-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V23K5zXsZWN7WMXeUJ9Xb1V1SonycxNWernTNen3aeIsHjMdW9Iy4sngUNifCc0s X/c+2k+IAGArnYzf6uDXpQ== 0000041499-03-000079.txt : 20031104 0000041499-03-000079.hdr.sgml : 20031104 20031104080449 ACCESSION NUMBER: 0000041499-03-000079 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GILLETTE CO CENTRAL INDEX KEY: 0000041499 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 041366970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00922 FILM NUMBER: 03974477 BUSINESS ADDRESS: STREET 1: PRUDENTIAL TOWER BLDG STREET 2: SUITE 4800 CITY: BOSTON STATE: MA ZIP: 02199 BUSINESS PHONE: 6174217000 MAIL ADDRESS: STREET 1: PRUDENTIAL TOWER BLDG STREET 2: SUITE 4800 CITY: BOSTON STATE: MA ZIP: 02199 FORMER COMPANY: FORMER CONFORMED NAME: GILLETTE SAFETY RAZOR CO DATE OF NAME CHANGE: 19660911 10-Q 1 f10q_093003-tgc.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 2003 Commission File Number 1-922 THE GILLETTE COMPANY (Exact name of registrant as specified in its charter) Incorporated in Delaware 04-1366970 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) Prudential Tower Building, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 421-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No______ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of each class Common Stock, $1.00 par value Shares Outstanding October 31, 2003 . . . . . . . . . . . . . . . 1,011,720,627 PAGE 1 PART I. FINANCIAL INFORMATION THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME (Millions, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September September 30 ------------------ ----------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net Sales .......................................... $ 2,405 $ 2,168 $ 6,630 $ 5,924 Cost of Sales ...................................... 935 882 2,583 2,374 ------- ------- ------- ------- Gross Profit ..................................... 1,470 1,286 4,047 3,550 Selling, General and Administrative Expenses ....... 866 764 2,558 2,281 Restructuring - Gain on Sale of Vaniqa ............. - - - (30) ------- ------- ------- ------- Profit from Operations ........................... 604 522 1,489 1,299 Nonoperating Charges (Income): Interest income .................................. (2) (7) (8) (18) Interest expense ................................. 13 21 43 65 Exchange ......................................... (7) (9) (2) (17) Other charges - net .............................. 7 4 4 8 ------- ------- ------- ------- 11 9 37 38 ------- ------- ------- ------- Income before Income Taxes ......................... 593 513 1,452 1,261 Income Taxes ....................................... 177 159 435 391 ------- ------- ------- ------- Net Income ....................................... $ 416 $ 354 $ 1,017 $ 870 ======= ======= ======= ======= Net Income per Common Share: Basic ............................................ $ .41 $ .33 $ .99 $ .82 ======= ======= ======= ======= Assuming Full Dilution ........................... $ .41 $ .33 $ .99 $ .82 ======= ======= ======= ======= Dividends per Common Share: Declared ......................................... $ - $ - $ .3250 $ .3250 Paid ............................................. $.1625 $ .1625 $ .4875 $ .4875 Weighted average number of common shares outstanding Basic ............................................ 1,017 1,058 1,025 1,057 Assuming full dilution ........................... 1,019 1,060 1,027 1,061
See Accompanying Notes to Consolidated Financial Statements. PAGE 2 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET ASSETS (Millions)
September 30, December 31, September 30, 2003 2002 2002 ------------ ------------ ----------- (Unaudited) (Unaudited) Current Assets: Cash and cash equivalents .............................. $ 845 $ 801 $ 981 Trade receivables, less allowances, Sept. 2003, $61; December 2002, $73; Sept. 2002, $61 .................. 1,249 1,202 1,220 Other receivables ...................................... 350 311 282 Inventories Raw materials and supplies .......................... 115 115 113 Work in process ..................................... 206 191 246 Finished goods ...................................... 856 622 821 ------- ------- ------- Total Inventories ................................. 1,177 928 1,180 ------- ------- ------- Deferred income taxes .................................. 333 380 491 Other current assets ................................... 271 175 251 ------- ------- ------- Total Current Assets .............................. 4,225 3,797 4,405 ------- ------- ------- Property, Plant and Equipment, at cost ................... 6,761 6,429 6,304 Less accumulated depreciation ............................ (3,253) (2,864) (2,809) ------- ------- ------- Net Property, Plant and Equipment ................. 3,508 3,565 3,495 ------- ------- ------- Goodwill ................................................. 996 962 952 Intangible Assets, less accumulated amortization ......... 514 400 400 Other Assets ............................................. 1,044 1,139 766 ------- ------- ------- $10,287 $ 9,863 $10,018 ======= ======= =======
See Accompanying Notes to Consolidated Financial Statements. PAGE 3 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (Millions, except per share amount)
September 30, December 31, September 30, 2003 2002 2002 ------------ ------------ ------------ (Unaudited) (Unaudited) Current Liabilities: Loans payable .................................... $ 732 $ 673 $ 1,176 Current portion of long-term debt ................ 432 527 755 Accounts payable ................................. 515 581 519 Accrued liabilities .............................. 1,793 1,303 1,238 Dividends payable ................................ - 170 - Income taxes ..................................... 223 234 345 -------- -------- -------- Total Current Liabilities ..................... 3,695 3,488 4,033 -------- -------- -------- Long-Term Debt ..................................... 2,715 2,457 1,852 Deferred Income Taxes .............................. 709 692 591 Other Long-Term Liabilities ........................ 898 920 713 Minority Interest .................................. 71 46 44 Contingent Redemption Value of Common Stock Put Options ......................... - - 241 Stockholders' Equity: Common stock, par value $1.00 per share: Authorized 2,320 shares Issued: Sept. 2003, 1,373 shares; Dec. 2002, 1,370 shares; Sept. 2002, 1,370 shares ............... 1,373 1,370 1,370 Additional paid-in capital ....................... 1,243 1,197 931 Earnings reinvested in the business .............. 7,292 6,608 6,604 Accumulated other comprehensive loss ............. (1,248) (1,523) (1,396) Treasury stock, at cost: Sept. 2003, 361 shares; Dec. 2002, 326 shares; and Sept. 2002, 312 shares (6,461) (5,392) (4,965) -------- -------- -------- Total Stockholders' Equity ............... 2,199 2,260 2,544 -------- -------- -------- $ 10,287 $ 9,863 $ 10,018 ======== ======== ========
See Accompanying Notes to Consolidated Financial Statements. PAGE 4 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (Millions) (Unaudited)
Nine Months Ended September 30 ------------------ 2003 2002 ---- ---- Operating Activities Net income ..................................... $1,017 $ 870 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................ 430 371 Deferred income taxes ........................ 70 99 Other ........................................ 3 12 Changes in assets and liabilities, excluding effects of acquisitions and divestitures: Trade and other accounts receivable ........ 5 323 Inventories ................................ (179) (146) Accounts payable and accrued liabilities ... 263 82 Other working capital items ................ (17) (60) Other noncurrent assets and liabilities .... 110 (131) ----- ----- Net cash provided by operating activities 1,702 1,420 ----- ----- Investing Activities Additions to property, plant and equipment ..... (218) (278) Acquisition of business, net of cash acquired .. (161) - Disposals of property, plant and equipment ..... 28 31 Other .......................................... 3 1 ----- ----- Net cash used in investing activities .... (348) (246) ----- ----- Financing Activities Purchase of treasury stock ..................... (1,069) - Proceeds from sale of put options ............. - 15 Proceeds from exercise of stock option and purchase plans ............................ 48 31 Proceeds from long-term debt ................... 684 619 Repayment of long-term debt .................... (534) (197) Increase (Decrease) in loans payable ........... 51 (1,061) Dividends paid ................................. (501) (515) Settlements of debt-related derivative contracts 6 (8) ----- ----- Net cash used in financing activities .... (1,315) (1,116) ----- ----- Effect of Exchange Rate Changes on Cash ............ 5 2 Net Cash Used in Discontinued Operations ........... - (26) ----- ----- Increase in Cash and Cash Equivalents .............. 44 34 Cash and Cash Equivalents at Beginning of Period ... 801 947 ----- ----- Cash and Cash Equivalents at End of Period ......... $ 845 $ 981 ===== ===== Supplemental disclosure of cash paid for: Interest ....................................... $ 45 $ 66 Income taxes ................................... $ 359 $ 218
See Accompanying Notes to Consolidated Financial Statements. PAGE 5 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Millions) (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ---------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net Income, as reported $ 416 $ 354 $1,017 $ 870 Other Comprehensive Income, net of tax: Foreign Currency Translation 8 32 270 39 Cash Flow Hedges 1 - 5 2 ----- ----- ------ ----- Comprehensive Income $ 425 $ 386 $1,292 $ 911 ===== ===== ====== =====
Accumulated Other Comprehensive Loss - ------------------------------------ The balances for the components of Accumulated Other Comprehensive Loss are: Accumulated Foreign Other Currency Pension Cash Flow Comprehensive Translation Adjustment Hedges Loss ----------- ---------- ----------- ------------- Balance December 31, 2001 $(1,373) $ (56) $ (8) $(1,437) Change in period (46) - 5 (41) Income tax benefit (expense) 6 - (2) 4 ------ ------ ------ ------ Balance March 31, 2002 (1,413) (56) (5) (1,474) Change in period 172 - (2) 170 Income tax benefit (expense) (125) - 1 (124) ------ ------ ------ ------ Balance June 30, 2002 $(1,366) $ (56) (6) $(1,428) Change in period (37) - - (37) Income tax benefit (expense) 69 - - 69 ------ ------ ------ ------ Balance September 30, 2002 $(1,334) $ (56) $ (6) $(1,396) ====== ====== ====== ====== Balance December 31, 2002 $(1,332) $ (186) $ (5) $(1,523) Change in period 2 - 3 5 Income tax benefit (expense) 89 - (1) 88 ------ ------ ------ ------ Balance March 31, 2003 (1,241) (186) (3) (1,430) Change in period 185 - 3 188 Income tax benefit (expense) (14) - (1) (15) ------ ------ ------ ------ Balance June 30, 2003 $(1,070) (186) (1) (1,257) Change in period 9 - 2 11 Income tax benefit (expense) (1) - (1) (2) ------ ------ ------ ------ Balance September 30, 2003 $(1,062) $ (186) $ - $(1,248) ====== ====== ====== ======
The change in accumulated foreign currency translation adjustment for the quarters ended September 30, 2003, and 2002, were gains, net of tax, of $8 million and $32 million, respectively. The gains in both quarters were due to strengthening European currencies, offset by weakening Latin American currencies, versus the U.S. dollar. See Accompanying Notes to Consolidated Financial Statements. PAGE 6 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Accounting Comments - ------------------- Reference is made to the registrant's 2002 Annual Report to Shareholders, which contains, at pages 32 through 54, the audited consolidated financial statements and the notes thereto, which are incorporated by reference into the registrant's Annual Report on Form 10-K for the year ended December 31, 2002. With respect to the financial information for the interim periods included in this report, which is unaudited, the management of the Company believes that all adjustments necessary for a fair presentation of the results for such interim periods have been included. Financial statements of subsidiaries outside the U.S., other than those operating in highly inflationary environments, are measured using the local currency as the functional currency. Adjustments from translating these financial statements into U.S. dollars are accumulated in the equity section of the balance sheet under the caption, "Accumulated Other Comprehensive Loss." For subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Therefore, exchange gains and losses for these subsidiaries are included with all other transactional exchange gains and losses in the Consolidated Statement of Income under the caption, "Exchange." The Company accounts for its stock option plans under Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. Accordingly, no compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and net income per common share if the Company had applied the fair-value-based method under Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," to record expense for stock option compensation.
Three Months Nine Months Ended Sept. 30, Ended Sept. 30, 2003 2002 2003 2002 ---- ---- ---- ---- (Millions, except per share amounts) - ------------------------------------ Net income, as reported $ 416 $ 354 $1,017 $ 870 Less: Compensation expense for option awards determined by the fair- value-based method, net of related tax effects (25) (29) (76) (83) ------ ------ ------ ------ Pro forma net income $ 391 $ 325 $ 941 $ 787 ====== ====== ====== ====== Net income per common share Basic As reported $ .41 $ .33 $ .99 $ .82 Pro forma .38 .31 .92 .74 Assuming full dilution As reported $ .41 $ .33 $ .99 $ .82 Pro forma .38 .31 .92 .74 The fair value of each option grant for the Company's plans is estimated on the date of the grant using the Black-Scholes option pricing model.
PAGE 7 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Accounting Pronouncements - ------------------------- In April 2003, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards (SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative, amends the definition of an underlying contract, and clarifies when a derivative contains a financing component in order to increase the comparability of accounting practices under SFAS No. 133. The Statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company's consolidated financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. The Statement is effective for financial instruments entered into or modified after May 31, 2003. The Company adopted this standard on June 1, 2003. Its adoption did not have any impact on the financial statements. In May 2003, the consensus on EITF Issue No. 01-08, "Determining Whether an Arrangement Contains A Lease," was issued. The guidance in the consensus applies to the purchase or sale of goods and services under various types of contracts, including outsourcing arrangements. Based on the criteria in the consensus, both parties to an arrangement are required to determine whether the arrangement includes a lease within the scope of SFAS No. 13. The new requirement applies prospectively to new or modified arrangements for reporting periods beginning after May 28, 2003. Accordingly, as of July 1, 2003, the Company accounts for new or modified arrangements based on this guidance. The adoption of this standard did not have a material impact on the Company's financial statements. PAGE 8 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Goodwill and Intangible Assets - ------------------------------ In August, 2003, the Company acquired a majority interest in Fujian Nanping Nanfu Battery Co., Ltd., a leading battery company in China. The Nanfu business is reported as part of the Duracell segment. The change between the September 30, 2003, and December 31, 2002, goodwill and intangible balances is due mainly to the acquisition of Nanfu, and, to a lesser degree, the impact of foreign currency translation. The Nanfu acquisition resulted in the capitalization of the Nanfu trademark as an indefinite-lived intangible asset, as well as other definite-lived intangible assets. The values of these intangibles, as well as the related goodwill, may be adjusted in future periods as the purchase price allocation for the acquisition is not final. Total goodwill by segment follows.
Net Carrying Amount September 30, December 31, September 30, (Millions) 2003 2002 2002 ------------ ------------ ------------ Blades & Razors $ 140 $ 140 $ 140 Duracell 605 571 563 Oral Care 173 173 173 Braun 78 78 76 Personal Care - - - ----- ----- ------ Total $ 996 $ 962 $ 952 ===== ===== ======
The detail of intangible assets follows.
Weighted Average September 30, 2003 December 31, 2002 September 30, 2002 Amortization ---------------------- ---------------------- ---------------------- Period Carrying Accumulated Carrying Accumulated Carrying Accumulated (Millions) (Years) Amount Amortization Amount Amortization Amount Amortization ------------ -------- ------------ -------- ------------ -------- ------------ Amortized Intangible Assets Patents 6 $ 101 $ 64 $ 101 $ 53 $ 103 $ 50 Trademarks 6 14 7 13 4 11 2 Software 5 12 10 12 9 11 9 Endorsements - 61 61 61 61 61 61 Other 23 20 3 11 3 12 3 ---- ---- ----- ----- ----- ----- Total 7 $ 208 $ 145 $ 198 $ 130 $ 198 $ 125 ---- ---- ----- ----- ----- ----- Unamortized Intangible Assets Trademarks $ 436 $ 317 $ 315 Pension 15 15 12 ---- ---- ----- ----- ----- ----- Total $ 659 $ 145 $ 530 $ 130 $ 525 $ 125 ---- ---- ----- ----- ----- ----- Intangible Assets, net $ 514 $ 400 $ 400 ==== ===== ===== Aggregate Amortization Expense: For the three months ended September 30, 2003 $ 4 September 30, 2002 $ 5 For the nine months ended: September 30, 2003 $ 15 September 30, 2002 $ 15 Estimated Amortization Expense: For the Years ended December 31, 2003 $ 21 2004 $ 20 2005 $ 8 2006 $ 5 2007 $ 4 2008 $ 4
PAGE 9 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Advertising - ----------- The advertising expense detailed below is included in selling, general and administrative expenses.
Three Months Ended Nine Months Ended (Millions) September 30 September 30 ------------------ ------------------ 2003 2002 2003 2002 ---- ---- ---- ---- Net Sales $ 2,405 $ 2,168 $ 6,630 $ 5,924 Advertising 219 160 572 456 % Net Sales 9.1% 7.4% 8.6% 7.7%
PAGE 10 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Share Repurchase Program - ------------------------ The Company has two share repurchase programs. The first program authorizes the purchase of up to 150 million shares, and the second program authorizes the purchase of up to 50 million shares in the open market or in privately negotiated transactions, depending on market conditions and other factors. From the inception of the first program through December 31, 2002, the Company repurchased 108.2 million shares in the open market for $4.5 billion. In the three and nine months ended September 30, 2003, the Company repurchased 8.9 million and 34.8 million shares for $282 million and $1.07 billion, respectively. There are 7 million shares remaining on the first authorization. As of September 30, 2003, there has been no activity in the second share repurchase program. Financial Information by Business Segment - ----------------------------------------- Net sales, profit (loss) from operations and identifiable assets for each of the Company's business segments are set forth below. There are no material intersegment revenues.
Net Sales -------------------------------------------------- Three Months Ended Nine Months Ended September 30 September 30 --------------------- --------------------- (Millions) 2003 2002 2003 2002 ------ ------ ------ ------ Blades & Razors $1,034 $ 887 $2,930 $2,541 Duracell 514 482 1,330 1,242 Oral Care 328 321 939 861 Braun 293 265 792 685 Personal Care 236 213 639 595 ------ ------ ------ ------ Total $2,405 $2,168 $6,630 $5,924 ====== ====== ====== ====== Profit/(Loss) from Operations ---------------------------------------------------- Three Months Ended Nine Months Ended September 30 September 30 --------------------------- ----------------------- (Millions) 2003 2002 2003 2002 ------ ------ ------ ------ Blades & Razors $ 413 $ 377 $1,121 $ 989 Duracell 106 78 199 123 Oral Care 64 60 166 163 Braun 22 22 43 47 Personal Care 26 17 50 33 ------ ------ ------ ------ Subtotal Reportable Segments 631 554 1,579 1,355 All Other (1) (27) (32) (90) (56) ------ ------ ------ ------ Total $ 604 $ 522 $1,489 $1,299 ====== ====== ====== ====== (1) All Other includes the $30 million pretax gain on the sale of Vaniqa in the nine months ended September 30, 2002.
PAGE 11 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Identifiable Assets ------------------------------- Sept. 30, Dec. 31, Sept. 30, (Millions) 2003 2002 2002 --------- ------- --------- (Unaudited) (Unaudited) Blades & Razors $ 3,325 $ 3,170 $ 3,149 Duracell 2,841 2,741 2,786 Oral Care 1,221 1,094 1,062 Braun 1,130 1,065 1,009 Personal Care 530 520 526 ------- ------- ------- Subtotal Reportable Segments 9,047 8,590 8,532 All Other 1,240 1,273 1,486 ------- ------- ------- Total $10,287 $ 9,863 $10,018 ======= ======= =======
PAGE 12 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Computation of net income per common share (Millions, except per share amounts) - ------------------------------------------
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------ 2003 2002 2003 2002 ---- ---- ---- ---- Net Income ............................. $ 416 $ 354 $1,017 $ 870 ====== ====== ====== ====== Common shares, basic ................... 1,017 1,058 1,025 1,057 Effect of dilutive securities: Stock options ...................... 2 2 2 4 ------ ------ ------ ------ Common shares, assuming full dilution 1,019 1,060 1,027 1,061 ====== ====== ====== ====== Net Income per Common Share: Basic ................................ $ .41 $ .33 $ .99 $ .82 ====== ====== ====== ====== Assuming full dilution ........ $ .41 $ .33 $ .99 $ .82 ====== ====== ====== ======
As of September 30, 2003 and 2002, 65.5 million and 56.2 million shares of common stock issuable under stock options, respectively, were not included in the calculation of fully diluted earnings per share because the option exercise price was above the market price. PAGE 13 THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Functional Excellence - --------------------- In the second quarter of 2002, the Company began actions associated with its Functional Excellence initiative. This initiative impacts all business segments and is focused on upgrading capabilities, while reducing overhead costs by improving processes and eliminating duplication across all functions. Specific program activities include outsourcing certain information technology functions, implementing new worldwide technology tools and processes, streamlining customer management and marketing programs, and consolidating financial functions. Total pretax charges under the Functional Excellence initiative, including employee termination benefits and other costs, were $17 million and $48 million in the three and nine months ended September 30, 2002, $121 million for the full year 2002, $17 million in the third quarter of 2003, and $103 million in the first nine months of 2003. Employee-related terminations are intended to be completed within 12 months of accrual. The employee-related termination benefits are calculated using the Company's long-standing severance formulas and vary on a country-by-country basis, depending on local statutory requirements. Details of the Functional Excellence accrual follow. Other costs include items such as consulting, lease buyouts and asset write-downs related to Functional Excellence programs.
Employee- (Millions) Related Other Total - ---------- ------- ----- ----- Accrual Balance December 31, 2002 $86 $6 $92 First Quarter 2003: Charges 38 6 44 Payments/Uses (44) (2) (46) ---- ---- ---- Accrual Balance March 31, 2003 $80 $10 $90 ---- ---- ---- Second Quarter 2003: Charges 34 8 42 Payments/Uses (34) (6) (40) ---- ---- ---- Accrual Balance June 30, 2003 $80 $12 $92 ==== ==== ==== Third Quarter 2003: Charges 16 1 17 Payments/Uses (16) (7) (23) ---- ---- ---- Accrual Balance September 30, 2003 $80 $ 6 $86 ==== ==== ====
Functional Excellence charges in 2003 included $2 million and $15 million, which were recorded as cost of goods sold, and $15 million and $88 million, which were recorded as selling, general and administrative expenses, in the three and nine month periods ended September 30, 2003, respectively. PAGE 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Results for any interim period, such as those described in the following analysis, are not necessarily indicative of results for the entire year. Third Quarter 2003 versus 2002 - ------------------------------ Total Company: Sales for the quarter ended September 30, 2003, were $2.41 billion, an increase of 11% versus the same quarter of the prior year. The impact of exchange was 5%, as the strength of European, Australian and Canadian currencies more than offset unfavorable exchange in Latin America. Volume/mix contributed 6% to sales growth, driven by new products, strong retailer support for upcoming fourth-quarter razor programs and increased consumer demand for batteries related to the North American electrical blackouts and Hurricane Isabel. The impact of pricing was neutral, as price increases in Blades and Razors offset lower list prices in Duracell. Profit from operations of $604 million climbed 16% from $522 million in the prior year, and margin increased by 100 basis points, to 25.1%. This improvement was mainly due to favorable product line mix, cost-savings initiatives, and strong sales growth from new products, partially offset by higher year-over-year exchange-driven European-based costs and significantly higher advertising investment. Blades and Razors: Third-quarter sales rose 17% from the third quarter of last year. Exchange accounted for 5% of the increase. Sales growth was driven by the continued success of Mach3Turbo and Venus, increased shipments of the Sensor3 premium disposable, which was launched into Europe and continued to gain share in North America, and strong trade demand for fourth-quarter consumer programs that feature the new Mach3Turbo Champion razor. The initial sell-in of those programs in the third quarter in both North America and Europe is anticipated to moderate the pace of sales growth in the upcoming fourth quarter. Third-quarter Blades and Razors profit was up 10%, though margin was down 250 basis points to 40%. The lower margin was driven by a strong double-digit percentage increase in advertising, sampling and display support. The Company announced that it is studying a possible realignment of its European Blades and Razors manufacturing facilities and distribution network to streamline and strengthen its operations. Duracell: Sales of Duracell for the quarter increased 7% versus those of a year ago, with currency gains accounting for 4% of the increase. The sales gain was driven by incremental consumer demand due to electrical blackouts and Hurricane Isabel in the United States, and the third-quarter 2003 acquisition of the Nanfu battery company in China. The increase was partially offset by lower pricing due to the North American price-deal realignment program, and lower volumes related to the 2002 divestiture of the carbon zinc businesses in South Africa and India. Profit from operations grew 35%, and margins increased 430 basis points versus a year ago, reflecting sales growth, continued manufacturing and purchasing efficiencies and overhead containment, partially offset by a substantial increase in marketing investment. The impact of lower pricing from the price-deal realignment was offset by lower promotional activity and the elimination of free cell giveaways. In August 2003, the Company acquired a majority interest in Fujian Nanping Nanfu Battery Co., Ltd., a leading battery company in China. The results of this business were not material to profits for the quarter. Oral Care: Oral Care third-quarter sales were 3% above 2002, with a 5% positive impact from exchange. Sales growth was restrained by softness in the rechargeable toothbrush segment, chiefly in Germany, and price competition in the batteries segment. Sales gains were realized on a constant currency basis in the AMEE (Africa/Middle East/Eastern Europe) and Latin America regions, where the manual toothbrush business achieved solid growth and battery-powered toothbrushes were successfully launched. Oral Care profit from operations grew 6% from a year ago, reflecting increased sales from new products, including the CrossAction Power battery toothbrush, partially offset by higher exchange-driven European-based manufacturing costs and a double-digit percentage increase in advertising to support new product launches. PAGE 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Braun: Sales of Braun rose 11% above the previous year. Currency represented 8% of the increase. Sales gains were driven by the introduction of the FreeGlider and Flex XP2 male shavers in North America, the introduction of the SoftPerfection epilator and the top-of-the-line Activator shaver in Japan and Europe, and strong sales of household appliances in Russia. These gains helped offset the effects of a weak economic environment in Europe and competitive pressures in mid-price shavers in Japan. Favorable mix towards male shavers and higher priced household appliances were offset by a double-digit percentage increase in marketing spending to support new product launches and by higher European-based manufacturing costs due to exchange. This resulted in lower profits and a 110 basis-point reduction in margin versus a year ago. Personal Care: Sales for the quarter increased 10%. Exchange impacted sales favorably by 3%. Growth was primarily driven by shave preparations, and was achieved in all regions except Latin America. Growth in antiperspirant/deodorants also contributed to the increase, as PowerStripe technology was extended throughout the product line in the United States, and the restaging of the Right Guard brand gained strength in Europe. Profit for the quarter increased 54% as compared with the prior year, and margins improved by 320 basis points to 11.1%, chiefly due to growth from new products and the benefit of cost-savings initiatives, partially offset by a double-digit percentage increase in advertising behind new product and brand restaging activities. Nine Months 2003 versus 2002 - ---------------------------- Total Company: Sales for the nine months ended September 30, 2003, were $6.63 billion, an increase of 12% versus the same period last year. The impact of exchange was 5%, and volume/mix contributed 7% to sales growth. Overall, pricing had no material impact on the period, as price increases in Blades and Razors were offset by lower prices in Duracell. Profit from operations of $1.49 billion increased 15% from $1.30 billion in the prior year, and margin increased by 60 basis points to 22.5%. Profit from operations in 2002 included a $30 million pretax gain on the sale of the Vaniqa business. The profit increase was driven by strong sales growth from new products, ongoing favorable mix to premium shaving products, and cost-savings initiatives, which more than offset higher European-based costs due to exchange, increased advertising investment, and incremental Functional Excellence and pension expenses. Heightened competitive activity is expected for the balance of the year in Blades and Razors, which could have a dampening effect on Gillette's 2003 and 2004 earnings potential through increased marketing investment and potential share loss. However, this activity is not expected to inhibit our ability to deliver on our financial growth targets. Blades and Razors: Sales rose 15% compared with the first nine months of last year. The impact of exchange was 5%. Sales growth was driven by the strength of premium shaving systems and disposables. Profit from operations was up 13% from the prior year. However, favorable product mix was more than offset by a double-digit percentage increase in marketing support, resulting in a 60 basis-point decline in margin. Duracell: Sales of Duracell for the nine months increased 7% versus those of a year ago, with currency gains accounting for 4% of the increase. Consumer pantry-loading in North America during the first and third quarters of 2003 was partially offset by lower pricing from the price-deal realignment initiative in North America and unmatched 2002 sales related to the divestiture of the carbon zinc businesses in South Africa and India. Profit year-to-date increased 62% and margin grew 510 basis points, due to higher sales, solid cost-savings programs and the absence of first-quarter 2002 costs associated with withdrawing selected hearing aid batteries. These gains were partially offset by significantly higher advertising expenses. PAGE 16 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Oral Care: Oral Care sales for the nine months were 9% above those of 2002. Favorable foreign exchange contributed 5% to the increase. Sales growth was driven by the success of new product introductions in both the manual and power categories, as well as strong growth in emerging markets. Profit increased 2% over the prior year, and margin was 120 basis points lower, as higher sales from new products and improved product mix were more than offset by higher exchange-driven export costs from Europe, a significant increase in marketing expenses to launch new products in 2003, and higher warranty-related accruals in the first quarter of 2003. Braun: Sales of Braun increased 16% over the prior year, with currency gains representing 10%. Growth was driven by significant gains in both male and female electric shavers, as well as strong first-half sales of Thermoscan thermometers, fueled by concerns over the SARS epidemic. Profit from operations declined 9%, due to incremental warranty accruals incurred in the first quarter of 2003, and the impact of exchange on European-based manufacturing costs, which more than offset benefits from improved product mix, manufacturing efficiencies and strong sales growth. Personal Care: Personal Care sales increased 7% over those of 2002. Exchange contributed 3% to the sales growth. Volume growth was primarily driven by shave preparations, and to a lesser degree by new product successes in antiperspirant/deodorants. Profit from operations increased 50%, due to higher sales and cost-savings initiatives, partially offset by increased marketing investment for new product launches. Costs and Expenses - ------------------ Third Quarter 2003 versus 2002 - ------------------------------ Gross profit for the three months ended September 30, 2003, was $1.47 billion, an increase of 14% versus 2002. Gross profit as a percentage of sales of 61.1% compared with 59.3% in 2002. This improvement stemmed from favorable product line mix, cost-savings initiatives and manufacturing efficiencies, particularly at Duracell, partially offset by higher year-over-year exchange driven European-based manufacturing costs. Selling, general and administrative expenses increased $102 million, or 13%, versus the prior year. Advertising and sales promotion combined increased 29% over the prior year, with advertising growing to 9.1% of sales, from 7.4% in the prior year. The increase was driven by our marketing investments, which included a higher level of sampling year-over-year. Every segment of the Company realized a double-digit percentage increase in advertising support. Sales promotion was flat as a percentage of sales, although display support increased due to the launch of Mach3Turbo Champion in Blades and Razors. Other selling, general and administrative expenses increased 6% from the prior year, and fell 100 basis points as a percentage of sales, from 24.5% in the third quarter of 2002 to 23.5% this year. This reduction was achieved despite higher European- based costs due to exchange. Net interest expense decreased, due to lower rates year-over-year. The effective tax rate was 30%, versus 31% the year before. The decrease was primarily due to favorable changes in the mix of earnings to countries taxed at rates lower than the U.S. statutory rate. Net income of $416 million was 18% above the $354 million in the prior year. Diluted net income per common share of $.41 was 24% above the $.33 reported for 2002. The growth in diluted net income per common share outpaced net income growth due to a reduction in the number of outstanding shares resulting from stock repurchases. PAGE 17 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended September 30, 2003 versus 2002 - ------------------------------------------------ Gross profit for the nine months ended September 30, 2003, was $4.05 billion, an increase of 14% versus 2002. Gross profit as a percentage of sales of 61.0% compared with 59.9% in 2002. This was due to favorable product mix in Blades and Razors, cost-savings initiatives and manufacturing efficiencies, which more than offset higher European-based costs due to exchange. Selling, general and administrative expenses increased $277 million, or 12%. Advertising and sales promotion expenses combined increased by 21%, with advertising up 25% to 8.6% of sales from 7.7% in the prior year, and sales promotion up 13% versus last year. Other selling, general and administrative expenses increased 8%, and were down as a percentage of sales, to 26.1% from 27.0% in the prior year. This reduction was achieved through cost-savings initiatives, offset partially by incremental Functional Excellence and pension expenses, and higher European-based costs due to the strengthening of the Euro. Net interest expense decreased due to lower rates in 2003. Exchange gains were lower than in the prior year. The effective tax rate was 30%, versus 31% the prior year. The decrease was primarily due to favorable changes in the mix of earnings to countries taxed at rates lower than the U.S. statutory rate. Net income was $1.02 billion, up 17% versus $870 million a year earlier. Diluted net income per common share of $.99 was 21% above $.82 in 2002. Net income in 2002 included a $21 million after-tax gain on the sale of the Vaniqa business which had a $.02 favorable impact on diluted net income per common share. The growth in diluted net income per common share, which outpaced net income growth, was driven by a reduction in the number of outstanding shares resulting from stock repurchases. Financial Condition - ------------------- Cash provided by operations is the Company's primary source of funds to finance operating needs, capital expenditures, stock repurchases and dividend payments. Free cash flow for the nine months ended September 30, 2003, was $1.51 billion, compared with $1.17 billion in the same period last year. Free cash flow, defined as cash flow from operations less capital investments, is analyzed by the Company as a measure of its liquidity, as well as its ability to fund future growth and to provide a return to shareholders. Free cash flow is not a measure of the residual cash flow that is available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. A reconciliation of free cash flow to the increase in cash and cash equivalents in accordance with Generally Accepted Accounting Principles (GAAP) follows. Nine months ended September 30 ----------------------------- (Millions) 2003 2002 - ---------- ------------- ------------- Net cash provided by operating activities $1,702 $1,420 Additions to property, plant and equipment (218) (278) Disposals of property, plant and equipment 28 31 ------ ------ Free cash flow $1,512 $1,173 ------ ------ Acquisition of business, net of cash acquired, and other (158) 1 Net cash used in investing activities $ (348) $ (246) Net cash used in financing activities $(1,315) $(1,116) Effect of exchange rate changes on cash 5 2 Net cash used in discontinued operations - (26) ------ ------ Increase in cash and cash equivalents $ 44 $ 34 ====== ======
PAGE 18 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net cash provided by operating activities was $1.70 billion during the nine months ended September 30, 2003, as compared with $1.42 billion during the same period in 2002. The increase in net cash provided by operating activities in 2003 was due primarily to $190 million in lower pension funding and higher profits. Lower capital spending during the nine months ended September 30, 2003, was due primarily to timing. Capital spending continued to be focused on new products and cost-reduction projects. In August 2003, the Company acquired a majority interest in Fujian Nanping Nanfu Battery Co., Ltd., a leading battery company in China. The results of this business are reported as part of the Duracell segment and were not material to the quarter. The Company spent $1.07 billion to repurchase 35 million shares and paid $501 million in dividends during the nine months ended September 30, 2003. Total long-term debt increased by $163 million, to $3.15 billion in September 2003 from $2.98 billion at December 2002. Loans payable increased by $59 million, and cash and cash equivalents increased by $44 million for the same period. The Company's investment grade long-term credit ratings of AA- from Standard & Poor's and Aa3 from Moody's and commercial paper ratings of A1+ from Standard & Poor's and P1 from Moody's provide a high degree of flexibility in obtaining funds. The Company has the ability to issue up to $1.53 billion in commercial paper in the U.S. and Euro markets. The Company's commercial paper program is supported by its revolving credit facility and other sources of liquidity; primarily the Company's cash flow from operations. At September 30, 2003, there was $609 million outstanding under the Company's commercial paper program, an increase of $60 million from $549 million outstanding at December 31, 2002. The Company has a revolving bank credit facility in the amount of $1.15 billion, of which $863 million is available on a 364-day basis and expires on October 12, 2004, and $288 million is available for five years. The Company believes it has sufficient alternative sources of funding available to replace its commercial paper program, if necessary. During 2002, two shelf registration statements were filed allowing the Company to offer to the public up to $2.8 billion in debt securities in the U.S. It is currently anticipated that the proceeds from the sale of any debt securities issued under these shelf registration statements will be used to repay commercial paper borrowings and replace other maturing debt, although the proceeds may also be used for other corporate purposes, including the repurchase of the Company's common stock. PAGE 19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the nine months ended September 30, 2003, $686 million was issued in public offerings under these shelf registration statements, consisting of $300 million 2.875% notes, due March 2008, $300 million 2.50% notes, due June 2008, $83 million in floating rate notes, due April 2043, and $3 million issued under the Gillette medium-term note program. All proceeds from these issuances were used to reduce commercial paper borrowings. The $83 million floating rate notes are redeemable at the option of the holder at various prices on a yearly basis from April 2004 to April 2014 and each third anniversary thereafter to maturity. The floating rate notes are also redeemable at the Company's option at various prices from April 2033 to maturity. At September 30, 2003, a total of $1.29 billion remained available under these shelf registrations. With its strong brands, leading market positions, strong financial condition and substantial cash-generating capability, Gillette expects to continue to have capital available for growth through both internally generated funds and significant credit resources. The Company has substantial unused lines of credit and access to worldwide financial markets, enabling the Company to raise funds at favorable rates. The Company has no material contingent commitments. The Company has no material "off balance sheet" arrangements and no non-consolidated Variable Interest Entities. Functional Excellence - --------------------- In the second quarter of 2002, the Company began actions associated with its Functional Excellence initiative, which is described in Notes to Consolidated Financial Statements. The total cost of this project is estimated at $350-$400 million through 2005. Annualized savings from the Functional Excellence initiative are currently expected to be approximately $300-$350 million by 2006. During 2002, the Company recorded expenses related to this initiative in the amount of $121 million ($79 million after taxes, or $.07 in diluted net income per common share). Charges for the three and nine-month periods ended September 30, 2003 and 2002, follow:
(Millions, except per share amounts) Three Months Ended Nine months Ended September 30 September 30 ------------------ ------------------ 2003 2002 2003 2002 ---- ---- ---- ---- Functional Excellence expense $ 17 $ 17 $103 $ 48 Functional Excellence expense, net of tax $ 14 $ 11 $ 85 $ 30 Impact on diluted net income per share $.01 $.01 $.08 $.03
Third quarter 2003 Functional Excellence charges were recorded to cost of goods sold in the amount of $2 million and to selling, general and administrative expense in the amount of $15 million. Of the $103 million in charges through the first nine months of 2003, $15 million was charged to cost of goods sold and $88 million was charged to selling, general and administrative expense. It is currently expected that total 2003 Functional Excellence expenses will be approximately $140 million. Additional costs will be recorded in 2004 and 2005 as programs are developed and approved. These forward-looking cost and savings numbers contain management estimates that are subject to change over time. PAGE 20 DISCLOSURE CONTROLS AND PROCEDURES Item 4. Controls and Procedures The Company's management, under the supervision and with the participation of the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of the Company's disclosure controls and procedures as defined in Securities and Exchange Commission ("SEC") Rule 13a-15(e) as of the end of the period covered by this report. Based on that evaluation, management has concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no significant changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PAGE 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings We are subject, from time to time, to legal proceedings and claims arising out of our business, which cover a wide range of matters, including antitrust and trade regulation, advertising, product liability, contracts, environmental issues, patent and trademark matters and taxes. Management, after review and consultation with counsel, considers that any liability from all of these legal proceedings and claims would not materially affect our consolidated financial position, results of operations or liquidity. Item 5. Other Information Shareholder Proposals - --------------------- The Company's 2004 Annual Meeting of Shareholders is scheduled to be held on May 20, 2004. The deadline for submitting shareholder proposals for inclusion in the Company's proxy statement and form of proxy for that meeting is December 8, 2003. Cautionary Statement - -------------------- Certain statements that we may make from time to time, including statements contained in this report, constitute "forward-looking statements" under the federal securities laws. Forward-looking statements may be identified by words such as "plans," "expects," "believes," "anticipates," "estimates," "projects," "will" and other words of similar meaning used in conjunction with, among other things, discussions of future operations, acquisitions and divestitures, financial performance, our strategy for growth, product development and new product launches, market position and expenditures. Forward-looking statements are based on current expectations of future events, but actual results could vary materially from our expectations and projections. Investors are cautioned not to place undue reliance on any forward-looking statements. We assume no obligation to update any forward-looking statements. We caution that historical results should not be relied upon as indications of future performance. PAGE 22 PART II. OTHER INFORMATION Factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf, include the following, some of which are described in greater detail below: - - the pattern of our sales, including variations in sales volume within periods; - - consumer demands and preferences, including the acceptance by our customers and consumers of new products and line extensions; - - the mix of products sold; - - our ability to control our internal costs and the cost of raw materials; - - competitive factors, including the prices, promotional incentives and trade terms of our products and our response, as well as those of our customers and competitors, to changes in these terms; - - business combinations and divestitures of our competitors and customers; - - our technological advances and/or those of our competitors; - - new patents granted to us or our competitors; - - changes in exchange rates in one or more of our geographic markets; - - changes in laws and regulations, including trade regulations, accounting standards and tax laws, governmental actions affecting the manufacturing and sale of our products, unstable governments and legal systems, and nationalization of industries; - - changes in accounting policies; - - acquisition, divestiture or other collaborative activities; or - - the impact of general political and economic conditions or hostilities in the United States or in other parts of the world. PAGE 23 PART II. OTHER INFORMATION Competitive Environment - ----------------------- We experience intense competition for sales of our products in most markets. Our products compete with widely advertised, well-known, branded products, as well as private label products, which typically are sold at lower prices. In most of our markets, we have major competitors, some of which are larger and more diversified than we are. Aggressive competition within our markets to preserve, gain or regain market share can affect our results in any given period. Changes in Technology and New Product Introductions - --------------------------------------------------- In most product categories in which we compete, there are continuous technological changes and frequent introductions of new products and line extensions. Our ability to successfully introduce new products and/or extend lines of established products will depend on, among other things, our ability to identify changing consumer tastes and needs, develop new technologies, differentiate our products and gain market acceptance of new products. We cannot be certain that we will successfully achieve these goals. With respect specifically to primary alkaline batteries, category growth could be adversely affected by the following additional factors: - - technological or design changes in portable electronic and other devices that use batteries as a power source; - - continued improvement in the service life of primary batteries; - - improvements in rechargeable battery technology; or - - the development of new battery technologies. Intellectual Property - --------------------- We rely upon patent, copyright, trademark and trade secret laws in the United States and in other countries to establish and maintain our proprietary rights in technology, products and our brands. Our intellectual property rights, however, could be challenged, invalidated or circumvented. We do not believe that our products infringe the intellectual property rights of others, but such claims, if they are established, can result in material liabilities or loss of business. Cost-Savings Strategy - --------------------- We have implemented and approved a number of programs designed to reduce costs. Such programs will require, among other things, the consolidation and integration of facilities, functions, systems and procedures, all of which present significant management challenges. There can be no assurance that such actions will be accomplished as rapidly as anticipated or that the full extent of expected cost reductions will be achieved. PAGE 24 PART II. OTHER INFORMATION Sales and Operations Outside of the United States - ------------------------------------------------- Sales outside of the United States represent a substantial portion of our business. In addition, we have a number of manufacturing facilities and suppliers located outside of the United States. Accordingly, the following factors could adversely affect operating results in any reporting period: - - changes in political or economic conditions; - - trade protection measures; - - import or export licensing requirements; - - changes in the mix of earnings taxed at varying rates; - - unexpected changes in regulatory requirements or tax laws; or - - longer payment cycles in certain countries. We are also exposed to foreign currency exchange rate risks with respect to our sales, profits, and assets and liabilities denominated in currencies other than the U.S. dollar. Although we use instruments to hedge certain foreign currency risks (through foreign currency forward, swap and option contracts and non-U.S. dollar denominated financings) and we are partially hedged through our foreign manufacturing operations, there can be no assurance that we will be fully protected against foreign currency fluctuations. Retail Environment - ------------------ With the growing trend towards retail trade consolidation, especially in developed markets such as the United States and Europe, we are increasingly dependent upon key retailers whose bargaining strength is growing. Accordingly, we face greater pressure from retail trade customers to provide more favorable trade terms. We can be negatively affected by changes in the policies of our retail trade customers, such as inventory destocking, limitations on access to shelf space and other conditions. Many of our customers, particularly our high-volume retail trade customers, have engaged in accelerated efforts to reduce inventory levels and shrinkage and to change inventory delivery systems. While we expect the level of trade inventory of our products to decline over time, the speed and magnitude of such reductions, and/or our inability to develop satisfactory inventory delivery systems, could adversely affect operating results in any reporting period. Effect of Military Hostilities and Political Activity - ------------------------------------------------------ Recent military hostilities and the threat of future hostilities, as well as attendant political activity, have created an atmosphere of economic uncertainty throughout the world. A disruption in our supply chain, an increase in import or export costs and/or other macroeconomic events resulting from military or political events could adversely affect operating results in any reporting period. PAGE 25 PART II. OTHER INFORMATION Item 6(a) Exhibits The following exhibits are included herewith: 10.1 Employment Agreement, dated January 19, 2001, between The Gillette Company and James M. Kilts, as amended through August 6, 2003. 10.2 $862,500,000 364-Day Credit Agreement, dated as of October 14, 2003, among The Gillette Company, JPMorgan Chase Bank, as agent, and a syndicate of domestic and foreign banks. 10.3 $287,500,000 5-Year Credit Agreement, dated as of October 14, 2003, among The Gillette Company, JPMorgan Chase Bank, as agent, and a syndicate of domestic and foreign banks. 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges. 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a). 31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a). 32 Certification Pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). Item 6(b) Reports on Form 8-K The following reports on Form 8-K were filed or furnished to the Commission: (a) The Company furnished, on August 5, 2003, a current report on Form 8-K containing one exhibit: a Press Release announcing the Company's financial results for the second quarter of 2003. (b) The Company furnished on August 7, 2003, a current report on Form 8-K containing two exhibits: the employment agreement between the Company and James M. Kilts, as amended, and a press release announcing that James M. Kilts, Chairman and Chief Executive Officer, had extended his employment agreement for one year. PAGE 26 SIGNATURE 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. THE GILLETTE COMPANY (Registrant) /s/ Claudio E. Ruben - -------------------------------- Claudio E. Ruben Vice President, Controller and Principal Accounting Officer November 4, 2003 EXHIBIT INDEX Exhibit Number and Description Exhibit 10.1 Employment Agreement, dated January 19, 2001, between The Gillette Company and James M. Kilts, as amended through August 6, 2003. Exhibit 10.2 $862,500,000 364-Day Credit Agreement, dated as of October 14, 2003, among The Gillette Company, JPMorgan Chase Bank, as agent, and a syndicate of domestic and foreign banks. Exhibit 10.3 $287,500,000 5-Year Credit Agreement, dated as of October 14, 2003, among The Gillette Company, JPMorgan Chase Bank, as agent, and a syndicate of domestic and foreign banks. Exhibit 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges. Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a). Exhibit 31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a). Exhibit 32 Certification Pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). EX-10 3 ex10i_093003-10q.txt EXHIBIT 10.1 EXHIBIT 10.1 EMPLOYMENT AGREEMENT AGREEMENT, made and entered into as of January 19, 2001 by and between The Gillette Company, a Delaware corporation (together with its successors and assigns permitted under this Agreement, the "Company"), and James M. Kilts (the "Executive"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment (this "Agreement") and the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a "Party" and together the "Parties") agree as follows: 1. Definitions. (a) "Affiliate" of a specified person or entity shall mean a person or entity that directly or indirectly controls, is controlled by, or is under common control with the person or entity specified. (b) "Base Salary" shall mean the annualized salary provided for in Section 4 below or any increased salary granted to the Executive pursuant to Section 4. (c) "Board" shall mean the Board of Directors of the Company. (d) "Bonus Payment Amount" shall mean the amount actually paid to the Executive pursuant to Section 13 of the Company's Incentive Bonus Plan or any comparable provision of any successor annual bonus plan. (e) "Cause" shall mean: (i) the Executive is convicted of, or pleads guilty or nolo contendere to, a felony or of any crime involving moral turpitude; or (ii) the Executive is guilty of willful gross neglect in carrying out his duties under this Agreement or of willful gross misconduct that results, or could reasonably be expected to result, in either case, in material harm to the business or reputation of the Company, unless, in either case, the Executive acted, or failed to act, in a good faith belief that such act or failure to act was in, or not contrary to, the best interests of the Company. (f) "Change of Control" shall mean (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that, for purposes of this Section 1(f)(i), the following acquisitions of Outstanding Company Common Stock or Outstanding Company Voting Securities shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition by any corporation pursuant to a transaction that is excluded from Section 1(f)(iii) because it complies with Sections l(f)(iii)(A), l(f)(iii)(B) and l(f)(iii)(C). (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. (iii) Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. (g) "Change of Control Effective Date" shall mean the first date on which a Change of Control occurs. Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to a Change of Control, and if it is reasonably demonstrated by the Executive that such termination of employment (1) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then "Change of Control Effective Date" means the date immediately prior to the date of such termination of employment. (h) "Commencement Date" shall be January 19, 2001. (i) "Disability" shall mean the Executive's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities under this Agreement for a period of six consecutive months as determined by a medical doctor selected by the Company and the Executive. If the Parties cannot agree on a medical doctor, each Party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose. (j) "Fair Market Value", when used with respect to the value of a security on a particular date, shall mean (A) the average of the high and low trading prices of the security on the principal national securities exchange or national market system on which the security is then listed or traded, in each case during normal business hours on such date or, if such date is not a trading day, on the most recent trading day that precedes such date or (B) if the security is not listed or traded on a national market system or national securities exchange as of such date, then the value as agreed by the Parties, or in the absence of such agreement, fair market value as determined by an independent appraiser on a going forward basis, determined without discount for transfer restrictions, lack of liquidity, minority status, or similar factors. For purposes of this Section 1(j), an "independent appraiser" is a nationally recognized, independent investment banking or accounting firm that has relevant appraisal experience and that is agreed upon by both Parties. (k) "Good Reason" shall mean the occurrence of any of the following events without the prior written consent of the Executive: (i) a reduction in the Executive's then current Base Salary or target bonus opportunity as a percentage of Base Salary; (ii) the taking of any other action by the Company that would diminish the incentive opportunities of the Executive as required hereunder; (iii) the taking of any action by the Company that would significantly diminish the aggregate value of the benefits (other than an across-the-board reduction applicable to employees generally) provided to the Executive under the Company's medical, health, accident, disability, life insurance, thrift and retirement plans; (iv) the failure to elect or reelect the Executive to any of the positions described in Section 3 below or removal of him from any such position; (v) a material diminution in the Executive's duties or the assignment to the Executive of duties which are materially inconsistent with his duties or which materially impair the Executive's ability to function as the Chairman and Chief Executive Officer of the Company; (vi) a change in the reporting structure so that the Executive reports to someone other than the Board; (vii) relocation of the Executive's principal place of employment to a location other than Boston, Massachusetts, or, after the Change of Control Effective Date, requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to such Change of Control Effective Date; (viii) a material breach by the Company of any provision of this Agreement or the stock option agreement the form of which is attached hereto as Exhibit A; (ix) any purported termination of the Executive's employment by the Company that is not effected in accordance with Section 14(b), Section 14(c) or Section 14(d) (relating, respectively, to Disability, Cause or "without Cause" terminations); or (x) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a merger, consolidation, sale or similar transaction. After the Change of Control Effective Date, any good faith determination of Good Reason by the Executive shall be conclusive. (l) "Highest Annual Bonus" shall mean an amount equal to the product of (i) the Executive's Base Salary at the date of termination and (ii) the Highest Annual Bonus Percentage. (m) "Highest Annual Bonus Percentage" shall mean the higher of (i) the Executive's Recent Annual Bonus Percentage and (ii) one-hundred percent (100%). (n) "Pro Rata" shall mean a fraction, the numerator of which is the number of days that the Executive was employed in the applicable performance period and the denominator of which shall be the number of days in the applicable performance period. (o) "Recent Annual Bonus Percentage" shall mean the highest actual annual bonus percentage awarded to the Executive under the Company's annual incentive plans, or any comparable bonus under any predecessor or successor plan, for the last three full fiscal years (or such lesser number of years that the Executive has been employed) prior to the Change of Control Effective Date. (p) "Term of Employment" shall mean the period specified in Section 2 below (including any extension as provided therein). 2. Term of Employment. The Term of Employment shall begin as of the Commencement Date, and shall extend until January 19, 2004, with automatic one-year extensions on each anniversary of the Commencement Date, commencing with the first anniversary, unless either Party notifies the other at least 90 days before such anniversary that the Term of Employment is not to so extend. Notwithstanding the foregoing, the Term of Employment shall end on the date on which the Executive's employment is earlier terminated by either Party in accordance with the provisions of Section 14. 3. Position, Duties and Responsibilities. (a) The Executive shall serve as the Chairman of the Board and Chief Executive Officer of the Company and shall, subject to the following sentence, be responsible for the general management of the affairs of the Company. The Executive shall assume his responsibilities as Chief Executive Officer effective February 12, 2001. The Executive shall be a member of the Board during the Term of Employment and the Board shall designate the Executive as its Chairman. The Executive, in carrying out his duties under this Agreement, shall report to the Board. During the Term of Employment, the Executive shall devote substantially all of his business time and attention to the business and affairs of the Company. (b) Nothing herein shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations with the concurrence of the Board (which approval shall not be unreasonably withheld), (ii) serving on the boards of a reasonable number of trade associations and/or charitable organizations, (iii) engaging in charitable activities and community affairs, and (iv) managing his personal investments and affairs, provided that such activities set forth in this Section 3(b) do not conflict or materially interfere with the effective discharge of his duties and responsibilities under Section 3(a). 4. Base Salary. During the Term of Employment, the Executive shall be paid a Base Salary, payable in accordance with the regular payroll practices of the Company, of $1 million per year. The Base Salary shall be reviewed annually for any increase in the discretion of the Personnel Committee of the Board. 5. Annual Incentive Award. During the Term of Employment, the Executive shall have a target bonus opportunity each year equal to 100% of Base Salary, payable in that amount if the performance goals established for the relevant year are met. If such performance goals are exceeded, the Executive shall receive a larger amount of up to 200% of Base Salary. For the year 2001, Executive's minimum award shall be equal to target, determined on a Pro Rata basis. The performance goals for each year shall be established by the Personnel Committee in consultation with the Executive. The Executive shall be paid his annual incentive awards no later than the date other senior executives of the Company are paid their annual incentive awards and in no event later than 90 days following the last day of the fiscal year in respect of which the annual incentive award is being paid. The Company may, but shall not be required to, implement the foregoing pursuant to a shareholder-approved bonus plan or arrangement that satisfies the requirements for exemption from the limitation on deductibility imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") that is set forth in Section 162(m)(4)(C) of the Code. Notwithstanding the foregoing, for each fiscal year of the Company which ends in the two-year period following the Change in Control Effective Date, the Executive's award shall be not less than the amount determined by multiplying his Base Salary for such year by the Recent Annual Bonus Percentage. 6. Sign-on Arrangements. (a) Cash Sign-on Bonus. As soon as practicable following the Commencement Date, the Company shall pay the Executive a cash bonus of $250,000. (b) Stock Option Grant. As of the Commencement Date the Company shall grant the Executive a ten-year option to purchase 2 million shares of The Gillette Company common stock, in the form attached hereto as Exhibit A. 7. Additional Long-Term Incentive Awards. (a) Stock Options. The Executive shall receive a minimum stock option grant of 650,000 shares, subject to adjustment as provided in the next paragraph, in each of 2001, 2002 and 2003. The grants shall be made no later than the date on which the first grant of options is made to the Company's senior executives generally for such year, but in no event later than December 31. The grants shall be made pursuant to The Gillette Company 1971 Stock Option Plan (the "Plan") or successor plan (if any) and contain the terms and conditions set forth in Exhibit B attached hereto. In the event there is no plan in place under which the options can be granted, the Executive's grants shall be made substantially in the form attached hereto as Exhibit A, except that the vesting schedule shall be as set forth in Exhibit B. If, before the grant of any of the options provided for in this Section 7(a) there occurs an event described in Section 9 of the Plan (or in the comparable section of a successor plan), the number and kind of shares to be granted pursuant to such options shall be adjusted to the extent determined to be appropriate by the Board, in a manner consistent with the adjustments made to outstanding stock options held by Executive (if any) and by other senior-level executives of the Company, in order to preserve the value of the options. (b) Ongoing Term Incentive Awards. The Executive shall be eligible to participate in any long-term incentive program that may hereafter be made available to other senior-level executives generally; provided, that the Executive's participation therein shall take into account the options to be granted to him pursuant to Section 7(a) hereof. 8. Stock Purchase. Executive agrees to buy $1 million in The Gillette Company common stock with his own funds from the Company on the Commencement Date at a price per share equal to the Fair Market Value on the Commencement Date, with payment to be made by the Executive no later than the close of business of the Company on January 26, 2001 and to hold such stock for a period of no less than the lesser of three years or until the date of termination of his employment. 9. Employee Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all employee pension and welfare benefit plans, programs and arrangements made available to the Company's senior-level executives or to its employees generally on the same terms and conditions as other senior-level executives, as such plans, programs or arrangements may be in effect from time to time, including, without limitation, pension, profit sharing, savings, estate preservation and other retirement plans or programs, 401(k), medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and all other pension or retirement plans or programs and employee welfare benefit plans or programs that may be sponsored by the Company from time to time, including any plans or programs that supplement the above-listed types of plans or programs, whether funded or unfunded. Company-provided life insurance will be no less than 300% of Base Salary. The Executive's participation shall be based on, and the calculation of all benefits shall be based on, the assumptions that the Executive has met all service-period and other requirements for such participation. The Executive shall be entitled to six weeks paid vacation per calendar year of employment. The Executive agrees to cooperate with any required eligibility procedures with respect to such plans, programs and arrangements, including without limitation customary medical underwriting procedures. 10. Supplemental Pension. (a) Following any termination of his employment with the Company other than by the Company for Cause or as a result of his death, the Executive shall be entitled to receive a supplemental pension benefit with annual payments equal to five percent (5%) of his Average Final Annual Compensation (as defined below) multiplied by his full and partial years of service with the Company (including any additional years of credited service pursuant to Sections 14(d) and 15(c)); provided however, that the maximum annual pension to which the Executive shall be entitled shall be 50% of his Average Final Annual Compensation. For this purpose, "Average Final Annual Compensation" shall be defined as the Executive's average cash compensation for the 36 consecutive months of highest cash compensation or such shorter period as the Executive has been employed by the Company, if the Executive has been employed for less than 36 months with the Company. Cash compensation shall include all salary and bonuses earned in respect of such 36-month period, regardless of when paid. The supplemental pension shall be fully vested and shall be paid monthly with the first payment to be made at the beginning of the first month following the termination of the Executive's employment hereunder. The Executive's entitlement to the supplemental pension benefit (apart from the determination of the amount of the benefit as set forth in the first sentence) shall apply without regard to the period of the Executive's employment with the Company. (b) If the Executive should die with a spouse surviving him after he has commenced receiving a benefit under this Section 10 (or would have commenced receiving a benefit but for the offset provided under Section 10(c)), the spouse's benefit, payable monthly, shall be determined in accordance with an election to be made by the Executive prior to the commencement of the supplemental pension benefit. The post-retirement benefit provided the spouse shall result in the normal actuarial discount applied to a joint and survivor benefit pursuant to the Company's tax-qualified pension plan. (c) Notwithstanding the foregoing, the supplemental pension benefit (including a spouse's benefit) determined in accordance with this Section 10 shall be offset (but not below zero) by any pension benefit (including a survivor's benefit) or long-term disability benefit received by the Executive (or pension or survivor benefit received by the spouse) under any of the Company's defined benefit pension or long-term disability benefit plans but shall not be offset by any other pension or retirement benefit paid by any prior employer of the Executive. 11. Perquisites. The Executive shall be entitled to perquisites on the same basis as provided to other senior level executives and, in any event, shall be entitled to have the Company provide the following: (a) a car and driver for business purposes, including commutation, as provided in Section 13, and as needed or required for security purposes; (b) reimbursement of tax and financial counseling fees up to $15,000 per year; (c) a residential security system; (d) membership and annual fees for two luncheon clubs; and (e) an annual physical by the doctor of his choice, including gross-up for any tax liabilities the Executive incurs in respect to the provision of such annual physical. 12. Aircraft Travel. For security purposes, the Executive shall be required to use, at Company expense, private aircraft for travel in North America including, without limitation, his weekly commutation as provided in Section 13. Outside North America he shall be entitled to first class air travel. 13. Reimbursement of Business and Other Expenses; Commutation; Relocation. The Executive is authorized to incur reasonable expenses in connection with carrying out his duties and responsibilities under this Agreement and the Company shall promptly reimburse him for all such expenses incurred in connection with carrying out the business of the Company, subject to documentation in accordance with the Company's policy. The Company shall pay legal fees and expenses up to $100,000 incurred by the Executive in connection with the negotiation and implementation of the Executive's employment arrangements with the Company, including, without limitation, gross-up for any tax liabilities the Executive incurs with respect to such payments. The Executive shall be under no obligation to relocate his personal residence to the Boston area. The Company shall provide and maintain for the Executive a 2-room apartment with full hotel services in the Boston area mutually acceptable to the Company and the Executive and pay any costs associated with the Executive's weekly commuting from Boston to the Executive's residence in Rye, New York including, without limitation, gross-up for any tax liabilities Executive incurs with respect to commutation costs. In the event the Executive relocates from the New York area to the Boston area, the Company will pay all costs associated with his relocation, including, without limitation, gross-up for any tax liabilities Executive incurs with respect to such relocation payments or reimbursements. 14. Termination of Employment. (a) Termination Due to Death. In the event that the Executive's employment hereunder is terminated due to his death, his estate or his beneficiaries, as the case may be, shall be entitled to the following: (i) Base Salary through the date of his death; (ii) a Pro-Rata annual incentive award for the year in which the Executive's death occurs based on the target bonus for the year of termination, payable promptly following his death; and (iii) full vesting and exercisability of all outstanding stock options which shall remain exercisable for a period equal to the lesser of one year and the remainder of their originally scheduled terms. (b) Termination Due to Disability. In the event that the Executive's employment hereunder is terminated by either Party hereto due to the Executive's Disability, he shall be entitled to the following: (i) Disability benefits provided in accordance with the long-term disability program in effect for senior executives at the Company; provided, however, in no event shall such benefits provide the Executive less than 50% of his then Base Salary to age 65; (ii) Base Salary through the end of the month before the month in which Disability benefits commence; (iii) a Pro-Rata annual incentive award for the year in which the termination occurs based on the target bonus for the year of termination, payable promptly following the termination of his employment; (iv) full vesting and exercisability of all outstanding options which shall remain exercisable for a period equal to the lesser of one year and the remainder of their originally scheduled terms; and (v) continued participation in all medical, dental, vision and hospitalization insurance coverage and benefits and in all other employee welfare benefit plans or programs in which he was participating on the date of the termination of his employment for a period of 24 months following such date, on the same terms and conditions as if he had remained employed by the Company; provided that to the extent that the Company's plans do not permit continuation of the Executive's participation throughout such period, the Company shall provide the Executive, no less frequently than quarterly in advance, with an amount which, after taxes, is sufficient for him to purchase equivalent benefits. In no event shall a termination of the Executive's employment hereunder for Disability occur until the Party terminating his employment gives written notice to the other Party in accordance with Section 28 below. (c) Termination by the Company for Cause. (i) A termination for Cause shall not take effect unless the provisions of this subclause (i) are complied with. The Executive shall be given written notice by the Board of the intention to terminate him for Cause, such notice (A) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (B) to be given within 60 days of the Board's learning of such act or acts or failure or failures to act. In the event the proposed termination is based on subclause (ii) of Section 1(d) above, the Executive shall have ten calendar days after the date that such written notice has been given to the Executive in which to cure such conduct. If he fails to cure such conduct, the Executive shall then be entitled to a hearing before the Board, and, thereafter, upon a determination by affirmative vote of no fewer than three-quarters of the members of the Board that Cause exists, he shall be terminated for Cause. (ii) In the event the Company terminates the Executive's employment hereunder for Cause: (A) he shall be entitled to Base Salary through the date of the termination; and (B) all stock options shall be forfeited. (d) Termination without Cause or Termination for Good Reason. In the event (x) the Executive's employment hereunder is terminated by the Company without Cause, other than due to Disability or death, or (y) the Executive terminates his employment for Good Reason hereunder at his initiative within 60 days following the occurrence of a Good Reason which has not been cured by the Company within 20 calendar days of receipt of notice thereof from the Executive, the Executive shall be entitled to the following benefits: (i) Base Salary through the date of termination; (ii) a Pro-Rata annual incentive award for the year of termination, based on the target bonus for such year, payable promptly following such termination; (iii) a lump sum payment in an amount equal to two times the Executive's Base Salary, determined as provided in the last sentence of this Section 14(d), payable promptly following such termination; (iv) a lump sum payment in an amount equal to two times the Executive's target annual incentive award for the year of termination, payable promptly following such termination; (v) all outstanding stock options shall become fully vested and exercisable and shall remain exercisable for a period equal to the lesser of five years and the remainder of their originally scheduled terms; (vi) two additional years of service for the purpose of determining the supplemental pension benefit pursuant to Section 10; provided, however, that the total number of years of service taken into account in determining such benefit shall in no event exceed ten (10); and (vii) continued participation in all medical, dental, vision and hospitalization insurance coverage and benefits and in all other employee and senior-level executive welfare benefit plans, programs and arrangements in which he was participating on the date of the termination of his employment, on the same terms and conditions as if he had remained employed by the Company, for a period equal to 24 months following the termination of his employment; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described above shall be secondary to those provided under such other plan during such applicable period of eligibility, provided that, to the extent that the Company's plans, programs and arrangements do not permit such continuation of the Executive's participation following his termination, the Company shall provide the Executive, no less frequently than quarterly in advance with an amount which, after taxes, is sufficient for him to purchase equivalent benefits. For purposes of Section 14(d)(iv) above, Base Salary shall be determined by the Base Salary at the annualized rate in effect on the date of termination of the Executive's employment, provided however, if, prior to the termination of the Executive's employment pursuant to this Section 14(d), the Base Salary has been reduced without the Executive's consent, the Base Salary in effect on the date of termination of the Executive's employment shall be deemed to be the Base Salary as in effect prior to such reduction. (e) Voluntary Termination. In the event that Executive terminates his employment hereunder on his own initiative, other than a termination in accordance with Section 14(a), 14(b) or 14(d) (relating respectively to death, Disability and "without Cause" terminations) (except to the extent otherwise provided in Section 14(f)), he shall be entitled to: (i) Base Salary through the date of termination; and (ii) the lesser of 90 days and the remainder of the regularly scheduled option term to exercise vested stock options and all unvested options shall be forfeited. A voluntary termination by the Executive is not a breach of this Agreement. (f) Retirement. The Executive shall be entitled to retire, for purposes of the stock options granted pursuant to Section 6(b) and 7(a) hereof, by voluntarily terminating his employment on or after the third anniversary of the Commencement Date. Upon such termination for retirement, any stock options which are not then vested shall become exercisable and all stock options shall remain exercisable for a period equal to the lesser of the remainder of the originally scheduled term and five years. (g) Other Termination Benefits. In the case of any termination of his employment with the Company, the Executive or his estate, where applicable, shall also be entitled to prompt payment or provision of: (i) the supplemental pension benefit described in Section 10 (other than following a termination for Cause or death); (ii) unless Executive has been terminated for Cause, the balance of any incentive awards due for performance periods which have been completed, but which have not yet been paid (subject to deferral of payments to the extent the Executive has elected, irrevocably, such deferral); (iii) any expense reimbursements due the Executive; and (iv) other benefits, including senior level executive benefits, if any, in accordance with applicable plans, programs and arrangements of the Company. (h) No Mitigation; No Offset. In the event of any termination of his employment hereunder, the Executive shall be under no obligation to seek other employment and except in the event of a termination by the Company for Cause there shall be no offset against amounts or benefits due the Executive under this Agreement on account of any claims asserted by the Company or any remuneration or benefits attributable to any subsequent employment that he may obtain, except to the extent set forth in Section 14(d)(vii). (i) Nature of Payments. Any amounts due under this Section 14 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty. (j) Resignation. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board he shall immediately resign from the Board and from all boards of directors of subsidiaries and Affiliates of the Company of which he may be a member. The Executive hereby agrees to execute any and all documentation of such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. (k) Cooperation in Litigation. For a period of two years following the termination of his employment, upon the reasonable request by the Company, the Executive shall cooperate in any litigation or other dispute relating to any matter in which he was involved during his employment with the Company; provided, that the Executive shall not be obligated to spend time and/or travel in connection with such cooperation to the extent it would interfere with his other commitments and obligations. The Company shall reimburse the Executive for all expenses he reasonably incurs in so cooperating, and shall pay the Executive a mutually agreed fee for his time spent in such cooperation (including without limitation any travel time); provided, that if the Executive and the Company cannot agree on such fee, they shall mutually select an independent expert to determine the appropriate amount of such fee based upon prevailing market practices. The determination of any such independent expert shall be final and binding, and the fees and expenses of such expert in making such determination shall be paid by the Company. 15 Change of Control. ----------------- (a) Notwithstanding any other provision of this Agreement, the provisions of this Section 15 shall apply if there occurs a Change of Control during the Term of Employment and the Executive's employment is terminated (i) during the period from the Change of Control Effective Date through the second anniversary thereof by the Company, other than for Cause or as a result of the Executive's Disability or death, or by the Executive for Good Reason, (ii) by the Executive for any reason during the 30-day period immediately following the first anniversary of a Change of Control, or (iii) by the Company prior to a Change of Control, if, in accordance with the definition of Change of Control Effective Date, it is reasonably demonstrated by the Executive that such termination of employment (A) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (B) otherwise arose in connection with or anticipation of a Change of Control. (b) In the event of a termination of the Executive's employment described in Section 15(a), then the Executive shall be entitled to the benefits set forth in Section 14(d), as modified by this Section 15. In lieu of the lump sum payments provided for in clauses (i), (ii), (iii) and (iv) of Section 14(d), the Company shall pay to the Executive, in a lump sum in cash within 30 days after the date of termination, an amount equal to the aggregate of the following amounts: (i) the sum of (A) the Executive's Base Salary through the date of termination to the extent not theretofore paid, (B) the product of (x) the Highest Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the date of termination and the denominator of which is 365, reduced (but not below zero), if the date of termination occurs in the same fiscal year as the Change of Control, by the Executive's Bonus Payment Amount, (C) if elected by the Executive, any compensation previously deferred by the Executive under the Company's Supplemental Savings Plan, Incentive Bonus Plan and/or Stock Equivalent Unit Plan or any other plan, agreement or arrangement of the Company (together with any accrued interest or earnings thereon), and (D) any accrued vacation pay, in each case to the extent not theretofore paid; (ii) the amount equal to the product of (A) three and (B) the sum of (x) the Executive's Base Salary and (y) the Executive's Highest Annual Bonus; and (iii) if elected by the Executive within 60 days following execution of this Agreement and prior to the Change of Control Effective Date, in lieu of and in substitution for the monthly benefit represented thereby, an amount equal to the lump sum actuarial equivalent (utilizing the interest rate and mortality table in effect for lump sum distributions under the Company's tax-qualified pension plan immediately prior to the Change of Control Effective Date, and determined assuming benefit commencement as of the date of termination) of that portion (if any) of the Executive's monthly supplemental pension benefit otherwise payable under Section 10, that accrues as a result of the application of the first sentence of Section 15(c). (c) In addition, in the event of a termination of the Executive's employment described in Section 15(a), in lieu of the benefit provided in clause (vi) of Section 14(d), the Executive shall be entitled to three (3) additional years of service for the purpose of determining the supplemental pension benefit pursuant to Section 10; provided, however, that the total number of years of service taken into account in determining such benefit shall in no event exceed ten (10). (d) Finally, in the event of a termination of the Executive's employment described in Section 15(a), the following additional benefits shall be provided to the Executive: (i) for purposes of determining the Executive's eligibility for retiree benefits pursuant to the Company's welfare plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the date of termination, provided, however, that the Executive's commencement of such retiree benefits shall not be any sooner than the Executive's earliest retirement date under the Company's Retirement Plan and Supplemental Retirement Plan; (ii) the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in the Executive's sole discretion; and (iii) clause (vii) of Section 14(d) shall be amended by changing the phrase "24 months" to "36 months". 16 Excise Tax. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, benefit or distribution from the Company or its Affiliates to or for the benefit of the Executive (whether paid or payable, received or receivable, or distributed or distributable pursuant to the terms of this Agreement, any plan or program of the Company or its Affiliates or otherwise but determined without regard to any additional payments required under this Section 16) (the "Payment") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, collectively, the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. 25 (b) Subject to the provisions of Section 16(c), all determinations required to be made under this Section 16, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG Peat Marwick or such other certified public accounting firm as may be designated by the Executive (the "Accounting Firm") that shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 16, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 16(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 16(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 16(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 16(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 16(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 17 Confidentiality; Non-Competition. (a) The Executive agrees that he will not at any time during the Term of Employment or thereafter disclose or use any confidential information of a proprietary nature relating to the Company or any Affiliate, and their respective businesses, which information shall have been obtained by the Executive during the Executive's employment by the Company or any Affiliate. For this purpose, "confidential information of a proprietary nature" shall include pricing policies, technical processes, formulae, inventions, research projects or other information regarding the financial and business affairs of the Company or any Affiliate that at the time in question have not been disclosed to the public or within the relevant trade or industry. Notwithstanding the foregoing provisions of this Section 17, the Executive may disclose or use any such information (i) as such disclosure or use may be required or appropriate in the course of his employment with the Company, (ii) when required by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction, or (iii) with the prior written consent of the Company. (b) The Executive agrees that at the time of the termination of his employment with the Company, whether at the instance of the Executive or the Company, and regardless of the reasons therefor, he will deliver to the Company, and not keep or deliver to anyone else, any and all notes, files, memoranda, papers and, in general, any and all physical matter and computer files containing information, including any and all documents significant to the conduct of the business of the Company or any subsidiary or Affiliate of the Company which are in his possession, except for any documents for which the Company or any subsidiary or Affiliate of the Company has given written consent to removal at the time of the termination of the Executive's employment and his personal rolodex, personal files, phone book and similar items. (c) During the Term of Employment and for a period of two years following the termination of his employment, the Executive shall not, other than in the course of performing his duties hereunder during the Term of Employment or as agreed by the Company in writing, engage in a "Competitive Business", directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity, in any geographic location in which the Company or any of its Affiliates is engaged in business. The Executive shall not be deemed to be in violation of this Section 17(c) from (i) his acquiring, solely as an investment, up to five percent (5%) of the outstanding equity securities (measured by value) of any entity, (ii) his becoming a consultant, advisor and/or agent to any entity providing consulting, investing or other services to any Competitor, so long as the Executive does not render services or advice, directly or indirectly, to any Competitor or Affiliate of the Competitor or (iii) his becoming affiliated with an entity which is not a Competitor which is subsequently acquired by or merged with a Competitor; provided that following such acquisition or merger, his duties do not involve any responsibilities with regard to any Competitive Business. "Competitive Business" shall mean a business that competes with a business that (i) was being conducted by the Company or any of its Affiliates at the time of the Executive's termination, and is being conducted at the time of the alleged violation, or (ii) the Company or any of its Affiliates was seeking to conduct, or seriously considering conducting, at the time of the Executive's termination and the Company or any of its Affiliates is actually conducting, or which the Company is seeking to conduct or seriously considering conducting, at the time of the alleged violation. "Competitor" shall mean any entity which engages in any Competitive Business. (d) The Executive agrees that for a period of two years following the termination of his employment, he will not, without the prior written consent of the Company, directly or indirectly, knowingly solicit or encourage any officer, employee or consultant of the Company or any of its subsidiaries to leave the employ of the Company and its subsidiaries. Notwithstanding the foregoing, the Company agrees that the Executive's (i) responding to an unsolicited request of an employee of the Company for advice on employment matters or (ii) responding to an unsolicited request for an employment reference regarding an employee of the Company shall not by itself be deemed a violation of this Section 17(d). (e) The Executive agrees that the Company's remedies at law would be inadequate in the event of a breach or threatened breach of this Section 17; accordingly, the Company shall be entitled, in addition to its rights at law, to seek injunctive and other equitable relief. If the Company defers or withholds payment of any amount otherwise payable under this Agreement on the basis of an asserted violation of the provisions of this Section 17, and it is subsequently finally determined that the Executive did not commit any such violation, the Company shall promptly pay all such unpaid amounts to the Executive, together with interest at the applicable federal rate as defined in Section 1274 of the Code, from the date such payments should have been made under this Agreement until the date they are actually paid. 18 Resolution of Disputes. Any dispute arising under, or relating to, this Agreement, any other agreement between Executive and the Company or its Affiliates, the Executive's employment with the Company or any termination of such employment shall be resolved by binding arbitration, to be held in Boston, Massachusetts, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator, including any injunctive relief, may be entered in any court having jurisdiction thereof. The Company shall advance to the Executive all reasonable fees, costs and expenses incurred by him in connection with such arbitration within 20 days after receipt by the Company of a written request for such advance, subject to repayment by the Executive thereof, if the arbitrator(s) determines that the Executive had no reasonable good faith basis for asserting his position with respect to the dispute in question. 19 Indemnification. (a) The Company agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, limited liability corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company's certificate of incorporation or bylaws or resolutions of the Company's Board of Directors or, if greater, by the laws of the State of Delaware, against all cost, expense, liability and loss (including, without limitation, attorney's fees, judgments, fines, ERISA excise taxes or other liabilities or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and not otherwise received by him from another source, such as insurance, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive's heirs and legal representatives. The Company shall advance to the Executive all costs and expenses incurred by him in connection with a Proceeding within 20 calendar days after receipt by the Company of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses; provided that the amount of such obligation to repay shall be limited to the after-tax amount of any such advance except to the extent the Executive is able to offset such taxes incurred on the advance by the tax benefit, if any, attributable to a deduction for the repayment. (b) Neither the failure of the Company (including its board of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under Section 19(a) above that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its board of directors, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct. (c) The Company agrees to continue and maintain a directors' and officers' liability insurance policy covering the Executive with terms and conditions no less favorable than the most favorable coverage then applying to any other present or former director or officer of the Company, both during the Term and for six years thereafter; provided, that during any periods when such insurance policy remains in effect but the Executive is not serving as an officer or director of the Company, such policy shall cover only acts, omissions and events occurring during his period of service as an officer or director of the Company. 20 Assignability; Binding Nature. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the business and assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company further agrees that, in the event of a sale of assets or liquidation as described in the preceding sentence, it shall take whatever action it reasonably can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Company hereunder. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to compensation and benefits, which may be transferred only by will or operation of law, except as provided in Section 26. 21 Entire Agreement. This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. 22 Representations. (a) The Company represents and warrants that (i) it is fully authorized by action of its Board (and of any other person, entity or body whose action is required) to enter into this Agreement and to perform its obligations under it; (ii) the execution, delivery and performance of this Agreement by it will not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document to which it is a party or by which it is bound; and (iii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be a valid and binding obligation of the Company, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. (b) The Executive represents and warrants that (i) he has the free and unfettered right to enter into this Agreement and to perform his obligations under it; (ii) to the best of his knowledge, the execution, delivery and performance of this Agreement by him will not violate any contract or agreement to which he is a party or by which he is bound; and (iii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be a valid and binding obligation of the Executive, enforceable against him in accordance with its terms. 23 Amendment or Waiver. No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be. 24 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law so as to achieve the purposes of this Agreement. 25 Survivorship. Except as otherwise expressly set forth in this Agreement, upon the expiration of the Term of Employment, the respective rights and obligations of the Parties shall survive such expiration to the extent necessary to carry out the intentions of the Parties as embodied in the rights (such as vested rights) and obligations of the Parties under this Agreement. This Agreement itself (as distinguished from the Executive's employment) may not be terminated by either Party without the written consent of the other Party. 26 Beneficiaries; References. The Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive's death by giving the Company written notice thereof. In the event of the Executive's death or a judicial determination of his incompetence, references in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. 26 27 Governing Law. This Agreement shall be governed in accordance with the laws of Delaware without reference to principles of conflict of laws. 28 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed given when (a) delivered personally, (b) three days after mailing by certified or registered mail, postage prepaid, return receipt requested or (c) delivered by overnight courier (provided that a written acknowledgment of receipt is obtained by the overnight courier) to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of: If to the Company: The Gillette Company Prudential Tower Building Boston, Massachusetts 02199 Attn: General Counsel If to the Executive: Mr. James M. Kilts c/o The Gillette Company Prudential Tower Building Boston, Massachusetts 02199 29 Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement. 30 Withholding. The Company shall withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. The Executive acknowledges that except for such withholding, and except for such gross-ups as are specifically provided herein, he is responsible for paying his own taxes. 31 Counterparts. This Agreement may be executed in two or more counterparts. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. The Gillette Company By: /s/ Robert E. DiCenso Robert E. DiCenso /s/ James M. Kilts James M. Kilts EXHIBIT A STOCK OPTION AGREEMENT 1. Grant of Option. The Gillette Company (the "Company") hereby grants to James M. Kilts (the "Optionee"), effective as of January 19, 2001 (the "Grant Date"), an option to purchase an aggregate of 2,000,000 shares of common stock of the Company (the "Common Stock") at a price of $34.16 per share, purchasable as set forth in, and subject to the terms and conditions of, this Stock Option Agreement and the Employment Agreement dated as of January 19, 2001 between the Company and the Optionee (the "Employment Agreement"). All capitalized terms not defined in this Stock Option Agreement shall have the meanings ascribed to such terms in the Employment Agreement. 2. Exercisability of Option. (a) On the Grant Date, this option shall vest and be exercisable with respect to 500,000 shares. On each of the first three anniversaries of the Grant Date, except as otherwise provided below, this option shall vest and become exercisable with respect to an additional 500,000 shares. (b) In the event that the Optionee's employment with the Company is terminated due to death or Disability, pursuant to Section 14(a) or 14(b), respectively, of the Employment Agreement, this option, to the extent not yet vested and exercisable, shall become fully vested and exercisable as of the date of termination, and shall remain exercisable for all shares through the first anniversary of such date, or, if earlier, January 19, 2011, at which time it shall expire to the extent it is not yet exercised. (c) In the event that the Optionee's employment with the Company is terminated for Cause, pursuant to Section 14(c) of the Employment Agreement, this option shall expire. (d) In the event that the Optionee's employment with the Company is terminated without Cause or for Good Reason, pursuant to Section 14(d) of the Employment Agreement, or Retirement, pursuant to Section 14(f) of the Employment Agreement, this option shall become fully vested and exercisable as of the date of termination and shall remain fully exercisable through the fifth anniversary of the date of termination, or, if earlier, January 19, 2011, at which time it shall expire to the extent it is not yet exercised. (e) In the event that the Optionee voluntarily terminates his employment with the Company prior to the third anniversary of the Grant Date, pursuant to Section 14(e) of the Employment Agreement, this option (x) to the extent that it is exercisable as of the date of termination, shall remain fully exercisable for 90 days following such date, or, if earlier, January 19, 2011, at which time it shall expire, and (y) to the extent that it is not exercisable as of the date of termination, shall expire. (f) Anything elsewhere to the contrary notwithstanding, (x) immediately prior to any Change of Control that occurs while this option remains outstanding during the Optionee's employment with the Company (to permit the Optionee, if he chooses, to exercise the option and acquire the shares subject to such exercise prior to the Change of Control), this option shall become fully vested and exercisable, (y) upon any termination by the Optionee which occurs pursuant to notice given by the Optionee within the 30 day period following the first anniversary of a Change of Control (a Termination under Section 15(a)(ii) of the Employment Agreement), this option shall remain fully exercisable through the fifth anniversary of the date of termination, or, if earlier, January 19, 2011, and (z) upon any involuntary termination by the Company without Cause which occurs during the one year period following a Change of Control, this option shall remain fully exercisable through January 19, 2011. (g) Anything herein to the contrary notwithstanding, this option shall cease to be exercisable with respect to any shares at the end of the day on January 19, 2011. 3. Exercise of Option. (a) Method of Exercise and Payments. Subject to the conditions set forth in this Stock Option Agreement, this option may be exercised in accordance with any method applicable either to options granted under the Company's 1971 Stock Option Plan, as amended (so long as the Company has any options outstanding under such plan and regardless of whether there are options outstanding thereunder if the Company shall not have adopted a successor plan) or under any successor stock option plan from time to time in effect (collectively, the "Plan"), including, without limitation, the provisions for payment of the exercise price of options and the provisions for delivery of shares purchased, and in accordance with the practices and procedures of the Company applicable to exercise of options by senior executives generally. The Company has in effect, and agrees to continue in effect and to make available to the Optionee at his election, for the term of this option, a "brokered exercise" program under the Plan. The Company will make available to the Optionee loans or guarantees with respect to the exercise price insofar as made available to any other senior executive or any director of the Company under the Plan or any other plan, program or arrangement of the Company. (b) Reservation of Shares. The Company shall at all times reserve, out of its authorized and unissued shares, a number of shares sufficient to provide for the exercise in full of this option. All shares issued upon exercise of this option shall be duly authorized and, when issued upon such exercise, shall be (i) validly issued, fully paid and nonassessable, (ii) registered for sale, and for resale, under Federal and state securities laws and (iii) listed, or otherwise qualified, for trading in the United States on a national securities exchange or national securities market system. 4. Deferral of Option Gains. (a) Notwithstanding anything elsewhere in this Agreement to the contrary, the Optionee shall have the right, by furnishing written notice to the Company during his employment with the Company and at least six months prior to any exercise of this option, to elect to defer all or a portion of any gains realized upon or in connection with such exercise. Any such deferral shall be made in such manner as may reasonably be required by the Company, including without limitation such requirements as may apply in order to defer such gains for Federal and state income tax purposes. Payment of the exercise price for such exercise shall be made by presenting to the Company shares of Common Stock (the "Presentation Shares") owned by the Optionee (which, in the event they were acquired by the previous exercise of a stock option, shall have been held by the Optionee for at least six months before the date of such exercise) and having a fair market value (as defined in the Plan) equal to the exercise price. The excess of the number of shares for which the option is exercised over the number of Presentation Shares shall be deferred in the form of "Share Units" as discussed in the next sentence. A "Share Unit" shall represent a share of Common Stock, including any dividends and other distributions that may be declared or made thereon during the period of the deferral. The Share Units shall be paid out under the terms of the Optionee's election to defer in the form of shares of Common Stock. (b) To the extent that any gain that would be realized by the Optionee upon an exercise of this option during his employment with the Company may not be deductible in full by the Company by virtue of Section 162(m) of the Internal Revenue Code of 1986, as amended (such Section, together with any successor thereto and any regulations thereunder, referred to herein as "Section 162(m)"), then the Optionee shall be deemed to have made a timely election to defer such portion of such gain pursuant to Section 4(a) above until the later of (i) the time (if any) actually elected pursuant to Section 4(a) and (ii) 30 days following the date on which payment of all or part of such deferral amount will not result in loss of deductibility under Section 162(m) (but only up to that amount which can be paid without loss of deductibility under Section 162(m)). 5. Nontransferability of Option. This option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process, except that this option may be transferred in whole or in part (a) by will or the laws of descent and distribution, (b) to any Family Member or to any trust, limited liability company, partnership or comparable entity, the principal beneficiaries of which are the Optionee and/or his Family Members, provided that such Family Members and/or entities (and upon distribution their beneficiaries) agree to be bound by the provisions of this Stock Option Agreement or (c) to organizations qualifying as charitable organizations within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. For purposes of clause (b) of the preceding sentence, "Family Member" shall mean the Optionee's spouse, parents, the parents of the Optionee's spouse, and lineal descendants of any of the foregoing (including descendants by adoption) and any other individual or entity included in the definition of "family member" for purposes of Form S-8 Registration Statement, as from time to time amended. Any individual or entity to whom this option has been transferred in whole or in part in accordance with the first sentence of this Section 5 shall, to the extent of the transfer, succeed to the rights, and assume the obligations, of the Optionee under this Stock Option Agreement but may not transfer this option (in whole or in part) other than to the Optionee without the prior written consent of the Company, which consent shall not be unreasonably withheld. The Optionee shall give notice to the Company of any transfer of this option, in whole or in part, pursuant to clause (b) of the first sentence of this Section 5. Notwithstanding the foregoing, no such transfer shall be effective unless and until Optionee and the transferee(s) have executed such documentation of their respective rights and obligations as the Company may reasonably determine to be necessary or appropriate. 6. Adjustment Provisions. The provisions of the Plan (as defined in Section 3(a) above, including Section 9 of the 1971 Stock Option Plan, as amended, or any corresponding provision of a successor plan) with respect to changes in the Common Stock in certain events shall be applicable to this option as if incorporated herein, and they are hereby incorporated by reference. In addition, notwithstanding the last sentence of Section 9 of the 1971 Stock Option Plan, as amended, and any corresponding provision of any successor plan, upon the occurrence of any event described in such sentence, the Company shall, if the Optionee so requests and the Board approves, use its reasonable best efforts to arrange to have the surviving corporation or any corporation of which the Company has become the direct or indirect subsidiary, assume this option or grant a replacement option to the Optionee. 7. Tax Withholding. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionee's satisfaction of all applicable Federal, state and local income, excise, and employment tax withholding requirements ("tax obligations"). The Optionee may satisfy any such tax obligations (a) in any of the manners provided in Section 3(a) above for payment of the purchase price; (b) by authorizing the Company to sell securities that would otherwise have been delivered to the Optionee having a Fair Market Value equal to, but not greater than, the minimum amount of tax required to be withheld; or (c) by any combination of (a) and (b). 8. The Company's Representations. The Company represents and warrants that (a) it is fully authorized by action of its Board (and of any person or body whose action is required) to enter into this Stock Option Agreement and to perform its obligations under it; (b) the execution, delivery and performance of this Stock Option Agreement by the Company does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document of the Company or any agreement among holders of its shares; and (c) upon the execution and delivery of this Stock Option Agreement by the Company and the Optionee, this Stock Option Agreement shall be the valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 9. Miscellaneous. (a) Any dispute arising out of or relating to this Stock Option Agreement shall be resolved by binding arbitration in accordance with Section 18 of the Employment Agreement. (b) All notices and other communications relating to this Stock Option Agreement shall be given as provided in Section 28 of the Employment Agreement. (c) Sections 20 (other than the last sentence thereof), 23, 25, 26 (second sentence only), 29 and 31 of the Employment Agreement (relating, respectively, to assignability; amendment or waiver; survivorship; references; headings; and counterparts) shall be deemed incorporated herein in full, with the references to the "Agreement" in such Sections being treated as references to this Stock Option Agreement and the references to the "Executive" in such Sections being treated as references to the Optionee. (d) Nothing contained in this Stock Option Agreement shall be construed or deemed under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised. (e) This Stock Option Agreement shall be governed, construed, performed and enforced in accordance with its express terms, and otherwise in accordance with the laws of the State of Delaware, without reference to conflict of laws principles. Grant Date: January 19, 2001 THE GILLETTE COMPANY By: /s/ Robert E. DiCenso Name: Robert E. DiCenso Title: Senior Vice President -- Personnel and Administration ACCEPTED OPTIONEE /s/ James M. Kilts James M. Kilts EXHIBIT B SUMMARY OF KEY TERMS AND CONDITIONS FOR ADDITIONAL STOCK OPTIONS - --------------------------------------------------------- --------------------- 1. Date, Size and Term of Grants: Not less than 650,000 shares in each of 2001, 2002 and 2003, subject to adjustment pursuant to Section 7(a) of the Employment Agreement. The term of each option shall be 10 years. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- 2. Exercise Price: Equal to the Fair Market Value on the date of grant. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- 3. Vesting: Each option shall vest and become exercisable in substantially equal annual installments on the first three anniversaries of its grant date, unless earlier vested upon termination of employment or Change of Control. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- 4. Consequences of Different Terminations: (a) Death or Disability: Upon the Executive's death or Disability, all outstanding options shall be fully vested and remain exercisable for the lesser of one year and their remaining originally scheduled terms. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- (b) Termination for Cause: All outstanding options shall be forfeited. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- (c) Termination by the Company All outstanding without Cause or by the options shall be fully Executive for Good Reason or vested and remain upon Retirement pursuant to exercisable for the Section 14(f) of the Employment lesser of five years Agreement: and the remainder of their originally scheduled terms. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- (d) Voluntary Termination: Outstanding options that are vested at the date of termination shall remain exercisable for the lesser of 90 days and the remainder of their originally scheduled terms; all unvested options shall be forfeited. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- (e) Certain Terminations After a Change of Upon any termination Control: of the Executive's employment (1)by the Executive pursuant to a notice given by him within the 30-day period following the first anniversary of a Change of Control, outstanding options shall remain exercisable for the lesser of five years and the remainder of their originally scheduled terms, and (2) by the Company without Cause during the one-year period following a Change of Control, outstanding options shall remain exercisable for the remainder of their originally scheduled terms. - --------------------------------------------------------- --------------------- - --------------------------------------------------------- --------------------- 5. Consequences of a Immediately prior to Change of Control: any Change of Control, all outstanding options shall be fully vested. - --------------------------------------------------------- --------------------- AMENDMENT TO EMPLOYMENT AGREEMENT This Amendment is made as of January 19, 2001 by and between The Gillette Company, a Delaware corporation (together with its successors and assigns permitted under this Agreement, the "Company"), and James M. Kilts (the "Executive"). WITNESSETH THAT: WHEREAS, the Company and the Executive have heretofore entered into an Employment Agreement dated as of January 19, 2001 (the "Employment Agreement"); and WHEREAS, both parties are desirous of modifying the Employment Agreement as regards the Company's obligations to provide certain life insurance coverage during the Executive's term of employment with the Company. NOW, THEREFORE, the Company and the Executive agree to modify the Employment Agreement, pursuant to Section 23 thereof, by amending Section 9 of the Employment Agreement to read in its entirety as follows: "9. Employee Benefit Programs. "During the Term of Employment, the Executive shall be entitled to participate in all employee pension and welfare benefit plans, programs and arrangements made available to the Company's senior-level executives or to its employees generally on the same terms and conditions as other senior-level executives, as such plans, programs or arrangements may be in effect from time to time, including, without limitation, pension, profit sharing, savings, estate preservation and other retirement plans or programs, 401(k), medical, dental, hospitalization, short-term and long-term disability plans, accidental death and dismemberment protection, travel accident insurance, and all other pension or retirement plans or programs and employee welfare benefit plans or programs that may be sponsored by the Company from time to time, including any plans or programs that supplement the above-listed types of plans or programs, whether funded or unfunded; provided, however, that the Executive shall not participate in any of the Company's executive or group life insurance programs and, in lieu thereof and substitution therefor, the Company shall pay the premium cost of the certain term life insurance policies (nos. MH0003676 and MH0003677 each issued as of December 28, 1999 by Old Line Life Insurance Co. of America) covering the Executive and his spouse during the Term of Employment or until the sooner termination of such policies. The Executive's participation shall be based on, and the calculation of all benefits shall be based on, the assumptions that the Executive has met all service-period and other requirements for such participation. The Executive shall be entitled to six weeks paid vacation per calendar year of employment. The Executive agrees to cooperate with any required eligibility procedures with respect to such plans, programs and arrangements, including without limitation customary medical underwriting procedures." IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above. THE GILLETTE COMPANY By: /s/ Edward E. Guillet ---------------------------------------- /s/ James M. Kilts James M. Kilts Amendment to Employment Agreement Dated January 19, 2001 This amendment to the Employment Agreement by and between The Gillette Company (the "Company") and James M. Kilts (the "Executive") is made and entered into as of this 27th day of August 2002. Whereas the Company has amended the post termination exercise periods for all options granted under its Stock Option Plan beginning in the year 2002; Whereas it is the intention of the Company to provide the Executive with option exercise terms no less favorable than the terms of options granted to other plan participants; Now, Therefore, in consideration of the above premises and mutual covenants contained in the Employment Agreement and for good and other valuable consideration, the Parties agree to amend the Employment Agreement as follows: Paragraph 14 (a) (iii) is amended to read as follows: "(iii) full vesting of all outstanding stock options with exercise periods (a)for all outstanding stock options granted prior to the year 2002, equal to the lesser of one year and the remainder of their originally scheduled terms and (b)for all outstanding stock options granted in the year 2002 and thereafter, equal to the lesser of three years and the remainder of their originally scheduled terms." Paragraph 14 (b) (iv) is amended to read as follows: "(iv) full vesting of all outstanding stock options with exercise periods (a) with respect to all outstanding stock options granted prior to the year 2002, equal to the lesser of one of year and the remainder of their originally scheduled terms and (b)with respect to all stock options granted in the year 2002 and thereafter, equal to the lesser of three years and the remainder of their originally scheduled terms; and" Paragraph 14 (d) (v) is amended to read as follows: "(v) all outstanding stock options shall become fully vested and exercisable. All stock options granted prior to the year 2002 shall remain exercisable for a period equal to the lesser of the remainder of their originally scheduled terms and five years and all stock options granted in the year 2002 or thereafter shall remain exercisable for the remainder of their originally scheduled terms." Paragraph 14(f) is amended to read as follows: "Retirement. The Executive shall be entitled to retire, for purposes of the stock options granted to him, whether pursuant to Section 6(b) and 7(a) hereof or otherwise, by voluntarily terminating his employment on or after the third anniversary of the Commencement Date. Upon such termination for retirement, any stock options which are not then vested shall become exercisable. All stock options granted prior to the year 2002 shall remain exercisable for a period equal to the lesser of the remainder of their originally scheduled terms and five years and all stock options granted in the year 2002 or thereafter shall remain exercisable for the remainder of their originally scheduled terms." The Gillette Company By: /s/ Edward E. Guillet ------------------------- Edward E. Guillet /s/ James M. Kilts ---------------------------- James M. Kilts Amendment to Employment Agreement This amendment (the "Amendment") to the Employment Agreement by and between The Gillette Company (the "Company") and James M. Kilts (the "Executive") dated January 19, 2001, as amended as of January 19, 2001 and as further amended August 27, 2002 (the "Employment Agreement") is made and entered into as of this 6th day of August, 2003. Whereas, unless otherwise specified below, terms defined in the Employment Agreement shall have the same meaning when used in this Amendment; Whereas, the Company and the Executive mutually desire to extend the term of the Employment Agreement through January 19, 2005, under certain modified terms and conditions; In consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Executive agree as follows: 1. The Executive and the Company mutually waive their rights, as provided in the first sentence of Paragraph 2 of the Employment Agreement, to terminate the Employment Agreement as of January 19, 2004. The Company and the Executive mutually agree to extend the Term of Employment for an additional year expiring on January 19, 2005. This waiver shall not affect the termination rights of the Company or the Executive with respect to extensions of the Agreement beyond January 19, 2005. 2. The Company hereby grants the Executive a contract extension award which shall be calculated and become payable in accordance with the following terms and conditions: (a) The amount of the contract extension award shall be calculated by multiplying the amount, if any, of the increase in the Fair Market Value of a share of the Company's common stock ("FMV") between June 19, 2003 and the Valuation Date (as defined below) by One Million ("the Award"). (b) (i) If the Executive ceases to be employed by the Company prior to January 2, 2004 by reason of a termination of employment by the Company without Cause or by the Executive with Good Reason or by reason of Death or Disability, the provisions of paragraph 2(c) below shall not apply and both the Valuation Date and the Settlement Date shall be the earlier of (A) a date selected by the Executive (or in the case of the Executive's death, the personal representative of his estate) or (B) (x) in the event of termination by the Company without Cause or by the Executive with Good Reason the earlier of June 19, 2013 or, in the event of the Executive's death following such termination, the third anniversary of his death or (y) in the event of termination by reason of Death or Disability, the third anniversary of such termination. If a Change of Control occurs prior to January 2, 2004 and the Executive's employment with the Company terminates as described in this clause (b) (i) the Award will be appropriately and equitably adjusted with respect to any or all of the number, price and kind of shares underlying the Award to preserve the potential value of the Award. (ii) If a Change of Control occurs prior to January 2, 2004 and the Executive remains employed by the Company on January 2, 2004, the Settlement Date shall be January 2, 2004 and the Valuation Date shall be the date of the Change of Control. (iii) Upon the occurrence of such Settlement Date, the Executive or, in the case of his death, his estate, shall be paid in cash the amount of the Award. (c) (i) In the event the Executive remains employed by the Company on January 2, 2004, the Award shall be converted into Stock Units ("SUs") and be credited to a Stock Unit account for the Executive on the books of the Company as of January 2, 2004. The number of SUs (rounded to the nearest thousandth of a share) shall be calculated by dividing the amount of the Award by the FMV on January 2, 2004. If such date is not a business day on which the Company's common stock is traded on the NYSE, such calculation shall be made using the FMV on the next business day on which the Company's common stock is traded on the NYSE (January 2, 2004 or such later date, "the Calculation Date".) Each time a dividend is paid on the Company's common stock having a record date on or after January 2, 2004, the Company shall make additional credits to the Executive's SU account calculated by multiplying the dividend amount per share of the Company's common stock by the number of SUs credited to the Executive's account as of the record date of the dividend and dividing the result by the FMV as of the dividend payment date. (ii) The value of the Executive's SU account shall be paid to the Executive in cash in a single lump sum on the "Payment Date" which shall be the earlier of (A) the date one year from the date of his termination of employment or (B) a Change of Control. The payment shall equal the FMV of the SUs credited to his account on the Payment Date. If such date does not fall a business day on which the Company's common stock is traded on the NYSE, such calculation shall be made using the FMV as of the next business day on which the Company's common stock is traded on the NYSE. (iii) Notwithstanding the above, the Executive shall be entitled to receive the dollar value of the SUs held in his account only if he remains employed by the Company through January 19, 2005 unless prior to such date there is (A) a Change of Control or (B) a termination of employment which is initiated by the Company without Cause, initiated by the Executive for Good Reason, or as a result of Death or Disability. In the event the Executive's employment is terminated by the Company with Cause or by the Executive voluntarily without Good Reason prior to January 19, 2005, the Award shall be cancelled and no payment shall be made by the Company pursuant to this Paragraph 2. In the event of the Executive's death prior to the payment of the award, the value of his SU account shall be paid to his estate on the one year anniversary of his termination of employment. 3. Unless the Executive's employment is terminated prior to January 2, 2004 the Company will grant the Executive, under The Gillette Company 1971 Stock Option Plan or any successor plan, a ten year option to purchase One Million shares of common stock of the Company at a price representing FMV on January 2, 2004; provided that if a Change of Control has occurred prior to January 2, 2004, the number, price and kind of shares subject to such option shall be appropriately and equitably adjusted to preserve the potential value of such options. If the Company's stock, for any reason, is not traded on the NYSE on January 2, 2004, such options shall be priced on the next business day thereafter that the Company's stock is traded on the New York Stock Exchange. Such options shall vest annually in one third segments over a three year period, such that the first segment vests on January 19, 2005, the second segment vests on January 19, 2006, and the final segment vests on January 19, 2007. If the Executive's employment is terminated prior to January 19, 2005 due to termination by the Company for Cause or Voluntary Termination, the option shall be cancelled and no portion thereof shall be exercisable. If the Executive's employment is terminated prior to January 19, 2005 due to Death, Disability, termination at the initiation of the Company without Cause or the Executive's resignation for Good Reason or a Change of Control of the Company occurs, all segments of the option shall vest upon such event and remain exercisable for the remaining term of the option . 4. Paragraph 14(f) of the Agreement is amended to read as follows: "Retirement. The Executive shall be entitled to retire for the purposes of the stock options granted to him prior to January 2, 2004, by voluntarily terminating his employment after January 19, 2004 whereupon any such stock options which are not then vested shall become vested and exercisable. The Executive shall be entitled to retire for the purposes of any stock options or other equity-based or other long-term incentive awards granted to him on or after January 2, 2004 ("New Awards") by voluntarily terminating his employment after January 19, 2005 whereupon any New Awards which are not then vested shall become vested and exercisable. All stock options granted prior to the year 2002 shall remain exercisable for a period equal to the lesser of the remainder of their originally scheduled terms and five years and all stock options granted in the year 2002 and thereafter shall remain exercisable for the remainder of their originally scheduled terms." 5. Paragraph 11(b) of the Agreement is amended to read as follows: "(b) reimbursement of tax and financial counseling fees under the terms of the Company's Senior Executive Financial Planning Program;" 6. Unless specifically modified herein, all other terms and conditions of the Agreement shall remain in effect. IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above. THE GILLETTE COMPANY /s/ Edward E. Guillet - ---------------------------------------- Edward E. Guillet, Sr. V.P., Human Resources /s/ James M. Kilts - ---------------------------------------- James M. Kilts EX-10 4 ex10ii_093003-10q.txt EXHIBIT 10.2 EXHIBIT 10.2 EXECUTION COPY $862,500,000 364-DAY CREDIT AGREEMENT dated as of October 14, 2003 among The Gillette Company, The Banks Listed Herein and JPMorgan Chase Bank, as Agent ____________________ J.P. Morgan Securities Inc., Lead Arranger and Sole Bookrunner Table of Contents Page Article 1 Definitions Section 1.01. Definitions..................................................1 Section 1.02. Accounting Terms and Determinations.........................12 Section 1.03. Types of Borrowings.........................................12 Article 2 The Credits Section 2.01. Commitments to Lend.........................................12 Section 2.02. Notice of Committed Borrowing...............................13 Section 2.03. Competitive Bid Borrowings..................................13 Section 2.04. Notice to Banks; Funding of Loans...........................17 Section 2.05. Registry; Notes.............................................18 Section 2.06. Maturity of Loans...........................................19 Section 2.07. Interest Rates..............................................19 Section 2.08. Facility Fee................................................21 Section 2.09. Termination or Reduction of Commitments.....................21 Section 2.10. Scheduled Termination of Commitments........................21 Section 2.11. Optional Prepayments........................................21 Section 2.12. General Provisions as to Payments...........................22 Section 2.13. Funding Losses..............................................22 Section 2.14. Computation of Interest and Fees............................23 Section 2.15. Judgment Currency...........................................23 Section 2.16. Foreign Subsidiary Costs....................................23 Section 2.17. Regulation D Compensation...................................24 Section 2.18. Method of Electing Interest Rates...........................24 Section 2.19. Increased Commitments; Additional Banks.....................25 Article 3 Conditions Section 3.01. Effectiveness...............................................27 Section 3.02. Borrowings..................................................28 Section 3.03. First Borrowing by Each Eligible Subsidiary.................28 Article 4 Representations and Warranties of the Company Section 4.01. Corporate Existence and Power...............................29 Section 4.02. Corporate and Governmental Authorization; Contravention.....29 Section 4.03. Binding Effect..............................................29 Section 4.04. Financial Information.......................................29 Section 4.05. No Material Adverse Change..................................30 Section 4.06. Compliance with ERISA.......................................30 Section 4.07. Litigation..................................................30 Section 4.08. Taxes.......................................................30 Section 4.09. Full Disclosure.............................................30 Article 5 Covenants Section 5.01. Information.................................................31 Section 5.02. Maintenance of Property; Insurance..........................33 Section 5.03. Conduct of Business and Maintenance of Existence............33 Section 5.04. Compliance with Laws........................................33 Section 5.05. Earnings to Interest Expense Ratio..........................34 Section 5.06. Negative Pledge.............................................34 Section 5.07. Consolidations, Mergers and Sales of Assets.................35 Section 5.08. Material Subsidiary Cash Flow...............................35 Section 5.09. Use of Proceeds.............................................35 Article 6 Defaults Section 6.01. Events of Default............................................35 Section 6.02. Notice of Default............................................37 Article 7 The Agent Section 7.01. Appointment and Authorization................................37 Section 7.02. Agent and Affiliates.........................................38 Section 7.03. Action by Agent..............................................38 Section 7.04. Consultation with Experts....................................38 Section 7.05. Liability of Agent...........................................38 Section 7.06. Indemnification..............................................38 Section 7.07. Credit Decision..............................................39 Section 7.08. Successor Agent..............................................39 Section 7.09. Agent's Fee..................................................39 Article 8 Change in Circumstances Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair.....39 Section 8.02. Illegality...................................................40 Section 8.03. Increased Cost and Reduced Return............................40 Section 8.04. Taxes........................................................42 Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans....43 Article 9 Representations and Warranties of Eligible Subsidiaries Section 9.01. Corporate Existence and Power.................................44 Section 9.02. Corporate and Governmental Authorization; Contravention.......44 Section 9.03. Binding Effect................................................44 Section 9.04. Taxes.........................................................45 Article 10 Guaranty Section 10.01. The Guaranty.................................................45 Section 10.02. Guaranty Unconditional.......................................45 Section 10.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances....................................................46 Section 10.04. Waiver by the Company........................................46 Section 10.05. No Subrogation...............................................46 Section 10.06. Stay of Acceleration.........................................46 Article 11 Miscellaneous Section 11.01. Notices.......................................................47 Section 11.02. No Waivers....................................................47 Section 11.03. Expenses; Indemnification.....................................47 Section 11.04. Sharing of Set-offs...........................................48 Section 11.05. Amendments and Waivers........................................48 Section 11.06. Successors and Assigns........................................49 Section 11.07. Designated Lenders............................................50 Section 11.08. Collateral....................................................51 Section 11.09. Governing Law; Submission to Jurisdiction; Service of Process.51 Section 11.10. Counterparts; Integration.....................................52 Section 11.11. WAIVER OF JURY TRIAL..........................................52 Section 11.12. Confidentiality...............................................52 COMMITMENT SCHEDULE EXHIBIT A.........- Note EXHIBIT B.........- Competitive Bid Quote Request EXHIBIT C.........- Invitation for Competitive Bid Quotes EXHIBIT D.........- Competitive Bid Quote EXHIBIT E.........- Opinion of Counsel for the Company EXHIBIT F ........- Opinion of Special Counsel for the Agent EXHIBIT G.........- Election to Participate EXHIBIT H.........- Election to Terminate EXHIBIT I.........- Opinion of Counsel for an Eligible Subsidiary EXHIBIT J.........- Assignment and Assumption Agreement EXHIBIT K.........- Designation Agreement CREDIT AGREEMENT AGREEMENT dated as of October 14, 2003 among THE GILLETTE COMPANY, the BANKS listed on the signature pages hereof and JPMORGAN CHASE BANK, as Agent. The parties hereto agree as follows: Article 1 Definitions Section 1.01. Definitions. The following terms, as used herein, have the following meanings: "Absolute Rate Auction" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Absolute Rates pursuant to Section 2.03. "Additional Bank" has the meaning set forth in Section 2.19(b). "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent duly completed by such Bank. "Agent" means JPMorgan Chase Bank in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Competitive Bid Loans, its Competitive Bid Lending Office. "Assignee" has the meaning set forth in Section 11.06(c). "Bank" means each bank or other financial institution listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 11.06(c), and their respective successors. "Bank" includes each Additional Bank which becomes a Bank pursuant to Section 2.19. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 0.50% plus the Federal Funds Rate for such day. "Base Rate Loan" means a Committed Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group and not excepted by Section 4(b) of ERISA. "Borrower" means the Company or any Eligible Subsidiary, as the context may require, and their respective successors, and "Borrowers" means all of the foregoing. "Borrowing" has the meaning set forth in Section 1.03. "Commitment" means (i) with respect to each Bank listed on the Commitment Schedule, the amount set forth opposite the name of such Bank on the Commitment Schedule and (ii) with respect to any Assignee, the amount of the transferor Bank's Commitment assigned to it pursuant to Section 11.06(c), in each case as such amount may be changed from time to time pursuant to Section 2.09 or 11.06(c). "Commitment" includes, with respect to each Additional Bank which becomes a Bank pursuant to Section 2.19, the amount of the Commitment thereby assumed by it, in each case, as such amount may be changed from time to time pursuant to Sections 2.08 and 2.19. "Commitment Schedule" means the Commitment Schedule attached hereto. "Committed Loan" means a loan made by a Bank pursuant to Section 2.01; provided that, if any such loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term Committed Loan shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Company" means The Gillette Company, a Delaware corporation, and its successors. "Company's Latest Form 10-Q" means the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Company's 2002 Form 10-K" means the Company's annual report on Form 10-K for 2002, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Competitive Bid Absolute Rate" has the meaning set forth in Section 2.03. "Competitive Bid Absolute Rate Loan" means a loan to be made by a Bank pursuant to an Absolute Rate Auction. "Competitive Bid Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Competitive Bid Lending Office by notice to the Borrower and the Agent; provided that any Bank may from time to time by notice to the Borrower and the Agent designate separate Competitive Bid Lending Offices for its Competitive Bid LIBOR Loans, on the one hand, and its Competitive Bid Absolute Rate Loans, on the other hand, in which case all references herein to the Competitive Bid Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Competitive Bid LIBOR Loan" means a loan to be made by a Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01). "Competitive Bid Loan" means a Competitive Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan. "Competitive Bid Margin" has the meaning set forth in Section 2.03(d)(ii)C . "Competitive Bid Quote" means an offer by a Bank, in substantially the form of Exhibit D hereto, to make a Competitive Bid Loan in accordance with Section 2.03. "Competitive Bid Quote Request" means the notice, in substantially the form of Exhibit B hereto, to be delivered by the Borrower in accordance with Section 2.03 in requesting Competitive Bid Quotes. "Consolidated Assets" means at any date the consolidated assets of the Company and its Consolidated Subsidiaries determined as of such date. "Consolidated Earnings Before Interest and Taxes" means, for any fiscal period, the sum of (i) Consolidated Net Income plus (ii) Gross Interest Expense plus (iii) to the extent deducted in determining Consolidated Net Income, provision for taxes on income, all determined on a consolidated basis for the Company and its Consolidated Subsidiaries for such fiscal period. "Consolidated Net Income" means, for any fiscal period, the net income (before preferred and common stock dividends) of the Company and its Consolidated Subsidiaries, determined on a consolidated basis for such fiscal period. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others Guaranteed by such Person. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Derivatives Obligations" of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions, excluding any amounts which the Borrower is entitled to set-off against its obligations under applicable law. "Designated Lender" means, with respect to any Designating Bank, an Eligible Designee designated by it pursuant to Section 11.07(a) as a Designated Lender for purposes of this Agreement. "Designating Bank" means, with respect to each Designated Lender, the Bank that designated such Designated Lender pursuant to Section 11.07(a). "Dollars" and the sign "$" mean lawful money of the United States of America. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City or Boston, Massachusetts are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Agent. "Effective Date" means the date this Agreement becomes effective in accordance with Section 3.01. "Election to Participate" means an Election to Participate substantially in the form of Exhibit G hereto. "Election to Terminate" means an Election to Terminate substantially in the form of Exhibit H hereto. "Eligible Designee" means a special purpose corporation that (i) is organized under the laws of the United States or any state thereof, (ii) is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and (iii) issues (or the parent of which issues) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's. "Eligible Subsidiary" means any Substantially-Owned Consolidated Subsidiary of the Company as to which an Election to Participate shall have been delivered to the Agent and as to which an Election to Terminate shall not have been delivered to the Agent. Each such Election to Participate and Election to Terminate shall be duly executed on behalf of such Substantially-Owned Consolidated Subsidiary and the Company in such number of copies as the Agent may request. The delivery of an Election to Terminate shall not affect any obligation of an Eligible Subsidiary theretofore incurred. The Agent shall promptly give notice to the Banks of the receipt of any Election to Participate or Election to Terminate. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in Dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Agent. "Euro-Dollar Loan" means any Committed Loan in respect of which interest is to be computed on the basis of a Euro-Dollar Rate. "Euro-Dollar Margin" has the meaning set forth in Section 2.07(b). "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07(b) on the basis of a London Interbank Offered Rate. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). "Event of Default" has the meaning set forth in Section 6.01. "Existing Credit Agreement" means the 364-Day Credit Agreement dated as of October 15, 2002, among the Company, the bank parties thereto and JPMorgan Chase Bank, as agent. "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 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 of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to JPMorgan Chase Bank on such day on such transactions as determined by the Agent. "Final Maturity Date" means the first anniversary of the Termination Date or, if such day is not a Euro-Dollar Business Day, the preceding Euro-Dollar Business Day. "Fixed Rate Loans" means Euro-Dollar Loans or Competitive Bid Loans (excluding Competitive Bid LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(b)(ii)) or any combination of the foregoing. "Gross Interest Expense" means, for any fiscal period, the consolidated interest expense of the Company and its Consolidated Subsidiaries for such period (calculated without deducting or otherwise netting consolidated interest income of the Company and its Consolidated Subsidiaries). "Group of Loans" means at any time a group of Loans consisting of (i) all Committed Loans to any single Borrower which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans to any single Borrower having the same Interest Period at such time, provided that, if a Committed Loan of any particular Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions, by "comfort letter" or other similar undertaking of support or otherwise) or (ii) entered into for the purpose of assuring in any other manner the holder of such Debt of the payment thereof or to protect such holder against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Increased Commitments" has the meaning set forth in Section 2.19(a). "Indemnitee" has the meaning set forth in Section 11.03(b). "Interest Period" means: (i) with respect to each Euro-Dollar Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (A) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (B) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to the further proviso below, end on the last Euro-Dollar Business Day of a calendar month; (ii) with respect to each Competitive Bid LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03; provided that: (A) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (B) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to the further proviso below, end on the last Euro-Dollar Business Day of a calendar month; (iii) with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than fifteen days) as the Borrower may elect in accordance with Section 2.03; provided that any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and provided further that: (iv) any Interest Period which begins before the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date; and (v) any Interest Period which would otherwise end after the Final Maturity Date shall end on the Final Maturity Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "LIBOR Auction" means a solicitation of Competitive Bid Quotes setting forth the Competitive Bid Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" and "Loans" mean and include each and every loan made by a Bank under this Agreement. "London Interbank Offered Rate" has the meaning set forth in Section 2.07(b). "Material Debt" means Debt (other than the Loans) of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $50,000,000. "Material Financial Obligations" means a principal amount of Debt and/or payment obligations in respect of Derivatives Obligations of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, exceeding in the aggregate $50,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000. "Material Subsidiary" means any Subsidiary which either (A) is an Eligible Subsidiary or (B) has consolidated assets, together with its Subsidiaries, exceeding 5% of Consolidated Assets at the date of determination of its status hereunder. "Moody's" means Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Notes" means promissory notes of a Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of such Borrower to repay the Loans made to it, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Competitive Bid Borrowing (as defined in Section 2.03(f)). "Notice of Interest Rate Election" has the meaning set forth in Section 2.18. "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 11.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group. "Prime Rate" means the rate of interest publicly announced by JPMorgan Chase Bank in New York City from time to time as its Prime Rate. "Quarterly Date" means the last day of March, June, September and December in each year, commencing December 31, 2003. "Reference Banks" means the principal London offices of Citibank, N.A., Bank of America, N.A. and JPMorgan Chase Bank. "Reference Bank" means any one of such Reference Banks. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Related Agreement" means the Five-Year Credit Agreement dated as of the date hereof among the Borrower, the lenders party thereto and JPMorgan Chase Bank, as administrative agent, as amended and in effect from time to time. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding more than 50% of the aggregate unpaid principal amount of the Loans. "Revolving Credit Loan" means a loan made or to be made by a Bank pursuant to Section 2.01(a). "Revolving Credit Period" means the period from and including the Effective Date to but excluding the Termination Date. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the Company. "Substantially-Owned Consolidated Subsidiary" means any Consolidated Subsidiary not less than 90% of the outstanding shares of each class of capital stock or other ownership interests of which are at the time directly or indirectly owned by the Company. "Term Loan" means a loan made or to be made by a Bank pursuant to Section 2.01(b). "Termination Date" means October 12, 2004, or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Utilization" means, at any date, the percentage equivalent of a fraction (i) the numerator of which is the sum of the aggregate outstanding principal amount of the Loans and the aggregate outstanding principal amount of loans under the Related Agreement on such date and (ii) the denominator of which is the sum of (A) an amount equal to the greater of (x) the aggregate amount of the Commitments and (y) the aggregate outstanding principal amount of the Loans and (B) an amount equal to the greater of (x) the aggregate amount of commitments under the Related Agreement and (y) the aggregate outstanding principal amount of loans under the Related Agreement, in each case on such date and after giving effect to any borrowing or repayment of loans and any increase, reduction or termination of commitments on such date. Section 1.02 . Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then the Company's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks. Section 1.03 . Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to a single Borrower pursuant to Article 2 on a single date and for a single Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments, while a "Competitive Bid Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). Article 2 The Credits Section 2.01 . Commitments to Lend. Revolving Credit Loans. During the Revolving Credit Period, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Company or any Eligible Subsidiary pursuant to this subsection 2.01(a) from time to time in amounts such that the aggregate principal amount of Revolving Credit Loans by such Bank at any one time outstanding to all Borrowers shall not exceed the amount of its Commitment. Within the foregoing limits, a Borrower may borrow under this subsection, prepay Loans to the extent permitted by Section 2.11 and reborrow at any time during the Revolving Credit Period under this subsection 2.01(a). (b) Term Loans. Each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Company or any Eligible Subsidiary on the Termination Date in an aggregate principal amount to all Borrowers up to but not exceeding the amount of its Commitment. (c) Minimum Borrowings. Each Borrowing under this Section shall be in an aggregate principal amount of $15,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Section 2.02 . Notice of Committed Borrowing. The Borrower shall give the Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate Borrowing and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (a) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (b) the aggregate amount of such Borrowing, (c) whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or a Euro-Dollar Rate, and (d) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. Section 2.03 Competitive Bid Borrowings. (a) The Competitive Bid Option. In addition to Committed Borrowings pursuant to Section 2.01, any Borrower may, as set forth in this Section, request the Banks during the Revolving Credit Period to make offers to make Competitive Bid Loans to such Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) Competitive Bid Quote Request. When a Borrower wishes to request offers to make Competitive Bid Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Competitive Bid Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and the Agent shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction, (ii) the aggregate amount of such Borrowing, which shall be $15,000,000 or a larger multiple of $1,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin or a Competitive Bid Absolute Rate. The Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Company and the Agent may agree) of any other Competitive Bid Quote Request. (c) Invitation for Competitive Bid Quotes. Promptly upon receipt of a Competitive Bid Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Competitive Bid Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Competitive Bid Quotes offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this Section. (d) Submission and Contents of Competitive Bid Quotes. (i) Each Bank may submit a Competitive Bid Quote containing an offer or offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by telex or facsimile transmission at its offices referred to in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and the Agent shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Competitive Bid Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour prior to the deadline for the other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and 4, any Competitive Bid Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Competitive Bid Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, (B) the principal amount of the Competitive Bid Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000 (y) may not exceed the principal amount of Competitive Bid Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Competitive Bid Margin") offered for each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Competitive Bid Absolute Rate") offered for each such Competitive Bid Loan, and (E) the identity of the quoting Bank. A Competitive Bid Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Competitive Bid Quotes. (iii) Any Competitive Bid Quote shall be disregarded if it: (A) is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii); (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes; or (D) arrives after the time set forth in subsection(d)(i). (e) Notice to Borrower. The Agent shall promptly notify the Borrower of the terms (x) of any Competitive Bid Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a previous Competitive Bid Quote submitted by such Bank with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Agent unless such subsequent Competitive Bid Quote is submitted solely to correct a manifest error in such former Competitive Bid Quote. The Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Quote Request, (B) the respective principal amounts and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Competitive Bid Loans for which offers in any single Competitive Bid Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and the Agent shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Competitive Bid Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid Quote in whole or in part; provided that: (i) the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Quote Request, (ii) the principal amount of each Competitive Bid Borrowing must be $15,000,000 or a larger multiple of $1,000,000, (iii) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, and (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) Allocation by Agent. If offers are made by two or more Banks with the same Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. Section 2.04 . Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 12:00 Noon (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 11.01. Unless the Agent determines that any applicable condition specified in Article 11.01 has not been satisfied, the Agent will make the funds so received from the Banks available to the Borrower at the Agent's aforesaid address. (c) If any Bank makes a Term Loan hereunder to a Borrower on a day on which such Borrower is to repay all or any part of an outstanding Revolving Credit Loan from such Bank, such Bank shall apply the proceeds of its Term Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed by such Borrower and the amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b), or remitted by such Borrower to the Agent as provided in Section 2.12, as the case may be. (d) Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to 12:00 Noon (New York City time) on the date of such Borrowing) that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. Section 2.05 . Registry; Notes. (a) The Agent shall maintain a register (the "Register") on which it will record the Commitment of each Bank, each Loan made by such Bank and each repayment of any Loan made by such Bank. Any such recordation by the Agent on the Register shall be presumptively correct, absent manifest error. Failure to make any such recordation, or any error in such recordation, shall not affect any Borrower's obligations hereunder. (b) Each Borrower hereby agrees that, promptly upon the request of any Bank at any time, such Borrower shall deliver to such Bank a single Note, in substantially the form of Exhibit A hereto, duly executed by such Borrower and payable to the order of such Bank and representing the obligation of such Borrower to pay the unpaid principal amount of all Loans made to such Borrower by such Bank, with interest as provided herein on the unpaid principal amount from time to time outstanding. (c) Each Bank shall record the date, amount and maturity of each Loan made by it to each Borrower and the date and amount of each payment of principal made by such Borrower with respect thereto, and each Bank receiving a Note pursuant to this Section, if such Bank so elects in connection with any transfer or enforcement of any Note, may endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of such Bank to make any such recordation or endorsement shall not affect the obligations of any Borrower hereunder or under the Notes. Such Bank is hereby irrevocably authorized by each Borrower so to endorse any Note and to attach to and make a part of any Note a continuation of any such schedule as and when required. Section 2.06. Maturity of Loans. (a) Each Revolving Credit Loan shall mature, and the principal amount thereof shall be due and payable, on the Termination Date. (b) Each Term Loan shall mature, and the principal amount thereof shall be due and payable, on the Final Maturity Date. (c) Each Competitive Bid Loan included in any Competitive Bid Borrowing shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to such Borrowing. Section 2.07. Interest Rates. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable at maturity, quarterly in arrears on each Quarterly Date prior to maturity and, with respect to the principal amount of any Base Rate Loan converted to a Euro-Dollar Loan, on the date of such conversion. Any overdue principal of or interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the rate otherwise applicable to Base Rate Loans for such day. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. "Euro-Dollar Margin" means a rate per annum equal to (i) for Revolving Credit Loans (x) for any day on which Utilization exceeds 50%, 0.185% and (y) for any other day, 0.135% and (ii) for Term Loans, 0.31%. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Dollar Loan of such Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. (c) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the higher of (i) the sum of 1% plus the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to the Interest Period for such Loan immediately before such payment was due and (ii) the sum of 1% plus the Euro-Dollar Margin for such day plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to each of the Reference Banks are offered to such Reference Bank in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 1% plus the rate applicable to Base Rate Loans for such day). (d) Subject to Section 8.01(b)(ii), each Competitive Bid LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(b) as if the related Competitive Bid LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Competitive Bid Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Competitive Bid Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Competitive Bid Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Competitive Bid Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the Base Rate for such day. (e) The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (f) Each Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated by this Section. If any Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. Section 2.08. Facility Fee. (a) The Company shall pay to the Agent for the account of the Banks ratably, a facility fee at the rate of 0.040% per annum. Such facility fee shall accrue (i) from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including the Termination Date or such earlier date of termination to but excluding the date the Loans shall be repaid in their entirety, on the daily aggregate outstanding principal amount of the Loans. (b) Payments. Accrued facility fees under this Section shall be payable quarterly on each Quarterly Date, and upon the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). Section 2.09. Termination or Reduction of Commitments. The Company may, upon at least three Domestic Business Days' notice to the Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple thereof, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. Promptly after receiving a notice pursuant to this subsection, the Agent shall notify each Bank of the contents thereof. Section 2.10. Scheduled Termination of Commitments. The Commitments shall terminate on the Termination Date. Section 2.11. Optional Prepayments. (a) Subject in the case of Euro-Dollar Loans to Section 2.13, the Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay any Group of Base Rate Loans (or any Competitive Bid Borrowing bearing interest at the Base Rate pursuant to Section 8.01(b)(ii)) or upon at least three Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $15,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Group (or Borrowing). (b) Except as provided in subsection (a) above, the Borrower may not prepay all or any portion of the principal amount of any Competitive Bid Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. Section 2.12. General Provisions as to Payments. (a) The Borrowers shall make each payment of principal of, and interest on, the Loans and of fees hereunder, without set-off, counterclaim or other deduction, not later than 12:00 Noon (New York City time) on the date when due, in Dollars in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 11.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Competitive Bid Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. Unless the Agent shall have received notice from a Borrower prior to the date on which any payment is due from such Borrower to the Banks hereunder that such Borrower will not make such payment in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that such Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate. Section 2.13. Funding Losses. If a Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(c), or if a Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), 2.11 or 2.18, such Borrower shall reimburse each Bank on demand for any resulting loss or expense incurred by it (or by any existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow, prepay, convert or continue, provided that such Bank shall have delivered to the Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Section 2.14. Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and all facility fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Section 2.15. Judgment Currency. If for the purpose of obtaining judgment in any court it is necessary to convert a sum due from any Borrower hereunder or under any of the Notes in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase Dollars with such other currency at the Agent's New York office on the Domestic Business Day preceding that on which final judgment is given. The obligations of each Borrower in respect of any sum due to any Bank or the Agent hereunder or under any Note shall, notwithstanding any judgment in a currency other than Dollars, be discharged only to the extent that on the Domestic Business Day following receipt by such Bank or the Agent (as the case may be) of any sum adjudged to be so due in such other currency such Bank or the Agent (as the case may be) may in accordance with normal banking procedures purchase Dollars with such other currency; if the amount of Dollars so purchased is less than the sum originally due to such Bank or the Agent, as the case may be, in Dollars, each Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Bank or the Agent, as the case may be, against such loss, and if the amount of Dollars so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the case may be, and (b) any amounts shared with other Banks as a result of allocations of such excess as a disproportionate payment to such Bank under Section 11.04, such Bank or the Agent, as the case may be, agrees to remit such excess to the appropriate Borrower. Section 2.16. Foreign Subsidiary Costs. (a) If the cost to any Bank of making or maintaining any Loan to an Eligible Subsidiary is increased, or the amount of any sum received or receivable by any Bank (or its Applicable Lending Office) is reduced by an amount deemed by such Bank to be material, by reason of the fact that such Eligible Subsidiary is incorporated in, or conducts business in, a jurisdiction outside the United States, such Borrower shall indemnify such Bank for such increased costs or reduction within 15 days after demand by such Bank (with a copy to the Agent and the Company). A certificate of such Bank claiming compensation under this subsection (a) and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. (b) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge that will entitle such Bank to additional compensation pursuant to subsection (a) above and will designate a different Applicable Lending Office, if, in the judgment of such Bank, such designation will avoid the need for, or reduce the amount of, such compensation and will not be otherwise disadvantageous to such Bank. Section 2.17. Regulation D Compensation. (a) Each Bank may require any Borrower to pay, contemporaneously with each payment of interest on the Euro-Dollar Loans to such Borrower, additional interest on the related Euro-Dollar Loan to such Borrower of such Bank at a rate per annum determined by such Bank up to but not exceeding the excess of (i) (A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank Offered Rate. Any Bank wishing to require payment of such additional interest (x) shall so notify such Borrower and the Agent, in which case such additional interest on the Euro-Dollar Loans to such Borrower of such Bank shall be payable to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Dollar Business Days after the giving of such notice, and (y) shall notify such Borrower at least five Euro-Dollar Business Days prior to each date on which interest is payable on the Euro-Dollar Loans to such Borrower of the amount then due it under this Section. Section 2.18. Method of Electing Interest Rates. The Loans included in each Committed Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8 and the last sentence of this subsection (a)), as follows: (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day and (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.12 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Agent not later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $15,000,000 or any larger multiple of $1,000,000. If no such notice is timely received prior to the end of an Interest Period, the Borrower shall be deemed to have elected that all Loans having such Interest Period be converted to Base Rate Loans at the end of such Interest Period. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Euro-Dollar Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Agent shall promptly notify each Bank of the contents thereof and such notice shall not thereafter be revocable by the Borrower. (d) An election by the Borrower to change or continue the rate of interest applicable to any Group of Loans pursuant to this Section shall not constitute a "Borrowing" subject to the provisions of Section 3.02. Section 2.19. Increased Commitments; Additional Banks. (a) Subsequent to the Effective Date (but not more than twice in any calendar year), the Company may, upon at least 30 days' notice to the Agent (which shall promptly provide a copy of such notice to the Banks), propose to increase the aggregate amount of the Commitments by an amount which (i) is a multiple of $50,000,000 or any other amount agreed to by the Company and the Agent and (ii) when combined with the sum of the aggregate amount by which the Commitments have theretofore been increased pursuant to this Section 2.19 and the aggregate amount by which the commitments have been increased pursuant to the corresponding provision of the Related Agreement, does not exceed $287,500,000 (the amount of any such increase, the "Increased Commitments"); provided that no Default shall have occurred and be continuing. Each Bank party to this Agreement at such time shall have the right (but no obligation), for a period of 15 days following receipt of such notice, to elect by notice to the Company and the Agent to increase its Commitment by a principal amount which bears the same ratio to the Increased Commitments as its then Commitment bears to the aggregate Commitments then existing. (b) If any Bank party to this Agreement shall not elect to increase its Commitment pursuant to subsection (a) of this Section, the Company may, within 10 days of the Banks' response, designate one or more of the existing Banks or other financial institutions acceptable to the Agent and the Company (which consent of the Agent shall not be unreasonably withheld) which at the time agree to (i) in the case of any such Person that is an existing Bank, increase its Commitment and (ii) in the case of any other such Person (an "Additional Bank"), become a party to this Agreement, provided that the Commitment of such Additional Bank is not less than $25,000,000. The sum of the increases in the Commitments of the existing Banks pursuant to this subsection (b) plus the Commitments of the Additional Banks shall not in the aggregate exceed the unsubscribed amount of the Increased Commitments. (c) An increase in the aggregate amount of the Commitments pursuant to this Section 2.19 shall become effective upon the receipt by the Agent of an agreement in form and substance satisfactory to the Agent signed by the Company, by each Additional Bank and by each other Bank whose Commitment is to be increased, setting forth the new Commitments of such Banks and setting forth the agreement of each Additional Bank to become a party to this Agreement and to be bound by all the terms and provisions hereof, together with such evidence of appropriate corporate authorization on the part of the Company with respect to the Increased Commitments and such opinions of counsel for the Company with respect to the Increased Commitments as the Agent may reasonably request. (d) Upon any increase in the aggregate amount of the Commitments pursuant to this Section 2.19 that is not a pro rata amount among all Banks, within five Domestic Business Days, in the case of any Group of Base Rate Loans then outstanding, and at the end of the then current Interest Period with respect thereto, in the case of any Group of Euro-Dollar Loans then outstanding, the relevant Borrower shall prepay such Group in its entirety and, to the extent such Borrower elects to do so and subject to the conditions specified in Article 3, such Borrower shall reborrow Committed Loans from the Banks in proportion to their respective Commitments after giving effect to such increase, until such time as all outstanding Committed Loans are held by the Banks in such proportion. Article 3 Conditions Section 3.01 . Effectiveness. This Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 11.05): (a) receipt by the Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it of telegraphic, telex, facsimile transmission or other written confirmation from such party of execution of a counterpart hereof by such party); (b) receipt by the Agent of an opinion of the General Counsel of the Company (or other counsel for the Company reasonably satisfactory to the Agent), substantially in the form of Exhibit E hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (c) receipt by the Agent of an opinion of Davis Polk & Wardwell, special counsel for the Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (d) receipt by the Agent of all documents it may reasonably request relating to the existence of the Company, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent; and (e) receipt by the Agent of evidence satisfactory to it of the payment of all principal and interest on any loans outstanding under, and of all other amounts payable under, the Existing Credit Agreement; provided that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied no later than October 14, 2003. The Agent shall promptly notify the Company and the Banks of the Effective Date, and such notice shall be conclusive and binding on all parties hereto. The Banks that are parties to the Existing Credit Agreement, comprising the "Required Banks" as defined in the Existing Credit Agreement, and the Company agree to eliminate the requirement under Section 2.09 of the Existing Credit Agreement that notice of optional termination of the commitments thereunder be given three Domestic Business Days in advance, and further agree that the commitments under the Existing Credit Agreement shall terminate in their entirety simultaneously with and subject to the effectiveness of this Agreement and that the Company shall be obligated to pay the accrued facility fees thereunder to but excluding the date of such effectiveness. Section 3.02. Borrowings. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) receipt by the Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (b) the fact that, immediately after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (c) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and (d) the fact that the representations and warranties of the Company and the Borrower (if other than the Company) contained in this Agreement (except for the representations and warranties set forth in Sections 4.05 and 4.07 as to any matter which has theretofore been disclosed in writing by the Company to the Banks) shall be true in all material respects on and as of the date of such Borrowing. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Company and the Borrower (if other than the Company) on the date of such Borrowing as to the facts specified in clauses (b), (c) and (d) of this Section. Section 3.03 . First Borrowing by Each Eligible Subsidiary. The obligation of each Bank to make a Loan on the occasion of the first Borrowing by each Eligible Subsidiary is subject to the satisfaction of the following further conditions: (a) receipt by the Agent of an opinion of counsel for such Eligible Subsidiary acceptable to the Agent, substantially in the form of Exhibit I hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (b) receipt by the Agent of all documents which it may reasonably request relating to the existence of such Eligible Subsidiary, the corporate authority for and the validity of the Election to Participate of such Eligible Subsidiary, this Agreement and the Notes of such Eligible Subsidiary, and any other matters relevant thereto, all in form and substance satisfactory to the Agent. The documents referred to in this Section 3.03 shall be delivered to the Agent by an Eligible Subsidiary no later than the date of the first Borrowing by such Eligible Subsidiary. Article 4 Representations and Warranties of the Company The Company represents and warrants that: Section 4.01 . Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Section 4.02 . Corporate and Governmental Authorization; Contravention. The execution, delivery and performance by the Company of this Agreement and its Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. Section 4.03 . Binding Effect. This Agreement constitutes a valid and binding agreement of the Company and its Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Company, in each case enforceable in accordance with their respective terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 4.04 . Financial Information. (a) The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 2002 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by KPMG LLP and set forth in the Company's Annual Report to Shareholders for 2002 incorporated by reference in the Company's 2002 Form 10-K, a copy of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) The unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of June 30, 2003 and the related unaudited consolidated statements of income and cash flows for the six months then ended, set forth in the Company's Latest Form 10-Q, a copy of which has been delivered to each of the Banks, fairly present, on a basis consistent with the financial statements referred to in subsection (a) of this Section, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such six-month period (subject to normal year-end adjustments). Section 4.05 . No Material Adverse Change. Since June 30, 2003, there has been no material adverse change in the business, operations or financial condition of the Company and its Consolidated Subsidiaries, considered as a whole. Section 4.06 . Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, if such failure or amendment has resulted, or there is a reasonable possibility that it could result, in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Section 4.07 . Litigation. Except as disclosed in the Company's 2002 Form 10-K and the Company's Latest Form 10-Q, there is no action, suit, investigation or proceeding pending against, or to the knowledge of the Company threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, operations or financial condition of the Company and its Consolidated Subsidiaries, taken as a whole, or which in any manner draws into question the validity of this Agreement or the Notes. Section 4.08 . Taxes. The Company has filed (or has obtained extensions of the time by which it is required to file) all United States federal income tax returns and all other material tax returns required to be filed by it and has paid all taxes shown due on the returns so filed as well as all other material taxes, assessments and governmental charges which have become due, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. Section 4.09 . Full Disclosure. All information heretofore furnished by the Company to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Company to the Agent or any Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified. The Company has disclosed to the Banks in writing any and all facts which materially and adversely affect or may affect (to the extent the Company can now reasonably foresee), the business, operations or financial condition of the Company and its Consolidated Subsidiaries, taken as a whole, or the ability of the Company to perform its obligations under this Agreement. Article 5 Covenants The Company agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: Section 5.01. Information. The Company will deliver to each of the Banks: (a) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG LLP or other independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter, (ii) the related consolidated statements of income for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter and (iii) the related consolidated statement of cash flows for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in cases (ii) and (iii) in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the principal accounting officer of the Company; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer or the principal accounting officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Section 5.05 on the date of such financial statements and (ii) stating whether there exists on the date of such certificate any Default and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements (i) stating whether anything has come to their attention to cause them to believe that there existed on the date of such statements any Default and (ii) confirming the calculations set forth in the officer's certificate delivered simultaneously therewith pursuant to clause (c) above; (e) forthwith upon the occurrence of any Default, a certificate of the chief financial officer or the principal accounting officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (f) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (g) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Company shall have filed with the Securities and Exchange Commission; (h) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might reasonably constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; or (iv) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement, if such failure or amendment has resulted, or there is a reasonable possibility that it could result, in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code, a certificate of the chief financial officer, the principal accounting officer or the treasurer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; (i) promptly upon any change in the rating by Standard & Poor's Ratings Services or Moody's Investors Service, Inc. of the Company's outstanding public senior unsecured long-term debt securities or the Company's outstanding commercial paper, a notice reporting such change and stating the date on which such change was announced by the relevant rating agency; and (j) from time to time such additional information regarding the business, operations or financial condition of the Company and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request. Information required to be delivered pursuant to clauses 5.01(a), 5.01(b), 5.01(f) or 5.01(g) above shall be deemed to have been delivered on the date on which the Company provides notice to the Banks that such information has been filed with the Securities and Exchange Commission and is available at www.sec.gov. Such notice may be included in a certificate delivered pursuant to clause 5.01(c); provided that the Company shall either deliver paper copies to any Bank which specifically requests such delivery of, or post on IntraLinks/IntraAgency or another relevant website, if any, to which each Bank and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent), the information referred to in clauses 5.01(a), 5.01(b), 5.01(c), 5.01(f) or 5.01(g), further provided that the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Bank 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. Section 5.02 . Maintenance of Property; Insurance. The Company will keep, and will cause each Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted; will maintain, and will cause each Subsidiary to maintain (either in the name of the Company or in such Subsidiary's own name) with financially sound and reputable insurance companies, insurance on all their property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Banks, upon written request from the Agent, such information as may be reasonably requested as to the insurance carried. Section 5.03 . Conduct of Business and Maintenance of Existence. The Company will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business. Section 5.04 . Compliance with Laws. The Company will comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, ERISA and the rules and regulations thereunder) except where the necessity of compliance therewith is contested in good faith by appropriate proceedings. Section 5.05 . Earnings to Interest Expense Ratio. At the end of each fiscal quarter of the Company, the ratio of (x) Consolidated Earnings Before Interest and Taxes for the four fiscal quarters then ended to (y) Gross Interest Expense for the four fiscal quarters then ended will not be less than 6.50:1. Section 5.06 . Negative Pledge. Neither the Company nor any Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date hereof securing Debt outstanding on the date hereof in an aggregate principal amount not exceeding $25,000,000; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition thereof; (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Subsidiary and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Company or a Subsidiary and not created in contemplation of such acquisition; (f) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets; (g) any Lien arising pursuant to any order of attachment or similar legal process arising in connection with court proceedings so long as the execution or other enforcement thereof is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings; (h) Liens incidental to the conduct of its business or the ownership of its assets which (i) do not secure Debt or Derivatives Obligations and (ii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (i) Liens on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Liens may at no time exceed $25,000,000; and (j) Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal amount at any time outstanding not to exceed 5% of Consolidated Assets. Section 5.07 . Consolidations, Mergers and Sales of Assets. The Company will not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any other Person; provided that the Company may merge with a Subsidiary if (A) the Company is the corporation surviving such merger and (B) immediately after giving effect to such merger, no Default shall have occurred and be continuing. Section 5.08 . Material Subsidiary Cash Flow. The Company will not, and will not permit any Material Subsidiary to, enter into any arrangement which restricts the ability of any Material Subsidiary, directly or indirectly, to make funds available to the Company, whether by way of dividend or other distribution, advance or otherwise. Section 5.09 . Use of Proceeds. The proceeds of Loans hereunder will be used by the Borrowers for their general corporate purposes, including without limitation, any purchase, redemption, retirement or acquisition of outstanding shares of capital stock of the Company ("Stock Repurchases"). Except for permitted Stock Repurchases referred to in the immediately preceding sentence, none of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any "margin stock" within the meaning of Regulation U. Article 6 Defaults Section 6.01 . Events of Default. If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) any principal of any Loan shall not be paid when due, or any interest, any fees or any other amount payable hereunder shall not be paid within five days of the due date thereof; (b) the Company shall fail to observe or perform any covenant contained in Sections 5.05 to 5.09, inclusive; (c) any Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after written notice thereof has been given to the Company by the Agent at the request of any Bank; (d) any representation, warranty, certification or statement made or deemed to have been made by any Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment in respect of any Material Debt or any Material Financial Obligations when due or within any applicable grace period; (f) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such Debt or any Person acting on such holder's behalf to accelerate the maturity thereof; (g) the Company or any Material Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Material Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Material Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due (including any approved extensions) an amount or amounts aggregating in excess of $50,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $50,000,000; (j) a judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Company or any Material Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 30 days; or (k) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Company; or, during any two-year period, the individuals who were serving on the board of directors of the Company at the beginning of such period or who were nominated for election or elected to such board during such period with the affirmative vote of at least two-thirds of such individuals still in office cease to constitute a majority of such board; then, and in every such event, the Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate, and (ii) if requested by Banks holding more than 50% of the aggregate unpaid principal amount of the Loans, by notice to the Company declare the Loans (together with accrued interest thereon and all accrued fees and other amounts payable by any Borrower hereunder) to be, and the Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to any Borrower, without any notice to any Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon terminate and the Loans (together with accrued interest thereon and all accrued fees and other amounts payable by any Borrower hereunder) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower. Section 6.02 . Notice of Default. The Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. Article 7 The Agent Section 7.01 . Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. Section 7.02 . Agent and Affiliates. JPMorgan Chase Bank shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and JPMorgan Chase Bank and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or any Subsidiary or affiliate of any Borrower as if it were not the Agent hereunder. Section 7.03 . Action by Agent. The obligations of the Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. Section 7.04 . Consultation with Experts. The Agent may consult with legal counsel (who may be counsel for any Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 7.05 . Liability of Agent. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks (or when expressly required hereby, all the Banks) or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Without limiting the generality of the foregoing, the use of the term "agent" in this Agreement with reference to the 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. Section 7.06 . Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with its role as Agent hereunder or any action taken or omitted by such indemnitees in connection therewith. Section 7.07 . Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. Section 7.08 . Successor Agent. The Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized or licensed under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. Section 7.09 . Agent's Fee. The Company shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Agent. Article 8 Change in Circumstances Section 8.01 . Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Fixed Rate Loans: (a) the Agent is advised by the Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Reference Banks in the London Interbank market for such Interest Period, or (b) in the case of a Euro-Dollar Borrowing, Banks having 50% or more of the aggregate amount of the Commitments advise the Agent that the London Interbank Offered Rate as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Agent shall forthwith give notice thereof to the Borrowers and the Banks, whereupon until the Agent notifies the Borrowers that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to continue or convert outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless a Borrower notifies the Agent at least one Domestic Business Day before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Euro-Dollar Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Competitive Bid LIBOR Borrowing, the Competitive Bid LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. Section 8.02 . Illegality. If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans to any Borrower and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and such Borrower, whereupon until such Bank notifies such Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans to such Borrower, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice is given, each such Euro-Dollar Loan of such Bank then outstanding shall be converted to a Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Section 8.03 . Increased Cost and Reduced Return. If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Competitive Bid Quote, in the case of any Competitive Bid Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any such requirement with respect to which such Bank is entitled to compensation during the relevant Interest Period under Section 2.17), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the London interbank market any other condition affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (b) If any Bank shall have determined that, on or after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency (including any determination by any such authority, central bank or comparable agency that, for purposes of capital adequacy requirements, the Commitments hereunder do not constitute commitments with an original maturity of one year or less, which shall be deemed to be a change in the interpretation and administration of such requirements), has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction. (c) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge, occurring on or after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. Section 8.04 . Taxes. (a) For the purposes of this Section 8.04, the following terms have the following meanings: "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any payment by any Borrower or the Company pursuant to this Agreement or under any Note, and all liabilities with respect thereto, excluding (i) in the case of each Bank and the Agent, taxes imposed on its income, and franchise or similar taxes imposed on it, by a jurisdiction under the laws of which such Bank or the Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in which its Applicable Lending Office is located and (ii) in the case of each Bank, any United States withholding tax imposed on such payments, but only up to the rate (if any) at which United States withholding tax would apply to such payments to such Bank at the time such Bank first becomes a party to this Agreement. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note. (b) Any and all payments by any Borrower or the Company to or for the account of any Bank or the Agent hereunder or under any Note shall be made without deduction for any Taxes or Other Taxes; provided that, if any Borrower or the Company shall be required by law to deduct any Taxes or Other Taxes from any such payments, (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) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) any Borrower or the Company shall make such deductions, (iii) any Borrower or the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) any Borrower or the Company shall furnish to the Agent, at its address referred to in Section 11.01, the original or a certified copy of a receipt evidencing payment thereof. (c) The Company agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be paid within 15 days after such Bank or the Agent (as the case may be) makes demand therefor. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter if requested in writing by the Company (but only so long as such Bank remains lawfully able to do so), shall provide the Company and the Agent with Internal Revenue Service form W-8BEN or W-8ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. (e) For any period with respect to which a Bank has failed to provide the Company or the Agent with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Bank shall not be entitled to indemnification under Section 8.04(b) or 8.04(c) with respect to Taxes imposed by the United States; provided that if a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax becomes subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes. (f) If any Borrower or the Company is required to pay additional amounts to or for the account of any Bank pursuant to this Section, then such Bank will change the jurisdiction of its Applicable Lending Office if, in the judgment of such Bank, such change (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank. Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to any Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) or 8.04 with respect to its Euro-Dollar Loans and a Borrower shall, by at least three Euro-Dollar Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies such Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans to such Borrower which would otherwise be made by such Bank as Euro-Dollar Loans shall be made instead as Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and (b) after each of its Euro-Dollar Loans to such Borrower has been repaid, all payments of principal which would otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans to such Borrower instead. If such Bank notifies the Company that the circumstances giving rise to such notice no longer apply, the principal amount of each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. Article 9 Representations and Warranties of Eligible Subsidiaries Each Eligible Subsidiary shall be deemed by the execution and delivery of its Election to Participate to have represented and warranted as of the date thereof that: Section 9.01 . Corporate Existence and Power. It is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as then conducted. Section 9.02 . Corporate and Governmental Authorization; Contravention. The execution and delivery by it of its Election to Participate and its Notes, and the performance by it of this Agreement and its Notes, are within its corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its certificate of incorporation or by-laws or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or such Eligible Subsidiary or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. Section 9.03 . Binding Effect. This Agreement constitutes a valid and binding agreement of such Eligible Subsidiary and its Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of such Eligible Subsidiary, in each case enforceable in accordance with their respective terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 9.04 . Taxes. Except as disclosed to the Banks in writing prior to the delivery of such Election to Participate, there is no income, stamp or other tax of any country, or any taxing authority thereof or therein, imposed by or in the nature of withholding or otherwise, which is imposed on any payment to be made by such Eligible Subsidiary pursuant hereto or on its Notes, or is imposed on or by virtue of the execution, delivery or enforcement of its Election to Participate, this Agreement or its Notes. Article 10 Guaranty Section 10.01 . The Guaranty. The Company hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to any Eligible Subsidiary pursuant to this Agreement, and the full and punctual payment of all other amounts payable by any Eligible Subsidiary under this Agreement. Upon failure by any Eligible Subsidiary to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. Section 10.02 . Guaranty Unconditional. The obligations of the Company hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Eligible Subsidiary under this Agreement or any Note, by operation of law or otherwise; (ii) any modification or amendment of or supplement to this Agreement or any Note; (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any Eligible Subsidiary under this Agreement or any Note; (iv) any change in the corporate existence, structure or ownership of any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Eligible Subsidiary or its assets, or any resultant release or discharge of the obligations of any Eligible Subsidiary hereunder or under any Note; (v) the existence of any claim, set-off or other rights which the Company may have at any time against any Eligible Subsidiary, the Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against any Eligible Subsidiary for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by any Eligible Subsidiary of the principal of or interest on any Note or any other amount payable by it under this Agreement; or (vii) any other act or omission to act or delay of any kind by any Eligible Subsidiary, the Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the Company's obligations hereunder. Section 10.03 . Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Loans and all other amounts payable by the Company and each Eligible Subsidiary under this Agreement shall have been paid in full. If at any time any payment of any principal of or interest on any Loans or any other amount payable by any Eligible Subsidiary under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. Section 10.04 . Waiver by the Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Eligible Subsidiary or any other Person. Section 10.05 . No Subrogation. If the Company makes any payment under this Article 10 in respect of any obligation of an Eligible Subsidiary, the Company shall not be subrogated to the rights of the holder of such obligation against such Eligible Subsidiary with respect to such payment. Section 10.06 . Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by any Eligible Subsidiary under this Agreement or the Notes is stayed upon the insolvency, bankruptcy or reorganization of such Eligible Subsidiary, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Agent made at the request of the Required Banks. Article 11 Miscellaneous Section 11.01 . Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of any Borrower or the Agent, at its address, facsimile number or telex number set forth on the signature pages hereof (or, in the case of an Eligible Subsidiary, its Election to Participate), (y) in the case of any Bank, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received. Section 11.02 . No Waivers. No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 11.03 . Expenses; Indemnification. (a) The Company shall pay (i) all out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent or any Bank, including (without duplication) the reasonable fees and disbursements of outside counsel and the allocated cost of inside counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Company agrees to indemnify the Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction. Section 11.04 . Sharing of Set-offs. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to the Loans held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest due with respect to the Loans held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Loans of such Borrower held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Loans held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of a Borrower other than its indebtedness hereunder. Each Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Loan, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Borrower in the amount of such participation. Section 11.05 . Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall: (a) unless signed by each affected Bank, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for termination of any Commitment or (iv) change the provisions of Article 10; (b) unless signed by all Banks, change the definition of Required Banks, the percentages specified in Sections 6.01 and 8.01 or this Section 11.05; (c) unless signed by a Designated Bank or its Designating Bank, (i) subject such Designated Bank to any additional obligation, (ii) affect its rights hereunder (unless the rights of all the Banks hereunder are similarly affected) or (iii) change this clause 11.05(d); or (d) unless signed by an Eligible Subsidiary, (w) subject such Eligible Subsidiary to any additional obligation, (x) increase the principal of or rate of interest on any outstanding Loan of such Eligible Subsidiary, (y) accelerate the stated maturity of any outstanding Loan of such Eligible Subsidiary or (z) change this proviso. Section 11.06 . 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, except that no Borrower may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. (b) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Borrowers and the Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrowers and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 11.05(a) without the consent of the Participant. The Borrowers agree that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part (equivalent to an initial Commitment of not less than $5,000,000) of all, of its rights and obligations under this Agreement and its Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit J hereto executed by such Assignee and such transferor Bank, with (and subject to) the subscribed consent of the Agent and (so long as at the time no Event of Default exists) the Company, which consents shall not be unreasonably withheld or delayed; provided that if an Assignee is an affiliate of such transferor Bank or was a Bank immediately prior to such assignment, no such consent shall be required, but the Assignee and the transferor Bank shall provide prompt notice of such assignment, together with information concerning addresses and related information with respect to the Assignee, to the Agent; and provided further that such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Competitive Bid Loans. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrowers shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $3,500. If the Assignee is not incorporated under the laws of the United States or a state thereof, it shall deliver to the Company and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 2.18. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder. (e) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Company's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. (f) If any Reference Bank transfers its Loans to an unaffiliated institution, the Agent shall, in consultation with the Company and with the consent of the Required Banks, appoint another Bank to act as a Reference Bank hereunder. Section 11.07 . Designated Lenders. Subject to the provisions of this subsection (a), any Bank may at any time designate an Eligible Designee to provide all or a portion of the Loans to be made by such Bank pursuant to this Agreement; provided that such designation shall not be effective unless the Company and the Agent consent thereto (which consents shall not be unreasonably withheld). When a Bank and its Eligible Designee shall have signed an agreement substantially in the form of Exhibit K hereto (a "Designation Agreement") and the Company and the Agent shall have signed their respective consents thereto, such Eligible Designee shall become a Designated Lender for purposes of this Agreement. The Designating Bank shall thereafter have the right to permit such Designated Lender to provide all or a portion of the Loans to be made by such Designating Bank pursuant to Section 2.01 or 2.03, and the making of such Loans or portion thereof shall satisfy the obligation of the Designating Bank to the same extent, and as if, such Loans or portion thereof were made by the Designating Bank. As to any Loans or portion thereof made by it, each Designated Lender shall have all the rights that a Bank making such Loans or portion thereof would have had under this Agreement and otherwise; provided that (x) its voting rights under this Agreement shall be exercised solely by its Designating Bank and (y) its Designating Bank shall remain solely responsible to the other parties hereto for the performance of such Designated Lender's obligations under this Agreement, including its obligations in respect of the Loans or portion thereof made by it. No additional Note shall be required to evidence the Loans or portion thereof made by a Designated Lender; and the Designating Bank shall be deemed to hold its Note as agent for its Designated Lender to the extent of the Loans or portion thereof funded by such Designated Lender. Each Designating Bank shall act as agent for its Designated Lender and give and receive notices and other communications on its behalf. Any payments for the account of any Designated Lender shall be paid to its Designating Bank as agent for such Designated Lender and neither the Company nor the Agent shall be responsible for any Designating Bank's application of such payments. In addition, any Designated Lender may, with notice to (but without the prior written consent of) the Company and the Agent, (i) assign all or portions of its interest in any Loans to its Designating Bank or to any financial institutions consented to by the Company and the Agent that provide liquidity and/or credit facilities to or for the account of such Designated Lender to support the funding of Loans or portions thereof made by it and (ii) disclose on a confidential basis any non-public information relating to its Loans or portions thereof to any rating agency, commercial paper dealer or provider of any guarantee, surety, credit or liquidity enhancement to such Designated Lender. (b) Each party to this Agreement agrees that it will not institute against, or join any other person in instituting against, any Designated Lender any bankruptcy, insolvency, reorganization or other similar proceeding under any federal or state bankruptcy or similar law, for one year and a day after all outstanding senior indebtedness of such Designated Lender is paid in full. The Designating Bank for each Designated Lender agrees to indemnify, save, and hold harmless each other party hereto for any loss, cost, damage and expense arising out of its inability to institute any such proceeding against such Designated Lender. This subsection (b) shall survive the termination of this Agreement. Section 11.08 . Collateral. Each of the Banks represents to the Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. Section 11.09 . Governing Law; Submission to Jurisdiction; Service of Process. This Agreement, each Election to Participate, each Election to Terminate and each Note shall be governed by and construed in accordance with the laws of the State of New York. Each Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each Borrower hereby appoints CT Corporation System its authorized agent to accept and acknowledge service of any and all processes which may be served in any suit, action or proceeding of the nature referred to in this Section 11.09 and consents to process being served in any such suit, action or proceeding upon CT Corporation System in any manner or by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to such Borrower's address referred to in Section 11.01; and (d) agrees that such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to it. A copy of any summons or complaint served on an Eligible Subsidiary pursuant to the foregoing shall be sent to the Company by registered or certified mail. Each Eligible Subsidiary represents and warrants that CT Corporation System has agreed in writing to accept such appointment and that true copies of such acceptance will be furnished to the Agent prior to or concurrently with delivery of such Eligible Subsidiary's Election to Participate. Nothing in this Section 11.09 shall affect the right of any Bank to serve process in any manner permitted by law or limit the right of any Bank to bring proceedings against the Company or any Eligible Subsidiary in the courts of any jurisdiction or jurisdictions. Section 11.10 . Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. Section 11.11 . WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Section 11.12 . Confidentiality. The Agent and each Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any 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 any agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Company and its obligations, (g) with the consent of the Company or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent or any Bank on a nonconfidential basis from a source other than the Company. For the purposes of this Section, "Information" means all information received from the Company relating to the Company or its business, other than any such information that is available to the Agent or any Bank on a nonconfidential basis prior to disclosure by the Company; provided that, in the case of information received from the Company after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, any party hereto (and any employee, representative or other agent of any party hereto) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and the U.S. federal income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. However, no disclosure of any information relating to such tax treatment or tax structure may be made to the extent nondisclosure is reasonably necessary in order to comply with applicable securities laws. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE GILLETTE COMPANY By: ---------------------------------------------------- Name: Title: Address: Prudential Tower Building Suite 4800, Boston, MA 02199 Facsimile Number: (617) 421-7699 JPMORGAN CHASE BANK, as Agent By: ---------------------------------------------------- Name: Title: Address: Loan & Agency Services 1111 Fannin, 10th Floor Houston, Texas 77002 Facsimile Number: (713) 750-2452 [NAME OF BANK] By: ---------------------------------------------------- Name: Title: COMMITMENT SCHEDULE BANK COMMITMENT JPMorgan Chase Bank $78,750,000 ABN AMRO Bank N.V. $63,750,000 Bank of America, N.A. $63,750,000 Bank One NA $62,750,000 HSBC Bank USA $62,750,000 Citicorp USA, Inc. $62,750,000 Deutsche Bank AG, New York Branch $62,750,000 Banco Santander Central Hispano, S.A. New York $33,750,000 Fleet National Bank $33,750,000 ING Luxembourg S.A. $33,750,000 Banca Intesa S.p.A., New York Branch $33,750,000 Merrill Lynch Bank USA $33,750,000 Morgan Stanley Bank $33,750,000 Societe Generale $33,750,000 Sumitomo Mitsui Banking Corporation $33,750,000 Svenska Handelsbanken AB $33,750,000 UBS Loan Finance LLC $33,750,000 The Bank of New York $26,250,000 William Street Commitment Corporation $18,750,000 Mellon Bank, N.A. $18,750,000 Total: $862,500,000 EXHIBIT A NOTE New York, New York , 200_ For value received, [name of Borrower], a [jurisdiction of incorporation] corporation (the "Borrower"), promises to pay to the order of __________(the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the maturity date provided for in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of JPMorgan Chase Bank, 270 Park Avenue, New York, New York. All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the 364-Day Credit Agreement dated as of October 14, 2003 among The Gillette Company, the Banks listed on the signature pages thereof and JPMorgan Chase Bank, as Agent (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. The Gillette Company has, pursuant to the provisions of the Credit Agreement, unconditionally guaranteed the payment in full of the principal of and interest on this note.* [NAME OF BORROWER] By: ---------------------------------------------------- Title:
Note (cont'd) LOANS AND PAYMENTS OF PRINCIPAL Amount of Date Amount of Loan Type of Loan Principal Repaid Maturity Date Notation Made By - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
EXHIBIT B Form of Competitive Bid Quote Request [Date] To: JPMorgan Chase Bank (the "Agent") From: [Name of Borrower] Re: 364-Day Credit Agreement (the "Credit Agreement") dated as of October 14, 2003 among The Gillette Company, the Banks listed on the signature pages thereof and the Agent We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Competitive Bid Quotes for the following proposed Competitive Bid Borrowing(s): Date of Borrowing: __________________ Principal Amount* Interest Period ** Maturity Date $ Such Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms used herein have the meanings assigned to them in the Credit Agreement. [NAME OF BORROWER] By: ---------------------------------------------------- Title: *Amo9unt must be $15,000,000 or a larger multiple of $1,000,000. ** Not less than one month (LIBOR Auction) or not less than 15 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. EXHIBIT C Form of Invitation for Competitive Bid Quotes To: [Name of Bank] Re: Invitation for Competitive Bid Quotes to [Name of Borrower] (the "Borrower") Pursuant to Section 2.03 of the 364-Day Credit Agreement dated as of October 14, 2003 among The Gillette Company, the Banks parties thereto and the undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to submit Competitive Bid Quotes to the Borrower for the following proposed Competitive Bid Borrowing(s): Date of Borrowing: __________________ Principal Amount Interest Period Maturity Date $ Such Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.] (New York City time) on [date]. JPMORGAN CHASE BANK By: ---------------------------------------------------- Authorized Officer EXHIBIT D Form of Competitive Bid Quote To: JPMorgan Chase Bank, as Agent Re: Competitive Bid Quote to [Name of Borrower] (the "Borrower") In response to your invitation on behalf of the Borrower dated _____________, 20__, we hereby make the following Competitive Bid Quote on the following terms: 1. Quoting Bank: ____________________________ 2. Person to contact at Quoting Bank:________________________ 3. Date of Borrowing: ____________________* 4. We hereby offer to make Competitive Bid Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Competitive Bid [Absolute Principal Amount** Interest Period*** [Margin]**** Rate]***** $ - ------------------------- *As specified in the related Invitation. **Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000. ***Not less than one month or not less than 15 days, as specified in the related invitation. No more than five bids are permitted for each Interest Period. ****Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". *****Specify rate of interest per annum (to the nearest 1/10,000 of 1%). [Provided, that the aggregate principal amount of Competitive Bid Loans for which the above offers may be accepted shall not exceed $____________.]** We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the 364-Day Credit Agreement dated as of October 14, 2003 among The Gillette Company, the Banks listed on the signature pages thereof and yourselves, as Agent, irrevocably obligates us to make the Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated:_______________ By: ____________________ Authorized Officer EXHIBIT E OPINION OF COUNSEL FOR THE COMPANY [Effective Date] To the Banks and the Agent Referred to Below c/o JPMorgan Chase Bank, as Agent 270 Park Avenue New York, New York 10017 Dear Sirs: I am Deputy General Counsel of The Gillette Company (the "Company"), and I am rendering this opinion pursuant to Section 3.01(b) of the 364-Day Credit Agreement dated as of October 14, 2003 among the Company, the banks parties thereto and JPMorgan Chase Bank, as Agent (the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined. I have examined or caused to be examined by counsel retained by or on the staff of the Company, among other things, originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted or have had conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. I am admitted to practice in The Commonwealth of Massachusetts. No opinion is expressed herein with respect to or as to the effect of any laws other than the laws of The Commonwealth of Massachusetts, the federal laws of the United States of America and the General Corporation Law of the State of Delaware. Upon the basis of the foregoing, I am of the opinion that: 1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 2. The execution, delivery and performance by the Company of the Credit Agreement and the Notes issued by it are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company and known to me or, to the best of my knowledge, result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. 3. The provision in Section 11.09 of the Credit Agreement that the Credit Agreement and each Note shall be construed in accordance with and governed by the law of the State of New York is a valid choice of law provision under Massachusetts law and should be respected by a court sitting in Massachusetts. 4. If a court sitting in Massachusetts were to apply Massachusetts law as the law governing the Credit Agreement and the Notes, the Credit Agreement would constitute a valid and binding agreement of the Company and the Notes, when executed and delivered, would constitute valid and binding obligations of the Company, in each case enforceable in accordance with their respective terms. 5. Except as disclosed in the Company's 2002 Form 10-K and the Company's Latest Form 10-Q, there is no action, suit or proceeding pending against, or to the best of my knowledge threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official, in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, operations or financial condition of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of the Credit Agreement or the Notes. My opinion in paragraph 4 above as to the enforceability of the Credit Agreement and the Notes issued by the Company is subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights in general, usury laws and the general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). With respect to the foregoing, I express no opinion, however, as to the enforceability of Section 11.03(b) of the Credit Agreement to the extent the rights to indemnification provided for therein are violative of any law, rule or regulation (including any federal or state securities law, rule or regulation) or public policy. To the extent that the obligations of the Company may be dependent upon such matters, I assume for purposes of this opinion that each Bank is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; and that the Credit Agreement has been duly authorized, executed and delivered by the Banks and constitutes the legal, valid and binding obligation of the Banks, enforceable against the Banks in accordance with its terms. I do not express any opinion as to the effect of the compliance by any of the Banks with any state or federal laws or as to the regulatory status or nature of the business of any of the Banks. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without my prior written consent. Very truly yours, EXHIBIT F OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE AGENT [Effective Date] To the Banks and the Agent Referred to Below c/o JPMorgan Chase Bank, as Agent 270 Park Avenue New York, New York 10017 Dear Sirs: We have participated in the preparation of the 364-Day Credit Agreement (the "Credit Agreement") dated as of October 14, 2003 among The Gillette Company, a Delaware corporation (the "Company"), the Banks parties thereto (the "Banks") and JPMorgan Chase Bank, as Agent (the "Agent"), and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, we are of the opinion that: 1. The execution, delivery and performance by the Company of the Credit Agreement and its Notes are within the Company's corporate powers and have been duly authorized by all necessary corporate action. 2. The Credit Agreement constitutes a valid and binding agreement of the Company and each Note issued by it constitutes a valid and binding obligation of the Company, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York, the federal laws of the United States of America and the General Corporation Law of the State of Delaware. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Bank is located which limits the rate of interest that such Bank may charge or collect. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without our prior written consent. Very truly yours, EXHIBIT G FORM OF ELECTION TO PARTICIPATE [Date] JPMORGAN CHASE BANK, as Agent for the Banks named in the 364-Day Credit Agreement dated as of October 14, 2003 among The Gillette Company, such Banks and such Agent (as amended from time to time, the "Credit Agreement") Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [name of Eligible Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to be an Eligible Subsidiary for purposes of the Credit Agreement, effective from the date hereof until an Election to Terminate shall have been delivered on behalf of the undersigned in accordance with the Credit Agreement. The undersigned confirms that the representations and warranties set forth in Article 9 of the Credit Agreement are true and correct as to the undersigned as of the date hereof, and the undersigned hereby agrees to perform all the obligations of an Eligible Subsidiary under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Sections 11.09 and 11.11 thereof, as if the undersigned were a signatory party thereto. [Tax disclosure pursuant to Section 9.04, if any] The address to which all notices to the undersigned Eligible Subsidiary under the Credit Agreement should be directed is: . This instrument shall be construed in accordance with and governed by the laws of the State of New York. Very truly yours, [NAME OF ELIGIBLE SUBSIDIARY] By: ------------------------------------------- Title: The undersigned hereby confirms that [name of Eligible Subsidiary] is an Eligible Subsidiary for purposes of the Credit Agreement described above. THE GILLETTE COMPANY By: ------------------------------------------- Title: Receipt of the above Election to Participate is hereby acknowledged on and as of the date set forth above. JPMORGAN CHASE BANK, as Agent By: ------------------------------------------- Title: EXHIBIT H FORM OF ELECTION TO TERMINATE [Date] JPMORGAN CHASE BANK, as Agent for the Banks named in the 364-Day Credit Agreement dated as of October 14, 2003 among The Gillette Company, such Banks and such Agent (as amended from time to time, the "Credit Agreement") Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [name of Eligible Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to terminate its status as an Eligible Subsidiary for purposes of the Credit Agreement, effective as of the date hereof. The undersigned hereby represents and warrants that all principal and interest on all Notes of the undersigned and all other amounts payable by the undersigned pursuant to the Credit Agreement have been paid in full on or prior to the date hereof. Notwithstanding the foregoing, this Election to Terminate shall not affect any obligation of the undersigned under the Credit Agreement or under any Note heretofore incurred. This instrument shall be construed in accordance with and governed by the laws of the State of New York. Very truly yours, [NAME OF ELIGIBLE SUBSIDIARY] By: ------------------------------------------- Title: The undersigned hereby confirms that the status of [name of Eligible Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement described above is terminated as of the date hereof. THE GILLETTE COMPANY By: ------------------------------------------- Title: Receipt of the above Election to Terminate is hereby acknowledged on and as of the date set forth above. JPMORGAN CHASE BANK, as Agent By: ------------------------------------------- Title: EXHIBIT I OPINION OF COUNSEL FOR THE BORROWER (BORROWINGS BY ELIGIBLE SUBSIDIARIES) [date] To the Banks and the Agent Referred to Below c/o JPMorgan Chase Bank, as Agent 270 Park Avenue New York, New York 10017 Dear Sirs: I am counsel to [name of Eligible Subsidiary, jurisdiction of incorporation] (the "Borrower") and give this opinion pursuant to Section 3.03(a) of the 364-Day Credit Agreement (as amended to the date hereof, the "Credit Agreement") dated as of October 14, 2003 among The Gillette Company (the "Company"), the banks parties thereto and JPMorgan Chase Bank, as Agent. Terms defined in the Credit Agreement are used herein as therein defined. I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, I am of the opinion that: 1. The Borrower is a corporation validly existing and in good standing under the laws of [jurisdiction of incorporation] and is a Substantially-Owned Consolidated Subsidiary of the Company. 2. The execution and delivery by the Borrower of its Election to Participate and its Notes and the performance by the Borrower of the Credit Agreement and its Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower. 3. The execution and delivery by the Borrower of its Election to Participate and its Notes and the performance by the Borrower of the Credit Agreement and its Notes do not contravene, or constitute a default under, any provision of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Subsidiaries and known to me or, to the best of my knowledge, result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries.* 4. The Credit Agreement constitutes a valid and binding agreement of the Borrower and its Notes constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Very truly yours, *The opinion in this paragraph may be given by Counsel for the Company. EXHIBIT J ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of _________, 200_ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), [THE GILLETTE COMPANY (the "Company") and JPMORGAN CHASE BANK, as Agent (the "Agent").] W I T N E S S E T H WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the 364-Day Credit Agreement dated as of October 14, 2003 among the Company, the Assignor and the other Banks party thereto, as Banks, and the Agent (as amended and in effect on the date hereof, the "Credit Agreement"); WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans in an aggregate principal amount at any time outstanding not to exceed $__________; WHEREAS, Committed Loans made by the Assignor under the Credit Agreement in the aggregate principal amount of $__________ are outstanding at the date hereof; and WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of [a portion of] its Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"), together with [a corresponding portion of] its outstanding Committed Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: Section 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. Section 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Committed Loans made by the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, the Company and the Agent and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor. Section 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.* It is understood that commitment and/or facility fees accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. Section 4. Consent of the Company and the Agent. This Agreement is conditioned upon the consent of the Company and the Agent pursuant to Section 11.06(c) of the Credit Agreement. The execution of this Agreement by the Company and the Agent is evidence of this consent. Pursuant to Section 11.06(c) the Borrower agrees to execute and deliver a Note [and to cause each Eligible Subsidiary to execute and deliver a Note] payable to the order of the Assignee to evidence the assignment and assumption provided for herein.]** Section 5. Non-reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of any Borrower, or the validity and enforceability of the obligations of any Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrowers. - ------------------------------- *Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Asignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum. **Consent is required if the Asignee is not an affiliate of the Assignor and was not a Bank immediately prior to the assignment. Consent of the Company is not required if an Event of Default exists. Section 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Section 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By: ------------------------------------------- Title: [ASSIGNEE] By: ------------------------------------------- Title: [THE GILLETTE COMPANY] By: ------------------------------------------- Title: JPMORGAN CHASE BANK, as Agent By: ------------------------------------------- Title: EXHIBIT K DESIGNATION AGREEMENT dated as of ________________, _____ Reference is made to the 364-Day Credit Agreement dated as of October 14, 2003 (as amended from time to time, the "Credit Agreement") among THE GILLETTE COMPANY, a Delaware corporation (the "Company"), the Lenders party thereto, JPMORGAN CHASE BANK, as Agent (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. _________________ (the "Designator") and ________________ (the "Designee") agree as follows: 1. The Designator designates the Designee as its Designated Lender under the Credit Agreement and the Designee accepts such designation. 2. The Designator makes no representations or warranties and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Designee (i) confirms that it is an Eligible Designee; (ii) appoints and authorizes the Designator as its administrative agent and attorney-in-fact and grants the Designator an irrevocable power of attorney to receive payments made for the benefit of the Designee under the Credit Agreement and to deliver and receive all communications and notices under the Credit Agreement, if any, that the Designee is obligated to deliver or has the right to receive thereunder; (iii) acknowledges that the Designator retains the sole right and responsibility to vote under the Credit Agreement, including, without limitation, the right to approve any amendment or waiver of any provision of the Credit Agreement, and (iv) agrees that the Designee shall be bound by all such votes, approvals, amendments and waivers and all other agreements of the Designator pursuant to or in connection with the Credit Agreement, all subject to Section 11.05(b) of the Credit Agreement. 4. The Designee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Article 4 or delivered pursuant to Article 5 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement and (ii) agrees that it will, independently and without reliance upon the Agent, the Designator or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action it may be permitted to take under the Credit Agreement. 5. Following the execution of this Designation Agreement by the Designator and the Designee and the consent hereto by the Company, it will be delivered to the Agent for its consent. This Designation Agreement shall become effective when the Agent consents hereto or on any later date specified on the signature page hereof. 6. Upon the effectiveness hereof, the Designee shall have the right to make Loans or portions thereof as a Bank pursuant to Section 2.01 or 2.03 of the Credit Agreement and the rights of a Bank related thereto. The making of any such Loans or portions thereof by the Designee shall satisfy the obligations of the Designator under the Credit Agreement to the same extent, and as if, such Loans or portions thereof were made by the Designator. 7. This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties have caused this Designation Agreement to be executed by their respective officers hereunto duly authorized, as of the date first above written. Effective Date:______ , ____ [NAME OF DESIGNATOR] By: ------------------------------------------- Name: Title: [NAME OF DESIGNEE] By: ------------------------------------------- Name: Title: The undersigned consent to the foregoing designation. [NAME OF BORROWER] By: ------------------------------------------- Name: Title: [NAME OF ADMINISTRATIVE AGENT], as Administrative Agent By: ------------------------------------------- Name: Title: EX-10 5 ex10iii_093003-10q.txt EXHIBIT 10.3 EXHIBIT 10.3 EXECUTION COPY $287,500,000 FIVE-YEAR CREDIT AGREEMENT dated as of October 14, 2003 among The Gillette Company, The Banks Listed Herein and JPMorgan Chase Bank, as Agent -------------------- J.P. Morgan Securities Inc., Lead Arranger and Sole Bookrunner Table of Contents ------------------------------ Page ARTICLE 1 DEFINITIONS Section 1.01. Definitions................................................1 - -------------------------- Section 1.02. Accounting Terms and Determinations.......................12 - -------------------------------------------------- Section 1.03. Types of Borrowings.......................................12 - ---------------------------------- ARTICLE 2 THE CREDITS Section 2.01. Commitments to Lend.......................................12 - ---------------------------------- Section 2.02. Notice of Committed Borrowing.............................13 - -------------------------------------------- Section 2.03. Competitive Bid Borrowings................................13 - ------------------------------------------ Section 2.04. Notice to Banks; Funding of Loans.........................17 - ------------------------------------------------- Section 2.05. Registry; Notes...........................................18 - ------------------------------ Section 2.06. Maturity of Loans.........................................18 - -------------------------------- Section 2.07. Interest Rates............................................19 - ----------------------------- Section 2.08. Facility Fee..............................................20 - --------------------------- Section 2.09. Termination or Reduction of Commitments...................21 - ------------------------------------------------------ Section 2.10. Scheduled Termination of Commitments......................21 - --------------------------------------------------- Section 2.11. Optional Prepayments......................................21 - ----------------------------------- Section 2.12. General Provisions as to Payments.........................21 - ------------------------------------------------ Section 2.13. Funding Losses............................................22 - ----------------------------- Section 2.14. Computation of Interest and Fees..........................22 - ----------------------------------------------- Section 2.15. Judgment Currency.........................................23 - -------------------------------- Section 2.16. Foreign Subsidiary Costs..................................23 - --------------------------------------- Section 2.17. Regulation D Compensation.................................24 - ---------------------------------------- Section 2.18. Method of Electing Interest Rates.........................24 - ------------------------------------------------ Section 2.19. Increased Commitments; Additional Banks...................25 - ------------------------------------------------------ ARTICLE 3 CONDITIONS Section 3.01. Effectiveness.............................................27 - ---------------------------- Section 3.02. Borrowings................................................28 - ------------------------- Section 3.03. First Borrowing by Each Eligible Subsidiary...............28 - ---------------------------------------------------------- ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY Section 4.01. Corporate Existence and Power...............................29 - -------------------------------------------- Section 4.02. Corporate and Governmental Authorization; Contravention.....29 - ---------------------------------------------------------------------- Section 4.03. Binding Effect..............................................29 - ----------------------------- Section 4.04. Financial Information.......................................29 - ------------------------------------ Section 4.05. No Material Adverse Change..................................30 - ----------------------------------------- Section 4.06. Compliance with ERISA.......................................30 - ------------------------------------ Section 4.07. Litigation..................................................30 - ------------------------- Section 4.08. Taxes.......................................................30 - -------------------- Section 4.09. Full Disclosure.............................................31 - ------------------------------ ARTICLE 5 COVENANTS Section 5.01. Information.................................................31 - -------------------------- Section 5.02. Maintenance of Property; Insurance..........................33 - ------------------------------------------------- Section 5.03. Conduct of Business and Maintenance of Existence............34 - --------------------------------------------------------------- Section 5.04. Compliance with Laws........................................34 - ----------------------------------- Section 5.05. Earnings to Interest Expense Ratio..........................34 - ------------------------------------------------- Section 5.06. Negative Pledge.............................................34 - ------------------------------ Section 5.07. Consolidations, Mergers and Sales of Assets.................35 - ---------------------------------------------------------- Section 5.08. Material Subsidiary Cash Flow...............................35 - -------------------------------------------- Section 5.09. Use of Proceeds.............................................35 - ------------------------------ ARTICLE 6 DEFAULTS Section 6.01. Events of Default...........................................35 - -------------------------------- Section 6.02. Notice of Default...........................................38 - -------------------------------- ARTICLE 7 THE AGENT Section 7.01. Appointment and Authorization...............................38 - -------------------------------------------- Section 7.02. Agent and Affiliates........................................38 - ----------------------------------- Section 7.03. Action by Agent.............................................38 - ------------------------------ Section 7.04. Consultation with Experts...................................38 - ---------------------------------------- Section 7.05. Liability of Agent..........................................38 - --------------------------------- Section 7.06. Indemnification.............................................39 - ------------------------------ Section 7.07. Credit Decision.............................................39 - ------------------------------ Section 7.08. Successor Agent.............................................39 - ------------------------------ Section 7.09. Agent's Fee.................................................40 - -------------------------- ARTICLE 8 CHANGE IN CIRCUMSTANCES Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair....40 - ----------------------------------------------------------------------- Section 8.02. Illegality..................................................40 - ------------------------- Section 8.03. Increased Cost and Reduced Return...........................41 - ------------------------------------------------ Section 8.04. Taxes.......................................................42 - -------------------- Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans...44 - ------------------------------------------------------------------------ ARTICLE 9 REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES Section 9.01. Corporate Existence and Power...............................45 - -------------------------------------------- Section 9.02. Corporate and Governmental Authorization; Contravention.....45 - ---------------------------------------------------------------------- Section 9.03. Binding Effect..............................................45 - ----------------------------- Section 9.04. Taxes.......................................................45 - -------------------- ARTICLE 10 GUARANTY Section 10.01. The Guaranty................................................45 - ---------------------------- Section 10.02. Guaranty Unconditional......................................46 - -------------------------------------- Section 10.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances......................................46 Section 10.04. Waiver by the Company.......................................47 - ------------------------------------- Section 10.05. No Subrogation..............................................47 - ------------------------------ Section 10.06. Stay of Acceleration........................................47 - ------------------------------------ ARTICLE 11 MISCELLANEOUS Section 11.01. Notices.....................................................47 - ----------------------- Section 11.02. No Waivers..................................................48 - -------------------------- Section 11.03. Expenses; Indemnification...................................48 - ----------------------------------------- Section 11.04. Sharing of Set-offs.........................................48 - ----------------------------------- Section 11.05. Amendments and Waivers......................................49 - -------------------------------------- Section 11.06. Successors and Assigns......................................49 - -------------------------------------- Section 11.07. Designated Lenders..........................................51 - ---------------------------------- Section 11.08. Collateral..................................................52 - -------------------------- Section 11.09. Governing Law; Submission to Jurisdiction; Service of Process..........................................................52 Section 11.10. Counterparts; Integration...................................53 - ----------------------------------------- Section 11.11. WAIVER OF JURY TRIAL........................................53 - ------------------------------------ Section 11.12. Confidentiality.............................................53 - ------------------------------- COMMITMENT SCHEDULE PRICING SCHEDULE EXHIBIT A.........- Note EXHIBIT B.........- Competitive Bid Quote Request EXHIBIT C.........- Invitation for Competitive Bid Quotes EXHIBIT D.........- Competitive Bid Quote EXHIBIT E.........- Opinion of Counsel for the Company EXHIBIT F ........- Opinion of Special Counsel for the Agent EXHIBIT G.........- Election to Participate EXHIBIT H.........- Election to Terminate EXHIBIT I.........- Opinion of Counsel for an Eligible Subsidiary EXHIBIT J.........- Assignment and Assumption Agreement EXHIBIT K.........- Designation Agreement CREDIT AGREEMENT AGREEMENT dated as of October 14, 2003 among THE GILLETTE COMPANY, the BANKS listed on the signature pages hereof and JPMORGAN CHASE BANK, as Agent. The parties hereto agree as follows: Article 1......... DEFINITIONS Section 1.01....... Definitions. The following terms, as used herein, have the following meanings: "Absolute Rate Auction" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Absolute Rates pursuant to Section 2.03. "Additional Bank" has the meaning set forth in Section 2.19(b). "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent duly completed by such Bank. "Agent" means JPMorgan Chase Bank in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Competitive Bid Loans, its Competitive Bid Lending Office. "Assignee" has the meaning set forth in Section 11.06(c). "Bank" means each bank or other financial institution listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 11.06(c), and their respective successors. "Bank" includes each Additional Bank which becomes a Bank pursuant to Section 2.19. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 0.50% plus the Federal Funds Rate for such day. "Base Rate Loan" means a Committed Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group and not excepted by Section 4(b) of ERISA. "Borrower" means the Company or any Eligible Subsidiary, as the context may require, and their respective successors, and "Borrowers" means all of the foregoing. "Borrowing" has the meaning set forth in Section 1.03. "Commitment" means (i) with respect to each Bank listed on the Commitment Schedule, the amount set forth opposite the name of such Bank on the Commitment Schedule and (ii) with respect to any Assignee, the amount of the transferor Bank's Commitment assigned to it pursuant to Section 11.06(c), in each case as such amount may be changed from time to time pursuant to Section 2.09 or 11.06(c). "Commitment" includes, with respect to each Additional Bank which becomes a Bank pursuant to Section 2.19, the amount of the Commitment thereby assumed by it, in each case, as such amount may be changed from time to time pursuant to Sections 2.08 and 2.19. "Commitment Schedule" means the Commitment Schedule attached hereto. "Committed Loan" means a loan made by a Bank pursuant to Section 2.01; provided that, if any such loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term Committed Loan shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Company" means The Gillette Company, a Delaware corporation, and its successors. "Company's Latest Form 10-Q" means the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Company's 2002 Form 10-K" means the Company's annual report on Form 10-K for 2002, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Competitive Bid Absolute Rate" has the meaning set forth in Section 2.03. "Competitive Bid Absolute Rate Loan" means a loan to be made by a Bank pursuant to an Absolute Rate Auction. "Competitive Bid Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Competitive Bid Lending Office by notice to the Borrower and the Agent; provided that any Bank may from time to time by notice to the Borrower and the Agent designate separate Competitive Bid Lending Offices for its Competitive Bid LIBOR Loans, on the one hand, and its Competitive Bid Absolute Rate Loans, on the other hand, in which case all references herein to the Competitive Bid Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Competitive Bid LIBOR Loan" means a loan to be made by a Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01). "Competitive Bid Loan" means a Competitive Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan. "Competitive Bid Margin" has the meaning set forth in Section 2.03(d)(ii)C . "Competitive Bid Quote" means an offer by a Bank, in substantially the form of Exhibit D hereto, to make a Competitive Bid Loan in accordance with Section 2.03. "Competitive Bid Quote Request" means the notice, in substantially the form of Exhibit B hereto, to be delivered by the Borrower in accordance with Section 2.03 in requesting Competitive Bid Quotes. "Consolidated Assets" means at any date the consolidated assets of the Company and its Consolidated Subsidiaries determined as of such date. "Consolidated Earnings Before Interest and Taxes" means, for any fiscal period, the sum of (i) Consolidated Net Income plus (ii) Gross Interest Expense plus (iii) to the extent deducted in determining Consolidated Net Income, provision for taxes on income, all determined on a consolidated basis for the Company and its Consolidated Subsidiaries for such fiscal period. "Consolidated Net Income" means, for any fiscal period, the net income (before preferred and common stock dividends) of the Company and its Consolidated Subsidiaries, determined on a consolidated basis for such fiscal period. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others Guaranteed by such Person. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Derivatives Obligations" of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions, excluding any amounts which the Borrower is entitled to set-off against its obligations under applicable law. "Designated Lender" means, with respect to any Designating Bank, an Eligible Designee designated by it pursuant to Section 11.07(a) as a Designated Lender for purposes of this Agreement. "Designating Bank" means, with respect to each Designated Lender, the Bank that designated such Designated Lender pursuant to Section 11.07(a). "Dollars" and the sign "$" mean lawful money of the United States of America. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City or Boston, Massachusetts are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Agent. "Effective Date" means the date this Agreement becomes effective in accordance with Section 3.01. "Election to Participate" means an Election to Participate substantially in the form of Exhibit G hereto. "Election to Terminate" means an Election to Terminate substantially in the form of Exhibit H hereto. "Eligible Designee" means a special purpose corporation that (i) is organized under the laws of the United States or any state thereof, (ii) is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and (iii) issues (or the parent of which issues) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's. "Eligible Subsidiary" means any Substantially-Owned Consolidated Subsidiary of the Company as to which an Election to Participate shall have been delivered to the Agent and as to which an Election to Terminate shall not have been delivered to the Agent. Each such Election to Participate and Election to Terminate shall be duly executed on behalf of such Substantially-Owned Consolidated Subsidiary and the Company in such number of copies as the Agent may request. The delivery of an Election to Terminate shall not affect any obligation of an Eligible Subsidiary theretofore incurred. The Agent shall promptly give notice to the Banks of the receipt of any Election to Participate or Election to Terminate. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in Dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Agent. "Euro-Dollar Loan" means any Committed Loan in respect of which interest is to be computed on the basis of a Euro-Dollar Rate. "Euro-Dollar Margin" has the meaning set forth in the Pricing Schedule. "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07(b) on the basis of a London Interbank Offered Rate. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). "Event of Default" has the meaning set forth in Section 6.01. "Existing Credit Agreement" means the 364-Day Credit Agreement dated as of October 15, 2002, among the Company, the bank parties thereto and JPMorgan Chase Bank, as agent. "Facility Fee Rate" has the meaning set forth in the Pricing Schedule. "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 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 of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to JPMorgan Chase Bank on such day on such transactions as determined by the Agent. "Fixed Rate Loans" means Euro-Dollar Loans or Competitive Bid Loans (excluding Competitive Bid LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(b)(ii)) or any combination of the foregoing. "Gross Interest Expense" means, for any fiscal period, the consolidated interest expense of the Company and its Consolidated Subsidiaries for such period (calculated without deducting or otherwise netting consolidated interest income of the Company and its Consolidated Subsidiaries). "Group of Loans" means at any time a group of Loans consisting of (i) all Committed Loans to any single Borrower which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans to any single Borrower having the same Interest Period at such time, provided that, if a Committed Loan of any particular Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions, by "comfort letter" or other similar undertaking of support or otherwise) or (ii) entered into for the purpose of assuring in any other manner the holder of such Debt of the payment thereof or to protect such holder against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Increased Commitments" has the meaning set forth in Section 2.19(a). "Indemnitee" has the meaning set forth in Section 11.03(b). "Interest Period" means: (i) with respect to each Euro-Dollar Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (A) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (B) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to the further proviso below, end on the last Euro-Dollar Business Day of a calendar month; (ii) with respect to each Competitive Bid LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03; provided that: (A) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (B) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to the further proviso below, end on the last Euro-Dollar Business Day of a calendar month; (iii) with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than fifteen days) as the Borrower may elect in accordance with Section 2.03; provided that any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and provided further that: (iv) any Interest Period which begins before the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "LIBOR Auction" means a solicitation of Competitive Bid Quotes setting forth the Competitive Bid Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" and "Loans" mean and include each and every loan made by a Bank under this Agreement. "London Interbank Offered Rate" has the meaning set forth in Section 2.07(b). "Material Debt" means Debt (other than the Loans) of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $50,000,000. "Material Financial Obligations" means a principal amount of Debt and/or payment obligations in respect of Derivatives Obligations of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, exceeding in the aggregate $50,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000. "Material Subsidiary" means any Subsidiary which either (A) is an Eligible Subsidiary or (B) has consolidated assets, together with its Subsidiaries, exceeding 5% of Consolidated Assets at the date of determination of its status hereunder. "Moody's" means Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Notes" means promissory notes of a Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of such Borrower to repay the Loans made to it, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Competitive Bid Borrowing (as defined in Section 2.03(f)). "Notice of Interest Rate Election" has the meaning set forth in Section 2.18. "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 11.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group. "Pricing Schedule" means the Schedule attached hereto identified as such. "Prime Rate" means the rate of interest publicly announced by JPMorgan Chase Bank in New York City from time to time as its Prime Rate. "Quarterly Date" means the last day of March, June, September and December in each year, commencing December 31, 2003. "Reference Banks" means the principal London offices of Citibank, N.A., Bank of America, N.A. and JPMorgan Chase Bank. "Reference Bank" means any one of such Reference Banks. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Related Agreement" means the 364-Day Credit Agreement dated as of the date hereof among the Borrower, the lenders party thereto and JPMorgan Chase Bank, as administrative agent, as amended and in effect from time to time. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding more than 50% of the aggregate unpaid principal amount of the Loans. "Revolving Credit Loan" means a loan made or to be made by a Bank pursuant to Section 2.01(a). "Revolving Credit Period" means the period from and including the Effective Date to but excluding the Termination Date. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the Company. "Substantially-Owned Consolidated Subsidiary" means any Consolidated Subsidiary not less than 90% of the outstanding shares of each class of capital stock or other ownership interests of which are at the time directly or indirectly owned by the Company. "Termination Date" means October 14, 2008, or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. Section 1.02 . Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then the Company's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks. Section 1.03 . Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to a single Borrower pursuant to Article 2 on a single date and for a single Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments, while a "Competitive Bid Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). Article 2 THE CREDITS Section 2.01 . Commitments to Lend. (a) Revolving Credit Loans. During the Revolving Credit Period, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Company or any Eligible Subsidiary pursuant to this subsection 2.01(a) from time to time in amounts such that the aggregate principal amount of Revolving Credit Loans by such Bank at any one time outstanding to all Borrowers shall not exceed the amount of its Commitment. Within the foregoing limits, a Borrower may borrow under this subsection, prepay Loans to the extent permitted by Section 2.11 and reborrow at any time during the Revolving Credit Period under this subsection 2.01(a). (b) Minimum Borrowings. Each Borrowing under this Section shall be in an aggregate principal amount of $15,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Section 2.02 . Notice of Committed Borrowing. The Borrower shall give the Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate Borrowing and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (a) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (b) the aggregate amount of such Borrowing, (c) whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or a Euro-Dollar Rate, and (d) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. Section 2.03 . Competitive Bid Borrowings. (a) The Competitive Bid Option. In addition to Committed Borrowings pursuant to Section 2.01, any Borrower may, as set forth in this Section, request the Banks during the Revolving Credit Period to make offers to make Competitive Bid Loans to such Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) Competitive Bid Quote Request. When a Borrower wishes to request offers to make Competitive Bid Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Competitive Bid Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and the Agent shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction, (ii) the aggregate amount of such Borrowing, which shall be $15,000,000 or a larger multiple of $1,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin or a Competitive Bid Absolute Rate. The Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Company and the Agent may agree) of any other Competitive Bid Quote Request. (c) Invitation for Competitive Bid Quotes. Promptly upon receipt of a Competitive Bid Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Competitive Bid Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Competitive Bid Quotes offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this Section. (d) Submission and Contents of Competitive Bid Quotes. (i) Each Bank may submit a Competitive Bid Quote containing an offer or offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by telex or facsimile transmission at its offices referred to in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and the Agent shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Competitive Bid Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour prior to the deadline for the other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and 4, any Competitive Bid Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Competitive Bid Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, (B) the principal amount of the Competitive Bid Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000 (y) may not exceed the principal amount of Competitive Bid Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Competitive Bid Margin") offered for each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Competitive Bid Absolute Rate") offered for each such Competitive Bid Loan, and (E) the identity of the quoting Bank. A Competitive Bid Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Competitive Bid Quotes. (iii) Any Competitive Bid Quote shall be disregarded if it: (A) is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii); (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes; or (D) arrives after the time set forth in subsection(d)(i). (e) Notice to Borrower. The Agent shall promptly notify the Borrower of the terms (x) of any Competitive Bid Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a previous Competitive Bid Quote submitted by such Bank with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Agent unless such subsequent Competitive Bid Quote is submitted solely to correct a manifest error in such former Competitive Bid Quote. The Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Quote Request, (B) the respective principal amounts and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Competitive Bid Loans for which offers in any single Competitive Bid Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and the Agent shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Competitive Bid Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid Quote in whole or in part; provided that: (i) the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Quote Request, (ii) the principal amount of each Competitive Bid Borrowing must be $15,000,000 or a larger multiple of $1,000,000, (iii) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, and (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) Allocation by Agent. If offers are made by two or more Banks with the same Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. Section 2.04 . Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 12:00 Noon (New York City time) on the date of each Borrowing, each Bank participating therein shall make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 11.01. Unless the Agent determines that any applicable condition specified in Article 11.01 has not been satisfied, the Agent will make the funds so received from the Banks available to the Borrower at the Agent's aforesaid address. (c) Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to 12:00 Noon (New York City time) on the date of such Borrowing) that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. Section 2.05 . Registry; Notes. (a) The Agent shall maintain a register (the "Register") on which it will record the Commitment of each Bank, each Loan made by such Bank and each repayment of any Loan made by such Bank. Any such recordation by the Agent on the Register shall be presumptively correct, absent manifest error. Failure to make any such recordation, or any error in such recordation, shall not affect any Borrower's obligations hereunder. (b) Each Borrower hereby agrees that, promptly upon the request of any Bank at any time, such Borrower shall deliver to such Bank a single Note, in substantially the form of Exhibit A hereto, duly executed by such Borrower and payable to the order of such Bank and representing the obligation of such Borrower to pay the unpaid principal amount of all Loans made to such Borrower by such Bank, with interest as provided herein on the unpaid principal amount from time to time outstanding. (c) Each Bank shall record the date, amount and maturity of each Loan made by it to each Borrower and the date and amount of each payment of principal made by such Borrower with respect thereto, and each Bank receiving a Note pursuant to this Section, if such Bank so elects in connection with any transfer or enforcement of any Note, may endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of such Bank to make any such recordation or endorsement shall not affect the obligations of any Borrower hereunder or under the Notes. Such Bank is hereby irrevocably authorized by each Borrower so to endorse any Note and to attach to and make a part of any Note a continuation of any such schedule as and when required. Section 2.06 . Maturity of Loans. (a) Each Revolving Credit Loan shall mature, and the principal amount thereof shall be due and payable, on the Termination Date. (b) Each Competitive Bid Loan included in any Competitive Bid Borrowing shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to such Borrowing. Section 2.07 . Interest Rates. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable at maturity, quarterly in arrears on each Quarterly Date prior to maturity and, with respect to the principal amount of any Base Rate Loan converted to a Euro-Dollar Loan, on the date of such conversion. Any overdue principal of or interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the rate otherwise applicable to Base Rate Loans for such day. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Dollar Loan of such Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. (c) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the higher of (i) the sum of 1% plus the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to the Interest Period for such Loan immediately before such payment was due and (ii) the sum of 1% plus the Euro-Dollar Margin for such day plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to each of the Reference Banks are offered to such Reference Bank in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 1% plus the rate applicable to Base Rate Loans for such day). (d) Subject to Section 8.01(b)(ii), each Competitive Bid LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(b) as if the related Competitive Bid LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Competitive Bid Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Competitive Bid Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Competitive Bid Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Competitive Bid Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the Base Rate for such day. (e) The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (f) Each Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated by this Section. If any Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. Section 2.08 . Facility Fee. (a) The Company shall pay to the Agent for the account of the Banks ratably a facility fee at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i) from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including the Termination Date or such earlier date of termination to but excluding the date the Loans shall be repaid in their entirety, on the daily aggregate outstanding principal amount of the Loans. (b) Payments. Accrued facility fees under this Section shall be payable quarterly on each Quarterly Date, and upon the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). Section 2.09 . Termination or Reduction of Commitments. The Company may, upon at least three Domestic Business Days' notice to the Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple thereof, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. Promptly after receiving a notice pursuant to this subsection, the Agent shall notify each Bank of the contents thereof. Section 2.10 . Scheduled Termination of Commitments. The Commitments shall terminate on the Termination Date. Section 2.11 . Optional Prepayments. (a) Subject in the case of Euro-Dollar Loans to Section 2.13, the Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay any Group of Base Rate Loans (or any Competitive Bid Borrowing bearing interest at the Base Rate pursuant to Section 8.01(b)(ii)) or upon at least three Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $15,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Group (or Borrowing). (b) Except as provided in subsection (a) above, the Borrower may not prepay all or any portion of the principal amount of any Competitive Bid Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. Section 2.12 . General Provisions as to Payments. (a) The Borrowers shall make each payment of principal of, and interest on, the Loans and of fees hereunder, without set-off, counterclaim or other deduction, not later than 12:00 Noon (New York City time) on the date when due, in Dollars in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 11.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Competitive Bid Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. Unless the Agent shall have received notice from a Borrower prior to the date on which any payment is due from such Borrower to the Banks hereunder that such Borrower will not make such payment in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that such Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate. Section 2.13 . Funding Losses. If a Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(c), or if a Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), 2.11 or 2.18, such Borrower shall reimburse each Bank on demand for any resulting loss or expense incurred by it (or by any existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow, prepay, convert or continue, provided that such Bank shall have delivered to the Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Section 2.14 . Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and all facility fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Section 2.15 . Judgment Currency. If for the purpose of obtaining judgment in any court it is necessary to convert a sum due from any Borrower hereunder or under any of the Notes in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase Dollars with such other currency at the Agent's New York office on the Domestic Business Day preceding that on which final judgment is given. The obligations of each Borrower in respect of any sum due to any Bank or the Agent hereunder or under any Note shall, notwithstanding any judgment in a currency other than Dollars, be discharged only to the extent that on the Domestic Business Day following receipt by such Bank or the Agent (as the case may be) of any sum adjudged to be so due in such other currency such Bank or the Agent (as the case may be) may in accordance with normal banking procedures purchase Dollars with such other currency; if the amount of Dollars so purchased is less than the sum originally due to such Bank or the Agent, as the case may be, in Dollars, each Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Bank or the Agent, as the case may be, against such loss, and if the amount of Dollars so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the case may be, and (b) any amounts shared with other Banks as a result of allocations of such excess as a disproportionate payment to such Bank under Section 11.04, such Bank or the Agent, as the case may be, agrees to remit such excess to the appropriate Borrower. Section 2.16 . Foreign Subsidiary Costs. (a) If the cost to any Bank of making or maintaining any Loan to an Eligible Subsidiary is increased, or the amount of any sum received or receivable by any Bank (or its Applicable Lending Office) is reduced by an amount deemed by such Bank to be material, by reason of the fact that such Eligible Subsidiary is incorporated in, or conducts business in, a jurisdiction outside the United States, such Borrower shall indemnify such Bank for such increased costs or reduction within 15 days after demand by such Bank (with a copy to the Agent and the Company). A certificate of such Bank claiming compensation under this subsection (a) and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. (b) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge that will entitle such Bank to additional compensation pursuant to subsection (a) above and will designate a different Applicable Lending Office, if, in the judgment of such Bank, such designation will avoid the need for, or reduce the amount of, such compensation and will not be otherwise disadvantageous to such Bank. Section 2.17 . Regulation D Compensation. (a) Each Bank may require any Borrower to pay, contemporaneously with each payment of interest on the Euro-Dollar Loans to such Borrower, additional interest on the related Euro-Dollar Loan to such Borrower of such Bank at a rate per annum determined by such Bank up to but not exceeding the excess of (i)(A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank Offered Rate. Any Bank wishing to require payment of such additional interest (x) shall so notify such Borrower and the Agent, in which case such additional interest on the Euro-Dollar Loans to such Borrower of such Bank shall be payable to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Dollar Business Days after the giving of such notice, and (y) shall notify such Borrower at least five Euro-Dollar Business Days prior to each date on which interest is payable on the Euro-Dollar Loans to such Borrower of the amount then due it under this Section. Section 2.18 . Method of Electing Interest Rates. (a)The Loans included in each Committed Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8 and the last sentence of this subsection (a)), as follows: (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day and (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.12 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Agent not later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $15,000,000 or any larger multiple of $1,000,000. If no such notice is timely received prior to the end of an Interest Period, the Borrower shall be deemed to have elected that all Loans having such Interest Period be converted to Base Rate Loans at the end of such Interest Period. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Euro-Dollar Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Agent shall promptly notify each Bank of the contents thereof and such notice shall not thereafter be revocable by the Borrower. (d) An election by the Borrower to change or continue the rate of interest applicable to any Group of Loans pursuant to this Section shall not constitute a "Borrowing" subject to the provisions of Section 3.02. Section 2.19 . Increased Commitments; Additional Banks. (a) Subsequent to the Effective Date (but not more than twice in any calendar year), the Company may, upon at least 30 days' notice to the Agent (which shall promptly provide a copy of such notice to the Banks), propose to increase the aggregate amount of the Commitments by an amount which (i) is a multiple of $50,000,000 or any other amount agreed to by the Company and the Agent and (ii) when combined with the sum of the aggregate amount by which the Commitments have theretofore been increased pursuant to this Section 2.19 and the aggregate amount by which the commitments have been increased pursuant to the corresponding provision of the Related Agreement, does not exceed $287,500,000 (the amount of any such increase, the "Increased Commitments"); provided that no Default shall have occurred and be continuing. Each Bank party to this Agreement at such time shall have the right (but no obligation), for a period of 15 days following receipt of such notice, to elect by notice to the Company and the Agent to increase its Commitment by a principal amount which bears the same ratio to the Increased Commitments as its then Commitment bears to the aggregate Commitments then existing. (b) If any Bank party to this Agreement shall not elect to increase its Commitment pursuant to subsection (a) of this Section, the Company may, within 10 days of the Banks' response, designate one or more of the existing Banks or other financial institutions acceptable to the Agent and the Company (which consent of the Agent shall not be unreasonably withheld) which at the time agree to (i) in the case of any such Person that is an existing Bank, increase its Commitment and (ii) in the case of any other such Person (an "Additional Bank"), become a party to this Agreement, provided that the Commitment of such Additional Bank is not less than $25,000,000. The sum of the increases in the Commitments of the existing Banks pursuant to this subsection (b) plus the Commitments of the Additional Banks shall not in the aggregate exceed the unsubscribed amount of the Increased Commitments. (c) An increase in the aggregate amount of the Commitments pursuant to this Section 2.19 shall become effective upon the receipt by the Agent of an agreement in form and substance satisfactory to the Agent signed by the Company, by each Additional Bank and by each other Bank whose Commitment is to be increased, setting forth the new Commitments of such Banks and setting forth the agreement of each Additional Bank to become a party to this Agreement and to be bound by all the terms and provisions hereof, together with such evidence of appropriate corporate authorization on the part of the Company with respect to the Increased Commitments and such opinions of counsel for the Company with respect to the Increased Commitments as the Agent may reasonably request. (d) Upon any increase in the aggregate amount of the Commitments pursuant to this Section 2.19 that is not a pro rata amount among all Banks, within five Domestic Business Days, in the case of any Group of Base Rate Loans then outstanding, and at the end of the then current Interest Period with respect thereto, in the case of any Group of Euro-Dollar Loans then outstanding, the relevant Borrower shall prepay such Group in its entirety and, to the extent such Borrower elects to do so and subject to the conditions specified in Article 3, such Borrower shall reborrow Committed Loans from the Banks in proportion to their respective Commitments after giving effect to such increase, until such time as all outstanding Committed Loans are held by the Banks in such proportion. Article 3 CONDITIONS Section 3.01 . Effectiveness. This Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 11.05): (a) receipt by the Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it of telegraphic, telex, facsimile transmission or other written confirmation from such party of execution of a counterpart hereof by such party); (b) receipt by the Agent of an opinion of the General Counsel of the Company (or other counsel for the Company reasonably satisfactory to the Agent), substantially in the form of Exhibit E hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (c) receipt by the Agent of an opinion of Davis Polk & Wardwell, special counsel for the Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (d) receipt by the Agent of all documents it may reasonably request relating to the existence of the Company, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent; and (e) receipt by the Agent of evidence satisfactory to it of the payment of all principal and interest on any loans outstanding under, and of all other amounts payable under, the Existing Credit Agreement; provided that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied no later than October 14, 2003. The Agent shall promptly notify the Company and the Banks of the Effective Date, and such notice shall be conclusive and binding on all parties hereto. The Banks that are parties to the Existing Credit Agreement, comprising the "Required Banks" as defined in the Existing Credit Agreement, and the Company agree to eliminate the requirement under Section 2.09 of the Existing Credit Agreement that notice of optional termination of the commitments thereunder be given three Domestic Business Days in advance, and further agree that the commitments under the Existing Credit Agreement shall terminate in their entirety simultaneously with and subject to the effectiveness of this Agreement and that the Company shall be obligated to pay the accrued facility fees thereunder to but excluding the date of such effectiveness. Section 3.02 . Borrowings. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) receipt by the Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (b) the fact that, immediately after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (c) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and (d) the fact that the representations and warranties of the Company and the Borrower (if other than the Company) contained in this Agreement (except for the representations and warranties set forth in Sections 4.05 and 4.07 as to any matter which has theretofore been disclosed in writing by the Company to the Banks) shall be true in all material respects on and as of the date of such Borrowing. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Company and the Borrower (if other than the Company) on the date of such Borrowing as to the facts specified in clauses (b), (c) and (d) of this Section. Section 3.03 . First Borrowing by Each Eligible Subsidiary. The obligation of each Bank to make a Loan on the occasion of the first Borrowing by each Eligible Subsidiary is subject to the satisfaction of the following further conditions: (a) receipt by the Agent of an opinion of counsel for such Eligible Subsidiary acceptable to the Agent, substantially in the form of Exhibit I hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (b) receipt by the Agent of all documents which it may reasonably request relating to the existence of such Eligible Subsidiary, the corporate authority for and the validity of the Election to Participate of such Eligible Subsidiary, this Agreement and the Notes of such Eligible Subsidiary, and any other matters relevant thereto, all in form and substance satisfactory to the Agent. The documents referred to in this Section 3.03 shall be delivered to the Agent by an Eligible Subsidiary no later than the date of the first Borrowing by such Eligible Subsidiary. Article 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants that: Section 4.01 . Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Section 4.02 . Corporate and Governmental Authorization; Contravention. The execution, delivery and performance by the Company of this Agreement and its Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. Section 4.03 . Binding Effect. This Agreement constitutes a valid and binding agreement of the Company and its Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Company, in each case enforceable in accordance with their respective terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 4.04 . Financial Information. (a) The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 2002 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by KPMG LLP and set forth in the Company's Annual Report to Shareholders for 2002 incorporated by reference in the Company's 2002 Form 10-K, a copy of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) The unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of June 30, 2003 and the related unaudited consolidated statements of income and cash flows for the six months then ended, set forth in the Company's Latest Form 10-Q, a copy of which has been delivered to each of the Banks, fairly present, on a basis consistent with the financial statements referred to in subsection (a) of this Section, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such six-month period (subject to normal year-end adjustments). Section 4.05 . No Material Adverse Change. Since June 30, 2003, there has been no material adverse change in the business, operations or financial condition of the Company and its Consolidated Subsidiaries, considered as a whole. Section 4.06 . Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, if such failure or amendment has resulted, or there is a reasonable possibility that it could result, in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Section 4.07 . Litigation. Except as disclosed in the Company's 2002 Form 10-K and the Company's Latest Form 10-Q, there is no action, suit, investigation or proceeding pending against, or to the knowledge of the Company threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, operations or financial condition of the Company and its Consolidated Subsidiaries, taken as a whole, or which in any manner draws into question the validity of this Agreement or the Notes. Section 4.08 . Taxes. The Company has filed (or has obtained extensions of the time by which it is required to file) all United States federal income tax returns and all other material tax returns required to be filed by it and has paid all taxes shown due on the returns so filed as well as all other material taxes, assessments and governmental charges which have become due, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. Section 4.09 . Full Disclosure. All information heretofore furnished by the Company to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Company to the Agent or any Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified. The Company has disclosed to the Banks in writing any and all facts which materially and adversely affect or may affect (to the extent the Company can now reasonably foresee), the business, operations or financial condition of the Company and its Consolidated Subsidiaries, taken as a whole, or the ability of the Company to perform its obligations under this Agreement. Article 5 COVENANTS The Company agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: Section 5.01. Information. The Company will deliver to each of the Banks: (a) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG LLP or other independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter, (ii) the related consolidated statements of income for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter and (iii) the related consolidated statement of cash flows for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in cases (ii) and (iii) in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the principal accounting officer of the Company; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer or the principal accounting officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Section 5.05 on the date of such financial statements and (ii) stating whether there exists on the date of such certificate any Default and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements (i) stating whether anything has come to their attention to cause them to believe that there existed on the date of such statements any Default and (ii) confirming the calculations set forth in the officer's certificate delivered simultaneously therewith pursuant to clause (c) above; (e) forthwith upon the occurrence of any Default, a certificate of the chief financial officer or the principal accounting officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (f) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (g) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Company shall have filed with the Securities and Exchange Commission; (h) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might reasonably constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; or (iv) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement, if such failure or amendment has resulted, or there is a reasonable possibility that it could result, in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code, a certificate of the chief financial officer, the principal accounting officer or the treasurer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; (i) promptly upon any change in the rating by Standard & Poor's Ratings Services or Moody's Investors Service, Inc. of the Company's outstanding public senior unsecured long-term debt securities or the Company's outstanding commercial paper, a notice reporting such change and stating the date on which such change was announced by the relevant rating agency; and (j) from time to time such additional information regarding the business, operations or financial condition of the Company and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request. Information required to be delivered pursuant to clauses 5.01(a), 5.01(b), 5.01(f) or 5.01(g) above shall be deemed to have been delivered on the date on which the Company provides notice to the Banks that such information has been filed with the Securities and Exchange Commission and is available at www.sec.gov. Such notice may be included in a certificate delivered pursuant to clause 5.01(c); provided that the Company shall either deliver paper copies to any Bank which specifically requests such delivery of, or post on IntraLinks/IntraAgency or another relevant website, if any, to which each Bank and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent), the information referred to in clauses 5.01(a), 5.01(b), 5.01(c), 5.01(f) or 5.01(g), further provided that the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Bank 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. Section 5.02 . Maintenance of Property; Insurance. The Company will keep, and will cause each Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted; will maintain, and will cause each Subsidiary to maintain (either in the name of the Company or in such Subsidiary's own name) with financially sound and reputable insurance companies, insurance on all their property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Banks, upon written request from the Agent, such information as may be reasonably requested as to the insurance carried. Section 5.03 . Conduct of Business and Maintenance of Existence. The Company will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business. Section 5.04 . Compliance with Laws. The Company will comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, ERISA and the rules and regulations thereunder) except where the necessity of compliance therewith is contested in good faith by appropriate proceedings. Section 5.05 . Earnings to Interest Expense Ratio. At the end of each fiscal quarter of the Company, the ratio of (x) Consolidated Earnings Before Interest and Taxes for the four fiscal quarters then ended to (y) Gross Interest Expense for the four fiscal quarters then ended will not be less than 6.50:1. Section 5.06 . Negative Pledge. Neither the Company nor any Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date hereof securing Debt outstanding on the date hereof in an aggregate principal amount not exceeding $25,000,000; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition thereof; (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Subsidiary and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Company or a Subsidiary and not created in contemplation of such acquisition; (f) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets; (g) any Lien arising pursuant to any order of attachment or similar legal process arising in connection with court proceedings so long as the execution or other enforcement thereof is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings; (h) Liens incidental to the conduct of its business or the ownership of its assets which (i) do not secure Debt or Derivatives Obligations and (ii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (i) Liens on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Liens may at no time exceed $25,000,000; and (j) Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal amount at any time outstanding not to exceed 5% of Consolidated Assets. Section 5.07 . Consolidations, Mergers and Sales of Assets. The Company will not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any other Person; provided that the Company may merge with a Subsidiary if (A) the Company is the corporation surviving such merger and (B) immediately after giving effect to such merger, no Default shall have occurred and be continuing. Section 5.08 . Material Subsidiary Cash Flow. The Company will not, and will not permit any Material Subsidiary to, enter into any arrangement which restricts the ability of any Material Subsidiary, directly or indirectly, to make funds available to the Company, whether by way of dividend or other distribution, advance or otherwise. Section 5.09 . Use of Proceeds. The proceeds of Loans hereunder will be used by the Borrowers for their general corporate purposes, including without limitation, any purchase, redemption, retirement or acquisition of outstanding shares of capital stock of the Company ("Stock Repurchases"). Except for permitted Stock Repurchases referred to in the immediately preceding sentence, none of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any "margin stock" within the meaning of Regulation U. Article 6 DEFAULTS Section 6.01 . Events of Default. If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) any principal of any Loan shall not be paid when due, or any interest, any fees or any other amount payable hereunder shall not be paid within five days of the due date thereof; (b) the Company shall fail to observe or perform any covenant contained in Sections 5.05 to 5.09, inclusive; (c) any Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after written notice thereof has been given to the Company by the Agent at the request of any Bank; (d) any representation, warranty, certification or statement made or deemed to have been made by any Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment in respect of any Material Debt or any Material Financial Obligations when due or within any applicable grace period; (f) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such Debt or any Person acting on such holder's behalf to accelerate the maturity thereof; (g) the Company or any Material Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Material Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Material Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due (including any approved extensions) an amount or amounts aggregating in excess of $50,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $50,000,000; (j) a judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Company or any Material Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 30 days; or (k) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Company; or, during any two-year period, the individuals who were serving on the board of directors of the Company at the beginning of such period or who were nominated for election or elected to such board during such period with the affirmative vote of at least two-thirds of such individuals still in office cease to constitute a majority of such board; then, and in every such event, the Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate, and (ii) if requested by Banks holding more than 50% of the aggregate unpaid principal amount of the Loans, by notice to the Company declare the Loans (together with accrued interest thereon and all accrued fees and other amounts payable by any Borrower hereunder) to be, and the Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to any Borrower, without any notice to any Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon terminate and the Loans (together with accrued interest thereon and all accrued fees and other amounts payable by any Borrower hereunder) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower. Section 6.02 . Notice of Default. The Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. Article 7 THE AGENT Section 7.01 . Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. Section 7.02 . Agent and Affiliates. JPMorgan Chase Bank shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and JPMorgan Chase Bank and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or any Subsidiary or affiliate of any Borrower as if it were not the Agent hereunder. Section 7.03 . Action by Agent. The obligations of the Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. Section 7.04 . Consultation with Experts. The Agent may consult with legal counsel (who may be counsel for any Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 7.05 . Liability of Agent. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks (or when expressly required hereby, all the Banks) or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Without limiting the generality of the foregoing, the use of the term "agent" in this Agreement with reference to the 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. Section 7.06 . Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with its role as Agent hereunder or any action taken or omitted by such indemnitees in connection therewith. Section 7.07 . Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. Section 7.08 . Successor Agent. The Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized or licensed under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. Section 7.09 . Agent's Fee. The Company shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Agent. Article 8 CHANGE IN CIRCUMSTANCES Section 8.01 . Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Fixed Rate Loans: (a) the Agent is advised by the Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Reference Banks in the London Interbank market for such Interest Period, or (b) in the case of a Euro-Dollar Borrowing, Banks having 50% or more of the aggregate amount of the Commitments advise the Agent that the London Interbank Offered Rate as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Agent shall forthwith give notice thereof to the Borrowers and the Banks, whereupon until the Agent notifies the Borrowers that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to continue or convert outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless a Borrower notifies the Agent at least one Domestic Business Day before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Euro-Dollar Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Competitive Bid LIBOR Borrowing, the Competitive Bid LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. Section 8.02 . Illegality. If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans to any Borrower and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and such Borrower, whereupon until such Bank notifies such Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans to such Borrower, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice is given, each such Euro-Dollar Loan of such Bank then outstanding shall be converted to a Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Section 8.03 . Increased Cost and Reduced Return. (a)If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Competitive Bid Quote, in the case of any Competitive Bid Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any such requirement with respect to which such Bank is entitled to compensation during the relevant Interest Period under Section 2.17), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the London interbank market any other condition affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (b) If any Bank shall have determined that, on or after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction. (c) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge, occurring on or after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. Section 8.04 . Taxes. (a) For the purposes of this Section 8.04, the following terms have the following meanings: "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any payment by any Borrower or the Company pursuant to this Agreement or under any Note, and all liabilities with respect thereto, excluding (i) in the case of each Bank and the Agent, taxes imposed on its income, and franchise or similar taxes imposed on it, by a jurisdiction under the laws of which such Bank or the Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in which its Applicable Lending Office is located and (ii) in the case of each Bank, any United States withholding tax imposed on such payments, but only up to the rate (if any) at which United States withholding tax would apply to such payments to such Bank at the time such Bank first becomes a party to this Agreement. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note. (b) Any and all payments by any Borrower or the Company to or for the account of any Bank or the Agent hereunder or under any Note shall be made without deduction for any Taxes or Other Taxes; provided that, if any Borrower or the Company shall be required by law to deduct any Taxes or Other Taxes from any such payments, (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) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) any Borrower or the Company shall make such deductions, (iii) any Borrower or the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) any Borrower or the Company shall furnish to the Agent, at its address referred to in Section 11.01, the original or a certified copy of a receipt evidencing payment thereof. (c) The Company agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be paid within 15 days after such Bank or the Agent (as the case may be) makes demand therefor. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter if requested in writing by the Company (but only so long as such Bank remains lawfully able to do so), shall provide the Company and the Agent with Internal Revenue Service form W-8BEN or W-8ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. (e) For any period with respect to which a Bank has failed to provide the Company or the Agent with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Bank shall not be entitled to indemnification under Section 8.04(b) or 8.04(c) with respect to Taxes imposed by the United States; provided that if a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax becomes subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes. (f) If any Borrower or the Company is required to pay additional amounts to or for the account of any Bank pursuant to this Section, then such Bank will change the jurisdiction of its Applicable Lending Office if, in the judgment of such Bank, such change (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank. Section 8.05 . Base Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to any Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) or 8.04 with respect to its Euro-Dollar Loans and a Borrower shall, by at least three Euro-Dollar Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies such Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans to such Borrower which would otherwise be made by such Bank as Euro-Dollar Loans shall be made instead as Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and (b) after each of its Euro-Dollar Loans to such Borrower has been repaid, all payments of principal which would otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans to such Borrower instead. If such Bank notifies the Company that the circumstances giving rise to such notice no longer apply, the principal amount of each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. Article 9 REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES Each Eligible Subsidiary shall be deemed by the execution and delivery of its Election to Participate to have represented and warranted as of the date thereof that: Section 9.01 . Corporate Existence and Power. It is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as then conducted. Section 9.02 . Corporate and Governmental Authorization; Contravention. The execution and delivery by it of its Election to Participate and its Notes, and the performance by it of this Agreement and its Notes, are within its corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its certificate of incorporation or by-laws or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or such Eligible Subsidiary or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. Section 9.03 . Binding Effect. This Agreement constitutes a valid and binding agreement of such Eligible Subsidiary and its Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of such Eligible Subsidiary, in each case enforceable in accordance with their respective terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 9.04 . Taxes. Except as disclosed to the Banks in writing prior to the delivery of such Election to Participate, there is no income, stamp or other tax of any country, or any taxing authority thereof or therein, imposed by or in the nature of withholding or otherwise, which is imposed on any payment to be made by such Eligible Subsidiary pursuant hereto or on its Notes, or is imposed on or by virtue of the execution, delivery or enforcement of its Election to Participate, this Agreement or its Notes. Article 10 GUARANTY Section 10.01 . The Guaranty. The Company hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to any Eligible Subsidiary pursuant to this Agreement, and the full and punctual payment of all other amounts payable by any Eligible Subsidiary under this Agreement. Upon failure by any Eligible Subsidiary to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. Section 10.02 . Guaranty Unconditional. The obligations of the Company hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Eligible Subsidiary under this Agreement or any Note, by operation of law or otherwise; (ii) any modification or amendment of or supplement to this Agreement or any Note; (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any Eligible Subsidiary under this Agreement or any Note; (iv) any change in the corporate existence, structure or ownership of any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Eligible Subsidiary or its assets, or any resultant release or discharge of the obligations of any Eligible Subsidiary hereunder or under any Note; (v) the existence of any claim, set-off or other rights which the Company may have at any time against any Eligible Subsidiary, the Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against any Eligible Subsidiary for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by any Eligible Subsidiary of the principal of or interest on any Note or any other amount payable by it under this Agreement; or (vii) any other act or omission to act or delay of any kind by any Eligible Subsidiary, the Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the Company's obligations hereunder. Section 10.03 . Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Loans and all other amounts payable by the Company and each Eligible Subsidiary under this Agreement shall have been paid in full. If at any time any payment of any principal of or interest on any Loans or any other amount payable by any Eligible Subsidiary under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. Section 10.04 . Waiver by the Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Eligible Subsidiary or any other Person. Section 10.05 . No Subrogation. If the Company makes any payment under this Article 10 in respect of any obligation of an Eligible Subsidiary, the Company shall not be subrogated to the rights of the holder of such obligation against such Eligible Subsidiary with respect to such payment. Section 10.06 . Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by any Eligible Subsidiary under this Agreement or the Notes is stayed upon the insolvency, bankruptcy or reorganization of such Eligible Subsidiary, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Agent made at the request of the Required Banks. Article 11 MISCELLANEOUS Section 11.01 . Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of any Borrower or the Agent, at its address, facsimile number or telex number set forth on the signature pages hereof (or, in the case of an Eligible Subsidiary, its Election to Participate), (y) in the case of any Bank, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received. Section 11.02 . No Waivers. No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 11.03 . Expenses; Indemnification. (a) The Company shall pay (i) all out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent or any Bank, including (without duplication) the reasonable fees and disbursements of outside counsel and the allocated cost of inside counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Company agrees to indemnify the Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction. Section 11.04 . Sharing of Set-offs. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to the Loans held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest due with respect to the Loans held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Loans of such Borrower held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Loans held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of a Borrower other than its indebtedness hereunder. Each Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Loan, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Borrower in the amount of such participation. Section 11.05 . Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall: (a) unless signed by each affected Bank, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for termination of any Commitment or (iv) change the provisions of Article 10; (b) unless signed by all Banks, change the definition of Required Banks, the percentages specified in Sections 6.01 and 8.01 or this Section 11.05; (c) unless signed by a Designated Bank or its Designating Bank, (i) subject such Designated Bank to any additional obligation, (ii) affect its rights hereunder (unless the rights of all the Banks hereunder are similarly affected) or (iii) change this clause 11.05(d); or (d) unless signed by an Eligible Subsidiary, (w) subject such Eligible Subsidiary to any additional obligation, (x) increase the principal of or rate of interest on any outstanding Loan of such Eligible Subsidiary, (y) accelerate the stated maturity of any outstanding Loan of such Eligible Subsidiary or (z) change this proviso. Section 11.06 . 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, except that no Borrower may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. (b) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Borrowers and the Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrowers and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 11.05(a) without the consent of the Participant. The Borrowers agree that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part (equivalent to an initial Commitment of not less than $5,000,000) of all, of its rights and obligations under this Agreement and its Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit J hereto executed by such Assignee and such transferor Bank, with (and subject to) the subscribed consent of the Agent and (so long as at the time no Event of Default exists) the Company, which consents shall not be unreasonably withheld or delayed; provided that if an Assignee is an affiliate of such transferor Bank or was a Bank immediately prior to such assignment, no such consent shall be required, but the Assignee and the transferor Bank shall provide prompt notice of such assignment, together with information concerning addresses and related information with respect to the Assignee, to the Agent; and provided further that such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Competitive Bid Loans. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrowers shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $3,500. If the Assignee is not incorporated under the laws of the United States or a state thereof, it shall deliver to the Company and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 2.18. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder. (e) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Company's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. (f) If any Reference Bank transfers its Loans to an unaffiliated institution, the Agent shall, in consultation with the Company and with the consent of the Required Banks, appoint another Bank to act as a Reference Bank hereunder. Section 11.07 . Designated Lenders. (a) Subject to the provisions of this subsection (a), any Bank may at any time designate an Eligible Designee to provide all or a portion of the Loans to be made by such Bank pursuant to this Agreement; provided that such designation shall not be effective unless the Company and the Agent consent thereto (which consents shall not be unreasonably withheld). When a Bank and its Eligible Designee shall have signed an agreement substantially in the form of Exhibit K hereto (a "Designation Agreement") and the Company and the Agent shall have signed their respective consents thereto, such Eligible Designee shall become a Designated Lender for purposes of this Agreement. The Designating Bank shall thereafter have the right to permit such Designated Lender to provide all or a portion of the Loans to be made by such Designating Bank pursuant to Section 2.01 or 2.03, and the making of such Loans or portion thereof shall satisfy the obligation of the Designating Bank to the same extent, and as if, such Loans or portion thereof were made by the Designating Bank. As to any Loans or portion thereof made by it, each Designated Lender shall have all the rights that a Bank making such Loans or portion thereof would have had under this Agreement and otherwise; provided that (x) its voting rights under this Agreement shall be exercised solely by its Designating Bank and (y) its Designating Bank shall remain solely responsible to the other parties hereto for the performance of such Designated Lender's obligations under this Agreement, including its obligations in respect of the Loans or portion thereof made by it. No additional Note shall be required to evidence the Loans or portion thereof made by a Designated Lender; and the Designating Bank shall be deemed to hold its Note as agent for its Designated Lender to the extent of the Loans or portion thereof funded by such Designated Lender. Each Designating Bank shall act as agent for its Designated Lender and give and receive notices and other communications on its behalf. Any payments for the account of any Designated Lender shall be paid to its Designating Bank as agent for such Designated Lender and neither the Company nor the Agent shall be responsible for any Designating Bank's application of such payments. In addition, any Designated Lender may, with notice to (but without the prior written consent of) the Company and the Agent, (i) assign all or portions of its interest in any Loans to its Designating Bank or to any financial institutions consented to by the Company and the Agent that provide liquidity and/or credit facilities to or for the account of such Designated Lender to support the funding of Loans or portions thereof made by it and (ii) disclose on a confidential basis any non-public information relating to its Loans or portions thereof to any rating agency, commercial paper dealer or provider of any guarantee, surety, credit or liquidity enhancement to such Designated Lender. (b) Each party to this Agreement agrees that it will not institute against, or join any other person in instituting against, any Designated Lender any bankruptcy, insolvency, reorganization or other similar proceeding under any federal or state bankruptcy or similar law, for one year and a day after all outstanding senior indebtedness of such Designated Lender is paid in full. The Designating Bank for each Designated Lender agrees to indemnify, save, and hold harmless each other party hereto for any loss, cost, damage and expense arising out of its inability to institute any such proceeding against such Designated Lender. This subsection (b) shall survive the termination of this Agreement. Section 11.08 . Collateral. Each of the Banks represents to the Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. Section 11.09 . Governing Law; Submission to Jurisdiction; Service of Process. This Agreement, each Election to Participate, each Election to Terminate and each Note shall be governed by and construed in accordance with the laws of the State of New York. Each Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each Borrower hereby appoints CT Corporation System its authorized agent to accept and acknowledge service of any and all processes which may be served in any suit, action or proceeding of the nature referred to in this Section 11.09 and consents to process being served in any such suit, action or proceeding upon CT Corporation System in any manner or by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to such Borrower's address referred to in Section 11.01; and (d) agrees that such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to it. A copy of any summons or complaint served on an Eligible Subsidiary pursuant to the foregoing shall be sent to the Company by registered or certified mail. Each Eligible Subsidiary represents and warrants that CT Corporation System has agreed in writing to accept such appointment and that true copies of such acceptance will be furnished to the Agent prior to or concurrently with delivery of such Eligible Subsidiary's Election to Participate. Nothing in this Section 11.09 shall affect the right of any Bank to serve process in any manner permitted by law or limit the right of any Bank to bring proceedings against the Company or any Eligible Subsidiary in the courts of any jurisdiction or jurisdictions. Section 11.10 . Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. Section 11.11 . WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Section 11.12 . Confidentiality. The Agent and each Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any 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 any agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Company and its obligations, (g) with the consent of the Company or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent or any Bank on a nonconfidential basis from a source other than the Company. For the purposes of this Section, "Information" means all information received from the Company relating to the Company or its business, other than any such information that is available to the Agent or any Bank on a nonconfidential basis prior to disclosure by the Company; provided that, in the case of information received from the Company after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, any party hereto (and any employee, representative or other agent of any party hereto) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and the U.S. federal income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. However, no disclosure of any information relating to such tax treatment or tax structure may be made to the extent nondisclosure is reasonably necessary in order to comply with applicable securities laws. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE GILLETTE COMPANY By: ---------------------------------------------------- Name: Title: Address: Prudential Tower Building Suite 4800, Boston, MA 02199 Facsimile Number: (617) 421-7699 JPMORGAN CHASE BANK, as Agent By: ---------------------------------------------------- Name: Title: Address: Loan & Agency Services 1111 Fannin, 10th Floor Houston, Texas 77002 Facsimile Number: (713) 750-2452 [NAME OF BANK] By: ---------------------------------------------------- Name: Title: COMMITMENT SCHEDULE BANK COMMITMENT JPMorgan Chase Bank $26,250,000 ABN AMRO Bank N.V. $21,250,000 Bank of America, N.A. $21,250,000 Bank One, NA $21,250,000 HSBC Bank USA $21,250,000 Citicorp USA, Inc. $21,250,000 Deutsche Bank AG, New York Branch $21,250,000 Banco Santander Central Hispano, S.A. New York $11,250,000 Fleet National Bank $11,250,000 ING Luxembourg S.A. $11,250,000 Banca Intesa S.p.A., New York Branch $11,250,000 Merrill Lynch Bank USA $11,250,000 Morgan Stanley Bank $11,250,000 Societe Generale $11,250,000 Sumitomo Mitsui Banking Corporation $11,250,000 Svenska Handelsbanken AB $11,250,000 UBS Loan Finance LLC $11,250,000 The Bank of New York $8,750,000 William Street Commitment Corporation $6,250,000 Mellon Bank, N.A. $6,250,000 Total: $287,500,000 PRICING SCHEDULE Each of "Facility Fee Rate" and "Euro-Dollar Margin" means, for any day, the rate set forth below, in basis points per annum, in the row opposite such term and in the column corresponding to the Pricing Level that applies for such day:
- ----------------------------- -------------- --------------- -------------- -------------- -------------- LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V - ----------------------------- -------------- --------------- -------------- -------------- -------------- - ----------------------------- -------------- --------------- -------------- -------------- -------------- Facility Fee Rate: 6.00 7.00 8.00 9.00 12.50 - ----------------------------- -------------- --------------- -------------- -------------- -------------- - ----------------------------- -------------- --------------- -------------- -------------- -------------- Euro-Dollar Margin: Utilization = 50% 11.50 13.00 17.00 26.00 37.50 Utilization > 50% 16.50 18.00 27.00 36.00 50.00 - ----------------------------- -------------- --------------- -------------- -------------- --------------
For purposes of this Schedule, the following terms have the following meanings: "Level I" status exists at any date if, at such date, the Company has senior unsecured long-term debt outstanding, without third-party credit enhancement, which is rated AA- or higher by S&P or Aa3 or higher by Moody's. "Level II" status exists at any date if, at such date, (i) Level I status does not exist and (ii) the Company has senior unsecured long-term debt outstanding, without third-party credit enhancement, which is rated A+ or higher by S&P or A1 or higher by Moody's. "Level III" status exists at any date if, at such date, (i) neither Level I status nor Level II status exists and (ii) the Company has senior unsecured long-term debt outstanding, without third-party credit enhancement, which is rated A or higher by S&P or A2 or higher by Moody's. "Level IV" status exists at any date if, at such date, (i) none of Level I status, Level II status or Level III status exists and (ii) the Company has senior unsecured long-term debt outstanding, without third-party credit enhancement, which is rated A- or higher by S&P or A3 or higher by Moody's. "Level V" status exists at any date if, at such date, no other Pricing Level status exists. "Moody's" means Moody's Investors Service, Inc. "Pricing Level" refers to the determination of which of Level I, Level II, Level III, Level IV or Level V status exists at any date. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. "Utilization" means, at any date, the percentage equivalent of a fraction (i) the numerator of which is the sum of the aggregate outstanding principal amount of the Loans and the aggregate outstanding principal amount of loans under the Related Agreement on such date and (ii) the denominator of which is the sum of (A) an amount equal to the greater of (x) the aggregate amount of the Commitments and (y) the aggregate outstanding principal amount of the Loans and (B) an amount equal to the greater of (x) the aggregate amount of commitments under the Related Agreement and (y) the aggregate outstanding principal amount of loans under the Related Agreement, in each case on such date and after giving effect to any borrowing or repayment of loans and any increase, reduction or termination of commitments on such date. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Company without third-party credit enhancement, and any rating assigned to any other debt security of the Company shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. If the Company is split-rated and the ratings differential is one notch, the higher of the two ratings will apply (e.g., A+/A2 results in Level II status). If the Company is split-rated and the ratings differential is more than one notch, a rating that is one notch lower than the higher of the two different ratings shall be used. EXHIBIT A NOTE New York, New York , 200_ For value received, [name of Borrower], a [jurisdiction of incorporation] corporation (the "Borrower"), promises to pay to the order of __________(the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the maturity date provided for in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of JPMorgan Chase Bank, 270 Park Avenue, New York, New York. All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the Five-Year Credit Agreement dated as of October 14, 2003 among The Gillette Company, the Banks listed on the signature pages thereof and JPMorgan Chase Bank, as Agent (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. The Gillette Company has, pursuant to the provisions of the Credit Agreement, unconditionally guaranteed the payment in full of the principal of and interest on this note.* - ----------------------------- * To be deleted in case of Notes executed and delivered by the Company. [NAME OF BORROWER] By: ---------------------------------------------------- Title: Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL Amount of Date Amount of Loan Type of Loan Principal Repaid Maturity Date Notation Made By - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------ - --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
EXHIBIT B Form of Competitive Bid Quote Request [Date] To: JPMorgan Chase Bank (the "Agent") From: [Name of Borrower] Re: Five-Year Credit Agreement (the "Credit Agreement") dated as of October 14, 2003 among The Gillette Company, the Banks listed on the signature pages thereof and the Agent We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Competitive Bid Quotes for the following proposed Competitive Bid Borrowing(s): Date of Borrowing: __________________ Principal Amount* Interest Period ** Maturity Date $ Such Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms used herein have the meanings assigned to them in the Credit Agreement. [NAME OF BORROWER] By: ---------------------------------------------------- Title: - --------------------------- * Amount must be $15,000,000 or a larger multiple of $1,000,000. ** Not less than one month (LIBOR Auction) or not less than 15 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. EXHIBIT C Form of Invitation for Competitive Bid Quotes To: [Name of Bank] Re: Invitation for Competitive Bid Quotes to [Name of Borrower] (the "Borrower") Pursuant to Section 2.03 of the Five-Year Credit Agreement dated as of October 14, 2003 among The Gillette Company, the Banks parties thereto and the undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to submit Competitive Bid Quotes to the Borrower for the following proposed Competitive Bid Borrowing(s): Date of Borrowing: __________________ Principal Amount Interest Period Maturity Date $ Such Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.] (New York City time) on [date]. JPMORGAN CHASE BANK By: ---------------------------------------------------- Authorized Officer EXHIBIT D Form of Competitive Bid Quote To: JPMorgan Chase Bank, as Agent Re: Competitive Bid Quote to [Name of Borrower] (the "Borrower") In response to your invitation on behalf of the Borrower dated _____________, 20__, we hereby make the following Competitive Bid Quote on the following terms: 1. Quoting Bank: ____________________________ 2. Person to contact at Quoting Bank:________________________ 3. Date of Borrowing: ____________________* 4. We hereby offer to make Competitive Bid Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Competitive Bid [Absolute Principal Amount** Interest Period*** [Margin]**** Rate]***** - ------------------ ------------------ ------------ ---------- $ - -------------------------- * As specified in the related Invitation. ** Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000. *** Not less than one month or not less than 15 days, as specified in the related Invitation. No more than five bids are permitted for each Interest Period. **** Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". ***** Specify rate of interest per annum (to the nearest 1/10,000 of 1%). [Provided, that the aggregate principal amount of Competitive Bid Loans for which the above offers may be accepted shall not exceed $____________.]** We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Five-Year Credit Agreement dated as of October 14, 2003 among The Gillette Company, the Banks listed on the signature pages thereof and yourselves, as Agent, irrevocably obligates us to make the Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated:_______________ By: ____________________ Authorized Officer EXHIBIT E OPINION OF COUNSEL FOR THE COMPANY [Effective Date] To the Banks and the Agent Referred to Below c/o JPMorgan Chase Bank, as Agent 270 Park Avenue New York, New York 10017 Dear Sirs: I am Deputy General Counsel of The Gillette Company (the "Company"), and I am rendering this opinion pursuant to Section 3.01(b) of the Five-Year Credit Agreement dated as of October 14, 2003 among the Company, the banks parties thereto and JPMorgan Chase Bank, as Agent (the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined. I have examined or caused to be examined by counsel retained by or on the staff of the Company, among other things, originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted or have had conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. I am admitted to practice in The Commonwealth of Massachusetts. No opinion is expressed herein with respect to or as to the effect of any laws other than the laws of The Commonwealth of Massachusetts, the federal laws of the United States of America and the General Corporation Law of the State of Delaware. Upon the basis of the foregoing, I am of the opinion that: 1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 2. The execution, delivery and performance by the Company of the Credit Agreement and the Notes issued by it are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company and known to me or, to the best of my knowledge, result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. 3. The provision in Section 11.09 of the Credit Agreement that the Credit Agreement and each Note shall be construed in accordance with and governed by the law of the State of New York is a valid choice of law provision under Massachusetts law and should be respected by a court sitting in Massachusetts. 4. If a court sitting in Massachusetts were to apply Massachusetts law as the law governing the Credit Agreement and the Notes, the Credit Agreement would constitute a valid and binding agreement of the Company and the Notes, when executed and delivered, would constitute valid and binding obligations of the Company, in each case enforceable in accordance with their respective terms. 5. Except as disclosed in the Company's 2002 Form 10-K and the Company's Latest Form 10-Q, there is no action, suit or proceeding pending against, or to the best of my knowledge threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official, in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, operations or financial condition of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of the Credit Agreement or the Notes. My opinion in paragraph 4 above as to the enforceability of the Credit Agreement and the Notes issued by the Company is subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights in general, usury laws and the general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). With respect to the foregoing, I express no opinion, however, as to the enforceability of Section 11.03(b) of the Credit Agreement to the extent the rights to indemnification provided for therein are violative of any law, rule or regulation (including any federal or state securities law, rule or regulation) or public policy. To the extent that the obligations of the Company may be dependent upon such matters, I assume for purposes of this opinion that each Bank is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; and that the Credit Agreement has been duly authorized, executed and delivered by the Banks and constitutes the legal, valid and binding obligation of the Banks, enforceable against the Banks in accordance with its terms. I do not express any opinion as to the effect of the compliance by any of the Banks with any state or federal laws or as to the regulatory status or nature of the business of any of the Banks. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without my prior written consent. Very truly yours, EXHIBIT F OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE AGENT [Effective Date] To the Banks and the Agent Referred to Below c/o JPMorgan Chase Bank, as Agent 270 Park Avenue New York, New York 10017 Dear Sirs: We have participated in the preparation of the Five-Year Credit Agreement (the "Credit Agreement") dated as of October 14, 2003 among The Gillette Company, a Delaware corporation (the "Company"), the Banks parties thereto (the "Banks") and JPMorgan Chase Bank, as Agent (the "Agent"), and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, we are of the opinion that: 1. The execution, delivery and performance by the Company of the Credit Agreement and its Notes are within the Company's corporate powers and have been duly authorized by all necessary corporate action. 2. The Credit Agreement constitutes a valid and binding agreement of the Company and each Note issued by it constitutes a valid and binding obligation of the Company, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York, the federal laws of the United States of America and the General Corporation Law of the State of Delaware. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Bank is located which limits the rate of interest that such Bank may charge or collect. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without our prior written consent. Very truly yours, EXHIBIT G FORM OF ELECTION TO PARTICIPATE [Date] JPMORGAN CHASE BANK, as Agent for the Banks named in the Five-Year Credit Agreement dated as of October 14, 2003 among The Gillette Company, such Banks and such Agent (as amended from time to time, the "Credit Agreement") Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [name of Eligible Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to be an Eligible Subsidiary for purposes of the Credit Agreement, effective from the date hereof until an Election to Terminate shall have been delivered on behalf of the undersigned in accordance with the Credit Agreement. The undersigned confirms that the representations and warranties set forth in Article 9 of the Credit Agreement are true and correct as to the undersigned as of the date hereof, and the undersigned hereby agrees to perform all the obligations of an Eligible Subsidiary under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Sections 11.09 and 11.11 thereof, as if the undersigned were a signatory party thereto. [Tax disclosure pursuant to Section 9.04, if any] The address to which all notices to the undersigned Eligible Subsidiary under the Credit Agreement should be directed is: . This instrument shall be construed in accordance with and governed by the laws of the State of New York. Very truly yours, [NAME OF ELIGIBLE SUBSIDIARY] By: ------------------------------------------- Title: The undersigned hereby confirms that [name of Eligible Subsidiary] is an Eligible Subsidiary for purposes of the Credit Agreement described above. THE GILLETTE COMPANY By: ------------------------------------------- Title: Receipt of the above Election to Participate is hereby acknowledged on and as of the date set forth above. JPMORGAN CHASE BANK, as Agent By: ------------------------------------------- Title: EXHIBIT H FORM OF ELECTION TO TERMINATE [Date] JPMORGAN CHASE BANK, as Agent for the Banks named in the Five-Year Credit Agreement dated as of October 14, 2003 among The Gillette Company, such Banks and such Agent (as amended from time to time, the "Credit Agreement") Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [name of Eligible Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to terminate its status as an Eligible Subsidiary for purposes of the Credit Agreement, effective as of the date hereof. The undersigned hereby represents and warrants that all principal and interest on all Notes of the undersigned and all other amounts payable by the undersigned pursuant to the Credit Agreement have been paid in full on or prior to the date hereof. Notwithstanding the foregoing, this Election to Terminate shall not affect any obligation of the undersigned under the Credit Agreement or under any Note heretofore incurred. This instrument shall be construed in accordance with and governed by the laws of the State of New York. Very truly yours, [NAME OF ELIGIBLE SUBSIDIARY] By: ------------------------------------------- Title: The undersigned hereby confirms that the status of [name of Eligible Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement described above is terminated as of the date hereof. THE GILLETTE COMPANY By: ------------------------------------------- Title: Receipt of the above Election to Terminate is hereby acknowledged on and as of the date set forth above. JPMORGAN CHASE BANK, as Agent By: ------------------------------------------- Title: EXHIBIT I OPINION OF COUNSEL FOR THE BORROWER (BORROWINGS BY ELIGIBLE SUBSIDIARIES) [date] To the Banks and the Agent Referred to Below c/o JPMorgan Chase Bank, as Agent 270 Park Avenue New York, New York 10017 Dear Sirs: I am counsel to [name of Eligible Subsidiary, jurisdiction of incorporation] (the "Borrower") and give this opinion pursuant to Section 3.03(a) of the Five-Year Credit Agreement (as amended to the date hereof, the "Credit Agreement") dated as of October 14, 2003 among The Gillette Company (the "Company"), the banks parties thereto and JPMorgan Chase Bank, as Agent. Terms defined in the Credit Agreement are used herein as therein defined. I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, I am of the opinion that: 1. The Borrower is a corporation validly existing and in good standing under the laws of [jurisdiction of incorporation] and is a Substantially-Owned Consolidated Subsidiary of the Company. 2. The execution and delivery by the Borrower of its Election to Participate and its Notes and the performance by the Borrower of the Credit Agreement and its Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower. 3. The execution and delivery by the Borrower of its Election to Participate and its Notes and the performance by the Borrower of the Credit Agreement and its Notes do not contravene, or constitute a default under, any provision of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Subsidiaries and known to me or, to the best of my knowledge, result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries.* 4. The Credit Agreement constitutes a valid and binding agreement of the Borrower and its Notes constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Very truly yours, * The opinion in this paragraph may be given by Counsel for the Company. EXHIBIT J ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of _________, 200_ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), [THE GILLETTE COMPANY (the "Company") and JPMORGAN CHASE BANK, as Agent (the "Agent").] W I T N E S S E T H WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the Five-Year Credit Agreement dated as of October 14, 2003 among the Company, the Assignor and the other Banks party thereto, as Banks, and the Agent (as amended and in effect on the date hereof, the "Credit Agreement"); WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans in an aggregate principal amount at any time outstanding not to exceed $__________; WHEREAS, Committed Loans made by the Assignor under the Credit Agreement in the aggregate principal amount of $__________ are outstanding at the date hereof; and WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of [a portion of] its Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"), together with [a corresponding portion of] its outstanding Committed Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: Section 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. Section 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Committed Loans made by the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, the Company and the Agent and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor. Section 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.* It is understood that commitment and/or facility fees accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. Section 4. Consent of the Company and the Agent. This Agreement is conditioned upon the consent of the Company and the Agent pursuant to Section 11.06(c) of the Credit Agreement. The execution of this Agreement by the Company and the Agent is evidence of this consent. Pursuant to Section 11.06(c) the Borrower agrees to execute and deliver a Note [and to cause each Eligible Subsidiary to execute and deliver a Note] payable to the order of the Assignee to evidence the assignment and assumption provided for herein.]** Section 5. Non-reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of any Borrower, or the validity and enforceability of the obligations of any Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that - ------------------------------ * Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum. ** Consent is required if the Assignee is not an affiliate of the Assignor and was not a Bank immediately prior to the assignment. Consent of the Company is not required if an Event of Default exists. it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrowers. Section 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Section 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By: ------------------------------------------- Title: [ASSIGNEE] By: ------------------------------------------- Title: [THE GILLETTE COMPANY] By: ------------------------------------------- Title: JPMORGAN CHASE BANK, as Agent By: ------------------------------------------- Title: EXHIBIT K DESIGNATION AGREEMENT dated as of ________________, _____ Reference is made to the Five-Year Credit Agreement dated as of October 14, 2003 (as amended from time to time, the "Credit Agreement") among THE GILLETTE COMPANY, a Delaware corporation (the "Company"), the Lenders party thereto, JPMORGAN CHASE BANK, as Agent (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. _________________ (the "Designator") and ________________ (the "Designee") agree as follows: 1. The Designator designates the Designee as its Designated Lender under the Credit Agreement and the Designee accepts such designation. 2. The Designator makes no representations or warranties and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Designee (i) confirms that it is an Eligible Designee; (ii) appoints and authorizes the Designator as its administrative agent and attorney-in-fact and grants the Designator an irrevocable power of attorney to receive payments made for the benefit of the Designee under the Credit Agreement and to deliver and receive all communications and notices under the Credit Agreement, if any, that the Designee is obligated to deliver or has the right to receive thereunder; (iii) acknowledges that the Designator retains the sole right and responsibility to vote under the Credit Agreement, including, without limitation, the right to approve any amendment or waiver of any provision of the Credit Agreement, and (iv) agrees that the Designee shall be bound by all such votes, approvals, amendments and waivers and all other agreements of the Designator pursuant to or in connection with the Credit Agreement, all subject to Section 11.05(b) of the Credit Agreement. 4. The Designee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Article 4 or delivered pursuant to Article 5 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement and (ii) agrees that it will, independently and without reliance upon the Agent, the Designator or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action it may be permitted to take under the Credit Agreement. 5. Following the execution of this Designation Agreement by the Designator and the Designee and the consent hereto by the Company, it will be delivered to the Agent for its consent. This Designation Agreement shall become effective when the Agent consents hereto or on any later date specified on the signature page hereof. 6. Upon the effectiveness hereof, the Designee shall have the right to make Loans or portions thereof as a Bank pursuant to Section 2.01 or 2.03 of the Credit Agreement and the rights of a Bank related thereto. The making of any such Loans or portions thereof by the Designee shall satisfy the obligations of the Designator under the Credit Agreement to the same extent, and as if, such Loans or portions thereof were made by the Designator. 7. This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties have caused this Designation Agreement to be executed by their respective officers hereunto duly authorized, as of the date first above written. Effective Date:______ , ____ [NAME OF DESIGNATOR] By: ------------------------------------------- Name: Title: [NAME OF DESIGNEE] By: ------------------------------------------- Name: Title: The undersigned consent to the foregoing designation. [NAME OF BORROWER] By: ------------------------------------------- Name: Title: [NAME OF ADMINISTRATIVE AGENT], as Administrative Agent By: ------------------------------------------- Name: Title: EX-12 6 ex12_093003-10q.txt EXHIBIT 12 Exhibit 12
The Gillette Company Ratio of Earnings to Fixed Charges Six months Six months Dollars in millions ended ended September 30, 2003 September 30, 2002 2002 2001 2000 1999 1998 --------------- --------------- ----- ----- ----- ----- ----- Earnings: Income from continuing operations before income taxes $ 1,452 1,261 1,752 1,342 1,288 1,912 1,656 Interest expense 43 65 84 145 223 136 94 Interest portion of rental expense 33 30 43 31 25 20 17 Amortization of capitalized interest 8 8 10 9 6 5 4 ----- ----- ----- ----- ----- ----- ----- Earnings available for fixed charges $ 1,536 1,364 1,889 1,527 1,542 2,073 1,771 ===== ===== ===== ===== ===== ===== ===== Fixed Charges: Interest expense $ 43 65 84 145 223 136 94 Interest capitalized 1 3 4 11 23 13 18 Iterest portion of rental expense 33 30 43 31 25 20 17 ----- ----- ----- ----- ----- ----- ----- Total fixed charges $ 77 98 131 187 271 169 129 ===== ===== ===== ===== ===== ===== ===== Ratio of Earnings to Fixed Charges 20.0 13.9 14.5 8.2 5.7 12.3 13.7 ===== ===== ===== ===== ===== ===== =====
EX-31 7 ex31i_093003-10q.txt EXHIBIT 31.1 CERTIFICATION Exhibit 31.1 I, James M. Kilts, certify that: 1. I have reviewed this quarterly report on Form 10-Q of The Gillette Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) (Intentionally omitted) (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant's Board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 4, 2003 /s/ James M. Kilts ------------------------------ James M. Kilts Chairman of the Board and Chief Executive Officer EX-31 8 ex31ii_093003-10q.txt EXHIBIT 31.2 CERTIFICATION Exhibit 31.2 I, Charles W. Cramb, certify that: 1. I have reviewed this quarterly report on Form 10-Q of The Gillette Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) (Intentionally omitted) (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant's Board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 4, 2003 /s/ Charles W. Cramb ------------------------------ Charles W. Cramb Senior Vice President and Chief Financial Officer EX-32 9 ex32_093003-10q.txt EXHIBIT 32 Exhibit 32 THE GILLETTE COMPANY Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of The Gillette Company, a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that: The Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 4, 2003 /s/ James M. Kilts ------------------------------ James M. Kilts Chairman of the Board and Chief Executive Officer Date: November 4, 2003 /s/ Charles W. Cramb ------------------------------ Charles W. Cramb Senior Vice President and Chief Financial Officer The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to The Gillette Company and will be retained by The Gillette Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----