligations and make dividend
payments.
The change in the Company's accumulated other comprehensive income from
December 31, 2001, was primarily due to net foreign currency adjustments,
net of related deferred taxes,
Page 22
primarily related to the strengthening of the Euro and Japanese Yen versus
the U.S. Dollar.
On September 10, 2002, the Company entered into a new three-year unsecured
Credit Agreement with a group of lenders providing for $375 million in
revolving credit facilities to replace its former Competitive Advance and
Revolving Credit Facility Agreement which matured on September 29, 2002.
Borrowing under the credit facility is conditioned upon compliance with
financial and other covenants set forth in the related agreement, including
covenants relating to leverage (measured as the ratio of debt and interest
to adjusted earnings). We currently are in compliance with all such
covenants. An increase in pricing level based on the Company's debt to
capitalization ratio would not accelerate the maturity of our indebtedness
thereunder. However, an increase in our debt to capitalization ratio would
result in an increase in the interest rate and fees payable under the
credit facility.
The noncurrent portion of the Company's long-term debt amounted to $177.6
million at September 30, 2002, compared to $12.4 million at the end of
2001. The Company's long-term debt, including the current portion, as a
percentage of total capitalization amounted to 24.3% at September 30, 2002.
The Company is guarantor of $17.2 million of long-term debt, in the form of
commitments, on behalf of its 50-percent owned joint venture company,
Jordan Bromine Company Limited. The Company's long-term debt, including the
guarantee, as a percent of total capitalization amounted to 26.0% at
September 30, 2002.
The Company's capital expenditures in the first nine months of 2002 were
lower than the same period of 2001. For the year, capital expenditures are
forecasted to be lower than the 2001 level. Capital spending will be
financed primarily with cash flow from operations with additional cash
needed, if any, to be provided from debt. The amount and timing of any
additional borrowings will depend on the Company's specific cash
requirements.
The Company operates with defined pension benefit plans that have
historically been over-funded. With the present situation in U.S. equity
markets and current interest rates, which affect actuarial discount rates
and, in turn, the accumulated benefit obligation of our pension plans, it
is likely that the Company will have to make cash contributions that range
between $10 million and $20 million to maintain a fully funded position and
avoid an other comprehensive income adjustment to shareholders' equity.
Should a cash contribution be required this calendar year, it will be
financed through our new Credit Agreement. Of course, this is all dependent
on the future performance of the equity markets.
The Company is subject to federal, state, local and foreign requirements
regulating the handling, manufacture and use of materials (some of which
may be classified as hazardous or toxic by one or more regulatory
agencies), the discharge of materials into the environment and the
protection of the environment. To the Company's knowledge, it currently is
complying, and expects to continue to comply, in all material respects with
existing environmental laws, regulations, statutes and ordinances. Such
compliance with federal, state, local and foreign environmental protection
laws is not expected to have in the future a material effect on earnings or
the competitive position of Albemarle.
Page 23
Among other environmental requirements, the Company is subject to the
federal Superfund law, and similar state laws, under which the Company may
be designated as a potentially responsible party and may be liable for a
share of the costs associated with cleaning up various hazardous waste
sites.
Additional Information
----------------------
Summary of Critical Accounting Policies:
----------------------------------------
Consolidation
The consolidated financial statements include the accounts and operations
of Albemarle Corporation and all of its majority-owned and controlled
subsidiaries. The Company applies the equity method of accounting for
investments between 20% and 50% owned over which the Company has
significant influence. All significant intercompany accounts and
transactions are eliminated in consolidation. Minority shareholders'
interest in controlled subsidiaries is included in other noncurrent
liabilities in the balance sheet and other (expense) income, net in the
consolidated statements of income for periods ended September 30, 2002.
Estimates and Reclassifications
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. Actual results could differ from those
estimates.
Revenue Recognition
Sales revenue is recognized when (1) ownership and all rewards and risks of
loss have been transferred to the buyer, (2) the price is fixed and
determinable, and (3) collectibility is reasonably assured. Revenue from
services is recognized when costs of providing services are incurred.
Inventories
Inventories are stated at the lower of cost or market, with cost determined
on the last-in, first-out ("LIFO") basis for substantially all domestic
inventories except stores and supplies, and on either the weighted-average
or first-in, first-out cost basis for other inventories.
Property, Plant and Equipment
Accounts include costs of assets constructed or purchased, related delivery
and installation costs and interest incurred on significant capital
projects during their construction periods. Expenditures for renewals and
betterments also are capitalized, but expenditures for repairs and
maintenance are expensed as incurred. The cost and accumulated depreciation
applicable to assets retired or sold are removed from the respective
accounts, and gains or losses thereon are included in income. Depreciation
is computed primarily by the straight-line method based on the estimated
useful lives of the assets.
The Company evaluates historical and expected undiscounted operating cash
flows of the related business segments or fair value of property, plant and
equipment to determine the future recoverability of any property, plant and
equipment recorded. Recorded property, plant
Page 24
and equipment is re-evaluated on the same basis at the end of each
accounting period whenever any significant permanent changes in business or
circumstances have occurred which might impair recovery.
The costs of brine leases and royalty interests are amortized using a
method approximating the units-of-production method.
Environmental Compliance and Remediation
Environmental compliance costs include the cost of purchasing and/or
constructing assets to prevent, limit and/or control pollution or to
monitor the environmental status at various locations. These costs are
capitalized and depreciated based on estimated useful lives. Environmental
compliance costs also include maintenance and operating costs with respect
to pollution prevention and control facilities and other administrative
costs. Such operating costs are expensed as incurred. Environmental
remediation costs of facilities used in current operations are generally
immaterial and are expensed as incurred.
The Company accrues for environmental remediation costs and
post-remediation costs on an undiscounted basis at facilities or off-plant
disposal sites that relate to existing conditions caused by past operations
in the accounting period in which responsibility is established and when
the related costs are estimable. In developing these cost estimates,
evaluation is given to currently available facts regarding each site, with
consideration given to existing technology, presently enacted laws and
regulations, prior experience in remediation of contaminated sites, the
financial capability of other potentially responsible parties and other
factors, subject to uncertainties inherent in the estimation process.
Additionally, these estimates are reviewed periodically, with adjustments
to the accruals recorded as necessary.
Pension Plans and Other Postretirement Benefits
Annual costs of pension plans are determined actuarially based on Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 87, "Employers' Accounting for Pensions" ("SFAS No.
87"). The Company's policy is to fund U.S. pension plans at amounts not
less than the minimum requirements of the Employee Retirement Income
Security Act of 1974 and generally for obligations under its foreign plans
to deposit funds with trustees and/or under insurance policies. Annual
costs of other postretirement plans are accounted for based on SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other than
Pensions." The policy of the Company is to fund post-retirement health
benefits for retirees on a pay-as-you-go basis. There are significant
assumptions used in determining amounts including the discount rate,
expected return on plan assets, rate of compensation increase and assumed
health care trend rate.
Income Taxes
The Company and its subsidiaries file consolidated U.S. Federal income tax
returns and individual foreign income tax returns.
Deferred income taxes result from temporary differences in the recognition
of income and expenses for financial and income tax reporting purposes,
using the liability or balance sheet method. Such temporary differences
result primarily from differences between the financial statement carrying
amounts and tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse. It is
the Company's policy
Page 25
to record deferred income taxes on any undistributed earnings of foreign
subsidiaries that are not deemed to be, or are not intended to be,
permanently reinvested in those subsidiaries.
Stock-Based Compensation
The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board No. 25, "Accounting for
Stock Issued to Employees" and related interpretations. Under the intrinsic
method, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of grant
over the amount an employee must pay to acquire the stock.
Research and Development Expenses
The Company-sponsored research and development expenses related to present
and future products are expensed currently as incurred.
Outlook
-------
FINE CHEMICALS
In the Company's end markets for agrichemicals , there has continued to be
volatility. Poor growing conditions in the United States and economic
instabilities in Latin America have combined to decrease the demand for the
Company's products by its agrichemicals customers. At the present time, the
Company expects this downturn will continue into the fourth quarter, thus
negating the significant seasonal agrichemicals performance that normally
occurs at the end of the year. The Company's pharmachemicals business is
expected to be up and to some extent should offset some or all of the
agrichemicals business weakness.
The Company's Jordan joint venture has established bromine production and
begun initial shipments. This venture will be ramping up production into
next year and beyond.
As the Company moves forward toward the close of 2002, and into 2003, it
will remain cautious about its outlook, recognizing poor agrichemicals
prospects as well as generally increasing raw material prices for fine
chemicals. However, the Company will continue to drive controllable costs
down and where possible work toward selective opportunities for increased
pricing in the markets, still believing that 2002 can show an improvement
over 2001.
POLYMER CHEMICALS
The Company's flame retardants business has seen good volume growth in the
previous two quarters on a year-over-year basis. This relatively high level
of volume has been maintained since the second quarter of this year, with
the third quarter essentially flat sequentially and with continued good
volumes in this business so far this quarter. However, the Company remains
cautious in its outlook due to the uncertainty in end-market demand of many
of its customers (especially in the relatively anemic consumer electronics
business sector, its major end use) and with general concerns about the
global economy.
The recent labor actions resulting in the West Coast dock situation has
caused delays in the Company's shipments, primarily to Asia. The Company is
working diligently, using other alternatives to assure it maintains supply
continuity, but recognizes it could incur additional costs that might
amount to as much as $1 million as a result. In addition, the Company has
Page 26
certain plant turnarounds planned in the fourth quarter that will increase
its factory costs in some of its Catalyst and Additives businesses.
Overall, the Company has had a strong start in its fourth quarter business,
continuing with strong volumes in most areas. The Company remains confident
with its position and its ability to continue to deliver quarterly earnings
this year that are an improvement over those of 2001 and, at this point,
are comfortable with the published range of earnings estimates for the year
before any special items or unusual global events.
As mentioned earlier in the Financial Condition and Liquidity section, due
to the Company's historical overfunded position, it recorded pension income
in 2001 and will record a lower amount in 2002. This is expected to unwind
further over the next few years.
Additional information regarding the Company, its products, markets and
financial performance is provided at the Company's Internet web site,
www.Albemarle.com.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
-----------------------------------------------------------
There have been no significant changes in our interest rate risk,
marketable security price risk or raw material price risk from the
information provided in our Form 10-K for the year ended December 31, 2001.
ITEM 4. Controls and Procedures
-----------------------
Within the 90-day period prior to the filing of this report, an evaluation
was performed under the supervision and with the participation of
Albemarle's management, including our principal executive officer and our
principal financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934). Based
upon that evaluation, our principal executive officer and our principal
financial officer concluded that the design and operation of these
disclosure controls and procedures were effective for the third quarter
2002. No significant changes were made in our internal controls or in other
factors that could significantly affect these controls subsequent to the
date of their evaluation.
Part II - OTHER INFORMATION
---------------------------
ITEM 1. Legal Proceedings
------------------
The Company and its subsidiaries are involved from time to time in legal
proceedings of types regarded as common in the Company's businesses,
particularly administrative or judicial proceedings seeking remediation
under environmental laws, such as Superfund, and products liability
litigation.
While it is not possible to predict or determine the outcome of the
proceedings presently pending, in the Company's opinion they should not
result ultimately in liabilities likely to have a material adverse effect
upon the results of operations or financial condition of the Company and
its subsidiaries on a consolidated basis.
Page 27
ITEM 5. Other Information
-----------------
During the third quarter, Mark C. Rohr was elected President and Chief
Executive Officer of the Company, effective October 1, 2002. After that
date, Floyd D. Gottwald, Jr., began serving as Vice Chairman of the Board
and continued as Chairman of the Executive Committee. On October 23, 2002,
the Company announced that Rohr would relocate to the Company's
headquarters in Richmond, Virginia.
In addition, the Company announced that Michael J. Zobrist, Vice President,
Investor Relations and External Affairs had elected to retire at the end of
the year and that Michael D. Whitlow, Vice President - Americas Sales and
Global Accounts, would assume the responsibilities currently undertaken by
Zobrist, effective January 1, 2003. The Company also announced that Anthony
S. Parnell has been promoted to the position of Division Vice President,
Americas Sales effective November 1, 2002, succeeding Mr. Whitlow. Whitlow
will report to Paul F. Rocheleau, Senior Vice President and Chief Financial
Officer, and in that role will relocate to Richmond.
Albemarle's Board of Directors elected Lloyd B. Andrew to the Board,
effective October 1. Andrew, 79, served on Albemarle's Board from March
1994 until December 1995. Previously, he had been Executive Vice President
and Chief Financial Officer of Ethyl Corporation, retiring in 1989.
ITEM 6. Exhibits and Reports on Form 8-K
---------------------------------
(a) Exhibits
The following documents are filed as exhibits to this Form
10-Q pursuant to Item 601 of Regulation S-K:
3(ii) By-laws of the registrant, amended in October 2002.
10.1 Credit Agreement dated September 10, 2002.
99. List of Albemarle Corporation Officers.
(b) The Company submitted a form 8-K document on August 14, 2002,
with which it submitted sworn certifications of its chief
executive officer and chief financial officer to the
Securities and Exchange Commission ("SEC") pursuant to the
SEC's Order 4-460 and Section 906 of the Sarbanes-Oxley Act of
2002.
Page 28
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALBEMARLE CORPORATION
---------------------
(Registrant)
Date: November 12, 2002 By: s/ ROBERT G. KIRCHHOEFER
-------------------------
Robert G. Kirchhoefer
Treasurer and Chief Accounting Officer
(Principal Accounting Officer)
Page 29
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
----------------------------------------
I, Mark C. Rohr, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Albemarle
Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent
Page 30
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: November 11, 2002
/S/ MARK C. ROHR
------------------------
President and Chief Executive Officer
Page 31
CERTIFICATION OF CHIEF FINANCIAL OFFICER
----------------------------------------
I, Paul F. Rocheleau, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Albemarle
Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent
Page 32
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: November 11, 2002
/S/ PAUL F. ROCHELEAU
------------------------
Senior Vice President and Chief Financial Officer
Page 33
EXHIBIT INDEX
-------------
Page
Number(s)
---------
3(ii) By-laws of the registrant amended in October 2002 34-56
10.1 Credit Agreement dated September 10, 2002. 57-200
99. List of Albemarle Corporation Officers 201
Page 34
EXHIBIT 3(ii)
- -------------
ALBEMARLE CORPORATION
BY-LAWS
ARTICLE I
Meeting of Shareholders
Section 1. Places of Meetings.
All meetings of the shareholders shall be held at such place, either within
or without the Commonwealth of Virginia, as may, from time to time, be
fixed by the Board of Directors.
Section 2. Annual Meetings.
The annual meeting of the shareholders, for the election of directors and
transaction of such other business as may come before the meeting, shall be
held each year at 11:00 a.m. EST on the fourth Wednesday in March or at
such other date and time as the Board of Directors of the Corporation may
designate from time to time.
Section 3. Special Meetings.
Special meetings of shareholders for any purpose or purposes may be called
at any time by the Chief Executive Officer, the Chairman of the Board or by
a majority of the Board of Directors. At a special meeting, no business
shall be transacted and no corporate action shall be taken other than that
stated in the notice of the meeting.
Section 4. Notice of Meetings.
Except as otherwise required by law or these By-laws, written or printed
notice stating the place, day and hour of every meeting of the shareholders
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be mailed not less than ten (10) nor more than
sixty (60) days before the date of the meeting to each shareholder of
record entitled to vote at such
Page 35
meeting, at his or her address which appears in the share transfer books of
the Corporation. Meetings may be held without notice if all the
shareholders entitled to vote at the meeting are present in person or by
proxy or if notice is waived in writing by those not present, either before
or after the meeting.
Section 5. Quorum.
Except as otherwise required by the Articles of Incorporation, any number
of shareholders together holding at least a majority of the outstanding
shares of capital stock entitled to vote with respect to the business to be
transacted, who shall be present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of
business. If less than a quorum shall be in attendance at the time for
which a meeting shall have been called, the meeting may be adjourned from
time to time by a majority of the shareholders present or represented by
proxy without notice other than by announcement at the meeting.
Section 6. Voting.
At any meeting of the shareholders each shareholder of a class entitled to
vote on the matters coming before the meeting shall have one vote, in
person or by proxy, for each share of capital stock standing in his or her
name on the books of the Corporation at the time of such meeting or on any
date fixed by the Board of Directors not more than seventy (70) days prior
to the meeting.
Section 7. Voting List.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make, at least ten (10) days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, with the address of and the number
of shares held by each. Such list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the
Corporation or at its principal place of business or at
Page 36
the office of its transfer agent or registrar and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder during
the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine
such list or transfer books or to vote at any meeting of shareholders. If
the requirements of this section have not been substantially complied with,
the meeting shall, on the demand of any shareholder in person or by proxy,
be adjourned until the requirements are complied with.
Section 8. Shareholder Proposals.
(a) Annual Meetings of Shareholders.
(i) Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders only (A)
pursuant to the Corporation's notice of meeting (or any supplement
thereto), (B) by or at the direction of the Board of Directors or (C) by
any shareholder of the Corporation who was a shareholder of record of the
Corporation who is entitled to vote at the meeting at the time the notice
provided for in this section is delivered to the Secretary of the
Corporation and who complies with the notice procedures set forth in this
section.
(ii) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (C) of paragraph (a)(i)
of this section, the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation and any such proposed business
other than the
Page 37
nominations of persons for election to the Board of Directors must
constitute a proper matter for shareholder action. To be timely, a
shareholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business
on the ninetieth day nor earlier than the close of business on the one
hundred twentieth day prior to the first anniversary of the preceding
year's annual meeting (provided, however, that in the event that the date
of the annual meeting is more than thirty days before or more than seventy
days after such anniversary date, notice by the shareholder must be so
delivered not earlier than the close of business on the one hundred
twentieth day prior to such annual meeting and not later than the close of
business on the later of the ninetieth day prior to such annual meeting or
the tenth day following the day on which public announcement of the date of
such meeting is first made by the Corporation). In no event shall the
public announcement of an adjournment or postponement of an annual meeting
commence a new time period (or extend any time period) for the giving of a
shareholder's notice as described above. Such shareholder's notice shall
set forth: (A) as to each person whom the shareholder proposes to nominate
for election as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (and such person's written consent to being
named in the proxy statement as a nominee and to serving as such a director
if elected); (B) as to any other business that the shareholder proposes to
bring before the meeting, a brief description of the business desired to be
brought before the meeting, the text of the proposal or business (including
Page 38
the text of any resolutions proposed for consideration and in the event
that such business includes a proposal to amend the By-laws of the
Corporation, the language of the proposed amendment), the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and for the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (1) the name and address of such shareholder, as they
appear on the Corporation's books, and of such beneficial owner, (2) the
class and number of shares of capital stock of the Corporation that are
owned beneficially and of record by such shareholder and such beneficial
owner, (3) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to propose such business or
nomination, and (4) a representation whether the shareholder or the
beneficial owner, if any, intends or is part of a group that intends (a) to
deliver a proxy statement and/or form of proxy to holders of at least the
percentage of the Corporation's outstanding capital stock required to
approve or adopt the proposal or elect the nominee and/or (b) otherwise to
solicit proxies from shareholders in support of such proposal or
nomination. The foregoing notice requirements shall be deemed satisfied by
a shareholder if the shareholder has notified the Corporation of his
intention to present a proposal at an annual meeting in compliance with
Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act
and such shareholder's proposal has been included in a proxy statement that
has been prepared by the Corporation to solicit proxies for such annual
meeting. The Corporation may require any proposed nominee to furnish such
other
Page 39
information as it may reasonably require to determine the eligibility of
such proposed nominee to serve as a director of the Corporation.
(iii) Notwithstanding anything in the second sentence of paragraph (a)(ii)
of this section to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation at an annual
meeting is increased and there is no public announcement by the Corporation
naming the nominees for the additional directorships at least one hundred
days prior to the first anniversary of the preceding year's annual meeting,
a shareholder's notice required by this section shall also be considered
timely, but only with respect to nominees for the additional directorships,
if it shall be delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the
tenth day following the day on which such public announcement is first made
by the Corporation.
(b) Special Meetings of Shareholders.
Only such business shall be conducted at a special meeting of shareholders
as shall have been brought before the meeting pursuant to the Corporation's
notice of meeting. Nominations of persons for election to the Board of
Directors may be made at a special meeting of shareholders at which
directors are to be elected pursuant to the Corporation's notice of meeting
(i) by or at the direction of the Board of Directors or (ii) provided that
the Board of Directors has determined that directors shall be elected at
such meeting, by any shareholder of the Corporation who is a shareholder of
record at the time the notice provided for in this section is delivered to
the Secretary of the Corporation, who is entitled to vote at the meeting
and upon such election and who complies with the notice procedures set
forth in this section. In the event the Corporation calls a special meeting
of shareholders for
Page 40
the purpose of electing one or more directors to the Board of Directors,
any such shareholder entitled to vote in such election of directors may
nominate a person or persons, as the case may be, for election to such
position(s) as specified in the Corporation's notice of meeting, if the
shareholder's notice required by paragraph (a)(ii) of this section is
delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the close of business on the one hundred
twentieth day prior to such special meeting, and not later than the close
of business on the later of the ninetieth day prior to such special meeting
or the tenth day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting. In no event shall the
public announcement of an adjournment or postponement of a special meeting
commence a new time period (or extend any time period) for giving of a
shareholder's notice as described above.
(c) General.
(i) Only such persons who are nominated in accordance with the procedures
set forth in this section shall be eligible at an annual or special meeting
of shareholders of the Corporation to serve as directors and only such
business shall be conducted at a meeting of shareholders as shall have been
brought before the meeting in accordance with the procedures set forth in
this section. Except as otherwise provided by law, the Chairman of the
meeting shall have the power and duty (A) to determine whether a nomination
or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth
in this section (including whether the shareholder or beneficial owner, if
any, on whose behalf the nomination or proposal is made solicited (or is
part
Page 41
of a group which solicited) or did not so solicit, as the case may be,
proxies in support of such shareholder's nominee or proposal in compliance
with such shareholder's representation as required by clause (a)(ii)(C) of
this section) and (B) to declare that such nomination shall be disregarded
or that such proposed business shall not be transacted. Notwithstanding the
foregoing provisions of this section, if the shareholder (or a designated
representative of the shareholder) does not appear at the annual or special
meeting of shareholders of the Corporation to present a nomination or
business, such nomination shall be disregarded and such proposed business
shall not be transacted, notwithstanding that proxies in respect of such
vote may have been received by the Corporation.
(ii) For purposes of this section, "public announcement" shall include
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this section, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this section. Nothing in this section shall be deemed
to affect any rights (A) of shareholders to request inclusion of proposals
in the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (B) of the holders of any series of preferred stock to
elect directors pursuant to any applicable provisions of the articles of
incorporation.
Page 42
Section 9. Inspectors.
An appropriate number of inspectors for any meeting of shareholders shall
be appointed by the Chairman of such meeting. Inspectors so appointed will
open and close the polls, will receive and take charge of proxies and
ballots, and will decide all questions as to the qualifications of voters,
validity of proxies and ballots, and the number of votes properly cast.
ARTICLE II
Directors
Section 1. General Powers.
The property, affairs and business of the Corporation shall be managed
under the direction of the Board of Directors, and except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws,
all of the powers of the Corporation shall be vested in such Board.
Section 2. Number of Directors.
The Board of Directors shall be eleven (11) in number. By amendment of
these By-laws the Board of Directors or the shareholders may increase or
decrease the number of directors; provided, however, that the Board of
Directors may not increase or decrease the number of directors by more than
thirty percent of the number of directors last elected by the shareholders.
Section 3. Election of Directors.
(a) Directors shall be elected each year at the annual meeting of
shareholders.
(b) Directors shall hold their offices until the next annual meeting of the
shareholders and until their successors are elected. Any director may be
removed from office as set forth in the Articles of Incorporation.
Page 43
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining directors though less
than a quorum of the Board of Directors.
(d) A majority of the number of directors fixed by these By-laws shall
constitute a quorum for the transaction of business. The act of a majority
of the directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors.
Section 4. Meetings of Directors.
Meetings of the Board of Directors shall be held at places within or
without the Commonwealth of Virginia and at times fixed by resolution of
the Board or upon call of the Chief Executive Officer or the Chairman of
the Board, and the Secretary or officer performing the Secretary's duties
shall give not less than twenty-four (24) hours' notice by letter,
telegraph or telephone (or in person) of all meetings of the directors,
provided that notice need not be given of regular meetings held at times
and places fixed by resolution of the Board. An annual meeting of the Board
of Directors shall be held as soon as practicable after the adjournment of
the annual meeting of shareholders. Meetings may be held at any time
without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. Directors may
be allowed, by resolution of the Board, a reasonable fee and expenses for
attendance at meetings.
ARTICLE III
Committees
Section 1. Executive Committee.
The Board of Directors shall, by vote of a majority of the number of
Directors fixed by these By-laws, designate an Executive
Page 44
Committee. The members of the Executive Committee shall serve until their
successors are designated by the Board of Directors, until removed or until
the Executive Committee is dissolved by the Board of Directors. All
vacancies which may occur in the Executive Committee shall be filled by the
Board of Directors.
When the Board of Directors is not in session, the Executive Committee
shall have all power vested in the Board of Directors by law, the Articles
of Incorporation or these By-laws, except as otherwise provided in the
Virginia Stock Corporation Act. The Executive Committee shall report at the
next regular or special meeting of the Board of Directors all action which
the Executive Committee may have taken on behalf of the Board since the
last regular or special meeting of the Board of Directors.
Meetings of the Executive Committee shall be held at such places and at
such times fixed by resolution of the Committee, or upon call of the Chief
Executive Officer, the Chairman of the Board or the Chairman of the
Executive Committee. Not less than twelve (12) hours' notice shall be given
by letter, telegraph or telephone (or in person) of all meetings of the
Executive Committee, provided that notice need not be given of regular
meetings held at times and places fixed by resolution of the Committee and
that meetings may be held at any time without notice if all of the members
of the Committee are present or if those not present waive notice in
writing either before or after the meeting. A majority of the members of
the Executive Committee then serving shall constitute a quorum for the
transaction of business at any meeting.
Section 2. Executive Compensation Committee.
The Board of Directors, at its regular annual meeting, shall designate an
Executive Compensation Committee which shall consist of three or more
Directors who shall not be eligible for bonus, stock option or stock
appreciation rights. In addition, the Board at any time may designate one
or more alternate members of such Committee who shall be Directors not
eligible for bonus, stock option
Page 45
or stock appreciation rights who may act in place of any absent regular
member upon invitation by the Chairman or Secretary of the Committee.
With respect to bonuses, the Executive Compensation Committee shall have
and may exercise the powers to determine the amounts annually available for
bonuses pursuant to any bonus plan or formula approved by the Board, to
determine, after receiving the recommendations of the Chief Executive
Officer and other members of management, bonus awards to executive officers
and to exercise such further powers with respect to bonuses as may from
time to time be conferred by the Board of Directors.
With respect to salaries, the Executive Compensation Committee, after
receiving the recommendations of the Chief Executive Officer and other
members of management, shall have and may exercise the power to fix and
determine from time to time all salaries of the executive officers of the
Corporation, and such further powers with respect to salaries as may from
time to time be conferred by the Board of Directors.
The Executive Compensation Committee shall administer the Corporation's
Incentive Stock Option Plan (the "Plan") and from time to time may grant,
consistent with the Plan, stock options and stock appreciation rights and
authorize the granting of restricted stock awards.
Vacancies in the Executive Compensation Committee shall be filled by the
Board of Directors, and members shall be subject to removal by the Board at
any time.
Page 46
The Executive Compensation Committee shall fix its own rules of procedure.
A majority of the number of regular members then serving shall constitute a
quorum; and regular and alternate members present shall be counted to
determine whether there is a quorum. The Executive Compensation Committee
shall keep minutes of its meetings, and all action taken by it shall be
reported to the Board of Directors.
Section 3. Audit Committee.
The Board of Directors at its regular annual meeting shall designate an
Audit Committee which shall consist of three or more Directors whose
membership on the Committee shall meet the requirements set forth in the
rules of the New York Stock Exchange, as amended from time to time.
The primary function of the Committee shall be to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing and
overseeing (i) the financial reports and other financial information
provided by the Corporation to any governmental body or the public, (ii)
the Corporation's system of internal controls regarding finance and
accounting that the Corporation's management and the Board have
established, (iii) the independence of the Corporation's outside auditors
and the performance of the Corporation's internal and outside auditors and
(iv) the Corporation's auditing, accounting and financial reporting
processes generally. The Committee shall review the reports and minutes of
any audit committees of the Corporation's subsidiaries. The Committee shall
review the Corporation's financial reporting process, including accounting
policies and procedures. The Committee shall examine the report of the
Corporation's outside auditors, consult with them with respect to their
report and the standards and procedures employed by them in their audit,
report to the Board the results of its study and recommend the selection of
auditors for each fiscal year.
Page 47
Vacancies in the Committee shall be filled by the Board of Directors with
Directors meeting the requirements set forth above, giving consideration to
continuity of the Committee, and members shall be subject to removal by the
Board at any time.
The Committee shall fix its own rules of procedure and a majority of the
members serving shall constitute a quorum. The Committee shall meet at
least twice a year with both the Corporation's internal and outside
auditors present. The Committee shall keep minutes of all of its meetings
and all action taken shall be reported to the Board of Directors.
Section 4. Nominating Committee.
The Board of Directors shall designate a Nominating Committee which shall
consist of three or more Directors. The Committee shall make
recommendations to the Board regarding nominees for election as Directors
by the shareholders at each Annual Shareholders' Meeting and make such
other recommendations regarding the Board of Directors as the Committee may
deem advisable from time to time. The Committee shall fix its own rules of
procedure and a majority of the members serving shall constitute a quorum.
Section 5. Other Committees of the Board.
The Board of Directors, by resolution duly adopted, may establish such
other committees of the Board as it may deem advisable and the members,
terms and authority of such committees shall be as set forth in the
resolutions establishing the same.
ARTICLE IV
Officers
Section 1. Election.
The officers of the Corporation may consist of a Chief Executive Officer, a
Chairman of the Board, a Vice Chairman of the Board, a President,
Page 48
one or more Vice Presidents (any one or more of whom may be designated as
Executive Vice Presidents or Senior Vice Presidents), a Secretary and a
Treasurer. In addition, such other officers as are provided in Section 3 of
this Article may from time to time be elected by the Board of Directors.
All officers shall hold office until the next annual meeting of the Board
of Directors or until their successors are elected. The Chairman of the
Board and the Vice Chairman of the Board shall be chosen from among the
Directors. Any two officers may be combined in the same person as the Board
of Directors may determine.
Section 2. Removal of Officers; Vacancies.
Any officer of the Corporation may be removed summarily with or without
cause, at any time by a resolution passed at any meeting by affirmative
vote of a majority of the number of Directors fixed by these By-laws.
Vacancies may be filled at any meeting of the Board of Directors.
Section 3. Other Officers.
Other officers may from time to time be elected by the Board, including,
without limitation, one or more Assistant Secretaries and Assistant
Treasurers.
Section 4. Duties.
The officers of the Corporation shall have such duties as generally pertain
to their offices, respectively, as well as such powers and duties as are
hereinafter provided and as from time to time shall be conferred by the
Board of Directors. The Board of Directors may require any officer to give
such bond for the faithful performance of his duties as the Board may see
fit.
Section 5. Duties of the Chief Executive Officer.
The Chief Executive Officer shall be responsible for the execution of the
policies of the Board of Directors and shall have supervision over the
business of the Corporation and its several officers, subject
Page 49
to the authority of the Board of Directors. In the incapacity or absence of
the President, the Chief Executive Officer shall perform the duties and
have the authority of the President. The Chief Executive Officer may sign
and execute in the name of the Corporation deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or
by these By-laws to some other officer or agent of the Corporation or shall
be required by law otherwise to be signed or executed. In addition, he
shall perform all duties incident to the office of the Chief Executive
Officer and such other duties as from time to time may be assigned to him
by the Board of Directors.
Section 6. Chairman of the Board.
The Chairman of the Board shall preside at all meetings of shareholders,
the Board of Directors and, unless there is a Chairman of the Executive
Committee, the Executive Committee.
The Chairman of the Board may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other
officer or agent of the Corporation or shall be required by law otherwise
to be signed or executed. In addition, he shall perform all duties incident
to the office of the Chairman of the Board and such other duties as from
time to time may be assigned to him by the Board of Directors.
Section 7. Duties of the Vice Chairman of the Board.
The Vice Chairman of the Board shall perform all duties incident to the
office of the Vice Chairman of the Board and shall have such other powers
and duties as may from time to time be assigned to him by the Board of
Directors, the Chief Executive Officer or the Chairman of the Board.
Page 50
The Vice Chairman of the Board may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts and other instruments,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other
officer or agent of the Corporation or shall be required by law otherwise
to be signed or executed.
Section 8. Duties of the President.
The President shall be the Chief Operating Officer of the Corporation and
shall have direct supervision over the business of the Corporation subject
to the authority of the Board of Directors, the Chief Executive Officer and
the Chairman of the Board. The President may sign and execute in the name
of the Corporation deeds, mortgages, bonds, contracts or other instruments,
except in cases where the signing and the execution thereof shall be
expressly delegated by the Board of Directors or by these By-laws to some
other officer or agent of the Corporation or shall be required by law
otherwise to be signed or executed. In addition, he shall perform all
duties incident to the office of the President and such other duties as
from time to time may be assigned to him.
Section 9. Duties of the Vice Presidents.
Each Vice President of the Corporation (including any Executive Vice
President and Senior Vice President) shall have powers and duties that are
customary for that office and such other powers and duties as may from time
to time be assigned to him. Any Vice President of the Corporation may sign
and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or
by these
Page 51
By-laws to some other officer or agent of the Corporation or shall be
required by law otherwise to be signed or executed.
Section 10. Duties of the Treasurer.
The Treasurer shall have charge and custody of and be responsible for all
funds and securities of the Corporation, and shall cause all such funds and
securities to be deposited in such banks and depositories as the Board of
Directors from time to time may direct. He shall maintain adequate accounts
and records of all assets, liabilities and transactions of the Corporation
in accordance with generally accepted accounting practices; shall exhibit
his accounts and records to any of the Directors of the Corporation at any
time upon request at the office of the Corporation; shall render such
statements of his accounts and records and such other statements to the
Board of Directors and officers as often and in such manner as they shall
require; and shall make and file (or supervise the making and filing of)
all tax returns required by law. He shall in general perform all duties
incident to the office of Treasurer and such other duties as from time to
time may be assigned to him.
Section 11. Duties of the Secretary.
The Secretary shall act as secretary of all meetings of the Board of
Directors and the shareholders of the Corporation, and shall keep the
minutes thereof in the proper book or books to be provided for that
purpose. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of
the Corporation and shall affix the seal or cause it to be affixed to all
certificates for stock of the Corporation and to all documents the
execution of which on behalf of the Corporation under its corporate seal is
duly authorized in accordance with the provisions of these By-laws; shall
have custody of all deeds, leases, contracts and other important corporate
documents; shall have charge
Page 52
of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that the reports,
statements and other documents required by law (except tax returns) are
properly filed; and shall, in general, perform all the duties incident to
the office of Secretary and such other duties as from time to time may be
assigned to him.
Section 12. Other Duties of Officers.
Any officer of the Corporation shall have, in addition to the duties
prescribed herein or by law, such other duties as from time to time shall
be prescribed.
ARTICLE V
Capital Stock
Section 1. Certificates.
The shares of capital stock of the Corporation shall be evidenced by
certificates in forms prescribed by the Board of Directors and executed by
the Chief Executive Officer or the Chairman of the Board and by the
Secretary or an Assistant Secretary and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes
of the stock of the Corporation may be appointed by the Board of Directors
and may be required to countersign certificates representing stock of such
class or classes. In the event that any officer whose signature or
facsimile thereof shall have been used on a stock certificate shall for any
reason cease to be an officer of the Corporation and such certificate shall
not then have been delivered by the Corporation, the Board of Directors may
nevertheless adopt such certificate and it may then be issued and delivered
as though such person had not ceased to be an officer of the Corporation.
Page 53
Section 2. Lost, Destroyed and Mutilated Certificates.
Holders of the stock of the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of the certificate
therefor, and the Board of Directors may, in its discretion, cause one or
more new certificates for the same number of shares in the aggregate to be
issued to such shareholder upon the surrender of the mutilated certificate
or upon satisfactory proof of such loss or destruction, and the deposit of
a bond in such form and amount and with such surety as the Board of
Directors may require.
Section 3. Transfer of Stock.
The stock of the Corporation shall be transferable or assignable only on
the books of the Corporation by the holders in person or by attorney on
surrender of the certificate for such shares duly endorsed and, if sought
to be transferred by attorney, accompanied by a written power of attorney
to have the same transferred on the books of the Corporation. The
Corporation will recognize the exclusive right of the person registered on
its books as the owner of shares to receive dividends and to vote as such
owner.
Section 4. Fixing Record Date.
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of the shareholders or any adjournment thereof, or
entitled to receive payment for any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than
seventy (70) days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. If no record
date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend,
Page 54
the date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. Except as otherwise required by law, when a determination of
shareholders entitled to vote at any meeting of shareholders has been made
as provided in this section such determination shall apply to any
adjournment thereof.
ARTICLE VI
Miscellaneous Provisions
Section 1. Seal.
The seal of the Corporation shall consist of a flat-face circular die, of
which there may be any number of counterparts, on which there shall be
engraved in the center the words "Albemarle Corporation."
Section 2. Fiscal Year.
The fiscal year of the Corporation shall end on December 31st of each year.
Section 3. Books and Records.
The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders and
Board of Directors; and shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar a
record of its shareholders, giving the names and addresses of all
shareholders, and the number, class and series of the shares being held.
Section 4. Checks, Notes and Drafts.
Checks, notes, drafts and other orders for the payment of money shall be
signed by such persons as the Board of Directors from time to time may
authorize. When the Board of Directors so authorizes, however, the
signature of any such person may be a facsimile.
Page 55
Section 5. Amendment of By-laws.
These By-laws may be amended or altered at any meeting of the Board of
Directors. The shareholders entitled to vote in respect of the election of
directors, however, shall have the power to rescind, alter, amend or repeal
any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
Section 6. Voting of Stock Held.
The Chief Executive Officer, the Chairman of the Board or such other
officer or officers as may be designated by the Board of Directors or the
Executive Committee shall from time to time appoint an attorney or
attorneys or agent or agents of this Corporation, in the name and on behalf
of this Corporation, to cast the vote which this Corporation may be
entitled to cast as a shareholder or otherwise in any other corporation any
of whose stock or securities may be held in this Corporation, at meetings
of the holders of the stock or other securities of such other corporation,
or to consent in writing to any action by any of such other corporation,
and shall instruct the person or persons so appointed as to the manner of
casting such votes or giving such consent and may execute or cause to be
executed on behalf of this Corporation and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as
may be necessary or proper in the premises; or, in lieu of such
appointment, the Chief Executive Officer, the Chairman of the Board or any
such designated officer or officers may attend in person any meetings of
the holders of stock or other securities of any such other corporation and
there vote or exercise any or all power of this Corporation as the holder
of such stock or other securities of such other corporation.
Page 56
Section 7. Control Share Acquisition Statute.
Article 14.1 of the Virginia Stock Corporation Act ("Control Share
Acquisitions") shall not apply to acquisitions of shares of stock of the
Corporation.
Page 57
EXHIBIT 10.1
- ------------
CREDIT AGREEMENT
Dated as of September 10, 2002
among
ALBEMARLE CORPORATION,
as the Borrower,
THE SUBSIDIARIES OF THE BORROWER IDENTIFIED HEREIN,
as the Guarantors,
The Lenders Party Hereto,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender and L/C Issuer,
FORTIS (USA) FINANCE LLC,
as Syndication Agent
and
SUNTRUST BANK AND THE BANK OF NEW YORK,
as Co-Documentation Agents
Arranged By:
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
Page 58
TABLE OF CONTENTS
Section Page
- -------- -----
Article I. DEFINITIONS AND ACCOUNTING TERMS...........................1
1.01 Defined Terms..............................................1
1.02 Other Interpretive Provisions............ ................25
1.03 Accounting Terms..........................................25
1.04 Rounding..................................................26
1.05 References to Agreements and Laws.........................26
1.06 Times of Day..............................................26
1.07 Letter of Credit Amounts..................................27
1.08 Exchange Rates; Currency Equivalents......................27
1.09 Additional Alternative Currencies.........................27
1.10 Redenomination of Certain Alternative Currencies..........28
Article II. THE COMMITMENTS AND CREDIT EXTENSIONS.....................28
2.01 Committed Loans; Increase in Commitments..................28
2.02 Borrowings, Conversions and Continuations of
Committed Loans...........................................29
2.03 Letters of Credit.........................................31
2.04 Swing Line Loans..........................................41
2.05 Prepayments...............................................44
2.06 Termination or Reduction of Commitments...................45
2.07 Repayment of Loans........................................45
2.08 Interest..................................................46
2.09 Fees......................................................46
2.10 Computation of Interest and Fees..........................49
2.11 Evidence of Debt..........................................49
2.12 Payments Generally........................................50
2.13 Sharing of Payments.......................................52
Article III. TAXES, YIELD PROTECTION AND ILLEGALITY....................53
3.01 Taxes.....................................................53
3.02 Illegality................................................55
3.03 Inability to Determine Rates..............................55
3.04 Increased Cost and Reduced Return; Capital Adequacy.......56
3.05 Funding Losses............................................57
3.06 Matters Applicable to all Requests for Compensation.......57
3.07 Survival..................................................58
Article IV. GUARANTY..................................................58
4.01 The Guaranty..............................................58
4.02 Obligations Unconditional.................................58
4.03 Reinstatement.............................................60
4.04 Certain Additional Waivers................................60
4.05 Remedies..................................................60
4.06 Rights of Contribution....................................60
4.07 Guarantee of Payment; Continuing Guarantee................61
i
Page 59
Article V. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS.................62
5.01 Conditions of Initial Credit Extension....................62
5.02 Conditions to all Credit Extensions.......................63
Article VI. REPRESENTATIONS AND WARRANTIES............................64
6.01 Existence, Qualification and Power; Compliance with Laws..64
6.02 Authorization; No Contravention...........................65
6.03 Governmental Authorization; Other Consents................65
6.04 Binding Effect............................................65
6.05 Financial Statements......................................65
6.06 Litigation................................................66
6.07 No Default................................................66
6.08 Ownership of Property; Liens..............................66
6.09 Environmental Compliance..................................66
6.10 Insurance.................................................67
6.11 Taxes.....................................................67
6.12 ERISA Compliance..........................................67
6.13 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act.......................................68
6.14 Disclosure................................................69
6.15 Compliance with Laws......................................69
6.16 Intellectual Property; Licenses, Etc......................69
Article VII. AFFIRMATIVE COVENANTS.....................................70
7.01 Financial Statements......................................70
7.02 Certificates; Other Information...........................71
7.03 Notices...................................................72
7.04 Payment of Obligations....................................73
7.05 Preservation of Existence, Etc............................73
7.06 Maintenance of Properties.................................73
7.07 Maintenance of Insurance..................................74
7.08 Compliance with Laws......................................74
7.09 Books and Records.........................................74
7.10 Inspection Rights.........................................74
7.11 Use of Proceeds...........................................75
7.12 Joinder of Guarantors.....................................75
7.13 ERISA Compliance..........................................75
Article VIII. NEGATIVE COVENANTS........................................75
8.01 Liens.....................................................75
8.02 Investments...............................................77
8.03 Mergers, Dispositions, etc................................77
8.04 Change in Nature of Business..............................78
8.05 Transactions with Affiliates..............................78
8.06 Use of Proceeds...........................................78
8.07 Financial Covenants.......................................79
8.08 ERISA.....................................................79
Article IX. EVENTS OF DEFAULT AND REMEDIES............................79
ii
Page 60
9.01 Events of Default.........................................79
9.02 Remedies Upon Event of Default............................82
9.03 Application of Funds......................................82
Article X. ADMINISTRATIVE AGENT......................................83
10.01 Appointment and Authorization of Administrative Agent.....83
10.02 Delegation of Duties......................................84
10.03 Liability of Administrative Agent.........................84
10.04 Reliance by Administrative Agent..........................85
10.05 Notice of Default.........................................85
10.06 Credit Decision; Disclosure of Information by
Administrative Agent......................................86
10.07 Indemnification of Administrative Agent...................86
10.08 Administrative Agent in its Individual Capacity...........87
10.09 Successor Administrative Agent............................87
10.10 Administrative Agent May File Proofs of Claim.............88
10.11 Guaranty Matters..........................................89
10.12 Other Agents; Arrangers and Managers......................89
Article XI. MISCELLANEOUS.............................................89
11.01 Amendments, Etc...........................................89
11.02 Notices and Other Communications; Facsimile Copies........91
11.03 No Waiver; Cumulative Remedies............................92
11.04 Attorney Costs, Expenses and Taxes........................93
11.05 Indemnification by the Borrower...........................93
11.06 Payments Set Aside........................................94
11.07 Successors and Assigns....................................94
11.08 Confidentiality...........................................97
11.09 Set-off...................................................98
11.10 Interest Rate Limitation..................................99
11.11 Counterparts..............................................99
11.12 Integration...............................................99
11.13 Survival of Representations and Warranties...............100
11.14 Severability.............................................100
11.15 Tax Forms................................................100
11.16 Replacement of Lenders...................................102
11.17 Source of Funds..........................................103
11.18 Governing Law............................................103
11.19 Waiver of Right to Trial by Jury.........................104
11.20 Judgment Currency........................................104
iii
Page 61
SCHEDULES
---------
1.01 Mandatory Cost Rate
2.01 Commitments and Pro Rata Shares
2.03 Existing Letters of Credit - none
6.09 Environmental Matters - none
8.01 Existing Liens - not attached
11.02 Eurocurrency and Domestic Lending Offices; Notice Addresses
EXHIBITS
--------
A Form of Committed Loan Notice
B Form of Swing Line Loan Notice
C Form of Note
D Form of Compliance Certificate
E Form of Assignment and Assumption
G Form of Joinder Agreement
H Form of Lender Joinder Agreement
iv
Page 62
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of September 10, 2002 among
ALBEMARLE CORPORATION, a Virginia corporation (the "Borrower"), the
Guarantors (defined herein), the Lenders (defined herein), BANK OF AMERICA,
N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, FORTIS
(USA) FINANCE LLC, as Syndication Agent, and SUNTRUST BANK and THE BANK OF
NEW YORK, as Co-Documentation Agents.
The Borrower has requested that the Lenders provide $375,000,000 in
revolving credit facilities, and the Lenders are willing to do so on the
terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms.
As used in this Agreement, the following terms shall have the meanings set
forth below:
"Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.
"Administrative Agent's Office" means, with respect to any currency, the
Administrative Agent's address and, as appropriate, account as set forth on
Schedule 11.02 with respect to such currency or such other address or
account with respect to such currency as the Administrative Agent may from
time to time notify the Borrower and the Lenders.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Adjusted Eurocurrency Rate" means for any Interest Period with respect to
any Eurocurrency Rate Loan, a rate per annum (rounded upward, if necessary,
to the next 1/100th of 1%) determined by the Administrative Agent to be
equal to the quotient obtained by dividing (a) the Eurocurrency Rate for
such Eurocurrency Loan for such Interest Period by (b) one minus the
Eurocurrency Reserve Percentage for such Eurocurrency Loan for such
Interest Period.
1
Page 63
"Affiliate" means, with respect to any 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.
"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. Without limiting the generality of the foregoing, a Person shall
be deemed to be Controlled by another Person if such other Person
possesses, directly or indirectly, power to vote 10% or more of the
securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.
"Agent-Related Persons" means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as
the Administrative Agent, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitments" means the Aggregate Domestic Commitments and the
Aggregate Multicurrency Commitments.
"Aggregate Domestic Commitments" means the aggregate amount of Domestic
Commitments of all the Domestic Lenders. The initial Aggregate Domestic
Commitment is referenced in Section 2.01(a). "Aggregate Multicurrency
Commitments" means the aggregate amount of Multicurrency Commitments of all
the Multicurrency Lenders. The initial Aggregate Multicurrency Commitment
is referenced in Section 2.01(b). "Agreement" means this Credit Agreement.
"Alternative Currency" means each of British Pounds Sterling, Canadian
Dollars, Euro, Japanese Yen and Swiss Francs and each other lawful currency
(other than Dollars) that is freely available and freely transferable and
convertible into Dollars and that is approved by all the Lenders in
accordance with Section 1.09.
"Alternative Currency Equivalent" means, at any time, with respect to any
amount denominated in Dollars, the equivalent amount thereof in the
applicable Alternative Currency as determined by the Administrative Agent
at such time on the basis of the Spot Rate (determined in respect of the
most recent Revaluation Date) for the purchase of such Alternative Currency
with Dollars.
"Applicable Currency" means Dollars or Alternative Currency, as applicable.
"Applicable Rate" means, from time to time, the following percentages per
annum, based upon the Debt Rating as set forth below (or, if no Debt Rating
is issued by S&P or Moody's, then based upon the Debt to Capitalization
Ratio as set forth below):
2
Page 64
Applicable Rate
for
Debt to Eurocurrency
Pricing Debt Rating Capitalization Rate Loans and Rate for Base Utilization Facility
Level S&P/Moody's Ratio Letters of Credit Rate Loans Fee Fee
- ----------- -------------------------- ------------------ ------------------- ---------------- ------------ ----------
1 A/A2 or better <15% 0.400% 0.000% 0.125% 0.100%
2 A-/A3 > 15% but <25% 0.500% 0.000% 0.125% 0.125%
3 BBB+/Baa1 > 25% but <40% 0.600% 0.000% 0.125% 0.150%
4 BBB/Baa2 > 40% but <50% 0.700% 0.000% 0.125% 0.175%
5 BBB-/Baa3 > 50% but <60% 1.025% 0.025% 0.125% 0.225%
6 worse than BBB-/Baa3 > 60% 1.200% 0.200% 0.250% 0.300%
- ----------- -------------------------- ------------------ ------------------- ---------------- ------------ ----------
"Debt Rating" means, as of any date of determination, the rating as
determined by either S&P or Moody's of the Borrower's non-credit-enhanced,
senior unsecured long-term debt; provided that if there is a split in the
Debt Rating of S&P and Moody's, then (a) in the case of a split between
Pricing Levels 1, 2, 3, 4 and 5, the higher (better) of such Debt Ratings
shall apply and (b) in the case of a split between Pricing Levels 5 and 6,
the lower (worse) of such Debt Ratings shall apply.
Initially, the Applicable Rate shall be determined based upon:
(i) if rated, the Debt Rating specified in the certificate delivered
pursuant to Section 5.01(a)(viii). Thereafter, each change in the
Applicable Rate resulting from a publicly announced change in the Debt
Rating shall be effective, in the case of an upgrade, during the period
commencing on the date of delivery by the Borrower to the Administrative
Agent of notice thereof pursuant to Section 7.03(f) and ending on the date
immediately preceding the effective date of the next such change and, in
the case of a downgrade, during the period commencing on the date of the
public announcement thereof and ending on the date immediately preceding
the effective date of the next such change.
(ii) if unrated, the Debt to Capitalization Ratio specified in the
certificate delivered pursuant to Section 5.01(a)(viii). Thereafter, each
change in the Applicable Rate resulting from a change in the Debt to
Capitalization Ratio shall be effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered
pursuant to Section 7.02(b); provided, however, that if a Compliance
Certificate is not delivered when due in accordance with such Section, then
Pricing Level 6 shall apply as of the first
3
Page 65
Business Day after the date on which such Compliance Certificate was
required to have been delivered until the first Business Day immediately
following the date such Compliance Certificate is received by the
Administrative Agent.
Determinations by the Administrative Agent of the appropriate Pricing Level
shall be conclusive absent manifest error.
"Applicable Time" means, with respect to any borrowings and payments in
Alternative Currencies, the local times in the place of settlement for such
Alternative Currencies as may be determined by the Administrative Agent to
be necessary for timely settlement on the relevant date in accordance with
normal banking procedures in the place of payment.
"Approved Fund" means any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of
its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
"Arranger" means Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.
"Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit E.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, following the
occurrence and during the continuation of an Event of Default, shall also
include the allocated cost of internal legal services and all expenses and
disbursements of internal counsel.
"Attributable Principal Amount" means (a) in the case of capital leases,
the amount of capital lease obligations determined in accordance with GAAP,
(b) in the case of Synthetic Leases, an amount determined by capitalization
of the remaining lease payments thereunder as if it were a capital lease
determined in accordance with GAAP, (c) in the case of Securitization
Transactions, the outstanding principal amount of such financing, after
taking into account reserve accounts and making appropriate adjustments, as
determined by the Administrative Agent in its reasonable judgment and (d)
in the case of any Sale and Lease Back Transaction, the present value
(discounted in accordance with GAAP at the debt rate implied in the
applicable lease) of the obligations of the lessee for rental payments
during the term of such lease. "Availability Period" means the period from
and including the Closing Date to the earliest of (a) the Maturity Date,
(b) the date of termination of the Aggregate Commitments pursuant to
Section 2.06, and (c) the date of termination of the commitment of each
Lender to make Loans and of the obligation of the L/C Issuer to make L/C
Credit Extensions pursuant to Section 9.02.
4
Page 66
"Bank of America" means Bank of America, N.A. and its successors.
"Base Rate" means for any day a fluctuating rate per annum (rounded upward,
if necessary, to the next 1/100th of 1%) equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as
its "prime rate." The "prime rate" is a rate set by Bank of America based
upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such
announced rate. Any change in the "prime rate" announced by Bank of America
shall take effect at the opening of business on the day specified in the
public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Borrowing" means a Committed Borrowing or a Swing Line Borrowing, as the
context may require.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in
fact closed in, the state where the Administrative Agent's Office with
respect to Obligations denominated in Dollars is located and (a) if such
day relates to any Eurocurrency Rate Loan denominated in a currency other
than Euro, means any such day on which dealings in deposits in the relevant
currency are conducted by and between banks in the London or other
applicable offshore interbank market for such currency or (b) if such day
relates to any Eurocurrency Rate Loan denominated in Euro, means a TARGET
Day.
"Cash Collateralize" has the meaning specified in Section 2.03(g).
"Change of Control" means an event or series of events by which (a) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934) other than Floyd D. Gottwald, Jr. or
members of his family (together, the "Gottwalds"), or any investment
entities owned by them, shall own directly or indirectly, beneficially or
of record, shares representing more than the greater of (i) 20% and (ii)
the percentage owned by the Gottwalds of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the
Borrower or any Person directly or indirectly Controlling the Borrower; or
(b) a majority of the seats (other than vacant seats) on the board of
directors of the Borrower or any Person directly or indirectly Controlling
the Borrower shall at any time be occupied by persons who were neither (i)
nominated by the management of the Borrower or by persons who were members
of the board of directors as of the Closing Date or members elected by two
thirds of such members, nor (ii) appointed by directors so nominated.
5
Page 67
"Closing Date" means the date hereof.
"Commitment" means the Domestic Commitment and the Multicurrency
Commitment.
"Committed Borrowing" means a Domestic Committed Borrowing or a
Multicurrency Committed Borrowing, as appropriate.
"Committed Loan" means a Domestic Committed Loan or a Multicurrency
Committed Loan, as appropriate.
"Committed Loan Notice" means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a
continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit D.
"Consolidated EBITDA" means, for any period, for the Consolidated Group, an
amount equal to Consolidated Net Income for such period plus the following
to the extent deducted in calculating such Consolidated Net Income: (a)
Consolidated Interest Charges for such period, (b) the provision for
federal, state, local and foreign income taxes payable by the Consolidated
Group for such period and (c) the amount of depreciation and amortization
expense for such period.
"Consolidated Funded Debt" means Funded Debt of the Consolidated Group
determined on a consolidated basis in accordance with GAAP. "Consolidated
Group" means the Borrower and its consolidated Subsidiaries as determined
in accordance with GAAP.
"Consolidated Interest Charges" means, for any period, for the Consolidated
Group, all interest expense, including the amortization of debt discount
and premium, the interest component under capital leases and the implied
interest component under Securitization Transactions, in each case on a
consolidated basis determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated EBITDA for the period of the
four prior fiscal quarters ending on such date to (b) Consolidated Interest
Charges for such period.
"Consolidated Leverage Ratio" means, as of any date of determination, the
ratio of (a) Consolidated Funded Debt as of such date to (b) Consolidated
EBITDA for the period of the four fiscal quarters most recently ended for
which the Borrower has delivered financial statements pursuant to Section
7.01(a) or (b).
6
Page 68
"Consolidated Net Income" means, for any period for the Consolidated Group,
the net income of the Consolidated Group (excluding extraordinary items and
related tax effects) for that period.
"Consolidated Net Worth" means, as of any date of determination,
consolidated shareholders' equity of the Consolidated Group as of that date
determined in accordance with GAAP (excluding, for purposes hereof, changes
in the cumulative foreign currency translation adjustment and any mark to
market of a derivative or hedging instrument (or any other adjustment
related thereto) required under FAS 133).
"Consolidated Tangible Domestic Assets" means, as of any date, the total
book value of assets of members of the Consolidated Group that are
organized under the laws of any political subdivision of the United States,
which assets are located in the United States, minus (i) intercompany loans
and advances from such members of the Consolidated Group to other members
of the Consolidated Group and (ii) the book value of intangible assets of
such members of the Consolidated Group, including goodwill, patents, trade
names, trademarks, copyrights, franchises, experimental expense,
organizational expense, unamortized debt discount and expense and deferred
assets (other than prepaid insurance and prepaid taxes), determined in
accordance with GAAP.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" has the meaning specified in the definition of "Affiliate."
"Credit Extension" means each of the following: (a) a Borrowing and (b) an
L/C Credit Extension.
"Debt Rating" has the meaning set forth in the definition of "Applicable
Rate."
"Debt to Capitalization Ratio" means, as of any date of determination, the
ratio of (a) Consolidated Funded Debt as of such date to (b) the sum of
Consolidated Net Worth as of such date plus Consolidated Funded Debt as of
such date.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.
"Default" means any event or condition that constitutes an Event of Default
or that, with the giving of any notice, the passage of time, or both, would
be an Event of Default.
"Default Rate" means an interest rate equal to (a) the Base Rate plus (b)
the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however,
7
Page 69
that with respect to a Eurocurrency Rate Loan, the Default Rate shall be an
interest rate equal to the interest rate (including any Applicable Rate)
otherwise applicable to such Loan plus 2% per annum, in each case to the
fullest extent permitted by applicable Laws.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Committed Loans, participations in L/C Obligations or
participations in Swing Line Loans required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder,
(b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within
one Business Day of the date when due, unless the subject of a good faith
dispute, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.
"Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any Sale and Leaseback Transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith.
"Dollar" and "$" mean lawful money of the United States.
"Dollar Equivalent" means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent at such time on the basis
of the Spot Rate (determined in respect of the most recent Revaluation
Date) for the purchase of Dollars with such Alternative Currency.
"Domestic Commitment" means, as to each Domestic Lender, the commitment of
such Lender to make Domestic Committed Loans and to participate in Domestic
L/C Obligations and Swing Line Loans in an aggregate principal amount at
any one time outstanding not to exceed the amount set forth as such
Domestic Lender's "Domestic Commitment" on Schedule 2.01. "Domestic
Committed Loans" has the meaning provided in Section 2.01(a).
"Domestic Committed Borrowing" means a borrowing consisting of simultaneous
Domestic Committed Loans of the same Type and, in the case of Eurocurrency
Rate Loans, having the same Interest Period made by each of the Domestic
Lenders as provided herein.
"Domestic L/C Advance" means, with respect to each Domestic Lender, such
Lender's funding of its participation in a Domestic L/C Borrowing.
"Domestic L/C Borrowing" means an extension of credit resulting from a
drawing under any Domestic Letter of Credit that has not been reimbursed on
the date when made or refinanced as a Domestic Committed Borrowing.
8
Page 70
"Domestic L/C Issuer" means Bank of America in its capacity as issuer of
the Domestic Letters of Credit, and its successors in such capacity.
"Domestic L/C Obligations" means as of any date of determination, the
aggregate undrawn amount of all outstanding Domestic Letters of Credit,
plus the aggregate amount of all Unreimbursed Amounts in respect of
Domestic Letters of Credit, including Domestic L/C Borrowings.
"Domestic Lenders" means each of the Lenders with Domestic Commitments
hereunder.
"Domestic Letter of Credit" means (i) those Existing Letters of Credit
identified as "Domestic Letters of Credit" on Schedule 2.03 and (ii) any
letter of credit issued under the Domestic Commitments under the provisions
of Section 2.03(a). Domestic Letters of Credit may be commercial letters of
credit or standby letters of credit.
"Domestic Letter of Credit Sublimit" shall have the meaning given such term
in Section 2.03(a)(i).
"Domestic Loan Obligations" means Domestic Committed Loans, Domestic L/C
Obligations and Swing Line Loans.
"Domestic Pro Rata Share" means, with respect to each Domestic Lender, a
fraction (expressed as percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Domestic Commitment of such
Lender at such time and the denominator of which is the amount of the
Aggregate Domestic Commitments at such time; provided that if the Domestic
Commitments shall have been terminated pursuant to Section 9.02, then the
Domestic Pro Rata Share of each Lender shall be determined based on the
Domestic Pro Rata Share of such Domestic Lender immediately prior to such
termination and after giving effect to any subsequent assignments made
pursuant to the terms hereof. The initial Domestic Pro Rata Share of each
Domestic Lender is set forth as such Domestic Lender's "Domestic Pro Rata
Share" on Schedule 2.01.
"Domestic Subsidiary" means any Subsidiary that is organized under the laws
of any political subdivision of the United States.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender (other
than an Affiliate that is a Foreign Lender); (c) an Approved Fund (other
than an Approved Fund that is a Foreign Lender); and (d) any other Person
(other than a natural person) approved by (i) the Administrative Agent, the
L/C Issuer and the Swing Line Lender, and (ii) unless an Event of Default
has occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed, provided that it shall be reasonable for
the Borrower to withhold consent if such Person does not provide to the
Borrower the information required under Section 11.15). Notwithstanding the
foregoing, "Eligible Assignee" shall not include the Borrower or any of the
Borrower's Affiliates or Subsidiaries.
9
Page 71
"EMU" means the economic and monetary union in accordance with the Treaty
of Rome 1957, as amended by the Single European Act 1986, the Maastricht
Treaty of 1992 and the Amsterdam Treaty of 1998, as amended from time to
time.
"EMU Legislation" means the legislative measures of the European Council
for the introduction of, changeover to or operation of a single or unified
European currency (whether known as the "euro" or otherwise).
"Environmental Laws" means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and
discharges to waste or public systems.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower, any other Loan Party or
any of their respective Subsidiaries 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.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b)
or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the
Internal Revenue Code for purposes of provisions relating to Section 412 of
the Internal Revenue Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or
any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Sections 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event
or condition that constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability
10
Page 72
under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
"Euro" and "EUR" mean the lawful currency of the Participating Member
States introduced in accordance with the EMU Legislation.
"Eurocurrency Rate" means, for such Interest Period:
(a) the rate per annum (rounded upward, if necessary, to the next 1/100th
of 1%) equal to the rate determined by the Administrative Agent to be the
offered rate that appears on the page of the Telerate screen (or any
successor thereto) that displays an average British Bankers Association
Interest Settlement Rate for deposits in the relevant currency (for
delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or
(b) if the rate referenced in the preceding clause (a) does not appear on
such page or service or such page or service shall not be available, the
rate per annum (rounded upward, if necessary, to the next 1/100th of 1%)
equal to the rate determined by the Administrative Agent to be the offered
rate on such other page or other service that displays an average British
Bankers Association Interest Settlement Rate for deposits in the relevant
currency (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or
(c) if the rates referenced in the preceding clauses (a) and (b) are not
available, the rate per annum (rounded upward, if necessary, to the next
1/100th of 1%) determined by the Administrative Agent as the rate of
interest at which deposits in relevant currency for delivery on the first
day of such Interest Period in same day funds in the approximate amount of
the Eurocurrency Rate Loan being made, continued or converted by Bank of
America and with a term equivalent to such Interest Period would be offered
by Bank of America's London Branch or London Affiliate to major banks in
the offshore interbank market for such currency at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period.
"Eurocurrency Rate Loan" means a Committed Loan that bears interest at a
rate based on the Adjusted Eurocurrency Rate.
"Eurocurrency Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any
particular Lender, under regulations issued from time to time by the FRB
for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve
11
Page 73
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Adjusted Eurocurrency Rate for each
outstanding Eurocurrency Rate Loan shall be adjusted automatically as of
the effective date of any change in the Eurocurrency Reserve Percentage.
"Event of Default" has the meaning specified in Section 9.01.
"Existing Credit Agreement" means the Competitive Advance and Revolving
Credit Facility Agreement dated as of September 24, 1996 among the
Borrower, the banks named therein, NationsBank, N.A. (now known as Bank of
America, N.A.), as Administrative Agent, and Bank of America Illinois (now
known as Bank of America, N.A.), The Bank of New York and The Chase
Manhattan Bank (now known as JPMorgan Chase Bank), as Co-Agents, as
amended.
"Existing Letters of Credit" means the letters of credit outstanding on the
Closing Date and identified on Schedule 2.03.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next 1/100th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to the next 1/100th of 1%)
charged to Bank of America on such day on such transactions as determined
by the Administrative Agent.
"Fee Letter" means the letter agreement, dated July 15, 2002, among the
Borrower, the Administrative Agent and the Arranger.
"Foreign Lender" has the meaning specified in Section 11.15(a)(i).
"FRB" means the Board of Governors of the Federal Reserve System of the
United States.
"Funded Debt" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness
or liabilities in accordance with GAAP:
(a) all obligations for borrowed money, whether current or long-term
(including the Obligations hereunder), and all obligations evidenced by
bonds, debentures, notes, loan agreements or other similar instruments;
(b) all purchase money indebtedness (including indebtedness and obligations
in respect of conditional sales and title retention arrangements, except
for
12
Page 74
customary conditional sales and title retention arrangements with suppliers
that are entered into in the ordinary course of business) and all
indebtedness and obligations in respect of the deferred purchase price of
property or services (other than trade accounts payable incurred the
ordinary course of business and payable on customary trade terms);
(c) all direct obligations under letters of credit (including standby and
commercial), bankers' acceptances, bank guaranties, surety bonds and
similar instruments;
(d) the Attributable Principal Amount of capital leases and Synthetic
Leases;
(e) the Attributable Principal Amount of Securitization Transactions;
(f) all preferred stock and comparable equity interests providing for
mandatory redemption, sinking fund or other like payments within three
years of the date thereof;
(g) Guarantees in respect of Funded Debt of another Person;
(h) Funded Debt of any partnership or joint venture or other similar entity
in which such Person is a general partner or joint venturer, and, as such,
has personal liability for such obligations, but only to the extent there
is recourse to such Person for payment thereof.
For purposes hereof, the amount of Funded Debt shall be determined based on
the outstanding principal amount in the case of borrowed money indebtedness
under clause (a) and purchase money indebtedness and the deferred purchase
obligations under clause (b), based on the maximum amount available to be
drawn in the case of letter of credit obligations and the other obligations
under clause (c), and based on the outstanding principal amount of Funded
Debt that is the subject of the Guarantees in the case of Guarantees under
clause (g).
"GAAP" means generally accepted accounting principles in the United States
as in effect from time to time set forth in the opinions and pronouncements
of the Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board, subject to the provisions of Section 1.03.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
13
Page 75
"Guarantee" means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation, (ii) to
purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness or other obligation of
the payment or performance of such Indebtedness or other obligation, (iii)
to maintain working capital, equity capital or any other financial
statement condition or liquidity or level of income or cash flow of the
primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term "Guarantee" as a verb has a corresponding
meaning.
"Guarantors" means each Person that joins as a Guarantor pursuant to
Section 7.12, together with their successors and permitted assigns.
"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.
"Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness
or liabilities in accordance with GAAP:
(a) all Funded Debt;
(b) all contingent obligations under letters of credit (including standby
and commercial letters of credit), bankers' acceptances, bank guaranties,
surety bonds and similar instruments;
(c) net obligations under any Swap Contract;
(d) Guarantees in respect of Indebtedness of another Person; and
14
Page 76
(e) Indebtedness of any partnership or joint venture or other similar
entity in which such Person is a general partner or joint venturer, and, as
such, has personal liability for such obligations, but only to the extent
there is recourse to such Person for payment thereof.
For purposes hereof, the amount of Indebtedness shall be determined based
on Swap Termination Value in the case of net obligations under Swap
Contracts under clause (c) and based on the outstanding principal amount of
Indebtedness that is the subject of the Guarantees in the case of
Guarantees under clause (d).
"Indemnified Liabilities" has the meaning set forth in Section 11.05.
"Indemnitees" has the meaning set forth in Section 11.05.
"Interest Payment Date" means (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a
Eurocurrency Rate Loan exceeds three months, the respective dates that fall
every three months after the beginning of such Interest Period shall also
be Interest Payment Dates; and (b) as to any Base Rate Loan (including a
Swing Line Loan), the last Business Day of each March, June, September and
December and the Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"Interest Period" means, as to each Eurocurrency Rate Loan, the period
commencing on the date such Eurocurrency Rate Loan is disbursed or
converted to or continued as a Eurocurrency Rate Loan and ending on the
date one, two, three or six months thereafter, as selected by the Borrower
in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless
such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period;
and
(c) no Interest Period shall extend beyond the Maturity Date.
"Investment" means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a
loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or
15
Page 77
joint venture interest in such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the
value of such Investment.
"IP Rights" has the meaning set forth in Section 6.16.
"IRS" means the United States Internal Revenue Service.
"Joinder Agreement" means a joinder agreement substantially in the form of
Exhibit G executed and delivered by a Material Domestic Subsidiary in
accordance with the provisions of Section 7.12.
"Laws" means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority
charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.
"L/C Advance" means a Domestic L/C Advance or a Multicurrency L/C Advance,
as appropriate.
"L/C Borrowing" means a Domestic L/C Borrowing or a Multicurrency
Borrowing, as appropriate.
"L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.
"L/C Issuer" means the Domestic L/C Issuer or the Multicurrency L/C Issuer,
as appropriate.
"L/C Obligations" means the Domestic L/C Obligations or the Multicurrency
L/C Obligations, as appropriate.
"Lender" means each of the Persons identified as a "Lender" on the
signature pages hereto and their successors and assigns and, as the context
requires, includes the L/C Issuer and the Swing Line Lender.
"Lender Joinder Agreement" means a joinder agreement substantially in the
form of Exhibit H executed and delivered in accordance with the provisions
of Section 2.01(c).
16
Page 78
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such in such Lender's Administrative Questionnaire, or
such other office or offices as a Lender may from time to time notify the
Borrower and the Administrative Agent.
"Letter of Credit" means a Domestic Letter of Credit or a Multicurrency
Letter of Credit, as appropriate.
"Letter of Credit Application" means an application and agreement for the
issuance or amendment of a letter of credit in the form from time to time
in use by the L/C Issuer.
"Letter of Credit Expiration Date" means the day that is seven days prior
to the Maturity Date then in effect (or, if such day is not a Business Day,
the next preceding Business Day).
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind
or nature whatsoever (including any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing).
"Loan" means an extension of credit by a Lender to the Borrower under
Article II in the form of a Committed Loan or a Swing Line Loan.
"Loan Documents" means this Agreement, each Note, each Letter of Credit,
each Letter of Credit Application, each Joinder Agreement, each Request for
Credit Extension, each Compliance Certificate, the Fee Letter and each
other document, instrument or agreement from time to time executed by the
Borrower or any of its Subsidiaries or any Responsible Officer thereof and
delivered in connection with this Agreement.
"Loan Obligations" means the Domestic Loan Obligations and the
Multicurrency Loan Obligations.
"Loan Parties" means, collectively, the Borrower and each Guarantor.
"Loan Party Tangible Domestic Assets" means, as of any date, the total book
value of assets of the Loan Parties that are organized under the laws of
any political subdivision of the United States, which assets are located in
the United States, minus (i) intercompany loans and advances from such Loan
Parties to other members of the Consolidated Group and (ii) the book value
of intangible assets of such Loan Parties, including goodwill, patents,
trade names, trademarks, copyrights, franchises, experimental expense,
organizational expense, unamortized debt discount and expense and deferred
assets (other than prepaid insurance and prepaid taxes), determined in
accordance with GAAP. "Mandatory Cost Rate" means, with respect to any
period, a rate per annum (rounded upward, if necessary, to the next 1/100th
of 1%) determined in accordance with Schedule 1.01.
17
Page 79
"Mandatory Cost Reference Lender" means Bank of America.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
liabilities (actual or contingent) or condition (financial or otherwise) of
the Borrower or the Consolidated Group taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document to which it is a party.
"Material Domestic Subsidiary" means any Domestic Subsidiary that
constitutes more than 5% of consolidated assets for the Consolidated Group
as of the end of the immediately preceding fiscal quarter or generates more
than 5% of consolidated revenues for the Consolidated Group for the period
of four consecutive fiscal quarters ending as of the end of the immediately
preceding fiscal quarter.
"Maturity Date" means September 10, 2005.
"Moody's" means Moody's Investors Service, Inc. and any successor thereto.
"Multicurrency Commitment" means, as to each Multicurrency Lender, the
commitment of such Lender to make Multicurrency Committed Loans and to
participate in Multicurrency L/C Obligations in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth as
such Multicurrency Lender's "Multicurrency Commitment" on Schedule 2.01.
"Multicurrency Committed Borrowing" means a borrowing consisting of
simultaneous Multicurrency Committed Loans of the same Type, in the same
currency and, in the case of Eurocurrency Rate Loans, having the same
Interest Period made by each of the Multicurrency Lenders as provided
herein.
"Multicurrency Committed Loans" has the meaning provided in Section
2.01(b).
"Multicurrency L/C Advance" means, with respect to each Multicurrency
Lender, such Lender's funding of its participation in a Multicurrency L/C
Borrowing.
"Multicurrency L/C Borrowing" means an extension of credit resulting from a
drawing under any Multicurrency Letter of Credit that has not been
reimbursed on the date when made or refinanced as a Multicurrency Committed
Borrowing.
"Multicurrency L/C Issuer" means Bank of America in its capacity as issuer
of the Multicurrency Letters of Credit, and its successors in such
capacity.
18
Page 80
"Multicurrency L/C Obligations" means as of any date of determination, the
aggregate undrawn amount of all outstanding Multicurrency Letters of
Credit, plus the aggregate amount of all Unreimbursed Amounts in respect of
Multicurrency Letters of Credit, including Multicurrency L/C Borrowings.
"Multicurrency Lenders" means each of the Lenders with Multicurrency
Commitments hereunder.
"Multicurrency Letter of Credit" means (i) those Existing Letters of Credit
identified as "Multicurrency Letters of Credit" on Schedule 2.03 and (ii)
any letter of credit issued under the Multicurrency Commitments under the
provisions of Section 2.03(a). Multicurrency Letters of Credit may be
commercial letters of credit or standby letters of credit.
"Multicurrency Letter of Credit Sublimit" shall have the meaning given such
term in Section 2.03(a)(ii).
"Multicurrency Loan Obligations" means Multicurrency Committed Loans and
Multicurrency L/C Obligations.
"Multicurrency Pro Rata Share" means, with respect to each Multicurrency
Lender, a fraction (expressed as percentage, carried out to the ninth
decimal place), the numerator of which is the amount of the Multicurrency
Commitment of such Lender at such time and the denominator of which is the
amount of the Aggregate Multicurrency Commitments at such time; provided
that if the Multicurrency Commitments shall have been terminated pursuant
to Section 9.02, then the Multicurrency Pro Rata Share of each Lender shall
be determined based on the Multicurrency Pro Rata Share of such
Multicurrency Lender immediately prior to such termination and after giving
effect to any subsequent assignments made pursuant to the terms hereof. The
initial Multicurrency Pro Rata Share of each Multicurrency Lender is set
forth as such Multicurrency Lender's "Multicurrency Pro Rata Share" on
Schedule 2.01.
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the
preceding five plan years, has made or been obligated to make
contributions.
"Note" means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit
C.
"Obligations" means, without duplication, (i) the Domestic Loan
Obligations, (ii) the Multicurrency Loan Obligations, (iii) all advances
to, and debts, liabilities, obligations, covenants and duties of, any Loan
Party arising under any Loan Document or otherwise with respect to any Loan
or Letter of Credit, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing
or hereafter arising and including interest and fees that accrue after the
commencement
19
Page 81
by or against any Loan Party or any Affiliate thereof of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding, and (iv) any Swap Contract of any Loan Party to which a
Lender or any Affiliate of such Lender is a party.
"Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating
agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with
its formation or organization with the applicable Governmental Authority in
the jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.
"Outstanding Amount" means (i) with respect to Committed Loans and Swing
Line Loans on any date, the aggregate outstanding principal Dollar
Equivalent thereof after giving effect to any borrowings and prepayments or
repayments of Committed Loans and Swing Line Loans, as the case may be,
occurring on such date; and (ii) with respect to any L/C Obligations on any
date, the Dollar Equivalent of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any
other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid
drawings under any Letters of Credit or any reductions in the maximum
amount available for drawing under Letters of Credit taking effect on such
date.
"Overnight Rate" means, for any day, (a) with respect to any amount
denominated in Dollars, the Federal Funds Rate and (b) with respect to any
amount denominated in an Alternative Currency, the rate of interest per
annum at which overnight deposits in the applicable Alternative Currency,
in an amount approximately equal to the amount with respect to which such
rate is being determined, would be offered for such day by a branch or
Affiliate of Bank of America located in the applicable interbank market for
such currency to major banks in such interbank market.
"Participant" has the meaning specified in Section 11.07(d).
"Participating Member State" means each state so described in any EMU
Legislation.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower
or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate
contributes or has an obligation to contribute,
20
Page 82
or in the case of a multiple employer or other plan described in Section
4064(a) of ERISA, has made contributions at any time during the immediately
preceding five plan years.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any
such plan that is subject to Section 412 of the Internal Revenue Code or
Title IV of ERISA, any ERISA Affiliate.
"Pro Forma Basis" means, for purposes of determining the applicable pricing
level under the definition of "Applicable Percentage" (if the Borrower is
unrated) and determining compliance with the financial covenants hereunder,
that the subject transaction shall be deemed to have occurred as of the
first day of the period of four consecutive fiscal quarters ending as of
the end of the most recent fiscal quarter for which annual or quarterly
financial statements shall have been delivered in accordance with the
provisions hereof. Further, for purposes of making calculations on a "Pro
Forma Basis" hereunder, (i) in the case of any Disposition, (A) income
statement items (whether positive or negative) attributable to the
property, entities or business units that are the subject of the
disposition shall be excluded to the extent relating to any period prior to
the date of subject transaction, and (B) Indebtedness paid or retired in
connection with the subject transaction shall be deemed to have been paid
and retired as of the first day of the applicable period; and (ii) in the
case of any acquisition, (A) income statement items (whether positive or
negative) attributable to the property, entities or business units that are
the subject of the acquisition shall be included to the extent relating to
any period prior to the date of subject transaction, and (B) Indebtedness
incurred in connection with the subject transaction shall be deemed to have
been incurred as of the first day of the applicable period (and interest
expense shall be imputed for the applicable period assuming prevailing
interest rates hereunder).
"Pro Rata Share" means (i) in respect of the Domestic Commitments and the
Domestic Loan Obligations, the Domestic Pro Rata Share, and (ii) in respect
of the Multicurrency Commitments and the Multicurrency Loan Obligations,
the Multicurrency Pro Rata Share.
"Register" has the meaning set forth in Section 11.07(c).
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the thirty-day notice period has been
waived.
"Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice, (b)
with respect to an L/C Credit Extension, a Letter of Credit Application,
and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
21
Page 83
"Required Lenders" means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments or, if the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 9.02, Lenders
holding in the aggregate more than 50% of the Loan Obligations (including,
in each case, the aggregate amount of each Lender's risk participation and
funded participation in L/C Obligations and Swing Line Loans); provided
that the Commitment of, and the portion of the Loan Obligations held or
deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Loan Party. Any
document delivered hereunder that is signed by a Responsible Officer of a
Loan Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such
Loan Party and such Responsible Officer shall be conclusively presumed to
have acted on behalf of such Loan Party.
"Revaluation Date" means each of the following: (a) each date of a
Borrowing of a Eurocurrency Rate Loan denominated in an Alternative
Currency, (b) each date of a continuation of a Eurocurrency Rate Loan
denominated in an Alternative Currency pursuant to Section 2.02; (c) each
date of issuance of a Letter of Credit denominated in an Alternative
Currency, (d) each date of an amendment of any such Letter of Credit having
the effect of increasing the amount thereof, and (e) such additional dates
as the Administrative Agent or the Required Lenders shall specify.
"Sale and Leaseback Transaction" means, with respect to the Borrower or any
Subsidiary, any arrangement, directly or indirectly, with any person
whereby the Borrower or such Subsidiary shall sell or transfer any
property, real or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or
other property that it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
"Same Day Funds" means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements
and payments in an Alternative Currency, same day or other funds as may be
determined by the Administrative Agent to be customary in the place of
disbursement or payment for the settlement of international banking
transactions in the relevant Alternative Currency.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Securitization Transaction" means any financing or factoring or similar
transaction (or series of such transactions) that has been or may be
entered into by a member of the
22
Page 84
Consolidated Group pursuant to which such member of the Consolidated Group
may sell, convey or otherwise transfer, or may grant a security interest
in, any accounts receivable, notes receivable, rights to future lease
payments or residuals or other similar rights to payment (the
"Securitization Receivables") to a special purpose Subsidiary or Affiliate
or any other Person.
"Special Notice Currency" means at any time an Alternative Currency, other
than the currency of Japan or of a country that is a member of the
Organization for Economic Cooperation and Development at such time located
in North America or Europe.
"Spot Rate" means, for a currency, the rate quoted by Bank of America as
the spot rate for the purchase by Bank of America of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date as
of which the foreign exchange computation is made.
"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of
the shares of securities or other interests having ordinary voting power
for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening
of a contingency) are at the time beneficially owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a
Subsidiary or Subsidiaries of the Borrower. Notwithstanding anything to the
contrary contained herein, Jordan Bromine Company Ltd. shall not be
considered a Subsidiary of the Borrower for purposes of this Agreement.
"Swap Contract" means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of
the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the related
confirmations, that are subject to the terms and conditions of, or governed
by, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a "Master Agreement"), including any
such obligations or liabilities under any Master Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to
23
Page 85
such Swap Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior
to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by
any recognized dealer in such Swap Contracts (which may include a Lender or
any Affiliate of a Lender).
"Swing Line" means the revolving credit facility made available by the
Swing Line Lender pursuant to Section 2.04.
"Swing Line Borrowing" means a borrowing of a Swing Line Loan pursuant to
Section 2.04.
"Swing Line Lender" means Bank of America in its capacity as provider of
Swing Line Loans, or any successor swing line lender hereunder.
"Swing Line Loan" has the meaning specified in Section 2.04(a).
"Swing Line Loan Notice" means a notice of a Swing Line Borrowing pursuant
to Section 2.04(b), which, if in writing, shall be substantially in the
form of Exhibit B.
"Swing Line Sublimit" has the meaning specified in Section 2.04(a).
"Synthetic Lease" means any synthetic, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product where
such transaction is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease under GAAP.
"TARGET Day" means any day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer (TARGET) System (or, if such clearing
system ceases to be operative, such other clearing system (if any)
determined by the Administrative Agent to be a suitable replacement) is
operating.
"Threshold Amount" means THIRTY-FIVE MILLION DOLLARS ($35,000,000).
"Type" means, with respect to a Committed Loan, its character as a Base
Rate Loan or a Eurocurrency Rate Loan.
"Unfunded Pension Liability" means, the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Pension Plan's assets, determined as of the end of the most recently
completed plan year in accordance with the assumptions used for funding the
Pension Plan pursuant to Section 412 of the Internal Revenue Code for the
applicable plan year.
"United States" and "U.S." mean the United States of America.
24
Page 86
"Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).
1.02 Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) (i) The words "herein," "hereto," "hereof" and "hereunder" and words of
similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.
(ii) Article, Section, Exhibit and Schedule references are to the Loan
Document in which such reference appears unless otherwise expressly
referenced.
(iii) The term "including" is by way of example and not limitation.
(iv) The term "documents" includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.
(c) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding"; and the word "through" means "to
and including."
(d) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation
of this Agreement or any other Loan Document.
1.03 Accounting Terms.
(a) All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the audited financial
statements for the fiscal year ended December 31, 2001, except as otherwise
specifically prescribed herein.
(b) Notwithstanding anything herein to the contrary, determinations of (i)
the applicable pricing level under the definition of "Applicable
Percentage" (if the Borrower
25
Page 87
is unrated) and (ii) compliance with the financial covenants hereunder
shall be made on a Pro Forma Basis.
(c) The Borrower will provide a written summary of material changes in GAAP
or in the consistent application thereof with each annual and quarterly
Compliance Certificate delivered in accordance with Section 7.02(b). If at
any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative
Agent, the Lenders and the Borrower shall negotiate in good faith to amend
such ratio or requirement to preserve the original intent thereof in light
of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Administrative Agent and
the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.
1.04 Rounding.
Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by
the other component, carrying the result to one place more than the number
of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).
1.05 References to Agreements and Laws.
Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but
only to the extent that such amendments, restatements, extensions,
supplements and other modifications are not prohibited by any Loan
Document; and (b) references to any Law shall include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.
1.06 Times of Day.
Unless otherwise specified, all references herein to times of day shall be
references to New York time (Eastern daylight or standard, as applicable).
26
Page 88
1.07 Letter of Credit Amounts.
Unless otherwise specified, all references herein to the amount of a Letter
of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to all increases thereof
contemplated by such Letter of Credit or the Letter of Credit Application
therefor, whether or not such maximum face amount is in effect at such
time.
1.08 Exchange Rates; Currency Equivalents.
(a) The Administrative Agent shall determine the Spot Rates as of each
Revaluation Date to be used for calculating Dollar Equivalent amounts of
Credit Extensions and Outstanding Amounts denominated in Alternative
Currencies. Such Spot Rates shall become effective as of such Revaluation
Date and shall be the Spot Rates employed in converting any amounts between
the applicable currencies until the next Revaluation Date to occur. Except
for purposes of financial statements delivered by Loan Parties hereunder or
calculating financial covenants hereunder or except as otherwise provided
herein, the applicable amount of any currency for purposes of the Loan
Documents shall be such Dollar Equivalent amount as so determined by the
Administrative Agent.
(b) Wherever in this Agreement in connection with a Borrowing, conversion,
continuation or prepayment of a Loan or the issuance of a Letter of Credit,
an amount, such as a required minimum or multiple amount, is expressed in
Dollars, but such Borrowing, Loan or Letter of Credit is denominated in an
Alternative Currency, such amount shall be the relevant Alternative
Currency Equivalent of such Dollar amount (rounded to the nearest 1,000
units of such Alternative Currency), as determined by the Administrative
Agent.
1.09 Additional Alternative Currencies.
The Borrower may from time to time request that Committed Loans be made in
a currency other than those specifically listed in the definition of
"Alternative Currency"; provided that such requested currency otherwise
meets the requirements set forth in such definition. Any such request shall
be made to the Administrative Agent (which shall promptly notify each
Multicurrency Lender thereof) not later than 12:00 noon twelve Business
Days prior to the date of the desired Credit Extension. Each Multicurrency
Lender shall notify the Administrative Agent, not later than 12:00 noon ten
Business Days after receipt of such request whether it consents, in its
sole discretion, to making Committed Loans in such requested currency. Any
failure by a Multicurrency Lender to respond to such request within the
time period specified in the preceding sentence shall be deemed to be a
refusal by such Lender to make Committed Loans in such requested currency.
If all the Multicurrency Lenders consent to making Committed Loans in such
requested currency, the Administrative Agent shall so notify the Borrower
and such currency shall thereupon be deemed for all purposes to be an
Alternative Currency hereunder. Upon any Multicurrency Lender's refusal to
make
27
Page 89
Committed Loans in the additional requested currency, the Borrower may
replace such Lender in accordance with Section 11.16.
1.10 Redenomination of Certain Alternative Currencies.
(a) Each obligation of the Borrower to make a payment denominated in the
national currency unit of any member state of the European Union that
adopts the Euro as its lawful currency after the date hereof shall be
redenominated into Euro at the time of such adoption (in accordance with
the EMU Legislation). If, in relation to the currency of any such member
state, the basis of accrual of interest expressed in this Agreement in
respect of that currency shall be inconsistent with any convention or
practice in the London interbank market for the basis of accrual of
interest in respect of the Euro, such expressed basis shall be replaced by
such convention or practice with effect from the date on which such member
state adopts the Euro as its lawful currency; provided that if any
Borrowing in the currency of such member state is outstanding immediately
prior to such date, such replacement shall take effect, with respect to
such Borrowing, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect the adoption of the Euro by any member
state of the European Union and any relevant market conventions or
practices relating to the Euro.
Article II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 Committed Loans; Increase in Commitments.
(a) Domestic Committed Loans. Subject to the terms and conditions set forth
herein, each Domestic Lender severally agrees to make loans (each such loan
a "Domestic Committed Loan") to the Borrower in Dollars from time to time
on any Business Day; provided that after giving effect to any such Domestic
Committed Loan, (i) with regard to the Domestic Lenders collectively, the
aggregate principal amount of Domestic Loan Obligations shall not exceed
TWO HUNDRED SEVENTY-FIVE MILLION DOLLARS ($275,000,000) (as such amount may
be increased or decreased in accordance with the provisions hereof, the
"Aggregate Domestic Commitments"), and (ii) with regard to each Domestic
Lender individually, such Lender's Domestic Pro Rata Share of the Domestic
Loan Obligations shall not exceed its respective Domestic Commitment.
Domestic Committed Loans may consist of Base Rate Loans, Eurocurrency Rate
Loans, or a combination thereof, as the Borrower may request, and may be
repaid and reborrowed in accordance with the provisions hereof.
28
Page 90
(b) Multicurrency Committed Loans. Subject to the terms and conditions set
forth herein, each Multicurrency Lender severally agrees to make loans
(each such loan a "Multicurrency Committed Loan") to the Borrower in
Dollars or Alternative Currencies from time to time on any Business Day;
provided that after giving effect to any such Multicurrency Committed Loan,
(i) with regard to the Multicurrency Lenders collectively, the aggregate
principal amount of Multicurrency Loan Obligations shall not exceed ONE
HUNDRED MILLION DOLLARS ($100,000,000) (as such amount may be increased or
decreased in accordance with the provisions hereof, the "Aggregate
Multicurrency Commitments"), and (ii) with regard to each Multicurrency
Lender individually, such Lender's Multicurrency Pro Rata Share of the
Multicurrency Loan Obligations shall not exceed its respective
Multicurrency Commitment. Multicurrency Committed Loans may consist of Base
Rate Loans, Eurocurrency Rate Loans, or a combination thereof, as the
Borrower may request, and may be repaid and reborrowed in accordance with
the provisions hereof.
(c) Increase in Aggregate Commitments. Subject to the terms and conditions
set forth herein, the Borrower may, upon written notice to the
Administrative Agent, increase the Aggregate Commitments to an amount not
to exceed FOUR HUNDRED MILLION DOLLARS ($400,000,000); provided that:
(i) the Borrower shall obtain commitments for the amount of the increase
from existing Lenders or other financial institutions reasonably acceptable
to the Administrative Agent, which financial institutions shall join in
this Agreement as Lenders by joinder agreement substantially in the form of
Exhibit H attached hereto or other arrangement reasonably acceptable to the
Administrative Agent, (ii) any such increase to the Aggregate Domestic
Commitments or to the Aggregate Multicurrency Commitments shall be in a
minimum aggregate principal amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof (or the remaining amount, if less), (iii) if
any Committed Loans are outstanding at the time of any such increase, the
Borrower shall make such payments and adjustments on the Committed Loans
(including payment of any amounts owing under Section 3.05) as may be
necessary to give effect to the revised Pro Rata Shares and Commitment
amounts, and (iv) the conditions to the making of a Committed Loan set
forth in Section 5.02 shall be satisfied.
In connection with any such increase in the Aggregate Commitments, Schedule
2.01 shall be revised to reflect the modified commitments and commitment
percentages of the Lenders, and the Borrower shall provide supporting
corporate resolutions, legal opinions, promissory notes and other items as
may be reasonably requested by the Administrative Agent on behalf of any
Lender in connection therewith.
2.02 Borrowings, Conversions and Continuations of Committed Loans.
(a) Each Committed Borrowing, each conversion of Committed Loans from one
Type to the other, and each continuation of Committed Loans as the same
Type shall be made upon the Borrower's irrevocable notice to the
Administrative Agent, which may
29
Page 91
be given by telephone. Each such notice must be received by the
Administrative Agent not later than 12:00 noon (i) three Business Days
prior to the requested date of any Borrowing of, conversion to or
continuation of Eurocurrency Rate Loans denominated in Dollars or of any
conversion of Eurocurrency Rate Loans denominated in Dollars to Base Rate
Loans, (ii) four Business Days (or five Business Days in the case of
Special Notice Currency) prior to the requested date of any Borrowing of,
conversion to or continuation of Eurocurrency Rate Loans denominated in
Alternative Currencies and (ii) one Business Day prior to the requested
date of any Borrowing of Base Rate Loans. Each telephonic notice by the
Borrower pursuant to this Section 2.02(b) must be confirmed promptly by
delivery to the Administrative Agent of a written Committed Loan Notice,
appropriately completed and signed by a Responsible Officer of the
Borrower. Each Borrowing of, conversion to or continuation of Eurocurrency
Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple
of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and
2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in a
principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof. Each Committed Loan Notice (whether telephonic or written) shall
specify (i) whether the Borrower is requesting a Committed Borrowing, a
conversion of Committed Loans from one Type to the other, or a continuation
of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing,
conversion or continuation, as the case may be (which shall be a Business
Day), (iii) the principal amount of Committed Loans to be borrowed,
converted or continued, (iv) the Type of Committed Loans to be borrowed or
to which existing Committed Loans are to be converted, (v) if applicable,
the duration of the Interest Period with respect thereto and (vi) if
applicable, the Alternative Currency requested with respect thereto. If the
Borrower fails to specify a Type of Committed Loan in a Committed Loan
Notice or if the Borrower fails to give a timely notice requesting a
conversion or continuation, then the applicable Committed Loans shall be
made as, or converted to, Base Rate Loans on the last day of the Interest
Period applicable thereto; provided, however, that in the case of a failure
to timely request a continuation of Committed Loans denominated in an
Alternative Currency, such Loans shall be continued as Eurocurrency Rate
Loans in their original currency with an Interest Period of one month. No
Committed Loan may be converted into or continued as a Committed Loan
denominated in a different currency, but instead must be prepaid in the
original currency of such Loan and reborrowed in the other currency.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount of its Pro Rata Share of
the applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Administrative Agent shall
notify each Lender of the details of any automatic conversion to Base Rate
Loans or continuation of Committed Loans denominated in an Alternative
Currency, in each case as described in the preceding subsection. In the
case of a Committed Borrowing, each Lender shall make the amount of its
Committed Loan available to the Administrative Agent in Same Day Funds at
the Administrative Agent's Office for the Applicable Currency not later
than 1:00 p.m., in the case of any Committed Loan denominated in Dollars,
and not later than the Applicable Time specified by the Administrative
Agent in the case of any Committed Loan
30
Page 92
denominated in Alternative Currency, in each case on the Business Day
specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 5.02 (and, if such Borrowing is
the initial Credit Extension, Section 5.01), the Administrative Agent shall
make all funds so received available to the Borrower in like funds as
received by the Administrative Agent either by (i) crediting the account of
the Borrower on the books of Bank of America with the amount of such funds
or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower; provided, however, that if, on the date of a
Committed Borrowing in Dollars, there are Swing Line Loans or L/C
Borrowings outstanding, then the proceeds of such Borrowing shall be
applied, first, to the payment in full of any such L/C Borrowings, second,
to the payment in full of any such Swing Line Loans, and third, to the
Borrower as provided above.
(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be
continued or converted only on the last day of the Interest Period for such
Eurocurrency Rate Loan. During the existence of a Default or Event of
Default, no Loans may be requested as, converted to or continued as
Eurocurrency Rate Loans without the consent of the Required Lenders, and
the Required Lenders may demand that (i) any or all of the then outstanding
Eurocurrency Rate Loans denominated in Dollars be converted immediately to
Base Rate Loans and (ii) any or all of the then outstanding Eurocurrency
Rate Loans denominated in an Alternative Currency be prepaid on the last
day of the then current Interest Period with respect thereto.
(d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for
Eurocurrency Rate Loans upon determination of such interest rate. The
determination of the Adjusted Eurocurrency Rate by the Administrative Agent
shall be conclusive in the absence of manifest error. At any time that Base
Rate Loans are outstanding, the Administrative Agent shall notify the
Borrower and the Lenders of any change in Bank of America's prime rate used
in determining the Base Rate promptly following the public announcement of
such change.
(e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of
Committed Loans as the same Type, there shall not be more than ten Interest
Periods in effect with respect to Committed Loans.
2.03 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Domestic Letter of Credit Commitment. Subject to the terms and
conditions set forth herein,
(A) the Domestic L/C Issuer agrees, in reliance upon the agreements of the
other Domestic Lenders set forth herein, (1) on any Business Day
31
Page 93
during the period from the Closing Date until the Letter of Credit
Expiration Date, to issue Domestic Letters of Credit in Dollars for the
account of the Borrower or any of its Subsidiaries, and to amend or renew
Domestic Letters of Credit previously issued by it, in accordance with the
provisions hereof, and (2) to honor drafts under Domestic Letters of
Credit, and
(B) the Domestic Lenders severally agree to participate in the Domestic
Letters of Credit as provided herein; provided that (x) the aggregate
principal amount of Domestic L/C Obligations shall not exceed the sum of
THIRTY-FIVE MILLION DOLLARS ($35,000,000) minus the aggregate principal
amount of Multicurrency L/C Obligations (as such amount may be increased or
decreased in accordance with the provisions hereof, the "Domestic Letter of
Credit Sublimit"), (y) with regard to the Domestic Lenders collectively,
the aggregate principal amount of Domestic Loan Obligations shall not
exceed the Aggregate Domestic Commitments, and (z) with regard to each
Domestic Lender individually, such Lender's Domestic Pro Rata Share of the
Domestic Loan Obligations shall not exceed its respective Domestic
Commitment. Subject to the terms and conditions hereof, the Borrower's
ability to obtain Domestic Letters of Credit shall be fully revolving and
accordingly the Borrower may obtain Domestic Letters of Credit to replace
Domestic Letters of Credit that have expired or that have been drawn upon
and reimbursed. Existing Letters of Credit that are Domestic Letters of
Credit shall be deemed to have been issued hereunder and shall be subject
to and governed by the terms and conditions hereof.
(ii) Multicurrency Letter of Credit Commitment. Subject to the terms and
conditions set forth herein, (A) the Multicurrency L/C Issuer agrees, in
reliance upon the agreements of the other Multicurrency Lenders set forth
herein, (1) on any Business Day during the period from the Closing Date
until the Letter of Credit Expiration Date, to issue Multicurrency Letters
of Credit in Dollars or Alternative Currencies for the account of the
Borrower or any of its Subsidiaries, and to amend or renew Multicurrency
Letters of Credit previously issued by it, in accordance with the
provisions hereof, and (2) to honor drafts under Multicurrency Letters of
Credit, and
(B) the Multicurrency Lenders severally agree to participate in the
Multicurrency Letters of Credit as provided herein; provided that (x) the
aggregate principal amount of Multicurrency L/C Obligations shall not
exceed the sum of THIRTY-FIVE MILLION DOLLARS ($35,000,000) minus the
aggregate principal amount of Domestic L/C Obligations (as such amount may
be increased or decreased in accordance with the provisions hereof, the
"Multicurrency Letter of Credit Sublimit"), (y) with regard to the
Multicurrency Lenders collectively, the aggregate principal amount of
Multicurrency Loan Obligations shall not exceed the Aggregate
32
Page 94
Multicurrency Commitments, and (z) with regard to each Multicurrency Lender
individually, such Lender's Multicurrency Pro Rata Share of the
Multicurrency Loan Obligations shall not exceed its respective
Multicurrency Commitment. Subject to the terms and conditions hereof, the
Borrower's ability to obtain Multicurrency Letters of Credit shall be fully
revolving and accordingly the Borrower may obtain Multicurrency Letters of
Credit to replace Multicurrency Letters of Credit that have expired or that
have been drawn upon and reimbursed. Existing Letters of Credit that are
Multicurrency Letters of Credit shall be deemed to have been issued
hereunder and shall be subject to and governed by the terms and conditions
hereof.
(iii) The applicable L/C Issuer shall be under no obligation to issue any
Letter of Credit if:
(A) the issuance of such Letter of Credit would violate one or more
policies of such L/C Issuer; or
(B) such Letter of Credit is in an initial amount less than $25,000, in the
case of a commercial Letter of Credit, or $100,000, in the case of a
standby Letter of Credit, or (i) with respect to Domestic Letters of
Credit, is to be denominated in a currency other than Dollars, and (ii)
with respect to Multicurrency Letters of Credit, is to be denominated in a
currency other than Dollars or Alternative Currencies.
(iv) The applicable L/C Issuer shall not issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer
from issuing such Letter of Credit, or any Law applicable to such L/C
Issuer or any request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over such L/C Issuer
shall prohibit, or request that such L/C Issuer refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular or
shall impose upon such L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which such L/C Issuer is
not otherwise compensated hereunder) not in effect on the Closing Date, or
shall impose upon such L/C Issuer any unreimbursed loss, cost or expense
that was not applicable on the Closing Date and that such L/C Issuer in
good faith deems material to it;
(B) subject to Section 2.03(b)(iii), the expiry date of such requested
Letter of Credit would occur more than twelve months after the date of
issuance or last renewal, unless (1) with respect to Domestic Letters of
Credit, Domestic Lenders having more than 50% of the Domestic Commitments
(or, if the commitment to make Loans and L/C Credit
33
Page 95
Extensions has been terminated, Domestic Lenders holding more than 50% of
the Domestic Loan Obligations (including, in each case, the aggregate
amount of such Lender's risk participation and funded participation in
Domestic L/C Obligations and Swing Line Loans) have approved such expiry
date, and (2) with respect to Multicurrency Letters of Credit,
Multicurrency Lenders having more than 50% of the Multicurrency Commitments
(or, if the commitment to make Loans and L/C Credit Extensions has been
terminated, Multicurrency Lenders holding more than 50% of the
Multicurrency Loan Obligations (including, in each case, the aggregate
amount of such Lender's risk participation and funded participation in
Multicurrency L/C Obligations) have approved such expiry date; or
(C) the expiry date of such requested Letter of Credit would occur after
the Letter of Credit Expiration Date, unless (i) with respect to Domestic
Letters of Credit, all of the Domestic Lenders have approved such expiry
date, and (ii) with respect to Multicurrency Letters of Credit, all of the
Multicurrency Lenders have approved such expiry date.
(v) The applicable L/C Issuer shall be under no obligation to amend any
Letter of Credit if (A) such L/C Issuer would have no obligation at such
time to issue such Letter of Credit in its amended form under the terms
hereof, or (B) the beneficiary of such Letter of Credit does not accept the
proposed amendment to such Letter of Credit.
(vi) The applicable L/C Issuer shall not issue or amend any Letter of
Credit if (A) one or more applicable conditions contained in Article V
shall not then be satisfied and such L/C Issuer shall have received written
notice thereof from any Lender, the Administrative Agent or any Loan Party
on or prior to the Business Day prior to the requested date of issuance or
amendment of such Letter of Credit, or (B) the Commitments have been
terminated pursuant to Section 9.02.
(b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of the Borrower delivered to the applicable L/C Issuer
(with a copy to the Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of
the Borrower. Such Letter of Credit Application must be received by such
L/C Issuer and the Administrative Agent not later than 12:00 noon at least
three Business Days (or such later date and time as such L/C Issuer may
agree in a particular instance in its sole discretion) prior to the
proposed issuance date or date of amendment, as the case may be. In the
case of a request for an initial issuance of a Letter of Credit, such
Letter of Credit Application shall specify in form and detail
34
Page 96
satisfactory to such L/C Issuer: (A) the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day); (B) the amount
and Applicable Currency thereof; (C) the expiry date thereof; (D) the name
and address of the beneficiary thereof; (E) the documents to be presented
by such beneficiary in case of any drawing thereunder; (F) the full text of
any certificate to be presented by such beneficiary in case of any drawing
thereunder; and (G) such other matters as such L/C Issuer may require. In
the case of a request for an amendment of any outstanding Letter of Credit,
such Letter of Credit Application shall specify in form and detail
satisfactory to such L/C Issuer (A) the Letter of Credit to be amended; (B)
the proposed date of amendment thereof (which shall be a Business Day); (C)
the nature of the proposed amendment; and (D) such other matters as such
L/C Issuer may require.
(ii) Promptly after receipt of any Letter of Credit Application, the
applicable L/C Issuer will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy
of such Letter of Credit Application from the Borrower and, if not, such
L/C Issuer will provide the Administrative Agent with a copy thereof. Upon
receipt by such L/C Issuer of confirmation from the Administrative Agent
that the requested issuance or amendment is permitted in accordance with
the terms hereof, then, subject to the terms and conditions hereof, such
L/C Issuer shall, on the requested date, issue a Letter of Credit for the
account of the Borrower or enter into the applicable amendment, as the case
may be, in each case in accordance with such L/C Issuer's usual and
customary business practices. Immediately upon the issuance of (A) each
Domestic Letter of Credit, each Domestic Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the
Domestic L/C Issuer a risk participation in such Letter of Credit in an
amount equal to the product of such Lender's Domestic Pro Rata Share times
the amount of such Letter of Credit and (B) each Multicurrency Letter of
Credit, each Multicurrency Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Multicurrency
L/C Issuer a risk participation in such Letter of Credit in an amount equal
to the product of such Lender's Multicurrency Pro Rata Share times the
amount of such Letter of Credit.
(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the applicable L/C Issuer may, in its sole and absolute
discretion, agree to issue a Letter of Credit that has automatic renewal
provisions (each, an "Auto-Renewal Letter of Credit"); provided that any
such Auto-Renewal Letter of Credit must permit such L/C Issuer to prevent
any such renewal at least once in each twelve-month period (commencing with
the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the "Nonrenewal Notice Date")
in each such twelve-month period to be agreed upon at the time such Letter
of Credit is issued. Unless otherwise directed by such L/C Issuer, the
Borrower shall not be required to make a specific request to such L/C
Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has
35
Page 97
been issued, the applicable Lenders shall be deemed to have authorized (but
may not require) such L/C Issuer to permit the renewal of such Letter of
Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that such L/C Issuer shall not permit
any such renewal if (A) it has determined that it would have no obligation
at such time to issue such Letter of Credit in its renewed form under the
terms hereof (by reason of the provisions of Section 2.03(a) or otherwise),
or (B) it has received notice (which may be by telephone or in writing) on
or before the day that is five Business Days before the Nonrenewal Notice
Date (1) from the Administrative Agent that the requisite applicable
Lenders have elected not to permit such renewal or (2) from the
Administrative Agent, any Lender or the Borrower that one or more of the
applicable conditions specified in Section 5.02 is not then satisfied.
(iv) Promptly after its delivery of any Letter of Credit or any amendment
to a Letter of Credit to an advising bank with respect thereto or to the
beneficiary thereof, the applicable L/C Issuer will also deliver to the
Borrower and the Administrative Agent a true and complete copy of such
Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon any drawing under any Letter of Credit, the applicable L/C Issuer
shall notify the Borrower and the Administrative Agent thereof. Not later
than 12:00 noon on the date of any payment by such L/C Issuer under a
Letter of Credit (each such date, an "Honor Date"), the Borrower shall
reimburse such L/C Issuer through the Administrative Agent in an amount
equal to the amount of such drawing and in the Applicable Currency. If the
Borrower fails to so reimburse such L/C Issuer by such time, the
Administrative Agent shall promptly notify each applicable Lender of the
Honor Date, the amount of the unreimbursed drawing (the "Unreimbursed
Amount"), and the amount of such Lender's Pro Rata Share thereof. In the
case of any Letter of Credit denominated in an Alternative Currency, the
Unreimbursed Amount shall be redenominated into Dollars and equal the
Dollar Equivalent Amount thereof, and the Administrative Agent shall so
notify the applicable Lenders in the notice described in the preceding
sentence. In such event, the Borrower shall be deemed to have requested a
Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in
an amount equal to the Unreimbursed Amount, without regard to the minimum
and multiples specified in Section 2.02 for the principal amount of Base
Rate Loans, and without regard to the amount of the unutilized portion of
the Aggregate Commitments and the conditions set forth in Section 5.02. Any
notice given by the L/C Issuers or the Administrative Agent pursuant to
this Section 2.03(c)(i) may be given by telephone if immediately confirmed
in writing; provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.
36
Page 98
(ii) Each Lender (including any Lender acting as an L/C Issuer) shall upon
any notice pursuant to Section 2.03(c)(i) make funds available to the
Administrative Agent for the account of the applicable L/C Issuer at the
Administrative Agent's Office for Dollar denominated payments in an amount
equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00
p.m. on the Business Day specified in such notice by the Administrative
Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each
Lender that so makes funds available shall be deemed to have made a
Committed Loan that is a Base Rate Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the applicable
L/C Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced
by a Committed Borrowing of Base Rate Loans for any reason, the Borrower
shall be deemed to have incurred from the applicable L/C Issuer an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate. In
such event, each applicable Lender's payment to the Administrative Agent
for the account of such L/C Issuer pursuant to Section 2.03(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.
(iv) Until each applicable Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.03(c) to reimburse the applicable L/C Issuer for
any amount drawn under any Letter of Credit, interest in respect of such
Lender's Pro Rata Share of such amount shall be solely for the account of
such L/C Issuer.
(v) Each Lender's obligation to make Committed Loans or L/C Advances to
reimburse an L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right that such Lender may have
against such L/C Issuer, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default or Event of
Default, (C) non-compliance with the conditions set forth in Section 5.02,
or (D) any other occurrence, event or condition, whether or not similar to
any of the foregoing. No such making of an L/C Advance shall relieve or
otherwise impair the obligation of the Borrower to reimburse the applicable
L/C Issuer for the amount of any payment made by such L/C Issuer under any
Letter of Credit, together with interest as provided herein.
(vi) If any Lender fails to make available to the Administrative Agent for
the account of an L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.03(c) by the time
specified in Section 2.03(c)(ii), such L/C Issuer shall be entitled to
recover from such
37
Page 99
Lender (acting through the Administrative Agent), on demand, such amount
with interest thereon for the period from the date such payment is required
to the date on which such payment is immediately available to such L/C
Issuer at a rate per annum equal to the Federal Funds Rate from time to
time in effect. A certificate of such L/C Issuer submitted to any
applicable Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest
error.
(d) Repayment of Participations.
(i) At any time after either L/C Issuer has made a payment under any Letter
of Credit and has received from any applicable Lender such Lender's L/C
Advance in respect of such payment in accordance with Section 2.03(c), if
the Administrative Agent receives for the account of such L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrower or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will promptly distribute to such Lender its Pro Rata
Share thereof (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's L/C Advance was
outstanding) in the same funds as those received by the Administrative
Agent.
(ii) If any payment received by the Administrative Agent for the account of
an L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned
under any of the circumstances described in Section 11.06 (including
pursuant to any settlement entered into by such L/C Issuer in its
discretion), each applicable Lender shall pay to the Administrative Agent
for the account of such L/C Issuer its Pro Rata Share thereof on demand of
the Administrative Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per
annum equal to the Federal Funds Rate from time to time in effect.
(e) Obligations Absolute. The obligation of the Borrower to reimburse the
applicable L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement
under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, any other Loan Document or any other agreement or instrument
relating thereto;
(ii) the existence of any claim, counterclaim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), such L/C Issuer or any
other Person,
38
Page 100
whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under such Letter of Credit;
(iv) any payment by such L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit; or any payment made by such L/C Issuer
under such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any
arising in connection with any proceeding under any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the
Borrower.
The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any
claim of noncompliance with the Borrower's instructions or other
irregularity, the Borrower will immediately notify the applicable L/C
Issuer. The Borrower shall be conclusively deemed to have waived any such
claim against such L/C Issuer and its correspondents unless such notice is
given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying
any drawing under a Letter of Credit, the L/C Issuers shall not have any
responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or
to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document.
None of the L/C Issuers, any Agent-Related Person nor any of the respective
correspondents, participants or assignees of the L/C Issuers shall be
liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the requisite applicable
Lenders; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument
related to any Letter of Credit or Letter of Credit Application. The
Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.
None of the L/C
39
Page 101
Issuers, any Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the L/C Issuers, shall be
liable or responsible for any of the matters described in clauses (i)
through (v) of Section 2.03(e); provided, however, that anything in such
clauses to the contrary notwithstanding, the Borrower may have a claim
against an L/C Issuer, and such L/C Issuer may be liable to the Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower that the
Borrower proves were caused by such L/C Issuer's willful misconduct or
gross negligence or such L/C Issuer's willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the
foregoing, the L/C Issuers may accept documents that appear on their face
to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C
Issuers shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any
reason.
(g) Cash Collateral. (i) If an L/C Issuer has honored any full or partial
drawing request under any Letter of Credit and such drawing has resulted in
an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date,
any Letter of Credit may for any reason remain outstanding and partially or
wholly undrawn, the Borrower shall immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations (in an amount equal to the Dollar
Equivalent of such Outstanding Amount determined as of the date of such L/C
Borrowing or the Letter of Credit Expiration Date, as the case may be). For
purposes hereof, "Cash Collateralize" means to pledge and deposit with or
deliver to the Administrative Agent, for the benefit of the L/C Issuers and
the Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to
the Administrative Agent and the applicable L/C Issuer (which documents are
hereby consented to by the Lenders). Derivatives of such term have
corresponding meanings. The Borrower hereby grants to the Administrative
Agent, for the benefit of the L/C Issuers and the Lenders, a security
interest in all such cash, deposit accounts and all balances therein and
all proceeds of the foregoing. Cash collateral shall be maintained in
blocked, non-interest bearing deposit accounts at the applicable L/C
Issuer. The Administrative Agent may, at any time and from time to time
after the initial deposit of Cash Collateral, request that additional Cash
Collateral be provided in order to protect against the results of exchange
rate fluctuations.
(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by
the applicable L/C Issuer and the Borrower when a Letter of Credit is
issued (including any such agreement applicable to an Existing Letter of
Credit), (i) the rules of the "International Standby Practices 1998"
published by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance) shall
apply to each standby Letter of Credit, and (ii) the rules of the Uniform
Customs and Practice for Documentary Credits, as most recently published by
the
40
Page 102
International Chamber of Commerce (the "ICC") at the time of issuance
(including the ICC decision published by the Commission on Banking
Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.
(i) Letter of Credit Fees. The Borrower shall pay Letter of Credit fees as
set forth in Section 2.09.
(j) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.
2.04 Swing Line Loans.
(a) Swing Line Loans. Subject to the terms and conditions set forth herein,
the Swing Line Lender agrees to make revolving loans (the "Swing Line
Loans" ) to the Borrower in Dollars on any Business Day during the
Availability Period; provided that (i) the aggregate principal amount of
Swing Line Loans shall not exceed THIRTY-FIVE MILLION DOLLARS ($35,000,000)
(as such amount may be increased or decreased in accordance with the
provisions hereof, the "Swing Line Sublimit"), (ii) with regard to the
Domestic Lenders collectively, the aggregate principal amount of Domestic
Loan Obligations shall not exceed the Aggregate Domestic Commitments, and
(iii) with regard to each Domestic Lender individually, such Lender's
Domestic Pro Rata Share of the Domestic Loan Obligations shall not exceed
its respective Domestic Commitment. Swing Line Loans shall be comprised
solely of Base Rate Loans, and may be repaid and reborrowed in accordance
with the provisions hereof. Immediately upon the making of a Swing Line
Loan, each Domestic Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a
participation interest in such Swing Line Loan in an amount equal to its
Domestic Pro Rata Share thereof.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the
Borrower's irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice
must be received by the Swing Line Lender and the Administrative Agent not
later than 2:00 p.m. on the requested borrowing date, and shall specify (i)
the amount to be borrowed, which shall be a minimum of $500,000, and a
multiple of $100,000 in excess thereof, and (ii) the requested borrowing
date, which shall be a Business Day. Each such telephonic notice must be
confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly
after receipt by the Swing Line Lender of any telephonic Swing Line Loan
Notice, the Swing Line Lender will confirm with the Administrative Agent
(by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender
will notify the Administrative Agent (by telephone or in writing) of the
contents thereof. Unless the Swing Line Lender has received notice (by
telephone or in writing)
41
Page 103
from the Administrative Agent (including at the request of any Lender)
prior to 12:00 noon on the date of the proposed Swing Line Borrowing (A)
directing the Swing Line Lender not to make such Swing Line Loan as a
result of the limitations set forth in the proviso to the first sentence of
Section 2.04(a), or (B) that one or more of the applicable conditions
specified in Article V is not then satisfied, then, subject to the terms
and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m.
on the borrowing date specified in such Swing Line Loan Notice, make the
amount of its Swing Line Loan available to the Borrower.
(c) Refinancing of Swing Line Loans.
(i) The Swing Line Lender at any time in its sole and absolute discretion
may request, on behalf of the Borrower (which hereby irrevocably requests
and authorizes the Swing Line Lender to so request on its behalf), that
each Domestic Lender make a Domestic Committed Loan that is a Base Rate
Loan in an amount equal to such Lender's Domestic Pro Rata Share of the
amount of Swing Line Loans then outstanding. Such request shall be made in
writing (which written request shall be deemed to be a Committed Loan
Notice for purposes hereof) and in accordance with the requirements of
Section 2.02, without regard to the minimum and multiples specified therein
for the principal amount of Base Rate Loans, and without regard to the
unutilized portion of the Aggregate Domestic Commitments or the conditions
set forth in Section 5.02. The Swing Line Lender shall furnish the Borrower
with a copy of the applicable Committed Loan Notice promptly after
delivering such notice to the Administrative Agent. Each Domestic Lender
shall make an amount equal to its Domestic Pro Rata Share of the amount
specified in such Committed Loan Notice available to the Administrative
Agent in immediately available funds for the account of the Swing Line
Lender at the Administrative Agent's Office not later than 2:00 p.m. on the
day specified in such Committed Loan Notice, whereupon, subject to Section
2.04(c)(ii), each Domestic Lender that so makes funds available shall be
deemed to have made a Domestic Committed Loan that is a Base Rate Loan to
the Borrower in such amount. The Administrative Agent shall remit the funds
so received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a
Domestic Committed Borrowing in accordance with Section 2.04(c)(i), the
request for Domestic Committed Loans that are Base Rate Loans submitted by
the Swing Line Lender as set forth herein shall be deemed to be a request
by the Swing Line Lender that each of the Domestic Lenders fund its risk
participation in the relevant Swing Line Loan and each Domestic Lender's
payment to the Administrative Agent for the account of the Swing Line
Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of
such participation.
(iii) If any Domestic Lender fails to make available to the Administrative
Agent for the account of the Swing Line Lender any amount required to be
paid by such Lender pursuant to the foregoing provisions of this Section
2.04(c) by
42
Page 104
the time specified in Section 2.04(c)(i), the Swing Line Lender shall be
entitled to recover from such Lender (acting through the Administrative
Agent), on demand, such amount with interest thereon for the period from
the date such payment is required to the date on which such payment is
immediately available to the Swing Line Lender at a rate per annum equal to
the Federal Funds Rate from time to time in effect. A certificate of the
Swing Line Lender submitted to any Domestic Lender (through the
Administrative Agent) with respect to any amounts owing under this clause
(iii) shall be conclusive absent manifest error.
(iv) Each Domestic Lender's obligation to make Domestic Committed Loans or
to purchase and fund risk participations in Swing Line Loans pursuant to
this Section 2.04(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any set-off, counterclaim,
recoupment, defense or other right that such Lender may have against the
Swing Line Lender, the Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of a Default or Event of
Default, (C) the conditions set forth in Section 5.02, or (D) any other
occurrence, event or condition, whether or not similar to any of the
foregoing. No such purchase or funding of risk participations shall relieve
or otherwise impair the obligation of the Borrower to repay Swing Line
Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any Domestic Lender has purchased and funded a risk
participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to such Lender its Domestic Pro Rata Share of such payment
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's risk participation was funded) in
the same funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of
principal or interest on any Swing Line Loan is required to be returned by
the Swing Line Lender under any of the circumstances described in Section
11.06 (including pursuant to any settlement entered into by the Swing Line
Lender in its discretion), each Domestic Lender shall pay to the Swing Line
Lender its Domestic Pro Rata Share thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned, at a rate per annum equal to the Federal Funds Rate.
The Administrative Agent will make such demand upon the request of the
Swing Line Lender.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall
be responsible for invoicing the Borrower for interest on the Swing Line
Loans. Until each Domestic Lender funds its Domestic Committed Loan or risk
participation pursuant to this Section 2.04 to refinance such Lender's
Domestic Pro Rata Share of any Swing
43
Page 105
Line Loan, interest in respect of such Pro Rata Share shall be solely for
the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans
directly to the Swing Line Lender.
2.05 Prepayments.
(a) The Borrower may, upon notice from the Borrower to the Administrative
Agent, at any time or from time to time voluntarily prepay Committed Loans
in whole or in part without premium or penalty; provided that (i) such
notice must be received by the Administrative Agent not later than 12:00
noon (A) three Business Days prior to any date of prepayment of
Eurocurrency Rate Loans denominated in Dollars, (B) four Business Days (or
five Business Days in the case of prepayment of Loans denominated in
Special Notice Currencies) prior to any date of prepayment of Eurocurrency
Rate Loans denominated in Alternative Currencies, and (C) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurocurrency Rate
Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof or, in each case, if less, the entire principal amount
thereof then outstanding. Each such notice shall specify the date and
amount of such prepayment, the Type(s) of Committed Loans to be prepaid,
and the amount of such prepayment to be applied to Domestic Committed Loans
and to Multicurrency Committed Loans (provided that if the Borrower does
not specify the Committed Loans to which such prepayment is to be applied,
such prepayment shall be applied pro rata to all Committed Loans
outstanding on the date thereof). The Administrative Agent will promptly
notify each applicable Lender of its receipt of each such notice, and of
the amount of such Lender's Pro Rata Share of such prepayment. If such
notice is given by the Borrower, the Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on
the date specified therein. Any prepayment of a Eurocurrency Rate Loan
shall be accompanied by all accrued interest thereon, together with any
additional amounts required pursuant to Section 3.05. Each such prepayment
shall be applied to the applicable Committed Loans of the Lenders in
accordance with their respective Pro Rata Shares thereof.
(b) The Borrower may, upon notice to the Swing Line Lender (with a copy to
the Administrative Agent), at any time or from time to time, voluntarily
prepay Swing Line Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Swing Line Lender and
the Administrative Agent not later than 2:00 p.m. on the date of the
prepayment, and (ii) any such prepayment shall be in a minimum principal
amount of $100,000. Each such notice shall specify the date and amount of
such prepayment. If such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein.
44
Page 106
(c) If at any time (i) the outstanding principal amount of Domestic Loan
Obligations shall be in excess of the Aggregate Domestic Commitments, (ii)
the outstanding principal amount of Domestic L/C Obligations shall be in
excess of the Domestic Letter of Credit Sublimit, or (iii) the outstanding
principal amount of Swing Line Loans shall be in excess of the Swing Line
Sublimit, the Borrower shall, within two Business Days, make prepayment on
or provide cash collateral in respect of the Domestic Loan Obligations in
an amount sufficient to eliminate the difference.
(d) If at any time (i) the outstanding principal amount of Multicurrency
Loan Obligations shall be in excess of the Aggregate Multicurrency
Commitments, or (ii) the outstanding principal amount of Multicurrency L/C
Obligations shall be in excess of the Multicurrency Letter of Credit
Sublimit, the Borrower shall, within two Business Days, make prepayment on
or provide cash collateral in respect of the Multicurrency Loan Obligations
in an amount sufficient to eliminate the difference. The Administrative
Agent may, at any time and from time to time after the initial deposit of
such Cash Collateral, request additional cash collateral be provided in
order to protect against the results of further exchange rate fluctuations.
2.06 Termination or Reduction of Commitments.
The Borrower may, upon notice from the Borrower to the Administrative
Agent, terminate the Aggregate Commitments or permanently reduce the
Aggregate Commitments to an amount not less than the Outstanding Amount of
Loans and L/C Obligations; provided that (i) any such notice shall be
received by the Administrative Agent not later than 12:00 noon five
Business Days prior to the date of termination or reduction, (ii) such
notice shall specify whether such reduction is of the Aggregate Domestic
Commitments or of the Aggregate Multicurrency Commitments (provided that if
the Borrower fails to specify application of such reduction, it shall be
applied pro rata to the Aggregate Domestic Commitments and the Aggregate
Multicurrency Commitments), and (iii) any such partial reduction shall be
in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000
in excess thereof. The Administrative Agent will promptly notify the
Lenders of any such notice of termination or reduction of the Aggregate
Commitments. Any reduction of the Aggregate Domestic Commitments or of the
Aggregate Multicurrency Commitments shall be applied to the Commitment of
each Lender according to its Pro Rata Share thereof. All facility fees and
utilization fees accrued until the effective date of any termination of the
Aggregate Commitments shall be paid on the effective date of such
termination.
2.07 Repayment of Loans.
(a) The Borrower shall repay to the Lenders on the Maturity Date the
aggregate principal amount of Committed Loans outstanding on such date.
(b) The Borrower shall repay each Swing Line Loan on the earlier to occur
of (i) the date five Business Days after such Loan is made and (ii) the
Maturity Date.
45
Page 107
2.08 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each
Eurocurrency Rate Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to the
sum of (A) the Adjusted Eurocurrency Rate for such Interest Period plus (B)
the Applicable Rate plus (C) without duplication, for any Interest Period
with respect to any Eurocurrency Rate Loan advanced by a Lender required to
comply with the relevant requirements of the Bank of England and the
Financial Services Authority of the United Kingdom, the Mandatory Cost Rate
for such Interest Period; (ii) each Base Rate Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date
at a rate per annum equal to the Base Rate plus the Applicable Rate; and
(iii) each Swing Line Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal
to the Base Rate plus the Applicable Rate.
(b) If any amount payable by the Borrower under any Loan Document is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by applicable Laws.
Furthermore, while any Event of Default exists, the Borrower shall pay
interest on the principal amount of all outstanding Obligations hereunder
at a fluctuating interest rate per annum at all times equal to the Default
Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid
interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
(d) For the purposes of the Interest Act (Canada), (i) whenever a rate of
interest or fee rate hereunder is calculated on the basis of a year (the
"deemed year") that contains fewer days than the actual number of days in
the calendar year of calculation, such rate of interest or fee rate shall
be expressed as a yearly rate by multiplying such rate of interest or fee
rate by the actual number of days in the calendar year of calculation and
dividing it by the number of days in the deemed year, (ii) the principle of
deemed reinvestment of interest shall not apply to any interest calculation
hereunder and (iii) the rates of interest stipulated herein are intended to
be nominal rates and not effective rates or yields.
2.09 Fees.
(a) Facility Fees.
46
Page 108
(i) Domestic Facility Fees. The Borrower shall pay to the Administrative
Agent for the account of each Domestic Lender in accordance with its
Domestic Pro Rata Share, a facility fee in Dollars equal to the Applicable
Rate times the actual daily amount of the Aggregate Domestic Commitments
(or, if the Aggregate Domestic Commitments have terminated, on the
Outstanding Amount of all Domestic Loan Obligations), regardless of usage.
Such facility fee shall accrue at all times during the Availability Period
(and thereafter so long as any Domestic Loan Obligations remain
outstanding), including at any time during which one or more of the
conditions in Article V is not met.
(ii) Multicurrency Facility Fees. The Borrower shall pay to the
Administrative Agent for the account of each Multicurrency Lender in
accordance with its Multicurrency Pro Rata Share, a facility fee in Dollars
equal to the Applicable Rate times the actual daily amount of the Aggregate
Multicurrency Commitments (or, if the Aggregate Multicurrency Commitments
have terminated, on the Outstanding Amount of all Multicurrency Loan
Obligations), regardless of usage. Such facility fee shall accrue at all
times during the Availability Period (and thereafter so long as any
Multicurrency Loan Obligations remain outstanding), including at any time
during which one or more of the conditions in Article V is not met.
The facility fees set forth in this Section 2.09(a) shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after
the Closing Date, and on the Maturity Date (and, if applicable, thereafter
on demand). The facility fees shall be calculated quarterly in arrears, and
if there is any change in the Applicable Rate during any quarter, the
actual daily amount shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate
was in effect.
(b) Utilization Fees.
(i) Domestic Utilization Fees. The Borrower shall pay to the Administrative
Agent for the account of each Domestic Lender in accordance with its
Domestic Pro Rata Share, a utilization fee in Dollars equal to the
Applicable Rate times the Domestic Loan Obligations on each day that the
Domestic Loan Obligations exceed 40% of the actual daily amount of the
Aggregate Domestic Commitments.
(ii) Multicurrency Utilization Fees. The Borrower shall pay to the
Administrative Agent for the account of each Multicurrency Lender in
accordance with its Multicurrency Pro Rata Share, a utilization fee in
Dollars equal to the Applicable Rate times the Multicurrency Loan
Obligations on each day that the Multicurrency Loan Obligations exceed 40%
of the actual daily amount of the Aggregate Multicurrency Commitments.
47
Page 109
The utilization fees set forth in this Section 2.09(b) shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after
the Closing Date, and on the Maturity Date. The utilization fees shall be
calculated quarterly in arrears and if there is any change in the
Applicable Rate during any quarter, the daily amount shall be computed and
multiplied by the Applicable Rate for each period during which such
Applicable Rate was in effect. The utilization fees shall accrue at all
times, including at any time during which one or more of the conditions in
Article V is not met.
(c) Letter of Credit Fees.
(i) Domestic Letter of Credit Fees. The Borrower shall pay (A) to the
Administrative Agent for the account of each Domestic Lender in accordance
with its Domestic Pro Rata Share a Letter of Credit fee for each Domestic
Letter of Credit equal to the Applicable Rate times the Dollar Equivalent
of the daily maximum amount available to be drawn under such Letter of
Credit (whether or not such maximum amount is then in effect under such
Letter of Credit) and (B) directly to the Domestic L/C Issuer for its own
account a fronting fee with respect to each Domestic Letter of Credit in an
amount equal to 1/8 of 1% per annum on the Dollar Equivalent of the daily
maximum amount available to be drawn thereunder.
(ii) Multicurrency Letter of Credit Fees. The Borrower shall pay (A) to the
Administrative Agent for the account of each Multicurrency Lender in
accordance with its Multicurrency Pro Rata Share a Letter of Credit fee for
each Multicurrency Letter of Credit equal to the Applicable Rate times the
Dollar Equivalent of the daily maximum amount available to be drawn under
such Letter of Credit (whether or not such maximum amount is then in effect
under such Letter of Credit) and (B) directly to the Multicurrency L/C
Issuer for its own account a fronting fee with respect to each
Multicurrency Letter of Credit in an amount equal to 1/8 of 1% per annum on
the Dollar Equivalent of the daily maximum amount available to be drawn
thereunder.
The letter of credit fees set forth in this Section 2.09(c) shall be
computed on a quarterly basis in arrears and shall be due and payable on
the last Business Day of each March, June, September and December
(commencing with the first such date to occur after the issuance of such
Letter of Credit) and on the Letter of Credit Expiration Date. If there is
any change in the Applicable Rate during any quarter, the daily maximum
amount of each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect. In addition, the Borrower shall pay directly
to the applicable L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs
and charges, of such L/C Issuer relating to letters of credit as from time
to time in effect. Such fees and charges are due and payable on demand and
are nonrefundable.
48
Page 110
(d) Other Fees.
(i) The Borrower shall pay to the Arranger and the Administrative Agent for
their own respective accounts fees in the amounts and at the times
specified in the Fee Letter. Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.
2.10 Computation of Interest and Fees.
All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America's "prime rate" shall be made on the basis of
a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest shall be made on the basis of a
360-day year and actual days elapsed (which results in more fees or
interest, as applicable, being paid than if computed on the basis of a
365-day year) or, in the case of interest in respect of Loans denominated
in Alternative Currencies as to which market practice differs from the
foregoing, in accordance with such market practice. Interest shall accrue
on each Loan for the day on which the Loan is made, and shall not accrue on
a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day on
which it is made shall, subject to Section 2.12(a), bear interest for one
day.
2.11 Evidence of Debt.
(a) The Credit Extensions made by each Lender shall be evidenced by one or
more accounts or records maintained by such Lender and by the
Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions
made by the Lenders to the Borrower and the interest and payments thereon.
Any failure to so record or any error in doing so shall not, however, limit
or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts
and records of the Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the
absence of manifest error. Upon the request of any Lender made through the
Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such
Lender's Loans in addition to such accounts or records. Each Lender may
attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect
thereto.
49
Page 111
(b) In addition to the accounts and records referred to in subsection (a),
each Lender and the Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales
by such Lender of participations in Letters of Credit and Swing Line Loans.
In the event of any conflict between the accounts and records maintained by
the Administrative Agent and the accounts and records of any Lender in
respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error.
2.12 Payments Generally.
(a) All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein and except with respect to principal of
and interest on Loans denominated in Alternative Currency, all payments by
the Borrower hereunder shall be made to the Administrative Agent, for the
account of the respective Lenders to which such payment is owed, at the
Administrative Agent's Office in Dollars and in Same Day Funds not later
than 2:00 p.m. on the date specified herein. Except as otherwise expressly
provided herein, all payments by the Borrower hereunder with respect to
principal of and interest on Loans denominated in Alternative Currency
shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative
Agent's Office in such Alternative Currency and in Same Day Funds not later
than the Applicable Time specified by the Administrative Agent on the dates
specified herein. The Administrative Agent will promptly distribute to each
Lender its Pro Rata Share (or other applicable share as provided herein) of
such payment in like funds as received by wire transfer to such Lender's
Lending Office. All payments received by the Administrative Agent (i) after
2:00 p.m., in the case of payments in Dollars, or (ii) after the Applicable
Time specified by the Administrative Agent in the case of payments in an
Alternative Currency, shall in each case be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue
to accrue.
(b) Subject to the definition of "Interest Period," if any payment to be
made by the Borrower shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such
extension of time shall be reflected in computing interest or fees, as the
case may be.
(c) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i)
first, toward costs and expenses (including Attorney Costs and amounts
payable under Article III) incurred by the Administrative Agent and each
Lender, (ii) second, toward repayment 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 (iii) third,
toward repayment of principal and L/C Borrowings then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts
of principal and L/C Borrowings then due to such parties.
50
Page 112
(d) Unless the Borrower or any Lender has notified the Administrative
Agent, prior to the date any payment is required to be made by it to the
Administrative Agent hereunder, that the Borrower or such Lender, as the
case may be, will not make such payment, the Administrative Agent may
assume that the Borrower or such Lender, as the case may be, has timely
made such payment and may (but shall not be so required to), in reliance
thereon, make available a corresponding amount to the Person entitled
thereto. If and to the extent that such payment was not in fact made to the
Administrative Agent in Same Day Funds, then:
(i) if the Borrower failed to make such payment, each Lender shall
forthwith on demand repay to the Administrative Agent the portion of such
assumed payment that was made available to such Lender in Same Day Funds,
together with interest thereon in respect of each day from and including
the date such amount was made available by the Administrative Agent to such
Lender to the date such amount is repaid to the Administrative Agent in
Same Day Funds at the applicable Overnight Rate from time to time in
effect; and
(ii) if any Lender failed to make such payment, such Lender shall forthwith
on demand pay to the Administrative Agent the amount thereof in Same Day
Funds, together with interest thereon for the period from the date such
amount was made available by the Administrative Agent to the Borrower to
the date such amount is recovered by the Administrative Agent (the
"Compensation Period") at a rate per annum equal to the applicable
Overnight Rate from time to time in effect. If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such
Lender's Committed Loan included in the applicable Borrowing. If such
Lender does not pay such amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent may make a demand therefor upon
the Borrower, and the Borrower shall pay such amount to the Administrative
Agent, together with interest thereon for the Compensation Period at a rate
per annum equal to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights that the
Administrative Agent or the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this subsection (c) shall be conclusive,
absent manifest error.
(e) If any Lender makes available to the Administrative Agent funds for any
Loan to be made by such Lender as provided in the foregoing provisions of
this Article II, and such funds are not made available to the Borrower by
the Administrative Agent because the conditions to the applicable Credit
Extension set forth in Article V are not satisfied or waived in accordance
with the terms hereof, the Administrative Agent shall promptly return such
funds (in like funds as received from such Lender) to such Lender, without
interest.
51
Page 113
(f) The obligations of the Lenders hereunder to make Committed Loans and to
fund participations in Letters of Credit and Swing Line Loans are several
and not joint. The failure of any Lender to make any Committed Loan or to
fund any such participation on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on such
date, and no Lender shall be responsible for the failure of any other
Lender to so make its Committed Loan or purchase its participation.
(g) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds
for any Loan in any particular place or manner.
2.13 Sharing of Payments.
If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of the Committed Loans made by it, or the participations
in L/C Obligations or in Swing Line Loans held by it (but not including any
amounts applied by the Swing Line Lender to outstanding Swing Line Loans),
any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder) thereof, such Lender shall immediately (a)
notify the Administrative Agent of such fact, and (b) purchase from the
other Lenders such participations in the Committed Loans made by them
and/or such subparticipations in the participations in L/C Obligations or
Swing Line Loans held by them, as the case may be, as shall be necessary to
cause such purchasing Lender to share the excess payment in respect of such
Committed Loans or such participations, as the case may be, pro rata with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Lender under any of the
circumstances described in Section 11.06 (including pursuant to any
settlement entered into by the purchasing Lender in its discretion), such
purchase shall to that extent be rescinded and each other Lender shall
repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender's ratable share (according to
the proportion of (i) the amount of such paying Lender's required repayment
to (ii) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered, without further interest thereon.
The Borrower agrees that any Lender so purchasing a participation from
another Lender may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off, but subject to
Section 11.09) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Lenders
following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section shall from and after such purchase
have the right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
52
Page 114
Obligations purchased to the same extent as though the purchasing Lender
were the original owner of the Obligations purchased.
Article III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Except as otherwise expressly provided herein, any and all payments by
the Borrower to or for the account of the Administrative Agent or any
Lender under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding (i) in the case of the
Administrative Agent and each Lender, any and all present and future taxes
imposed on or measured by its income or gross receipts, and franchise taxes
imposed on it, by a jurisdiction (the "Taxing Jurisdiction") as a result of
(A) the Administrative Agent or such Lender, as the case may be, being
organized under the Laws of or maintaining a lending office in the Taxing
Jurisdiction or (B) the Administrative Agent or such Lender, as the case
may be, booking Loans made by it in the Taxing Jurisdiction and (ii) in the
case of a Foreign Lender, any taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities
with respect thereto, that are 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 are attributable to such Foreign
Lender's failure or inability (other than as a result of a change in any
applicable law, treaty or governmental rule, regulation or order) to comply
with Section 11.15, 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 taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities
with respect thereto, pursuant to this Section 3.01 (all such non-excluded
taxes, duties, levies, imposts, deductions, assessments, fees, withholdings
or similar charges, and liabilities with respect thereto being hereinafter
referred to as "Taxes" and all such excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities with respect thereto being hereinafter referred to as
"Excluded Taxes"). If the Borrower shall be required by any Laws to deduct
any Taxes from or in respect of any sum payable under any Loan Document to
the Administrative Agent or any Lender, (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 such Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable Laws, and (iv) within thirty days after the
date of such payment, the Borrower shall furnish to the Administrative
53
Page 115
Agent (which shall forward the same to such Lender) the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or
charges or similar levies that arise from the execution, delivery,
performance (other than payment of amounts owing under the Credit
Documents), enforcement or registration of, or otherwise similarly with
respect to, any Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify the Administrative Agent and each
Lender for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this Section) paid by the Administrative Agent and such
Lender and (ii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto, in each
case whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; provided,
however, that the Borrower shall not have any obligation to indemnify any
party hereunder for Taxes, Other Taxes or any other liability that arises
from such party's own gross negligence or willful misconduct. Payment under
this subsection (d) shall be made within sixty days after the date the
Lender or the Administrative Agent makes a written demand therefor;
provided, however, that notwithstanding any other provision of this Section
3.01, if the Administrative Agent or any Lender requests indemnification or
compensation for Taxes or Other Taxes pursuant to this Section 3.01 more
than 120 days after the earlier of (i) the date on which the Administrative
Agent or such Lender, as the case may be, makes payment of such Taxes or
Other Taxes, and (ii) the date on which the appropriate Governmental
Authority makes written demand on the Administrative Agent or such Lender,
as the case may be, for payment of such Taxes or Other Taxes, then the
Borrower shall not be obligated to indemnify or reimburse the
Administrative Agent or such Lender, as the case may be, for such Taxes or
Other Taxes.
(d) Treatment of Certain Refunds. If the Administrative Agent, a Lender or
the Issuing Bank determines, in good faith, that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 3.01, it shall pay an amount equal to such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 3.01 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, such Lender or the
Issuing Bank and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided that
the Borrower, upon the request of the Administrative Agent, such Lender or
the Issuing Bank, agrees to repay the amount paid over to the Borrower
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent, such Lender or the
Issuing Bank in the event the Administrative Agent, such Lender or the
Issuing Bank is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require the
Administrative Agent, any Lender or the Issuing Bank to
54
Page 116
make available its tax returns (or any other information relating to its
taxes that it deems confidential) to the Borrower or any other Person.
3.02 Illegality.
If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or
its applicable Lending Office to make, maintain or fund Eurocurrency Rate
Loans in the Applicable Currency, or to determine or charge interest rates
based upon the Adjusted Eurocurrency Rate, or any Governmental Authority
has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, any Applicable Currency in the
applicable interbank market, then, on notice thereof by such Lender to the
Borrower through the Administrative Agent, any obligation of such Lender to
make or continue Eurocurrency Rate Loans in the Applicable Currency or to
convert Base Rate Loans to Eurocurrency Rate Loans in the Applicable
Currency shall be suspended until such Lender notifies the Administrative
Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower
shall, upon demand from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable and such Eurocurrency Rate Loans are
denominated in Dollars, convert all Eurocurrency Rate Loans of such Lender
to Base Rate Loans, either on the last day of the Interest Period therefor,
if such Lender may lawfully continue to maintain such Eurocurrency Rate
Loans to such day, or immediately, if such Lender may not lawfully continue
to maintain such Eurocurrency Rate Loans. Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or converted. Each Lender agrees to designate a different Lending
Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender. If such Lender does not designate a
different Lending Office to avoid the need for such notice, the Borrower
may replace such Lender in accordance with Section 11.16.
3.03 Inability to Determine Rates.
(a) If the Administrative Agent determines in connection with any request
for a Eurocurrency Rate Loan or a conversion to or continuation thereof
that (i) deposits in the Applicable Currency are not being offered to banks
in the applicable offshore interbank market for such currency for the
applicable amount and Interest Period of such Eurocurrency Rate Loan, (ii)
adequate and reasonable means do not exist for determining the Eurocurrency
Rate for such Eurocurrency Rate Loan, or (iii) the Eurocurrency Rate for
such Eurocurrency Rate Loan does not adequately and fairly reflect the cost
to the Lenders of funding such Eurocurrency Rate Loan, the Administrative
Agent will promptly notify the Borrower and all Lenders. Thereafter, the
obligation of the Lenders to make or maintain Eurocurrency Rate Loans in
the Applicable Currency shall be suspended until the Administrative Agent
revokes such notice. Upon receipt of such notice, the Borrower may revoke
any pending request for a Borrowing, conversion or continuation of
Eurocurrency Rate Loans or, failing that, will
55
Page 117
be deemed to have converted such request into a request for a Committed
Borrowing of Base Rate Loans in the amount specified therein.
(b) If any Mandatory Cost Reference Lender's Commitment shall terminate
(otherwise than on termination of the Aggregate Commitments), or for any
reason whatsoever any Mandatory Cost Reference Lender shall cease to be a
Lender hereunder, such Mandatory Cost Reference Lender shall thereupon
cease to be a Mandatory Cost Reference Lender, and, when necessary, the
Mandatory Cost Rate shall be determined on the basis of the rates as
notified by the remaining Mandatory Cost Reference Lenders in accordance
with Schedule 1.01.
3.04 Increased Cost and Reduced Return; Capital Adequacy.
(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law following the date hereof, or
such Lender's compliance therewith, there shall be any increase in the cost
to such Lender of agreeing to make or making, funding or maintaining
Eurocurrency Rate Loans or (as the case may be) issuing or participating in
Letters of Credit, or a reduction in the amount received or receivable by
such Lender in connection with any of the foregoing (excluding for purposes
of this subsection (a) any such increased costs or reduction in amount
resulting from (i) Taxes, Other Taxes and Excluded Taxes (as to which
Section 3.01 shall govern), (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or any
foreign jurisdiction or any political subdivision of either thereof under
the Laws of which such Lender is organized or has its Lending Office, and
(iii) reserve requirements utilized, as to Eurocurrency Rate Loans, in the
determination of the Adjusted Eurocurrency Rate), then from time to time
upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such
additional amounts as will compensate such Lender for such increased cost
or reduction.
(b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof
following the date hereof, or compliance by such Lender (or its Lending
Office) therewith, has the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder (taking into
consideration its policies with respect to capital adequacy and such
Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such reduction; provided that each such Lender
shall make demand for compensation hereunder no later than ninety days
after becoming aware of such effect.
(c) Notwithstanding anything to the contrary in this Section 3.04, the
Borrower shall not be required to pay to any Lender additional amounts
under this Section 3.04 for Taxes, Other Taxes and Excluded Taxes (Section
3.01 shall govern the obligation of the Borrower to pay additional amounts
for Taxes, Other Taxes and Excluded Taxes).
56
Page 118
3.05 Funding Losses.
Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Borrower shall promptly compensate such Lender for and
hold such Lender harmless from any loss, cost or expense incurred by it as
a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower;
(c) any failure by the Borrower to make payment of any Loan or drawing
under any Letter of Credit (or interest due thereon) denominated in an
Alternative Currency on its scheduled due date or any payment thereof in a
different currency; or
(d) any assignment of a Eurocurrency Rate Loan on a day other than the last
day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 11.16;
including any foreign exchange losses and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such
Loan or from fees payable to terminate the deposits from which such funds
were obtained. The Borrower shall also pay any reasonable customary
administrative fees charged by such Lender in connection with the
foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders
under this Section 3.05, each Lender shall be deemed to have funded each
Eurocurrency Rate Loan made by it at the Eurocurrency Rate used in
determining the Adjusted Eurocurrency Rate for such Loan by a matching
deposit or other borrowing in the applicable offshore interbank market for
such currency for a comparable amount and for a comparable period, whether
or not such Eurocurrency Rate Loan was in fact so funded.
3.06 Matters Applicable to all Requests for Compensation.
(a) A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Administrative Agent or
such Lender may use any reasonable averaging and attribution methods.
57
Page 119
(b) Upon any Lender's making a claim for compensation under Section 3.01 or
3.04, the Borrower may replace such Lender in accordance with Section
11.16.
3.07 Survival.
All of the Borrower's obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other
Obligations hereunder.
Article IV.
GUARANTY
4.01 The Guaranty.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Swap Contract, and
the Administrative Agent as hereinafter provided, as primary obligor and
not as surety, the prompt payment of the Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
a mandatory cash collateralization or otherwise) strictly in accordance
with the terms thereof. The Guarantors hereby further agree that if any of
the Obligations are not paid in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any
of the Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration,
as a mandatory cash collateralization or otherwise) in accordance with the
terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Loan Documents or Swap Contracts, the obligations of each
Guarantor under this Agreement and the other Loan Documents shall be
limited to an aggregate amount equal to the largest amount that would not
render such obligations subject to avoidance under the Debtor Relief Laws
or any comparable provisions of any applicable state law.
4.02 Obligations Unconditional.
The obligations of the Guarantors under Section 4.01 are joint and several,
absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Loan Documents or Swap
Contracts, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Obligations, and, to the fullest extent permitted
by applicable law, irrespective of any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.02 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that
58
Page 120
such Guarantor shall have no right of subrogation, indemnity, reimbursement
or contribution against the Borrower or any other Guarantor for amounts
paid under this Article IV until such time as the Obligations have been
paid in full and the Commitment have expired or terminated. Without
limiting the generality of the foregoing, it is agreed that, to the fullest
extent permitted by law, the occurrence of any one or more of the following
shall not alter or impair the liability of any Guarantor hereunder, which
shall remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to any Guarantor, the
time for any performance of or compliance with any of the Obligations shall
be extended, or such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any of the Loan
Documents, any Swap Contract between any Loan Party and any Lender, or any
Affiliate of a Lender, or any other agreement or instrument referred to in
the Loan Documents or such Swap Contracts shall be done or omitted;
(c) the maturity of any of the Obligations shall be accelerated, or any of
the Obligations shall be modified, supplemented or amended in any respect,
or any right under any of the Loan Documents, any Swap Contract between any
Loan Party and any Lender, or any Affiliate of a Lender, or any other
agreement or instrument referred to in the Loan Documents or such Swap
Contracts shall be waived or any other guarantee of any of the Obligations
or any security therefor shall be released, impaired or exchanged in whole
or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Administrative Agent or any
Lender or Lenders as security for any of the Obligations shall fail to
attach or be perfected; or
(e) any of the Obligations shall be determined to be void or voidable
(including, without limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any Person (including,
without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any
of the Loan Documents, any Swap Contract between any Loan Party and any
Lender, or any Affiliate of a Lender, or any other agreement or instrument
referred to in the Loan Documents or such Swap Contracts, or against any
other Person under any other guarantee of, or security for, any of the
Obligations.
59
Page 121
4.03 Reinstatement.
The obligations of the Guarantors under this Article IV shall be
automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Obligations is
rescinded or must be otherwise restored by any holder of any of the
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will
indemnify the Administrative Agent and each Lender on demand for all
reasonable costs and expenses (including, without limitation, fees and
expenses of counsel) incurred by the Administrative Agent or such Lender in
connection with such rescission or restoration, including any such costs
and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
4.04 Certain Additional Waivers.
Each Guarantor agrees that such Guarantor shall have no right of recourse
to security for the Obligations, except through the exercise of rights of
subrogation pursuant to Section 4.02 and through the exercise of rights of
contribution pursuant to Section 4.06.
4.05 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Administrative Agent and
the Lenders, on the other hand, the Obligations may be declared to be
forthwith due and payable as provided in Section 9.02 (and shall be deemed
to have become automatically due and payable in the circumstances provided
in said Section 9.02) for purposes of Section 4.01 notwithstanding any
stay, injunction or other prohibition preventing such declaration (or
preventing the Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration (or the
Obligations being deemed to have become automatically due and payable), the
Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by the Guarantors for purposes of Section
4.01.
4.06 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have
a right of contribution from each other Guarantor in an amount equal to
such other Guarantor's Contribution Share (as defined below) of such Excess
Payment. The payment obligations of any Guarantor under this Section 4.06
shall be subordinate and subject in right of payment to the Obligations
until such time as the Obligations have been paid in full and the
Commitments have expired or terminated, and none of the Guarantors shall
exercise any right or remedy under this Section 4.06 against any other
Guarantor until such Obligations have been paid in full and the Commitments
have expired or terminated. For purposes of this Section 4.06, (a) "Excess
Payment" shall mean the amount paid by any Guarantor in excess of its
Ratable Share of any Guaranteed Obligations; (b) "Ratable Share" shall
mean, for any Guarantor in respect of any payment of Obligations, the ratio
(expressed as a percentage) as of the date of such payment of Guaranteed
Obligations of (i) the
60
Page 122
amount by which the aggregate present fair salable value of all of its
assets and properties exceeds the amount of all debts and liabilities of
such Guarantor (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable
value of all assets and other properties of all of the Loan Parties exceeds
the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Loan Parties hereunder) of the Loan Parties; provided,
however, that, for purposes of calculating the Ratable Shares of the
Guarantors in respect of any payment of Obligations, any Guarantor that
became a Guarantor subsequent to the date of any such payment shall be
deemed to have been a Guarantor on the date of such payment and the
financial information for such Guarantor as of the date such Guarantor
became a Guarantor shall be utilized for such Guarantor in connection with
such payment; (c) "Contribution Share" shall mean, for any Guarantor in
respect of any Excess Payment made by any other Guarantor, the ratio
(expressed as a percentage) as of the date of such Excess Payment of (i)
the amount by which the aggregate present fair salable value of all of its
assets and properties exceeds the amount of all debts and liabilities of
such Guarantor (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable
value of all assets and other properties of the Loan Parties other than the
maker of such Excess Payment exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Loan
Parties) of the Loan Parties other than the maker of such Excess Payment;
provided, however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any Guarantor
that became a Guarantor subsequent to the date of any such Excess Payment
shall be deemed to have been a Guarantor on the date of such Excess Payment
and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such Excess Payment; and (d) "Guaranteed Obligations" shall
mean the Obligations guaranteed by the Guarantors pursuant to this Article
IV. This Section 4.06 shall not be deemed to affect any right of
subrogation, indemnity, reimbursement or contribution that any Guarantor
may have under Law against the Borrower in respect of any payment of
Guaranteed Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after such
time, if ever, that such Guarantor shall be relieved of its obligations in
accordance with Section 10.11.
4.07 Guarantee of Payment; Continuing Guarantee.
The guarantee in this Article IV is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.
61
Page 123
Article V.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
5.01 Conditions of Initial Credit Extension.
The obligation of each Lender to make its initial Credit Extension
hereunder is subject to satisfaction of the following conditions precedent:
(a) The Administrative Agent's receipt of the following, each of which
shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing
Date) and each in form and substance satisfactory to the Administrative
Agent and its legal counsel:
(i) executed counterparts of this Agreement by the Administrative Agent,
each Lender and each Loan Party, sufficient in number for distribution to
the Administrative Agent, each Lender and the Borrower;
(ii) a Note executed by the Borrower in favor of each Lender requesting a
Note;
(iii) copies of the Organization Documents of each Loan Party certified to
be true and complete as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its incorporation or
organization, where applicable, and certified by a secretary or assistant
secretary of such Loan Party to be true and correct as of the Closing Date;
(iv) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as the Administrative Agent may require evidencing the identity,
authority and capacity of each Responsible Officer thereof authorized to
act as a Responsible Officer in connection with this Agreement and the
other Loan Documents to which such Loan Party is a party;
(v) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or
formed, and that each of the Borrower and the Guarantors is validly
existing, in good standing and qualified to engage in business in its state
of organization or formation, the state of its principal place of business
and each other jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification,
except to the extent that failure to do so would not reasonably be expected
to have a Material Adverse Effect;
62
Page 124
(vi) a favorable opinion of Hunton & Williams, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, dated as of the
Closing Date, and in form and substance reasonably satisfactory to the
Administrative Agent;
(vii) a certificate of a Responsible Officer of each Loan Party either (A)
attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party
and the validity against such Loan Party of the Loan Documents to which it
is a party, and such consents, licenses and approvals shall be in full
force and effect, or (B) stating that no such consents, licenses or
approvals are so required;
(viii) a certificate signed by a Responsible Officer of the Borrower
certifying (A) that the conditions specified in Sections 5.02(a) and (b)
have been satisfied, (B) that there has been no event or circumstance since
the date of the audited financial statements for the fiscal year ended
December 31, 2001 that has had or would be reasonably expected to have a
Material Adverse Effect; and (C)(1) if rated, the current Debt Ratings and
(2) if unrated, the Debt to Capitalization Ratio as of the end of the
fiscal quarter ending June 30, 2002;
(ix) evidence that the loans and other obligations under the Existing
Credit Agreement have been repaid (or will be repaid with the initial Loans
made hereunder on the Closing Date) and the commitments thereunder have
been terminated; and
(x) such other assurances, certificates, documents, consents or opinions as
the Administrative Agent, the L/C Issuer, the Swing Line Lender or the
Required Lenders reasonably may require.
(b) Any fees required to be paid on or before the Closing Date shall have
been paid.
(c) Unless waived by the Administrative Agent, the Borrower shall have paid
all Attorney Costs of the Administrative Agent to the extent invoiced prior
to or on the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute its reasonable estimate of Attorney Costs incurred or
to be incurred by it through the closing proceedings (provided that such
estimate shall not thereafter preclude a final settling of accounts between
the Borrower and the Administrative Agent).
5.02 Conditions to all Credit Extensions.
The obligation of each Lender to honor any Request for Credit Extension
(other than a Committed Loan Notice requesting only a conversion of
Committed Loans to the other
63
Page 125
Type, or a continuation of Committed Loans as the same Type) is subject to
the following conditions precedent:
(a) The representations and warranties of the Borrower and each other Loan
Party contained in Article VI or any other Loan Document, or that are
contained in any document furnished at any time under or in connection
herewith or therewith, shall be true and correct on and as of the date of
such Credit Extension, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes
of this Section 5.02, the representations and warranties contained in
subsections (a) and (b) of Section 6.05 shall be deemed to refer to the
most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 7.01.
(b) No Default shall exist, or would result from such proposed Credit
Extension.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the
Swing Line Lender shall have received a Request for Credit Extension in
accordance with the requirements hereof.
Each Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type or a
continuation of Eurocurrency Rate Loans) submitted by the Borrower shall be
deemed to be a representation and warranty that the conditions specified in
Sections 5.02(a) and (b) have been satisfied on and as of the date of the
applicable Credit Extension.
Article VI.
REPRESENTATIONS AND WARRANTIES
The Loan Parties represent and warrant to the Administrative Agent and the
Lenders that:
6.01 Existence, Qualification and Power; Compliance with Laws.
Each Loan Party (a) is a corporation, partnership or limited liability
company duly organized or formed, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation or organization,
(b) has all requisite power and authority and all requisite governmental
licenses, authorizations, consents and approvals to (i) own its assets and
carry on its business and (ii) execute, deliver and perform its obligations
under the Loan Documents to which it is a party, (c) is duly qualified and
is licensed and in good standing under the Laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct of its
business requires such qualification or license, and (d) is in compliance
with all Laws; except in each case
64
Page 126
referred to in clause (b)(i), (c) or (d), to the extent that failure to do
so would not reasonably be expected to have a Material Adverse Effect.
6.02 Authorization; No Contravention.
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not (a)
contravene the terms of any of such Person's Organization Documents; (b)
conflict with or result in any breach or contravention of, or the creation
of any Lien under, (i) any Contractual Obligation to which such Person is a
party or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law.
6.03 Governmental Authorization; Other Consents.
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person
is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, any Loan Party of this Agreement or
any other Loan Document.
6.04 Binding Effect.
This Agreement and each other Loan Document has been duly executed and
delivered by each Loan Party that is party thereto. This Agreement and each
other Loan Document constitutes a legal, valid and binding obligation of
each Loan Party that is party thereto, enforceable against each such Loan
Party in accordance with its terms.
6.05 Financial Statements.
(a) The audited consolidated balance sheet of the Consolidated Group for
the fiscal year ended December 31, 2001, and the related consolidated
statements of income or operations, shareholders' equity and cash flows for
such fiscal year, including the notes thereto (i) were prepared in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; (ii) fairly present
the financial condition of the Consolidated Group as of the date thereof
and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all
material indebtedness and other liabilities, direct or contingent, of the
Consolidated Group as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness.
(b) The unaudited consolidated financial statements of the Consolidated
Group for the fiscal quarter ended June 30, 2002, and the related
consolidated statements of income or operations, shareholders' equity and
cash flows for such fiscal quarter
65
Page 127
(i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein;
(ii) fairly present the financial condition of the Consolidated Group as of
the date thereof and their results of operations for the period covered
thereby, subject, in the case of clauses (i) and (ii), to the absence of
footnotes and to normal year-end audit adjustments; and (iii) show all
material indebtedness and other liabilities, direct or contingent, of the
Consolidated Group as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness.
6.06 Litigation.
There are not any actions, suits or proceedings at law or in equity or by
or before any governmental instrumentality or other agency now pending or,
to the knowledge of the Loan Parties, threatened (and reasonably likely to
be commenced) against or affecting any member of the Consolidated Group or
any property or rights of the Consolidated Group as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, would individually or in the aggregate materially impair the
right of the Consolidated Group taken as a whole to carry on business
substantially as now being conducted or would result in a Material Adverse
Effect.
6.07 No Default.
(a) Neither the Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation that would reasonably be expected to
have a Material Adverse Effect.
(b) No Default or Event of Default has occurred and is continuing or would
result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.
6.08 Ownership of Property; Liens.
Each member of the Consolidated Group has good record and marketable title
in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. The property of the
Consolidated Group is subject to no Liens, other than Liens permitted by
Section 8.01.
6.09 Environmental Compliance.
Except as set forth in Schedule 6.09: (a) the Consolidated Group is in
compliance in all material respects with all federal, state, local and
other statutes, ordinances, orders, judgments, rulings and regulations
relating to environmental pollution or to environmental regulation or
control or to employee health or safety, except where the
66
Page 128
failure to do so would not be reasonably likely, individually or in the
aggregate, to result in a Material Adverse Effect; (b) no member of the
Consolidated Group has received notice of any material failure so to
comply, which non-compliance neither has been remedied nor is being
contested in good faith by the Borrower nor is the subject of the
Borrower's good faith efforts to achieve compliance; (c) the Consolidated
Group's facilities do not manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances, toxic pollutants or
substances similarly denominated, as those terms or similar terms are used
in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendment and Reauthorization Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act, as
amended, the Clean Water Act, the Occupational Health and Safety Act or any
other applicable law relating to environmental pollution or employee health
and safety, in violation in any material respect of any law or any
regulations promulgated pursuant thereto, except where the failure to do so
would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect; and (d) the Borrower is aware of no
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that would be reasonably likely
to result in a Material Adverse Effect.
6.10 Insurance.
The properties of the Consolidated Group are insured with financially sound
and reputable insurance companies not Affiliates of the Borrower, in such
amounts (after giving effect to any self-insurance compatible with the
following standards), with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or its Subsidiaries
operate.
6.11 Taxes.
Each member of the Consolidated Group has filed all federal, state and
other material tax returns and reports required to be filed, and have paid
all federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those that are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed
tax assessment against the Borrower or any Subsidiary that would, if made,
have a Material Adverse Effect.
6.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Internal Revenue Code and other federal or state
Laws. Each Plan that is intended to qualify under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from
the IRS or an application for such a letter is
67
Page 129
currently being processed by the IRS with respect thereto and, to the
knowledge of the Borrower, nothing has occurred that would prevent, or
cause the loss of, such qualification. The Borrower and each ERISA
Affiliate have made all required contributions to each Plan subject to
Section 412 of the Internal Revenue Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412
of the Internal Revenue Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that would reasonably be expected to
have a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
that has resulted or would reasonably be expected to result in a Material
Adverse Effect.
(c) Other than as would not reasonably be expected to result in liability
in excess of $10,000,000, (i) no ERISA Event has occurred or is reasonably
expected to occur, (ii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA and other contributions payable in
accordance with the terms of such Pension Plan or applicable law), and
(iii) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred that,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan.
(d) No Pension Plan, individually, has any Unfunded Pension Liability in
excess of $10,000,000, and the Pension Plans, on a consolidated basis, do
not have any Unfunded Pension Liability.
(e) Neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that is subject to Sections 4069 or 4212(c) of ERISA.
6.13 Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.
(a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying
"margin stock" within the meaning of Regulation U issued by the FRB, as in
effect from time to time, or extending credit for the purpose of purchasing
or carrying "margin stock," and the Credit Extensions hereunder will not be
used to purchase or carry "margin stock" in violation of Regulation U or to
extend credit to others for the purpose of purchasing or carrying "margin
stock," or for any purpose that would violate or be inconsistent with the
provisions of Regulation X issued by the FRB, as in effect from time to
time.
(b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a
"holding company," or an
68
Page 130
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.
6.14 Disclosure.
The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally)
by or on behalf of any Loan Party to the Administrative Agent or any Lender
in connection with the transactions contemplated hereby and 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.
6.15 Compliance with Laws.
Each of the Borrower and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in
such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate
proceedings or (b) the failure to comply therewith would not reasonably be
expected to have a Material Adverse Effect.
6.16 Intellectual Property; Licenses, Etc.
To the knowledge of the Loan Parties, the Consolidated Group owns, or
possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, "IP Rights") that are
reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the knowledge of
the Loan Parties, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated
to be employed, by the Borrower or any Subsidiary infringes upon any rights
held by any other Person. No claim or litigation regarding any of the
foregoing is pending or, to the knowledge of the Loan Parties, threatened,
that would reasonably be expected to have a Material Adverse Effect.
69
Page 131
Article VII.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Loan Parties shall and shall
cause each of their respective Subsidiaries to:
7.01 Financial Statements.
Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:
(a) as soon as available, but in any event within ninety days after the end
of each fiscal year of the Borrower, a consolidated balance sheet of the
Consolidated Group as of the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders' equity and
cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, audited and accompanied by a report and
opinion of an independent certified public accountant of nationally
recognized standing reasonably acceptable to the Required Lenders, which
report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any "going concern" or like
qualification or exception or any qualification or exception as to the
scope of such audit; and
(b) as soon as available, but in any event within fifty days after the end
of each of the first three fiscal quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Consolidated Group as of the
end of such fiscal quarter, and the related consolidated statements of
income or operations, shareholders' equity and cash flows for such fiscal
quarter and for the portion of the Borrower's fiscal year then ended,
setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail
and certified by a Responsible Officer of the Borrower as fairly presenting
the financial condition, results of operations, shareholders' equity and
cash flows of the Consolidated Group in accordance with GAAP, subject only
to normal year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section
7.02(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be
in derogation of the obligation of the Borrower to furnish the information
and materials described in subsections (a) and (b) above at the times
specified therein.
70
Page 132
7.02 Certificates; Other Information.
Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:
(a) concurrently with the delivery of the financial statements referred to
in Section 7.01(a), a certificate of its independent certified public
accountants certifying such financial statements and stating that in making
the examination necessary therefor no knowledge was obtained of any Default
or Event of Default under the financial covenants set forth herein or, if
any such Default or Event of Default shall exist, stating the nature and
status of such event;
(b) concurrently with the delivery of the financial statements referred to
in Sections 7.01(a) and (b), a duly completed Compliance Certificate signed
by a Responsible Officer of the Borrower, (i) setting forth computations in
reasonable detail satisfactory to the Administrative Agent demonstrating
(A) compliance with the financial covenants contained herein and (B) the
amount of Consolidated Tangible Domestic Assets and the amount of Loan
Party Tangible Domestic Assets, (ii) certifying that no Default or Event of
Default exists as of the date thereof (or, to the extent a Default or Event
of Default exists, the nature and extent thereof and the proposed actions
of the Loan Parties with respect thereto) and (iii) including a summary of
all material changes in GAAP and in the consistent application thereof, the
effect on the financial covenants resulting therefrom, and a reconciliation
between calculation of the financial covenants (and determination of the
applicable pricing level under the definition of "Applicable Percentage")
before and after giving effect to such changes (which certificate may be
delivered by electronic mail or by facsimile, with an executed original to
follow within five Business Days);
(c) promptly after requested by the Administrative Agent on behalf of any
Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee
of the board of directors) of the Borrower by independent accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or
any audit of any of them;
(d) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements that the Borrower may file
or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered
to the Administrative Agent pursuant hereto; and
(e) promptly, such additional information regarding the business, financial
or corporate affairs of the Borrower or any Subsidiary, or compliance with
the terms
71
Page 133
of the Loan Documents, as the Administrative Agent, on behalf of any
Lender, may from time to time reasonably request.
Documents required to be delivered pursuant to Section 7.01(a) or (b) or
Section 7.02(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
the Borrower posts such documents, or provides a link thereto on the
Borrower's website on the internet at the website address listed on
Schedule 11.02; or (ii) on which such documents are posted on the
Borrower's behalf on IntraLinks/IntraAgency or another relevant website, if
any, to which each Lender and the Administrative Agent have access (whether
a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (i) the Borrower shall deliver paper
copies of such documents to the Administrative Agent or any Lender that
requests the Borrower to deliver such paper copies until a written request
to cease delivering paper copies is given by the Administrative Agent or
such Lender and (ii) the Borrower shall notify (which may be by facsimile
or electronic mail) the Administrative Agent and each Lender of the posting
of any such documents and provide to the Administrative Agent by electronic
mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrower
shall be required to provide paper copies of the Compliance Certificates
required by Section 7.02(b) to the Administrative Agent and each of the
Lenders. Except for such Compliance Certificates, the Administrative Agent
shall have no obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.
7.03 Notices.
Promptly notify the Administrative Agent and each Lender:
(a) of the occurrence of any Default;
(b) of any matter that has resulted or would reasonably be expected to
result in a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a Contractual Obligation of the
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws;
(c) of the occurrence of any ERISA Event;
(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary;
72
Page 134
(e) of any litigation, investigation or proceeding affecting any Loan Party
in which the amount involved would reasonably be expected to have a
Material Adverse Effect, or in which injunctive relief or similar relief is
sought, which relief, if granted, would reasonably be expected to have a
Material Adverse Effect; and
(f) if unrated, any announcement by Moody's or S&P of any Debt Rating, or
if rated, any announcement by Moody's or S&P of any change or possible
change in a Debt Rating.
Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has
taken and proposes to take with respect thereto. Each notice pursuant to
Section 7.03(a) shall describe with particularity any and all provisions of
this Agreement and any other Loan Document that have been breached.
7.04 Payment of Obligations.
Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities, assessments
and governmental charges or levies upon it or its properties or assets,
unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary; (b) all lawful claims that,
if unpaid, would by law become a Lien upon its property; and (c) all
Indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
7.05 Preservation of Existence, Etc.
(a) Preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 8.03; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses
and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so would not reasonably
be expected to have a Material Adverse Effect; and (c) preserve or renew
all of its registered patents, trademarks, trade names and service marks,
the non-preservation of which would reasonably be expected to have a
Material Adverse Effect.
7.06 Maintenance of Properties.
(a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order
and condition, ordinary wear and tear excepted; (b) make all necessary
repairs thereto and renewals and replacements thereof except where the
failure to do so would not reasonably be
73
Page 135
expected to have a Material Adverse Effect; and (c) use the standard of
care typical in the industry in the operation and maintenance of its
facilities.
7.07 Maintenance of Insurance.
Maintain with financially sound and reputable insurance companies not
Affiliates of the Borrower, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance compatible with the
following standards) as are customarily carried under similar circumstances
by such other Persons.
7.08 Compliance with Laws.
Comply in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (a) such requirement of Law
or order, write, injunction or decree is being contested in good faith by
appropriate proceedings; or (b) the failure to comply therewith would not
reasonably be expected to have a Material Adverse Effect.
7.09 Books and Records.
(a) Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made
of all financial transactions and matters involving the assets and business
of the Borrower or such Subsidiary, as the case may be; and (b) maintain
such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction
over the Borrower or such Subsidiary, as the case may be.
7.10 Inspection Rights.
Upon the request of the Administrative Agent on behalf of any Lender,
permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to
examine its corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants,
all at the expense of the Borrower and at such reasonable times during
normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided, however, that when an
Event of Default exists the Administrative Agent or any Lender (or any of
their respective representatives or independent contractors) may do any of
the foregoing at the expense of the Borrower at any time during normal
business hours and without advance notice.
74
Page 136
7.11 Use of Proceeds.
Use the proceeds of the Credit Extensions for (a) general corporate
purposes, (b) to refinance existing Indebtedness, (c) to finance
acquisitions, (iv) to repurchase common stock of the Borrower, (v) for
working capital and (vi) for Capital Expenditures, provided that in no
event shall the proceeds of the Credit Extensions be used in contravention
of any Law or of any Loan Document.
7.12 Joinder of Guarantors.
Cause Material Domestic Subsidiaries to be joined as Guarantors hereunder,
as necessary, such that Loan Party Tangible Domestic Assets are not at any
time less than $750,000,000. The Borrower will, in connection with any such
joinder, promptly cause to be delivered to the Administrative Agent an
executed Joinder Agreement, together with supporting resolutions,
incumbency certificates, organizational documents, opinions of counsel and
such other information as shall be reasonably requested by the
Administrative Agent, all in form and substance reasonably acceptable to
the Administrative Agent.
7.13 ERISA Compliance.
Do, and cause each of its ERISA Affiliates to do, each of the following:
(a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law;
(b) cause each Plan that is qualified under Section 401(a) of the Code to
maintain such qualification; and (c) make all required contributions to any
Plan subject to Section 412 of the Code.
Article VIII.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, no Loan Party shall nor shall it
permit any of its Subsidiaries to, directly or indirectly:
8.01 Liens.
Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the
following:
(a) Liens pursuant to any Loan Document;
75
Page 137
(b) Liens existing on the date hereof and listed on Schedule 8.01 and any
renewals or extensions thereof, provided that the property covered thereby
is not increased;
(c) Liens for taxes not yet due or that are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of the applicable Person in accordance with
GAAP;
(d) carriers,' warehousemen's, mechanics,' materialmen's, repairmen's or
other like Liens arising in the ordinary course of business that are not
overdue for a period of more than thirty days or that are being contested
in good faith and by appropriate proceedings, if adequate reserves with
respect thereto are maintained on the books of the applicable Person;
(e) pledges or deposits in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;
(f) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than
bonds related to judgments or litigation, which are covered in subsection
(h) below), performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property that, in the aggregate, are not substantial in
amount, and that do not in any case materially detract from the value of
the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;
(h) Liens securing judgments for the payment of money in an aggregate
amount not in excess of the Threshold Amount (except to the extent covered
by independent third-party insurance as to which the insurer has
acknowledged in writing its obligation to cover), unless any such judgment
remains undischarged for a period of more than forty-five consecutive days
during which execution is not effectively stayed;
(i) Liens securing, or in respect of, obligations under capital leases or
Synthetic Leases and purchase money obligations for fixed or capital
assets; provided that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of
acquisition;
(j) Liens on property or assets of the Borrower or any Subsidiary granted
in connection with Sale and Leaseback Transactions, provided that the
aggregate
76
Page 138
Attributable Principal Amount in connection with such Sale and Leaseback
Transactions shall not at any time be in excess of $100,000,000;
(k) Liens on property or assets of the Borrower or any Subsidiary granted
in connection with Securitization Transactions, provided that the aggregate
Attributable Principal Amount in connection with such Securitization
Transactions shall not at any time be in excess of $100,000,000.
(l) Liens on the property and assets of any Person to the extent such Liens
are existing at the time such Person becomes a member of the Consolidated
Group, provided such Liens are not created in contemplation thereof and do
not extend to any property or assets of any other member of the
Consolidated Group; and
(m) Liens other than those referred to in subparagraphs (a) through (l)
above, provided, however, that the aggregate amount of all Indebtedness
that is secured or evidenced by such Liens does not at any time exceed an
amount equal to 10% of Consolidated Net Worth.
8.02 Investments.
Make Investments in Subsidiaries, joint ventures or other entities or
enterprises that are organized outside the United States and its political
subdivisions, unless after giving effect thereto there are Consolidated
Tangible Domestic Assets of at least $750,000,000.
8.03 Mergers, Dispositions, etc.
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) all or
substantially all of its assets (whether now owned or hereafter acquired)
or any capital stock of any Subsidiary, except that:
(a) Any member of the Consolidated Group may purchase and sell inventory in
the ordinary course of business;
(b) If at the time thereof and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be continuing: (i) any
wholly owned Subsidiary or any other person may merge into the Borrower in
a transaction in which the Borrower is the surviving corporation, (ii) any
wholly owned Subsidiary may merge into or consolidate with any other wholly
owned Subsidiary in a transaction in which the surviving entity is a wholly
owned Subsidiary and no person other than the Borrower or a wholly owned
Subsidiary receives any consideration therefor, provided that, if either
wholly owned Subsidiary is a Domestic Subsidiary, the surviving entity is a
Domestic Subsidiary, and (iii) so long as (A) the Debt Ratings of the
surviving corporation are better than or equal
77
Page 139
to the Debt Ratings of the Borrower and (B) the surviving corporation
agrees in writing to assume the obligations of the Borrower under this
Agreement, the Borrower may merge into or consolidate with any other
person;
(c) The Borrower may sell 100% of the capital stock of any Subsidiary for
fair market value, as determined in good faith by the Borrower's board of
directors, provided (i) such sale does not constitute a sale of all or
substantially all of the Borrower's assets and (ii) after giving effect
thereto, the Borrower remains in compliance with Section 7.12; and
(d) The Borrower may sell any portion of the capital stock of any
Subsidiary in connection with the establishment of a joint venture for the
purpose of developing or continuing a product or business related to any of
the Borrower's existing lines of business as of the date of this Agreement.
In connection with any disposition permitted hereunder of any Subsidiary
that is a Guarantor, such Guarantor shall be released from its obligations
under the Guaranty in accordance with the provisions hereof.
8.04 Change in Nature of Business.
Engage in any material line of business substantially different from those
lines of business conducted by the Consolidated Group on the date hereof or
any business substantially related or incidental thereto.
8.05 Transactions with Affiliates.
Enter into any transaction of any kind with any Affiliate of the Borrower,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such
Subsidiary as would be obtainable by the Borrower or such Subsidiary at the
time in a comparable arm's length transaction with a Person other than an
Affiliate, provided that the foregoing restriction shall not apply to
transactions between or among the Borrower and any Guarantor or between and
among any Guarantors.
8.06 Use of Proceeds.
Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry
margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or
to refund indebtedness originally incurred for such purpose, in each case
in violation of, or for a purpose that violates, or would be inconsistent
with, Regulation T, U or X of the FRB.
78
Page 140
8.07 Financial Covenants.
(a) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio as of the end of any fiscal quarter of the Borrower to be
less than 3.00:1.00.
(b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as
of the end of any fiscal quarter of the Borrower to be greater than
3.50:1.00.
8.08 ERISA.
At any time engage in a transaction that is subject to Section 4069 or
4212(c) of ERISA, or permit any Plan to (a) engage in any non-exempt
"prohibited transaction" (as defined in Section 4975 of the Code); (b) fail
to comply with ERISA or any other applicable Laws; or (c) incur any
material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), that, with respect to each event listed above, would reasonably be
expected to have a Material Adverse Effect.
Article IX.
EVENTS OF DEFAULT AND REMEDIES
9.01 Events of Default.
Any of the following shall constitute an Event of Default:
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when
and as required to be paid herein, in the currency required hereunder, any
amount of principal of any Loan or any L/C Obligation, or (ii) within three
Business Days after the same becomes due, any interest on any Loan or on
any L/C Obligation, or any facility fee, utilization fee or other fee due
hereunder, or (iii) within five Business Days after the same becomes due,
any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 7.03, 7.05 or 7.11 or
Article VIII; or
(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and
such failure continues for thirty days; or
79
Page 141
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of
the Borrower or any other Loan Party herein, in any other Loan Document, or
in any document delivered in connection herewith or therewith shall be
incorrect or misleading when made or deemed made; or
(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or
Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than the
Threshold Amount, or (B) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or Guarantee or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event occurs, the effect of which default or other event is to
cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to be demanded or
to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Indebtedness to be made, prior to its stated maturity, or such
Guarantee to become payable or cash collateral in respect thereof to be
demanded; or (ii) there occurs under any Swap Contract an Early Termination
Date (as defined in such Swap Contract) resulting from (A) any event of
default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in
either event, the Swap Termination Value owed by the Borrower or such
Subsidiary as a result thereof is greater than the Threshold Amount; or
(f) Insolvency Proceedings, Etc.
(i) Any Loan Party or any of its Subsidiaries institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of
its property; or
(ii) Any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such Person and the appointment continues undismissed for sixty
calendar days, or an order or decree approving or ordering such
80
Page 142
appointment shall continue unstayed for thirty calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to
all or any material part of its property is instituted without the consent
of such Person and continues undismissed for sixty calendar days, or an
order or decree approving or ordering such proceeding shall continue
unstayed for thirty calendar days; or
(g) Inability to Pay Debts; Attachment.
(i) The Borrower or any Subsidiary becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due; or
(ii) Any writ or warrant of attachment or execution or similar process is
issued or levied against all or any material part of the property of any
such Person and such process, if not fully bonded, continues undismissed
for sixty calendar days, or an order or decree approving or ordering such
process shall continue unstayed for thirty calendar days; or
(h) Judgments. There is entered against the Borrower or any Subsidiary (i)
a final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage),
or (ii) any one or more non-monetary final judgments that have, or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings
are commenced by any creditor upon such judgment or order, or (B) there is
a period of forty-five consecutive days during which a stay of enforcement
of such judgment, by reason of a pending appeal or otherwise, is not in
effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan that has resulted or would reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess
of the Threshold Amount; or
(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in
full force and effect; or any Loan Party or any other Person contests in
any manner the validity or enforceability of any Loan Document; or any Loan
Party
81
Page 143
denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or
(k) Change of Control. There occurs any Change of Control with respect to
the Borrower.
9.02 Remedies Upon Event of Default.
If any Event of Default occurs and is continuing, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required
Lenders, take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation
of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon
such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the Dollar Equivalent of the then Outstanding Amount
thereof as such amount may vary from time to time); and
(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;
provided, however, that upon the occurrence of an actual or deemed entry of
an order for relief with respect to the Borrower under the Bankruptcy Code
of the United States, the obligation of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable, and the obligation of the Borrower to Cash
Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or
any Lender.
9.03 Application of Funds.
After the exercise of remedies provided for in Section 9.02 (or after the
Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as
set forth in the proviso to Section 9.02), any amounts received on account
of the Obligations shall be applied by the Administrative Agent in the
following order:
82
Page 144
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and
amounts payable under Article III) payable to the Administrative Agent in
its capacity as such;
Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable
to the Lenders (including Attorney Costs and amounts payable under Article
III), ratably among them in proportion to the amounts described in this
clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans and L/C Borrowings, ratably among the
Lenders in proportion to the respective amounts described in this clause
Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, L/C Borrowings and Swap Contracts, ratably among
the Lenders in proportion to the respective amounts described in this
clause Fourth held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to
Cash Collateralize that portion of L/C Obligations comprised of the
aggregate undrawn amount of Letters of Credit; and
Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.
Subject to Section 2.03(c), amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth
above shall be applied to satisfy drawings under such Letters of Credit as
they occur. If any amount remains on deposit as Cash Collateral after all
Letters of Credit have either been fully drawn or expired, such remaining
amount shall be applied to the other Obligations, if any, in the order set
forth above.
Article X.
ADMINISTRATIVE AGENT
10.01 Appointment and Authorization of Administrative Agent.
(a) Each Lender hereby irrevocably appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions
of this Agreement and each other Loan Document and to exercise such powers
and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.
83
Page 145
Notwithstanding any provision to the contrary contained elsewhere herein or
in any other Loan Document, the Administrative Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" herein and in the other
Loan Documents with reference to the Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.
(b) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and
the L/C Issuer shall have all of the benefits and immunities (i) provided
to the Administrative Agent in this Article X with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the applications and
agreements for letters of credit pertaining to such Letters of Credit as
fully as if the term "Administrative Agent" as used in this Article X and
in the definition of "Agent-Related Person" included the L/C Issuer with
respect to such acts or omissions, and (ii) as additionally provided herein
with respect to the L/C Issuer.
10.02 Delegation of Duties.
The Administrative Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence
of gross negligence or willful misconduct.
10.03 Liability of Administrative Agent.
No Agent-Related Person shall (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct in connection with its
duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or
warranty made by any Loan Party or any officer thereof, contained herein or
in any other Loan Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of any Loan Party or any other party to any Loan
84
Page 146
Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender or
participant to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or
any other Loan Document, or to inspect the properties, books or records of
any Loan Party or any Affiliate thereof.
10.04 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel
(including counsel to any Loan Party), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under
any Loan Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Lenders against any
and all liability and expense that may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Required Lenders (or such greater number of
Lenders as may be expressly required hereby in any instance) and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders.
(b) For purposes of determining compliance with the conditions specified in
Section 5.01, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received notice from such Lender prior to the proposed
Closing Date specifying its objection thereto.
10.05 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or
the Borrower referring to this Agreement, describing such Default and
stating that such notice is a "notice of default." The Administrative Agent
will notify the Lenders of its receipt of any such notice. The
Administrative Agent shall take such action with respect to such Default as
may be directed by the Required Lenders in accordance with Article IX;
provided, however, that unless and until the Administrative Agent has
received any such direction, the Administrative Agent may (but shall not be
obligated to)
85
Page 147
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable or in the best interest of the Lenders.
10.06 Credit Decision; Disclosure of Information by Administrative Agent.
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative
Agent hereafter taken, including any consent to and acceptance of any
assignment or review of the affairs of any Loan Party or any Affiliate
thereof, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their
possession. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
the Loan Parties and their respective Subsidiaries, and all applicable bank
or other regulatory Laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend credit
to the Borrower and the other Loan Parties hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties. Except for
notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent herein, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the
Loan Parties or any of their respective Affiliates that may come into the
possession of any Agent-Related Person.
10.07 Indemnification of Administrative Agent.
Whether or not the transactions contemplated hereby are consummated, the
Lenders shall indemnify upon demand each Agent-Related Person (to the
extent not reimbursed by or on behalf of any Loan Party and without
limiting the obligation of any Loan Party to do so), pro rata, and hold
harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person's own gross negligence or willful misconduct;
provided, however, that no action taken in accordance with the directions
of the Required Lenders shall be deemed to constitute gross negligence or
willful misconduct for purposes of this Section. Without limitation of the
86
Page 148
foregoing, each Lender shall reimburse the Administrative Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment
or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of
the Borrower. The undertaking in this Section shall survive termination of
the Aggregate Commitments, the payment of all other Obligations and the
resignation of the Administrative Agent.
10.08 Administrative Agent in its Individual Capacity.
Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests
in and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Loan Parties and their
respective Affiliates as though Bank of America were not the Administrative
Agent or the L/C Issuer hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Loan Party
or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate)
and acknowledge that the Administrative Agent shall be under no obligation
to provide such information to them. With respect to its Loans, Bank of
America shall have the same rights and powers under this Agreement as any
other Lender and may exercise such rights and powers as though it were not
the Administrative Agent or the L/C Issuer, and the terms "Lender" and
"Lenders" include Bank of America in its individual capacity.
10.09 Successor Administrative Agent.
The Administrative Agent may resign as Administrative Agent upon thirty
days' notice to the Lenders; provided that any such resignation by Bank of
America shall also constitute its resignation as L/C Issuer and Swing Line
Lender. If the Administrative Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent
shall be consented to by the Borrower at all times other than during the
existence of an Event of Default (which consent of the Borrower shall not
be unreasonably withheld or delayed). If no successor administrative agent
is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Borrower, a successor administrative
agent from among the Lenders. Upon the acceptance of its appointment as
successor administrative agent hereunder, the Person acting as such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent, L/C Issuer and Swing Line
Lender and the respective terms "Administrative Agent," "L/C Issuer" and
"Swing Line Lender" shall mean such successor administrative agent, Letter
of Credit issuer and swing line lender, and the
87
Page 149
retiring Administrative Agent's appointment, powers and duties as
Administrative Agent shall be terminated and the retiring L/C Issuer's and
Swing Line Lender's rights, powers and duties as such shall be terminated,
without any other or further act or deed on the part of such retiring L/C
Issuer or Swing Line Lender or any other Lender, other than the obligation
of the successor L/C Issuer to issue letters of credit in substitution for
the Letters of Credit, if any, outstanding at the time of such succession
or to make other arrangements satisfactory to the retiring L/C Issuer to
effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this
Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement. If no successor administrative agent has
accepted appointment as Administrative Agent by the date thirty days
following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
10.10 Administrative Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise
and irrespective of whether the Administrative Agent shall have made any
demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all
other Obligations (other than Swap Contracts) that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent
under Sections 2.03(i) and (j), 2.09 and 11.04) allowed in such judicial
proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the
event that the Administrative Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Administrative Agent any
amount due for the reasonable compensation, expenses,
88
Page 150
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections
2.09 and 11.04.
Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender
any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any
such proceeding.
10.11 Guaranty Matters.
The Lenders irrevocably authorize the Administrative Agent, at its option
and in its discretion, to release any Guarantor from its obligations under
the Guaranty if such Person ceases to be a Subsidiary as a result of a
transaction permitted hereunder. Upon request by the Administrative Agent
at any time, the Required Lenders will confirm in writing the
Administrative Agent's authority to release any Guarantor from its
obligations under the Guaranty pursuant to this Section 10.12.
10.12 Other Agents; Arrangers and Managers.
None of the Lenders or other Persons identified on the facing page or
signature pages of this Agreement as a "syndication agent," "documentation
agent," "co-agent," "book manager," "lead manager," "arranger," "lead
arranger" or "co-arranger" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than, in the
case of such Lenders, those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders or other Persons so identified
shall have or be deemed to have any fiduciary relationship with any Lender.
Each Lender acknowledges that it has not relied, and will not rely, on any
of the Lenders or other Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
Article XI.
MISCELLANEOUS
11.01 Amendments, Etc.
No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower or any other Loan
Party therefrom, shall be effective unless in writing signed by the
Required Lenders and the Borrower and the Loan Parties, and acknowledged by
the Administrative Agent, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, waiver or consent
shall, unless in writing and signed by each of the Lenders directly
affected
89
Page 151
thereby and by the Borrower, and acknowledged by the Administrative Agent,
do any of the following:
(a) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 9.02), it being understood that a
waiver of an Event of Default or a mandatory reduction in Commitments is
not considered an increase in Commitments;
(b) postpone any date fixed by this Agreement or any other Loan Document
for any payment of principal, interest, fees or other amounts due to any
Lender hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein on,
any Loan or L/C Borrowing, or (subject to clause (vi) of the second proviso
to this Section 11.01) any fees or other amounts payable hereunder or under
any other Loan Document without the written consent of each Lender directly
affected thereby; provided, however, that only the consent of the Required
Lenders shall be necessary to amend the definition of "Default Rate" or to
waive any obligation of the Borrower to pay interest at the Default Rate;
(d) change any provision of this Agreement regarding pro rata sharing or
pro rata funding with respect to (i) the making of advances (including
participations), (ii) the manner of application of payments or prepayments
of principal, interest, the Facility Fee, the Utilization Fee and the
Letter of Credit Fees (other than fronting fees for the account of the L/C
Issuers), (iii) the manner of application of reimbursement obligations from
drawings under Letters of Credit, or (iv) the manner of reduction of the
respective commitments and committed amounts;
(e) change any provision of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage
of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent hereunder;
(f) amend the definition of "Alternative Currency" to add additional
currencies; or
(g) release all or substantially all of the Guarantors from their
obligations hereunder; and, provided further, that (i) no amendment, waiver
or consent shall, unless in writing and signed by Lenders having more than
50% of the Aggregate Domestic Commitments or, if the Domestic Commitments
have been terminated, Lenders holding more than 50% of the Domestic Loan
Obligations (including, in each case, the aggregate amount of such Lender's
risk participation and funded participation in Domestic L/C Obligations and
Swing Line Loans), waive any of the conditions in Section 5.02 to Credit
Extensions of Domestic Loan Obligations or extend the time for,
90
Page 152
or reduce the amount, or otherwise alter the manner of application of
proceeds (with respect to prepayments under Section 2.05 or otherwise) in
respect of Domestic Commitments, (ii) no amendment, waiver or consent
shall, unless in writing and signed by Lenders having more than 50% of the
Aggregate Multicurrency Commitments or, if the Multicurrency Commitments
have been terminated, Lenders holding more than 50% of the Multicurrency
Loan Obligations (including, in each case, the aggregate amount of such
Lender's risk participation and funded participation in Multicurrency L/C
Obligations), waive any of the conditions in Section 5.02 to Credit
Extensions of Multicurrency Loan Obligations or extend the time for, or
reduce the amount, or otherwise alter the manner of application of proceeds
(with respect to prepayments under Section 2.05 or otherwise) in respect of
Multicurrency Commitments, (iii) no amendment, waiver or consent shall,
unless in writing and signed by the L/C Issuer in addition to the Lenders
required above, affect the rights or duties of the L/C Issuer under this
Agreement or any Letter of Credit Application relating to any Letter of
Credit issued or to be issued by it; (iv) no amendment, waiver or consent
shall, unless in writing and signed by the Swing Line Lender in addition to
the Lenders required above, affect the rights or duties of the Swing Line
Lender under this Agreement; (v) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the
Lenders required above, affect the rights or duties of the Administrative
Agent under this Agreement or any other Loan Document; and (vi) the Fee
Letter may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto. Notwithstanding anything to
the contrary herein, no Defaulting Lender shall have any right to approve
or disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the
consent of such Lender.
11.02 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed
or delivered to the applicable address, facsimile number or (subject to
subsection (c) below) electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall
be made to the applicable telephone number, as follows: if to the Borrower,
the Administrative Agent, the L/C Issuer, the Swing Line Lender or any
Lender, to the address, facsimile number, electronic mail address or
telephone number specified for such Person on Schedule 11.02 or to such
other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the other
parties.
All such notices and other communications shall be deemed to be given or
made upon the earlier to occur of (i) actual receipt by the relevant party
hereto and (ii) (A) if delivered by hand or by courier, when signed for by
or on behalf of the relevant party hereto; (B) if delivered by mail, four
Business Days after deposit in the mails, postage prepaid; (C) if delivered
by facsimile, when sent and receipt has been confirmed by telephone; and
(D) if delivered by electronic mail (which form of delivery is subject to
91
Page 153
the provisions of subsection (c) below), when delivered; provided, however,
that notices and other communications to the Administrative Agent, the L/C
Issuer and the Swing Line Lender pursuant to Article II shall not be
effective until actually received by such Person. In no event shall a
voicemail message be effective as a notice, communication or confirmation
hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may
be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same
force and effect as manually signed originals and shall be binding on all
Loan Parties, the Administrative Agent and the Lenders. The Administrative
Agent may also require that any such documents and signatures be confirmed
by a manually signed original thereof; provided, however, that the failure
to request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.
(c) Limited Use of Electronic Mail. Electronic mail and internet and
intranet websites may be used only to distribute routine communications,
such as financial statements and other information as provided in Section
7.02, and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose.
(d) Reliance by Administrative Agent and Lenders. The Administrative Agent
and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices and Swing Line Loan Notices)
purportedly given by or on behalf of the Borrower and received by the
Administrative Agent and the Lenders in good faith even if (i) such notices
were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii)
the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify each Agent-Related
Person and each Lender from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given
by or on behalf of the Borrower. All telephonic notices to and other
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to
such recording.
11.03 No Waiver; Cumulative Remedies
No failure by any Lender or the Administrative Agent to exercise, and no
delay by any such Person in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
92
Page 154
11.04 Attorney Costs, Expenses and Taxes
The Borrower agrees (a) to pay or reimburse the Administrative Agent for
all reasonable costs and expenses incurred in connection with the
preparation, negotiation and execution of this Agreement and the other Loan
Documents and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration
of the transactions contemplated hereby and thereby, including all Attorney
Costs and costs and expenses in connection with the use of Intralinks, Inc.
or other similar information transmission systems in connection with this
Agreement, and (b) to pay or reimburse the Administrative Agent and each
Lender for all costs and expenses incurred in connection with the
enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or the other Loan Documents (including all
such costs and expenses incurred during any "workout" or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include out-of-pocket expenses incurred
by the Administrative Agent and the cost of independent public accountants
and other outside experts retained by the Administrative Agent or any
Lender; provided that, so long as no Default or Event of Default exists and
is continuing under this Agreement, such costs and expenses shall not
include independent audits on behalf of the Administrative Agent or any
Lender. All amounts due under this Section 11.04 shall be payable within
ten Business Days after demand therefor. The agreements in this Section
shall survive the termination of the Aggregate Commitments and repayment of
all other Obligations.
11.05 Indemnification by the Borrower.
Whether or not the transactions contemplated hereby are consummated, the
Borrower agrees to indemnify and hold harmless each Agent-Related Person,
each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the
"Indemnitees") from and against any and all liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits,
costs, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever (other than Taxes, Other Taxes and Excluded Taxes (as to
which Section 3.01 governs)) that may at any time be imposed on, incurred
by or asserted against any such Indemnitee in any way relating to or
arising out of or in connection with (a) the execution, delivery,
enforcement, performance or administration of any Loan Document or any
other agreement, letter or instrument delivered in connection with the
transactions contemplated thereby or the consummation of the transactions
contemplated thereby, (b) any Commitment, Loan or Letter of Credit or the
use or proposed use of the proceeds therefrom (including any refusal by the
L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), or (c) any actual or alleged
presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by the Borrower, any other Loan
Party, or any of their Subsidiaries, or any Environmental Liability related
in any
93
Page 155
way to the Borrower, any other Loan Party, or any of their Subsidiaries,
that has arisen because of such Indemnitee's relationship with the
Borrower, any other Loan Party, or any of their Subsidiaries, or (d) any
actual or threatened claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any
other theory (including any investigation of, preparation for, or defense
of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities"); provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent that such liabilities, obligations, losses, damages, penalties,
claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Except to the extent directly
resulting from an Indemnitee's gross negligence or willful misconduct, such
Indemnitee (i) shall not be liable for any damages arising from the use by
others of any information or other materials obtained through IntraLinks or
other similar information transmission systems in connection with this
Agreement, and (ii) shall not have any liability for any indirect or
consequential damages relating to this Agreement or any other Loan Document
or arising out of its activities in connection herewith or therewith
(whether before or after the Closing Date). All amounts due under this
Section 11.05 shall be payable within ten Business Days after demand
therefor. The agreements in this Section shall survive the resignation of
the Administrative Agent, the replacement of any Lender, the termination of
the Aggregate Commitments and the repayment, satisfaction or discharge of
all the other Obligations.
11.06 Payments Set Aside.
To the extent that any payment by or on behalf of the Borrower is made to
the Administrative Agent or any Lender, or the Administrative Agent or any
Lender exercises its right of set-off, and such payment or the proceeds of
such set-off or any part thereof (or the Dollar Equivalent amount thereof)
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding
under any Debtor Relief Law or otherwise, then (a) to the extent of such
recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand
its applicable share of any amount so recovered from or paid by the
Administrative Agent, plus interest thereon from the date of such demand to
the date such payment is made at a rate per annum equal to the Federal
Funds Rate from time to time in effect, in the applicable currency of such
recovery or payment.
11.07 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,
94
Page 156
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 no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with
the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f) of this Section (and any
other attempted assignment or transfer by any party hereto 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, Participants to the
extent provided in subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may at any time assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes of
this subsection (b), participations in L/C Obligations and in Swing Line
Loans) at the time owing to it); provided that (i) except in the case of an
assignment of the entire remaining amount of the assigning Lender's
Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as
defined in subsection (g) of this Section) with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) subject to each such assignment, determined as of
the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if "Trade Date" is specified in
the Assignment and Assumption, as of the Trade Date, shall not be less than
$5,000,000 unless each of the Administrative Agent and, so long as no Event
of Default has occurred and is continuing, the Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed); (ii) 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
with respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not apply to rights in respect of Swing Line Loans; (iii)
any assignment of a Commitment must be approved by the Administrative
Agent, the L/C Issuer and the Swing Line Lender unless the Person that is
the proposed assignee is itself a Lender (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and (iv) the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and
recordation fee payable by the Assignor (or as otherwise provided in
Section 11.16 hereof) of $3,500. Subject to acceptance and recording
thereof by the Administrative Agent pursuant to subsection (c) of this
Section, from and after the effective date specified in each Assignment and
Assumption, the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, 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 Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment
95
Page 157
and Assumption 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 3.01,
3.04, 3.05, 11.04 and 11.05 with respect to facts and circumstances
occurring prior to the effective date of such assignment). Upon request,
the Borrower (at its expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this subsection
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
subsection (d) of this Section.
(c) The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent's Office a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments
of, and principal amounts of the Loans and L/C Obligations 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) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower's
Affiliates or Subsidiaries) (each, 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/or the Loans (including such Lender's
participations in L/C Obligations and/or Swing Line 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, waiver or other modification described in the first proviso to
Section 11.01 that directly affects such Participant. Subject to subsection
(e) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant
to subsection (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.09 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.
96
Page 158
(e) A Participant shall not be entitled to receive any greater payment
under Section 3.01 or 3.04 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such
Participant. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 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
11.15 as though it were a Lender.
(f) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its
Note, if any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that
no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(g) At the time of each assignment pursuant to Section 11.07(b) to a
Foreign Lender that is not already a Lender hereunder, the assignee shall
provide to the Administrative Agent and to the Borrower certification as to
exemption for deduction or withholding of Taxes in accordance with Section
11.15 and shall be subject to the provisions thereof.
(h) Notwithstanding anything to the contrary contained herein, if at any
time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, (i) upon thirty days' notice to
the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon thirty
days' notice to the Borrower, resign as Swing Line Lender. In the event of
any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall
be entitled to appoint from among the Lenders a successor L/C Issuer or
Swing Line Lender hereunder; provided, however, that no failure by the
Borrower to appoint any such successor shall affect the resignation of Bank
of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank
of America resigns as L/C Issuer, it shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of
Credit outstanding as of the effective date of its resignation as L/C
Issuer and all L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America
resigns as Swing Line Lender, it shall retain all the rights of the Swing
Line Lender provided for hereunder with respect to Swing Line Loans made by
it and outstanding as of the effective date of such resignation, including
the right to require the Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.04(c).
11.08 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
97
Page 159
instructed to keep such Information confidential); (b) to the extent
requested by any regulatory authority; (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process;
(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 (i) any Eligible Assignee of or Participant in,
or any prospective Eligible Assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty's or prospective counterparty's professional advisor) to any
credit derivative transaction relating to obligations of the Loan Parties;
(g) with the consent of the Borrower; (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; or (i) to
the National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires
access to information about a Lender's or its Affiliates' investment
portfolio in connection with ratings issued with respect to such Lender or
its Affiliates. In addition, the Administrative Agent and the Lenders may
disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the
lending industry, and service providers to the Administrative Agent and the
Lenders in connection with the administration and management of this
Agreement, the other Loan Documents, the Commitments, and the Credit
Extensions. For the purposes of this Section, "Information" means all
information received from any Loan Party relating to any Loan Party 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 any Loan Party; provided that, in the case of information
received from a Loan Party after the date hereof, such information is
clearly identified in writing 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.
11.09 Set-off.
In addition to any rights and remedies of the Lenders provided by law, upon
the occurrence and during the continuance of any Event of Default, each
Lender and any Affiliate of any Lender is authorized at any time and from
time to time, without prior notice to the Borrower or any other Loan Party,
any such notice being waived by the Borrower (on its own behalf and on
behalf of each Loan Party) to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any
time owing by, such Lender to or for the credit or the account of the
respective Loan Parties against any and all Obligations owing to such
Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the
98
Page 160
Administrative Agent or such Lender shall have made demand under this
Agreement or any other Loan Document and although such Obligations may be
contingent or unmatured or denominated in a currency different from that of
the applicable deposit or indebtedness. Each Lender agrees promptly to
notify the Borrower and the Administrative Agent after any such set-off and
application made by such Lender; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and
application.
11.10 Interest Rate Limitation.
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable
Law (the "Maximum Rate"). If the Administrative Agent or any Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds
such unpaid principal, refunded to the Borrower. In determining whether the
interest contracted for, charged, or received by the Administrative Agent
or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.
11.11 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
11.12 Integration.
This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter
hereof and thereof and supersedes all prior agreements, written or oral, on
such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights
or remedies in favor of the Administrative Agent or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement.
Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.
99
Page 161
11.13 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof. Such representations and warranties have been or will
be relied upon by the Administrative Agent and each Lender, regardless of
any investigation made by the Administrative Agent or any Lender or on
their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default at the time of any
Credit Extension, and shall continue in full force and effect as long as
any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding.
11.14 Severability.
If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other
Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid
or unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
11.15 Tax Forms.
(a) (i) Each Lender that is not a "United States person" within the meaning
of Section 7701(a)(30) of the Internal Revenue Code (a "Foreign Lender")
shall deliver to the Administrative Agent and to the Borrower, on or prior
to the date of its execution and delivery of this Agreement (or upon
accepting an assignment of an interest herein), two duly signed completed
copies of either IRS Form W-8BEN or any successor thereto (relating to such
Foreign Lender and entitling it to an exemption from withholding tax on all
payments to be made to such Foreign Lender by the Borrower pursuant to this
Agreement) or IRS Form W-8ECI or any successor thereto (relating to all
payments to be made to such Foreign Lender by the Borrower pursuant to this
Agreement) or such other evidence satisfactory to the Borrower and the
Administrative Agent that such Foreign Lender is entitled to an exemption
from U.S. withholding tax, including any exemption pursuant to Sections
871(h) and 881(c) of the Internal Revenue Code. Thereafter and from time to
time, each such Foreign Lender shall (A) promptly submit to the
Administrative Agent and to the Borrower such additional duly completed and
signed copies of one of such forms (or such successor forms as shall be
adopted from time to time by the relevant United States taxing authorities)
as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to the Borrower
and the Administrative Agent of any available exemption from United States
withholding taxes in respect of all payments to be made to such
100
Page 162
Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly
notify the Administrative Agent and the Borrower of any change in
circumstances that would modify or render invalid any claimed exemption,
and (C) take such steps as shall not be materially disadvantageous to it,
in the good faith judgment of such Lender, and as may be reasonably
requested in writing by the Borrower (including filing any certificate or
document or the re-designation of its Lending Office) to avoid any
requirement of applicable Laws that the Borrower make any deduction or
withholding for taxes from amounts payable to such Foreign Lender or to
reduce the amount of any such deduction or withholding to the greatest
extent possible.
(ii) Each Foreign Lender, to the extent it does not act or ceases to act
for its own account with respect to any portion of any sums paid or payable
to such Lender under any of the Loan Documents (for example, in the case of
a typical participation by such Lender), shall deliver to the
Administrative Agent and to the Borrower on the date when such Foreign
Lender ceases to act for its own account with respect to any portion of any
such sums paid or payable, and at such other times as may be necessary in
the determination of the Administrative Agent or the Borrower (in the
reasonable exercise of their respective discretion), (A) two duly signed
completed copies of the forms or statements required to be provided by such
Lender as set forth above, to establish the portion of any such sums paid
or payable with respect to which such Lender acts for its own account that
is not subject to U.S. withholding tax, and (B) two duly signed completed
copies of IRS Form W-8IMY (or any successor thereto), together with any
information such Lender chooses to transmit with such form, and any other
certificate or statement of exemption required under the Internal Revenue
Code, to establish that such Lender is not acting for its own account with
respect to a portion of any such sums payable to such Lender.
(iii) Notwithstanding any other provision of this Agreement, the Borrower
shall not be required to pay any additional amount or indemnification to
any Foreign Lender under Section 3.01 (A) with respect to any Taxes
required to be deducted or withheld on the basis of the information,
certificates or statements of exemption such Lender transmits with an IRS
Form W-8IMY pursuant to this Section 11.15(a) or (B) if such Lender shall
have failed to satisfy the foregoing provisions of this Section 11.15(a);
provided that if such Lender shall have satisfied the requirements of this
Section 11.15(a) on the date such Lender became a Lender or ceased to act
for its own account with respect to any payment under any of the Loan
Documents, nothing in this Section 11.15(a) shall relieve the Borrower of
its obligation to pay any amounts pursuant to Section 3.01 in the event
that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent
date establishing the fact that such Lender or other Person for the account
of which such Lender receives any sums payable under any of the Loan
Documents is not subject to withholding or is subject to withholding at a
reduced rate.
101
Page 163
(iv) The Administrative Agent may, without reduction, withhold any Taxes
required to be deducted and withheld from any payment under any of the Loan
Documents with respect to which the Borrower is not required to pay
additional amounts under this Section 11.15(a).
(b) Upon the request of the Administrative Agent, each Lender that is a
"United States person" within the meaning of Section 7701(a)(30) of the
Internal Revenue Code shall deliver to the Administrative Agent two duly
signed completed copies of IRS Form W-9. If such Lender fails to deliver
such forms, then the Administrative Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable back-up
withholding tax imposed by the Internal Revenue Code, without reduction.
The Borrower shall have no liability under Section 3.01 or otherwise with
respect to amounts withheld by the Administrative Agent pursuant to this
Section 11.15(b).
(c) If any Governmental Authority asserts that the Administrative Agent did
not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such
Lender shall indemnify the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the
amounts payable to the Administrative Agent under this Section, and costs
and expenses (including Attorney Costs) of the Administrative Agent. The
obligation of the Lenders under this Section shall survive the termination
of the Aggregate Commitments, repayment of all other Obligations hereunder
and the resignation of the Administrative Agent.
11.16 Replacement of Lenders.
Under any circumstances set forth herein providing that the Borrower shall
have the right to replace a Lender as a party to this Agreement, the
Borrower may, upon notice to such Lender and the Administrative Agent,
replace such Lender by causing such Lender to assign its Commitment (with
the assignment fee to be paid by the Borrower in such instance) pursuant to
Section 11.07(b) to one or more other Lenders or Eligible Assignees
procured by the Borrower; provided, however, that if the Borrower elects to
exercise such right with respect to any Lender pursuant to Section 1.09,
Section 3.02 or Section 3.06(b), it shall be obligated to replace all
similarly situated Lenders. The Borrower shall (x) pay in full all
principal, interest, fees and other amounts owing to such Lender through
the date of replacement (including any amounts payable pursuant to Section
3.05), (y) provide appropriate assurances and indemnities (which may
include letters of credit) to the L/C Issuer and the Swing Line Lender as
each may reasonably require with respect to any continuing obligation to
fund participation interests in any L/C Obligations or any Swing Line Loans
then outstanding, and (z) release such Lender from its obligations under
the Loan Documents. Any Lender being replaced shall execute and deliver an
Assignment and Assumption with respect to such Lender's Commitment and
outstanding Loans and participations in L/C Obligations and Swing Line
Loans; provided that the processing and recordation fee in connection with
such Assignment and Assumption shall be paid by the Borrower.
102
Page 164
11.17 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is an accurate representation as to
the source of funds to be used by such Lender in connection with the
financing hereunder:
(a) no part of such funds constitutes assets allocated to any separate
account maintained by such Lender in which any employee benefit plan (or
its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets allocated
to any separate account maintained by such Lender, such Lender has
disclosed to the Borrower the name of each employee benefit plan whose
assets in such account exceed 10% of the total assets of such account as of
the date of such purchase (and, for purposes of this subsection (b), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes assets of an
insurance company's general account, such insurance company has complied
with all of the requirements of the regulations issued under Section
401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific benefit plans that
such Lender has identified in writing to the Borrower.
As used in this Section 11.17, the terms "employee benefit plan" and
"separate account" shall have the respective meanings provided in Section 3
of ERISA.
11.18 Governing Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
the LAW OF THE STATE OF NEW YORK applicable to agreements made and to be
performed entirely within such State; PROVIDED THAT THE ADMINISTRATIVE
Agent AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER, THE ADMINISTRATIVE Agent AND EACH LENDER CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
103
Page 165
THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE Agent AND EACH LENDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED
THERETO. THE BORROWER, THE ADMINISTRATIVE Agent AND EACH LENDER WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, THAT MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
11.19 Waiver of Right to Trial by Jury.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.20 Judgment Currency.
If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due hereunder or any other Loan Document in one currency into
another currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of the
Borrower in respect of any such sum due from them to the Administrative
Agent or the Lenders hereunder or under the other Loan Documents shall,
notwithstanding any judgment in a currency (the "Judgment Currency") other
than that in which such sum is denominated in accordance with the
applicable provisions of this Agreement (the "Agreement Currency"), be
discharged only to the extent that on the Business Day following receipt by
the Administrative Agent of any sum adjudged to be so due in the Judgment
Currency, the Administrative Agent may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency. If
the amount of the Agreement Currency so purchased is less than the sum
originally due to the Administrative Agent from the Borrower in the
Agreement Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or
the Person to whom such obligation
104
Page 166
was owing against such loss. If the amount of the Agreement Currency so
purchased is greater than the sum originally due to the Administrative
Agent in such currency, the Administrative Agent agrees to return the
amount of any excess to the Borrower (or to any other Person who may be
entitled thereto under applicable law).
[SIGNATURE PAGES FOLLOW]
105
Page 167
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BORROWER: ALBEMARLE CORPORATION,
a Virginia corporation
By:___________________
Name:
Title:
GUARANTORS: [NONE AS OF THE CLOSING DATE]
ADMINISTRATIVE AGENT: BANK OF AMERICA, n.a.,
as Administrative Agent
By:___________________
Name:
Title:
LENDERS: BANK OF AMERICA, n.a.,
as a Lender, L/C Issuer
and Swing Line Lender
By:___________________
Name:
Title:
FORTIS (USA) FINANCE LLC
By:___________________
Name:
Title:
THE BANK OF NEW YORK
By:___________________
Name:
Title:
SUNTRUST BANK
By:___________________
Name:
Title:
Page 168
BANK ONE, NA
(Main Office, Chicago)
By:___________________
Name:
Title:
BANK OF CHINA, NEW YORK BRANCH
By:___________________
Name:
Title:
SUMITOMO MITSUI BANKING CORPORATION
By:___________________
Name:
Title:
NATIONAL CITY BANK
By:___________________
Name:
Title:
THE NORINCHUKIN BANK, NEW YORK BRANCH
By:___________________
Name:
Title:
WHITNEY NATIONAL BANK
By:___________________
Name:
Title:
MERRILL LYNCH BUSINESS
FINANCIAL SERVICES INC.
By:___________________
Name:
Title:
Page 169
SCHEDULES
---------
1.01 Mandatory Cost Rate
2.01 Commitments and Pro Rata Shares
2.03 Existing Letters of Credit
6.09 Environmental Matters
8.01 Existing Liens
11.02 Eurocurrency and Domestic Lending Offices; Notice Addresses
EXHIBITS
--------
A Form of Committed Loan Notice
B Form of Swing Line Loan Notice
C Form of Note
D Form of Compliance Certificate
E Form of Assignment and Assumption
G Form of Joinder Agreement
H Form of Lender Joinder Agreement
Page 170
Schedule 1.01
MANDATORY COST RATE
For the purposes of this Schedule: "Act" means the Bank of England Act
1998.
"Eligible Liabilities" has the meaning specified pursuant to the Act or by
the Bank of England (as may be appropriate), on the day of the application
of the formula. "Fee Base" has the meaning specified for the purposes of,
and shall be calculated in accordance with, the Fees Regulations. "Fees
Regulations" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1999; or
(b) such other law or regulations as from time to time may be in force,
relating to the payment of fees for banking supervision.
"FSA" means the Financial Services Authority.
"Special Deposits" has the meaning specified pursuant to the Act or by the
Bank of England (as may be appropriate), on the day of the application of
the formula.
The Mandatory Cost Rate will be the percentage rate per annum determined by
the Administrative Agent (rounded upward, if necessary, to four decimal
places) as the rate resulting from the application (as appropriate) of the
following formulae: (a) in relation to Loans or other unpaid amounts
denominated in British Pounds Sterling:
XL + S(L - D) + F x 0.01
------------------------
100 - (X + S)
(b) in relation to Loans or other unpaid amounts denominated in any
currency other than British Pounds Sterling:
F x 0.01
--------
300
where, in each case, on the day of application of such formula:
"X" is the percentage of Eligible Liabilities (in excess of any stated
minimum) by reference to which the Mandatory Cost Reference Lender is
required under or pursuant to the Act to maintain cash ratio deposits with
the Bank of England; "L" is the Adjusted Eurocurrency Rate applicable to
such Loan; "F" is the rate of charge payable by such Mandatory Cost
Reference Lender to the FSA pursuant to paragraphs 2.02 or 2.03 (as the
case may be) of the Fees Regulations (but for this purpose the figure at
paragraph 2.02b or 2.03b (as the case may be) shall be deemed to be zero)
and expressed in pounds per (pound)1 million of the Fee Base of the
Mandatory Cost Reference Lender; "S" is the level of interest-bearing
Special Deposits, expressed as a percentage of Eligible Liabilities, that
such Mandatory Cost Reference Lender is required to maintain by the Bank of
England (or other United Kingdom governmental authorities or agencies); and
"D" is the percentage rate per annum payable by the Bank of England to the
Mandatory Cost Reference Lender on Special Deposits.
Page 171
("X," "L," "S" and "D" are to be expressed in the formula as numbers and
not as percentages. A negative result obtained from subtracting "D" from
"L" shall be counted as zero.)
The Mandatory Cost Rate for any Interest Period shall be calculated at or
about 11:00 a.m. (London time) on the first day of such Interest Period for
the duration of such Interest Period. The determination of the Mandatory
Cost Rate in relation to any Interest Period shall, in the absence of
manifest error, be conclusive and binding on all parties hereto. If there
is any change in circumstance (including the imposition of alternative or
additional requirements, including capital adequacy requirements) that in
the reasonable opinion of the Administrative Agent renders or will render
the above formulae (or any element thereof, or any defined term used
therein) inappropriate or inapplicable, the Administrative Agent shall
promptly notify the Borrower and the Lenders thereof and (following
consultation with the Required Lenders) shall be entitled to vary the same
with the prior written consent of the Borrower, such consent not to be
unreasonably withheld. Any such variation shall, in the absence of manifest
error, be conclusive and binding on all parties and shall apply from the
date specified in a notice from the Administrative Agent to the Borrower
and the Lenders.
Page 172
Schedule 2.01
COMMITMENTS AND PRO RATA SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic Domestic Multicurrency Multicurrency
Lenders Commitment Pro Rata Share Commitment Pro Rata Share
- ------------------------------------------------------------------------------------------------------------------------------------
Bank of America, N.A. $40,645,161.29 14.7800587% $19,354,838.71 19.35483871%
Fortis (USA) Finance LLC $40,645,161.29 14.7800587% $19,354,838.71 19.35483871%
The Bank of New York $30,483,870.97 11.0850440% $14,516,129.03 14.51612903%
SunTrust Bank $30,483,870.97 11.0850440% $14,516,129.03 14.51612903%
Bank One, NA (Main Office, Chicago) $23,709,677.42 8.6217009% $11,290,322.58 11.29032258%
Bank of China, New York Branch $35,000,000.00 12.7272727% $0 0%
Sumitomo Mitsui Banking Corporation $16,935,483.87 6.1583578% $8,064,516.13 8.06451613%
National City Bank $13,548,387.10 4.9266862% $6,451,612.90 6.45161290%
The Norinchukin Bank, New York Branch $20,000,000.00 7.2727273% $0 0%
Whitney National Bank $13,548,387.10 4.9266862% $6,451,612.90 6.45161290%
Merrill Lynch Business Financial Services Inc. $10,000,000.00 3.6363636% $0 0%
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $275,000,000.00 100.000000000% $100,000,000.00 100.000000000%
- ------------------------------------------------------------------------------------------------------------------------------------
Page 173
Schedule 11.02
NOTICE ADDRESSES
Party Notice Address Lending Office
- -----------------------------------------------------------------------------------------------------------------------------------
(for payments and Requests for Credit Extensions)
BORROWER: ALBEMARLE CORPORATION N/A
330 South Fourth Street
P.O. Box 1335
Richmond, Virginia 23210
Attention:
Telephone:
Facsimile:
Electronic Mail: _______@_____
With a copy to:
ALBEMARLE CORPORATION
451 Florida Street
Baton Rouge, Louisiana 70801
Attention: Treasurer
Page 174
GUARANTORS: [GUARANTOR] N/A
c/o Albemarle Corporation
330 South Fourth Street
P.O. Box 1335
Richmond, Virginia 23210
Attention:
Telephone:
Facsimile:
Electronic Mail: _______@_____
With a copy to:
ALBEMARLE CORPORATION
451 Florida Street
Baton Rouge, Louisiana 70801
Attention: Treasurer
Page 175
ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A. BANK OF AMERICA, N.A.
One Independence Center One Independence Center
101 North Tryon Street 101 North Tryon Street
Mail Code: NC1-001-08-19 Mail Code: NC1-001-15-03
Charlotte, North Carolina 28255 Charlotte, North Carolina 28255-0001
Attention: Barry M. Flynn Attention: Laura A. Schultz, Agency Services
Telephone: 704-387-5450 Telephone: 704-388-6484
Facsimile: 704-409-0648 Facsimile: 704-409-0008
Laura.a.schultz@bankofamerica.com
With a copy to: Account No.: 1366212250600
BANK OF AMERICA, N.A. Ref: Albemarle Corporation
335 Madison Avenue, 5th Floor ABA # 053000196
Mail Code: NY1-503-05-13
New York, New York 10017
Attention: Wendy J. Gorman
Telephone: 212-503-7363
Facsimile: 212-503-7878
Wendy.j.gorman@bankofamerica.com
Page 176
L/C ISSUER: BANK OF AMERICA, N.A. BANK OF AMERICA, N.A.
Trade Operations-Los Angeles #22621 Trade Operations-Los Angeles #22621
333 S. Beaudry Avenue, 19th Floor 333 S. Beaudry Avenue, 19th Floor
Mail Code: CA9-703-19-23 Mail Code: CA9-703-19-23
Los Angeles, CA 90017-1466 Los Angeles, CA 90017-1466
Attention: Sandra Leon, Vice President Attention: Sandra Leon, Vice President
Telephone: 213.345.5231 Telephone: 213.345.5231
Facsimile: 213.345.6694 Facsimile: 213.345.6694
Sandra.Leon@bankofamerica.com Sandra.Leon@bankofamerica.com
SWING LINE LENDER: BANK OF AMERICA, N.A. BANK OF AMERICA, N.A.
One Independence Center One Independence Center
101 North Tryon Street 101 North Tryon Street
Mail Code: NC1-001-15-03 Mail Code: NC1-001-15-03
Charlotte, North Carolina 28255-0001 Charlotte, North Carolina 28255-0001
Attention: Laura A. Schultz, Attention: Laura A. Schultz, Agency Services
Agency Services
Telephone: 704-388-6484 Telephone: 704-388-6484
Facsimile: 704-409-0008 Facsimile: 704-409-0008
Laura.a.schultz@bankofamerica.com Laura.a.schultz@bankofamerica.com
Account No.: 1366212250600 Account No.: 1366212250600
Ref: Albemarle Corporation Ref: Albemarle Corporation
ABA # 053000196 ABA # 053000196
Page 177
LENDERS: FORTIS (USA) FINANCE LLC FORTIS (USA) FINANCE LLC
3 Stamford Plaza 3 Stamford Plaza
301 Tresser Boulevard, 9th Floor 301 Tresser Boulevard, 9th Floor
Stamford, CT 06901-3239 Stamford, CT 06901-3239
Attention: Mikko Vaisanen Attention: Elice Tracey/Marlene
Purrier-Ellis
Telephone: 203-705-5734 Telephone: 203-705-5778
Facsimile: 203-705-5919 Facsimile: 203-705-5898
Email: Mikkovaisanen@fortiscapitalusa.com Email: Elise.Tracey@Fortiscapitalusa.com
THE BANK OF NEW YORK THE BANK OF NEW YORK
One Wall Street, 22nd Floor One Wall Street, 22nd Floor
New York, New York 10005 New York, New York 10005
Attention: Steven Cavaluzzo Attention: Larry Geter
Telephone: 212-635-1059 Telephone: 212-635-6340
Facsimile: 212-635-6434 Facsimile: 212-635-6399
Email: Email:
SUNTRUST BANK SUNTRUST BANK
919 East Main Street 10710 Midlothian Turnpike
Richmond, VA 23219 Richmond, VA 23235
Attention: Mark A. Flatin Attention: Bonnie Brown
Telephone: 804-782-5449 Telephone: 804-594-1061
Facsimile: 804-782-5413 Facsimile: 804-594-1139
Email: mark.flatin@suntrust.com Email:
Page 178
BANK ONE, NA (Main Office, Chicago) BANK ONE, NA (Main Office, Chicago)
153 West 51st Street 1 Bank One Plaza
New York, New York 10019 Chicago, IL 60670
Attention: Jules Panno Attention: Deborah Turner
Telephone: 212-373-1194 Telephone: 312-732-3641
Facsimile: 212-373-1180 Facsimile: 312-732-4840
Email: jules_panno@bankone.com Email:
BANK OF CHINA, NEW YORK BRANCH THE BANK OF CHINA, NEW YORK BRANCH
410 Madison Avenue 410 Madison Avenue
New York, New York 10017 New York, New York 10017
Attention: David Haong Attention: Elaine Ho
Telephone: 212-935-3101 Telephone: 212-935-3101
Facsimile: 212-308-4993 Facsimile: 646-840-1796
Email: Dhoang@bocusa.com Email: Eho@bocusa.com
SUMITOMO MITSUI BANKING CORPORATION SUMITOMO MITSUI BANKING CORPORATION
277 Park Avenue 277 Park Avenue
New York, New York 10172 New York, New York 10172
Attention: Laura Buckley Attention: Yvette Browne
Telephone: 212-224-4170 Telephone: 212-224-4306
Facsimile: 212-224-4384 Facsimile: 212-224-5197
Email: laura_j_buckley@smbcgroup.com Email: yvette_brown@smbcgroup.com
Page 179
NATIONAL CITY BANK NATIONAL CITY BANK
One South Broad Street 23000 Mill Creek Pkwy
13th Floor Highland Hills OH 44124
Philadelphia, PA 19107 Attention: Vernon Johnson
Attention: Heather Gotwols Telephone: 216-488-7099
Telephone: 267-256-4052 Facsimile: 216-488-7110
Facsimile: 267-256-4001 Email:
Email: heather.gotwols@nationalcity.com
THE NORINCHUKIN BANK, NEW YORK BRANCH THE NORINCHUKIN BANK, NEW YORK BRANCH
245 Park Avenue, 29th Floor 245 Park Avenue, 29th Floor
New York, New York 10167 New York, New York 10167
Attention: Junya Morishita Attention: Connie Auyeung
Telephone: 212-697-1717 Telephone: 212-697-1717
Facsimile: 212-697-5754 Facsimile: 212-697-5754
Email: jmorishita@mochubank.or.jp Email:
WHITNEY NATIONAL BANK WHITNEY NATIONAL BANK
228 St. Charles Avenue 228 St. Charles Avenue
New Orleans, LA 70130-2601 New Orleans, LA 70130-2601
Attention: M. Jesse Shannon Attention: Kitty Jordan
Telephone: 504-552-4691 Telephone: 504-539-7841
Facsimile: 504-599-3073 Facsimile: 504-552-4677
Email: jshannon@whitneybank.com Email: kjourdan@whitneybank.com
Page 180
MERRILL LYNCH BUSINESS MERRILL LYNCH BUSINESS
FINANCIAL SERVICES INC. FINANCIAL SERVICES INC.
222 North LaSalle Street, 17th Floor 222 North LaSalle Street, 17th Floor
Chicago, IL 60601 Chicago, IL 60601
Attention: Jason E. Deegan Attention: Jason E. Deegan
Telephone: 312-269-4447 Telephone: 312-269-4447
Facsimile: 312-368-1387 Facsimile: 312-368-1387
Email: jason_deegan@ml.com Email: jason_deegan@ml.com
Page 181
Exhibit A
FORM OF COMMITTED LOAN NOTICE
Date:____________, _____
To: Bank of America, N.A., as Administrative Agent
Re: Credit Agreement dated as of September 10, 2002 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time,
the "Credit Agreement") among Albemarle Corporation, a Virginia corporation
(the "Borrower"), the Guarantors, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender. Capitalized terms used but not otherwise defined herein
have the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned hereby requests (select one):
___ A Borrowing of [Domestic/Multicurrency] Committed Loans
___ A conversion or continuation of [Domestic/Multicurrency] Loans
On ______,________ (a Business Day).
Applicable Currency:__________ .
In the amount of $_____________ .
Comprised of ______________________(Type of Committed Loan requested).
For Eurodollar Rate Loans: with an Interest Period of ________months.
With respect to any Borrowing requested herein, the Borrower hereby
represents and warrants that (i) such request complies with the
requirements of Section 2.01 of the Credit Agreement and (ii) each of the
conditions set forth in Section 5.02 of the Credit Agreement have been
satisfied on and as of the date of such Borrowing.
ALBEMARLE CORPORATION
By:___________________
Name:
Title:
Page 182
Exhibit B
FORM OF SWING LINE LOAN NOTICE
Date:____________ ,_________
To: Bank of America, N.A., as Swing Line Lender Bank of America, N.A., as
Administrative Agent
Re: Credit Agreement dated as of September 10, 2002 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time,
the "Credit Agreement") among Albemarle Corporation, a Virginia corporation
(the "Borrower"), the Guarantors, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender. Capitalized terms used but not otherwise defined herein
have the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned hereby requests a Swing Line Loan:
On _________ ,________ (a Business Day).
In the amount of $_____________________.
With respect to such Swing Line Borrowing, the Borrower hereby represents
and warrants that (i) such request complies with the requirements of
Section 2.04(a) of the Credit Agreement and (ii) each of the conditions set
forth in Section 5.02 of the Credit Agreement have been satisfied on and as
of the date of such Swing Line Borrowing.
ALBEMARLE CORPORATION
By:___________________
Name:
Title:
Page 183
Exhibit C
FORM OF NOTE
September 10, 2002
FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to
pay to _____________________ or registered assigns (the "Lender"), in
accordance with the provisions of the Credit Agreement (as hereinafter
defined), the principal amount of each Loan from time to time made by the
Lender to the Borrower under that certain Credit Agreement dated as of the
date hereof (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the "Credit Agreement") among the
Borrower, the Guarantors, the Lenders from time to time party thereto, and
Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender. Capitalized terms used but not otherwise defined herein have the
meanings provided in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates and at such times as provided in the Credit
Agreement. Except as otherwise provided in Section 2.04(f) of the Credit
Agreement with respect to Swing Line Loans, all payments of principal and
interest shall be made to the Administrative Agent for the account of the
Lender in Dollars in immediately available funds at the Administrative
Agent's Office. If any amount is not paid in full when due hereunder, such
unpaid amount shall bear interest, to be paid upon demand, from the due
date thereof until the date of actual payment (and before as well as after
judgment) computed at the per annum rate set forth in the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part
subject to the terms and conditions provided therein. Upon the occurrence
and continuation of one or more of the Events of Default specified in the
Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable all as
provided in the Credit Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender
in the ordinary course of business. The Lender may also attach schedules to
this Note and endorse thereon the date, amount and maturity of its Loans
and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Page 184
ALBEMARLE CORPORATION,
a Virginia corporation
By:___________________
Name:
Title:
Page 185
LOANS AND PAYMENTS
Amount of Outstanding
Applicable Principal or Principal
Type of Loan Amount of Loan Currency of End of Interest Paid Balance This Notation
Date Made Made Loan Made Interest Period This Date Date Made By
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ----------- ----------------- ----------------- ---------------- ----------------- ---------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
- ------------ --------------- ----------------- ----------------- ---------------- ----------------- ---------------- ------------
Page 186
Exhibit D
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date:_____________ , _____
To: Bank of America, N.A., as Administrative Agent
Re: Credit Agreement dated as of September 10, 2002 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time,
the "Credit Agreement") among Albemarle Corporation, a Virginia corporation
(the "Borrower"), the Guarantors, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender. Capitalized terms used but not otherwise defined herein
have the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned Responsible Officer hereby certifies as of the date hereof
that [he/she] is the ____________________ of the Borrower, and that, in
[his/her] capacity as such, [he/she] is authorized to execute and deliver
this Certificate to the Administrative Agent on the behalf of the Borrower,
and that:
[Use following paragraph 1 for fiscal year-end financial statements:]
[1. Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 7.01(a) of the Credit Agreement for the
fiscal year of the Borrower ended as of the above date, together with the
report and opinion of an independent certified public accountant required
by such section.]
[Use following paragraph 1 for fiscal quarter-end financial statements:]
[1. Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 7.01(b) of the Credit Agreement for the fiscal quarter
of the Borrower ended as of the above date. Such financial statements
fairly present the financial condition, results of operations and cash
flows of the Borrower and its Subsidiaries in accordance with GAAP as of
such date and for such period, subject only to normal year-end audit
adjustments and the absence of footnotes.]
[select one:]
[2. To the best knowledge of the undersigned during such fiscal period, no
Default or Event of Default exists as of the date hereof.]
[or:]
Page 187
[the following is a list of each existing Default or Event of Default, the
nature and extent thereof, and the proposed actions of the Loan Parties
with respect thereto:]
3. The representations and warranties of the Borrower contained in Article
VI of the Credit Agreement, or which are contained in any document
furnished at any time under or in connection with the Loan Documents, are
true and correct on and as of the date hereof, except to the extent that
such representations and warranties specifically refer to an earlier date,
in which case they are true and correct as of such earlier date, and except
that for purposes of this Compliance Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 6.05 of the
Credit Agreement shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 7.01 of
the Credit Agreement, including the statements in connection with which
this Compliance Certificate is delivered.
4. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this
Certificate.
5. Set forth below is a summary of all material changes in GAAP and in the
consistent application thereof occurring during the most recent fiscal
quarter ending prior to the date hereof, the effect on the financial
covenants resulting therefrom, and a reconciliation between calculation of
the financial covenants (and determination of the applicable pricing level
under the definition of "Applicable Percentage") before and after giving
effect to such changes:
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________ ___, ______.
ALBEMARLE CORPORATION
By:___________________
Name:
Title:
Page 188
Exhibit E
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the "Assignor") and [Insert name of Assignee]
(the "Assignee"). Capitalized terms used but not defined herein have the
meanings provided in the Credit Agreement identified below, receipt of a
copy of which is hereby acknowledged by the Assignee. The Standard Terms
and Conditions set forth in Annex 1 attached hereto are hereby agreed to
and incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard
Terms and Conditions and the Credit Agreement, as of the Effective Date
inserted by the Administrative Agent as contemplated below (i) all of the
Assignor's rights and obligations as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the
extent related to the amount and percentage interest identified below of
all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below (including, without limitation,
Letters of Credit and Swing Line Loans included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all
claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed
thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related
to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i)
and (ii) above being referred to herein collectively as, the "Assigned
Interest"). Such sale and assignment is without recourse to the Assignor
and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
1. Assignor:
2. Assignee: [and is an Affiliate/Approved Fund of [identify Lender]]
3. Borrower: Albemarle Corporation, a Virginia corporation
4. Administrative Agent: Bank of America, N.A.
Page 189
5. Credit Agreement: The Credit Agreement dated as of September 10, 2002 by
and among the Borrower, the Guarantors, the Lenders parties thereto, and
Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender
Page 190
6. Assigned Interest:
- --------------------------------- --------------------------- ----------------------------- ---------------------------
Aggregate Amount of Amount of
Commitment/Loans Commitment/Loans Percentage Assigned of
Facility Assigned for all Lenders Assigned Commitment/Loans
- --------------------------------- --------------------------- ----------------------------- ---------------------------
Domestic Commitment $______________ $______________ ________%
Multicurrency Commitment $______________ $______________ ________%
- --------------------------------- --------------------------- ----------------------------- ---------------------------
[7. Trade Date: __________________]
Effective Date: __________________, _____
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR: [NAME OF ASSIGNOR]
By:___________________
Name:
Title:
ASSIGNEE: [NAME OF ASSIGNEE]
By:___________________
Name:
Title:
[Consented to and]2 Accepted:
BANK OF AMERICA, N.A., as Administrative Agent
By:
Name:
Title:
Page 191
[Consented to:]3
[_______________ ]
[By:___________________]
[Name: ]
[Title: ]
1 To be inserted by Administrative Agent; shall be the effective date of
recordation of transfer in the register therefor.
2 To be added only if the consent of the Administrative Agent is required
by the terms of the Credit Agreement.
3 To be added only if the consent of the Borrower and/or other parties
(e.g. Swing Line Lender, L/C Issuer) is required by the terms of the Credit
Agreement.
Page 192
Annex 1 to Assignment and Assumption
STANDARD TERMS AND CONDITIONS
1. Representations and Warranties.
1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim
and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or
any collateral thereunder, (iii) the financial condition of the Borrower,
any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any
of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all requirements of an Eligible Assignee under the
Credit Agreement (subject to receipt of such consents as may be required
under the Credit Agreement), (iii) from and after the Effective Date, it
shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 7.01 thereof, as applicable, and
such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it
has made such analysis and decision independently and without reliance on
the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached hereto is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed
by the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, and (ii) it will perform in accordance
with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned interest (including
payments of principal, interest, fees and other amounts) to the Assignee
whether such amounts have accrued prior to or on or after the Effective
Date. The Assignor and the Assignee shall make all appropriate
Page 193
adjustments in payments by the Administrative Agent for periods prior to
the Effective Date or with respect to the making of this assignment
directly between themselves.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in
any number of counterparts, which together shall constitute one instrument.
Delivery of an executed counterpart of a signature page of this Assignment
and Assumption by telecopy shall be effective as delivery of a manually
executed counterpart of this Assignment and Assumption. This Assignment and
Assumption shall be governed by, and construed in accordance with, the law
of the State of New York.
Page 194
Exhibit G
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of ______________ is by
and between _____________________, a ___________________ (the "Material
Domestic Subsidiary"), and Bank of America, N.A., in its capacity as
Administrative Agent under that certain Credit Agreement dated as of
September 10, 2002 (as amended, modified, supplemented, increased and
extended from time to time, the "Credit Agreement"; terms defined therein
are used herein as therein defined) among Albemarle Corporation, a Virginia
corporation (the "Borrower"), the Guarantors, the Lenders from time to time
party thereto and Bank of America, N.A., as Administrative Agent.
The Loan Parties are required by Section 7.12 of the Credit Agreement to
cause the Material Domestic Subsidiary to become a "Guarantor" thereunder.
Accordingly, the Material Domestic Subsidiary hereby agrees as follows with
the Administrative Agent, for the benefit of the Lenders:
1. The Material Domestic Subsidiary hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Material Domestic
Subsidiary will be deemed to be a party to the Credit Agreement and a
"Guarantor" for all purposes of the Credit Agreement, and shall have all of
the obligations of a Guarantor thereunder as if it had executed the Credit
Agreement. The Material Domestic Subsidiary hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and
conditions applicable to the Guarantors contained in the Credit Agreement.
Without limiting the generality of the foregoing terms of this paragraph 1,
the Material Domestic Subsidiary hereby jointly and severally together with
the other Guarantors, guarantees to each Lender and the Administrative
Agent, as provided in Section 4 of the Credit Agreement, the prompt payment
and performance of the Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) strictly
in accordance with the terms thereof.
2. The address of the Material Domestic Subsidiary for purposes of all
notices and other communications is:
[Material Domestic Subsidiary]
Attention:
Telephone:
Facsimile:
Page 195
3. The Material Domestic Subsidiary hereby waives acceptance by the
Administrative Agent and the Lenders of the guaranty by the Material
Domestic Subsidiary under Section 4 of the Credit Agreement upon the
execution of this Agreement by the Material Domestic Subsidiary.
4. This Agreement may be executed in multiple counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute one contract.
5. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Page 196
IN WITNESS WHEREOF, the Material Domestic Subsidiary has caused this
Joinder Agreement to be duly executed by its authorized officer, and the
Administrative Agent, for the benefit of the Lenders, has caused the same
to be accepted by its authorized officer, as of the day and year first
above written.
[MATERIAL DOMESTIC SUBSIDIARY]
By:___________________
Name:
Title:
Acknowledged and accepted:
BANK OF AMERICA, N.A., as Administrative Agent
By:___________________
Name:
Title:
Page 197
Exhibit H
FORM OF LENDER JOINDER AGREEMENT
THIS LENDER JOINDER AGREEMENT (this "Agreement") dated as of __________,
_____ to the Credit Agreement referenced below is by and among [NEW LENDER]
(the "New Lender"), ALBEMARLE CORPORATION, a Virginia corporation (the
"Borrower"), certain Subsidiaries and Affiliates of the Borrower, as
Guarantors, and BANK OF AMERICA, N.A., as administrative agent (in such
capacity, the "Administrative Agent") for the Lenders. All of the defined
terms of the Credit Agreement are incorporated herein by reference.
W I T N E S S E T H
WHEREAS, pursuant to that Credit Agreement dated as of September 10, 2002
(as amended and modified from time to time, the "Credit Agreement") among
the Borrower, the Guarantors, the Lenders and the Administrative Agent, the
Lenders have agreed to provide the Borrower with a revolving credit
facility;
WHEREAS, pursuant to Section 2.1(c) of the Credit Agreement, the Borrower
has requested that the New Lender provide an additional Commitment under
the Credit Agreement; and
WHEREAS, the New Lender has agreed to provide the additional Commitment on
the terms and conditions set forth herein and to become a "Lender" under
the Credit Agreement in connection therewith;
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The New Lender hereby agrees to provide Domestic Commitments and
Multicurrency Commitments to the Borrower in the amounts set forth on
Schedule 2.01 to the Credit Agreement as attached hereto. The Domestic Pro
Rata Share and the Multicurrency Pro Rata Share of the New Lender are as
set forth on Schedule 2.01.
2. The New Lender shall be deemed to have purchased without recourse:
(a) a risk participation from the Domestic L/C Issuer in all Domestic
Letters of Credit issued or existing under the Credit Agreement (including
Existing Letters of Credit that are Domestic Letters of Credit) and the
obligations arising thereunder in an amount equal to its Domestic Pro Rata
Share of the obligations under such Letters of Credit, and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and
not as surety, and be obligated to pay to the Domestic L/C Issuer therefor
and discharge when due, its Domestic Pro Rata Share of the obligations
arising under such Letter of Credit; and
Page 198
(b) a risk participation from the Multicurrency L/C Issuer in all
Multicurrency Letters of Credit issued or existing under the Credit
Agreement (including Existing Letters of Credit that are Multicurrency
Letters of Credit) and the obligations arising thereunder in an amount
equal to its Multicurrency Pro Rata Share of the obligations under such
Letters of Credit, and shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and be obligated to pay to
the Multicurrency L/C Issuer therefor and discharge when due, its
Multicurrency Pro Rata Share of the obligations arising under such Letter
of Credit.
3. The New Lender (a) represents and warrants that it is a commercial
lender, other financial institution or other "accredited" investor (as
defined in SEC Regulation D) that makes or acquires loans in the ordinary
course of business and that it will make or acquire Loans for its own
account in the ordinary course of business, (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 7.01 thereof and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; (c) agrees 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
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (d) appoints and
authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Credit
Agreement as are delegated to the Administrative Agent by the terms
thereof, together with such powers and discretion as are reasonably
incidental thereto; and (e) agrees that, as of the date hereof, the New
Lender shall (i) be a party to the Credit Agreement and the other Loan
Documents, (ii) be a "Lender" for all purposes of the Credit Agreement and
the other Loan Documents, (iii) perform all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a
"Lender" under the Credit Agreement and (iv) shall have the rights and
obligations of a Lender under the Credit Agreement and the other Loan
Documents.
4. Each of the Borrower and the Guarantors agrees that, as of the date
hereof, the New Lender shall (i) be a party to the Credit Agreement and the
other Loan Documents, (ii) be a "Lender" for all purposes of the Credit
Agreement and the other Loan Documents, and (iii) have the rights and
obligations of a Lender under the Credit Agreement and the other Loan
Documents.
5. The address of the New Lender for purposes of all notices and other
communications is:
Page 199
6. This Agreement may be executed in any number of counterparts and by the
various parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one contract. Delivery of an executed counterpart of this
Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
7. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.
[remainder of page intentionally left blank]
Page 200
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by a duly authorized officer as of the date first above
written.
NEW LENDER: [NEW LENDER], as New Lender
By:___________________
Name:
Title:
BORROWER: ALBEMARLE CORPORATION, a Virginia corporation
By:___________________
Name:
Title:
GUARANTORS: [EACH GUARANTOR]
By:___________________
Name:
Title:
of each of the foregoing
Accepted and Agreed:
BANK OF AMERICA, N.A.,
as Administrative Agent
By:___________________
Name:
Title:
Page 201
EXHIBIT 99
- ----------
List of Albemarle Corporation Officers Effective November 1, 2002
-----------------------------------------------------------------
Name Officers
- ----------------------------------------------------------------------------------------------------------------------------------
William M. Gottwald* Chairman of the Board and Secretary to the Executive Committee as Management Committee
Floyd D. Gottwald, Jr.* Vice Chairman of the Board and Chairman of the Executive Committee
Charles B. Walker* Vice Chairman of the Board
Mark C. Rohr* President and Chief Executive Officer
E. Whitehead Elmore Executive Vice President
Paul F. Rocheleau Senior Vice President and Chief Financial Officer
John G. Dabkowski Vice President - Polymer Chemicals
Thomas F. Dominick Vice President
Jack P. Harsh Vice President - Human Resources
George P. Manson, Jr. Vice President, General Counsel and Secretary
George A. Newbill Vice President - Sourcing Organization
John J. Nicols Vice President - Fine Chemicals
John M. Steitz Vice President - Business Operations
Gary L. Ter Haar Vice President-Health and Environment
Michael D. Whitlow Vice President-Americas Sales and Global Accounts
Edward G. Woods Vice President-Corporate Development
Michael J. Zobrist Vice President - Investor Relations/External Affairs
Robert G. Kirchhoefer Treasurer and Chief Accounting Officer
Richard A. Sabalot Assistant Secretary
*Member of the Executive Committee