-----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, ILORYSFGtPN9zdMlM0k7mnmprUCEp25WndCNP3USKtEES+9anqVUgByBog2XJWDU jqQzg7ufzf1jCTwFpN4FJw== 0001036050-97-000557.txt : 19970801 0001036050-97-000557.hdr.sgml : 19970801 ACCESSION NUMBER: 0001036050-97-000557 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970731 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCO CHEMICAL CO CENTRAL INDEX KEY: 0000819544 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 510104393 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09678 FILM NUMBER: 97649517 BUSINESS ADDRESS: STREET 1: 3801 WEST CHESTER PIKE CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 2153592000 10-Q 1 FORM 10-Q =============================================================================== - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ------------------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 ------------------------- Commission file number 1-9678 ------------------------- ARCO Chemical Company (Exact name of registrant as specified in its charter) ------------------------- Delaware 51-0104393 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 3801 West Chester Pike Newtown Square, Pennsylvania 19073-2387 (Address of principal executive offices) (Zip Code) ------------------------- (610) 359-2000 (Registrant's telephone number, including area code) ------------------------- Not Applicable (Former name, former address and former fiscal year, if changed since last report) ------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- Number of shares of Common Stock, $1.00 par value, outstanding as of June 30, 1997: 96,976,290. - -------------------------------------------------------------------------------- ================================================================================ PART I. FINANCIAL INFORMATION Item 1. ARCO CHEMICAL COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF INCOME (Millions of Dollars, Except Per Share Data)
Three Months Ended Six Months Ended June 30, June 30, ---------------------- -------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Sales and other operating revenues $ 956 $ 959 $ 1,985 $ 1,941 Costs and other operating expenses 795 743 1,639 1,473 ----- ----- ------- ------- Gross profit 161 216 346 468 Selling, general and administrative expenses 67 70 135 133 Research and development 20 21 41 39 ----- ----- ------- ------- Operating income 74 125 170 296 Interest expense (20) (21) (42) (43) Other (expense) income, net (1) 9 (2) 18 ----- ----- ------- ------- Income before income taxes 53 113 126 271 Provision for income taxes 18 32 43 84 ----- ----- ------- ------- Net income $ 35 $ 81 $ 83 $ 187 ===== ===== ======= ======= Earnings per common share $ .36 $ .84 $ .86 $ 1.94 ===== ===== ======= ======= Cash dividends paid per common share $ .70 $ .70 $ 1.40 $ 1.40 ===== ===== ======= =======
See accompanying notes. ARCO CHEMICAL COMPANY CONSOLIDATED BALANCE SHEETS (Millions of Dollars)
June 30, December 31, 1997 1996 ---- ---- ASSETS Current assets: Cash and cash equivalents $ 88 $ 70 Accounts receivable 592 629 Inventories 513 536 Prepaid expenses and other current assets 37 37 ------- ------- Total current assets 1,230 1,272 Investments and long-term receivables 65 71 Property, plant and equipment, net 2,553 2,622 Deferred charges and other assets (net of accumulated amortization of $111 in 1997 and $312 in 1996) 425 429 ------- ------- Total assets $ 4,273 $ 4,394 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 200 $ 150 Long-term debt due within one year 24 25 Accounts payable 296 349 Taxes payable 28 19 Other accrued liabilities 230 229 ------- ------- Total current liabilities 778 772 ------- ------- Long-term debt 806 844 Other liabilities and deferred credits 183 171 Deferred income taxes 377 408 Minority interest 215 185 Stockholders' equity: Common stock 100 100 Additional paid-in capital 877 875 Retained earnings 1,010 1,062 Foreign currency translation 8 64 Treasury stock, at cost (81) (87) ------- ------- Total stockholders' equity 1,914 2,014 ------- ------- Total liabilities and stockholders' equity $ 4,273 $ 4,394 ======= =======
See accompanying notes. - 2 - ARCO CHEMICAL COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars)
Six Months Ended June 30, ---------------- 1997 1996 ---- ---- Cash flows from operating activities Net income $ 83 $ 187 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 116 109 Changes in working capital accounts (1) (25) Other 12 (14) ----- ----- Net cash provided by operating activities 210 257 ----- ----- Cash flows from investment activities Capital expenditures (127) (95) Proceeds from asset sales 20 22 Proceeds from short-term investments -- 25 Other 15 8 ----- ----- Net cash used in investment activities (92) (40) ----- ----- Cash flows from financing activities Dividends paid (136) (135) Repayment of long-term debt (172) (15) Proceeds from issuance of long-term debt 158 -- Net proceeds from notes payable 46 -- Other 8 9 ----- ----- Net cash used in financing activities (96) (141) ----- ----- Effect of exchange rate changes on cash (4) (3) ----- ----- Net increase in cash and cash equivalents 18 73 Cash and cash equivalents at beginning of year 70 235 ----- ----- Cash and cash equivalents at end of period $ 88 $ 308 ===== =====
See accompanying notes. - 3 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED NOTE A. Basis of Presentation The foregoing financial information is unaudited and has been prepared from the records of ARCO Chemical Company (the Company). In the opinion of management, the financial information reflects all adjustments (consisting only of items of a normal recurring nature) necessary for a fair statement of financial position and results of operations in conformity with generally accepted accounting principles. Certain amounts in 1996 have been reclassified for comparative purposes. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 1996. NOTE B. Geographic Information The Company is an international manufacturer of intermediate chemicals and specialty chemical products which it principally markets to other industrial concerns. The Company operates in one industry segment. The geographic distribution of the Company's markets is indicated by the table below. Total revenues are summarized geographically by destination (customer location) and by origin (point of sale); intercompany sales between geographic areas are excluded.
Three Months Ended Six Months Ended June 30, June 30, ------------------------ ----------------------- 1997 1996 1997 1996 ---- ---- ---- ---- (Millions of Dollars) Total revenues (by destination) United States $ 480 $ 501 $ 1,011 $ 1,017 Europe 255 265 519 546 Other foreign 221 193 455 378 ----- ----- ------- ------- Total $ 956 $ 959 $ 1,985 $ 1,941 ===== ===== ======= ======= Total revenues (by origin) United States $ 582 $ 569 $ 1,221 $ 1,130 Europe 277 311 569 648 Other foreign 97 79 195 163 ----- ----- ------- ------- Total $ 956 $ 959 $ 1,985 $ 1,941 ===== ===== ======= ======= Pretax earnings United States $ 105 $ 121 $ 196 $ 263 Europe (32) 21 (30) 61 Other foreign -- (8) 2 (10) Interest expense (20) (21) (42) (43) ----- ----- ------- ------- Total $ 53 $ 113 $ 126 $ 271 ===== ===== ======= =======
Pretax earnings include royalty charges made to foreign operations for the use of Company technology. - 4 - NOTE C. Inventories Inventories at June 30, 1997 and December 31, 1996 comprised the following categories:
1997 1996 ---- ---- (Millions of Dollars) Finished goods $365 $392 Work-in-process 35 38 Raw materials 68 62 Materials and supplies 45 44 ---- ---- Total $513 $536 ==== ==== NOTE D. Property, Plant and Equipment, Net Property, plant and equipment, at cost, and related accumulated depreciation at June 30, 1997 and December 31, 1996 were as follows: 1997 1996 ---- ---- (Millions of Dollars) Property, plant and equipment $4,107 $4,152 Less: accumulated depreciation 1,554 1,530 ------ ------ Total $2,553 $2,622 ====== ======
NOTE E. Contingencies The Company and its subsidiaries are involved in a number of lawsuits, all of which have arisen in the ordinary course of the Company's business. The Company is unable to predict the outcome of these matters, but does not believe, based upon currently available facts, that the ultimate resolution of such matters will have a material adverse effect on the consolidated financial statements of the Company. The Company is subject to other loss contingencies pursuant to federal, state, local, and foreign environmental laws and regulations. These contingencies include possible obligations to remove or mitigate the effects on the environment of the past disposal or release of certain chemical substances at various sites (remediation costs). The Company continues to evaluate the amount of these remediation costs and periodically adjusts its reserve for remediation costs and its estimate of additional environmental loss contingencies based on progress made in determining the magnitude, method and timing of the remedial actions that may be required by government authorities and an evaluation of the Company's potential liability in relation to the liability and financial resources of any other potentially responsible parties. At June 30, 1997, the Company's environmental reserve totaled $48 million, which reflected the Company's latest assessment of potential future remediation costs associated with existing sites. A significant portion of the reserve is related to the Beaver Valley plant site, located in Monaca, Pennsylvania. The reserve - 5 - gives recognition to a work plan, between the Company and the Pennsylvania Department of Environmental Protection (PADEP), for testing, risk assessment, remedial process design and remediation of conditions at the Beaver Valley plant. The reserve also reflects an agreement between the Company and another responsible party whereby that party has agreed to pay for approximately 50 percent of the costs associated with the Beaver Valley plant work plan. The Company sold the Beaver Valley plant assets to NOVA Chemicals Inc. (NOVA) on September 30, 1996, but currently retains ownership of the land at the Beaver Valley plant site, substantial portions of which are being leased to NOVA. The Company has retained responsibility for certain remediation of the land at the Beaver Valley plant site under the work plan and for certain additional remediation that may be required by PADEP pursuant to the Pennsylvania Land Recycling and Environmental Remediation Standards Act. The remainder of the reserve is related to four other plant sites and one federal Superfund site for amounts ranging from $2 million to $14 million per site. The Company is involved in administrative proceedings or lawsuits relating to eight other Superfund sites. However, the Company estimates, based on currently available information, that potential loss contingencies associated with these sites, individually and in the aggregate, are not significant. Substantially all amounts reserved are expected to be paid out over the next five to ten years. The Company relies upon remedial investigation/feasibility studies (RI/FS) at each site as a basis for estimating remediation costs at the site. The Company has completed RI/FS or preliminary assessments at most of its sites. However, selection of the remediation method and the cleanup standard to be applied are, in most cases, subject to approval by the appropriate government authority. Accordingly, the Company may have possible loss contingencies in excess of the amounts reserved to the extent the scope of remediation required, the final remediation method selected and the cleanup standard applied vary from the assumptions used in estimating the reserve. The Company estimates that the upper range of these possible loss contingencies should not exceed the amount accrued by more than $65 million. The extent of loss related to environmental matters ultimately depends upon a number of factors, including technological developments, changes in environmental laws, the number and ability to pay of other parties involved at a particular site and the Company's potential involvement in additional environmental assessments and cleanups. Based upon currently known facts, management believes that any remediation costs the Company may incur in excess of the amounts reserved or disclosed above would not have a material adverse impact on the Company's consolidated financial statements. The Company and the other principal responsible party (PRP) at the Beaver Valley site have reached an agreement with the U.S. government whereby the government will pay 28.5 percent of the costs incurred by the Company and the other PRP for remediation of substantial portions of the Beaver Valley site. The Company and the Atlantic Richfield Company (ARCO) are parties to an agreement whereby the Company has indemnified ARCO against certain claims or liabilities that ARCO may incur relating to ARCO's former ownership and operation of the oxygenates and polystyrenics businesses of the Company, including liabilities under laws relating to the protection of the environment and the workplace and liabilities arising out of certain litigation. ARCO has indemnified the Company with respect to claims or liabilities and other matters of litigation not related to the assets or businesses reflected in the consolidated financial statements. ARCO has also indemnified the Company for certain federal, foreign, state, and local taxes that might be assessed upon audit of the operations of the Company included in its consolidated financial statements for periods prior to the July 1, 1987 formation of the Company. - 6 - NOTE F. Earnings Per Common Share Earnings per common share for the three- and six-month periods ended June 30, 1997 are computed based on 96.9 million weighted average shares outstanding. Earnings per common share for the three- and six-month periods ended June 30, 1996 are computed based on 96.6 million weighted average shares outstanding. The effect of stock options issued under the 1987 Executive Long- Term Incentive Plan and the 1990 Long-Term Incentive Plan on the computation of primary and fully diluted earnings per common share was not material. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," establishing standards for computing and presenting earnings per share (EPS). SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997 and requires restatement of all prior-period EPS data presented. Earlier application is not permitted. The implementation of SFAS No. 128 is not expected to have a material effect on the reported EPS of the Company. NOTE G. Supplemental Cash Flow Information Following is supplemental cash flow information for the six months ended June 30, 1997 and 1996:
1997 1996 ---- ---- (Millions of Dollars) Changes in working capital-increase (decrease) in cash: Accounts receivable $ (1) $ 24 Inventories 14 (40) Prepaid expense and other current assets (9) (30) Accounts payable (24) 61 Taxes payable 10 (20) Other accrued liabilities 9 (20) ------- ------- Changes in working capital accounts $ (1) $ (25) ======= ======= Short-term investments: Gross proceeds from maturities $ - 139 Gross purchases - (114) ------- ------- Net proceeds $ - $ 25 ======= ======= Notes payable: Gross proceeds from issuances $ 962 $ - Gross repayments (916) - ------- ------- Net proceeds $ 46 $ - ======= ======= The above changes exclude the effects of foreign exchange rate changes. Cash paid during the period for: Interest (net of amount capitalized) $ 42 $ 47 ======= ====== Income taxes $ 26 $ 97 ======= ======
- 7 - Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The Company manufactures and markets intermediate chemicals and specialty products, operating in a single industry segment. It conducts business primarily in the Americas, Europe, and the Asia Pacific region. Each of the Company's two principal manufacturing processes yields its key product, propylene oxide (PO), and one of two co-products, styrene monomer (SM) or tertiary butyl alcohol (TBA). The Company also manufactures numerous derivatives of PO and TBA. Among these are polyols, a key derivative of PO, and methyl tertiary butyl ether (MTBE), a principal derivative of TBA. The Company also manufactures and markets toluene diisocyanate (TDI). TDI and polyols are combined in the manufacture of polyurethanes. MTBE is used in oxygenated fuels and as an octane additive. During the second quarter 1997, the Company initiated a restructuring program designed to reduce annual fixed and controllable costs, currently about $750 million, by about $150 million. The program seeks to simplify the organization and streamline processes in plant operations, commercial activities, corporate staff functions, and research and development. The restructuring efforts are expected to continue through the end of 1998, with the cost reductions substantially in place by 1999. A key element of the program is the reduction of 800 to 1,100 employee and contractor positions on a current base of 5,300 positions. The Company expects to take a special charge to earnings in the second half of 1997 to account for the costs of the restructuring program. Results of Operations Product Volumes Sales and other operating revenues include the sales and processing volumes of the Company's core products and co-products for the periods indicated below. Core products include PO, PO derivatives, and TDI.
Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 1997 1996 1997 1996 ---- ---- ---- ---- (Millions) Core products (pounds) 974 834 1,976 1,729 Co-products: SM and derivatives (pounds) 627 691 1,335 1,350 TBA and derivatives (gallons) 260 257 520 532
The reported SM volumes include quantities processed for PO/SM II equity partners (SM equity volumes) under long-term processing arrangements. The SM equity volumes averaged approximately 200 million pounds per - 8 - quarter in both 1997 and 1996. The 1996 data include SM derivatives sales volumes for periods prior to the September 30, 1996 sale of the plastics business. Second Quarter 1997 versus Second Quarter 1996 Net Income Net income for the second quarter 1997 was $35 million compared with $81 million in the second quarter 1996. The $46 million decline was primarily due to lower margins for most products and increased costs as a result of scheduled maintenance turnarounds, partly offset by the benefit from higher PO and derivatives volumes. Revenues Revenues of $956 million in the second quarter 1997 were comparable to revenues of $959 million in the second quarter 1996, as lower average sales prices offset the benefit of higher sales volumes. The lower average 1997 sales prices were primarily due to lower prices for PO derivatives, TDI, and MTBE, partly offset by higher prices for PO. Factors contributing to the lower 1997 prices included stronger price competition in PO derivatives and TDI markets, the expiration of most of the Company's long-term MTBE contracts, and the effect of a stronger U.S. dollar. Volumes for core products increased 17 percent in the second quarter 1997 versus the prior year period. The increase reflected higher volumes for PO derivatives and, to a lesser extent, TDI. PO derivatives volumes benefited from improved demand and temporary supply shortages for certain products. TDI volumes were higher due to the Olin acquisition and the increased availability of TDI from a plant in France. The French plant was under repair and operated at restricted rates in the 1996 period. The loss of SM derivatives volumes through the sale of the plastics business was essentially offset by increased SM volumes processed for the buyer of the plastics business. Other SM volumes declined due to the timing of export shipments. Gross Profit Gross profit of $161 million in the second quarter 1997 decreased $55 million from $216 million in the 1996 second quarter, reflecting lower margins for most products and higher maintenance costs. Gross profit was 16.8 percent of sales in the second quarter 1997 compared to 22.5 percent in the 1996 period. The decline in gross profit margins is due to the combined effect of lower sales prices and higher costs for most feedstocks in the second quarter 1997 versus the 1996 period. Turnaround costs of $23 million in the 1997 period were $16 million higher, reflecting an increase in the number of scheduled plant maintenance turnarounds versus the prior year period. The Company estimates that plant turnaround costs will total $23 million in the second half of 1997. Other Other expense of $1 million in 1997 compared to income of $9 million in 1996. The $10 million decrease is primarily due to a benefit from an insurance settlement included in the second quarter 1996 and lower interest income as a result of lower levels of cash and cash equivalents in the 1997 period. - 9 - The Company expects its 1997 effective tax rate to be 34.0 percent compared to a 28.3 percent effective tax rate used in the second quarter 1996 and a final 1996 effective tax rate of 28.5 percent. The final 1996 rate reflected utilization of capital loss carryforwards and the utilization of foreign tax credits pursuant to the tax sharing agreement with ARCO. Six Months Ended June 30, 1997 versus 1996 Net Income Net income for the six months ended June 30, 1997 was $83 million compared with $187 million for the comparable 1996 period. The $104 million decline was primarily due to lower margins for PO derivatives, TDI, and MTBE, which were only partly offset by the benefit from higher core product volumes. Maintenance costs were also higher due to an increase in the number of scheduled plant turnarounds in 1997. Revenues Revenues of $1,985 million in the first six months of 1997 increased two percent compared to revenues of $1,941 million in the first six months of 1996, as higher net volumes were substantially offset by lower average sales prices. Volumes for core products increased 14 percent in the first six months of 1997 versus the prior year period. The increase reflected higher TDI volumes due to the Olin acquisition and the increased availability of TDI from the plant in France. Core product sales also reflected higher volumes for PO derivatives, which benefited from improved demand and temporary supply shortages for certain products. SM volumes declined slightly; the loss of SM derivatives volumes through the sale of the plastics business were essentially replaced by increased SM volumes processed for the buyer of the plastics business. TBA and derivative volumes decreased two percent, mainly due to a weak MTBE market in the first quarter 1997. Average sales prices were generally lower in the 1997 period versus 1996. Contributing to the weakness in 1997 prices were stronger competition in PO derivatives and TDI markets, expiration of most of the Company's long-term MTBE contracts, industry concerns over SM capacity additions in Asia, and the effect of a stronger U.S. dollar. Gross Profit Gross profit of $346 million in the first six months of 1997 decreased $122 million from $468 million in the 1996 period, reflecting lower margins for most products and increased plant turnaround maintenance costs. Gross profit was 17.4 percent of sales in the 1997 period compared to 24.1 percent in the 1996 period. The decline in gross profit margins is due to the combined effect of lower sales prices and higher feedstock costs in the 1997 period versus the 1996 period. Other Other expense of $2 million in the 1997 period compared to income of $18 million in the 1996 period. The $20 million decrease reflects the benefit of an insurance settlement included in the 1996 period, lower interest income as a result of lower levels of cash and cash equivalents in the 1997 period, and higher foreign exchange losses in 1997 due to the stronger U.S. dollar. - 10 - The Company expects its 1997 effective tax rate to be 34.0 percent compared to a 31.0 percent effective tax rate used in the first six months of 1996 and a final 1996 effective tax rate of 28.5 percent. The final 1996 rate reflected utilization of capital loss carryforwards and the utilization of foreign tax credits pursuant to the tax sharing agreement with ARCO. Financial Condition Liquidity and Capital Resources As of June 30, 1997, the company had $88 million in cash and cash equivalents compared with $70 million at December 31, 1996. The Consolidated Statement of Cash Flows for the six months ended June 30, 1997 shows that net cash flows provided by operating activities were $210 million, whereas net cash flows used by investment and financing activities were $92 million and $96 million, respectively. Investment activities for the first six months 1997 included capital expenditures of $127 million. The Company's 1997 budget for plant and equipment is $453 million and is part of a five-year, $2.6 billion program primarily devoted to capacity expansion and growth. Minority interest includes equity contributions designated for specific capital projects. At June 30, 1997, the unexpended amounts were classified as deferred charges and other assets in the balance sheet. During July 1997, the Company negotiated a new revolving credit facility comprised of a $200 million credit agreement and a $300 million credit agreement, for a total commitment of $500 million. The $200 million credit agreement is renewable annually; the $300 million credit agreement has a term of five years. This facility replaces the previous $300 million revolving credit agreement. The new facility has a restrictive financial covenant that requires the Company to maintain a minimum consolidated net worth, as defined in the agreements, of $1.5 billion. The Company has no outstanding borrowing against the facility, which is used to back up the Company's commercial paper borrowing. During the second quarter 1997, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission for up to $350 million of debt securities. During the first quarter 1997, the Company executed an agreement to refinance two Dutch bank loans, having a combined principal balance of 300 million Dutch guilders ($158 million) and due in 1997, with one loan due in 2002. The Company paid dividends totaling $136 million during the first six months 1997, including a dividend of $.70 per share, totaling $68 million, during the quarter ended June 30, 1997. On July 17, 1997, the Board of Directors declared a dividend of $.70 per share on the Company's common stock, payable September 5, 1997. During the first quarter 1997, the Company revised its hedging strategy with respect to capital commitments related to construction of the new PO/SM plant in Rotterdam, the Netherlands. To take advantage of the strong U.S. dollar, the Company effectively terminated forward contracts in the notional amount of $127 million, and entered into purchased option contracts for approximately the same notional amount. Gains on the purchased options will be deferred and offset against the plant's construction costs. There were no deferred hedging gains as of June 30, 1997. It is expected that future cash requirements for capital expenditures, dividends and debt repayments will be met by cash generated from operating activities and additional borrowing. - 11 - Statement of Financial Accounting Standards Not Yet Adopted In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," establishing standards for computing and presenting earnings per share (EPS). SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997 and requires restatement of all prior-period EPS data presented. Earlier application is not permitted. The implementation of SFAS No. 128 is not expected to have a material effect on the reported EPS of the Company. - 12 - PART II. OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the disclosures on page 10 of the Company's 1996 Annual Report on Form 10-K and on page 12 of the Company's first quarter 1997 Form 10-Q Report regarding other litigation. The Company responded in writing to the Commission's Statement of Objections on June 11, 1997 and requested an oral hearing to present its arguments. That hearing has been scheduled for August 6-8, 1997. The Company believes that the provisions in question are consistent with European law and are valid and enforceable and has so argued to the Commission. Item 4. Submission of Matters to a Vote of Security Holders The Company's annual meeting of stockholders was held on May 8, 1997. The stockholders elected all the Company's nominees for director, approved and ratified an amendment to the ARCO Chemical Company 1990 Long-Term Incentive Plan, and approved the appointment of Coopers & Lybrand L.L.P. as the Company's independent auditors for 1997. The votes were as follows:
1. Election of Directors: For Withheld --- -------- Walter F. Beran 94,754,531 293,022 Mike R. Bowlin 94,757,520 290,033 Anthony G. Fernandes 94,757,826 289,727 Alan R. Hirsig 94,757,644 289,909 Marie L. Knowles 94,757,879 289,674 James A. Middleton 94,756,898 290,655 Stephen R. Mut 94,757,970 289,583 Frank Savage 94,755,754 291,799 Marvin O. Schlanger 94,758,620 288,933 Robert H. Stewart, III 94,754,525 293,028 Walter J. Tusinski 94,758,858 288,695 2. Approval and ratification of amendment to the ARCO Chemical Company 1990 Long-Term Incentive Plan: For 93,881,204 Against 1,054,753 Abstain 111,596 3. Approval of the Appointment of Coopers & Lybrand L.L.P.: For 94,827,904 Against 170,850 Abstain 48,799
- 13 - Item 5. Other Information CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The Private Securities Litigation Reform of 1995 (the "Act") provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about their companies without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the statement. The Company is hereby filing cautionary statements to take advantage of the safe harbor provisions of the Act. From time to time the Company's management may wish to make forward- looking statements to inform more fully existing and potential security holders regarding various matters, including without limitation, projections regarding future income, sales volumes, production and capital spending, as well as predictions as to the timing and success of specific strategic initiatives, such as downstream integration, capacity additions, acquisitions, cost reduction programs, efficiency improvements, and new product and new market development. Forward-looking statements are generally accompanied by words such as estimate, project, predict, or expect that convey the uncertainty of future events or outcomes. The Company believes that the following are important factors that could cause the Company's actual results to differ materially from projections, forecasts, or estimates made by, or on behalf of, the Company. - Changes in the competitive environment, including the emergence of new competitors; the rate of capacity additions by competitors; the intensification of price competition in the Company's markets; and the introduction of new or substitute products by competitors. - General economic conditions and specific chemical industry cycles, including the dependence of certain Company products on cyclical demand in the housing and automotive markets. - Changes in the cost and availability of feedstocks, reflecting changes in the supply/demand balance in petrochemical feedstock, natural gas, and crude oil markets; and changes in the cost and availability of utilities, such as steam and electricity. - The level of worldwide demand growth for the Company's products, including the effect on demand of changes in the political, regulatory and economic climates of developing countries in Latin America, Eastern Europe and the Asia Pacific region. - Changes in or additions to federal, state, local, and foreign government legislation and regulations that may affect the demand for or the value of the Company's products, the cost of producing them, or the general levels of construction, maintenance, and operating costs. - Technological innovations by competitors. - Hazards related to chemical operations. The Company's operations can be affected by disruptions at its facilities as well as at those of its suppliers or customers. - The Company's ability to implement its cost reduction program as well as the cost, timing and degree of success of such efforts. - The Company's ability to complete construction projects on schedule. - 14 - The factors identified in this statement are believed to be important factors, but not necessarily all of the important factors, that could cause actual results to differ materially from those expressed in any forward- looking statement made by or on behalf of the Company. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 10.1 Term Loan Agreement, dated as of March 12, 1997, among ARCO Chemie Nederland, Ltd. (Rotterdam Branch), as Borrower, the Company, as Guarantor, Chase Investment Bank Limited, as Arranger, Chase Manhattan International Limited, as Agent, and the Banks listed therein. 10.2 Credit Agreement A, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. 10.3 Credit Agreement B, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. 10.4 Amendment No. 7, dated as of July 29, 1997, to the ARCO Chemical Company 1990 Long-Term Incentive Plan. 27 Financial Data Schedule for the six months ended June 30, 1997. (b) Reports on Form 8-K: The Company filed a Current Report on Form 8-K, dated June 27, 1997, which contained a press release, dated June 24, 1997, announcing the Company's cost reduction program. The Company filed a Current Report on Form 8-K, dated July 21, 1997, which announced the adoption of a restricted stock program for the compensation of directors serving on the Company's Board of Directors, who are neither directors, officers or employees of Atlantic Richfield Company nor officers or employees of the Company. - 15 - SIGNATURE 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. ARCO CHEMICAL COMPANY (Registrant) /s/ Van Billet ----------------------------- (Signature) Van Billet Vice President and Controller (Duly Authorized Officer and Chief Accounting Officer) Dated: July 31, 1997 - 16 - EXHIBIT INDEX Exhibit Number Description - ------ ----------- 10.1 Term Loan Agreement, dated as of March 12, 1997, among ARCO Chemie Nederland, Ltd. (Rotterdam Branch), as Borrower, the Company, as Guarantor, Chase Investment Bank Limited, as Arranger, Chase Manhattan International Limited, as Agent, and the Banks listed therein. 10.2 Credit Agreement A, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. 10.3 Credit Agreement B, dated as of July 23, 1997, among the Company, the Banks named therein and The First National Bank of Chicago, as Agent. 10.4 Amendment No. 7, dated as of July 29, 1997, to the ARCO Chemical Company 1990 Long-Term Incentive Plan. 27 Financial Data Schedule for the six months ended June 30, 1997. EX-10.1 2 TERM LOAN AGREEMENT CONFORMED COPY NLG300,000,000 TERM LOAN AGREEMENT between ARCO CHEMIE NEDERLAND, LTD. (ROTTERDAM BRANCH) as Borrower ARCO CHEMICAL COMPANY as Guarantor CHASE INVESTMENT BANK LIMITED as Arranger CHASE MANHATTAN INTERNATIONAL LIMITED as Agent and OTHERS Clifford Chance London Exhibit 10.1 THE SCHEDULES The First Schedule : The Banks The Second Schedule : Form of Transfer Certificate The Third Schedule : Condition Precedent Documents The Fourth Schedule : Notice of Drawdown The Fifth Schedule : Opinion of the Guarantor's Counsel
CONTENTS
Clause Page No. PART 1 DEFINITIONS AND INTERPRETATION 1. Definitions and Interpretation ................................... 1 PART 2 THE FACILITY 2. The Facility ..................................................... 10 3. Availability of the Facility ..................................... 10 PART 3 INTEREST 4. Interest Periods ................................................. 12 5. Payment and Calculation of Interest .............................. 12 6. Alternative Interest Rates ....................................... 12 PART 4 REPAYMENT, CANCELLATION AND PREPAYMENT 7. Repayment ........................................................ 15 8. Cancellation and Prepayment ...................................... 15 PART 5 RISK ALLOCATION 9. Taxes ............................................................ 16 10. Tax Receipts ..................................................... 18 11. Changes in Circumstances ......................................... 18 PART 6 REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT 12. Representations .................................................. 20 13. Information ...................................................... 23 14. Financial Condition .............................................. 27 15. Covenants ........................................................ 27 16. Events of Default ................................................ 31
PART 7 GUARANTEE 17. Guarantee and Indemnity .......................................... 35 PART 8 DEFAULT INTEREST AND INDEMNITY 18. Default Interest and Indemnity ................................... 38 PART 9 PAYMENTS 19. Currency of Account and Payment .................................. 40 20. Payments ......................................................... 40 21. Set-Off .......................................................... 41 22. Sharing .......................................................... 41 PART 10 FEES, COSTS AND EXPENSES 23. Fees ............................................................. 43 24. Costs and Expenses ............................................... 43 PART 11 AGENCY PROVISIONS 25. The Agent, the Arranger and the Banks ............................ 45 PART 12 ASSIGNMENTS AND TRANSFERS 26. Assignments and Transfers ........................................ 50 PART 13 MISCELLANEOUS 27. Calculations and Evidence of Debt ................................ 52 28. Remedies and Waivers, Partial Invalidity ......................... 52 29. Notices .......................................................... 53 30. Amendments ....................................................... 53 PART 14 LAW AND JURISDICTION 31. Law and Jurisdiction ............................................. 55
THIS AGREEMENT is made on 12th March 1997 BETWEEN (1) ARCO CHEMIE NEDERLAND, LTD. (ROTTERDAM BRANCH) (the "Borrower"); (2) ARCO CHEMICAL COMPANY (the "Guarantor"); (3) CHASE INVESTMENT BANK LIMITED (the "Arranger"); (4) CHASE MANHATTAN INTERNATIONAL LIMITED (the "Agent"); and (5) THE BANKS (as defined below). It is agreed as follows. PART 1 DEFINITIONS AND INTERPRETATION 1. Definitions and Interpretation 1.1 Definitions In this Agreement the following terms have the meanings given to them in this Clause 1.1. "Advance" means, save as otherwise provided herein, an advance (as from time to time reduced by repayment) made or to be made by the Banks hereunder. "Affiliate" means (a) any person which controls, directly or indirectly, the Guarantor or (b) any person (other than a member of the Group) which is controlled by or is under common control with a person which controls, directly or indirectly, the Guarantor. "Atlantic" means Atlantic Richfield Company, or its Successor. "Available Commitment" means, in relation to a Bank at any time and save as otherwise provided herein, the amount set opposite its name in the First Schedule (The Banks) less the aggregate amount which it has advanced hereunder at such time. "Available Facility" means, at any time, the aggregate amount of the Available Commitments at such time. "Bank" means: (a) any financial institution named in the First Schedule (The Banks) (other than one which has ceased to be a party hereto in accordance with the terms hereof); or -1- (b) any financial institution which has become a party hereto in accordance with the provisions of Clause 26.4 (Assignments by Banks) or Clause 26.5 (Transfers by Banks). "Basle Paper" means the paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988 and prepared by the Basle Committee on Banking Regulations and Supervision, as amended in November 1991. "Benefit Arrangement" means at any time an employee pension 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. "Capital Adequacy Requirement" means a request or requirement relating to the maintenance of capital, including one which makes any change to, or is based on any alteration in, the interpretation of the Basle Paper or which increases the amounts of capital required thereunder, other than a request or requirement made by way of implementation of the Basle Paper in the manner in which it is being implemented at the date hereof. "Code" means the United States Internal Revenue Code of 1986. "Cross-Indemnification Agreement" means the cross-indemnification agreement dated 1 June 1987, as amended, made between Atlantic and the Guarantor. "Environmental Law" means, with respect to any person, all laws, regulations, treaties and conventions concerning the pollution or protection of human health or the environment or the conditions of the workplace or the generation, transportation, storage, treatment or disposal of any Materials of Environmental Concern. "Environmental License" means any permit, approval, ruling, exemption, consent, license or other authorization required by any Environmental Law. "Equivalent Amount" means the amount of any currency converted from the relevant amount of dollars at the Agent's spot buying rate (based on the market rates then prevailing) for the exchange of dollars and such currency at or about 11.00 a.m. on the third business day prior to the date on which the relevant amount in such currency is to be paid or calculated under this Agreement. "ERISA" means the United States Employee Retirement Income Security Act of 1974. "ERISA Group" means the Guarantor 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 Guarantor, are treated as a single employer under Section 414 of the Code. "Event of Default" means any circumstances described as such in Clause 16 (Events of Default). "Existing Facilities" means the facilities made available to the Borrower pursuant to: (a) the NLG150,000,000 Facility Agreement dated 3 March 1990 and made between ABN AMRO Bank, N.V. and the Borrower; and -2- (b) the NLG150,000,000 Facility Agreement dated 15 November 1990 and made between ABN AMRO Bank, N.V. and the Borrower. "Facility" means the term loan facility granted to the Borrower in this Agreement. "Facility Office" means, in relation to the Agent or any Bank, the office identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) or such other office as it may from time to time select. "Guarantee" means the guarantee granted by the Guarantor in this Agreement. "Group" means the Guarantor and its subsidiaries from time to time. "Indebtedness for Borrowed Money" means, in relation to any person at any date, without duplication: (a) all obligations of such person for borrowed money; (b) all obligations of such person evidenced by debentures, bonds, notes or other similar instruments; (c) 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; (d) all obligations of such person as lessee under capital leases; (e) all Indebtedness for Borrowed Money of others secured by an encumbrance on any asset of such person, whether or not such Indebtedness for Borrowed Money is assumed by such person; and (f) all Indebtedness for Borrowed Money of others guaranteed by such person Provided that in no event shall Indebtedness for Borrowed Money be deemed to include any "take-or-pay" obligations incurred by the Guarantor in the ordinary course of business. "Information Memorandum" means the document dated February 1997 concerning the Obligors which, at their request and on their behalf, was prepared in relation to this transaction and distributed by the Arranger to selected banks. "Instructing Group" means: (a) before any Advances have been made hereunder, a Bank or group of Banks whose Available Commitments amount in aggregate to more than 66 per cent. of the Available Facility; and (b) thereafter, a Bank or group of Banks to whom in aggregate more than 66 per cent. of the Loan is (or, immediately prior to its repayment, was then) owed. -3- "Interest Period" means, save as otherwise provided herein, any of those periods mentioned in Clause 4.1 (Interest Periods). "LIBOR" means, in relation to any amount owed by an Obligor hereunder on which interest for a given period is to accrue, the rate per annum determined by the Agent to be equal to the arithmetic mean (rounded upwards, if not already such a multiple, to the nearest whole multiple of one-sixteenth of one per cent.) of the rates (as notified to the Agent) at which each of the Reference Banks was offering to prime banks in the London Interbank Market deposits in Guilders for such period at or about 11.00 a.m. (London time) on the Quotation Date for such period. "Loan" means the aggregate principal amount for the time being outstanding hereunder. "Margin" means 0.175 per cent. per annum. "Materials of Environmental Concern" includes, but is not limited to, any and all hydrocarbons, gases, pollutants, contaminants, toxic substances and any radioactive omissions likely to cause harm to man or any living organism or to damage the environment or public health or welfare. "Material Subsidiary" means, at any time, a subsidiary of the Guarantor whose assets have an aggregate book value which exceeds 10 per cent. of the consolidated book value of the assets of the Group and/or whose aggregate revenues exceed 10 per cent. of the consolidated revenues of the Group determined by reference to the latest audited consolidated financial statements of the Guarantor (adjusted in such manner as the Agent may require to take account of any matters occurring after the date of preparation of the financial statements in question). "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. "Notice of Drawdown" means a notice substantially in the form set out in the Fourth Schedule (Notice of Drawdown). "Obligors" means the Borrower and the Guarantor. "Original Financial Statements" means: (a) in relation to ARCO Chemie Nederland, Ltd., its unaudited financial statements for its financial year ended 31 December 1995; and (b) in relation to the Guarantor, its audited consolidated financial statements for its financial year ended 31 December 1995. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Encumbrance" means any encumbrance: -4- (a) on any asset of a corporation existing at the time it becomes a subsidiary of the Guarantor or at the time it is merged or consolidated into a member of the Group and not created in contemplation of such event; (b) subsisting over an asset at the time it is acquired or created to secure either (i) payment of the consideration therefor or (ii) Indebtedness for Borrowed Money incurred prior to, at the time of or within 24 months after the acquisition thereof for the purpose of financing all or part of the consideration therefor; (c) created over an asset to secure (i) all or part of the cost of construction or improvements thereon or (ii) Indebtedness for Borrowed Money incurred to provide funds for the construction or improvements thereon in a principal amount not exceeding the cost of such construction or improvement; (d) which secures Indebtedness for Borrowed Money owing from any member of the Group to any other member of the Group; (e) in favour of the United States of America or any state thereof, or any department, agency, instrumentality or political subdivision thereof to secure (i) any payment due pursuant to any agreement, law or regulation or (ii) Indebtedness for Borrowed Money incurred for the purpose of financing all or part of the consideration for or cost of constructing or improving the asset subject to such encumbrance including, without limitation, encumbrances to secure Indebtedness for Borrowed Money in respect of any pollution control, industrial revenue bond or other similar type of financing; (f) required by any agreement, law or regulation to enable the Guarantor or any member of the Group to perform any agreement made by it with or at the request of the United States of America or any state thereof, or any department, agency, instrumentality or political subdivision thereof; (g) created in favour of a supplier or other similar trade creditor in the ordinary course of business securing Indebtedness for Borrowed Money which is not overdue or being contested in good faith by appropriate proceedings and in connection with which adequate reserves are being maintained; (h) which secures the obligations of any member of the Group owing pursuant to a deferred payment agreement in an aggregate amount not exceeding $10,000,000 (or its Equivalent Amount); (i) of a judgment or attachment in respect of any Indebtedness for Borrowed Money so long as (1) the Guarantor in good faith by appropriate action, promptly initiated and diligently conducted, shall contest or cause to be contested the validity, amount, extent or application thereof and (2) such action shall operate to prevent the sale or foreclosure (or the posting of notices preparatory to any sale or foreclosure) of any part of an asset to satisfy such encumbrance prior to a final determination of such action; -5- (j) which secures taxes not delinquent or being contested in good faith by appropriate proceedings and for which reserves adequate under generally accepted accounting principles in the State of Delaware are being maintained; and (k) which is an extension, renewal or replacement of an encumbrance referred to in sub-paragraphs (a) to (h) above or of the Indebtedness for Borrowed Money secured thereby Provided that the principal amount of Indebtedness for Borrowed Money secured thereby does not exceed the principal amount of Indebtedness for Borrowed Money so secured at the time of such extension, renewal or replacement and that such extension, renewal or replacement shall be limited to all or part of substantially the same property which secured the encumbrance extended renewed or replaced (including improvements on such property). "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 Code and either: (a) is maintained or contributed to by a member of the ERISA Group for employees of a member of the ERISA Group; or (b) 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 for employees of any person which was at such time a member of the ERISA Group. "Potential Event of Default" means any event which may become (with the passage of time, the giving of notice, the making of any determination hereunder or any combination thereof) an Event of Default. "Quotation Date" means, in relation to any period for which an interest rate is to be determined hereunder, the day on which quotations would ordinarily be given by prime banks in the London Interbank Market for deposits in Guilders for delivery on the first day of that period Provided that, if, for any such period, quotations would ordinarily be given on more than one date, the Quotation Date for that period shall be the last of those dates. "Reference Banks" means the principal London offices of ABN AMRO Bank N.V., ING Bank N.V. and The Chase Manhattan Bank or such other bank or banks as may from time to time be agreed between the Borrower and the Agent acting on the instructions of an Instructing Group. "Repayment Date" means the day which is 60 months after the date hereof. "Sale and Lease-Back Transaction" means an arrangement with any person (other than a member of the Group) providing for the leasing to any member of the Group for a period of more than three years of any property which has been sold or transferred by such member of the Group to such person, to which amounts have been advanced or are to be advanced by such person on the security of the leased property. -6- "Successor" in relation to a party means an assignee or successor in title of such party or any person who, under the laws of its jurisdiction of incorporation or domicile, has assumed the rights and obligations of such party hereunder or to which under such laws the same has been transferred. "Tax-Sharing Agreement" means the amended and restated tax-sharing agreement dated 1 January 1995 made between Atlantic and the Guarantor. "Termination Date" means the earlier of the day which is one month after the date hereof and the first business day on which the Available Commitment of each of the Banks is zero. "Transfer Certificate" means a certificate substantially in the form set out in the Second Schedule (Form of Transfer Certificate) signed by a Bank and a Transferee whereby: (a) such Bank seeks to procure the transfer to such Transferee of all or a part of such Bank's rights, benefits and obligations hereunder as contemplated in Clause 26.3 (Assignments and Transfers by Banks); and (b) such Transferee undertakes to perform the obligations it will assume as a result of delivery of such certificate to the Agent as is contemplated in Clause 26.5 (Transfers by Banks). "Transfer Date" means, in relation to any Transfer Certificate, the date for the making of the transfer as specified in the schedule to such Transfer Certificate. "Transferee" means a bank or other financial institution to which a Bank seeks to transfer all or part of such Bank's rights, benefits and obligations hereunder. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which the present value of all benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits (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. "Value" means, with respect to a Sale and Lease-Back Transaction, as of any particular time the amount equal to the greater of (a) the net proceeds of the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction or (b) the fair value in the opinion of the board of directors of the relevant member of the Group of such property at the time of entering into such Sale and Lease-Back Transaction, in each case divided first by the number of full years of the term of the lease and then multiplied by the number of full years of such term remaining at the time of determination, without regard to any renewal or extension options contained in the lease. 1.2 Interpretation Any reference in this Agreement to: the "Agent" or any "Bank" shall be construed so as to include its and any subsequent Successors, Transferees and assigns in accordance with their respective interests; -7- a "business day" shall be construed as a reference to a day (other than a Saturday or Sunday) on which banks generally are open for business in Amsterdam, London and New York City; an "encumbrance" shall be construed as a reference to (a) a mortgage, charge, pledge, lien or other encumbrance securing any obligation of any person, (b) any arrangement under which money or claims to, or the benefit of, a bank or other account may be applied, set-off or made subject to a combination of accounts so as to effect payment of sums owed or payable to any person or (c) any other type of preferential arrangement (including title transfer and retention arrangements) having a similar effect; a "holding company" of a company or corporation shall be construed as a reference to any company or corporation of which the first-mentioned company or corporation is a subsidiary; "indebtedness" shall be construed so as to include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; a "month" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that, where any such period would otherwise end on a day which is not a business day, it shall end on the next succeeding business day, unless that day falls in the calendar month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding business day Provided that, if a period starts on the last business day in a calendar month or if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last business day in that later month (and references to "months" shall be construed accordingly); a "person" shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing; "repay" (or any derivative form thereof) shall, subject to any contrary indication, be construed to include "prepay" (or, as the case may be, the corresponding derivative form thereof); a "subsidiary" of a company or corporation shall be construed as a reference to any company or corporation: (a) which is controlled, directly or indirectly, by the first-mentioned company or corporation; (b) more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or (c) which is a subsidiary of another subsidiary of the first-mentioned company or corporation and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body; -8- "tax" shall be construed so as to include any tax, levy, impost, duty or other charge of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same); "VAT" shall be construed as a reference to value added tax including any similar tax which may be imposed in place thereof from time to time; a "wholly-owned subsidiary" of a company or corporation shall be construed as a reference to any company or corporation which has no other members except that other company or corporation and that other company's or corporation's wholly- owned subsidiaries or persons acting on behalf of that other company or corporation or its wholly-owned subsidiaries; and the "winding-up", "dissolution" or "administration" of a company or corporation shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors. 1.3 Currency Symbols "$" and "dollars" denote lawful currency of the United States of America and "NLG" or "Guilders" denote lawful currency of The Netherlands. 1.4 Agreements and Statutes Save where the contrary is indicated, any reference in this Agreement to: (a) this Agreement or any other agreement or document shall be construed as a reference to this Agreement or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented; and (b) a statute shall be construed as a reference to such statute as the same may have been, or may from time to time be, amended or re- enacted. 1.5 Headings Clause, Part and Schedule headings are for ease of reference only. -9- PART 2 THE FACILITY 2. The Facility 2.1 Grant of the Facility The Banks grant to the Borrower, upon the terms and subject to the conditions hereof, a term loan facility in an aggregate amount of NLG300,000,000. 2.2 Purpose and Application The Facility is intended to refinance the Existing Facilities and, accordingly, the Borrower shall apply all amounts raised by it hereunder in or towards satisfaction of such purpose and neither the Agent, the Arranger and the Banks nor any of them shall be obliged to concern themselves with such application. 2.3 Condition Precedent Documents Save as the Banks may otherwise agree, the Borrower may not deliver any Notice of Drawdown hereunder unless the Agent has confirmed to the Borrower and the Banks that it has received all of the documents listed in the Third Schedule (Condition Precedent Documents) and that each is, in form and substance, satisfactory to the Agent. 2.4 Banks' Rights and Obligations Several The obligations of each Bank hereunder are several and the failure by a Bank to perform its obligations hereunder shall not affect the obligations of the Borrower, the Guarantor or any Bank towards any other party hereto nor shall any other party be liable for the failure by such Bank to perform its obligations hereunder. The rights of each Bank hereunder are several and each Bank may, save as otherwise provided herein, separately enforce those rights. 3. Availability of the Facility 3.1 Drawdown Conditions An Advance will be made by the Banks to the Borrower if: (a) prior to 10.00 a.m. (London time) on the third business day before the proposed date for the making of such Advance, the Agent has received from the Borrower a Notice of Drawdown therefor, receipt of which shall oblige the Borrower to borrow the amount therein requested on the date therein stated upon the terms and subject to the conditions contained herein; (b) the proposed date for the making of such Advance is a business day which is or precedes the Termination Date; (c) the proposed date for the making of such Advance is not less than five business days after the date upon which the previous Advance (if any) was made hereunder; (d) the proposed amount of such Advance is (i) an amount or integral multiple of NLG10,000,000 which is less than the amount of the Available Facility or (ii) equal to the amount of the Available Facility; (e) the interest rate applicable to such Advance during its first Interest Period would not fall to be determined pursuant to Clause 6.1 (Market Disruption); and -10- (f) no Event of Default or Potential Event of Default has occurred and the representations set out in Clause 12 (Representations) are true on and as of the proposed date for the making of such Advance. 3.2 Notice to Banks The Agent shall notify each Bank of the receipt of a Notice of Drawdown, the details specified in such Notice of Drawdown and the amount of such Bank's participation in the proposed Advance. 3.3 Each Bank's Participation Each Bank will participate through its Facility Office in each Advance made pursuant to Clause 3.1 (Drawdown Conditions) in the proportion borne by its Available Commitment to the Available Facility immediately prior to the making of that Advance. 3.4 Reduction of Available Commitment If a Bank's Available Commitment is reduced in accordance with the terms hereof after the Agent has received the Notice of Drawdown for an Advance, then the amount of that Advance shall be reduced accordingly. 3.5 Expiry of Termination Date Each Bank's Available Commitment shall immediately be reduced to zero on the Termination Date. -11- PART 3 INTEREST 4. Interest Periods 4.1 Interest Periods The period for which an Advance is outstanding shall be divided into successive periods each of which (other than the first) shall start on the last day of the preceding such period. 4.2 Duration The duration of each Interest Period shall, save as otherwise provided herein, be one, three, six or twelve months, in each case as the Borrower may by not less than five business days' prior notice to the Agent select Provided that: (a) if the Borrower fails to give such notice of its selection in relation to an Interest Period, the duration of that Interest Period shall, subject to paragraphs (b) and (c) below, be six months; (b) any Interest Period which begins during or at the same time as any other Interest Period shall end at the same time as that other Interest Period; and (c) any Interest Period which would otherwise end during the month preceding, or extend beyond, the Repayment Date shall be of such duration that it shall end on the Repayment Date. 4.3 Consolidation of Advances If two or more Interest Periods end at the same time, then, on the last day of those Interest Periods, the Advances to which they relate shall be consolidated into and treated as a single Advance. 5. Payment and Calculation of Interest 5.1 Payment of Interest On the last day of each Interest Period (and, in the case of any Interest Period of more than six months duration, on the last day of each successive period of six months during such Interest Period) the Borrower shall pay accrued interest on the Advance to which such Interest Period relates. 5.2 Calculation of Interest The rate of interest applicable to an Advance from time to time during an Interest Period relating thereto shall be the rate per annum which is the sum of the Margin and LIBOR on the Quotation Date therefor. 5.3 Notice to Banks The Agent shall notify each Bank of the interest payable prior to the last day of each Interest Period. 6. Alternative Interest Rates 6.1 Market Disruption If: (a) the Agent determines that at or about 11.00 a.m. (London time) on the Quotation Date for an Interest Period in respect of an Advance none or only one of the Reference Banks -12- was offering to prime banks in the London Interbank Market deposits in Guilders for the proposed duration of such Interest Period; or (b) before the close of business in London on the Quotation Date for an Interest Period in respect of an Advance, the Agent has been notified by a Bank or each of a group of Banks to whom in aggregate thirty-five per cent. or more of such Advance is (or, in the case of an undrawn Advance, if such Advance were then made, would be) owed that the rate at which such deposits were being so offered does not accurately reflect the cost to it of obtaining such deposits, then, notwithstanding the provisions of Clause 4 (Interest Periods) and Clause 5 (Payment and Calculation of Interest): (i) if paragraph (a) above applies, the duration of that Interest Period shall be one month or, if less, such that it shall end on the Repayment Date; and (ii) if either paragraph (a) or (b) above applies, the rate of interest applicable to such Advance from time to time during such Interest Period shall be the rate per annum which is the sum of the Margin and the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if not already such a multiple, to the nearest whole multiple of one-sixteenth of one per cent.) of the rates notified by each Bank to the Agent before the last day of such Interest Period to be those which express as a percentage rate per annum the cost to each Bank of funding from whatever sources it may select its portion of such Advance during such Interest Period. 6.2 Substitute Basis or Repayment If (i) either of those events mentioned at paragraphs (a) and (b) in Clause 6.1 (Market Disruption) occurs in relation to an Advance and an Interest Period during which such Advance is (or was) to be outstanding in Guilders or (ii) by reason of circumstances affecting the London Interbank Market during any period of three consecutive business days none or only one of the Reference Banks offers deposits in Guilders to prime banks in the London Interbank Market, then: (a) the Agent shall notify the Borrower and the Banks of such event; (b) if the Agent so requires, within five days of such notification the Agent and the Borrower shall enter into negotiations with a view to agreeing a substitute basis (1) for determining the rates of interest from time to time applicable to the Advances and/or (2) upon which the Advances may be maintained (whether in Guilders or some other currency) thereafter and any such substitute basis that is agreed shall take effect in accordance with its terms and be binding on each party hereto Provided that the Agent may not agree any such substitute basis without the prior consent of each Bank; and -13- (c) if the Agent has required the Borrower to enter into such negotiations, the Agent may declare (any such declaration to be binding on the Borrower) that each Advance shall become due and payable on the last day of its then current Interest Period unless by then a substitute basis has been agreed in relation thereto. -14- PART 4 REPAYMENT, CANCELLATION AND PREPAYMENT 7. Repayment The Borrower shall repay the Loan in full on the Repayment Date. 8. Cancellation and Prepayment 8.1 Cancellation The Borrower may, by giving to the Agent not less than fifteen business days' prior notice to that effect, cancel the whole or any part (being an amount or integral multiple of NLG20,000,000) of the Available Facility; any such cancellation shall reduce the Available Commitments of the Banks rateably. 8.2 Prepayment The Borrower may, if it has given to the Agent not less than fifteen business days' prior notice to that effect, prepay the whole of any Advance or any part of any Advance (being an amount or integral multiple of NLG20,000,000) on the last day of any Interest Period relating to that Advance which ends after the Termination Date; any such prepayment shall reduce rateably the remaining obligations of the Borrower under Clause 7 (Repayment). 8.3 Notice of Cancellation or Prepayment Any notice of cancellation or prepayment given by the Borrower pursuant to Clause 8.1 (Cancellation) or Clause 8.2 (Prepayment) shall be irrevocable, shall specify the date upon which such cancellation or prepayment is to be made and the amount of such cancellation or prepayment and, in the case of a notice of prepayment, shall oblige the Borrower to make such prepayment on such date. 8.4 Repayment of a Bank's Share of the Loan If any Bank claims indemnification from the Borrower under Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs) or if any Obligor is required to make an additional payment under Clause 9.1 (Tax Gross-Up) and within thirty days thereafter the Agent receives from the Borrower at least ten business days' prior notice (which shall be irrevocable) of the Borrower's intention to repay such Bank's share of the Loan, the Borrower shall on the last day of each of the then current Interest Periods repay such Bank's portion of the Advance to which such Interest Period relates; any repayment so made after the Termination Date shall reduce rateably the remaining obligations of the Borrower under Clause 7 (Repayment). 8.5 No Further Advances A Bank for whose account a repayment is to be made under Clause 8.4 (Repayment of a Bank's Share of the Loan) shall not be obliged to participate in the making of Advances on or after the date upon which the Agent receives the Borrower's notice of its intention to repay such Bank's share of the Loan, on which date such Bank's Available Commitment shall be reduced to zero. 8.6 No Other Repayments and No Reborrowing The Borrower shall not repay all or any part of the Loan except at the times and in the manner expressly provided for in this Agreement and shall not be entitled to reborrow any amount repaid or cancelled. -15- PART 5 RISK ALLOCATION 9. Taxes 9.1 Tax Gross-up All payments to be made by either of the Obligors to any Bank or the Agent on its behalf hereunder shall be made free and clear of and without deduction for or on account of tax unless such Obligor is required to make such a payment subject to the deduction or withholding of tax, in which case the sum payable by such Obligor in respect of which such deduction or withholding is required to be made shall be increased to the extent necessary to ensure that, after the making of the required deduction or withholding, such Bank or the Agent on its behalf receives and retains (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made. 9.2 Tax Indemnity Without prejudice to the provisions of Clause 9.1 (Tax Gross-up), if any Bank or the Agent on its behalf is required to make any payment on account of tax (not being a tax imposed on and calculated by reference to the net income) on or calculated by reference to the amount of such Bank's share of the Advances or on or in relation to any sum received or receivable hereunder by such Bank or the Agent on its behalf (including any sum received or receivable under this Clause 9) or any liability in respect of any such payment is asserted, imposed, levied or assessed against such Bank or the Agent on its behalf, the Borrower shall, upon demand of the Agent, promptly indemnify such Bank or the Agent, as the case may be, against such payment or liability, together with any interest, penalties, costs and expenses payable or incurred in connection therewith. 9.3 Claims by Banks A Bank intending to make a claim pursuant to Clause 9.2 (Tax Indemnity) shall notify the Agent of the event by reason of which it is entitled to do so within 90 days of the date on which such Bank's Facility Office ought reasonably to have become aware of such Bank's entitlement to make such a claim, whereupon the Agent shall notify the Borrower thereof. In the event that such Bank or the Agent fails to so notify the Borrower within the period provided in the preceding sentence, the Borrower shall not be obliged to indemnify such Bank for all or part of any payment or liability under Clause 9.2 (Tax Indemnity) to the extent that such amount is imposed with respect to payments made prior to the date which is 90 days prior to the date on which such Bank or the Agent gives notice to the Borrower of the event by reason of which it is entitled to be so indemnified. Nothing herein contained shall require such Bank to disclose any confidential information relating to the organisation of its affairs. 9.4 Tax Credit In the event that an additional payment is made under Clause 9.1 (Tax Gross-up), Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs) and the person for whose benefit such payment is made, in its reasonable bona fide opinion, determines that it has received or been granted (and has derived full use and benefit from) a credit against, relief or remission for, or repayment of, any tax paid or payable by it in respect of or calculated with reference to the deduction or withholding giving rise to such additional payment or, in the case of an additional payment made pursuant to Clause 11.1 (Increased Costs), with reference to the liability, expense or loss to which the payment giving rise to the additional payment relates, such person shall, to the extent that it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the relevant Obligor such amount as such person shall, in its reasonable opinion (exercised in good faith) have concluded to be attributable to such -16- deduction or withholding or, as the case may be, such liability, expense or loss. Any such payment shall be conclusive evidence of the amount due to the relevant Obligor hereunder and shall be accepted by such Obligor in full and final settlement of its rights of reimbursement hereunder in respect of such deduction or withholding or, as the case may be, in respect of the additional payment related to any liability, expense or loss. Nothing herein contained shall interfere with the right of the Agent or any Bank to arrange its tax affairs in whatever manner it thinks fit or oblige the Agent or any Bank to disclose any information relating to its tax affairs or any computation made in respect thereof and, in particular, neither the Agent nor any Bank shall be under any obligation to claim credit, relief, remission or repayment from or against its corporate profits or similar tax liability in respect of the amount of such deduction or withholding or, as the case may be, in respect of the additional payment related to any liability, expense or loss in priority to any other claims, reliefs, credits or deductions available to it. 9.5 United States Withholding Tax The Agent and each Bank agrees that: (a) on or prior to the date of this Agreement (or in the case of a Bank which becomes a party hereto pursuant to a transfer or assignment, on or prior to the date on which the relevant transfer or assignment becomes effective), it shall deliver to the Borrower and (in the case of each Bank) the Agent two duly completed and executed originals of United States Internal Revenue Service Form 1001 or Form 4224 and Form W-8 or Form W-9, as the case may be, (or successor forms) or other manner of certification to establish that such Bank or the Agent is exempt from withholding or deduction of any United States federal income taxes and shall deliver, extensions or renewals thereof, upon the request of the Borrower, on or before the date that any such form expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Bank or the Agent from duly completing and delivering any such form with respect to it and such Bank or the Agent so advises the Borrower and (in the case of any Bank) the Agent; and (b) by its execution of this Agreement, it certifies that it is entitled to receive payments from the Obligors under this Agreement without deduction or withholding of any United States federal income taxes; and (c) the Borrower is relying upon the forms and certification delivered by the Agent and each Bank pursuant to sub-paragraphs (a) and (b) above in providing the representation contained in Clause 12.4 (No Deduction or Withholding) insofar as such representation relates to the deduction or withholding of United States federal income taxes; and (d) the Obligors shall not be required to make any additional payment to any Bank or the Agent on its behalf pursuant to Clause 9.1 (Tax Gross- up) or Clause 9.2 (Tax Indemnity) if such Bank or the Agent, as the case may be, fails to complete or deliver any form required to be completed or delivered by it pursuant to sub-paragraph (a) above or if such form or the certification in sub-paragraph (b) above is not true in all material respects and such additional payment would not have been payable if such -17- Bank or the Agent, as the case may be, had completed and delivered such form and such form and certification had been true in all material respects. 10. Tax Receipts 10.1 Notification of Requirement to Deduct Tax If, at any time, either of the Obligors is required by law to make any deduction or withholding from any sum payable by it hereunder (or if thereafter there is any change in the rates at which or the manner in which such deductions or withholdings are calculated), such Obligor shall promptly notify the Agent. 10.2 Evidence of Payment of Tax If either of the Obligors makes any payment hereunder in respect of which it is required to make any deduction or withholding, it shall pay the full amount required to be deducted or withheld to the relevant taxation or other authority within the time allowed for such payment under applicable law and shall request such authority for an original receipt (or a certified copy thereof) issued by such authority evidencing the payment to such authority of all amounts so required to be deducted or withheld in respect of that Bank's share of such payment which upon receipt by such Obligor shall be promptly delivered to the Agent for each Bank. 11. Changes in Circumstances 11.1 Increased Costs If, by reason of (i) any change in law or in its interpretation or administration (other than the adoption of a new tax or change in an existing tax, which would be subject to the indemnification provisions under Clause 9.2 (Tax Indemnity)) and/or (ii) compliance with any Capital Adequacy Requirement or any other request from or requirement of any central bank or other fiscal, monetary or other authority: (a) a Bank or any holding company of such Bank is unable to obtain the rate of return on its capital pursuant to or in respect of this Agreement which it would have been able to obtain but for such reason; (b) a Bank or any holding company of such Bank incurs a cost as a result of such Bank's entering into or assuming or maintaining a commitment or performing its obligations (including its obligation to participate in the making of Advances) under this Agreement; or (c) there is any increase in the cost to a Bank or any holding company of such Bank of funding or maintaining all or any of the loans comprised in a class of loans formed by or including such Bank's share of the Advances, then the Borrower shall, from time to time on demand of the Agent, promptly pay to the Agent for the account of that Bank amounts sufficient to hold harmless and indemnify that Bank or such Bank's holding company from and against, as the case may be, (1) such reduction in the rate of return of capital, (2) such cost and (3) such increased cost (or such proportion of such increased cost as is, in the opinion of that Bank, attributable to its participating in the funding or maintaining of Advances). 11.2 Increased Costs Claims A Bank intending to make a claim pursuant to Clause 11.1 (Increased Costs) shall notify the Agent of the event by reason of which it is entitled to do so (supported by any relevant calculations), whereupon the Agent shall notify the Borrower thereof Provided that nothing herein shall require such Bank to disclose any confidential information relating to the organisation of its affairs. -18- 11.3 Illegality If, at any time, it is unlawful for a Bank to make, fund or allow to remain outstanding all or part of its share of the Advances, then that Bank shall, promptly after becoming aware of the same, deliver to the Borrower through the Agent a notice to that effect and: (a) such Bank shall not thereafter be obliged to participate in the making of any Advances and the amount of its Available Commitment shall be immediately reduced to zero; and (b) if the Agent on behalf of such Bank so requires, the Borrower shall on such date as the Agent shall have specified (which in any event shall be a date no later than legally permitted) repay such Bank's share of any outstanding Advances together with accrued interest thereon and all other amounts owing to such Bank hereunder. 11.4 Mitigation If, in respect of any Bank, circumstances arise which would or would upon the giving of notice result in: (a) an increase in the amount of any payment to be made to it for its account pursuant to Clause 9.1 (Tax Gross-Up); or (b) a claim for indemnification from the Borrower pursuant to Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs), then such Bank shall, after consultation with the Agent and the Borrower and to the extent that it can do so lawfully and without prejudice to its own position, consider what steps it might reasonably take (including a change in its Facility Office or the transfer of its rights, benefits and obligations hereunder to another financial institution acceptable to the Borrower and willing to participate in the Facility) with a view to mitigating the effect of such circumstances on the Borrower. -19- PART 6 REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT 12. Representations Each of the Obligors (in respect of itself) makes the representations and warranties set out in Clause 12.1 to Clause 12.22 and acknowledges that the Agent, the Arranger and the Banks have entered into this Agreement in reliance on those representations and warranties. 12.1 Existence It is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification (or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction). 12.2 Powers It has all corporate power and authority, governmental permits, licences, consents, authorisations, orders and other approvals as are necessary to carry on its business substantially as presently conducted except for such of the foregoing the absence of which would not, in the aggregate, subject it to any material liability or disability. 12.3 Due Authorisation The execution, delivery and performance of its obligations under this Agreement are within its corporate power and authority and have been duly authorised by all necessary corporate proceedings. 12.4 No Deduction or Withholding Under the laws of either its jurisdiction of incorporation or The Netherlands in force at the date hereof, it will not be required to make any deduction or withholding from any payment it may make hereunder. 12.5 Claims Pari Passu Under the laws of either its jurisdiction of incorporation or The Netherlands in force at the date hereof, the claims of the Agent, the Arranger and the Banks against it under this Agreement will rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors save those whose claims are preferred solely by any bankruptcy, insolvency, liquidation or other similar laws of general application. 12.6 Consents, Filing or Stamp Taxes Under the laws of either its jurisdiction of incorporation or The Netherlands in force at the date hereof, no consent, authorisation, notarial attestation, order or approval of (or filing or registration with) any court, governmental commission, board or other authority is required to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement and it is not necessary that any stamp, registration or similar tax be paid on or in relation to this Agreement. 12.7 Binding Obligations Assuming the due execution by the Agent and the Banks of this Agreement, this Agreement constitutes its legal, valid and binding obligation (subject, as to enforcement of remedies, to applicable bankruptcy, re-organisation, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity). 12.8 No Proceedings or Winding-up No member of the Group has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to its knowledge) threatened against any member of the Group for its winding-up, dissolution, administration or re-organisation or for the -20- appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or of any or all of its assets or revenues. 12.9 No Defaults No Event of Default or Potential Event of Default has occurred and is continuing. 12.10 No Material Proceedings Except as disclosed in writing to the Banks prior to the date hereof, there is no action or administrative proceeding pending or, to the knowledge of the Borrower or the Guarantor, as the case may be, threatened against it or any member of the Group before any court or by any agency which is likely to have a material adverse effect upon its ability to perform its obligations under this Agreement or which in any manner affects the validity of this Agreement. 12.11 Original Financial Statements The Original Financial Statements of ARCO Chemie Nederland, Ltd. and the Guarantor were prepared in accordance with accounting principles generally accepted in the United States of America and consistently applied and give (in conjunction with the notes thereto) a true and fair view of the financial condition of ARCO Chemie Nederland, Ltd. or, as the case may be, the Guarantor at the date as of which they were prepared and the results of the operations of ARCO Chemie Nederland, Ltd. or the Guarantor, as the case may be, during the financial year then ended. 12.12 Quarterly Statements The unaudited financial information of the Guarantor in its quarterly report on Form 10-Q for the quarter ended 30 September 1996, as filed (with exhibits) with the Securities and Exchange Commission, were prepared in accordance with accounting principles generally accepted in the United States of America and consistently applied and give (in conjunction with the notes thereto) a true and fair view of the financial condition of the Group at the date as of which they were prepared and the results of the Group's operations during the quarter then ended. 12.13 No Material Adverse Change Except as disclosed in writing to the Banks prior to the date hereof, there has been no material adverse change since 30 September 1996 and prior to the date hereof in the business operations, affairs, assets, condition (financial or otherwise) or the results of operations of the Guarantor and each member of the Group considered as a whole. 12.14 Full Disclosure The information contained in the Information Memorandum and all other written information supplied by any member of the Group in connection herewith is accurate in all material respects and is not misleading in any material respect and neither the Borrower nor the Guarantor is aware of any material and adverse fact or circumstances which have arisen, or any events which have occurred, that have not been disclosed to the Agent, the Arranger or the Banks and which might, if disclosed, adversely affect the decision of a person considering whether or not to provide finance to the Borrower or to provide such finance against the security of a guarantee issued by the Guarantor; any opinions, predictions or intentions expressed in the Information Memorandum on the part of the Group are honestly held or made and are not misleading in any material respect; all assumptions upon which any of the projections or forecasts in the Information Memorandum are based are reasonable and all proper enquiries have been made to ascertain and to verify the foregoing. 12.15 Encumbrances Save as permitted by Clause 15.5 (Negative Pledge) no encumbrance exists over all or any of the present or future revenues or assets of any member of the Group. -21- 12.16 Execution of this Agreement Its execution of this Agreement and its exercise of its rights and performance of its obligations hereunder do not and will not: (a) conflict with any agreement, mortgage, bond or other instrument or treaty to which it is a party or which is binding upon it or any of its assets; (b) conflict with its constitutive documents and rules and regulations; (c) conflict with any applicable law, regulation or official or judicial order; or (d) cause the creation of any encumbrance on any of its properties pursuant to the provisions of any indenture, agreement or other instrument to which it is a party or by which it is bound. 12.17 Ownership of the Borrower The Borrower is a wholly-owned subsidiary of the Guarantor. 12.18 Cross-Indemnification Agreement and Tax-Sharing Agreement (a) The Cross-Indemnification Agreement and the Tax-Sharing Agreement, in the respective forms, with amendments, are in full force and effect in accordance with their respective terms except for: (i) any amendments, modifications or waivers of the Tax-Sharing Agreement which do not materially alter the rights and obligations of the Guarantor thereunder which as a whole place the Guarantor in the same (or more favourable) relative financial position with respect to Atlantic which the Guarantor would have been in if the Guarantor were not consolidated with Atlantic for the purposes of filing federal, state or local or other income tax returns; (ii) any amendments to the Cross-Indemnification Agreement for the purpose of placing the Guarantor and Atlantic in the same financial positions with respect to each other which they would have been in if the Guarantor and Atlantic were not members of the same ERISA Group, including the allocation of, and indemnification with respect to, assets and funded and unfunded liabilities among the Guarantor, Atlantic, Affiliates and other members of the Group and their respective Plans in such manner as is fair and equitable to the Guarantor and any member of the Group; (iii) any amendments, modifications and waivers of the Cross- Indemnification Agreement or the Tax-Sharing Agreement which do not, in the aggregate, materially reduce the rights of the Guarantor thereunder against Atlantic or materially increase the obligations of the Guarantor thereunder to Atlantic; and (iv) any other amendments, modifications or waivers of such instruments to which an Instructing Group has consented -22- and true and complete copies of all such amendments, modifications and waivers have been delivered to the Agent. (b) No amount that may be due under the Cross-Indemnification Agreement or the Tax-Sharing Agreement from Atlantic to the Guarantor or to Atlantic from the Guarantor is delinquent, except such amount as the Guarantor or Atlantic may be contesting in good faith. 12.19 Subsidiaries Each subsidiary of the Guarantor 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 governmental licences, authorisations, consents and approvals required to carry on its business as now conducted except for licences, authorisations, consents or approvals the absence of which would not materially and adversely affect the business of the Group taken as a whole. 12.20 Investment Company The Guarantor is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 12.21 ERISA Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Plan, and has not:- (a) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan; (b) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of an encumbrance or the posting of a bond or other security under ERISA or the Code; or (c) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. 12.22 Securities Exchange Act Except as disclosed in writing to the Banks prior to the date hereof, the description of environmental matters affecting the Group contained in each of the reports delivered to the Agent pursuant to Clause 13.4 (SEC Reports) complied in all material respects as of the date of such report with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder. 13. Information 13.1 Annual Statements Each of ARCO Chemie Nederland, Ltd. and the Guarantor shall as soon as the same become available, but in any event within 120 days after the end of each of its financial years, deliver to the Agent in sufficient copies for the Banks its financial statements (or, in the case of the Guarantor, the consolidated financial statements of the Group) for such financial year setting forth in each case in comparative form the figures for the previous financial year Provided that the delivery requirement -23- in respect of the Guarantor shall be deemed to have been satisfied upon delivery by the Guarantor to the Agent within 120 days after the end of its financial year of its annual report on Form 10-K for such financial year, as filed (with exhibits) with the Securities and Exchange Commission. 13.2 Quarterly Statements The Guarantor shall as soon as the same become available, but in any event within 60 days after the end of each of the first three quarters of each of its financial years, deliver to the Agent in sufficient copies for the Banks the consolidated financial statements of the Group for such quarter setting forth in comparative form the figures for the previous financial year Provided that the delivery requirement shall be deemed to have been satisfied upon delivery by the Guarantor to the Agent within 60 days after the end of such quarter of its quarterly report on Form 10-Q for such quarter, as filed (with exhibits) with the Securities and Exchange Commission. 13.3 Shareholder Information The Guarantor shall, as soon as the same become available, deliver to the Agent all notices, reports and proxy materials sent to the shareholders of the Guarantor. 13.4 SEC Reports The Guarantor shall, as soon as the same become available, deliver to the Agent all regular and periodic reports filed by the Guarantor with the Securities and Exchange Commission (or any governmental agency succeeding to the functions of such Commission). 13.5 ERISA The Guarantor shall deliver to the Agent, if and when any member of the ERISA Group: (a) 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 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; (b) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganisation, is insolvent or has been terminated, a copy of such notice; (c) 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; (d) applies for a waiver of the minimum funding standard under Section 412 of the Code, a copy of such application; (e) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (f) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; and (g) 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 -24- which has resulted or could result in the imposition of an encumbrance or the posting of a bond or other security, a certificate of the chief financial officer of the Guarantor setting forth details as to such occurrence and action, if any, which the Guarantor or applicable member of the ERISA Group is required or proposes to take. 13.6 Other Information Each of the Obligors shall from time to time on the request of the Agent, furnish the Agent with such information about the business operations, affairs, assets and condition (financial or otherwise) of the Group or any member thereof as the Agent or a Bank through the Agent may reasonably require. 13.7 Requirements as to Financial Statements (a) the Guarantor shall ensure that each set of financial statements delivered by it pursuant to Clause 13.1 (Annual Statements) has been audited by a nationally recognised firm of independent certified public accountants licensed to practise in the United States of America; (b) the Guarantor shall ensure that each set of financial statements delivered by it pursuant to Clause 13.2 (Quarterly Statements) is certified by the treasurer or other financial officer of the Guarantor as to fairness of presentation, generally accepted accounting principles and consistency; and (c) ARCO Chemie Nederland, Ltd. shall ensure that each set of financial statements delivered by it pursuant to Clause 13.1 (Annual Statements) is certified by its treasurer or other financial officer as to fairness of presentation, generally accepted accounting principles and consistency. 13.8 Compliance Certificates (a) Each set of financial statements delivered by the Guarantor pursuant to this Clause 13.1 (Annual Statements) and Clause 13.2 (Quarterly Statements) shall be accompanied by a certificate of the treasurer of other financial officer of the Guarantor: (i) setting forth in reasonable detail the calculations required to establish whether the Guarantor was in compliance with Clause 14 (Financial Condition) on the date of such financial statements; and (ii) stating whether there exists on the date of such certificate any Event of Default or Potential Event of Default, and if so, specifying the nature and period of existence thereof and the action the Guarantor is taking and proposes to take in respect thereto; and (b) each set of financial statements delivered by the Borrower pursuant to this Clause 13 shall be accompanied by a certificate of the treasurer or other financial officer of the Borrower stating whether there exists on the date of such certificate any Event of Default or Potential -25- Event of Default, and if so, specifying the nature and period of existence thereof and the action the Borrower is taking and proposes to take in respect thereto. 13.9 Accounting Policies Each of the Obligors shall ensure that each set of financial statements delivered to the Agent pursuant to: (a) Clause 13.1 (Annual Statements) is prepared using accounting policies, practices, procedures and reference period consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any such set of financial statements, ARCO Chemie Nederland, Ltd. or the Guarantor, as the case may be, notifies the Agent that there have been one or more changes in any such accounting policies, practices, procedures or reference period and the auditors for the time being of the Guarantor or the treasurer or other financial officer of ARCO Chemie Nederland, Ltd., as the case may be, provide: (i) a description of the changes and the adjustments which would be required to be made to those financial statements in order to cause them to use the accounting policies, practices, procedures and reference period upon which the Original Financial Statements were prepared; and (ii) sufficient information, in such detail and format as may be reasonably required by the Agent, to enable the Banks to make an accurate comparison between the financial position indicated by those financial statements and the Original Financial Statements; Provided that the notification requirement in respect of the Guarantor shall be deemed to be satisfied upon delivery by the Guarantor to the Agent of any reports filed disclosing such changes and provided to the Agent under Clause 13.4 (SEC Reports); and (b) Clause 13.2 (Quarterly Statements) is prepared using accounting policies, practices, procedures and reference period consistent with those applied in the preparation of the financial statements for the quarter ended 30 September 1996 unless, in relation to any such set of financial statements, the Guarantor notifies the Agent that there have been one or more changes in any such accounting policies, practices, procedures or reference period and the treasurer or other financial officer of the Guarantor provides: (i) a description of the changes and the adjustments which would be required to be made to those financial statements in order to cause them to use the accounting policies, practices, procedures and reference period upon which the financial statements for the quarter ended 30 September 1996 were prepared; and (ii) sufficient information, in such detail and format as may be reasonably required by the Agent, to enable the Banks to make an accurate comparison between the financial position indicated by those financial statements and the financial statements for the quarter ended 30 September 1996, and any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements or the financial statements for the quarter ended 30 September 1996, as the case may be, were prepared. -26- 14. Financial Condition 14.1 Financial Condition of the Group At any date, the consolidated financial condition of the Group, determined as of such date, shall be such that Consolidated Net Worth is not less than $1,500,000,000 (or its Equivalent Amount). 14.2 Definitions of Financial Terms In Clause 14.1 (Financial Condition of the Group): "Consolidated Net Worth" means, at any date, the aggregate consolidated shareholders' equity of the Guarantor and each member of the Group less their aggregate consolidated Write-ups, all determined as of such date. "Write-ups" means the amount (to the extent reflected in determining shareholders' equity) of all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within 12 months after the acquisition of such business) subsequent to 31 December 1995 in the book value of any asset owned by the Guarantor or a member of the Group. 14.3 Accounting Terms All accounting expressions which are not otherwise defined herein shall be construed in accordance with generally accepted accounting principles in the United States of America. 15. Covenants 15.1 Maintenance of Legal Validity Each of the Obligors shall obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required in or by the laws and regulations of its jurisdiction of incorporation to enable it lawfully to enter into and perform its obligations under this Agreement and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of this Agreement. 15.2 Untrue Representations After the delivery of any Notice of Drawdown and before the making of the Advance requested therein, each of the Obligors shall notify the Agent of the occurrence of any event which results in or may reasonably be expected to result in any of the representations contained in Clause 12 (Representations) being untrue in any material respect at or before the time of the making of such Advance. 15.3 Notification of Events of Default Each of the Obligors shall promptly inform the Agent of the occurrence of any Event of Default or Potential Event of Default and, upon receipt of a written request to that effect from the Agent, confirm to the Agent that, save as previously notified to the Agent or as notified in such confirmation, no Event of Default or Potential Event of Default has occurred. 15.4 Claims Pari Passu Each of the Obligors shall ensure that at all times the claims of the Agent, the Arranger and the Banks against it under this Agreement rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application. -27- 15.5 Negative Pledge The Guarantor shall ensure that no member of the Group shall create or permit to subsist any encumbrance other than a Permitted Encumbrance over all or any of its present or future revenues or assets without effectively providing that the Loan (together with, if the Guarantor so determines, any other Indebtedness for Borrowed Money then existing and any other Indebtedness for Borrowed Money thereafter created ranking equally with the Loan) shall be secured equally and rateably with (or prior to) such Indebtedness for Borrowed Money so long as such Indebtedness for Borrowed Money shall be so secured Provided that the Guarantor, the Borrower and any one or more subsidiaries may issue, assume or guarantee Indebtedness for Borrowed Money secured by encumbrances which would otherwise be subject to the foregoing restrictions or grant any such encumbrance to secure any such Indebtedness for Borrowed Money in an aggregate principal amount which, together with the aggregate outstanding principal amount of all Indebtedness for Borrowed Money of the Guarantor and each member of the Group which would otherwise be subject to the foregoing restrictions (not including Indebtedness for Borrowed Money permitted to be secured under a Permitted Encumbrance), and the aggregate Value of the Sale and Lease-Back Transactions in existence at such time (not including Sale and Lease-Back Transactions as to which the Guarantor has complied with Clause 15.9(b)) does not at any time exceed 15 per cent. of the consolidated total assets of the Guarantor and each member of the Group determined by reference to the latest audited consolidated financial statements of the Guarantor (adjusted in such manner as the Agent may require to take account of any matters occurring after the date of preparation of the financial statements in question). 15.6 Disposals The Guarantor shall ensure that (disregarding sales of stock in trade in the ordinary course of business) no member of the Group shall sell, lease, transfer or otherwise dispose of all or any substantial part of its assets by one or more transactions or series of transactions (whether related or not), other than any sale, lease, transfer or disposal: (a) which is a Sale and Lease-Back Transaction permitted under Clause 15.9 (Sale and Lease-Back); (b) made on an arm's length basis or for full market value to a wholly- owned subsidiary of the Guarantor which is (i) a non-operating subsidiary and (ii) does not at any time (including at the time of or after any sale, lease, transfer or disposal under this sub-paragraph (b)) have any indebtedness owing to a person other than the Guarantor, the Borrower or a wholly-owned subsidiary which meets the criteria in (i) and (ii) under this sub-paragraph (b); or (c) made by any member of the Group to the Guarantor, the Borrower or a wholly-owned subsidiary of the Guarantor and for the purpose of this Clause 15.6, "substantial part of its assets" means assets (including any member of the Group and valued at the higher of book or fair market value) (y) representing in aggregate more than 25 per cent. of the consolidated assets of the Group or (z) responsible in aggregate for more than 25 per cent. of the consolidated net revenues or of the consolidated net income of the Group, in each case determined by reference to the latest audited consolidated financial statements of the Guarantor (adjusted in such manner as the Agent may require to take account of any matters occurring after the date of preparation of the financial statements in question) -28- 15.7 Environmental Matters Each of the Obligors shall, and shall procure that each member of the Group shall: (a) comply with (i) the terms and conditions of all Environmental Licences applicable to it (and obtain and renew the same) and (ii) all other applicable Environmental Laws; and (b) promptly upon receipt of the same, notify the Agent of any claim, notice or communication served on it in respect of any alleged breach of any Environmental Law which might, if substantiated, have a material adverse effect on the ability of such Obligor to perform its obligations under this Agreement; and (c) indemnify the Agent, the Arranger and each Bank and their respective officers, employees, agents and delegates (an "Indemnified Party") against any loss, liability, cost or expense suffered or incurred by them which: (i) arises by virtue of any actual or alleged breach of any Environmental Law; (ii) would not have arisen if this Agreement had not been entered into; and (iii) was not caused by the gross negligence or wilful default of the Indemnified Party. 15.8 Merger The Guarantor shall ensure that no member of the Group which constitutes a substantial part of its assets shall enter into any merger or consolidation Provided that: (a) the Guarantor or the Borrower may enter into a merger if it is the corporation surviving the merger and immediately after giving effect to the merger, no Event of Default has occurred and is continuing; (b) the Guarantor may merge or consolidate with or into Atlantic if Atlantic expressly assumes the obligations of the Guarantor hereunder by an instrument satisfactory in form and substance to the Agent and the Banks; and (c) any member of the Group may enter into a merger if it merges with the Guarantor, the Borrower or a wholly-owned subsidiary of the Guarantor and for the purpose of this Clause 15.8, "substantial part of its assets" means assets (including any member of the Group and valued at the higher of book or fair market value) (y) representing in aggregate more than 25 per cent. of the consolidated assets of the Group or (z) responsible in aggregate for more than 25 per cent. of the consolidated net revenues or of the consolidated net income of the Group, in each case determined by reference to the latest audited consolidated financial statements of the Guarantor (adjusted in such manner as the Agent may require to take account of any matters occurring after the date of preparation of the financial statements in question). -29- 15.9 Sale and Lease-Back The Guarantor shall ensure that no member of the Group shall enter into a Sale and Lease-Back Transaction unless: (a) such member of the Group would be entitled pursuant to Clause 15.5 (Negative Pledge) to incur Indebtedness for Borrowed Money in a principal amount equal to or exceeding the Value of such Sale and Lease-Back Transaction secured by an encumbrance on the property to be leased without equally and ratably securing the Loan; or (b) the Guarantor (and in any such case the Guarantor covenants to) within four months after the effective date of such Sale and Lease-Back Transaction (whether made by the Guarantor or any other member of the Group), repays Indebtedness for Borrowed Money of the Borrower ranking at least pari passu with the Loan in an amount equal to the Value of such Sale and Lease-Back Transaction less the principal amount of such Indebtedness for Borrowed Money repaid within such four month period, excluding repayments of such Indebtedness for Borrowed Money as a result of conversions or pursuant to mandatory sinking fund or repayment provisions or (other than in the case of commercial paper) by payment at maturity. 15.10 Transactions with Affiliates The Guarantor shall ensure that no member of the Group shall, directly or indirectly, pay any funds to or for the account of, make any investment in (whether by acquisition of shares or indebtedness, by loan, advance, transfer of property, guarantee or other agreement to pay, purchase or service, directly or indirectly, any Indebtedness for Borrowed Money, or otherwise), sell, lease, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in or effect any transaction in connection with any joint enterprise or other joint arrangement with, any Affiliate Provided that the foregoing shall not prohibit: (a) the Guarantor declaring or making a dividend or other distribution Provided that no Event of Default or Potential Event of Default occurs and is continuing upon the declaring or making of such dividend or distribution; (b) any member of the Group entering into any sale, lease or purchase with any Affiliate and, in connection therewith, extending credit or making payments; (c) any member of the Group making payments for services rendered by any Affiliate; (d) any member of the Group participating in, or effecting any transaction in connection with, any joint enterprise or other joint arrangement with any Affiliate if such sales, purchases or leases are made or such services are rendered or such member of the Group participates in the ordinary course of its business and in the aggregate during each financial year of the Guarantor, the terms and conditions of all such sales, purchases, leases, rendered services and participations are not materially less favourable to the similar transactions with persons who are not Affiliates; (e) any member of the Group making payments with respect to any Indebtedness for Borrowed Money of such member of the Group to any Affiliate if the terms of such Indebtedness for Borrowed Money are substantially as favourable as the terms which could have been obtained at the time of the creation of such Indebtedness for Borrowed Money from a lender who was not an Affiliate. -30- 16. Events of Default Each of Clause 16.1 to Clause 16.17 describes circumstances which constitute an Event of Default for the purposes of this Agreement. Clause 16.18 and Clause 16.19 deal with the rights of the Agent and the Banks after the occurrence of an Event of Default. 16.1 Failure to Pay Either of the Obligors fails to pay, in the currency and in the manner specified herein, (a) any principal in respect of the Loan on the due date for payment or (b) any interest in respect of the Loan or any other sum due hereunder within five business days of the relevant due date for payment. 16.2 Misrepresentation Any representation or statement made by either of the Obligors in this Agreement or in any notice or other document, certificate or statement delivered by it pursuant hereto or in connection herewith is or proves to have been incorrect or misleading in any material respect when made. 16.3 Specific Covenants Either of the Obligors fails duly to perform or comply with any of the obligations expressed to be assumed by it in Clause 15.1 (Maintenance of Legal Validity), Clause 15.5 (Negative Pledge), Clause 15.6 (Disposals), Clause 15.8 (Mergers) or Clause 15.9 (Sale and Lease-Back). 16.4 Other Obligations Either of the Obligors fails duly to perform or comply with any other obligation expressed to be assumed by it in this Agreement and such failure is not remedied within thirty days after the Agent has given notice thereof to such Obligor. 16.5 Financial Condition At any time any of the requirements of Clause 14.1 (Financial Condition of the Group) is not satisfied. 16.6 Cross Default Any Indebtedness for Borrowed Money of the Guarantor, the Borrower or any Material Subsidiary is not paid when due or within any applicable grace period, any Indebtedness for Borrowed Money of the Guarantor, the Borrower or any Material Subsidiary is declared to be or otherwise becomes due and payable prior to its specified maturity or any creditor or creditors of the Guarantor, the Borrower or any Material Subsidiary become entitled to declare any Indebtedness for Borrowed Money of the Guarantor, the Borrower or any Material Subsidiary due and payable prior to its specified maturity Provided that the aggregate amount of all such Indebtedness for Borrowed Money, excluding any Indebtedness for Borrowed Money owed to: (a) any department, agency, instrumentality or political subdivision of the United States of America or any state thereof in respect of any pollution control, industrial revenue bond or other similar type of financing where such obligation is being contested in good faith by appropriate proceedings; or (b) any member of the Group by any other member of the Group, equals or exceeds $30,000,000 (or its Equivalent Amount). -31- 16.7 Voluntary Bankruptcy The Guarantor, the Borrower, any Material Subsidiary or any two or more members of the Group which, if combined, would constitute a Material Subsidiary, commences a voluntary case or other proceeding seeking liquidation, reorganisation 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 consents 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 makes a general assignment for the benefit of creditors, or fails generally to pay its debts as they become due, or takes any corporate action to authorise any of the foregoing. 16.8 Involuntary Bankruptcy An involuntary case or other proceeding is commenced against the Guarantor, the Borrower, any Material Subsidiary or any two or more members of the Group which, if combined, would constitute a Material Subsidiary, seeking liquidation, reorganisation 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 remains undismissed and unstayed for a period of 60 days; or an order for relief is entered against the Guarantor, the Borrower, any Material Subsidiary or any two or more members of the Group which, if combined, would constitute a Material Subsidiary, under the bankruptcy laws as now or hereafter in effect. 16.9 Execution or Distress Any execution or distress in respect of an amount in excess of $20,000,000 (or its Equivalent Amount) is levied against, or an encumbrancer takes possession of, the whole or any part of, the property, undertaking or assets of any member of the Group. 16.10 Analogous Events Any event occurs which under the laws of any jurisdiction has a similar or analogous effect to any of those events mentioned in Clause 16.7 (Insolvency and Rescheduling), Clause 16.8 (Winding-up) or Clause 16.9 (Execution or Distress). 16.11 Ownership of the Borrower The Guarantor ceases to own more than sixty- six and two-thirds per cent. of the issued share capital of the Borrower. 16.12 The Group's Business Either of the Obligors or any Material Subsidiary ceases to carry on the business it carries on at the date hereof or enters into any unrelated business. 16.13 Repudiation Either of the Obligors repudiates this Agreement or does or causes to be done any act or thing evidencing an intention to repudiate this Agreement. 16.14 Illegality At any time it is or becomes unlawful for either of the Obligors to perform or comply with any or all of its obligations hereunder or any of the obligations of either of the Obligors hereunder are not or cease to be legal, valid and binding. 16.15 Performance of Obligations Any circumstances arise which give reasonable grounds in the opinion of an Instructing Group for belief that either of the Obligors may not (or may be unable to) perform or comply with its material obligations hereunder. 16.16 Judgment A final, non-appealable judgment or order enforceable by the courts of the United States, England or any other European Union country for the payment of money in excess of $50,000,000 (or its Equivalent Amount) is rendered against any member of the Group and remains unsatisfied after a period of thirty days. -32- 16.17 Termination of Plan (a) Any member of the ERISA Group fails to pay when due an aggregate amount in excess of $20,000,000 (or its Equivalent Amount) which it becomes liable to pay under Title IV of ERISA; (b) notice of intent to terminate a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000 (or its Equivalent Amount) (collectively a "Material Plan") is filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; (c) the PBGC institutes proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; (d) a condition exists by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; (e) there occurs a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $20,000,000 (or its Equivalent Amount). 16.18 Acceleration and Cancellation Upon the occurrence of an Event of Default or at any time thereafter (unless such Event of Default has been remedied or waived), the Agent may (and, if so instructed by an Instructing Group, shall) by written notice to the Borrower: (a) declare the Advances to be immediately due and payable (whereupon the same shall become so payable together with accrued interest thereon and any other sums then owed by the Borrower hereunder) or declare the Advances to be due and payable on demand of the Agent; and/or (b) declare that any undrawn portion of the Facility shall be cancelled, whereupon the same shall be cancelled and the Available Commitment of each Bank shall be reduced to zero. 16.19 Advances Due on Demand If, pursuant to Clause 16.18 (Acceleration and Cancellation), the Agent declares the Advances to be due and payable on demand of the Agent, then, and at any time thereafter, the Agent may (and, if so instructed by an Instructing Group, shall) by written notice to the Borrower: (a) require repayment of the Advances on such date as it may specify in such notice (whereupon the same shall become due and payable on such date together with accrued interest thereon and any other sums then owed by the Borrower hereunder) or withdraw its declaration with effect from such date as it may specify in such notice; and/or (b) select as the duration of any Interest Period which begins whilst such declaration remains in effect a period of six months or less. -33- PART 7 GUARANTEE 17. Guarantee and Indemnity 17.1 Guarantee The Guarantor irrevocably and unconditionally guarantees to the Agent, the Arranger and the Banks the due and punctual observance and performance of all the terms, conditions and covenants on the part of the Borrower contained in this Agreement and agrees to pay to the Agent from time to time on demand any and every sum or sums of money which the Borrower is at any time liable to pay to the Agent, the Arranger and the Banks or any of them under or pursuant to this Agreement and which has become due and payable but has not been paid at the time such demand is made. 17.2 Indemnity The Guarantor irrevocably and unconditionally agrees as a primary obligation to indemnify the Agent, the Arranger and the Banks from time to time on demand by the Agent from and against any loss incurred by the Agent, the Arranger and the Banks or any of them as a result of any of the obligations of the Borrower under or pursuant to this Agreement being or becoming void, voidable, unenforceable or ineffective as against the Borrower for any reason whatsoever, whether or not known to the Agent, the Arranger and the Banks or any of them or any other person, the amount of such loss being the amount which the person or persons suffering it would otherwise have been entitled to recover from the Borrower. 17.3 Additional Security The obligations of the Guarantor herein contained shall be in addition to and independent of every other security which the Agent, the Arranger and the Banks or any of them may at any time hold in respect of any of the Borrower's obligations hereunder. 17.4 Continuing Obligations The obligations of the Guarantor herein contained shall constitute and be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever and shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the obligations of the Borrower under this Agreement and shall continue in full force and effect until final payment in full of all amounts owing by the Borrower hereunder and total satisfaction of all the Borrower's actual and contingent obligations hereunder. 17.5 Obligations not Discharged Neither the obligations of the Guarantor herein contained nor the rights, powers and remedies conferred in respect of the Guarantor upon the Agent, the Arranger and the Banks or any of them by this Agreement or by law shall be discharged, impaired or otherwise affected by: (a) the winding-up, dissolution, administration or re-organisation of the Borrower or any other person or any change in its status, function, control or ownership; (b) any of the obligations of the Borrower or any other person hereunder or under any other security taken in respect of any of its obligations hereunder being or becoming illegal, invalid, unenforceable or ineffective in any respect; (c) time or other indulgence being granted or agreed to be granted to the Borrower in respect of its obligations hereunder or under any such other security; -34- (d) any amendment to, or any variation, waiver or release of, any obligation of the Borrower hereunder or under any such other security; (e) any failure to take, or fully to take, any security contemplated hereby or otherwise agreed to be taken in respect of the Borrower's obligations hereunder; (f) any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution of, any security taken in respect of the Borrower's obligations hereunder; or (g) any other act, event or omission which, but for this Clause 17.5, might operate to discharge, impair or otherwise affect any of the obligations of the Guarantor herein contained or any of the rights, powers or remedies conferred upon the Agent, the Arranger and the Banks or any of them by this Agreement or by law. 17.6 Settlement Conditional Any settlement or discharge between the Guarantor and the Agent, the Arranger and the Banks or any of them shall be conditional upon no security or payment to the Agent, the Arranger and the Banks or any of them by the Borrower or the Guarantor or any other person on behalf of the Borrower or, as the case may be, the Guarantor being avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, insolvency, liquidation or similar laws of general application for the time being in force and, if any such security or payment is so avoided or reduced, the Agent, the Arranger and the Banks shall each be entitled to recover the value or amount of such security or payment from the Guarantor subsequently as if such settlement or discharge had not occurred. 17.7 Exercise of Rights Neither the Agent, the Arranger and the Banks nor any of them shall be obliged before exercising any of the rights, powers or remedies conferred upon them in respect of the Guarantor by this Agreement or by law: (a) to make any demand of the Borrower; (b) to take any action or obtain judgment in any court against the Borrower; (c) to make or file any claim or proof in a winding-up or dissolution of the Borrower; or (d) to enforce or seek to enforce any other security taken in respect of any of the obligations of the Borrower hereunder. 17.8 Deferral of Guarantor's Rights The Guarantor agrees that, so long as any amounts are or may be owed by the Borrower hereunder or the Borrower is under any actual or contingent obligations hereunder, the Guarantor shall not exercise any rights which the Guarantor may at any time have by reason of performance by it of its obligations hereunder: (a) to be indemnified by the Borrower; and/or (b) to claim any contribution from any other guarantor of the Borrower's obligations hereunder; and/or -35- (c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Agent, the Arranger and the Banks hereunder or of any other security taken pursuant to, or in connection with, this Agreement by all or any of the Agent, the Arranger and the Banks. 17.9 Suspense Accounts All moneys received, recovered or realised by a Bank by virtue of Clause 17.1 (Guarantee) or Clause 17.2 (Indemnity) may, in that Bank's discretion, be credited to a suspense or impersonal account and may be held in such account for so long as such Bank thinks fit pending the application from time to time (as such Bank may think fit) of such moneys in or towards the payment and discharge of any amounts owing by either of the Obligors to such Bank hereunder and any interest accruing on such moneys shall be applied by such Bank in or towards the payment and discharge of any amounts owing by either of the Obligors to such Bank hereunder. -36- PART 8 DEFAULT INTEREST AND INDEMNITY 18. Default Interest and Indemnity 18.1 Default Interest Periods If any sum due and payable by either of the Obligors hereunder is not paid on the due date therefor in accordance with the provisions of Clause 20 (Payments) or if any sum due and payable by either of the Obligors under any judgment of any court in connection herewith is not paid on the date of such judgment, the period beginning on such due date or, as the case may be, the date of such judgment and ending on the date upon which the obligation of such Obligor to pay such sum (the balance thereof for the time being unpaid being herein referred to as an "unpaid sum") is discharged shall be divided into successive periods, each of which (other than the first) shall start on the last day of the preceding such period and the duration of each of which shall (except as otherwise provided in this Clause 18) be selected by the Agent. 18.2 Default Interest During each such period relating thereto as is mentioned in Clause 18.1 (Default Interest Periods) an unpaid sum shall bear interest at the rate per annum which is the sum from time to time of one per cent., the Margin and LIBOR on the Quotation Date therefor Provided that: (a) if, for any such period, LIBOR cannot be determined, the rate of interest applicable to each Bank's portion of such unpaid sum shall be the rate per annum which is the sum of one per cent., the Margin and the rate per annum notified to the Agent by such Bank as soon as practicable after the beginning of such period as being that which expresses as a percentage rate per annum the cost to such Bank of funding from whatever sources it may select its portion of such unpaid sum during such period; and (b) if such unpaid sum is all or part of an Advance which became due and payable on a day other than the last day of an Interest Period relating thereto, the first such period applicable thereto shall be of a duration equal to the unexpired portion of that Interest Period and the rate of interest applicable thereto from time to time during such period shall be that which exceeds by one per cent. the rate which would have been applicable to it had it not so fallen due. 18.3 Payment of Default Interest Any interest which shall have accrued under Clause 18.2 (Default Interest) in respect of an unpaid sum shall be due and payable and shall be paid by the Obligor owing such unpaid sum at the end of the period by reference to which it is calculated or on such other dates as the Agent may specify by written notice to such Obligor. 18.4 Broken Periods If any Bank or the Agent on its behalf receives or recovers all or any part of such Bank's share of an Advance otherwise than on the last day of an Interest Period relating to that Advance, the Borrower shall pay to the Agent on demand for account of such Bank an amount equal to the amount (if any) by which (a) the additional interest which would have been payable on the amount so received or recovered had it been received or recovered on the last day of that Interest Period exceeds (b) the amount of interest which in the opinion of the Agent would have been payable to the Agent on the last day of that Interest Period in respect of a Guilder deposit equal to the amount so received or recovered placed by it with a prime bank in London for a period starting on the third business day following the date of such receipt or recovery and ending on the last day of that Interest Period Provided that such Bank shall deliver to the Borrower, within sixty days of such receipt or recovery, a certificate as to the amounts due pursuant to sub-paragraphs (a) and (b) above and setting forth in reasonable detail the basis for such amount and such certificate shall be conclusive in the absence of manifest error. -37- 18.5 Borrower's Indemnity The Borrower undertakes to indemnify: (a) each of the Agent, the Arranger and the Banks against any cost, claim, loss, expense (including legal fees) or liability together with any VAT thereon, which any of them may sustain or incur (otherwise than by reason of its own gross negligence or wilful misconduct) as a consequence of the occurrence of any Event of Default or any default by the Borrower in the performance of any of the obligations expressed to be assumed by it in this Agreement; and (b) each Bank against any loss it may suffer or incur (otherwise than by reason of its own gross negligence or wilful misconduct) as a result of its funding or making arrangements to fund its portion of an Advance requested by the Borrower hereunder but not made by reason of the operation of any one or more of the provisions hereof. 18.6 Unpaid Sums as Advances Any unpaid sum shall (for the purposes of this Clause 18 and Clause 11.1 (Increased Costs)) be treated as an advance and accordingly in this Clause 18 and Clause 11.1 (Increased Costs)) the term "Advance" includes any unpaid sum and the term "Interest Period", in relation to an unpaid sum, includes each such period relating thereto as is mentioned in Clause 18.1 (Default Interest Periods). -38- PART 9 PAYMENTS 19. Currency of Account and Payment 19.1 Currency of Account The Guilder is the currency of account and payment for each and every sum at any time due from either of the Obligors hereunder Provided that: (a) each payment in respect of costs and expenses shall be made in the currency in which the same were incurred; and (b) each payment pursuant to Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs) shall be made in the currency specified by the party claiming thereunder. 19.2 Currency Indemnity If any sum due from either of the Obligors under this Agreement or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable hereunder or under such order or judgment into another currency (the "second currency") for the purpose of (a) making or filing a claim or proof against such Obligor, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation hereto, the Borrower shall indemnify and hold harmless each of the persons to whom such sum is due from and against any loss suffered or incurred as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such person may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. 20. Payments 20.1 Payments to the Agent On each date on which this Agreement requires an amount denominated in Guilders to be paid by either of the Obligors or any of the Banks hereunder, such Obligor or, as the case may be, such Bank shall make the same available to the Agent by payment in Guilders and in immediately available, freely transferable, cleared funds to such account with such bank as the Agent shall have specified for this purpose. 20.2 Alternative Payment Arrangements If, at any time, it shall become impracticable (by reason of any action of any governmental authority or any change in law, exchange control regulations or any similar event) for either or both of the Obligors to make any payments hereunder in the manner specified in Clause 20.1 (Payments to the Agent), then such Obligor may agree with each or any of the Banks alternative arrangements for the payment direct to such Bank of amounts due to such Bank hereunder Provided that, in the absence of any such agreement with any Bank, such Obligor shall be obliged to make all payments due to such Bank in the manner specified herein. Upon reaching such agreement such Obligor and such Bank shall immediately notify the Agent thereof and shall thereafter promptly notify the Agent of all payments made direct to such Bank. 20.3 Payments by the Agent Save as otherwise provided herein, each payment received by the Agent for the account of another person pursuant to Clause 20.1 (Payments to the Agent) shall be made available by the Agent to such other person (in the case of a Bank, for the account of its Facility Office) for value the same day -39- by transfer to such account of such person with such bank in the principal financial centre of the country of the currency of such payment as such person shall have previously notified to the Agent. 20.4 No Set-off All payments required to be made by either of the Obligors hereunder shall be calculated without reference to any set-off or counterclaim and shall be made free and clear of and without any deduction for or on account of any set-off or counterclaim. 20.5 Clawback Where a sum is to be paid hereunder to the Agent for account of another person, the Agent shall not be obliged to make the same available to that other person until it has been able to establish to its satisfaction that it has actually received such sum, but if it does so and it proves to be the case that it had not actually received such sum, then the person to whom such sum was so made available shall on request refund the same to the Agent together with an amount sufficient to indemnify the Agent against any cost or loss it may have suffered or incurred by reason of its having paid out such sum prior to its having received such sum. 21. Set-Off 21.1 Contractual Set-off Each of the Obligors authorises each Bank to apply any credit balance to which such Obligor is entitled on any account of such Obligor with that Bank in satisfaction of any sum due and payable from such Obligor to such Bank hereunder but unpaid; for this purpose, each Bank is authorised to purchase with the moneys standing to the credit of any such account such other currencies as may be necessary to effect such application. 21.2 Set-off not Mandatory No Bank shall be obliged to exercise any right given to it by Clause 21.1 (Contractual Set-off). 22. Sharing 22.1 Redistribution of Payments Subject to Clause 22.3 (Recoveries Through Legal Proceedings), if at any time, the proportion which any Bank (a "Recovering Bank") has received or recovered (whether by payment, the exercise of a right of set-off or combination of accounts or otherwise) in respect of its portion of any payment (a "relevant payment") to be made under this Agreement by either of the Obligors for account of such Recovering Bank and one or more other Banks is greater (the portion of such receipt or recovery giving rise to such excess proportion being herein called an "excess amount") than the proportion thereof so received or recovered by the Bank or Banks so receiving or recovering the smallest proportion thereof, then: (a) such Recovering Bank shall inform the Agent of such receipt or recovery and pay to the Agent an amount equal to such excess amount; (b) there shall thereupon fall due from such Obligor to such Recovering Bank an amount equal to the amount paid out by such Recovering Bank pursuant to paragraph (a) above, the amount so due being, for the purposes hereof, treated as if it were an unpaid part of such Recovering Bank's portion of such relevant payment; and -40- (c) the Agent shall treat the amount received by it from such Recovering Bank pursuant to paragraph (a) above as if such amount had been received by it from such Obligor in respect of such relevant payment and shall pay the same to the persons entitled thereto (including such Recovering Bank) pro rata to their respective entitlements thereto. 22.2 Repayable Recoveries If any sum (a "relevant sum") received or recovered by a Recovering Bank in respect of any amount owing to it by either of the Obligors becomes repayable and is repaid by such Recovering Bank, then: (a) each Bank which has received a share of such relevant sum by reason of the implementation of Clause 22.1 (Redistribution of Payments) shall, upon request of the Agent, pay to the Agent for account of such Recovering Bank an amount equal to its share of such relevant sum; and (b) there shall thereupon fall due from such Obligor to each such Bank an amount equal to the amount paid out by it pursuant to paragraph (a) above, the amount so due being, for the purposes hereof, treated as if it were the sum payable to such Bank against which such Bank's share of such relevant sum was applied. 22.3 Recoveries Through Legal Proceedings If any Bank shall commence any action or proceeding in any court to enforce its rights hereunder after consultation with the other Banks and, as a result thereof or in connection therewith, shall receive any excess amount (as defined in Clause 22.1 (Redistribution of Payments)), then such Bank shall not be required to share any portion of such excess amount with any Bank which has the legal right to, but does not, join in such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in another court. -41- PART 10 FEES, COSTS AND EXPENSES 23. Fees 23.1 Arrangement Fee The Borrower shall pay to the Arranger the fees specified in the letter of even date herewith from the Arranger to the Borrower at the times, and in the dollar amounts (or the Equivalent Amount), specified in such letter to be distributed amongst the Arranger and the Banks as agreed between the Arranger and the Banks. 23.2 Agency Fee The Borrower shall pay to the Agent for its own account the agency fees specified in the letter of even date herewith from the Agent to the Borrower at the times, and in the dollar amounts (or the Equivalent Amount), specified in such letter. 24. Costs and Expenses 24.1 Transaction Expenses The Borrower shall, from time to time on demand of the Agent, reimburse each of the Agent and the Arranger for all reasonable costs and expenses (including legal fees) together with any VAT thereon incurred by it in connection with the negotiation, preparation and execution of this Agreement and the completion of the transactions herein contemplated. 24.2 Preservation and Enforcement of Rights The Borrower shall, from time to time on demand of the Agent, reimburse the Agent, the Arranger and the Banks for all reasonable costs and expenses (including legal fees) together with any VAT thereon incurred in or in connection with the preservation and/or enforcement of any of the rights of the Agent, the Arranger and the Banks under this Agreement. 24.3 Stamp Taxes The Borrower shall pay all stamp, registration and other taxes to which this Agreement or any judgment given in connection herewith is or at any time may be subject and shall, from time to time on demand of the Agent, indemnify the Agent, the Arranger and the Banks against any liabilities, costs, claims and expenses resulting from any failure to pay or any delay in paying any such tax. 24.4 Agent's Costs The Borrower shall, from time to time on demand of the Agent (and without prejudice to the provisions of Clause 24.2 (Preservation and Enforcement of Rights) and Clause 30.2 (Amendment Costs) compensate the Agent at such daily and/or hourly rates as the Agent shall from time to time reasonably determine for the time and expenditure, all reasonable costs and expenses (including telephone, fax, copying, travel and personnel costs) incurred by the Agent in connection with its taking such action as it may deem appropriate or in complying with any instructions from an Instructing Group or any request by the Obligors or either of them in connection with the occurrence of any event which is an Event of Default or a Potential Event of Default. 24.5 Banks' Liabilities for Costs If the Borrower fails to perform any of its obligations under this Clause 24, each Bank shall, in the proportion borne by its share of the Loan (or, if no Advances have been made, its Available Commitment) to the amount of the Loan (or, if no Advances have been made, the Available Facility) for the time being (or, if the Loan has been repaid in full, immediately prior to the final repayment thereof), indemnify each of the Agent and the Arranger against any loss incurred by any of them as a result of such failure and the Borrower shall forthwith reimburse each Bank for any payment made by it pursuant to this Clause 24.5. -42- PART 11 AGENCY PROVISIONS 25. The Agent, the Arranger and the Banks 25.1 Appointment of the Agent The Arranger and each Bank hereby appoints the Agent to act as its agent in connection herewith and authorises the Agent to exercise such rights, powers, authorities and discretions as are specifically delegated to the Agent by the terms hereof together with all such rights, powers, authorities and discretions as are reasonably incidental thereto. The Agent is not a trustee and owes no fiduciary obligations to any other party to this Agreement. 25.2 Agent's Discretions The Agent may: (a) assume, unless it has, in its capacity as agent for the Banks, received notice to the contrary from any other party hereto (or, in the case of a payment default, actual knowledge to the contrary), that (i) any representation made by either of the Obligors in connection herewith is true, (ii) no Event of Default or Potential Event of Default has occurred, (iii) neither of the Obligors is in breach of or default under its obligations hereunder and (iv) any right, power, authority or discretion vested herein upon an Instructing Group, the Banks or any other person or group of persons has not been exercised; (b) assume that the Facility Office of each Bank is that identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) until it has received from such Bank a notice designating some other office of such Bank to replace its Facility Office and act upon any such notice until the same is superseded by a further such notice; (c) engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts whose advice or services may to it seem necessary, expedient or desirable and rely upon any advice so obtained; (d) rely as to any matters of fact which might reasonably be expected to be within the knowledge of either of the Obligors upon a certificate signed by or on behalf of such Obligor; (e) rely upon any communication or document believed by it to be genuine; (f) refrain from exercising any right, power or discretion vested in it as agent hereunder unless and until instructed by an Instructing Group as to whether or not such right, power or discretion is to be exercised and, if it is to be exercised, as to the manner in which it should be exercised; and (g) refrain from acting in accordance with any instructions of an Instructing Group to begin any legal action or proceeding arising out of or in connection with this Agreement until it shall have received such security as it may require (whether by way of payment in advance or otherwise) for all costs, claims, losses, expenses (including legal fees) and liabilities together -43- with any VAT thereon which it will or may expend or incur in complying with such instructions. 25.3 Agent's Obligations The Agent shall: (a) promptly inform each Bank of the contents of any notice or document received by it in its capacity as Agent from either of the Obligors hereunder; (b) promptly notify each Bank of the occurrence of any Event of Default or any default by either of the Obligors in the due performance of or compliance with its obligations under this Agreement of which the Agent has notice from any other party hereto (or, in the case of a payment default, actual knowledge); (c) save as otherwise provided herein, act as agent hereunder in accordance with any instructions given to it by an Instructing Group, which instructions shall be binding on the Arranger and the Banks; and (d) if so instructed by an Instructing Group, refrain from exercising any right, power or discretion vested in it as agent hereunder. 25.4 Excluded Obligations Notwithstanding anything to the contrary expressed or implied herein, neither the Agent nor the Arranger shall: (a) be bound to enquire as to (i) whether or not any representation made by either of the Obligors in connection herewith is true, (ii) the occurrence or otherwise of any Event of Default or Potential Event of Default, (iii) the performance by either of the Obligors of its obligations hereunder or (iv) any breach of or default by either of the Obligors of or under its obligations hereunder; (b) be bound to account to any Bank for any sum or the profit element of any sum received by it for its own account; (c) be bound to disclose to any other person any information relating to any member of the Group or anyone else if such disclosure would or might in its opinion constitute a breach of any law or regulation or be otherwise actionable at the suit of any person; or (d) be under any obligations other than those for which express provision is made herein. 25.5 Delegation The Agent may delegate, transfer or assign to any subsidiary of The Chase Manhattan Corporation or its Successor from time to time all or any of the rights, powers, authorities and discretions vested in it hereunder and the performance of its duties in accordance herewith, and such delegation, transfer or assignment may be made upon such terms and subject to such conditions (including the power to sub-delegate) and subject to such regulations as the Agent may think fit (and the term "Agent" as used in this Agreement shall include any such delegate, transferee or assignee). -44- 25.6 Indemnification Each Bank shall, from time to time on demand by the Agent, indemnify the Agent, in the proportion its share of the Loan (or, if no Advances have been made, its Available Commitment) bears to the amount of the Loan (or, if no Advances have been made, the Available Facility) at the time of such demand (or, if the Loan has then been repaid in full, immediately prior to the final repayment thereof), against any and all costs, claims, losses, expenses (including legal fees) and liabilities together with any VAT thereon which the Agent may incur, otherwise than by reason of (a) its own gross negligence or wilful misconduct, in acting in its capacity as agent hereunder or (b) the failure of the Borrower to pay to the Agent the agency fees referred to in Clause 23.2 (Agency Fee). 25.7 Exclusion of Liabilities Neither the Agent nor the Arranger accepts any responsibility for the accuracy and/or completeness of the Information Memorandum or any other information supplied by either of the Obligors in connection herewith or for the legality, validity, effectiveness, adequacy or enforceability of this Agreement and neither the Agent nor the Arranger shall be under any liability as a result of taking or omitting to take any action in relation to this Agreement, save in the case of gross negligence or wilful misconduct. 25.8 No Actions Each of the Banks agrees that it will not assert or seek to assert against any director, officer or employee of the Agent or the Arranger any claim it might have against any of them but which it could not bring successfully against the Agent or the Arranger. 25.9 Business with the Group and others The Agent (whether acting through its agency division or otherwise) and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group whether or not it may or does lead to a conflict with the interests of any Bank and the Agent or the Arranger may undertake business with or for others even though it may or does lead to a conflict with the interests of any Bank. 25.10 Resignation The Agent may resign its appointment hereunder at any time without assigning any reason therefor by giving not less than thirty days' prior written notice to that effect to each of the other parties hereto Provided that no such resignation shall be effective until either: (a) the Agent appoints as its Successor any subsidiary or holding company, or any subsidiary of any holding company, of the Agent; or (b) a Successor for the Agent is appointed in accordance with the succeeding provisions of this Clause 25. 25.11 Successor Agent If the Agent gives notice of its resignation pursuant to Clause 25.10 (Resignation), then any reputable and experienced bank or other financial institution may be appointed as a Successor to the Agent by an Instructing Group with the consent of the Borrower (such consent not to be unreasonably withheld) during the period of such notice but, if no such Successor is so appointed within 30 days after the expiry of such notice, the Agent may appoint such a Successor itself with the consent of the Borrower (such consent not to be unreasonably withheld). 25.12 Rights and Obligations If a Successor to the Agent is appointed under the provisions of Clause 25.11 (Successor Agent), then (a) the retiring Agent shall be discharged from any further obligation hereunder but shall remain entitled to the benefit of the provisions of this Clause 25 and (b) its Successor and each of the other parties hereto shall have the same rights and obligations amongst themselves as they would have had if such Successor had been a party hereto. -45- 25.13 Own Responsibility It is understood and agreed by each Bank that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of each member of the Group and, accordingly, each Bank warrants to the Agent and the Arranger that it has not relied on and will not hereafter rely on the Agent and the Arranger or any of them: (a) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by either of the Obligors in connection with this Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter circulated to such Bank by the Agent and the Arranger or any of them); or (b) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any member of the Group. 25.14 Agency Division Separate In acting as agent for the Arranger and the Banks, the agency division of the Agent shall be treated as if it were a legal entity separate from all its other divisions and departments ("elsewhere"). Accordingly, any information or documents received elsewhere is not, by reason of such receipt, to be treated as having been received by the agency division, and all business undertaken elsewhere is not to be treated as having been undertaken by the agency division. The agency division of the Arranger shall be treated in this same manner as a legal entity separate from all its other divisions and departments. 25.15 Confidential Information Notwithstanding anything to the contrary expressed or implied herein and without prejudice to the provisions of Clause 25.14 (Agency Division Separate), the Agent shall not be bound to disclose to any Bank or other person any information which is supplied by any member of the Group to the Agent in its capacity as agent hereunder for the Banks and which is identified by such member of the Group at the time it is so supplied as being confidential information Provided that the consent of the relevant member of the Group to such disclosure shall not be required in relation to any information which in the opinion of the Agent relates to an Event of Default or Potential Event of Default or in respect of which the Banks have given a confidentiality undertaking in a form satisfactory to the Agent and the relevant member of the Group. 25.16 Tax Confirmation Each Bank confirms in favour of the Agent (on the date hereof, or, in the case of a Bank which becomes a party hereto pursuant to a transfer or assignment, on the date on which the relevant transfer or assignment becomes effective) that either:- (a) it is not resident for tax purposes in the United Kingdom and is beneficially entitled to its share of the Loan and the interest thereon; or (b) it is a bank as defined for the purposes of Section 349 of the Income and Corporation Taxes Act 1988 and is beneficially entitled to its share of the Loan and the interest thereon, and each Bank in favour of the Agent agrees to notify the Agent if there is any change in its position from that set out above. -46- PART 12 ASSIGNMENTS AND TRANSFERS 26. Assignments and Transfers 26.1 Binding Agreement This Agreement shall be binding upon and enure to the benefit of each party hereto and its or any subsequent Successors, Transferees and assigns. 26.2 Assignments and Transfers by the Obligors Each of the Obligors shall only be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder with the prior written consent of the Agent and all the Banks. 26.3 Assignments and Transfers by Banks Any Bank may, at any time, assign or transfer all or any of its rights and benefits hereunder or transfer in accordance with Clause 26.5 (Transfers by Banks) all or any of its rights, benefits and obligations hereunder to: (i) any affiliate of such Bank (for the purposes of this Clause "affiliate" means (a) any person which controls directly or indirectly the Bank or (b) any person which is controlled by or is under common control with a person which controls, directly or indirectly, the Bank); or (ii) with the prior consent of the Borrower (such consent not to be unreasonably withheld), any other person. 26.4 Assignments by Banks If any Bank assigns all or any of its rights and benefits hereunder in accordance with Clause 26.3 (Assignments and Transfers by Banks), then, unless and until the assignee has agreed with the Agent, the Arranger and the other Banks that it shall be under the same obligations towards each of them as it would have been under if it had been an original party hereto as a Bank (whereupon such assignee shall become a party hereto as a "Bank"), the Agent, the Arranger and the other Banks shall not be obliged to recognise such assignee as having the rights against each of them which it would have had if it had been such a party hereto. 26.5 Transfers by Banks If any Bank wishes to transfer all or any of its rights, benefits and/or obligations hereunder as contemplated in Clause 26.3 (Assignments and Transfers by Banks), then such transfer may be effected by the delivery to the Agent of a duly completed and duly executed Transfer Certificate in which event, on the later of the Transfer Date specified in such Transfer Certificate and the fifth business day after (or such earlier business day endorsed by the Agent on such Transfer Certificate falling on or after) the date of delivery of such Transfer Certificate to the Agent: (a) to the extent that in such Transfer Certificate the Bank party thereto seeks to transfer its rights, benefits and obligations hereunder, each of the Obligors and such Bank shall be released from further obligations towards one another hereunder and their respective rights against one another shall be cancelled (such rights and obligations being referred to in this Clause 26.5 as "discharged rights and obligations"); -47- (b) each of the Obligors and the Transferee party thereto shall assume obligations towards one another and/or acquire rights against one another which differ from such discharged rights and obligations only insofar as such Obligor and such Transferee have assumed and/or acquired the same in place of such Obligor and such Bank; (c) the Agent, the Arranger, such Transferee and the other Banks shall acquire the same rights and benefits and assume the same obligations between themselves as they would have acquired and assumed had such Transferee been an original party hereto as a Bank with the rights, benefits and/or obligations acquired or assumed by it as a result of such transfer; and (d) such Transferee shall become a party hereto as a "Bank". 26.6 Changes in Circumstances No assignee or Transferee of a Bank's rights may receive any greater payment under Clause 9 (Taxes) or Clause 11 (Changes in Circumstances) than such Bank would have been entitled to receive with respect to the rights assigned or transferred unless such transfer is (a) made with the prior written consent of the Borrower or (b) made to either (i) a Bank already party to this Agreement at the time of such assignment or transfer or (ii) an affiliate of the transferor Bank. 26.7 Transfer Fees On the date upon which a transfer takes effect pursuant to Clause 26.5 (Transfers by Banks) the Transferee in respect of such transfer shall pay to the Agent for its own account a transfer fee of $1000 (or its Equivalent Amount). 26.8 Disclosure of Information Any Bank may disclose to any actual or potential assignee or Transferee or to any person who may otherwise enter into contractual relations with such Bank in relation to this Agreement such information about the Obligors and the Group as such Bank shall consider appropriate. -48- PART 13 MISCELLANEOUS 27. Calculations and Evidence of Debt 27.1 Basis of Accrual Interest shall accrue from day to day and shall be calculated on the basis of a year of 360 days (or, in any case where market practice differs, in accordance with market practice) and the actual number of days elapsed. 27.2 Quotations If on any occasion a Reference Bank or Bank fails to supply the Agent with a quotation required of it under the foregoing provisions of this Agreement, the rate for which such quotation was required shall be determined from those quotations which are supplied to the Agent. 27.3 Evidence of Debt Each Bank shall maintain in accordance with its usual practice accounts evidencing the amounts from time to time lent by and owing to it hereunder. 27.4 Control Accounts The Agent shall maintain on its books a control account or accounts in which shall be recorded (a) the amount of any Advance made or arising hereunder and each Bank's share therein, (b) the amount of all principal, interest and other sums due or to become due from either of the Obligors to any of the Banks hereunder and each Bank's share therein and (c) the amount of any sum received or recovered by the Agent hereunder and each Bank's share therein. 27.5 Prima Facie Evidence In any legal action or proceeding arising out of or in connection with this Agreement, the entries made in the accounts maintained pursuant to Clause 27.3 (Evidence of Debt) and Clause 27.4 (Control Accounts) shall be prima facie evidence of the existence and amounts of the specified obligations of the Obligors. 27.6 Certificates of Banks A certificate of a Bank (and any relevant calculations provided pursuant to Clause 11.2 (Increased Costs Claims)) as to (a) the amount by which a sum payable to it hereunder is to be increased under Clause 9.1 (Tax Gross-up) or (b) the amount for the time being required to indemnify it against any such cost, payment or liability as is mentioned in Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs) shall, in the absence of manifest error, be prima facie evidence of the existence and amounts of the specified obligations of the Obligors. 27.7 Agent's Certificates A certificate of the Agent as to the amount at any time due from the Borrower hereunder or the amount which, but for any of the obligations of the Borrower hereunder being or becoming void, voidable, unenforceable or ineffective, at any time would have been due from the Borrower hereunder shall, in the absence of manifest error, be conclusive for the purposes of Part 7 (Guarantee). 28. Remedies and Waivers, Partial Invalidity 28.1 Remedies and Waivers No failure to exercise, nor any delay in exercising, on the part of the Agent, the Arranger and the Banks or any of them, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. -49- 28.2 Partial Invalidity If, at any time, any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. 29. Notices 29.1 Communications in Writing Each communication to be made hereunder shall be made in writing and, unless otherwise stated may be made by tested telex, telefax or letter Provided that an Obligor shall indemnify each of the Agent, the Arranger and the Banks against any cost, claim, loss, expense (including legal fees) or liability together with any VAT thereon which any of them may sustain or incur as a consequence of any telefax communication originating from such Obligor not being actually received by or delivered to the intended recipient thereof or any telefax communication purporting to originate from such Obligor being made or delivered fraudulently. 29.2 Delivery Any communication or document to be made or delivered by one person to another pursuant to this Agreement shall (unless that other person has by fifteen days' written notice to the Agent specified another address) be made or delivered to that other person at the address identified with its name below (in the case of an Obligor, the Agent or a Bank) (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) and (without prejudice to the provisions of Clause 28.1 (Communications in Writing) shall be deemed to have been made or delivered when despatched and answerback received (in the case of any communication made by telex) or when despatched and an appropriate acknowledgement of message transfer received by the sender (in the case of any communication made by telefax) or when left at that address, or as the case may be, ten days after being deposited in the post postage prepaid in an envelope addressed to it at that address (in the case of any communication made by letter) Provided that any communication or document to be made or delivered to the Agent shall be effective only when received by the Agent and then only if the same is expressly marked for the attention of the department or officer identified with the Agent's signature below (or such other department or officer as the Agent shall from time to time specify for this purpose). 29.3 English Language Each communication and document made or delivered by one party to another pursuant to this Agreement shall be in the English language or accompanied by a translation thereof into English certified (by an officer of the person making or delivering the same) as being a true and accurate translation thereof. 30. Amendments 30.1 Amendment Procedures The Agent, if it has the prior written consent of an Instructing Group, and the Obligors may from time to time agree in writing to amend this Agreement or to waive, prospectively or retrospectively, any of the requirements of this Agreement and any amendments or waivers so agreed shall be binding on all the Banks, the Arranger and the Obligors Provided that: (a) no such waiver or amendment shall subject any party hereto to any new or additional obligations without the consent of such party; -50- (b) without the prior written consent of all the Banks, no such amendment or waiver shall: (i) amend or waive any provision of Clause 22 (Sharing) or this Clause 30; (ii) reduce the proportion of any amount received or recovered (whether by way of set-off, combination of accounts or otherwise) in respect of any amount due from the Borrower hereunder to which any Bank is entitled; (iii) change the principal amount of or currency of any Advance, or defer the Repayment Date; (iv) change the Margin, change the amount or currency or defer the date for any payment of interest, fees or any other amount payable hereunder to all or any of the Agent, the Arranger and the Banks; (v) defer the Termination Date; (vi) amend the definition of Instructing Group; (vii) amend any provision of the Guarantee; or (viii) amend any provision which contemplates the need for the consent or approval of all the Banks; (c) notwithstanding any other provisions hereof, the Agent shall not be obliged to agree to any such amendment or waiver if the same would: (i) amend or waive any provision of this Clause 30, Clause 24 (Costs and Expenses) or Part 11 (Agency Provisions); or (ii) otherwise amend or waive any of the Agent's rights hereunder or subject the Agent or the Arranger to any additional obligations hereunder; and (d) if a single currency is introduced into all or part of the European Union in circumstances where the Guilder (in existence at the date hereof) is superseded by such single currency then the Agent (acting on the instructions of an Instructing Group) may make such amendments as may be necessary to ensure applicable conventions for loans in such single currency are followed. 30.2 Amendment Costs If either of the Obligors requests any amendment or waiver in accordance with Clause 30.1 (Amendment Procedures) then the Borrower shall, on demand of the Agent, reimburse the Agent and the Arranger for all reasonable costs and expenses (including legal fees) together with any VAT thereon incurred by the Agent and the Arranger in the negotiation, preparation and execution of any written instrument contemplated by Clause 30.1 (Amendment Procedures). -51- PART 14 LAW AND JURISDICTION 31. Law and Jurisdiction 31.1 English Law This Agreement, and all matters arising out of or in connection with it, shall be governed by English law. 31.2 English Courts Each of the parties hereto irrevocably agrees for the benefit of each of the Agent, the Arranger and the Banks that the courts of England shall have jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this Agreement (respectively "Proceedings" and "Disputes") and, for such purposes, irrevocably submits to the jurisdiction of such courts. 31.3 Appropriate Forum Each of the Obligors irrevocably waives any objection which it might now or hereafter have to the courts referred to in Clause 31.2 (English Courts) being nominated as the forum to hear and determine any Proceedings and to settle any Disputes and agrees not to claim that any such court is not a convenient or appropriate forum. 31.4 Service of Process Each of the Obligors agrees that the process by which any Proceedings are begun may be served on it by being delivered to ARCO Chemical Europe, Inc. at ARCO Chemical House, Bridge Avenue, Maidenhead, Berkshire SL6 1YP, England; Attention: Assistant General Counsel - Europe or other its registered office for the time being. If the person mentioned in this Clause 31.4 resigns or otherwise revokes its appointment in respect of either or both Obligors, such Obligor or Obligors shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within 15 days, the Agent shall be entitled to appoint such a person by notice to such Obligor or Obligors Provided that such resignation or revocation shall for the purpose of this Agreement be deemed to be ineffective until such further person is appointed in accordance with this Clause 31.4. Nothing contained herein shall affect the right to serve process in any other manner permitted by law. 31.5 Non-exclusive Submissions The submission to the jurisdiction of the courts referred to in Clause 31.2 (English Courts) shall not (and shall not be construed so as to) limit the right of the Agent, the Arranger and the Banks or any of them (but shall limit the right of each Obligor) to take Proceedings against either of the Obligors in any other court of competent jurisdiction nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by applicable law. 31.6 Consent to Enforcement Each of the Obligors hereby consents generally in respect of any Proceedings to the giving of any relief or the issue of any process in connection with such Proceedings including the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such Proceedings. 31.7 Waiver of Immunity To the extent that either of the Obligors may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), such Obligor hereby irrevocably agrees not to claim and -52- hereby irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction and, in particular, to the intent that in any proceedings taken in New York the foregoing waiver of immunity shall have effect under and be construed in accordance with the United States Foreign Sovereign Immunities Act of 1976. AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written. -53- THE FIRST SCHEDULE The Banks
Bank Commitment (NLG) The Chase Manhattan Bank 30,000,000 Bayerische Landesbank International S.A. 24,375,000 Credit Lyonnais, Amsterdam Branch 24,375,000 Deutsche Bank de Bary N.V. Rotterdam Branch 24,375,000 Generale Bank Nederland N.V. 24,375,000 ING Bank N.V. 24,375,000 RBC Finance B.V. 24,375,000 Sakura Bank (Luxembourg) S.A. 24,375,000 Societe Generale 24,375,000 ABN AMRO Bank N.V. 15,000,000 Banque et Caisse d'Epargne de l'Etat, Luxembourg 15,000,000 Caixa Geral de Depositos, S.A., Paris Branch 15,000,000 Citibank, N.A. 15,000,000 The First National Bank of Chicago 15,000,000 ---------------- 300,000,000 ================
-54- THE SECOND SCHEDULE Form of Transfer Certificate To: [ ] TRANSFER CERTIFICATE relating to the agreement (as from time to time amended, varied, novated or supplemented, the "Facility Agreement") dated 12 March 1997 whereby a NLG300,000,000 term loan facility was made available to ARCO Chemie Nederland, Ltd as borrower under the guarantee of ARCO Chemical Company as guarantor by a group of banks on whose behalf Chase Manhattan International Limited acted as agent in connection therewith. 1. Terms defined in the Facility Agreement shall, subject to any contrary indication, have the same meanings herein. The terms Bank, Transferee, Bank's Participation and Amount Transferred are defined in the schedule hereto. 2. The Bank confirms that the Bank's Participation is an accurate summary of its participation in the Facility Agreement and requests the Transferee to accept and procure the transfer to the Transferee of a percentage of the Bank's Participation (equal to the percentage that the Amount Transferred is of the aggregate of the component amounts (as set out in the schedule hereto) of the Bank's Participation) by counter-signing and delivering this Transfer Certificate to the Agent at its address for the service of notices specified in the Facility Agreement. 3. The Transferee hereby requests the Agent to accept this Transfer Certificate as being delivered to the Agent pursuant to and for the purposes of Clause 26.5 (Transfers by Banks) of the Facility Agreement so as to take effect in accordance with the terms thereof on the Transfer Date or on such later date as may be determined in accordance with the terms thereof. 4. The Transferee confirms that it has received a copy of the Facility Agreement together with such other information as it has required in connection with this transaction and that it has not relied and will not hereafter rely on the Bank to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information and further agrees that it has not relied and will not rely on the Bank to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or the Guarantor. 5. The Transferee hereby undertakes with the Bank and each of the other parties to the Facility Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Facility Agreement will be assumed by it after delivery of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect. 6. The Bank makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Facility Agreement or any document relating thereto and assumes no responsibility for the financial condition of the Borrower or the Guarantor or for the performance and observance by the Borrower or the Guarantor of any of its obligations under the Facility Agreement or any document relating thereto and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded. -55- 7. The Bank hereby gives notice that nothing herein or in the Facility Agreement (or any document relating thereto) shall oblige the Bank to (a) accept a re-transfer from the Transferee of the whole or any part of its rights, benefits and/or obligations under the Facility Agreement transferred pursuant hereto or (b) support any losses directly or indirectly sustained or incurred by the Transferee for any reason whatsoever including the non-performance by the Borrower, the Guarantor or any other party to the Facility Agreement (or any document relating thereto) of its obligations under any such document. The Transferee hereby acknowledges the absence of any such obligation as is referred to in (a) or (b) above. 8. This Transfer Certificate and the rights, benefits and obligations of the parties hereunder shall be governed by and construed in accordance with English law. THE SCHEDULE 1. Bank: 2. Transferee: 3. Transfer Date: 4. Bank's Participation: Bank's Available Commitment* Bank's Portion of the Loan 5. Amount Transferred: Advances [Transferor Bank] [Transferee Bank] By: By: Date: Date: -56- Administrative Details of Transferee Address: Contact Name: Account for Payments: Telex: Telefax: Telephone: SWIFT: ________________________________________________________________________________ * Details of the Bank's Available Commitment should not be completed after the Termination Date -57- THE THIRD SCHEDULE Condition Precedent Documents 1. In relation to each of the Obligors: (a) a copy, certified a true copy by a duly authorised officer of such Obligor, of the constitutional documents of such Obligor; (b) a copy, certified a true copy by a duly authorised officer of such Obligor, of a Board Resolution of such Obligor approving the execution, delivery and performance of this Agreement and the terms and conditions hereof and authorising a named person or persons to sign this Agreement and any documents to be delivered by such Obligor pursuant hereto; and (c) a certificate of a duly authorised officer of such Obligor setting out the names and signatures of the persons authorised to sign, on behalf of such Obligor, this Agreement and any documents to be delivered by such Obligor pursuant hereto. 2. A certificate of the Chairman of the works' council of the Borrower or of a duly authorised officer of the Borrower confirming either that the approval of the works' council has been obtained for the Borrower to enter into this Agreement or that no such approval is required. 3. A copy, certified a true copy by or on behalf of the Borrower, of each such law, decree, consent, licence, approval, registration or declaration as is, in the opinion of counsel to the Banks, necessary to render this Agreement legal, valid, binding and enforceable, to make this Agreement admissible in evidence in each Obligor's jurisdiction of incorporation and to enable each of the Obligors to perform its obligations hereunder. 4. A legal opinion of the Banks' Dutch Counsel, in substantially the form distributed to the Banks' prior to the signing of this Agreement. 5. A legal opinion of the Banks' Delaware Counsel, in substantially the form distributed to the Banks' prior to the signing of this Agreement. 6. A legal opinion of the Guarantor's Counsel, in substantially the form set out in the Fifth Schedule (Opinion of the Guarantor's Counsel). 7. A legal opinion of Clifford Chance, solicitors to the Agent, satisfactory in form and substance to the Agent. 8. A copy, certified a true copy by a duly authorised officer of the Borrower, of the Original Financial Statements of the Borrower. 9. A copy, certified a true copy by a duly authorised officer of the Guarantor, of the Original Financial Statements of the Guarantor. -58- 10. Evidence that ARCO Chemical Europe, Inc. has agreed to act as the agent of the Obligors for the service of process in England. 11. Evidence in a form satisfactory to the Agent, that, subject to the repayment and satisfaction of all amounts outstanding under the facility agreements relating thereto, the Existing Facilities have been cancelled. 12. A copy, certified a true copy by a duly authorised officer of the Guarantor, of each of the Cross-Indemnification Agreement and the Tax-Sharing Agreement as originally executed and all amendments, modifications and waivers thereto. -59- THE FOURTH SCHEDULE Notice of Drawdown From: ARCO Chemie Nederland, Ltd To: Chase Manhattan International Limited Dated: Dear Sirs, 1. We refer to the agreement (as from time to time amended, varied, novated or supplemented, the "Facility Agreement") dated [ ] 1997 and made between ARCO Chemie Nederland, Ltd as Borrower, ARCO Chemical Company as Guarantor, Chase Investment Bank Limited as Arranger, Chase Manhattan International Limited as Agent and the financial institutions named therein as banks. Terms defined in the Facility Agreement shall have the same meaning in this notice. 2. We hereby give you notice that, pursuant to the Facility Agreement and on [date of proposed Advance], we wish to borrow an Advance in the amount of NLG[ ] Dutch Guilders upon the terms and subject to the conditions contained therein. [3. We would like this Advance to have a first Interest Period of [ ] months' duration.]* 4. We confirm that, at the date hereof, the representations set out in Clause 12 (Representations) of the Facility Agreement are true and no Event of Default or Potential Event of Default has occurred. 5. The proceeds of this drawdown should be credited to [insert account details]. Yours faithfully .................. for and on behalf of ARCO Chemie Nederland, Ltd ________________________________________________________________________________ * Insert only if there are no outstanding Advances -60- THE FIFTH SCHEDULE Opinion of the Guarantor's Counsel March , 1997 To: Chase Manhattan International Limited as Agent on its own behalf and for and on behalf of the Arranger and the Banks referred to in the Facility Agreement (described below) Re: NLG300,000,000 Term Loan Facility Ladies and Gentlemen: We have acted as counsel to ARCO Chemical Company, a Delaware corporation (the "Guarantor") and ARCO Chemie Nederland, Ltd., a Delaware corporation (the "Borrower") in connection with that certain NLG300,000,000 Term Loan Facility, dated March __, 1997 (the "Facility Agreement") among the Borrower, the Company as Guarantor, Chase Investment Bank Limited as Arranger, Chase Manhattan International Limited as Agent, and the financial institutions defined therein as Banks. Except as otherwise provided herein, terms defined in the Facility Agreement are used herein as defined therein. This opinion letter is being delivered pursuant to Clause 2.3 of the Facility Agreement. In rendering the opinions expressed below, we have examined the Facility Agreement, the Certificate of Incorporation and Bylaws of each of the Guarantor and the Borrower and such records of each of the Guarantor and the Borrower and such other documents as we have deemed necessary as a basis for such opinions. In our examination, we have assumed the genuineness of all signatures (other than those of the Guarantor and the Borrower), the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. As to matters of fact, we have relied upon statements of governmental officials and upon representations made in or pursuant to the Facility Agreement and certificates of appropriate representatives of the Guarantor and the Borrower. Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that: 1. Each of the Guarantor and the Borrower is a corporation validly existing and in good standing under the laws of the State of Delaware. 2. Each of the Guarantor and the Borrower has all necessary corporate power and authority to execute and deliver the Facility Agreement and to perform its respective obligations thereunder, and all necessary corporate action on the part of each of the Guarantor and the Borrower has been taken to authorize such execution, delivery and performance. -61- 3. The Facility Agreement has been duly authorised executed and delivered by each of the Guarantor and the Borrower and constitutes the legal, valid and binding obligation of each of the Guarantor and the Borrower, enforceable against such parties in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability of the Facility Agreement is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation (a) the availability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing. 4. No approval, consent, order, authorization, permit, license, exemption of, or registration, declaration or filing with, any federal, state or local governmental, regulatory or public agency, authority or court is required in connection with the execution, delivery and performance by each of the Guarantor and the Borrower of its respective obligations under the Facility Agreement. 5. Except as may be limited by the Uniform Foreign Money Judgment Recognition Act as in effect in the Commonwealth of Pennsylvania, a judgment for the recovery of money due and owing under the Facility Agreement in the English courts would be enforceable in the courts of the Commonwealth of Pennsylvania in the same manner as a judgment obtained in a court of appropriate jurisdiction in the United States of America. The foregoing opinions are subject to the following comments and qualifications: (A) The enforceability of provisions of the Facility Agreement requiring the Borrower or the Guarantor to indemnify any other party may be limited by (i) laws rendering unenforceable indemnification contrary to Federal or state securities laws and the public policy underlying such laws and (ii) laws limiting the enforceability of provisions exculpating or exempting a party, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, wilful misconduct or unlawful conduct. (B) The enforceability of provisions in the Facility Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances. (C) We express no opinion as to (i) the effect of the laws of any jurisdiction in which any Bank is located that limit the interest, fees or other charges such Bank may impose, (ii) clause 31 of the Facility Agreement. (D) We assume that the Facility Agreement is the legal, valid and binding obligation of each party thereto other than the Guarantor and the Borrower. We are licensed to practice law in the Commonwealth of Pennsylvania and have not in connection with this opinion made an investigation of the laws of any other jurisdiction except the federal laws of the United States and the General Corporation Law of the State of Delaware and nothing in this opinion should be or shall be construed otherwise. This opinion is limited solely to the laws of the Commonwealth of Pennsylvania, the General Corporation Law of the State of Delaware and the federal laws of the United States and rules, regulations and orders thereunder which are presently in effect. -62- This opinion is given as of the date hereof, is given for the benefit of the Arranger and the Banks and the benefit of your counsel, and may not be relied upon by any other person or entity. Very truly yours, -63- The Borrower ARCO CHEMIE NEDERLAND, LTD. (ROTTERDAM BRANCH) By: WALTER J. TUSINSKI RONALD R. REMICK Address: Theemsweg 14 3197 KM Botlek Rotterdam The Netherlands Attention: Financial Controls Manager Telefax: +31181 294999 With a copy to: Address: ARCO Chemical Company 3801 West Chester Pike Newtown Square Pennsylvania 19073 United States of America Attention: Manager of Corporate Finance Telefax: +1 610 359 7222 -64- The Guarantor ARCO CHEMICAL COMPANY By: WALTER J. TUSINSKI Address: 3801 West Chester Pike Newtown Square Pennsylvania 19073 United States of America Attention: Manager of Corporate Finance Telefax: +1 610 359 7222 The Arranger CHASE INVESTMENT BANK LIMITED By: EDWARD BROWN Address: 125 London Wall London EC2Y 5AJ United Kingdom Attention: Edward Brown Telephone: +44 171 777 4836 Telefax: +44 171 777 3841 -65- The Agent CHASE MANHATTAN INTERNATIONAL LIMITED By: DONALD BURRI Address: Trinity Tower 9 Thomas More Street London E1 9YT United Kingdom Attention: Steve Clarke Telephone: +44 171 777 2353 Telefax: +44 171 777 2360 Telex: 94060177 CMIL G The Banks The Lead Managers BAYERISCHE LANDESBANK INTERNATIONAL S.A. By: KATHRYN JEPSON (Attorney-in-fact) Address: 3 rue Jean Monnet L-2180 Luxembourg Attention: Mr P Lang Telephone: + 352 42434 3325 Telefax: + 352 42434 3399 Telex: 1229 bayer lu -66- THE CHASE MANHATTAN BANK By: KATHRYN JEPSON Address 125 London Wall London EC2Y 5AS United Kingdom For notices: Address: Chaseside Bournemouth Dorset BH7 7DB United Kingdom Attention: Nick Gittins/Tina Holes European Loan Services Telephone: + 44 1202 34 3923/2020 Telefax: + 44 1202 34 3730 Telex: 8954681 CMB G CREDIT LYONNAIS, AMSTERDAM BRANCH By: KATHRYN JEPSON (Attorney-in-fact) Address: "Atrium", 5th Floor Strawinskylaan 3093 1077 ZX Amsterdam The Netherlands Attention: Audouin de Forestier Telephone: + 31 20 504 7070 Telefax: + 31 20 504 7077 -67- DEUTSCHE BANK . DE BARY N.V., ROTTERDAM BRANCH By: KATHRYN JEPSON (Attorney-in-fact) Address: Westplein 12 P.O. Box 1711 3000 BS Rotterdam The Netherlands Attention: Mr E R Bergkotte Telephone: + 31 10 436 6400 Telefax: + 31 10 436 8017 Telex: 22608 GENERALE BANK NEDERLAND N.V. By: KATHRYN JEPSON (Attorney-in-fact) Address: Blaak 555 PO Box 339 3000 AH Rotterdam The Netherlands For credit matters: Attention: Mr Bart M.H. van Iersel (RB 22 A) Telephone: + 31 10 2703265 Telefax: + 31 10 2703881 For administration matters: Attention: Mrs H Willemen-van-Gelder (RB 02 C) Mr L M van der Moer (RB 02 C) Telephone: + 31 10 270 1241/1242 Telefax: + 31 10 270 3897 -68- ING BANK N.V. By: KATHRYN JEPSON (Attorney-in-fact) Address: 49 St. Stephen's Green Dublin 2 Ireland For credit matters: Attention: Samantha de Foubert Account Manager Telephone: + 353 1 662 1911 Telefax: + 353 1 662 1916 For administrative matters: Attention: Alan Maher Assistant Manager, Administration Telephone: + 353 1 662 1911 Telefax: + 353 1 662 1916 RBC FINANCE B.V. By: KATHRYN JEPSON (Attorney-in-fact) Address: Keizersgracht 604 1017EP Amsterdam The Netherlands Attention: C J Pickett/Ms I Awondatu Telephone: + 31 20 5 233 213 Telefax: + 31 20 6 262 196 Telex: 15595 rbc nl -69- SAKURA BANK (LUXEMBOURG) S.A. By: KATHRYN JEPSON (Attorney-in-fact) Address: 33, boulevard du Prince Henri L-2010 Luxembourg Attention: Business Promotion Department Telephone: + 352 46 24 36 / 22 54 55 Telefax: + 352 46 24 39 / 47 57 81 Telex: 60792 (MTKBK) 2466 (MITKBK) SOCIETE GENERALE By: KATHRYN JEPSON (Attorney-in-fact) Address: Tour Societe Generale ENTR/FIN/ING 92972 Paris La Defense Cedex France For credit matters: Attention: Christine Broutin Telephone: + 33 1 42 13 80 96 Telefax: + 33 1 42 14 60 93 For administrative matters: Attention: Laurence Gaertner Telephone: + 33 1 42 13 77 71 Telefax: + 33 1 42 13 69 67 Telex: SG MAR 615 890 -70- The Managers ABN AMRO BANK N.V. By: KATHRYN JEPSON (Attorney-in-fact) Address: Coolsingel 119 3012 AG Rotterdam The Netherlands Attention: Mr J G Smit Telephone: + 31 10 402 5725 Telefax: + 31 10 402 5580 Telex: 12377 (arbitration) BANQUE ET CAISSE D'EPARGNE L'ETAT, LUXEMBOURG By: KATHRYN JEPSON (Attorney-in-fact) Address: 1+2 Place de Metz L-1930 Luxembourg For credit matters: Attention: Mr Jean-Pierre Thein Telephone: + 352 4015 4337 Telefax: + 352 4015 4284 Telex: 3417 EPPDA LU For administrative matters: Attention: Mrs Marguerite Braun/Mrs Christiane Hahn/Mrs Pina Girardi Telephone: + 352 4015 4364/4366/4349 Telefax: + 352 4015 4284 Telex: + 3417 EPPDA LU -71- CAIXA GERAL DE DEP SITOS S.A., PARIS BRANCH By: KATHRYN JEPSON (Attorney-in-fact) Address: 83 avenue Marceau 75116 Paris France For credit matters: Attention: Ms Isabelle Khegt Telephone: + 331 4069 5449 Telefax: + 331 4070 0309 Telex: 640569 F For administrative matters: Attention: Ms Sandra Bagulho Telephone: + 331 4069 5447 Telefax: + 331 4070 0309 Telex: 640569 F CITIBANK, N.A. By: MOIRA McMANUS Address: "Europlaza" Hoogoorddreef 54B 1101 BE Amsterdam z.o. The Netherlands Attention: Sigrid Jorissen Telephone: + 31 20 65 14 205 Telefax: + 31 20 65 14 292 Telex: 12261 -72- THE FIRST NATIONAL BANK OF CHICAGO By: DAVID ROBERTS Address: First Chicago House 90 Long Acre London WC2E 9RB United Kingdom Attention: Dot O'Flaherty Credit Operations Telephone: + 44 171 438 4150 Telefax: + 44 171 438 4148 Telex: 887716 -73- EX-10.2 3 CREDIT AGREEMENT A ============================================================================ CREDIT AGREEMENT A DATED AS OF JULY 23, 1997 AMONG ARCO CHEMICAL COMPANY, THE FIRST NATIONAL BANK OF CHICAGO, AS AGENT AND THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC. ============================================================================ EXHIBIT 10.2
TABLE OF CONTENTS SECTION PAGE ARTICLE I DEFINITIONS............................... 1 SECTION 1.01. Definitions................................................. 1 SECTION 1.02. Accounting Terms and Determinations......................... 12 ARTICLE II THE CREDITS.............................. 13 SECTION 2.01. Commitments to Lend......................................... 13 SECTION 2.02. Notice of Syndicated Borrowings............................. 14 SECTION 2.03. Money Market Borrowings..................................... 14 SECTION 2.04. Notice to Banks; Funding of Loans........................... 19 SECTION 2.05. Notes....................................................... 19 SECTION 2.06. Maturity of Loans........................................... 20 SECTION 2.07. Interest Rates.............................................. 20 SECTION 2.08. Fees........................................................ 22 SECTION 2.09. Optional Termination or Reduction of Commitments............ 22 SECTION 2.10. Mandatory Termination of Commitments........................ 23 SECTION 2.11. Optional Prepayments........................................ 23 SECTION 2.12. General Provisions as to Payments........................... 23 SECTION 2.13. Funding Losses.............................................. 24 SECTION 2.14. Computation of Interest and Fees............................ 25 SECTION 2.15. Judgment Currency........................................... 25 SECTION 2.16. Taxes....................................................... 26 SECTION 2.17. Maximum Interest Rate....................................... 28 SECTION 2.18. Extension of the Termination Date........................... 28 ARTICLE III CONDITIONS TO BORROWINGS........................ 29 SECTION 3.01. Initial Borrowing by the Borrower........................... 29 SECTION 3.02. Each Borrowing.............................................. 30 ARTICLE IV REPRESENTATIONS AND WARRANTIES..................... 31 SECTION 4.01. Representations and Warranties of the Borrower.............. 31
i
SECTION PAGE ARTICLE V COVENANTS................................. 34 SECTION 5.01. Certain Information to be Furnished by the Borrower.......... 34 SECTION 5.02. Limitation on Liens.......................................... 36 SECTION 5.03. Limitation on Sale and Lease-Back............................ 37 SECTION 5.04. Consolidation, Merger, Disposition of Assets................. 38 SECTION 5.05. Minimum Consolidated Net Worth............................... 39 SECTION 5.06. Transactions with Affiliates................................. 39 SECTION 5.07. Use of Proceeds.............................................. 39 ARTICLE V IDEFAULTS................................. 40 SECTION 6.01. ............................................................. 40 SECTION 6.02. Notice of Default............................................ 42 ARTICLE VII THE AGENT................................. 42 SECTION 7.01. Appointment and Authorization................................ 42 SECTION 7.02. Agent and Affiliates......................................... 42 SECTION 7.03. Action by Agent.............................................. 42 SECTION 7.04. Employment and Reliance on Agents and Counsel................ 42 SECTION 7.05. Liability of Agent........................................... 42 SECTION 7.06. Reimbursement and Indemnification............................ 43 SECTION 7.07. Credit Decision.............................................. 43 SECTION 7.08. Successor Agent.............................................. 43 SECTION 7.09. Co-Agents.................................................... 44 ARTICLE VIII CHANGE IN CIRCUMSTANCES......................... 44 SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair..... 44 SECTION 8.02. Illegality................................................... 46 SECTION 8.03. Increased Cost and Reduced Return............................ 46 SECTION 8.04. Substitute Loans............................................. 48 SECTION 8.05. Certain Reserve Compensation................................. 48 SECTION 8.06. Substitution of Bank......................................... 49
ii
SECTION PAGE ARTICLE IX MISCELLANEOUS..........................................49 SECTION 9.01. Notices..................................................................49 SECTION 9.02. No Waiver................................................................50 SECTION 9.03. Governing Law............................................................50 SECTION 9.04. Expenses and Indemnification.............................................50 SECTION 9.05. Amendments, Etc..........................................................50 SECTION 9.06. Counterparts; Effectiveness; Termination of Existing Credit Agreement....51 SECTION 9.07. Successors and Assigns...................................................51 SECTION 9.08. Survival.................................................................52 SECTION 9.09. Acknowledgement..........................................................52 SECTION 9.10. Headings.................................................................53 SECTION 9.11. Sharing of Setoffs.......................................................53 SECTION 9.12. Collateral...............................................................53 SECTION 9.13. Consent to Jurisdiction..................................................53 SECTION 9.14. Waiver of Jury Trial.....................................................54
iii SCHEDULE I -- Euro-Currency Payment Offices of the Agent EXHIBIT A -- Note EXHIBIT B -- Money Market Quote Request EXHIBIT C -- Invitation for Money Market Quotes EXHIBIT D -- Money Market Quote EXHIBIT E -- Form of Certificate of Incumbency EXHIBIT F -- Form of Opinion of Counsel for the Borrower EXHIBIT G -- Assignment and Assumption Agreement EXHIBIT H -- Notice of Effectiveness EXHIBIT I -- Form of Opinion of Special Counsel for the Agent This CREDIT AGREEMENT A (this "Agreement") is entered into as of July 23, 1997 among ARCO CHEMICAL COMPANY, a Delaware corporation (the "Borrower"), the several financial institutions from time to time party to this Agreement (individually each a "Bank;" collectively the "Banks") and THE FIRST NATIONAL BANK OF CHICAGO, as Agent (the "Agent"). WHEREAS, the Borrower desires to borrow from the Banks from time to time under this Agreement amounts not exceeding in the aggregate $200,000,000 outstanding at any one time for its general corporate purposes, and the Banks are prepared to make loans upon the terms hereof. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. In addition to terms defined elsewhere in this ----------- Agreement, as used in this Agreement, the following terms shall have the following meanings (all terms defined in this Agreement in the singular to have the same meanings when used in the plural and vice versa): "Absolute Rate Auction" shall mean a solicitation of Money Market Quotes setting forth Money Market Rates pursuant to Section 2.03. "Administrative Questionnaire" shall mean, with respect to any Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Bank. "Affiliate" shall mean (i) any Person that directly, or indirectly through one or more intermediaries, controls the Borrower (a "Controlling Person") or (ii) any Person (other than the Borrower or a Subsidiary) which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" shall mean The First National Bank of Chicago in its capacity as agent for the Banks hereunder, and its successors in such capacity. "Agreed Currency" shall mean Dollars, Deutsche Marks, Dutch guilders, French francs, Japanese yen and pounds sterling and any other currency which is freely transferable and convertible into Dollars, in which deposits are customarily offered to banks in the London interbank market, which the Borrower requests the Agent to include as an Agreed Currency hereunder and which is acceptable to each Bank; provided that the Agent shall promptly notify each Bank -------- of each such request and each Bank shall be deemed to have agreed to each such request if its objection thereto has not been received by the Agent within five Domestic Business Days from the date of such notification by the Agent to such Bank. "Applicable Lending Office" shall mean as to any Bank (i) in the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of its Euro- Currency Loans, its Euro-Currency Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office. "Approximate Equivalent Amount" of any currency with respect to any amount of Dollars at any date shall mean the Equivalent Amount of such currency with respect to such amount of Dollars at such date (i) if such currency is an Agreed Currency listed below, rounded up to the nearest amount of such Agreed Currency set forth below opposite such amount of Dollars:
Amount of Amount of Amount of Amount of Amount of Amount of Deutsche Dutch French Japanese Pounds Dollars Marks Guilders Francs Yen Sterling - --------- --------- --------- --------- ----------- --------- up to 1,000,000 1,000 1,000 1,000 100,000 1,000 1,000,000 to 9,999,999 10,000 10,000 10,000 1,000,000 10,000 10,000,000 to 99,999,999 100,000 100,000 100,000 10,000,000 100,000 100,000,000 and upwards 1,000,000 1,000,000 1,000,000 100,000,000 1,000,000
and (ii) if such currency is not an Agreed Currency listed above, rounded up to the nearest amount of such currency as determined by the Agent from time to time. "Arranger" shall mean First Chicago Capital Markets, Inc. "Assignee" shall have the meaning set forth in Section 9.07(c). "Authorized Officer" and "Authorized Representative" of the Borrower shall mean an officer or other representative of the Borrower designated in the latest Certificate of Incumbency of the Borrower. The Agent and the Banks shall be conclusively entitled to rely on the latest such Certificate of Incumbency delivered to the Agent. "Bank" shall mean each bank which is listed on the signature pages hereof as having a Commitment and which has executed and delivered this Agreement, and its successors and assigns. "Bank Credit Documents" shall mean, collectively, this Agreement, the Notes, the Other Agreement and the "Notes" under and as defined in the Other Agreement. "Base Rate" shall mean, for any day, a rate per annum equal to the higher of (i) the Corporate Base Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Base Rate Loan" shall mean a Loan to be made by a Bank pursuant to Section 2.01 as a Base Rate Loan in accordance with the applicable Notice of Borrowing or pursuant to Article VIII or 2 Section 2.04(d). "Benefit Arrangement" shall mean at any time an employee pension 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. "Borrowed Funds" shall mean Debt for borrowed money. "Borrower" shall mean ARCO Chemical Company, a Delaware corporation, and its permitted successors. "Borrowing" shall mean the aggregation of Loans of the same type and currency of one or more Banks to be made to the Borrower pursuant to Article II 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-Currency Borrowing" is a Borrowing comprised of Euro-Currency Loans) or by reference to the provisions of Article II under which participation therein is determined (e.g., a "Syndicated Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments and a "Money Market Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined by the Agent in accordance therewith). "Certificate of Incumbency" shall mean a Certificate of Incumbency described in Section 3.01(ii) and any successor or replacement Certificate of Incumbency delivered hereunder. "Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor statute. "Commitment" shall mean, as to each Bank, the Dollar Amount set forth opposite its name on the signature pages hereof under the heading "Commitment" (as such amount may be reduced from time to time as provided in Section 2.09). "Consolidated Net Worth" shall mean at any date the consolidated stockholders' equity of the Borrower and its Consolidated Subsidiaries less their consolidated write-ups, all determined as of such date. For purposes of this definition, "write-ups" shall mean the amount (to the extent reflected in determining such consolidated stockholders' equity) of all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within 12 months after the acquisition of such business) subsequent to December 31, 1995 in the book value of any asset owned by the Borrower or a Consolidated Subsidiary. "Consolidated Subsidiary" shall mean, on any date, any Subsidiary or other entity the accounts of which would be consolidated with those of the Borrower in its consolidated financial statements as of such date. "Corporate Base Rate" shall mean a rate per annum equal to the corporate base rate of interest 3 announced by The First National Bank of Chicago from time to time, changing when and as said corporate base rate changes. "Cross-Indemnification Agreement" shall mean the Cross-Indemnification Agreement dated as of June 1, 1987, as amended, between the Parent and the Borrower. "Debt" of any Person shall mean 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 under capital leases, (v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, and (vi) all Debt of others guaranteed by such Person; provided that in no event shall "Debt" be deemed to include any -------- "take-or-pay" obligations incurred by the Borrower in connection with its purchases of petrochemical feedstocks or other such petrochemical products in the ordinary course of business. "Default" shall mean any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Designated Currency" shall mean (i) each Agreed Currency, (ii) any other currency which is freely transferable and convertible into Dollars, in which deposits are customarily offered to banks in the London interbank market and which the Borrower designates as a Designated Currency hereunder upon five Domestic Business Days' notice in writing to the Banks through the Agent and (iii) any other currency which is freely transferable and convertible into Dollars, in which deposits are not customarily offered to banks in the London interbank market and which the Borrower designates as a Designated Currency hereunder by notice in writing to the Banks through the Agent; provided that any -------- notice given pursuant to this clause (iii) shall also propose an appropriate amendment to this Agreement to provide for the basis for determining the rate to which Money Market Margins are to be added or subtracted in the relevant Money Market Quotes and to amend any other relevant provisions hereof as necessary and that any such notice and proposed amendment shall be effective for all purposes hereunder on the 20th Domestic Business Day after the date of such notification by the Agent to each Bank if no Bank has objected thereto to the Agent before such 20th Domestic Business Day. "Dollar Amount" of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the equivalent amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such currency on the London market at the opening of business in London on the relevant FX Date. "Dollars" and "$" shall mean lawful money of the United States of America. 4 "Domestic Business Day" shall mean any day except a Saturday, Sunday or other day on which commercial banks in New York City or Chicago, Illinois are authorized or required by law to close. "Domestic Lending Office" shall mean, as to each Bank, its office, branch or affiliate specified as its "Domestic Lending Office" below its name on the signature pages hereof or such other office, branch or affiliate as such Bank may from time to time specify to the Agent and the Borrower as its Domestic Lending Office. "Equivalent Amount" of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such other currency at the opening of business in London on the relevant FX Date. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Group" shall mean the Borrower and all members of a controlled group of corporations and all trades or business (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. "Euro-Currency Business Day" shall mean any Domestic Business Day on which commercial banks are open for international business (including dealings in Dollar deposits) in London and, where funds are to be paid or made available in a currency other than Dollars, on which commercial banks are open for domestic and international business (including dealings in deposits in such currency) in both London and the place where such funds are to be paid or made available. "Euro-Currency Lending Office" shall mean, as to each Bank, (i) for loans denominated in each of Dollars, Deutsche Marks, Dutch guilders, French francs, Japanese yen and pounds sterling, its office, branch or affiliate specified as its "Euro-Currency Lending Office" for such currency below its name on the signature pages hereof (or, if no such office is specified, its Domestic Lending Office for Base Rate Loans) or such other office, branch or affiliate of such Bank as it may from time to time specify to the Agent and the Borrower as its Euro-Currency Lending Office and (ii) for loans denominated in each other Agreed Currency permitted hereunder from time to time, such office branch or affiliate of such Bank as it may from time to time specify to the Agent and the Borrower as its Euro-Currency Lending Office for such other currency (or, if no such office is specified, its Domestic Lending Office for Base Rate Loans). "Euro-Currency Loan" shall mean a Loan to be made by a Bank pursuant to Section 2.01 as a Euro-Currency Loan in accordance with the applicable Notice of Borrowing. "Euro-Currency Payment Office" of the Agent shall mean, (i) for each of Dollars, Deutsche Marks, Dutch guilders, French francs, Japanese yen and pounds sterling, the office, branch or affiliate of the Agent specified as the "Euro- Currency Payment Office" for such currency in Schedule 5 I hereto or such other office, branch, affiliate or correspondent bank of the Agent as it may from time to time specify to the Borrower and each Bank as its Euro-Currency Payment Office and, (ii) for each other Designated Currency, such office, branch, affiliate or correspondent bank of the Agent as it may from time to time specify to the Borrower and each Bank as its Euro-Currency Payment Office for such Designated Currency. "Euro-Currency Reserve Percentage" shall mean with respect to any Bank 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 reserve requirement imposed on such Bank 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-Currency Loans and Money Market LIBOR Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of such Bank to United States residents). "Event of Default" shall have the meaning assigned to that term in Section 6.01. "Existing Credit Agreement" shall mean the $300 million Credit Agreement dated as of November 19, 1993 (as amended by Amendment No. 1 dated as of October 14, 1994, and Amendment No. 2 dated as of April 3, 1996), among the Borrower, the banks listed on the signature pages thereof and The First National Bank of Chicago, as agent. "Facility Fee Percentage" shall mean 0.05% per annum. "Federal Funds Rate" shall mean 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 The First National Bank of Chicago on such day on such transactions as determined by the Agent. "Fixed Rate Loans" shall mean Euro-Currency Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing. "FX Date" shall mean the date on which the Agent's spot rate of exchange shall be determined for purposes of calculating the Dollar Amount and Equivalent Amount of any currency at any time. With respect to any calculation of Dollar Amount or Equivalent Amount as of: (i) any borrowing date for any type of Borrowing, the relevant FX Date shall be the 6 latest date by which a Notice of Borrowing is required to be delivered with respect to such Borrowing (unless the Borrowing is a Base Rate Borrowing pursuant to Section 2.04(d), 8.01(a), 8.02 or 8.04(b), in which case the relevant FX Date shall be four Euro-Currency Business Days before the borrowing date); (ii) the Termination Date, the relevant FX Date shall be four Euro- Currency Business Days before the Termination Date; (iii) any date of prepayment of any Loan which is not also a borrowing date, the relevant FX Date shall be the date of such prepayment; (iv) each day as of which the Commitment may be reduced or terminated pursuant to Section 2.09, the relevant FX Date shall be four Euro-Currency Business Days before such day; and (v) each day on which any vote or other action by the Required Banks or Banks holding a specified proportion of the principal amount of the Notes is to be taken or to be effective and each other day not specified above on which the Dollar Amount or Equivalent Amount is to be determined (including, without limitation, pursuant to Section 6.01(e) and 6.01(i)), the relevant FX Date shall be such day. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Guarantee" by any Person shall mean any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation 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 or other obligation (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 or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee 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 shall have a corresponding meaning. "Interest Period" shall mean: (1) with respect to each Euro-Currency Borrowing, the period commencing on the date of such Borrowing and ending 1, 2, 3 or 6 months thereafter (or 9 or 12 months thereafter if all Reference Banks agree to such period), as the Borrower may elect in the 7 applicable Notice of Borrowing; provided that: -------- (a) any Interest Period which would otherwise end on a day which is not a Euro-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day; (b) any Interest Period which begins on the last Euro-Currency Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Currency Business Day of a calendar month; and (c) the Borrower may not elect any Interest Period which would end subsequent to the Termination Date; (2) with respect to each Base Rate Borrowing, the period commencing on the date of such Borrowing and ending 30 days thereafter; provided that: -------- (a) any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day; and (b) any Interest Period which begins before the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date; (3) with respect to each Money Market LIBOR Borrowing, the period commencing on the date of such 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-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day; (b) any Interest Period which begins on the last Euro-Currency Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Currency Business Day of a calendar month; and (c) the Borrower may not elect any Interest Period which would end subsequent to the Termination Date; 8 (4) with respect to each Money Market Rate Borrowing, the period commencing on the date of such Borrowing and ending on such day (not earlier than the 7th day) 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-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day; and (b) the Borrower may not elect any Interest Period which would end subsequent to the Termination Date. "Internally-Funded Subsidiary" shall mean any Wholly-Owned Consolidated Subsidiary (a) all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are owned by the Borrower or another Internally-Funded Subsidiary, (b) which is a non-operating Subsidiary, and (c) that does not at any time (including, without limitation, at the time of, or at any time subsequent to, any transfer of the Borrower's assets to such Subsidiary pursuant to clause (B) of the third proviso to Section 5.04) have any Debt owing to any Person other than the Borrower or another Internally-Funded Subsidiary. "LIBOR Auction" shall mean a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Lien" shall mean, 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 Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vender or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" shall mean a Base Rate Loan or a Euro-Currency Loan or a Money Market Loan and "Loans" means Base Rate Loans or Euro-Currency Loans or Money Market Loans or any combination of the foregoing. "London Interbank Offered Rate" shall have the meaning set forth in Section 2.07(b). "Material Subsidiary" shall mean, as of any date of determination, a Subsidiary which meets the definition of a "significant subsidiary" contained as of the date of this Agreement in Regulation S-X of the Securities and Exchange Commission. "Money Market Lending Office" shall mean, as to each Bank, (i) for Money Market Loans denominated in Dollars, its Domestic Lending Office for Base Rate Loans or such other office, branch or affiliate of such Bank as it may from time to time specify as its Money Market Lending Office by notice to the Borrower and the Agent and (ii) for Money Market Loans denominated in each other Designated Currency, such office, branch or affiliate of such Bank as it may from time 9 to time specify as its Money Market Lending Office for such other Designated Currency by notice to the Borrower and the Agent (or, if no such office if specified, its Domestic Lending Office for Base Rate Loans); provided that any -------- Bank may from time to time by notice to the Borrower and the Agent designate separate Money Market Lending Offices for each of its Money Market LIBOR Loans denominated in each Designated Currency and its Money Market Rate Loans in which case all references herein to the Money Market Lending Office of such Bank shall be deemed to refer to one or all of such offices, as the context may require. "Money Market LIBOR Loan" shall mean 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(a)). "Money Market Loan" shall mean a Money Market LIBOR Loan or a Money Market Rate Loan. "Money Market Margin" shall have the meaning set forth in Section 2.03(d). "Money Market Quote" shall mean an offer by a Bank to make a Money Market Loan in accordance with Section 2.03. "Money Market Rate" shall have the meaning set forth in Section 2.03(d). "Money Market Rate Loan" shall mean a Loan to be made by a Bank pursuant to an Absolute Rate Auction. "Multiemployer Plan" shall mean 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. "New York Interbank Offered Rate" applicable to any Interest Period for any Euro-Currency Loan or Money Market LIBOR Loan shall mean the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in the currency in which such Euro-Currency Loan is denominated are offered to each of the Reference Banks in the New York interbank market at approximately 11:00 a.m., New York City time, two Euro-Currency Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Currency Loan of such Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans, and "Note" means any one of such promissory notes issued hereunder. 10 "Notice of Borrowing" shall mean a Notice of Syndicated Borrowing (as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section 2.03(f)) and the "date of a Notice of Borrowing" shall mean the date the Notice of Borrowing is given to the Agent pursuant to Section 2.02 or 2.03(f), as the case may be. "Other Agreement" means Credit Agreement B dated as of July 23, 1997, as it may be amended, extended, supplemented or otherwise modified, among the Borrower, the banks listed on the signature pages thereof and The First National Bank of Chicago, as agent for said banks. "Parent" shall mean Atlantic Richfield Company, a Delaware corporation, and its successors. "Participant" shall have the meaning set forth in Section 9.07(b). "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" shall mean 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" shall mean 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 Code and either (i) is maintained, or contributed to, by a member of the ERISA Group for employees of a 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 for employees of any Person which was at such time a member of the ERISA Group. "Quarterly Date" shall mean the last day of each March, June, September and December, commencing September 30, 1997; provided that, if any such date is not -------- a Euro-Currency Business Day, the relevant Quarterly Date shall be the next succeeding Euro-Currency Business Day. "Reference Banks" shall mean the principal London offices of Bank of America National Trust and Savings Association, The Chase Manhattan Bank and The First National Bank of Chicago, and each such other bank as may be appointed pursuant to Section 9.07(f), and "Reference Bank" shall mean any one of such Reference Banks. "Refunding Borrowing" shall mean a Borrowing which, after application of the proceeds thereof to repay one or more other Borrowings in whole or in part, results in no net increase in the aggregate principal amount of Loans outstanding hereunder. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time (including any successor provision thereto or any other United 11 States law or regulation imposing reserves on deposits or loans). "Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time (including any successor provision thereto). "Required Banks" shall mean at any time Banks having at least 66-2/3% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes the Dollar Amount of the aggregate principal amount of which evidence at least 66-2/3% of the Dollar Amount of the outstanding aggregate principal amount of the Notes. "Subsidiary" shall mean 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 (whether or not any other class of securities has or might have voting power by reason of the happening of a contingency) are at the time owned or controlled directly or indirectly by the Borrower. "Syndicated Loan" shall mean a Base Rate Loan or a Euro-Currency Loan made by a Bank pursuant to Section 2.01. "Syndicated Margin" shall mean, with respect to Base Rate Loans, 0%, and with respect to Euro-Currency Loans, 0.15%. "Taxes" shall mean any present or future taxes, duties, withholdings or other charges levied or imposed by any government or any political subdivision or taxing authority thereof, excluding any of the foregoing imposed on or calculated by reference to the net income of any Bank. "Tax Sharing Agreement" shall mean the Amended and Restated Tax Sharing Agreement dated as of January 1, 1995, as amended, between the Parent and the Borrower. "Termination Date" shall mean July 22, 1998, or such later date to which the Termination Date may be extended pursuant to Section 2.18 (or, if such day is not a Euro-Currency Business Day, the next preceding Euro-Currency Business Day). "Unfunded Liabilities" shall mean, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits (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. "Wholly-Owned Consolidated Subsidiary" shall mean any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Borrower. 12 SECTION 1.02. Accounting Terms and Determinations. Unless otherwise ----------------------------------- specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks; provided that if the Borrower -------- notifies the Agent that the Borrower wishes to amend Section 5.05 to eliminate or to take into account the effect of any change in GAAP on the operation of such covenant (or if the Agent notifies the Borrower that the Required Banks wish to amend Section 5.05 for such purpose), then the Borrower's compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Banks. SECTION 1.03. Introduction of Euro. For the avoidance of doubt, the -------------------- parties hereto affirm and agree that neither the fixation of the conversion rate of any Designated Currency of a country that is a member of the European Union against the Euro as a single currency, in accordance with the Treaty Establishing the European Economic Community, as amended by the Treaty on the European Union (the Maastricht Treaty), nor the conversion of any Loans or other obligations under this Agreement from a Designated Currency of a country that is a member of the European Union into Euros, shall require the early termination of this Agreement or the prepayment of any amount due under this Agreement or create any liability of one party to another party for any direct or consequential loss arising from any of such events. As of the date that any such Designated Currency is no longer the lawful currency of its respective country, all payment obligations under this Agreement that would otherwise be in such Designated Currency shall thereafter by satisfied in Euros. ARTICLE II THE CREDITS SECTION 2.01. Commitments to Lend. From the date hereof to but not ------------------- including the Termination Date, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to lend to the Borrower pursuant to this Section 2.01 from time to time amounts such that, upon giving effect to each such Borrowing: (i) the then aggregate outstanding principal Dollar Amount of all Syndicated Loans made by such Bank to the Borrower shall not exceed the amount of such Bank's Commitment then in effect and (ii) the then aggregate outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans made by the Banks to the Borrower shall not exceed the aggregate amount of the Commitments then in effect. Each Borrowing under this Section 2.01 shall be in an aggregate principal amount of $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof) (except that any such Borrowing may be in the aggregate amount of the unused 13 Commitments or the Equivalent Amount thereof) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this Section 2.01, repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow under this Section 2.01 at any time prior to the Termination Date. Subject to the preceding provisions of this Section 2.01, each Bank severally agrees to make Euro-Currency Loans in the Agreed Currencies. SECTION 2.02. Notice of Syndicated Borrowings. The Borrower shall give ------------------------------- the Agent notice (a "Notice of Syndicated Borrowing") not later than 10:00 a.m., Chicago time, on (x) the Domestic Business Day next preceding each Base Rate Borrowing, (y) in the case of a Euro-Currency Borrowing to be made in Dollars, the third Euro-Currency Business Day before each such Euro-Currency Borrowing (or the fourth Euro-Currency Business Day before any such Euro-Currency Borrowing for which a 9 or 12 month Interest Period is requested) and (z) in the case of a Euro-Currency Borrowing to be made in an Agreed Currency other than Dollars, the fourth Euro-Currency Business Day before each such Euro-Currency Borrowing, specifying: (i) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Euro-Currency Business Day in the case of a Euro-Currency Borrowing; (ii) the aggregate amount of such Borrowing; provided that upon -------- giving effect to such Borrowing, the then aggregate outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans shall not exceed the aggregate amount of the Commitments then in effect; (iii) whether the Loans comprising such Borrowing are to be Base Rate Loans or Euro-Currency Loans and, if Euro-Currency Loans, the currency thereof in accordance with the last sentence of Section 2.01; and (iv) in the case of a Euro-Currency Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period and provided that deposits in the currency of such Borrowing are being offered for such Interest Period to the Reference Banks in the London interbank market. Notwithstanding the preceding provisions of this Section 2.02, if, by 10:00 a.m., Chicago time, on the Domestic Business Day next preceding the last day of the Interest Period applicable to any outstanding Syndicated Loan, the Borrower shall not have either (i) given a Notice of Syndicated Borrowing to refinance such Syndicated Loan, (ii) requested offers for Money Market Loans pursuant to Section 2.03(b) to refinance such Syndicated Loan or (iii) given notice of the Borrower's election to prepay such Syndicated Loan pursuant to Section 2.11 or to repay such Syndicated Loan pursuant to Section 2.12, then the Borrower shall be deemed to have given Notice of Syndicated Borrowing for a Refunding Borrowing comprised of a Base Rate Loan in Dollars to be made on the last day of such Interest Period in a principal amount equal to the outstanding principal Dollar 14 Amount of such Syndicated Loan, the making of such Refunding Borrowing to be subject to each of the conditions precedent set forth in clauses (ii), (iii) and (iv) of Section 3.02. SECTION 2.03. Money Market Borrowings. (a) In addition to Syndicated ----------------------- Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this Section, request the Banks at any time prior to the Termination Date (but not during any period when the Borrower's senior unsecured long-term public debt is rated either below Baa3 by Moody's Investor Service, Inc. (or its successor) or below BBB- by Standard & Poor's Corporation (or its successor)) to make offers to make Money Market Loans to the 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) When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received no later than (x) 3:00 p.m., London time, on the fifth Euro-Currency Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (y) 10:00 a.m., Chicago time, on the fifth Euro-Currency Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction in Dollars or (z) 9:00 a.m., Chicago time, on the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in any such case, such other time and date as the Borrower and the Agent shall have mutually agreed and shall have notified the Banks of not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), specifying: (i) the proposed date of Borrowing, which shall be a Euro-Currency Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction; (ii) the proposed currency of such Borrowing, which shall be a Designated Currency in the case of a LIBOR Auction or Dollars in the case of an Absolute Rate Auction; (iii) the aggregate amount of such Borrowing, which shall be at least $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof); provided that upon giving effect to such Borrowing, the then aggregate -------- outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans shall not exceed the aggregate amount of the Commitments then in effect; (iv) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and (v) whether the Money Market Quotes requested are to set forth a Money Market 15 Margin or a Money Market Rate. The Borrower may request offers to make Money Market Loans for more than one Interest Period but not more than one currency in a single Money Market Quote Request. No Money Market Quote Request shall be given within five Euro-Currency Business Days (or such other number of days as the Borrower and the Agent may agree) of any other Money Market Quote Request (under and as defined in either this Agreement or the Other Agreement). (c) Promptly upon receipt of a Money Market Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section. (d)(i) Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection and must be submitted to the Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 9.01 not later than (x) 3:00 p.m., London time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (y) 1:00 p.m., Chicago time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (z) 9:00 a.m., Chicago time, on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in any such case, such other time and date as the Borrower and the Agent shall have mutually agreed and shall have notified the Banks of not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes -------- submitted by the Agent (or any Affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (A) 2:00 p.m., London time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (B) noon, Chicago time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (C) 8:45 a.m., Chicago time, on the proposed date of Borrowing, in the case of an Absolute Rate Auction. Subject to Articles III and VI, any Money Market Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing and, in the case of a LIBOR Auction, the proposed currency of such Borrowing; 16 (B) the principal amount of each Money Market Loan for which each such offer is being made, (w) the Dollar Amount of which principal amount may be greater or less than the Commitment of the quoting Bank, (x) which principal amount must be $1,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof), (y) which principal amount may not exceed in the aggregate with the other Money Market Loans included in such offer the principal amount of Money Market Loans for which offers were requested and (z) which principal amount may be subject to an aggregate limitation as to the maximum principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted; (C) the duration of the Interest Period applicable to each Money Market Loan for which each such offer is being made, subject to the provisions of the definition of Interest Period; (D) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Money Market Margin") offered for each such Money Market Loan, expressed as a percentage (rounded to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate; (E) in the case of an Absolute Rate Auction, the rate of interest per annum (rounded to the nearest 1/10,000th of 1%) (the "Money Market Rate") offered for each such Money Market Loan; and (F) the identity of the quoting Bank. A Money Market Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes. (iii) Any Money Market Quote shall be disregarded that: (A) is not substantially in the form of Exhibit D hereto or does not specify all of the information required by subsection (d)(ii) of this Section; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or (D) arrives after the time set forth in subsection (d)(i) of this Section. (e) The Agent shall promptly notify the Borrower of the terms (i) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d) of this Section and (ii) of any subsequent Money Market Quote that amends, modifies or is otherwise inconsistent with a previous 17 Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request; provided that any such subsequent Money Market Quote shall be -------- disregarded by the Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Agent's notice to the Borrower shall specify (x) the aggregate principal amount and currency of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (y) the respective principal amounts and Money Market Margins or Money Market Rates, as the case may be, so offered and (z) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted. (f) Not later than (x) 5:00 p.m., London time, on the fourth Euro-Currency business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (y) 10:00 a.m., Chicago time, on the third Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (z) 10:00 a.m., Chicago time, on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in any such case, such other time and date as the Borrower and the Agent shall have mutually agreed upon and shall have notified the Banks of not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e) of this Section. In the case of acceptance, such notice (a "Notice of Money Market Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Money Market Quote in whole or in part; provided -------- that: (i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request; (ii) the principal amount of each Money Market Borrowing must be at least $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof); provided that upon giving effect to such Borrowing, the then -------- aggregate outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans shall not exceed the aggregate amount of the Commitments then in effect; (iii) acceptance of offers for each Interest Period may only be made on the basis of ascending Money Market Margins or Money Market Rates, as the case may be; and (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) of this Section or that otherwise fails to comply with the requirements of this Agreement. (g) If offers are made by two or more Banks with the same Money Market Margins or Money Market Rates, as the case may be, for a greater aggregate principal amount of Money Market Loans than can be accepted for the related Interest Period (after giving effect to the acceptance of all lower 18 Money Market Margins or Money Market Rates, as the case may be, properly offered for such Interest Period), the principal amount of Money Market Loans which can be accepted shall be allocated by the Agent among such Banks as nearly as possible (in such multiples, not greater than $1,000,000 (or the Approximate Equivalent Amount thereof), as the Agent may deem appropriate) in proportion to the aggregate principal amount of such offers. Determinations by the Agent of the amounts of Money Market Loans by each Bank 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 ratable share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower except pursuant to subsection (d) of this Section or Section 8.01(a). (b) On the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its ratable share of such Borrowing, (i) if such Borrowing is denominated in Dollars, not later than 12:00 noon, Chicago time, in Federal or other funds immediately available to the Agent, in Chicago, Illinois at its address specified in or pursuant to Section 10.01 and, (ii) if such Borrowing is denominated in another currency, not later than 12:00 noon, local time in the city of the Agent's Euro-Currency Payment Office for such currency, in such funds as may then be customary for the settlement of international transactions in such currency in the city of and at the address of the Agent's Euro-Currency Payment Office for such currency. Unless the Agent determines that any applicable condition specified in Article III 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 new Loan hereunder on the date on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, which outstanding Loan is denominated in the currency of such new Loan, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the principal amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b) of this Section or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be. (d) Notwithstanding the satisfaction of all conditions referred to in Section 2.01, 2.02 or 2.03(b) with respect to any Borrowing in any currency other than Dollars, if there shall occur on or prior to the date of such Borrowing any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the opinion of the Agent or the Required Banks make it impracticable for the Euro-Currency Loans or Money Market LIBOR Loans comprising such Borrowing to be denominated in the currency specified by the Borrower, then the Agent shall forthwith give notice thereof to the Borrower and the Banks, and such Loans shall not be denominated in such currency but shall be made on the date of such Borrowing in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Notice of Borrowing, as Base Rate Loans, unless the Borrower notifies the Agent at least one Domestic Business Day before such date that (i) it elects 19 not to borrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency or Designated Currency, as the case may be, in which the denomination of such Loans would in the opinion of the Agent and the Required Banks be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Notice of Borrowing. SECTION 2.05. Notes. (a) The Loans of each Bank to the Borrower shall be ----- evidenced by a single Note of the Borrower payable to the order of such Bank for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Bank's Loans to the Borrower. (b) Each Bank may, by notice to the Borrower and the Agent (to be given not later than two Domestic Business Days prior to the first Borrowing) request that its Loans of a particular type be evidenced by a separate Note in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant type. Each reference in this Agreement to a "Note" or the "Notes" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of each Bank's Note(s) pursuant to Section 3.01(vi), the Agent shall mail such Note(s) to such Bank. Each Bank shall record, and prior to any transfer of its Note(s) shall endorse on the schedules forming a part thereof appropriate notations to evidence, the date, currency, amount and maturity of each Loan made by it to the Borrower and the date and amount of each payment of principal made by the Borrower with respect thereto; provided that -------- the failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to endorse the Notes and to attach to and make a part of any such Note a continuation of any such schedule as and when required. SECTION 2.06. Maturity of Loans. Each Loan included in any 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 for each Interest Period on the last day thereof. Any overdue principal of and, to the extent permitted by law, overdue 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-Currency 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 applicable 20 Syndicated Margin plus the applicable London Interbank Offered Rate. 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 for any Euro-Currency Loan or Money Market LIBOR Loan shall mean the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in the currency in which such Euro-Currency Loan or Money Market LIBOR Loan is denominated are offered to each of the Reference Banks in the London interbank market at approximately 11:00 a.m., London time, two Euro-Currency Business Days before the first day of such Interest Period, in an amount approximately equal to (i) the principal amount of the Euro-Currency Loan or Money Market LIBOR Loan of such Reference Bank to which such Interest Period is to apply or (ii) if such Reference Bank is not submitting a Money Market Quote for such Money Market LIBOR Loan, $10,000,000 (or the Approximate Equivalent Amount thereof), and for a period of time comparable to such Interest Period; provided that (i) for Euro-Currency Loans -------- denominated in pounds sterling the respective rates per annum at which deposits in pounds sterling are offered to each of the Reference Banks shall be the rate for euro-sterling deposits not domestic sterling deposits and (ii) for Money Market LIBOR Loans denominated in pounds sterling the respective rates per annum at which deposits in pounds sterling are offered to each of the Reference Banks shall be the rates for euro-sterling or domestic sterling deposits as specified by the Borrower in the relevant Money Market Quote Request. (c) Any overdue principal of and, to the extent permitted by law, overdue interest on any Euro-Currency Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 1% plus the applicable Syndicated Margin plus 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-Currency Business Days, then for such other period of time not longer than three months as the Agent may elect) deposits in the relevant currency 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 (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 (i) if such Euro-Currency Loan is denominated in Dollars, 1% plus the rate applicable to Base Rate Loans for such day and (ii) if such Euro-Currency Loan is denominated in any other currency, 1% plus the cost to such Bank of funding or maintaining such Euro-Currency Loan). The certificate of such Bank as to the cost of funding or maintaining such Euro-Currency Loan shall be conclusive absent manifest error. (d) Subject to Section 8.01(a)(1), each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with subsection (c) of this Section as if each Reference Bank were to participate in the related Money Market Borrowing ratably in proportion to its Commitment) plus (or minus) the 21 Money Market Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Money Market Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market 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. Any overdue principal of and, to the extent permitted by law, overdue interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of (i) if such Money Market Loan is denominated in Dollars, 1% plus the rate applicable to Base Rate Loans for such day and (ii) if such Money Market Loan is denominated in any other currency, 1% plus the cost to such Bank of funding or maintaining such Money Market Loan. The certificate of such Bank certifying the cost of funding or maintaining such Money Market Loan shall be conclusive absent manifest error. (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 by telex or facsimile transmission 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. Fees. (a) The Borrower shall pay to the Agent for the ---- account of the Banks ratably in proportion to their Commitments a facility fee at a rate per annum equal to the Facility Fee Percentage on the daily average amount of the Commitments (without regard to the outstanding principal amount of the Loans). Such facility fee shall accrue from and including July 23, 1997 to but excluding the Termination Date. (b) The Borrower shall pay to each of the Agent and the Arranger for its own account fees in the amounts and at the time previously agreed upon between the Borrower, the Agent and the Arranger. (c) Accrued fees under subsection (a) of this Section shall be payable quarterly in arrears on the fifth Domestic Business Day after each Quarterly Date for the quarter ending on such Quarterly Date or, if earlier, the fifth Domestic Business Day after the date of termination of the Commitments in their entirety. SECTION 2.09. Optional Termination or Reduction of Commitments. ------------------------------------------------ (a) The Borrower may, upon at least two Domestic Business Days' irrevocable notice to the Agent, terminate at any time, or reduce from time to time by an aggregate amount of $10,000,000 or a larger multiple of $1,000,000 the aggregate amount of the Commitments in excess of the Dollar 22 Amount of the aggregate outstanding principal amount of the Loans. (b) In the absence of a Default that has occurred and is continuing and in the event that (i) any Bank claims indemnification pursuant Section 2.16(a) or Section 2.16(b), (ii) the Borrower is required to make an additional payment to any Bank pursuant to Section 2.16(a), or (iii) any Bank makes a claim for increased costs relating to taxes under Section 8.03, the Borrower shall have the right to repay all of such Bank's outstanding Loans and to terminate such Bank's Commitment hereunder upon ten days prior written notice to the Agent and such Bank. On the day on which any Bank's Commitment is terminated pursuant to this Section 2.09(b), the Borrower shall pay all principal, accrued interest, fees and other amounts owing to such Bank hereunder (including, without limitation, any amounts owing under Sections 2.08, 2.13, 2.16, and 8.03). SECTION 2.10. Mandatory Termination of Commitments. The Commitments shall ------------------------------------ terminate on the Termination Date, and any Loans outstanding on the Termination Date shall be due and payable on the Termination Date (together with accrued interest thereon). SECTION 2.11. Optional Prepayments. (a) The Borrower may prepay any Base -------------------- Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a)) upon at least one Domestic Business Day's notice to the Agent or, subject to Section 2.13, prepay any Euro-Currency Borrowing upon at least two Euro-Currency Business Days' notice to the Agent, in any such case in whole at any time, or from time to time in part in amounts aggregating $10,000,000 (or the Approximate Equivalent Amount thereof) or any larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof), 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 Borrowing. The Borrower may not prepay all or any portion of the principal amount of any Money Market Loan (other than a Money Market LIBOR Loan bearing interest at the Base Rate pursuant to Section 8.01(a)) prior to the maturity thereof. (b) 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) All payments to be --------------------------------- made by the Borrower hereunder or under the Notes in Dollars shall be made not later than 12:00 noon, Chicago time, on the date when due, in Federal or other funds immediately available in Chicago, Illinois, to the Agent at its address referred to in Section 9.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. (b) Each Borrowing shall be repaid or prepaid in the currency in which it was made in the amount borrowed and interest payable thereon shall be paid in such currency. All payments to be made by the Borrower hereunder or under the Notes in any currency other than Dollars shall be made in such currency on the date due in such funds as may then be customary for the settlement of 23 international transactions in such currency for the account of the Agent, at its Euro-Currency Payment Office for such currency. The Agent will promptly cause such payments to be distributed to each Bank in like funds and currency. Notwithstanding the foregoing provisions of this Section, if, after the making of any Loan in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that different types of such currency (the "New Currency") are introduced and the type of currency in which the Borrowing was made (the "Original Currency") no longer exists or the Borrower is not able to make payment to the Agent for the account of the Banks in such Original Currency, then all payments to be made by the Borrower hereunder or under the Notes in such currency shall be made in such amount and such type of the New Currency as shall be equivalent to the amount of such payment otherwise due hereunder or under the Notes in the Original Currency, it being the intention of the parties hereto that the Borrower takes all risks of the imposition of any such currency control or exchange regulations. In addition, notwithstanding the foregoing provisions of this Section, if, after the making of any Borrowing in any currency other than Dollars, the Borrower is not able to make payment to the Agent for the account of the Banks in the type of currency in which such Borrowing was made, then such Borrowing shall instead be repaid when due in Dollars in a principal amount equal to the Dollar Amount (as of the date of repayment) of such Borrowing. (c) Whenever any payment of principal of, or interest on, the Base Rate Loans or of additional compensation 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-Currency Loans shall be due on a day which is not a Euro- Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day occurs in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Currency Business Day. Whenever any payment of principal of, or interest on, the Money Market Loans shall be due on a day which is not a Euro-Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency 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. (d) Unless the Agent shall have been notified by a Bank or the Borrower (the "Payor") prior to the date on which such Bank is to make payment to the Agent of the proceeds of a Loan to be made by it hereunder or the Borrower is to make a payment to the Agent for the account of one or more of the Banks, as the case may be (each of such payments being herein called a "Required Payment"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Agent, the Agent may assume that the Required Payment has been made and may (but shall not be required to), in reliance upon such assumption, make the amount thereof available to the intended recipient on such date and, if the Payor has not in fact made the Required Payment to the Agent, the recipient of such payment shall, on demand, refund to the Agent the amount made available to it together with interest thereon in respect of the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate equal to the Federal Funds Rate for such period, if the recipient is a Bank, and, if 24 the recipient is the Borrower, the rate which the Borrower would have been obligated to pay hereunder for the Loans that are the subject of, or are equivalent to, such payment for such period. SECTION 2.13. Funding Losses. The Borrower shall pay to the Agent for the -------------- account of each Bank, upon the request of such Bank through the Agent, such amount or amounts as shall compensate such Bank for any reasonable loss, cost or expense incurred by such Bank (or, subject to Section 9.07(b), by an existing or prospective Participant in the related Loan) as a result of: (a) any payment or prepayment of a Fixed Rate Loan (pursuant to Section 2.11 or Article VI or VIII or otherwise) held by such Bank on a date other than the last day of the Interest Period applicable thereto, or the end of an applicable period fixed pursuant to Section 2.07(c) or (b) any failure by the Borrower to borrow a Fixed Rate Loan (including a failure to borrow due to the occurrence of any event described in Section 2.04(d)) held or to be held by such Bank on the date for such Borrowing specified in the relevant Notice of Borrowing under Section 2.02 or 2.03(f), such compensation to be payable in the currency specified in the certificate referred to below and to include, without limitation, an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so paid or prepaid, or not borrowed, for the period from the date of such payment or prepayment or failure to borrow to the last day of such Interest Period (or, in the case of a failure to borrow, the Interest Period for such Fixed Rate Loan which would have commenced on the date of such failure to borrow) in each case at the applicable rate of interest for such Fixed Rate Loan provided for herein (excluding, however, the Syndicated Margin or any positive Money Market Margin, as the case may be, included therein) over (ii) the amount of interest (as reasonably determined by such Bank) which would have accrued to such Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the London interbank market or in the New York or Chicago certificate of deposit market; provided that such -------- Bank shall have delivered to the Borrower, within 60 days after the date of such payment or prepayment or failure to borrow, a certificate as to the amount and currency of such loss or expense, which certificate shall set forth in reasonable detail the basis for such loss or expense and shall be conclusive in the absence of manifest error. SECTION 2.14. Computation of Interest and Fees. Interest based on the -------------------------------- Base Rate and interest on Borrowings denominated in pounds sterling shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). SECTION 2.15. Judgment Currency. If for the purposes of obtaining ----------------- judgment in any court it is necessary to convert a sum due from the Borrower hereunder or under any of the Notes in the currency expressed to be payable herein or under the Notes (the "specified currency") into another 25 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 the specified currency with such other currency at the Agent's main Chicago office on the Euro-Currency Business Day preceding that on which final, non-appealable judgment is given. The obligations of the 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 the specified currency, be discharged only to the extent that on the Euro-Currency 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, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Bank or the Agent, as the case may be, in the specified currency, the 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 the specified currency so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the case may be, in the specified currency 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 9.11, such Bank or the Agent, as the case may be, agrees to remit such excess to the Borrower. SECTION 2.16. Taxes. (a) All payments made by the Borrower in respect of ----- principal of and interest on its Borrowings and of all other amounts payable by it under this Agreement are payable without deduction for or on account of any Taxes. If the Borrower shall be required by law to deduct or withhold any Taxes from any such amount payable by it hereunder or under any of the Notes to or for the account of any Bank, (i) such amount shall be increased as may be necessary so that, after making such deductions or withholdings (including any deductions or withholdings applicable to additional amounts payable pursuant to this Section), such Bank receives an amount equal to the amount it would have received had no such deductions or withholdings been made and (ii) the Borrower shall make such deductions and withholdings and pay the amount thereof to the relevant government, political subdivision or taxing authority at or prior to the time required to be paid under applicable law (and shall promptly furnish to the Agent, for the benefit of the Banks, official receipts evidencing such payment). In addition, the Borrower will pay any present or future stamp or documentary taxes or similar taxes or levies imposed by any government of any jurisdiction outside the United States of America or any political subdivision or taxing authority thereof from any payment by it hereunder or under any of the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the Notes (herein called "Other Taxes"). The Borrower will indemnify each Bank and the Agent for, and hold each Bank and the Agent harmless against, the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section) paid or payable by such Bank or the Agent and any liability of such Bank or the Agent relating thereto (including, without limitation, penalties, interest and expenses). Notwithstanding anything set forth above in this clause (a), the Borrower shall have no obligation to increase the amount payable to any Bank as a result of any deduction or withholding, or to indemnify any Bank for or hold any Bank harmless against any Taxes or Other Taxes, to the extent that such deduction or withholding would not have 26 been required, or such Taxes or Other Taxes would not have been paid or payable, if such Bank's representation and warranty in clause (f) below had been accurate or such Bank had complied with its obligations under clause (g) below. (b) If the cost to any Bank of making or maintaining any Loan to the Borrower 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, which increase or reduction would not have occurred but for the fact that the Borrower conducts business in a jurisdiction outside the United States of America, the Borrower shall indemnify such Bank for such increased cost or reduction within 15 days after demand by such Bank (with a copy to the Agent). A certificate of such Bank claiming indemnification under this Section, setting forth the additional amount or amounts to be paid to it hereunder and setting forth in reasonable detail a reasonable basis therefor, shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. (c) Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge that will entitle such Bank to any payment or indemnification under clause (a) or (b) of this subsection and will designate a different Domestic Lending Office, Money Market Lending Office or Euro-Currency Lending Office, as the case may be, if such designation will avoid the need for, or reduce the amount of, such payment or indemnification and will not, in the sole opinion of such Bank, be otherwise materially disadvantageous to such Bank. (d) If, and to the extent that, any Bank shall obtain a credit, relief or remission for, or repayment of, any Taxes or Other Taxes indemnified or paid by the Borrower pursuant to this Section or for any taxes for which Borrower has made payments under Section 8.03, such Bank agrees to promptly notify the Borrower thereof and thereupon enter into negotiations in good faith with the Borrower to determine the basis on which an equitable reimbursement of such taxes can be made to the Borrower. (e) All tax receipts required to be delivered under this Section shall be originals, duplicate originals or duly certified or authenticated copies within the meaning of Treasury Regulation Section 1.905-2(a)(2). (f) Each Bank represents and warrants to the Borrower and the Agent that, as of the date of this Agreement (or, in the case of an Assignee, the date it becomes a party hereto), it is entitled to receive payments hereunder without any deduction or withholding for or on account of any Taxes imposed by the United States of America or any political subdivision or taxing authority thereof. (g) Each Bank which is a Non-U.S. Person (and, if at any time the Agent hereunder is a Non-U.S. Person, such Agent) agrees that it will, to the extent it is able to do so under applicable law and treaties, (i) within 30 days of the date of this Agreement (or, in the case of a Bank which 27 becomes a party hereto pursuant to a transfer or assignment, on or prior to the date on which the relevant transfer or assignment becomes effective) deliver to the Borrower (and, in the case of a Bank, to the Agent) such forms (including two duly executed originals of United States Internal Revenue Form 1001 or 4224 or any successor to the applicable form), properly and accurately completed, as are necessary to claim complete or partial (as the case may be) exemption from withholding of United States federal taxes; and (ii) deliver extensions or renewals of such forms on or before the date that any such form expires or becomes obsolete, and after the occurrence of any event requiring a change in the most recent form previously delivered by it, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Agent or Bank from duly completing and delivering any such form with respect to it and such Agent or Bank so advises the Borrower (and, in the case of a Bank, the Agent). For purposes of the foregoing, a Non-U.S. Person means a Person that is not (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized under the laws of the United States or any state thereof or (iii) an estate or trust the income of which is subject to United States federal income taxation regardless of its source; SECTION 2.17. Maximum Interest Rate. (a) Nothing contained in this --------------------- Agreement or the Notes shall require the Borrower to pay interest at a rate exceeding the maximum rate permitted by applicable law. (b) If the amount of interest payable for the account of any Bank on any interest payment date in respect of the immediately preceding interest computation period, computed pursuant to Section 2.07, would exceed the maximum amount permitted by applicable law to be charged by such Bank, the amount of interest payable for its account on such interest payment date shall be automatically reduced to such maximum permissible amount. (c) If the amount of interest payable for the account of any Bank in respect of any interest computation period is reduced pursuant to clause (b) of this Section and the amount of interest payable for its account in respect of any subsequent interest computation period, computed pursuant to Section 2.07, would be less than the maximum amount permitted by applicable law to be charged by such Bank, then the amount of interest payable for its account in respect of such subsequent interest computation period shall be automatically increased to such maximum permissible amount; provided that at no time shall the aggregate -------- amount by which interest paid for the account of any Bank has been increased pursuant to this clause (c) exceed the aggregate amount by which interest paid for its account has theretofore been reduced pursuant to clause (b) of this Section. SECTION 2.18. Extension of the Termination Date. (a) The Borrower may, --------------------------------- from time to time, by written notice to the Agent (each such notice being an "Extension Notice") given not later 28 than 30 days but not sooner than 60 days prior to the then scheduled Termination Date, request an extension of the Termination Date to the Euro-Currency Business Day falling not more than 364 days after the then-scheduled Termination Date. The Agent shall notify each Bank in writing of its receipt of an Extension Notice within three Domestic Business Days after the Agent's receipt thereof. Each Bank may, by a revocable written notice (a "Consent Notice") to the Borrower and the Agent given within 30 days following the Agent's receipt of such Extension Notice (the "Consent Deadline Date"), consent to such extension of the Termination Date, which consent may be given or withheld by each Bank in its absolute and sole discretion; it being understood that any Bank that fails to respond in writing to the Borrower and the Agent by the Consent Deadline Date shall be deemed not to have consented to such request. (b) Any Bank which does not consent (or is deemed not to have consented) to an extension of the Termination Date (a "Non-Consenting Bank") shall be obliged during the 30 days following the Consent Deadline Date, at the request of the Borrower and subject to the Non-Consenting Bank receiving payment in full of all amounts owing to it under this Agreement, the Other Agreement and its "Notes" (as defined in both this Agreement and the Other Agreement), to assign, in accordance with the provisions of Section 9.07(c) of this Agreement and the Other Agreement, all of its rights and obligations under this Agreement, the Other Agreement and its "Notes" (as defined in both this Agreement and the Other Agreement) to a Bank or other bank or financial institution nominated by the Borrower, consented to by the Agent (such consent not to be unreasonably withheld) and willing to participate in the Other Agreement and this Agreement (through, in the case of this Agreement, the extended Termination Date) in the place of such Non-Consenting Bank. (c) If all Banks consent to the extension of the scheduled Termination Date prior to the Consent Deadline Date pursuant to clause (a) above or all Non-Consenting Banks are replaced as parties to this Agreement prior to the scheduled Termination Date pursuant to clause (b) above, then the Termination Date shall be extended to the date requested by the Borrower in its Extension Notice (effective on the previously scheduled Termination Date). In the absence of such consents or such replacement(s), the Termination Date shall occur as scheduled. ARTICLE III CONDITIONS TO BORROWINGS SECTION 3.01. Initial Borrowing by the Borrower. The obligation of each --------------------------------- Bank to make any Loan to be made by it as a part of the initial Borrowing by the Borrower hereunder is subject to the condition precedent that the Agent shall have received the following documents: (i) certified copies of the Certificate of Incorporation and By-Laws of the Borrower and the resolutions of the Board of Directors of the Borrower adopted in respect of the transactions contemplated hereby and such other documents as the Agent or the Required Banks may reasonably request relating to the existence of the Borrower, the corporate 29 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; (ii) a Certificate of Incumbency executed by the Secretary or an Assistant Secretary of the Borrower in substantially the form of Exhibit E hereto setting forth the name, title and specimen signature of each Authorized Officer or Authorized Representative of the Borrower (1) who has signed this Agreement on behalf of the Borrower, (2) who will sign the Notes on behalf of the Borrower or (3) who will, until replaced by another officer or representative duly authorized for that purpose, act as the representative of the Borrower for the purposes of signing documents and giving notices and other communications by the Borrower in connection with this Agreement and the transactions contemplated hereby; (iii) an opinion of the General Counsel or, in his absence, the Associate General Counsel-Corporate, of the Borrower, dated on or prior to the date of such initial Borrowing, with respect to the Borrower in substantially the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (iv) certified copies of the Cross-Indemnification Agreement and the Tax Sharing Agreement as originally executed and all amendments, modifications and waivers thereto; (v) a certificate signed by the President or any Vice President of the Borrower to the effect set forth in clauses (iii) and (iv) of Section 3.02; (vi) for the account of each Bank, a duly executed Note, dated on or before the date of such initial Borrowing, complying with the provisions of Section 2.05; and (vii) an opinion of Mayer, Brown and Platt, special counsel to the Agent, substantially in the form of Exhibit I hereto. The certificate referred to in subclause (v) shall be dated no more than three Euro-Currency Business Days before the date of such initial Borrowing. SECTION 3.02. Each Borrowing. The obligation of each Bank to make each -------------- Loan to be made by it as part of a Borrowing hereunder to the Borrower is subject to the further conditions precedent that: (i) the Agent shall have received a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (ii) the fact that, immediately after such Borrowing, the Dollar Amount of the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; 30 (iii) the fact that, immediately after such Borrowing, no Default shall have occurred and be continuing; and (iv) the fact that the representations and warranties of the Borrower contained in this Agreement shall be true on and as of the date of such Borrowing as if made on and as of such date (except, in the case of a Refunding Borrowing, the representations and warranties set forth in clauses (d) and (e) of Section 4.01 as to any material adverse change or litigation, respectively, which has theretofore been disclosed in writing by the Borrower to the Banks). Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (ii), (iii) and (iv) of this Section. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The ---------------------------------------------- Borrower represents and warrants to the Banks as follows: (a)(1) The Borrower (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and (ii) either is qualified to do business and in good standing in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (2) The Borrower has all corporate power and authority, governmental permits, licenses, consents, authorizations, orders and approvals and other authorizations as are necessary to carry on its business substantially as presently conducted except for such of the foregoing the absence of which would not, in the aggregate, subject the Borrower to any material liability or disability. (3) The execution, delivery and performance of the Bank Credit Documents, and borrowings thereunder by the Borrower, are within its corporate power and authority and have been duly authorized by all necessary corporate proceedings. (4) Neither such authorization nor the execution, delivery and performance by the Borrower of the Bank Credit Documents, nor any borrowing thereunder by the Borrower when made, will conflict with, result in a breach of or constitute a default under any of the terms, conditions or provisions of any law or any regulation, order, writ, injunction or decree of any court or governmental authority or of the Certificate of Incorporation or By-Laws of the Borrower or result in the violation or contravention of, or the acceleration of any obligation under, or cause the creation of any Lien on any of the properties of the Borrower 31 pursuant to the provisions of, any indenture, agreement or other instrument to which it is a party or by which it is bound. (5) Assuming their due execution by the Banks and the Agent, each of this Agreement and the Other Agreement constitutes a legal, valid and binding agreement of the Borrower, and the Notes (both as defined hereunder and under the Other Agreement), when duly executed on behalf of the Borrower and delivered in accordance with this Agreement and the Other Agreement, will constitute legal, valid and binding obligations of the Borrower (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity). (b) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 1996 and the related consolidated statements of income and changes in financial position for the 12 months ended that date, certified by Coopers & Lybrand, copies of all of which have been delivered to the Banks, fairly present the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and the consolidated results of their operations and changes in financial position for such fiscal year, in conformity with GAAP consistently applied. (c) The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of March 31, 1997 and the related unaudited consolidated statements of income and changes in financial position for the fiscal quarter then ended, a copy of which has been delivered to each of the Banks, fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in paragraph (b) of this Section, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and changes in financial position for such fiscal quarter (subject to normal year-end adjustments). (d) Except as disclosed in writing to the Banks prior to July 23, 1997, there has been no material adverse change since December 31, 1996 and prior to July 23, 1997, in the business, operations, affairs, assets, condition (financial or otherwise) or results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole. (e) Except as disclosed in writing to the Banks prior to July 23, 1997, there is no action, suit or proceeding pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries in any court or before or by any arbitrator, governmental department, agency or instrumentality (i) which is likely to have a material adverse effect upon the Borrower's ability to pay and perform its obligations under the Bank Credit Documents in accordance with their respective terms or (ii) which in any manner draws into question the validity of any of the Bank Credit Documents. (f) No Default has occurred and is continuing. 32 (g) No consent, authorization, order or approval of (or filing or registration with) any governmental commission, board or other regulatory authority (other than routine reporting requirements) is required for the execution, delivery and performance by the Borrower of any of the Bank Credit Documents or for borrowings thereunder by the Borrower. (h) Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the 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 Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the 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. (i) The Cross-Indemnification Agreement and the Tax Sharing Agreement, in the respective forms, with amendments, certified to the Banks pursuant to Section 3.01(iv), are in full force and effect in accordance with their respective terms except for (1) any amendments, modifications or waivers of the Tax Sharing Agreement which do not materially alter the rights and obligations of the Borrower thereunder which as a whole place the Borrower in the same (or more favorable) relative financial position with respect to the Parent which the Borrower would have been in if the Borrower were not consolidated with the Parent for purposes of filing federal, state or local or other income tax returns, (2) any amendments to the Cross- Indemnification Agreement for the purpose of placing the Borrower and the Parent in the same financial positions with respect to each other which they would have been in if the Borrower and the Parent were not members of the same ERISA Group, including the allocation of, and indemnification with respect to, assets and funded and unfunded liabilities among the Borrower, the Parent, Affiliates, Subsidiaries and their respective Plans in such manner as is fair and equitable to the Borrower and its Subsidiaries, (3) any amendments, modifications or waivers of the Cross-Indemnification Agreement or the Tax Sharing Agreement which do not, in the aggregate, materially reduce the rights of the Borrower thereunder against the Parent or materially increase the obligations of the Borrower thereunder to the Parent and (4) any other amendments, modifications or waivers of such instruments to which the Required Banks have consented. True and complete copies of all such amendments, modifications and waivers have been delivered to the Agent for each of the Banks. No amount that may be due under the Cross-Indemnification Agreement or the Tax Sharing Agreement from the Parent to the Borrower or to the Parent from the Borrower is delinquent, except such amount as the Borrower or the Parent may be contesting in good faith. (j) Each corporate Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate 33 powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted except for licenses, authorizations, consents or approvals the absence of which will not materially and adversely affect the business of the Borrower and its Consolidated Subsidiaries taken as a whole. (k) The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (l) There are no Liens on any asset of the Borrower or any Subsidiary on July 23, 1997 which would have been prohibited if Section 5.02 of this Agreement had been in effect on the date the Borrower or such Subsidiary, as the case may be, acquired such asset. (m) Except as disclosed in writing to the Banks, the description of environmental matters affecting the Borrower and its Subsidiaries contained in each of the Borrower's reports delivered to the Banks pursuant to clause (ii) of Section 5.01(c) complied in all material respects as of the date of such report with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. ARTICLE V COVENANTS The Borrower agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: SECTION 5.01. Certain Information to be Furnished by the Borrower. The --------------------------------------------------- Borrower will deliver to each Bank: (a) as soon as available and in any event within 120 days after the end of each of its fiscal years, the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, prepared in accordance with GAAP consistently applied and so certified by a nationally recognized firm of independent certified public accountants, provided, that the delivery requirement -------- described in this paragraph (a) for any fiscal year shall be deemed to have been satisfied upon delivery by the Borrower to the Banks within 120 days after the end of such fiscal year of its Annual Report on Form 10-K for such fiscal year, as filed (with exhibits) with the Securities and Exchange Commission; (b) as soon as available and in any event within 60 days after the end of each of the first three quarters of each of its fiscal years, the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal quarter, the related consolidated 34 statement of income for such fiscal quarter and for the portion of the fiscal year ended with such quarter and the related consolidated statement of cash flows for the portion of the fiscal year ended with such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the chief financial officer or the chief accounting officer of the Borrower, provided, that the delivery requirement described in this paragraph (b) for -------- any fiscal quarter shall be deemed to have been satisfied upon delivery by the Borrower to the Banks within 60 days after the end of such fiscal quarter of its Quarterly Report on Form 10-Q for such fiscal quarter, as filed (with exhibits) with the Securities and Exchange Commission; (c) promptly after the same are available, copies of all (i) financial statements, notices, reports and proxy materials sent to shareholders of the Borrower and (ii) regular and periodic reports filed by the Borrower with the Securities and Exchange Commission (or any governmental agency succeeding to the functions of such Commission); (d) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the Borrower signed by the Treasurer or other financial officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower 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 such Default then exists, specifying the nature and period of existence thereof and the action the Borrower is taking and proposes to take with respect thereto; (e) forthwith, if at any time any officer of the Borrower shall obtain knowledge of any Default, a certificate of the Treasurer or other financial officer specifying the nature and period of existence thereof and the action the Borrower is taking and proposes to take with respect thereto; (f) 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 constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Code, a copy of such application; (v) gives notice of intent to terminate 35 any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth details as to such occurrence and action, if any, which the Borrower or applicable member of the ERISA Group is required or proposes to take; and (g) from time to time such further information regarding compliance with this Agreement or the business, operations, affairs, assets, condition (financial or otherwise) or results of operations of the Borrower and its Consolidated Subsidiaries as the Agent, at the request of any Bank, may reasonably request. SECTION 5.02. Limitation on Liens. Neither the Borrower nor any ------------------- Subsidiary will issue, assume or guarantee any Debt secured by any Lien upon any asset of the Borrower or any Subsidiary or grant any Lien on any such asset to secure any such Debt without effectively providing that all of the Notes (together with, if the Borrower so determines, any other Debt then existing and any other Debt thereafter created ranking equally with the Notes) shall be secured equally and ratably with (or prior to) such Debt so long as such Debt shall be so secured. To the extent the following Liens would otherwise be prohibited by the foregoing provisions, the foregoing provisions shall not apply to: (a) Liens on any asset of a corporation existing at the time it becomes a Subsidiary of the Borrower or at the time it is merged into or consolidated with the Borrower or a Subsidiary and not created in contemplation of such event; (b) Liens on property existing at the time of acquisition thereof or incurred to secure payment of all or part of the purchase price thereof or to secure Debt incurred prior to, at the time of or within 24 months after acquisition thereof for the purpose of financing all or part of the purchase price thereof; (c) Liens on any property to secure all or part of the cost of construction or improvements thereon or Debt incurred to provide funds for any such purpose in a principal amount not exceeding the cost of such construction or improvements; (d) Liens which secure only Debt owing by a Subsidiary to the Borrower or another Subsidiary; (e) Liens in favor of the United States of America or any state thereof or any department, agency, instrumentality or political subdivision of any such jurisdiction to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure 36 any Debt payable to the foregoing incurred for the purpose of financing all or any part of the purchase price or cost of constructing or improving the property subject to such Lien, including, without limitation, Liens to secure Debt in respect of any pollution control, industrial revenue bond or other similar type of financing; (f) Liens required by any contract or statute in order to permit the Borrower or a Subsidiary to perform any contract or subcontract made by it with or at the request of the United States of America, any state or any department, agency or instrumentality or political subdivision of either; (g) mechanics', suppliers', materialmen's and similar Liens arising in the ordinary course of business securing Debt which is not overdue or is being contested by the Borrower in good faith by appropriate action, promptly initiated and diligently conducted and in connection with which adequate reserves are being maintained; (h) Liens securing obligations of the Borrower or any Subsidiary to pay the deferred purchase price of services not exceeding in the aggregate $10,000,000; (i) the Lien of any judgment or attachment in respect of any Debt, so long as (1) the Borrower in good faith by appropriate action, promptly initiated and diligently conducted, shall contest or cause to be contested the validity, amount, extent or application thereof and (2) such action shall operate to prevent the sale or foreclosure (or the posting of notices preparatory to any sale or foreclosure) of any part of any asset to satisfy such Lien prior to a final determination of such action; (j) Liens for taxes not delinquent or being contested in good faith based on the advice of counsel that such contest is meritorious and by appropriate proceedings and for which reserves adequate under GAAP are being maintained; and (k) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (a) to (h) inclusive or of any Debt secured thereby, provided that the principal amount of Debt secured thereby shall not exceed -------- the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement Lien shall be limited to all or part of substantially the same property which secured the Lien extended, renewed or replaced (plus improvements on such property); provided that the Borrower and any one or more Subsidiaries may issue, assume or - -------- guarantee Debt secured by Liens which would otherwise be subject to the foregoing restrictions or grant any such Lien to secure any such Debt in an aggregate principal amount which, together with the aggregate outstanding principal amount of all Debt of the Borrower and the Subsidiaries which would otherwise be subject to the foregoing restrictions (not including Debt permitted to be secured under clauses (a) to (g) inclusive above) and the aggregate Value of the Sale and Lease-Back Transactions 37 (as such terms are defined in Section 5.03 hereof) in existence at such time (not including Sale and Lease-Back Transactions as to which the Borrower has complied with Section 5.03(b) hereof) does not at any one time exceed 15% of the consolidated total assets of the Borrower and its Consolidated Subsidiaries. SECTION 5.03. Limitation on Sale and Lease-Back. Neither the Borrower nor --------------------------------- any Subsidiary will enter into any arrangement with any Person (other than the Borrower or a Subsidiary), or to which any such Person is a party, providing for the leasing to the Borrower or a Subsidiary for a period of more than three years of any property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any Person (other than the Borrower or a Subsidiary), to which funds have been or are to be advanced by such Person on the security of the leased property (in this Section and in Section 5.02 hereof called a "Sale and Lease-Back Transaction") unless either: (a) the Borrower or such Subsidiary would be entitled, pursuant to the provisions of Section 5.02 hereof, to incur Debt in a principal amount equal to or exceeding the Value of such Sale and Lease-Back Transaction, secured by a Lien on the property to be leased, without equally and ratably securing the Notes; or (b) the Borrower (and in any such case the Borrower covenants and agrees that it will do so) during or immediately after the expiration of four months after the effective date of such Sale and Lease-Back Transaction (whether made by the Borrower or a Subsidiary) applies to the voluntary retirement of Debt of the Borrower ranking at least pari passu with the Notes an amount equal to the Value of such Sale and Lease-Back Transaction, less the principal amount of such Debt of the Borrower voluntarily retired by the Borrower within such four-month period, excluding retirements of such Debt as a result of conversions or pursuant to mandatory sinking fund or repayment provisions or (other than in the case of commercial paper) by payment at maturity. For purposes of Section 5.02 hereof and this Section, the term "Value" shall mean, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds of the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value in the opinion of the Board of Directors of the Borrower of such property at the time of entering into such Sale and Lease-Back Transaction, in either case divided first by the number of full years of the term of the lease and then multiplied by the number of full years of such term remaining at the time of determination, without regard to any renewal or extension options contained in the lease. SECTION 5.04. Consolidation, Merger, Disposition of Assets. The Borrower -------------------------------------------- will not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer all or any substantial part of its assets (whether in a single transaction or in a series of related transactions) to any other Person; provided that the Borrower may merge with another Person if (A) the -------- Borrower is the corporation surviving such merger and (B) immediately after giving effect to such merger, no 38 Default shall have occurred and be continuing; and provided further that the -------- ------- Borrower may consolidate or merge with or into the Parent if (A) the Parent theretofore expressly assumes the obligations of the Borrower hereunder and under the Notes by an instrument satisfactory in form and substance to the Required Banks and (B) immediately after giving effect to such consolidation or merger and such assumption, no Default shall have occurred and be continuing; and provided further that the Borrower may (A) sell its inventory in the -------- ------- ordinary course of business and (B) sell, lease or otherwise transfer such of its assets (including all or any portion of the stock of any Subsidiary) on an arms-length basis to an Internally-Funded Subsidiary. The Borrower will not permit any Subsidiary which constitutes a substantial part of its assets to consolidate or merge with or into, or transfer all or substantially all of its assets (whether in a single transaction or in a series of related transactions) to, any Person other than the Borrower or a Wholly-Owned Consolidated Subsidiary. For purposes of this Section, "substantial part of its assets" means assets (including Subsidiaries or other Persons and valued at the higher of book or fair market value) (y) representing more than 25% of the consolidated assets of the Borrower and its Subsidiaries as reflected in the then most recent consolidated annual financial statements of the Borrower and its Subsidiaries delivered pursuant to Section 5.01(a) or (z) responsible for more than 25% of the consolidated net revenues or of the consolidated net income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in the preceding clause (y). Notwithstanding the foregoing, the Banks will not unreasonably withhold their consent to any sale, lease or other transfer of assets by the Borrower or any of its Subsidiaries. SECTION 5.05. Minimum Consolidated Net Worth. Consolidated Net Worth will ------------------------------ at no time be less than $1,500,000,000. SECTION 5.06. Transactions with Affiliates. The Borrower will not, and ---------------------------- will not permit any Subsidiary to, directly or indirectly, pay any funds to or for the account of, make any investment (whether by acquisition of stock or indebtedness, by loan, advance, transfer of property, Guarantee or other agreement to pay, purchase or service, directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect any transaction in connection with any joint enterprise or other joint arrangement with, any Affiliate; provided, however, that the foregoing provisions of this Section -------- ------- shall not prohibit (a) the Borrower from declaring or paying any lawful dividend to, or repurchasing its common stock from, any Affiliate so long as, after giving effect thereto, no Default shall have occurred and be continuing, (b) the Borrower or any Subsidiary (1) from making sales to or purchases from or leasing from any Affiliate and, in connection therewith, extending credit or making payments, or (2) from making payments for services rendered by any Affiliate or (3) from participating in, or effecting any transaction in connection with, any joint enterprise or other joint arrangement with any Affiliate if such sales, purchases or leases are made or such services are rendered or the Borrower or such Subsidiary participates in the ordinary course of business of the Borrower or such Subsidiary, as the case may be, and, in the aggregate during each fiscal year of the Borrower, the terms and conditions of all such sales, purchases, leases, rendered services and participations are not materially less favorable to the similar transactions with Persons who are not Affiliates and (c) the Borrower or any Subsidiary from making payments of principal, interest and premium on any Debt of the Borrower 39 or such Subsidiary held by an Affiliate if the terms of such Debt are substantially as favorable to the Borrower or such Subsidiary as the terms which could have been obtained at the time of the creation of such Debt from a lender which was not an Affiliate. SECTION 5.07. Use of Proceeds. The proceeds of the Loans made under this --------------- Agreement will be used for general corporate purposes. 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 VI DEFAULTS SECTION 6.01. Defaults. If one or more of the following events (herein -------- called "Events of Default") shall occur and be continuing: (a) Non-Payment: the Borrower shall default in the payment when due ----------- of any principal of any Loan or shall default in the payment within five days of the due date thereof of any interest on any Loan or any other amount payable hereunder; (b) Certain Covenant Violations: the Borrower shall fail to perform --------------------------- or observe any covenant or agreement to be performed or observed by it contained in Sections 5.02 to 5.05, inclusive, or Section 5.07; (c) Certain Other Covenants: the Borrower shall fail to perform or ----------------------- observe any covenant or agreement to be performed by it contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days (less, in the case of any failure to observe or perform Section 5.01(e), the number of days elapsed from the date an officer of the Borrower obtained knowledge of any Default to the date the Borrower delivered notice thereof to the Banks) after written notice of such failure is given to the Borrower by the Agent at the request of any Bank; (d) Misrepresentation: the Borrower shall have made or be deemed to ----------------- have made pursuant to this Agreement any representation or warranty in or pursuant to this Agreement, or in any certificate, financial statement or other document delivered pursuant hereto, which shall prove to have been incorrect in any material respect when made or deemed made; (e) Default With Respect to Other Borrowed Funds: the Borrower or any -------------------------------------------- Subsidiary shall fail to repay any Borrowed Funds (other than the Loans) payable or guaranteed by it, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the 40 applicable grace period, if any, specified in the agreement or instrument relating to such Borrowed Funds or guarantee thereof, or any event or condition shall occur which results in the acceleration of the maturity of any Borrowed Funds (or guarantee thereof) of the Borrower or any Subsidiary; provided that (i) the aggregate amount of such Borrowed Funds -------- payable or guaranteed, including any interest or premium thereon, shall exceed $50,000,000 (or the Equivalent Amount thereof) and (ii) there shall be excluded for purposes of the foregoing any such Borrowed Funds (A) owed to any department, agency, instrumentality or political subdivision of the United States of America or any state thereof in respect of any pollution control, industrial revenue bond or other similar type of financing, so long as the obligation of the Borrower or any Subsidiary to pay or guarantee such Borrowed Funds is being contested in good faith or (B) owed to the Borrower by any Subsidiary or owed by the Borrower to any Subsidiary; (f) Voluntary Bankruptcy: the Borrower, any Material Subsidiary or -------------------- any two or more Subsidiaries which, if combined, would constitute a 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; (g) Involuntary Bankruptcy: an involuntary case or other proceeding ---------------------- shall be commenced against the Borrower, any Material Subsidiary or any two or more Subsidiaries which, if combined, would constitute a 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 Borrower, any Material Subsidiary or any two or more Subsidiaries which, if combined, would constitute a Material Subsidiary, under the federal bankruptcy laws as now or hereafter in effect; (h) Termination of Plan: any member of the ERISA Group shall fail to ------------------- pay when due an amount or amounts aggregating in excess of $20,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000 (collectively, a "Material Plan") shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under 41 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 $20,000,000; or (i) Judgment Default: a final, non-appealable judgment or order ---------------- enforceable by the courts of the United States or the United Kingdom or any other European Community country for the payment of money in excess of $50,000,000 (or the Equivalent Amount thereof) shall be rendered against the Borrower or any Subsidiary and such judgment or order shall continue unsatisfied for a period of 30 days; then, and in every such event, the Agent shall (i) if requested by Banks having at least 66-2/3% in aggregate amount of the Commitments, by notice to the Borrower terminate the Commitments, and they shall thereupon terminate, and/or (ii) if requested by Banks holding Notes evidencing at least 66-2/3% in aggregate principal amount of the Loans, by notice to the Borrower declare the full unpaid principal of and accrued interest on the Loans and the Notes and all other amounts payable hereunder to be immediately due and payable, whereupon the Commitments shall terminate and the Loans and the Notes and such other amounts shall be immediately due and payable, without further notice, presentment, demand, protest or other formality of any kind, all of which are hereby expressly waived by the Borrower; provided that in the case of the occurrence of -------- an event referred to in clause (f) or (g) above, the Commitments shall automatically terminate and the full unpaid principal of and accrued interest on the Loans and Notes and all other amounts payable hereunder shall automatically become immediately due and payable, without notice, presentment, demand, protest or other formality of any kind, all of which are hereby expressly waived by the Borrower. SECTION 6.02. Notice of Default. The Agent shall give notice to the ----------------- Borrower under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. ARTICLE VII 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 and the Notes as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. The Agent shall not have a fiduciary relationship in respect of any Bank by reason of this Agreement. 42 SECTION 7.02. Agent and Affiliates. The First National Bank of Chicago -------------------- shall have the same rights and powers under this Agreement and its Notes as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and The First National Bank of Chicago and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or any Affiliate 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 VI. SECTION 7.04. Employment and Reliance on Agents and Counsel. The Agent --------------------------------------------- may execute any of its duties as Agent hereunder by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. In addition, the Agent may consult with legal counsel (who may be employees of the Agent or counsel for the 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, the Arranger, 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 (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent, the Arranger, 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 the Borrower; (iii) the satisfaction of any condition specified in Article III, 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. Neither the Agent nor the Arranger shall incur any liability by acting in reliance upon any Note, notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it in good faith to be genuine or to be signed by the proper party or parties. SECTION 7.06. Reimbursement and Indemnification. The Banks agree to --------------------------------- reimburse and indemnify the Agent ratably in proportion to their respective Commitments (i) for any amounts not reimbursed by the Borrower for which the Agent (for clarity, in its capacity as Agent, not as a Bank) is entitled to reimbursement by the Borrower under this Agreement, (ii) for any other expenses incurred by the Agent on behalf of the Banks, in connection with the administration and enforcement of this Agreement and the Notes and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out 43 of this Agreement, the Notes or any other document delivered in connection herewith or the transactions contemplated hereby, or the enforcement of any of the terms hereof or of any such other documents, provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Agent. SECTION 7.07. Credit Decision. Each Bank acknowledges that it has, --------------- independently and without reliance upon the Agent, the Arranger or any other Bank, and based on the financial statements prepared by the Borrower and such other 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, the Arranger 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 --------------- written notice thereto to the Banks and the Borrower. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent who has been approved by the Borrower (such approval not to be unreasonably withheld or delayed). 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's giving notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent. The successor Agent shall be (i) a commercial bank organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least $100,000,000 and (ii) a Bank, unless the Borrower consents to the successor Agent not being a Bank, which consent may not be unreasonably withheld or delayed. Upon the acceptance by a successor Agent of its appointment as Agent hereunder, it 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. Each successor Agent shall notify promptly the Borrower of its appointment as Agent 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. Co-Agents. None of the Banks identified on the signature --------- pages of this Agreement as a "Co-Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Without limiting the foregoing, none of the Banks so identified as a "Co-Agent" shall have or be deemed to have any fiduciary relationship with any Bank. Each Bank acknowledges that it has not relied, and will not rely, on any of the Banks identified as Co-Agents in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE VIII CHANGE IN CIRCUMSTANCES 44 SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair. -------------------------------------------------------- (a) If on or prior to the first day of any Interest Period for any Fixed Rate Borrowing (other than a Money Market Rate Loan): (1) the Agent is advised by the Reference Banks that deposits in the applicable currency (in the applicable amounts) are not being offered to the Reference Banks in the relevant market for such Interest Period, or (2) the Required Banks 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-Currency Loans or Money Market LIBOR Loans, as the case may be, for such Interest Period, the Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Agent notifies the Borrower that the circumstances giving rise to such notice no longer exist: (A) the New York Interbank Offered Rate shall replace the London Interbank Offered Rate for purposes of interest rate determinations hereunder for Euro-Currency Borrowings and Money Market LIBOR Borrowings for such Interest Period (and all references herein to the London interbank market and the London Interbank Offered Rate for such purposes shall, unless the context otherwise requires, be deemed to be references to the New York interbank market and the New York Interbank Offered Rate, respectively), as the case may be, and (B) unless the 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 or that it elects to borrow in another currency such that clause (1) or (2) above is not applicable thereto, (i) if such Fixed Rate Borrowing is a Euro-Currency Borrowing, the interest rate for such Euro-Currency Borrowing shall be determined on the basis of the New York Interbank Offered Rate if all of the procedures set forth herein for a Euro-Currency Borrowing on such basis (including the required notice to the Banks) can be complied with at such time or, if clause (1) or (2) of this subsection is applicable to the New York Interbank Offered Rate at such time, such Euro-Currency Borrowing shall instead be made as a Base Rate Borrowing; provided that, if such Euro- -------- Currency Borrowing was to be denominated in a currency other than Dollars, the principal amount of the Base Rate Borrowing shall be the Dollar Amount of the principal amount of such Euro-Currency Borrowing, and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the interest rate for such Money Market LIBOR Borrowing shall be determined on the basis of the New York Interbank Offered Rate if all of the procedures set forth herein for a Money Market LIBOR Borrowing on such basis (including the required notice to the Banks) can be complied with at such time or, if clause (1) or (2) of this subsection is applicable to the New York Interbank Offered Rate at such time, the Money Market LIBOR Loans comprising such Borrowing shall be made in Dollars in a principal amount equal to the Dollar Amount of the principal amount of such Money Market LIBOR Borrowing and shall bear interest for each 45 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. (b) If clause (1) or (2) of subsection (a) of this Section becomes applicable when the New York Interbank Offered Rate has replaced the London Interbank Offered Rate hereunder, then the Agent shall give notice to the Borrower of such condition and the Borrower and the Agent (in consultation with the Banks) shall promptly enter into negotiations in good faith with a view to agreeing upon an alternative basis (a "Substitute Basis") acceptable to the Borrower and the Banks for determining the interest rate which shall be applicable to the affected Euro-Currency Borrowings or Money Market LIBOR Borrowings, which rate shall reflect the cost to the Banks of maintaining such Euro-Currency Borrowings plus the applicable Syndicated Margin or maintaining such Money Market LIBOR Loans plus any applicable Money Market Margin, as the case may be. If, prior to the expiration of 20 days from the date of such notice by the Agent, the Borrower and the Banks shall agree upon a Substitute Basis, interest on such Euro-Currency Borrowings or Money Market LIBOR Borrowings for the affected Interest Periods commencing during the period beginning two Euro-Currency Business Days after the date of such notice and ending on the date three Euro-Currency Business Days after the Agent notifies the Borrower and the Banks that the condition specified in clause (1) or (2) of subsection (a) of this Section has ceased to be in effect shall be determined on such Substitute Basis. If no such agreement has been reached by the expiration of such 20-day period, the Agent shall so notify the Banks and each Bank shall, within ten days after the date of such notice, notify the Borrower (through the Agent) of the rate (or the basis of determining the rate) at which it is prepared to maintain such Euro-Currency Borrowings or Money Market LIBOR Borrowings held by it hereunder for the affected Interest Periods (which rate shall reflect the cost to such Bank of maintaining such Borrowings plus the applicable Syndicated Margin or plus any applicable positive Money Market Margin, as the case may be) and such rate (or basis) shall be applicable to such Euro-Currency Borrowings or Money Market LIBOR Borrowings, as the case may be, held by it for the affected Interest Periods applicable thereto referred to in the preceding sentence. The Agent shall determine the total amount of interest payable by the Borrower on each date for the payment of interest hereunder determined in accordance with this subsection (b) (to the extent it has received the necessary information from the Banks) and notify the Borrower of such total amount (provided that no Bank's right to receive any interest payable to it hereunder shall be impaired by its failure to provide such information to the Agent). The Borrower shall have the right at any time to suspend the obligation of each Bank notifying a rate (or basis) pursuant to the second preceding sentence of this subsection to make Euro-Currency Loans. SECTION 8.02. Illegality. If, after July 23, 1997, the adoption of any ---------- applicable law, rule or regulation, or any change therein, 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 make it unlawful or impossible for any Bank (or its Applicable Lending Office) to make, maintain or fund its Euro-Currency Loans and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and the Borrower, whereupon until 46 such Bank notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro- Currency Loans shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise materially disadvantageous to such Bank. If such Bank shall determine that it may not lawfully continue to maintain and fund any of its outstanding Euro-Currency Loans to maturity and shall so specify in such notice, the Borrower shall immediately prepay in full the then outstanding principal amount of each such affected Euro-Currency Loan, together with accrued interest thereon. Concurrently with prepaying each such affected Euro-Currency Loan, the Borrower shall borrow a Base Rate Loan (or, subject to Section 2.03 and the willingness of such Bank in its own discretion to submit a Money Market Quote, a Money Market Rate Loan) from such Bank in a principal amount equal to the Dollar Amount of the principal amount of such affected Euro-Currency Loan for an Interest Period coincident with the remaining term of the Interest Period applicable to such affected Euro-Currency Loan, and such Bank shall make such a Base Rate Loan. SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x) --------------------------------- July 23, 1997, in the case of any Syndicated Loan or any obligation to make Syndicated Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change therein, 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: (i) shall subject any Bank (or its Applicable Lending Office) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Notes or its obligation to make Euro-Currency Loans, or shall change the basis of taxation of payments to any Bank (or its Applicable Lending Office) of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Euro-Currency Loans (except for changes in the rate of tax on the overall net income of such Bank or its Applicable Lending Office imposed by the jurisdiction in which such Bank's principal executive office or Applicable Lending Office is located) or (ii) shall impose, modify or deem applicable any reserve, special deposit, deposit insurance assessment or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro- Currency Loan or Money Market LIBOR Loan any such requirement included in an applicable Euro-Currency Reserve Percentage) 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 Euro- Currency Loans, 47 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 Notes with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank (without duplication of amounts otherwise payable hereunder) such additional amount or amounts as will compensate such Bank for such increased cost or reduction with respect to such affected Fixed Rate Loan or such affected sum. (b) If any Bank shall have reasonably determined that, after July 23, 1997, the adoption of any applicable law, rule or regulation regarding capital adequacy or any change therein, 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 regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or has had the effect of reducing the rate of return on the capital of such Bank (or its parent) as a consequence of its obligations hereunder to a level below that which such Bank (or its parent) could have achieved but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank (without duplication of amounts otherwise payable hereunder) such additional amount or amounts as will compensate such Bank (or its parent) for such reduction. (c) Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after July 23, 1997, 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 materially disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section, setting forth the additional amount or amounts to be paid to it hereunder and setting forth in reasonable detail a reasonable basis therefor, shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. (d) Notwithstanding any other provision of this Agreement, the Borrower shall have no obligation to make any payment under this Section 8.03 to the extent that such payment would not have been required (i) if such Bank's representation and warranty in Section 2.16(f) had been accurate, or (ii) if such Bank had complied with its obligations under Section 2.16(g). SECTION 8.04. Substitute Loans. If (i) the obligation of any Bank to make ---------------- Euro-Currency Loans has been suspended pursuant to Section 8.01(b) or 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) and the Borrower shall, by at least five Euro-Currency Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer apply: 48 (a) all Loans denominated in Dollars which would otherwise be made by such Bank as Euro-Currency Loans shall be made instead as Base Rate Loans, (b) all Loans denominated in a currency other than Dollars which would otherwise be made by such Bank as Euro-Currency Loans shall be made instead as Base Rate Loans in Dollars in a principal amount equal to the Dollar Amount of the principal amount of such Euro-Currency Loans, and (c) after each of its Euro-Currency Loans has been repaid, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall instead be applied to repay its Loans made pursuant to Section 8.02 or clauses (a) or (b) above. SECTION 8.05. Certain Reserve Compensation. Each Bank may require the ---------------------------- Borrower to pay, contemporaneously with each payment of interest on the Euro- Currency Borrowings of the Borrower, additional interest on the related Euro- Currency Loan of such Bank at a rate per annum equal to the excess of (i)(A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro- Currency Reserve Percentage over (ii) the rate specified in clause (i)(A). In addition, each Bank may require the Borrower to pay, contemporaneously with each payment of interest on the Euro-Currency Borrowings of the Borrower which are denominated in pounds sterling, additional interest on the related Euro-Currency Loan of such Bank at the percentage calculated from time to time by such Bank to be the percentage required to fully compensate such Bank for all reserve costs, liabilities, expenses and assessments which have been incurred by such Bank (or its Applicable Lending Office) in complying with any and all requirements of any relevant United Kingdom banking authority or authorities applicable to such Bank (or its Applicable Lending Office) regarding the making, funding or maintaining of such Euro-Currency Loan (including, without limitation, any and all liquid asset maintenance requirements of the Bank of England). A certificate of any Bank claiming compensation under the preceding sentence, setting forth the additional interest to be paid to it thereunder and setting forth in reasonable detail a reasonable basis therefor, shall be conclusive in the absence of manifest error, and in determining the amount of such interest, such Bank may use any reasonable averaging and attribution methods. Any Bank wishing to require payment of such additional interest (x) shall so notify the Borrower and the Agent, in which case such additional interest on the Euro-Currency Loans of such Bank shall be payable in the currency of such Loan to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least five Euro-Currency Business Days after the giving of such notice and (y) shall notify the Borrower at least five Euro- Currency Business Days prior to each date on which interest is payable on such Euro-Currency Loans of the amount (and currency thereof) then due it under this Section. SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank to -------------------- make Euro-Currency Loans has been suspended pursuant to either Section 8.01(b) or Section 8.02 of either this Agreement or the Other Agreement or (ii) any Bank has demanded compensation under any of Sections 2.16, 8.03 or 8.05 of either this Agreement or the Other Agreement, the Borrower shall have the right, with the assistance of the Agent, to seek a mutually satisfactory substitute bank or banks (which may be one or more of the Banks) to purchase and assume all of the rights and obligations of such Bank under this Agreement, the Other Agreement and such Bank's "Notes" (as defined in both this Agreement and the Other Agreement), all in accordance with the provisions of Section 49 9.07(c) of this Agreement and Section 9.07(c) of the Other Agreement and subject to such Bank receiving payment in full of all amounts owing to it under this Agreement, the Other Agreement, and its "Notes" (as defined in both this Agreement and the Other Agreement). ARTICLE IX MISCELLANEOUS SECTION 9.01. Notices. All notices and other communications provided for ------- herein shall be in writing (including bank wire, telex, facsimile transmission, telegraph or similar writing) and shall be given to the intended recipient: (x) in the case of the Borrower or the Agent, at its address or telex or telecopy number set forth on the signature pages hereof, (y) in the case of any Bank, at its address or telex or telecopy number set forth in its Administrative Questionnaire or (z) in the case of any party, at such other address or telex or telecopy number as shall be designated by such party in a notice to the Borrower and the Agent. All notices and other communications shall be effective (i) if given by telex or facsimile transmission, when transmitted to the telex or telecopy number specified in this Section (and, in the case of telex, when the appropriate answerback is received), (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under -------- Article II or VIII hereof shall not be effective until received. SECTION 9.02. No Waiver. No failure on the part of the Agent or any Bank --------- to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any Note preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. SECTION 9.03. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE REQUESTS, ------------- INVITATIONS AND OFFERS PROVIDED FOR IN SECTION 2.03 SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. SECTION 9.04. Expenses and Indemnification. The Borrower agrees to pay, ---------------------------- or reimburse each of the Agent and the Arranger for paying, all reasonable costs and out-of-pocket expenses incurred or paid by each of the Agent and the Arranger in connection with the preparation, negotiation, execution, delivery and syndication of this Agreement and the Notes and the making of the Borrowings hereunder (including the reasonable fees, time charges and expenses of in-house or outside counsel to the Agent and the Arranger). The Borrower agrees to pay, or reimburse the Agent and the Banks for paying, all reasonable fees, time charges and expenses of in-house counsel to the Agent and such outside counsel, if any, as shall have been retained by the Agent or the Required Banks on behalf of the Banks, in connection with the amendment, modification, consent or waiver of any of the terms of this Agreement or any of the Notes. The Borrower agrees to pay, or reimburse the Agent and the Banks for paying, all reasonable costs, internal charges and out-of-pocket expenses (including the reasonable fees, time charges and expenses of in-house or outside counsel to the Agent or any Bank) paid or incurred by the Agent or any Bank in connection with the enforcement of this 50 Agreement or any Note and any collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. The Borrower hereby agrees to indemnify the Agent, the Arranger and each Bank (and their respective directors, officers and employees) from and hold each of them harmless against any and all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Arranger or any Bank is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the Notes, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Borrowing, except to the extent any of the foregoing arises from the gross negligence or willful misconduct of the Person seeking indemnification. If and to the extent that the foregoing indemnification is unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction of each of such losses, liabilities, claims, damages or expenses which is permissible under applicable law. The obligations of the Borrower under this Section 9.04 shall survive the termination of this Agreement. SECTION 9.05. Amendments, Etc. Any provision of this Agreement or the --------------- Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that the -------- Agent may, with the consent of the Borrower (which shall not be unreasonably withheld), specify by notice to the Banks modifications in the procedures set forth in Section 2.03; and provided further that no such amendment, waiver or -------- ------- modification shall, unless signed by all the Banks, (i) increase or extend the Commitment of any Bank or subject any Bank to any additional obligation (except for increases to the Commitment of any Bank pursuant to Section 8.06 to which such Bank has agreed in writing), (ii) reduce the principal of or rate of interest on any Loan or any fees or other amounts payable hereunder or change the currency of payment thereof, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder, (iv) change the definition of "Required Banks", amend this Section 9.05, or otherwise change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement, or (v) change Section 9.11 or any provision providing for the equal or ratable treatment of the Banks. SECTION 9.06. Counterparts; Effectiveness; Termination of Existing Credit ----------------------------------------------------------- Agreement. This Agreement may be executed in any number of counterparts, all of - --------- which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall become effective when (a) the Agent shall have received counterparts hereof signed by the Borrower, each Bank listed on the signature pages hereof and the Agent, and (b) all of the Borrower's obligations under the Existing Credit Agreement shall have been satisfied (except for any obligations under Article VIII, Section 2.16 and Section 9.04 therein). Each Bank that is a party to the Existing Credit Agreement acknowledges and agrees that, notwithstanding anything to the contrary therein, upon the effectiveness of this Agreement, the commitments of the banks under the Existing Credit Agreement to make loans thereunder shall be automatically terminated and any notice requirements in respect of such termination or in respect of any prepayment of loans thereunder shall be waived. The Agent shall notify the Borrower and the Banks of the effectiveness of this Agreement by delivery of a notice in the form of Exhibit H hereto. 51 SECTION 9.07. Successors and Assigns. (a) The provisions of this ---------------------- Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks and the Agent. (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 Borrower and the Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided -------- that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (ii) or (iii) of Section 9.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Sections 2.13, 2.15, 2.16, 9.04 and Article VIII to the extent of its participating interest and with such benefits to be determined as if the related Bank had not granted such participation. 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) With (and subject to) the written consent of the Borrower and the Agent (such consents not to be unreasonably withheld and, in the case of an assignment to an Affiliate, not to be required), any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank; provided, that simultaneously with each such assignment, the transferor Bank shall assign to the same Assignee the same proportionate share of all of its rights and obligations, if any, under the Other Agreement in accordance with the provisions of Section 9.07(c) of the Other Agreement. 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 Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment under this Agreement, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment equal to $1,500. 52 (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 (without any requirement to obtain the consent of the Borrower or the Agent thereto). 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 8.05 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is (i) made with the Borrower's prior written consent or (ii) made to either (y) a Bank already party to this Agreement at the time of such assignment or (z) an affiliate of the transferor Bank. (f) If any Reference Bank assigns all of its rights and obligations under this Agreement and its Notes to an unaffiliated institution, the Agent shall, in consultation with the Borrower and with the consent of the Required Banks, appoint another Bank to act as a Reference Bank hereunder. SECTION 9.08. Survival. The obligations of the Borrower under Article -------- VIII and Sections 2.16 and 9.04 shall survive the repayment of the Loans and the termination of the Commitments. SECTION 9.09. Acknowledgement. The Borrower acknowledges that the Banks --------------- have entered into this Agreement in reliance on the Borrower's assurance that it does not intend to use the proceeds of any Borrowings hereunder in a manner which would violate any applicable law or governmental rule or regulation. SECTION 9.10. Headings. The Table of Contents and Article and Section -------- headings used herein shall not affect the interpretation of any provision of this Agreement. SECTION 9.11. Sharing of Setoffs. Each Bank agrees that, if it shall, by ------------------ exercising any right of setoff or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note 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 any Note held by such other Bank (other than disproportionate payments to any Bank provided for by this Agreement), the Bank receiving such proportionately greater payment shall purchase such participations in the Notes 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 Notes 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 setoff or counterclaim it may have and to apply the amount recovered thereby to the payment of indebtedness of the Borrower other than its indebtedness under the Notes. If under any applicable bankruptcy, insolvency or other similar law, any Bank receives a secured claim in lieu of a setoff to which this Section applies, such Bank shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Banks entitled under this Section to share in the benefits of any recovery on such secured claim. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. 53 SECTION 9.12. 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 9.13. Consent to Jurisdiction. (a) The Borrower irrevocably ----------------------- submits to the jurisdiction of any federal or Illinois state court sitting in Chicago, Illinois over any suit, action or proceeding arising out of or relating to this Agreement or any Note. The 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 suit, action or proceeding brought in such court and any claim that any suit, action or proceeding brought in such court has been brought in an inconvenient forum. The Borrower agrees that a final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Borrower and may be enforced in any federal or Illinois state court sitting in Chicago, Illinois (or any other courts to the jurisdiction of which the Borrower is or may be subject) by a suit upon such judgment, provided that service of process is effected upon the Borrower in one of the manners specified in subsection (b) of this Section or as otherwise permitted by law. (b) Service of Process. The Borrower hereby consents to process being ------------------ served in any suit, action or proceeding referred to in the first sentence of subsection (a) of this Section in any federal or Illinois state court sitting in Chicago, Illinois by mailing a copy thereof by registered or certified air mail, postage prepaid, return receipt requested, to the Borrower at its address specified in Section 9.01 or to any other address of which the Borrower shall have given written notice to the Agent. The Borrower irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any such service in any such suit, action or proceeding brought by the Agent or any Bank. The Borrower agrees that such service shall be deemed in every respect effective service of process upon the Borrower in any such suit, action or proceeding and shall, to the fullest extent permitted by law, be taken and held to be valid and personal service upon and personal delivery to the Borrower. (c) No Limitation on Service or Suit. Nothing in this Article shall -------------------------------- affect the right of the Agent or any Bank to serve process in any other manner permitted by law or limit the right of the Agent or any Bank to bring proceedings against the Borrower in the courts of the jurisdiction of the Bank's Applicable Lending Office or the courts of any jurisdiction or jurisdictions in which the Borrower has any assets. SECTION 9.14. Waiver of Jury Trial. THE AGENT, THE BANKS AND THE BORROWER -------------------- HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER BANK CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE BANKS, OR THE BORROWER. 54 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. THE BORROWER ARCO CHEMICAL COMPANY By /s/ R. Remick ----------------------------------------- Ronald R. Remick Vice President and Treasurer Address for Notices: 3801 West Chester Pike Newtown Square, Pennsylvania 19073 Attn: Assistant Treasurer Telex No.: 99-0756 (answerback ARCO CHEM NS1) Telephone No.: 610-359-3362 Telecopier No.: 610-359-3322 S-1 THE AGENT THE FIRST NATIONAL BANK OF CHICAGO By /s/ George R. Schanz ----------------------------------------- Title GEORGE R. SCHANZ -------------------------------------- Vice President Address for Notices: The First National Bank of Chicago One First National Plaza Chicago, Illinois 60670 Attention: William P. Laird Mail Suite 0634 Telex No.: 4330253 (answerback FNBCUI) Telephone No.: 312-732-5635 Telecopier No.: 312-732-4840 cc: W. Walter Green, III Mail Suite 0363 Telex No.: 4330253 (answerback FNBCUI) Telephone No.: 312-732-7235 Telecopier No.: 312-732-3055 THE BANKS Commitment - ---------- $22,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO, as a Bank By /s/ George R. Schanz ----------------------------------------- Title GEORGE R. SCHANZ -------------------------------------- Vice President S-2 Commitment - ---------- $20,000,000.00 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Co-Agent and a Bank By [SIGNATURE APPEARS HERE] ----------------------------------------- Title Vice President -------------------------------------- S-3 Commitment - ---------- $20,000,000.00 THE CHASE MANHATTAN BANK, as a Co-Agent and a Bank By /s/ R. T. Sacks ----------------------------------------- Title ROBERT T. SACKS -------------------------------------- MANAGING DIRECTOR S-4 Commitment - ---------- $20,000,000.00 DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, as a Co-Agent and a Bank By /s/ Jean Hannigan /s/ R. Hoffmann ----------------------------------------- Title Jean M. Hannigan Ralf Hoffmann -------------------------------------- Vice President Vice President S-5 Commitment - ---------- $14,000,000.00 BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Bank By /s/ M.R. Marron ----------------------------------------- Title M. R. MARRON -------------------------------------- Vice President S-6 Commitment - ---------- $14,000,000.00 CREDIT LYONNAIS NEW YORK BRANCH, as a Bank By /s/ PASCAL POUPELLE ----------------------------------------- Title Executive Vice President -------------------------------------- S-7 Commitment - ---------- $14,000,000.00 CORESTATES BANK, N.A. as a Bank By [SIGNATURE APPEARS HERE] ----------------------------------------- Title Vice President -------------------------------------- S-8 Commitment - ---------- $14,000,000.00 MARINE MIDLAND BANK, as a Bank By /s/ William M. Holland ----------------------------------------- Title William M. Holland -------------------------------------- Vice President S-9 Commitment - ---------- $14,000,000.00 WACHOVIA BANK, N.A., as a Bank By /s/ A. T. Ogburn ------------------------------------ ADAM T. OGBURN ------------------------------------ Title VICE PRESIDENT ------------------------------------ S-10 Commitment - ---------- $6,000,000.00 THE BANK OF NEW YORK, as a Bank By /s/ I. K. Stewart ----------------------------------------- Title IAN K. STEWART -------------------------------------- SENIOR VICE PRESIDENT S-11 Commitment - ---------- $6,000,000.00 THE BANK OF NOVA SCOTIA, as a Bank By /s/ J. A. Edwards ------------------------------------ J. ALAN EDWARDS ------------------------------------ Title AUTHORIZED SIGNATORY ------------------------------------ S-12 Commitment - ---------- $6,000,000.00 CITIBANK, N.A., as a Bank By /s/ R. Beldam --------------------------------------- RUFUS BELDAM --------------------------------------- Title Managing Director 399 Park/4th Fl./Zn.4 (212) 559-1605 --------------------------------------- S-13 Commitment - ---------- $6,000,000.00 THE DAI-ICHI KANGYO BANK, LTD., LOS ANGELES AGENCY, as a Bank By /s/ Mr. Morishita ----------------------------------------- Title MASATSUGU MORISHITA -------------------------------------- SR. VICE PRESIDENT & JOINT GENERAL MANAGER S-14 Commitment - ---------- $6,000,000.00 FIRST UNION NATIONAL BANK, as a Bank By [SIGNATURE APPEARS HERE] ----------------------------------------- Title Senior Vice President -------------------------------------- S-15 Commitment - ---------- $6,000,000.00 FUJI BANK, LTD., as a Bank By [SIGNATURE APPEARS HERE] ----------------------------------------- Title Senior Vice President -------------------------------------- S-16 Commitment - ---------- $6,000,000.00 MELLON BANK, N.A., as a Bank By /s/ John K. Walsh ------------------------------------ JOHN K WALSH ------------------------------------ Title VICE PRESIDENT ------------------------------------ S-17 Commitment - ---------- $6,000,000.00 THE SAKURA BANK, LTD., as a Bank By /s/ Y. Kikuchi ----------------------------------------- Title YASUMASA KIKUCHI Senior Vice President S-18 SCHEDULE I Euro-Currency Payment Offices of the Agent Currency Euro-Currency Payment Office - -------- ---------------------------- Dollars The First National Bank of Chicago Chicago Office Account No.: 7521-7653 Ref.: ARCO Chemical Deutsche Marks To: Swiss Bank Corp. Frankfurt, Germany For: The First National Bank of Chicago Chicago Office Account No.: 103350.50.00 Ref.: ARCO Chemical Dutch Guilders To: Rabobank Nederland, N.V. Utrecht, Netherlands For: The First National Bank of Chicago Chicago Office Account No.: 3908.02.042 Ref.: ARCO Chemical French Francs To: Credit Commercial De France Paris, France For: The First National Bank of Chicago Chicago Office Account No.: 020350699000 Ref.: ARCO Chemical Japanese Yen To: Bank of Tokyo Tokyo, Japan For: The First National Bank of Chicago Chicago Office Account No.: 6530422606 Ref.: ARCO Chemical Pounds Sterling To: Midland Bank, PLC London, England For: The First National Bank of Chicago Chicago Office Account No.: 00472803 Ref.: ARCO Chemical EXHIBIT A --------- NOTE Chicago, Illinois July 23, 1997 For value received, ARCO CHEMICAL COMPANY, a Delaware 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 last day of the Interest Period relating to such Loan. 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 (i) if in Dollars, in lawful money of the United States in Federal or other immediately available funds at the main office of The First National Bank of Chicago, as Agent, in Chicago Illinois or (ii) if in any other currency, in such funds as may then be customary for the settlement of international transactions in such other currency at the place specified for payment thereof pursuant to the Credit Agreement. All Loans made by the Bank, the respective maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, prior to any transfer hereof, 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 Credit Agreement A dated as of July 23, 1997 among ARCO Chemical Company, the banks listed on the signature pages thereof and The First National Bank of Chicago, 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. ARCO CHEMICAL COMPANY By:____________________________ Title:__________________ Note (cont'd) LOANS AND PAYMENTS OF PRINCIPAL Currency and Amount of Type of Amount of Principal Maturity Notation Date Loan Loan Repaid Date Made by - ---- ------- -------- ------ ------- ------- Page 2 EXHIBIT B --------- FORM OF MONEY MARKET QUOTE REQUEST [Date] TO: The First National Bank of Chicago (the "Agent") One First National Plaza Chicago, Illinois 60670 From: Arco Chemical Company Re: Credit Agreement A dated as of July 23, 1997 (the "Credit Agreement") among ARCO Chemical 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 Money Market Quotes for the following proposed Money Market Borrowing(s): Date of Borrowing:__________________ Currency* Principal Amount** Interest Period*** -------- ---------------- --------------- Such Money Market Quotes should offer a Money Market [Margin] [Rate]. [The applicable base rate is the London Interbank Offered Rate.] Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. ARCO CHEMICAL COMPANY By:__________________ Title:_______________ ____________ * If pounds sterling, indicate whether euro-sterling or domestic sterling. ** Amount must be $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof). *** Not less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. EXHIBIT C --------- FORM OF INVITATION FOR MONEY MARKET QUOTES [Date] To: [Name of Bank] [address of Bank] Re: Invitation for Money Market Quotes to Arco Chemical Company (the "Borrower") Pursuant to Section 2.03 of Credit Agreement A dated as of July 23, 1997 (the "Credit Agreement") among ARCO Chemical Company, the Banks listed on the signature pages thereof and the undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s): Date of Borrowing:________________________ Currency* Principal Amount Business Period -------- ---------------- --------------- Such Money Market Quotes should offer a Money Market [Margin] [Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [3:00 p.m.] [1:00 p.m.] [9:00 a.m.] [(London time)] [(Chicago time)] on [date]. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. THE FIRST NATIONAL BANK OF CHICAGO, as Agent By:___________________________ Authorized Officer _________ * If pounds sterling, indicate whether euro-sterling or domestic sterling. EXHIBIT D --------- FORM OF MONEY MARKET QUOTE To: The First National Bank of Chicago, as Agent One First National Plaza Chicago, Illinois 60670 Attention: Funding Services -- Loan Sale Group Re: Money Market Quote to Arco Chemical Company (the "Borrower") In response to your invitation on behalf of the Borrower dated ___________, ____, we hereby make the following Money Market Quote on the following terms: 1. Quoting Bank: 2. Person to contact at Quoting Bank: 3. Date of Borrowing: * 4. We hereby offer to make Money Market Loan(s) in the following principal amounts for the following Interest Periods and at the following rates: Principal Interest Money Market Currency** Amount*** Period**** [Margin+][Rate++] -------- ------- ------- ------------------- [provided that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $___________]*** __________ * As specified in the related Invitation. ** ***[If pounds sterling, indicate whether euro-sterling or domestic sterling.]*** *** 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 will-ing to lend. Bids must be made for $1,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple thereof. **** Not less than 7 days, as specified in the related Invitation for Money Market Quotes. + Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (rounded to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". ++ Specify rate of interest per annum (rounded to the nearest 1/10,000th of 1%). We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in Credit Agreement A dated as of July 23, 1997 (the "Credit Agreement") among ARCO Chemical Company, the Banks listed on the signature pages thereof and yourselves, as Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. Very truly yours, [NAME OF BANK] Dated:_____________________ By:_________________________ Authorized Officer Page 2 EXHIBIT E --------- CERTIFICATE OF INCUMBENCY I, , [Secretary/Assistant Secretary] of ARCO CHEMICAL COMPANY, a Delaware corporation (the "Borrower"), hereby certify as follows: (1) Each of the following named individuals is an Authorized Officer (as that term is defined in Credit Agreement A, dated as of July 23, 1997 among ARCO Chemical Company, the Banks named therein and The First National Bank of Chicago, as Agent (the "Credit Agreement")) of the Borrower and each has been duly elected to and is now holding the office indicated, and the signature appearing opposite each name is the genuine signature of such Authorized Officer: Title Name Signature ----- ---- --------- __________________ ___________________ _____________________ __________________ ___________________ _____________________ __________________ ___________________ _____________________ (2) Each of the following named individuals has been duly designated as an "Authorized Representative" (as that term is defined in the Credit Agreement) of the Borrower, and the signature appearing opposite each name is the genuine signature of such Authorized Representative: Title Name Signature ----- ---- --------- __________________ ___________________ _____________________ __________________ ___________________ _____________________ __________________ ___________________ _____________________ __________________ ___________________ _____________________ __________________ ___________________ _____________________ __________________ ___________________ _____________________ IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Borrower this day of 19 . ____________________ Secretary/Assistant Secretary [SEAL] I, [name], [Treasurer/Assistant Secretary/Secretary] of ARCO Chemical Company, do hereby certify that is, and at all times since , 19 has been, the duly elected or appointed, qualified and acting [Secretary/Assistant Secretary] of the Borrower and that the signature set forth above is [his][her] genuine signature. IN WITNESS WHEREOF, I have hereunto set my hand this day of , 19. ____________________ Treasurer/Assistant Secretary Page 2 EXHIBIT F --------- OPINION OF COUNSEL FOR THE BORROWER [Dated as provided in Section 3.01 of the Credit Agreement] To the Banks and the Agent Referred to Below c/o The First National Bank of Chicago, as Agent One First National Plaza Chicago, Illinois 60670 Ladies and Gentlemen: I am [General Counsel] [Associate General Counsel-Corporate] of ARCO Chemical Company (the "Borrower") and as such have acted as counsel, or supervised attorneys who have acted as counsel, for the Borrower in connection with Credit Agreement A, dated as of July 23, 1997 (the "Credit Agreement"), among ARCO Chemical Company, the banks listed on the signature pages thereof, and The First National Bank of Chicago, as Agent. Capitalized terms used but not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement. 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. (a) The Borrower (i) is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and (ii) either is qualified to do business and in good standing in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (b) The Borrower has all corporate powers and authority, governmental permits, licenses, consents, authorizations, orders and approvals and other authorizations as are necessary to carry on its business substantially as presently conducted except for such of the foregoing the absence of which would not, in the aggregate, subject the Borrower to any material liability or disability. (c) The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes, and Borrowings under the Credit Agreement by the Borrower, are within the corporate power and authority of the Borrower and have been duly authorized by all necessary corporate proceedings by the Borrower. (d) Neither such authorization nor the execution, delivery and performance by the Borrower of the Credit Agreement or of the Notes, nor any Borrowing by the Borrower when made, will conflict with, result in a breach of or constitute a default under any of the terms, conditions or provisions of any law or any regulation, order, writ, injunction or decree of any court or governmental authority or of the Certificate of Incorporation or By-Laws of the Borrower or result in the violation or contravention of, or the acceleration of any obligation under, or cause the creation of any Lien on any of the properties of the Borrower pursuant to the provisions of, any indenture, agreement or other instrument to which it is a party or by which it is bound. (e) Assuming its due execution by the Banks and the Agent, the Credit Agreement constitutes a legal, valid and binding agreement of the Borrower and the Notes, when duly executed on behalf of the Borrower and delivered in accordance with the Credit Agreement, will constitute legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity). 2. Except as previously disclosed in writing to the Banks prior to July 23, 1997, there is no action, suit or proceeding pending or, to my knowledge, threatened against or affecting the Borrower or any of its subsidiaries in any court or before or by any arbitrator, governmental department, agency or instrumentality (i) which is likely to have a material adverse effect upon the Borrower's ability to pay and perform its obligations under the Bank Credit Documents in accordance with their respective terms or (ii) which in any manner draws into question the validity of any of the Bank Credit Documents. In this regard, the Borrower has brought to your attention the Borrower's annual report on Form 10-K for the year ended December 31, 1996, and the Borrower's quarterly report on Form 10-Q for the three months ended March 31, 1997. 3. No consent, authorization, order or approval of (or filing or registration with) any governmental commission, board or other regulatory authority (other than routine reporting requirements) is required for the execution, delivery and performance by the Borrower of the Credit Agreement or the Notes or for Borrowings under the Credit Agreement. 4. The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 5. The Cross-Indemnification Agreement, as amended to the date hereof, and the Tax Sharing Agreement are in full force and effect in accordance with their respective terms. Page 2 6. Each of the Borrower's Subsidiaries that is a corporation is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted except for licenses, authorizations, consents or approvals the absence of which will not materially and adversely affect the business of the Borrower and its Consolidated Subsidiaries taken as a whole. I am counsel admitted to practice in the Commonwealth of Pennsylvania. In giving the foregoing opinion, I express no opinion as to the effect (if any) of any laws of any jurisdiction other than the general corporate laws of the State of Delaware and the laws of the Commonwealth of Pennsylvania. I have assumed for the purposes of this opinion that the applicable laws of the State of Illinois are the same as the laws of the Commonwealth of Pennsylvania. Very truly yours, Page 3 EXHIBIT G --------- ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of __________, 19__ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), ARCO CHEMICAL COMPANY (the "Company") and THE FIRST NATIONAL BANK OF CHICAGO, as Agent (the "Agent"). WITNESSETH WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to Credit Agreement A dated as of July 23, 1997 among the Company, the Assignor and the other Banks party thereto, as Banks, and the Agent (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, Syndicated 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 Syndicated 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 Syndicated 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 an amount equal to $__________*. It is understood that facility fees with respect to the Assigned Amount 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 9.07(c) of the Credit Agreement. The execution of this Agreement by the Company and the Agent is evidence of this consent. Pursuant to Section 9.07(c) the Company agrees to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.** ____________ * 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. ** Delete this Section 4 if no consent is required pursuant to Section 9.07(c) of the Credit Agreement. Page 2 SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation ------------------------ or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Borrower, or the validity and enforceability of the obligations of the Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrower. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be liable for any mistake, error of judgment, or action taken or omitted to be taken in connection with any Loans, Note, Commitment or other interest under the Credit Agreement. SECTION 6. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Illinois. 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:________________ Page 3 ARCO CHEMICAL COMPANY By:____________________ Title:_________________ THE FIRST NATIONAL BANK OF CHICAGO, as Agent By:____________________ Title:_________________ Page 4 EXHIBIT H --------- NOTICE OF EFFECTIVENESS July 23, 1997 ARCO Chemical Company 3801 West Chester Pike Newtown Square, Pennsylvania 19073 Attention: Treasurer Dear Ladies/Gentlemen: We hereby notify you that Credit Agreement A dated as of July 23, 1997 among ARCO Chemical Company, the banks listed on the signature pages thereof and The First National Bank of Chicago, as Agent, has become effective as of the date hereof in accordance with Section 9.06 thereof. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO, as Agent By:___________________________ Title:________________________ EXHIBIT I --------- OPINION OF SPECIAL COUNSEL FOR THE AGENT [Dated as provided in Section 3.01 of the Credit Agreement] The First National Bank of Chicago, as Agent, and the other financial institutions which are parties to each of the Credit Agreements referred to below Re: ARCO Chemical Company --------------------- Ladies and Gentlemen: We have acted as special counsel to The First National Bank of Chicago, as Agent (in such capacity, the "Agent"), in connection with Credit Agreement A and Credit Agreement B (collectively, the "Credit Agreements"), each dated as of July 23, 1997, among ARCO Chemical Company (the "Borrower"), various financial institutions, and the Agent. Capitalized terms used herein and not otherwise defined shall have the meanings attributed to them in each of the Credit Agreements. In connection herewith, we have examined counterparts of each Credit Agreement executed by the Borrower, each of the Banks and the Agent; and each Note issued by the Borrower on the date hereof pursuant to the Credit Agreements (the "Notes"). In connection with such examination, we have assumed the genuineness of all signatures, the authority of the persons signing such documents and the authenticity of such documents. We also have assumed, without any independent investigation, that (a) each Credit Agreement and each Note has been duly authorized, executed and delivered by each of the parties thereto and (b) each Credit Agreement is the legal, valid and binding obligation of each party thereto other than the Borrower, enforceable against each such party in accordance with its terms. Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that, under the laws of the State of Illinois: (1) Each Credit Agreement is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. (2) The Notes are the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms. ________, 1997 Page 2 Our opinions are subject to the following qualifications: (a) Our opinions are subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing. (b) We express no opinion as to indemnification or contribution obligations which contravene public policy. (c) We express no opinion as to any provision of either Credit Agreement purporting to convey rights to Persons other than parties to such Credit Agreement. (d) We express no opinion as to any waiver of (i) the right to a jury trial, (ii) any objection to venue or (iii) any right to bring legal proceedings in any court having jurisdiction. (e) Our opinions are limited to the laws of the State of Illinois, and we express no opinion as to the laws of any other jurisdiction. This opinion letter is solely for the benefit of the addressees hereof (and their respective successors and assigns) in connection with the transactions contemplated by the Credit Agreements, and this opinion letter may not be relied upon by any other Person or for any other purpose. Very truly yours, MAYER, BROWN & PLATT RCB:DTJ Page 2 EX-10.3 4 CREDIT AGREEMENT B ================================================================================ CREDIT AGREEMENT B DATED AS OF JULY 23, 1997 AMONG ARCO CHEMICAL COMPANY, THE FIRST NATIONAL BANK OF CHICAGO, AS AGENT AND THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC. ================================================================================ EXHIBIT 10.3 TABLE OF CONTENTS
SECTION PAGE ARTICLE I DEFINITIONS .................................1 SECTION 1.01. Definitions ....................................................1 SECTION 1.02. Accounting Terms and Determinations............................14 ARTICLE II THE CREDITS..................................15 SECTION 2.01. Commitments to Lend............................................15 SECTION 2.02. Notice of Syndicated Borrowings................................15 SECTION 2.03. Money Market Borrowings........................................16 SECTION 2.04. Notice to Banks; Funding of Loans..............................20 SECTION 2.05. Notes..........................................................21 SECTION 2.06. Maturity of Loans..............................................22 SECTION 2.07. Interest Rates.................................................22 SECTION 2.08. Fees...........................................................24 SECTION 2.09. Optional Termination or Reduction of Commitments...............24 SECTION 2.10. Mandatory Termination of Commitments...........................24 SECTION 2.11. Optional Prepayments...........................................24 SECTION 2.12. General Provisions as to Payments..............................25 SECTION 2.13. Funding Losses.................................................26 SECTION 2.14. Computation of Interest and Fees...............................27 SECTION 2.15. Judgment Currency..............................................27 SECTION 2.16. Taxes..........................................................28 SECTION 2.17. Maximum Interest Rate..........................................30 ARTICLE III CONDITIONS TO BORROWINGS ...........................30 SECTION 3.01. Initial Borrowing by the Borrower..............................30 SECTION 3.02. Each Borrowing.................................................31 ARTICLE IV REPRESENTATIONS AND WARRANTIES........................32 SECTION 4.01. Representations and Warranties of the Borrower.................32
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SECTION PAGE ARTICLE V COVENANTS.................................35 SECTION 5.01. Certain Information to be Furnished by the Borrower...........35 SECTION 5.02. Limitation on Liens...........................................37 SECTION 5.03. Limitation on Sale and Lease-Back.............................39 SECTION 5.04. Consolidation, Merger, Disposition of Assets..................39 SECTION 5.05. Minimum Consolidated Net Worth................................40 SECTION 5.06. Transactions with Affiliates..................................40 SECTION 5.07. Use of Proceeds...............................................41 ARTICLE VI DEFAULTS..................................41 SECTION 6.01. Defaults......................................................41 SECTION 6.02. Notice of Default.............................................43 ARTICLE VII THE AGENT.................................43 SECTION 7.01. Appointment and Authorization.................................43 SECTION 7.02. Agent and Affiliates..........................................44 SECTION 7.03. Action by Agent...............................................44 SECTION 7.04. Employment and Reliance on Agents and Counsel.................44 SECTION 7.05. Liability of Agent............................................44 SECTION 7.06. Reimbursement and Indemnification.............................44 SECTION 7.07. Credit Decision...............................................45 SECTION 7.08. Successor Agent...............................................45 SECTION 7.09. Co-Agents.....................................................45 ARTICLE VIII CHANGE IN CIRCUMSTANCES..........................46 SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair......46 SECTION 8.02. Illegality....................................................48 SECTION 8.03. Increased Cost and Reduced Return.............................48 SECTION 8.04. Substitute Loans..............................................50 SECTION 8.05. Certain Reserve Compensation..................................50 SECTION 8.06. Substitution of Bank..........................................51
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SECTION PAGE ARTICLE IX MISCELLANEOUS..........................................51 SECTION 9.01. Notices..................................................................51 SECTION 9.02. No Waiver................................................................51 SECTION 9.03. Governing Law............................................................51 SECTION 9.04. Expenses and Indemnification.............................................51 SECTION 9.05. Amendments, Etc..........................................................52 SECTION 9.06. Counterparts; Effectiveness; Termination of Existing Credit Agreement....52 SECTION 9.07. Successors and Assigns...................................................53 SECTION 9.08. Survival.................................................................54 SECTION 9.09. Acknowledgement..........................................................54 SECTION 9.10. Headings.................................................................54 SECTION 9.11. Sharing of Setoffs.......................................................54 SECTION 9.12. Collateral...............................................................55 SECTION 9.13. Consent to Jurisdiction..................................................55 SECTION 9.14. Waiver of Jury Trial.....................................................56
iii SCHEDULE I -- Euro-Currency Payment Offices of the Agent EXHIBIT A -- Note EXHIBIT B -- Money Market Quote Request EXHIBIT C -- Invitation for Money Market Quotes EXHIBIT D -- Money Market Quote EXHIBIT E -- Form of Certificate of Incumbency EXHIBIT F -- Form of Opinion of Counsel for the Borrower EXHIBIT G -- Assignment and Assumption Agreement EXHIBIT H -- Notice of Effectiveness EXHIBIT I -- Form of Opinion of Special Counsel for the Agent This CREDIT AGREEMENT B (this "Agreement") is entered into as of July 23, 1997 among ARCO CHEMICAL COMPANY, a Delaware corporation (the "Borrower"), the several financial institutions from time to time party to this Agreement (individually each a "Bank;" collectively the "Banks") and THE FIRST NATIONAL BANK OF CHICAGO, as Agent (the "Agent"). WHEREAS, the Borrower desires to borrow from the Banks from time to time under this Agreement amounts not exceeding in the aggregate $300,000,000 outstanding at any one time for its general corporate purposes, and the Banks are prepared to make loans upon the terms hereof. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. In addition to terms defined elsewhere in this ----------- Agreement, as used in this Agreement, the following terms shall have the following meanings (all terms defined in this Agreement in the singular to have the same meanings when used in the plural and vice versa): "Absolute Rate Auction" shall mean a solicitation of Money Market Quotes setting forth Money Market Rates pursuant to Section 2.03. "Administrative Questionnaire" shall mean, with respect to any Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Bank. "Affiliate" shall mean (i) any Person that directly, or indirectly through one or more intermediaries, controls the Borrower (a "Controlling Person") or (ii) any Person (other than the Borrower or a Subsidiary) which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" shall mean The First National Bank of Chicago in its capacity as agent for the Banks hereunder, and its successors in such capacity. "Agreed Currency" shall mean Dollars, Deutsche Marks, Dutch guilders, French francs, Japanese yen and pounds sterling and any other currency which is freely transferable and convertible into Dollars, in which deposits are customarily offered to banks in the London interbank market, which the Borrower requests the Agent to include as an Agreed Currency hereunder and which is acceptable to each Bank; provided that the Agent shall promptly -------- notify each Bank of each such request and each Bank shall be deemed to have agreed to each such request if its objection thereto has not been received by the Agent within five Domestic Business Days from the date of such notification by the Agent to such Bank. "Applicable Lending Office" shall mean as to any Bank (i) in the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of its Euro- Currency Loans, its Euro-Currency Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office. "Approximate Equivalent Amount" of any currency with respect to any amount of Dollars at any date shall mean the Equivalent Amount of such currency with respect to such amount of Dollars at such date (i) if such currency is an Agreed Currency listed below, rounded up to the nearest amount of such Agreed Currency set forth below opposite such amount of Dollars:
Amount of Amount of Amount of Amount of Amount of Amount of Deutsche Dutch French Japanese Pounds Dollars Marks Guilders Francs Yen Sterling - -------------- ------ -------- ------- ------ -------- up to 1,000,000 1,000 1,000 1,000 100,000 1,000 1,000,000 to 9,999,999 10,000 10,000 10,000 1,000,000 10,000 10,000,000 to 99,999,999 1000,000 100,000 100,000 10,000,000 100,000 100,000,000 and upwards, 1,000,000 1,000,000 1,000,000 100,000,000 1,000,000
and (ii) if such currency is not an Agreed Currency listed above, rounded up to the nearest amount of such currency as determined by the Agent from time to time. "Arranger" shall mean First Chicago Capital Markets, Inc. "Assignee" shall have the meaning set forth in Section 9.07(c). "Authorized Officer" and "Authorized Representative" of the Borrower shall mean an officer or other representative of the Borrower designated in the latest Certificate of Incumbency of the Borrower. The Agent and the Banks shall be conclusively entitled to rely on the latest such Certificate of Incumbency delivered to the Agent. "Bank" shall mean each bank which is listed on the signature pages hereof as having a Commitment and which has executed and delivered this Agreement, and its successors and assigns. "Bank Credit Documents" shall mean, collectively, this Agreement, the Notes, the Other Agreement and the "Notes" under and as defined in the Other Agreement. "Base Rate" shall mean, for any day, a rate per annum equal to the higher of (i) the Corporate Base Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. 2 "Base Rate Loan" shall mean a Loan to be made by a Bank pursuant to Section 2.01 as a Base Rate Loan in accordance with the applicable Notice of Borrowing or pursuant to Article VIII or Section 2.04(d). "Benefit Arrangement" shall mean at any time an employee pension 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. "Borrowed Funds" shall mean Debt for borrowed money. "Borrower" shall mean ARCO Chemical Company, a Delaware corporation, and its permitted successors. "Borrowing" shall mean the aggregation of Loans of the same type and currency of one or more Banks to be made to the Borrower pursuant to Article II 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-Currency Borrowing" is a Borrowing comprised of Euro-Currency Loans) or by reference to the provisions of Article II under which participation therein is determined (e.g., a "Syndicated Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments and a "Money Market Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined by the Agent in accordance therewith). "Certificate of Incumbency" shall mean a Certificate of Incumbency described in Section 3.01(ii) and any successor or replacement Certificate of Incumbency delivered hereunder. "Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor statute. "Commitment" shall mean, as to each Bank, the Dollar Amount set forth opposite its name on the signature pages hereof under the heading "Commitment" (as such amount may be reduced from time to time as provided in Section 2.09). "Consolidated Net Worth" shall mean at any date the consolidated stockholders' equity of the Borrower and its Consolidated Subsidiaries less their consolidated write-ups, all determined as of such date. For purposes of this definition, "write-ups" shall mean the amount (to the extent reflected in determining such consolidated stockholders' equity) of all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within 12 months after the acquisition of such business) subsequent to December 31, 1995 in the book value of any asset owned by the Borrower or a Consolidated Subsidiary. "Consolidated Subsidiary" shall mean, on any date, any Subsidiary or other entity the accounts of which would be consolidated with those of the Borrower in its consolidated financial statements as of such date. 3 "Corporate Base Rate" shall mean a rate per annum equal to the corporate base rate of interest announced by The First National Bank of Chicago from time to time, changing when and as said corporate base rate changes. "Cross-Indemnification Agreement" shall mean the Cross-Indemnification Agreement dated as of June 1, 1987, as amended, between the Parent and the Borrower. "Debt" of any Person shall mean 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 under capital leases, (v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, and (vi) all Debt of others guaranteed by such Person; provided that in no event shall "Debt" be deemed to include any -------- "take-or-pay" obligations incurred by the Borrower in connection with its purchases of petrochemical feedstocks or other such petrochemical products in the ordinary course of business. "Default" shall mean any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Designated Currency" shall mean (i) each Agreed Currency, (ii) any other currency which is freely transferable and convertible into Dollars, in which deposits are customarily offered to banks in the London interbank market and which the Borrower designates as a Designated Currency hereunder upon five Domestic Business Days' notice in writing to the Banks through the Agent and (iii) any other currency which is freely transferable and convertible into Dollars, in which deposits are not customarily offered to banks in the London interbank market and which the Borrower designates as a Designated Currency hereunder by notice in writing to the Banks through the Agent; provided that any -------- notice given pursuant to this clause (iii) shall also propose an appropriate amendment to this Agreement to provide for the basis for determining the rate to which Money Market Margins are to be added or subtracted in the relevant Money Market Quotes and to amend any other relevant provisions hereof as necessary and that any such notice and proposed amendment shall be effective for all purposes hereunder on the 20th Domestic Business Day after the date of such notification by the Agent to each Bank if no Bank has objected thereto to the Agent before such 20th Domestic Business Day. "Dollar Amount" of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the equivalent amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such currency on the London market at the opening of business in London on the relevant FX Date. "Dollars" and "$" shall mean lawful money of the United States of America. 4 "Domestic Business Day" shall mean any day except a Saturday, Sunday or other day on which commercial banks in New York City or Chicago, Illinois are authorized or required by law to close. "Domestic Lending Office" shall mean, as to each Bank, its office, branch or affiliate specified as its "Domestic Lending Office" below its name on the signature pages hereof or such other office, branch or affiliate as such Bank may from time to time specify to the Agent and the Borrower as its Domestic Lending Office. "Equivalent Amount" of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such other currency at the opening of business in London on the relevant FX Date. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Group" shall mean the Borrower and all members of a controlled group of corporations and all trades or business (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. "Euro-Currency Business Day" shall mean any Domestic Business Day on which commercial banks are open for international business (including dealings in Dollar deposits) in London and, where funds are to be paid or made available in a currency other than Dollars, on which commercial banks are open for domestic and international business (including dealings in deposits in such currency) in both London and the place where such funds are to be paid or made available. "Euro-Currency Lending Office" shall mean, as to each Bank, (i) for loans denominated in each of Dollars, Deutsche Marks, Dutch guilders, French francs, Japanese yen and pounds sterling, its office, branch or affiliate specified as its "Euro-Currency Lending Office" for such currency below its name on the signature pages hereof (or, if no such office is specified, its Domestic Lending Office for Base Rate Loans) or such other office, branch or affiliate of such Bank as it may from time to time specify to the Agent and the Borrower as its Euro-Currency Lending Office and (ii) for loans denominated in each other Agreed Currency permitted hereunder from time to time, such office branch or affiliate of such Bank as it may from time to time specify to the Agent and the Borrower as its Euro-Currency Lending Office for such other currency (or, if no such office is specified, its Domestic Lending Office for Base Rate Loans). "Euro-Currency Loan" shall mean a Loan to be made by a Bank pursuant to Section 2.01 as a Euro-Currency Loan in accordance with the applicable Notice of Borrowing. "Euro-Currency Payment Office" of the Agent shall mean, (i) for each of Dollars, Deutsche Marks, Dutch guilders, French francs, Japanese yen and pounds sterling, the office, branch or affiliate of the Agent specified as the "Euro- Currency Payment Office" for such currency in Schedule 5 I hereto or such other office, branch, affiliate or correspondent bank of the Agent as it may from time to time specify to the Borrower and each Bank as its Euro-Currency Payment Office and, (ii) for each other Designated Currency, such office, branch, affiliate or correspondent bank of the Agent as it may from time to time specify to the Borrower and each Bank as its Euro-Currency Payment Office for such Designated Currency. "Euro-Currency Reserve Percentage" shall mean with respect to any Bank 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 reserve requirement imposed on such Bank 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-Currency Loans and Money Market LIBOR Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of such Bank to United States residents). "Event of Default" shall have the meaning assigned to that term in Section 6.01. "Existing Credit Agreement" shall mean the $300 million Credit Agreement dated as of November 19, 1993 (as amended by Amendment No. 1 dated as of October 14, 1994, and Amendment No. 2 dated as of April 3, 1996), among the Borrower, the banks listed on the signature pages thereof and The First National Bank of Chicago, as agent. "Facility Fee Percentage" shall mean, with respect to each payment of the facility fee pursuant to Section 2.08(a), the percentage rate per annum set forth below opposite the ratings on the Borrower's senior unsecured long-term public debt issued by both Moody's Investor Service, Inc. (or its successor) and Standard & Poor's Corporation (or its successor) in effect on the applicable date of determination:
Facility Fee S & P Rating Moody's Rating Percentage ------------ -------------- ----------- A+ or higher A1 or higher .060% A or A- A2 or A3 .070% BBB+ Baa1 .090% BBB Baa2 .125% BBB- Baa3 .150% Below BBB- Below Baa3 .200%
For each facility fee payment pursuant to Section 2.08(a), the applicable Facility Fee Percentage shall be determined as of the Quarterly Date, or date of termination of the Commitments in their entirety, as the case may be, which is five Domestic Business Days preceding the date such payment is due pursuant to Section 2.08(a). In the event of a split rating, the Borrower shall be entitled to the benefit of the higher rating, unless either rating is below BBB- or Baa3 (in which case the lower rating shall control). In the event that a 6 rating is available from only one rating agency, such rating shall control. In the event that a rating is not available from either rating agency, the applicable Facility Fee Percentage shall be .20%. "Federal Funds Rate" shall mean 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 The First National Bank of Chicago on such day on such transactions as determined by the Agent. "Fixed Rate Loans" shall mean Euro-Currency Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing. "FX Date" shall mean the date on which the Agent's spot rate of exchange shall be determined for purposes of calculating the Dollar Amount and Equivalent Amount of any currency at any time. With respect to any calculation of Dollar Amount or Equivalent Amount as of: (i) any borrowing date for any type of Borrowing, the relevant FX Date shall be the latest date by which a Notice of Borrowing is required to be delivered with respect to such Borrowing (unless the Borrowing is a Base Rate Borrowing pursuant to Section 2.04(d), 8.01(a), 8.02 or 8.04(b), in which case the relevant FX Date shall be four Euro-Currency Business Days before the borrowing date); (ii) the Termination Date, the relevant FX Date shall be four Euro- Currency Business Days before the Termination Date; (iii) any date of prepayment of any Loan which is not also a borrowing date, the relevant FX Date shall be the date of such prepayment; (iv) each day as of which the Commitment may be reduced or terminated pursuant to Section 2.09, the relevant FX Date shall be four Euro-Currency Business Days before such day; and (v) each day on which any vote or other action by the Required Banks or Banks holding a specified proportion of the principal amount of the Notes is to be taken or to be effective and each other day not specified above on which the Dollar Amount or Equivalent 7 Amount is to be determined (including, without limitation, pursuant to Section 6.01(e) and 6.01(i)), the relevant FX Date shall be such day. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Guarantee" by any Person shall mean any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation 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 or other obligation (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 or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee 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 shall have a corresponding meaning. "Interest Period" shall mean: (1) with respect to each Euro-Currency Borrowing, the period commencing on the date of such Borrowing and ending 1, 2, 3 or 6 months thereafter (or 9 or 12 months thereafter if all Reference Banks agree to such period), as the Borrower may elect in the applicable Notice of Borrowing; provided that: -------- (a) any Interest Period which would otherwise end on a day which is not a Euro-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day; (b) any Interest Period which begins on the last Euro-Currency Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Currency Business Day of a calendar month; and (c) the Borrower may not elect any Interest Period which would end subsequent to the Termination Date; (2) with respect to each Base Rate Borrowing, the period commencing on the date of such Borrowing and ending 30 days thereafter; provided that: -------- 8 (a) any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day; and (b) any Interest Period which begins before the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date; (3) with respect to each Money Market LIBOR Borrowing, the period commencing on the date of such 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-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day; (b) any Interest Period which begins on the last Euro-Currency Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Currency Business Day of a calendar month; and (c) the Borrower may not elect any Interest Period which would end subsequent to the Termination Date; (4) with respect to each Money Market Rate Borrowing, the period commencing on the date of such Borrowing and ending on such day (not earlier than the 7th day) 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-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day; and (b) the Borrower may not elect any Interest Period which would end subsequent to the Termination Date. "Internally-Funded Subsidiary" shall mean any Wholly-Owned Consolidated Subsidiary (a) all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are owned by the Borrower or another Internally-Funded Subsidiary, (b) which is a non-operating Subsidiary, and (c) that does not at any time (including, without limitation, at the time of, or at any time subsequent to, any transfer of the Borrower's assets to such Subsidiary pursuant to clause (B) of the third proviso to Section 5.04) have any Debt owing to any Person other than the Borrower or another Internally-Funded Subsidiary. 9 "LIBOR Auction" shall mean a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Lien" shall mean, 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 Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vender or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" shall mean a Base Rate Loan or a Euro-Currency Loan or a Money Market Loan and "Loans" means Base Rate Loans or Euro-Currency Loans or Money Market Loans or any combination of the foregoing. "London Interbank Offered Rate" shall have the meaning set forth in Section 2.07(b). "Material Subsidiary" shall mean, as of any date of determination, a Subsidiary which meets the definition of a "significant subsidiary" contained as of the date of this Agreement in Regulation S-X of the Securities and Exchange Commission. "Money Market Lending Office" shall mean, as to each Bank, (i) for Money Market Loans denominated in Dollars, its Domestic Lending Office for Base Rate Loans or such other office, branch or affiliate of such Bank as it may from time to time specify as its Money Market Lending Office by notice to the Borrower and the Agent and (ii) for Money Market Loans denominated in each other Designated Currency, such office, branch or affiliate of such Bank as it may from time to time specify as its Money Market Lending Office for such other Designated Currency by notice to the Borrower and the Agent (or, if no such office if specified, its Domestic Lending Office for Base Rate Loans); provided that any -------- Bank may from time to time by notice to the Borrower and the Agent designate separate Money Market Lending Offices for each of its Money Market LIBOR Loans denominated in each Designated Currency and its Money Market Rate Loans in which case all references herein to the Money Market Lending Office of such Bank shall be deemed to refer to one or all of such offices, as the context may require. "Money Market LIBOR Loan" shall mean 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(a)). "Money Market Loan" shall mean a Money Market LIBOR Loan or a Money Market Rate Loan. "Money Market Margin" shall have the meaning set forth in Section 2.03(d). "Money Market Quote" shall mean an offer by a Bank to make a Money Market Loan in accordance with Section 2.03. 10 "Money Market Rate" shall have the meaning set forth in Section 2.03(d). "Money Market Rate Loan" shall mean a Loan to be made by a Bank pursuant to an Absolute Rate Auction. "Multiemployer Plan" shall mean 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. "New York Interbank Offered Rate" applicable to any Interest Period for any Euro-Currency Loan or Money Market LIBOR Loan shall mean the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in the currency in which such Euro-Currency Loan is denominated are offered to each of the Reference Banks in the New York interbank market at approximately 11:00 a.m., New York City time, two Euro-Currency Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Currency Loan of such Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" shall mean a Notice of Syndicated Borrowing (as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section 2.03(f)) and the "date of a Notice of Borrowing" shall mean the date the Notice of Borrowing is given to the Agent pursuant to Section 2.02 or 2.03(f), as the case may be. "Other Agreement" means Credit Agreement A dated as of July 23, 1997, as it may be amended, extended, supplemented or otherwise modified, among the Borrower, the banks listed on the signature pages thereof and The First National Bank of Chicago, as agent for said banks. "Parent" shall mean Atlantic Richfield Company, a Delaware corporation, and its successors. "Participant" shall have the meaning set forth in Section 9.07(b). "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" shall mean 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. 11 "Plan" shall mean 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 Code and either (i) is maintained, or contributed to, by a member of the ERISA Group for employees of a 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 for employees of any Person which was at such time a member of the ERISA Group. "Quarterly Date" shall mean the last day of each March, June, September and December, commencing September 30, 1997; provided that, if any such date is not -------- a Euro-Currency Business Day, the relevant Quarterly Date shall be the next succeeding Euro-Currency Business Day. "Reference Banks" shall mean the principal London offices of Bank of America National Trust and Savings Association, The Chase Manhattan Bank and The First National Bank of Chicago, and each such other bank as may be appointed pursuant to Section 9.07(f), and "Reference Bank" shall mean any one of such Reference Banks. "Refunding Borrowing" shall mean a Borrowing which, after application of the proceeds thereof to repay one or more other Borrowings in whole or in part, results in no net increase in the aggregate principal amount of Loans outstanding hereunder. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time (including any successor provision thereto or any other United States law or regulation imposing reserves on deposits or loans). "Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time (including any successor provision thereto). "Required Banks" shall mean at any time Banks having at least 66-2/3% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes the Dollar Amount of the aggregate principal amount of which evidence at least 66-2/3% of the Dollar Amount of the outstanding aggregate principal amount of the Notes. "Subsidiary" shall mean 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 (whether or not any other class of securities has or might have voting power by reason of the happening of a contingency) are at the time owned or controlled directly or indirectly by the Borrower. "Syndicated Loan" shall mean a Base Rate Loan or a Euro-Currency Loan made by a Bank pursuant to Section 2.01. 12 "Syndicated Margin" shall mean, with respect to a Syndicated Loan outstanding on the applicable date of determination, the applicable Syndicated Margin set forth below (i) beneath the interest rate option applicable to such Syndicated Loan and (ii) opposite the ratings on the Borrower's senior unsecured long-term public debt issued by both Moody's Investor Service, Inc. (or its successor) and Standard & Poor's Corporation (or its successor) in effect on such date of determination:
S & P Rating Moody's Rating Euro-Currency Base Rate ------------ -------------- ------------- ---------- A+ or higher A1 or higher .115% .000% A or A- A2 or A3 .130% .000% BBB+ Baa1 .185% .000% BBB Baa2 .225% .000% BBB- Baa3 .300% .000% Below BBB- Below Baa3 .450% .000%
The rate of interest applicable to any outstanding Syndicated Loan shall change simultaneously with, and to the extent that, the applicable Syndicated Margin changes (as a result of a rating change). In the event of a split rating, the Borrower shall be entitled to the benefit of the higher rating, unless either rating is below BBB- or Baa3 (in which case the lower rating shall control). In the event that a rating is available from only one rating agency, such rating shall control. In the event that a rating is not available from either rating agency, the applicable Syndicated Margin shall be that which would be applicable in the case of a rating below BBB- or Baa3. "Taxes" shall mean any present or future taxes, duties, withholdings or other charges levied or imposed by any government or any political subdivision or taxing authority thereof, excluding any of the foregoing imposed on or calculated by reference to the net income of any Bank. "Tax Sharing Agreement" shall mean the Amended and Restated Tax Sharing Agreement dated as of January 1, 1995, as amended, between the Parent and the Borrower. "Termination Date" shall mean July 23, 2002 or, if such day is not a Euro- Currency Business Day, the next preceding Euro-Currency Business Day. "Unfunded Liabilities" shall mean, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits (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. 13 "Wholly-Owned Consolidated Subsidiary" shall mean any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Borrower. SECTION 1.02. Accounting Terms and Determinations. Unless otherwise ----------------------------------- specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks; provided that if the Borrower -------- notifies the Agent that the Borrower wishes to amend Section 5.05 to eliminate or to take into account the effect of any change in GAAP on the operation of such covenant (or if the Agent notifies the Borrower that the Required Banks wish to amend Section 5.05 for such purpose), then the Borrower's compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Banks. SECTION 1.03. Introduction of Euro. For the avoidance of doubt, the -------------------- parties hereto affirm and agree that neither the fixation of the conversion rate of any Designated Currency of a country that is a member of the European Union against the Euro as a single currency, in accordance with the Treaty Establishing the European Economic Community, as amended by the Treaty on the European Union (the Maastricht Treaty), nor the conversion of any Loans or other obligations under this Agreement from a Designated Currency of a country that is a member of the European Union into Euros, shall require the early termination of this Agreement or the prepayment of any amount due under this Agreement or create any liability of one party to another party for any direct or consequential loss arising from any of such events. As of the date that any such Designated Currency is no longer the lawful currency of its respective country, all payment obligations under this Agreement that would otherwise be in such Designated Currency shall thereafter by satisfied in Euros. ARTICLE II THE CREDITS SECTION 2.01. Commitments to Lend. From the date hereof to but not ------------------- including the Termination Date, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to lend to the Borrower pursuant to this Section 2.01 from time to time amounts such that, upon giving effect to each such Borrowing: (i) the then aggregate outstanding principal Dollar Amount of all Syndicated Loans made by such Bank to the Borrower shall not exceed the amount of such Bank's Commitment then in effect and (ii) the then aggregate outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans made by the Banks to the Borrower 14 shall not exceed the aggregate amount of the Commitments then in effect. Each Borrowing under this Section 2.01 shall be in an aggregate principal amount of $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof) (except that any such Borrowing may be in the aggregate amount of the unused Commitments or the Equivalent Amount thereof) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this Section 2.01, repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow under this Section 2.01 at any time prior to the Termination Date. Subject to the preceding provisions of this Section 2.01, each Bank severally agrees to make Euro-Currency Loans in the Agreed Currencies. SECTION 2.02. Notice of Syndicated Borrowings. The Borrower shall give ------------------------------- the Agent notice (a "Notice of Syndicated Borrowing") not later than 10:00 a.m., Chicago time, on (x) the Domestic Business Day next preceding each Base Rate Borrowing, (y) in the case of a Euro-Currency Borrowing to be made in Dollars, the third Euro-Currency Business Day before each such Euro-Currency Borrowing (or the fourth Euro-Currency Business Day before any such Euro-Currency Borrowing for which a 9 or 12 month Interest Period is requested) and (z) in the case of a Euro-Currency Borrowing to be made in an Agreed Currency other than Dollars, the fourth Euro-Currency Business Day before each such Euro-Currency Borrowing, specifying: (i) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Euro-Currency Business Day in the case of a Euro-Currency Borrowing; (ii) the aggregate amount of such Borrowing; provided that upon -------- giving effect to such Borrowing, the then aggregate outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans shall not exceed the aggregate amount of the Commitments then in effect; (iii) whether the Loans comprising such Borrowing are to be Base Rate Loans or Euro-Currency Loans and, if Euro-Currency Loans, the currency thereof in accordance with the last sentence of Section 2.01; and (iv) in the case of a Euro-Currency Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period and provided that deposits in the currency of such Borrowing are being offered for such Interest Period to the Reference Banks in the London interbank market. Notwithstanding the preceding provisions of this Section 2.02, if, by 10:00 a.m., Chicago time, on the Domestic Business Day next preceding the last day of the Interest Period applicable to any outstanding Syndicated Loan, the Borrower shall not have either (i) given a Notice of Syndicated Borrowing to refinance such Syndicated Loan, (ii) requested offers for Money Market Loans pursuant to Section 2.03(b) to refinance such Syndicated Loan or (iii) given notice of the Borrower's 15 election to prepay such Syndicated Loan pursuant to Section 2.11 or to repay such Syndicated Loan pursuant to Section 2.12, then the Borrower shall be deemed to have given Notice of Syndicated Borrowing for a Refunding Borrowing comprised of a Base Rate Loan in Dollars to be made on the last day of such Interest Period in a principal amount equal to the outstanding principal Dollar Amount of such Syndicated Loan, the making of such Refunding Borrowing to be subject to each of the conditions precedent set forth in clauses (ii), (iii) and (iv) of Section 3.02. SECTION 2.03. Money Market Borrowings. (a) In addition to Syndicated ----------------------- Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this Section, request the Banks at any time prior to the Termination Date (but not during any period when the Borrower's senior unsecured long-term public debt is rated either below Baa3 by Moody's Investor Service, Inc. (or its successor) or below BBB- by Standard & Poor's Corporation (or its successor)) to make offers to make Money Market Loans to the 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) When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received no later than (x) 3:00 p.m., London time, on the fifth Euro-Currency Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (y) 10:00 a.m., Chicago time, on the fifth Euro-Currency Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction in Dollars or (z) 9:00 a.m., Chicago time, on the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in any such case, such other time and date as the Borrower and the Agent shall have mutually agreed and shall have notified the Banks of not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), specifying: (i) the proposed date of Borrowing, which shall be a Euro-Currency Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction; (ii) the proposed currency of such Borrowing, which shall be a Designated Currency in the case of a LIBOR Auction or Dollars in the case of an Absolute Rate Auction; (iii) the aggregate amount of such Borrowing, which shall be at least $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof); provided that upon giving effect to such Borrowing, the then aggregate -------- outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans shall not exceed the aggregate amount of the Commitments then in effect; 16 (iv) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and (v) whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Rate. The Borrower may request offers to make Money Market Loans for more than one Interest Period but not more than one currency in a single Money Market Quote Request. No Money Market Quote Request shall be given within five Euro-Currency Business Days (or such other number of days as the Borrower and the Agent may agree) of any other Money Market Quote Request (under and as defined in either this Agreement or the Other Agreement). (c) Promptly upon receipt of a Money Market Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section. (d)(i) Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection and must be submitted to the Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 9.01 not later than (x) 3:00 p.m., London time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (y) 1:00 p.m., Chicago time, on the fourth Euro- Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (z) 9:00 a.m., Chicago time, on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in any such case, such other time and date as the Borrower and the Agent shall have mutually agreed and shall have notified the Banks of not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes -------- submitted by the Agent (or any Affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (A) 2:00 p.m., London time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (B) noon, Chicago time, on the fourth Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (C) 8:45 a.m., Chicago time, on the proposed date of Borrowing, in the case of an Absolute Rate Auction. Subject to Articles III and VI, any Money Market Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: 17 (A) the proposed date of Borrowing and, in the case of a LIBOR Auction, the proposed currency of such Borrowing; (B) the principal amount of each Money Market Loan for which each such offer is being made, (w) the Dollar Amount of which principal amount may be greater or less than the Commitment of the quoting Bank, (x) which principal amount must be $1,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof), (y) which principal amount may not exceed in the aggregate with the other Money Market Loans included in such offer the principal amount of Money Market Loans for which offers were requested and (z) which principal amount may be subject to an aggregate limitation as to the maximum principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted; (C) the duration of the Interest Period applicable to each Money Market Loan for which each such offer is being made, subject to the provisions of the definition of Interest Period; (D) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Money Market Margin") offered for each such Money Market Loan, expressed as a percentage (rounded to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate; (E) in the case of an Absolute Rate Auction, the rate of interest per annum (rounded to the nearest 1/10,000th of 1%) (the "Money Market Rate") offered for each such Money Market Loan; and (F) the identity of the quoting Bank. A Money Market Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes. (iii) Any Money Market Quote shall be disregarded that: (A) is not substantially in the form of Exhibit D hereto or does not specify all of the information required by subsection (d)(ii) of this Section; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or (D) arrives after the time set forth in subsection (d)(i) of this Section. 18 (e) The Agent shall promptly notify the Borrower of the terms (i) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d) of this Section and (ii) of any subsequent Money Market Quote that amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request; provided that any such subsequent Money Market Quote shall be disregarded by the - -------- Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Agent's notice to the Borrower shall specify (x) the aggregate principal amount and currency of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (y) the respective principal amounts and Money Market Margins or Money Market Rates, as the case may be, so offered and (z) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted. (f) Not later than (x) 5:00 p.m., London time, on the fourth Euro-Currency business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in a Designated Currency other than Dollars, (y) 10:00 a.m., Chicago time, on the third Euro-Currency Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (z) 10:00 a.m., Chicago time, on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in any such case, such other time and date as the Borrower and the Agent shall have mutually agreed upon and shall have notified the Banks of not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e) of this Section. In the case of acceptance, such notice (a "Notice of Money Market Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Money Market Quote in whole or in part; provided -------- that: (i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request; (ii) the principal amount of each Money Market Borrowing must be at least $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof); provided that upon giving effect to such Borrowing, the then -------- aggregate outstanding principal Dollar Amount of all Syndicated Loans and all Money Market Loans shall not exceed the aggregate amount of the Commitments then in effect; (iii) acceptance of offers for each Interest Period may only be made on the basis of ascending Money Market Margins or Money Market Rates, as the case may be; and (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) of this Section or that otherwise fails to comply with the requirements of this Agreement. 19 (g) If offers are made by two or more Banks with the same Money Market Margins or Money Market Rates, as the case may be, for a greater aggregate principal amount of Money Market Loans than can be accepted for the related Interest Period (after giving effect to the acceptance of all lower Money Market Margins or Money Market Rates, as the case may be, properly offered for such Interest Period), the principal amount of Money Market Loans which can be accepted shall be allocated by the Agent among such Banks as nearly as possible (in such multiples, not greater than $1,000,000 (or the Approximate Equivalent Amount thereof), as the Agent may deem appropriate) in proportion to the aggregate principal amount of such offers. Determinations by the Agent of the amounts of Money Market Loans by each Bank 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 ratable share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower except pursuant to subsection (d) of this Section or Section 8.01(a). (b) On the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its ratable share of such Borrowing, (i) if such Borrowing is denominated in Dollars, not later than 12:00 noon, Chicago time, in Federal or other funds immediately available to the Agent, in Chicago, Illinois at its address specified in or pursuant to Section 10.01 and, (ii) if such Borrowing is denominated in another currency, not later than 12:00 noon, local time in the city of the Agent's Euro-Currency Payment Office for such currency, in such funds as may then be customary for the settlement of international transactions in such currency in the city of and at the address of the Agent's Euro-Currency Payment Office for such currency. Unless the Agent determines that any applicable condition specified in Article III 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 new Loan hereunder on the date on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, which outstanding Loan is denominated in the currency of such new Loan, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the principal amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b) of this Section or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be. (d) Notwithstanding the satisfaction of all conditions referred to in Section 2.01, 2.02 or 2.03(b) with respect to any Borrowing in any currency other than Dollars, if there shall occur on or prior to the date of such Borrowing any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the opinion of the Agent or the Required Banks make it impracticable for the Euro-Currency Loans or Money Market LIBOR Loans comprising such Borrowing to be denominated in the currency specified by the Borrower, then the Agent shall forthwith give notice thereof to the Borrower and the Banks, and such Loans shall not be denominated in such currency but shall be made on the date of such 20 Borrowing in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Notice of Borrowing, as Base Rate Loans, unless the Borrower notifies the Agent at least one Domestic Business Day before such date that (i) it elects not to borrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency or Designated Currency, as the case may be, in which the denomination of such Loans would in the opinion of the Agent and the Required Banks be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Notice of Borrowing. SECTION 2.05. Notes. (a) The Loans of each Bank to the Borrower shall be ----- evidenced by a single Note of the Borrower payable to the order of such Bank for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Bank's Loans to the Borrower. (b) Each Bank may, by notice to the Borrower and the Agent (to be given not later than two Domestic Business Days prior to the first Borrowing) request that its Loans of a particular type be evidenced by a separate Note in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant type. Each reference in this Agreement to a "Note" or the "Notes" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of each Bank's Note(s) pursuant to Section 3.01(vi), the Agent shall mail such Note(s) to such Bank. Each Bank shall record, and prior to any transfer of its Note(s) shall endorse on the schedules forming a part thereof appropriate notations to evidence, the date, currency, amount and maturity of each Loan made by it to the Borrower and the date and amount of each payment of principal made by the Borrower with respect thereto; provided that -------- the failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to endorse the Notes and to attach to and make a part of any such Note a continuation of any such schedule as and when required. SECTION 2.06. Maturity of Loans. Each Loan included in any 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 for each Interest Period on the last day thereof. Any overdue principal of and, to the extent permitted by law, overdue 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. 21 (b) Each Euro-Currency 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 applicable Syndicated Margin plus the applicable London Interbank Offered Rate. 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 for any Euro-Currency Loan or Money Market LIBOR Loan shall mean the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in the currency in which such Euro-Currency Loan or Money Market LIBOR Loan is denominated are offered to each of the Reference Banks in the London interbank market at approximately 11:00 a.m., London time, two Euro-Currency Business Days before the first day of such Interest Period, in an amount approximately equal to (i) the principal amount of the Euro-Currency Loan or Money Market LIBOR Loan of such Reference Bank to which such Interest Period is to apply or (ii) if such Reference Bank is not submitting a Money Market Quote for such Money Market LIBOR Loan, $10,000,000 (or the Approximate Equivalent Amount thereof), and for a period of time comparable to such Interest Period; provided that (i) for Euro-Currency Loans -------- denominated in pounds sterling the respective rates per annum at which deposits in pounds sterling are offered to each of the Reference Banks shall be the rate for euro-sterling deposits not domestic sterling deposits and (ii) for Money Market LIBOR Loans denominated in pounds sterling the respective rates per annum at which deposits in pounds sterling are offered to each of the Reference Banks shall be the rates for euro-sterling or domestic sterling deposits as specified by the Borrower in the relevant Money Market Quote Request. (c) Any overdue principal of and, to the extent permitted by law, overdue interest on any Euro-Currency Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 1% plus the applicable Syndicated Margin plus 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-Currency Business Days, then for such other period of time not longer than three months as the Agent may elect) deposits in the relevant currency 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 (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 (i) if such Euro-Currency Loan is denominated in Dollars, 1% plus the rate applicable to Base Rate Loans for such day and (ii) if such Euro-Currency Loan is denominated in any other currency, 1% plus the cost to such Bank of funding or maintaining such Euro-Currency Loan). The certificate of such Bank as to the cost of funding or maintaining such Euro-Currency Loan shall be conclusive absent manifest error. (d) Subject to Section 8.01(a)(1), each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum 22 equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with subsection (c) of this Section as if each Reference Bank were to participate in the related Money Market Borrowing ratably in proportion to its Commitment) plus (or minus) the Money Market Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Money Market Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market 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. Any overdue principal of and, to the extent permitted by law, overdue interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of (i) if such Money Market Loan is denominated in Dollars, 1% plus the rate applicable to Base Rate Loans for such day and (ii) if such Money Market Loan is denominated in any other currency, 1% plus the cost to such Bank of funding or maintaining such Money Market Loan. The certificate of such Bank certifying the cost of funding or maintaining such Money Market Loan shall be conclusive absent manifest error. (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 by telex or facsimile transmission 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. Fees. (a) The Borrower shall pay to the Agent for the ---- account of the Banks ratably in proportion to their Commitments a facility fee at a rate per annum equal to the applicable Facility Fee Percentage on the daily average amount of the Commitments (without regard to the outstanding principal amount of the Loans). Such facility fee shall accrue from and including July 23, 1997 to but excluding the Termination Date. (b) The Borrower shall pay to each of the Agent and the Arranger for its own account fees in the amounts and at the time previously agreed upon between the Borrower, the Agent and the Arranger. (c) Accrued fees under subsection (a) of this Section shall be payable quarterly in arrears on the fifth Domestic Business Day after each Quarterly Date for the quarter ending on such Quarterly Date or, if earlier, the fifth Domestic Business Day after the date of termination of the Commitments in their entirety. SECTION 2.09. Optional Termination or Reduction of Commitments. ------------------------------------------------ 23 (a) The Borrower may, upon at least two Domestic Business Days' irrevocable notice to the Agent, terminate at any time, or reduce from time to time by an aggregate amount of $10,000,000 or a larger multiple of $1,000,000 the aggregate amount of the Commitments in excess of the Dollar Amount of the aggregate outstanding principal amount of the Loans. (b) In the absence of a Default that has occurred and is continuing and in the event that (i) any Bank claims indemnification pursuant Section 2.16(a) or Section 2.16(b), (ii) the Borrower is required to make an additional payment to any Bank pursuant to Section 2.16(a), or (iii) any Bank makes a claim for increased costs relating to taxes under Section 8.03, the Borrower shall have the right to repay all of such Bank's outstanding Loans and to terminate such Bank's Commitment hereunder upon ten days prior written notice to the Agent and such Bank. On the day on which any Bank's Commitment is terminated pursuant to this Section 2.09(b), the Borrower shall pay all principal, accrued interest, fees and other amounts owing to such Bank hereunder (including, without limitation, any amounts owing under Sections 2.08, 2.13, 2.16, and 8.03). SECTION 2.10. Mandatory Termination of Commitments. The Commitments shall ------------------------------------ terminate on the Termination Date, and any Loans outstanding on the Termination Date shall be due and payable on the Termination Date (together with accrued interest thereon). SECTION 2.11. Optional Prepayments. (a) The Borrower may prepay any Base -------------------- Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a)) upon at least one Domestic Business Day's notice to the Agent or, subject to Section 2.13, prepay any Euro-Currency Borrowing upon at least two Euro-Currency Business Days' notice to the Agent, in any such case in whole at any time, or from time to time in part in amounts aggregating $10,000,000 (or the Approximate Equivalent Amount thereof) or any larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof), 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 Borrowing. The Borrower may not prepay all or any portion of the principal amount of any Money Market Loan (other than a Money Market LIBOR Loan bearing interest at the Base Rate pursuant to Section 8.01(a)) prior to the maturity thereof. (b) 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) All payments to be --------------------------------- made by the Borrower hereunder or under the Notes in Dollars shall be made not later than 12:00 noon, Chicago time, on the date when due, in Federal or other funds immediately available in Chicago, Illinois, to the Agent at its address referred to in Section 9.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. 24 (b) Each Borrowing shall be repaid or prepaid in the currency in which it was made in the amount borrowed and interest payable thereon shall be paid in such currency. All payments to be made by the Borrower hereunder or under the Notes in any currency other than Dollars shall be made in such currency on the date due in such funds as may then be customary for the settlement of international transactions in such currency for the account of the Agent, at its Euro-Currency Payment Office for such currency. The Agent will promptly cause such payments to be distributed to each Bank in like funds and currency. Notwithstanding the foregoing provisions of this Section, if, after the making of any Loan in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that different types of such currency (the "New Currency") are introduced and the type of currency in which the Borrowing was made (the "Original Currency") no longer exists or the Borrower is not able to make payment to the Agent for the account of the Banks in such Original Currency, then all payments to be made by the Borrower hereunder or under the Notes in such currency shall be made in such amount and such type of the New Currency as shall be equivalent to the amount of such payment otherwise due hereunder or under the Notes in the Original Currency, it being the intention of the parties hereto that the Borrower takes all risks of the imposition of any such currency control or exchange regulations. In addition, notwithstanding the foregoing provisions of this Section, if, after the making of any Borrowing in any currency other than Dollars, the Borrower is not able to make payment to the Agent for the account of the Banks in the type of currency in which such Borrowing was made, then such Borrowing shall instead be repaid when due in Dollars in a principal amount equal to the Dollar Amount (as of the date of repayment) of such Borrowing. (c) Whenever any payment of principal of, or interest on, the Base Rate Loans or of additional compensation 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-Currency Loans shall be due on a day which is not a Euro- Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day occurs in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Currency Business Day. Whenever any payment of principal of, or interest on, the Money Market Loans shall be due on a day which is not a Euro-Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency 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. (d) Unless the Agent shall have been notified by a Bank or the Borrower (the "Payor") prior to the date on which such Bank is to make payment to the Agent of the proceeds of a Loan to be made by it hereunder or the Borrower is to make a payment to the Agent for the account of one or more of the Banks, as the case may be (each of such payments being herein called a "Required Payment"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Agent, the Agent may assume that the Required Payment has been made and may (but shall not be required to), in reliance upon such assumption, make the amount thereof available to the intended recipient on such date and, if the Payor has not in fact made the Required 25 Payment to the Agent, the recipient of such payment shall, on demand, refund to the Agent the amount made available to it together with interest thereon in respect of the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate equal to the Federal Funds Rate for such period, if the recipient is a Bank, and, if the recipient is the Borrower, the rate which the Borrower would have been obligated to pay hereunder for the Loans that are the subject of, or are equivalent to, such payment for such period. SECTION 2.13. Funding Losses. The Borrower shall pay to the Agent for the -------------- account of each Bank, upon the request of such Bank through the Agent, such amount or amounts as shall compensate such Bank for any reasonable loss, cost or expense incurred by such Bank (or, subject to Section 9.07(b), by an existing or prospective Participant in the related Loan) as a result of: (a) any payment or prepayment of a Fixed Rate Loan (pursuant to Section 2.11 or Article VI or VIII or otherwise) held by such Bank on a date other than the last day of the Interest Period applicable thereto, or the end of an applicable period fixed pursuant to Section 2.07(c) or (b) any failure by the Borrower to borrow a Fixed Rate Loan (including a failure to borrow due to the occurrence of any event described in Section 2.04(d)) held or to be held by such Bank on the date for such Borrowing specified in the relevant Notice of Borrowing under Section 2.02 or 2.03(f), such compensation to be payable in the currency specified in the certificate referred to below and to include, without limitation, an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so paid or prepaid, or not borrowed, for the period from the date of such payment or prepayment or failure to borrow to the last day of such Interest Period (or, in the case of a failure to borrow, the Interest Period for such Fixed Rate Loan which would have commenced on the date of such failure to borrow) in each case at the applicable rate of interest for such Fixed Rate Loan provided for herein (excluding, however, the Syndicated Margin or any positive Money Market Margin, as the case may be, included therein) over (ii) the amount of interest (as reasonably determined by such Bank) which would have accrued to such Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the London interbank market or in the New York or Chicago certificate of deposit market; provided that such -------- Bank shall have delivered to the Borrower, within 60 days after the date of such payment or prepayment or failure to borrow, a certificate as to the amount and currency of such loss or expense, which certificate shall set forth in reasonable detail the basis for such loss or expense and shall be conclusive in the absence of manifest error. SECTION 2.14. Computation of Interest and Fees. Interest based on the -------------------------------- Base Rate and interest on Borrowings denominated in pounds sterling shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). 26 SECTION 2.15. Judgment Currency. If for the purposes of obtaining ----------------- judgment in any court it is necessary to convert a sum due from the Borrower hereunder or under any of the Notes in the currency expressed to be payable herein or under the Notes (the "specified currency") 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 the specified currency with such other currency at the Agent's main Chicago office on the Euro-Currency Business Day preceding that on which final, non-appealable judgment is given. The obligations of the 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 the specified currency, be discharged only to the extent that on the Euro-Currency 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, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Bank or the Agent, as the case may be, in the specified currency, the 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 the specified currency so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the case may be, in the specified currency 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 9.11, such Bank or the Agent, as the case may be, agrees to remit such excess to the Borrower. SECTION 2.16. Taxes. (a) All payments made by the Borrower in respect of ----- principal of and interest on its Borrowings and of all other amounts payable by it under this Agreement are payable without deduction for or on account of any Taxes. If the Borrower shall be required by law to deduct or withhold any Taxes from any such amount payable by it hereunder or under any of the Notes to or for the account of any Bank, (i) such amount shall be increased as may be necessary so that, after making such deductions or withholdings (including any deductions or withholdings applicable to additional amounts payable pursuant to this Section), such Bank receives an amount equal to the amount it would have received had no such deductions or withholdings been made and (ii) the Borrower shall make such deductions and withholdings and pay the amount thereof to the relevant government, political subdivision or taxing authority at or prior to the time required to be paid under applicable law (and shall promptly furnish to the Agent, for the benefit of the Banks, official receipts evidencing such payment). In addition, the Borrower will pay any present or future stamp or documentary taxes or similar taxes or levies imposed by any government of any jurisdiction outside the United States of America or any political subdivision or taxing authority thereof from any payment by it hereunder or under any of the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the Notes (herein called "Other Taxes"). The Borrower will indemnify each Bank and the Agent for, and hold each Bank and the Agent harmless against, the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section) paid or payable by such Bank or the Agent and any liability of such Bank or the Agent relating thereto (including, 27 without limitation, penalties, interest and expenses). Notwithstanding anything set forth above in this clause (a), the Borrower shall have no obligation to increase the amount payable to any Bank as a result of any deduction or withholding, or to indemnify any Bank for or hold any Bank harmless against any Taxes or Other Taxes, to the extent that such deduction or withholding would not have been required, or such Taxes or Other Taxes would not have been paid or payable, if such Bank's representation and warranty in clause (f) below had been accurate or such Bank had complied with its obligations under clause (g) below. (b) If the cost to any Bank of making or maintaining any Loan to the Borrower 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, which increase or reduction would not have occurred but for the fact that the Borrower conducts business in a jurisdiction outside the United States of America, the Borrower shall indemnify such Bank for such increased cost or reduction within 15 days after demand by such Bank (with a copy to the Agent). A certificate of such Bank claiming indemnification under this Section, setting forth the additional amount or amounts to be paid to it hereunder and setting forth in reasonable detail a reasonable basis therefor, shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. (c) Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge that will entitle such Bank to any payment or indemnification under clause (a) or (b) of this subsection and will designate a different Domestic Lending Office, Money Market Lending Office or Euro-Currency Lending Office, as the case may be, if such designation will avoid the need for, or reduce the amount of, such payment or indemnification and will not, in the sole opinion of such Bank, be otherwise materially disadvantageous to such Bank. (d) If, and to the extent that, any Bank shall obtain a credit, relief or remission for, or repayment of, any Taxes or Other Taxes indemnified or paid by the Borrower pursuant to this Section or for any taxes for which Borrower has made payments under Section 8.03, such Bank agrees to promptly notify the Borrower thereof and thereupon enter into negotiations in good faith with the Borrower to determine the basis on which an equitable reimbursement of such taxes can be made to the Borrower. (e) All tax receipts required to be delivered under this Section shall be originals, duplicate originals or duly certified or authenticated copies within the meaning of Treasury Regulation Section 1.905-2(a)(2). (f) Each Bank represents and warrants to the Borrower and the Agent that, as of the date of this Agreement (or, in the case of an Assignee, the date it becomes a party hereto), it is entitled to receive payments hereunder without any deduction or withholding for or on account of any Taxes imposed by the United States of America or any political subdivision or taxing authority thereof. 28 (g) Each Bank which is a Non-U.S. Person (and, if at any time the Agent hereunder is a Non-U.S. Person, such Agent) agrees that it will, to the extent it is able to do so under applicable law and treaties, (i) within 30 days of the date of this Agreement (or, in the case of a Bank which becomes a party hereto pursuant to a transfer or assignment, on or prior to the date on which the relevant transfer or assignment becomes effective) deliver to the Borrower (and, in the case of a Bank, to the Agent) such forms (including two duly executed originals of United States Internal Revenue Form 1001 or 4224 or any successor to the applicable form), properly and accurately completed, as are necessary to claim complete or partial (as the case may be) exemption from withholding of United States federal taxes; and (ii) deliver extensions or renewals of such forms on or before the date that any such form expires or becomes obsolete, and after the occurrence of any event requiring a change in the most recent form previously delivered by it, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Agent or Bank from duly completing and delivering any such form with respect to it and such Agent or Bank so advises the Borrower (and, in the case of a Bank, the Agent). For purposes of the foregoing, a Non-U.S. Person means a Person that is not (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized under the laws of the United States or any state thereof or (iii) an estate or trust the income of which is subject to United States federal income taxation regardless of its source; SECTION 2.17. Maximum Interest Rate. (a) Nothing contained in this --------------------- Agreement or the Notes shall require the Borrower to pay interest at a rate exceeding the maximum rate permitted by applicable law. (b) If the amount of interest payable for the account of any Bank on any interest payment date in respect of the immediately preceding interest computation period, computed pursuant to Section 2.07, would exceed the maximum amount permitted by applicable law to be charged by such Bank, the amount of interest payable for its account on such interest payment date shall be automatically reduced to such maximum permissible amount. (c) If the amount of interest payable for the account of any Bank in respect of any interest computation period is reduced pursuant to clause (b) of this Section and the amount of interest payable for its account in respect of any subsequent interest computation period, computed pursuant to Section 2.07, would be less than the maximum amount permitted by applicable law to be charged by such Bank, then the amount of interest payable for its account in respect of such subsequent interest computation period shall be automatically increased to such maximum permissible amount; provided that at no time shall the aggregate -------- amount by which interest paid for the account of any 29 Bank has been increased pursuant to this clause (c) exceed the aggregate amount by which interest paid for its account has theretofore been reduced pursuant to clause (b) of this Section. ARTICLE III CONDITIONS TO BORROWINGS SECTION 3.01. Initial Borrowing by the Borrower. The obligation of each --------------------------------- Bank to make any Loan to be made by it as a part of the initial Borrowing by the Borrower hereunder is subject to the condition precedent that the Agent shall have received the following documents: (i) certified copies of the Certificate of Incorporation and By-Laws of the Borrower and the resolutions of the Board of Directors of the Borrower adopted in respect of the transactions contemplated hereby and such other documents as the Agent or the Required Banks may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent; (ii) a Certificate of Incumbency executed by the Secretary or an Assistant Secretary of the Borrower in substantially the form of Exhibit E hereto setting forth the name, title and specimen signature of each Authorized Officer or Authorized Representative of the Borrower (1) who has signed this Agreement on behalf of the Borrower, (2) who will sign the Notes on behalf of the Borrower or (3) who will, until replaced by another officer or representative duly authorized for that purpose, act as the representative of the Borrower for the purposes of signing documents and giving notices and other communications by the Borrower in connection with this Agreement and the transactions contemplated hereby; (iii) an opinion of the General Counsel or, in his absence, the Associate General Counsel-Corporate, of the Borrower, dated on or prior to the date of such initial Borrowing, with respect to the Borrower in substantially the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (iv) certified copies of the Cross-Indemnification Agreement and the Tax Sharing Agreement as originally executed and all amendments, modifications and waivers thereto; (v) a certificate signed by the President or any Vice President of the Borrower to the effect set forth in clauses (iii) and (iv) of Section 3.02; 30 (vi) for the account of each Bank, a duly executed Note, dated on or before the date of such initial Borrowing, complying with the provisions of Section 2.05; and (vii) an opinion of Mayer, Brown and Platt, special counsel to the Agent, substantially in the form of Exhibit I hereto. The certificate referred to in subclause (v) shall be dated no more than three Euro-Currency Business Days before the date of such initial Borrowing. SECTION 3.02. Each Borrowing. The obligation of each Bank to make each -------------- Loan to be made by it as part of a Borrowing hereunder to the Borrower is subject to the further conditions precedent that: (i) the Agent shall have received a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (ii) the fact that, immediately after such Borrowing, the Dollar Amount of the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (iii) the fact that, immediately after such Borrowing, no Default shall have occurred and be continuing; and (iv) the fact that the representations and warranties of the Borrower contained in this Agreement shall be true on and as of the date of such Borrowing as if made on and as of such date (except, in the case of a Refunding Borrowing, the representations and warranties set forth in clauses (d) and (e) of Section 4.01 as to any material adverse change or litigation, respectively, which has theretofore been disclosed in writing by the Borrower to the Banks). Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (ii), (iii) and (iv) of this Section. 31 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The ---------------------------------------------- Borrower represents and warrants to the Banks as follows: (a)(1) The Borrower (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and (ii) either is qualified to do business and in good standing in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (2) The Borrower has all corporate power and authority, governmental permits, licenses, consents, authorizations, orders and approvals and other authorizations as are necessary to carry on its business substantially as presently conducted except for such of the foregoing the absence of which would not, in the aggregate, subject the Borrower to any material liability or disability. (3) The execution, delivery and performance of the Bank Credit Documents, and borrowings thereunder by the Borrower, are within its corporate power and authority and have been duly authorized by all necessary corporate proceedings. (4) Neither such authorization nor the execution, delivery and performance by the Borrower of the Bank Credit Documents, nor any borrowing thereunder by the Borrower when made, will conflict with, result in a breach of or constitute a default under any of the terms, conditions or provisions of any law or any regulation, order, writ, injunction or decree of any court or governmental authority or of the Certificate of Incorporation or By-Laws of the Borrower or result in the violation or contravention of, or the acceleration of any obligation under, or cause the creation of any Lien on any of the properties of the Borrower pursuant to the provisions of, any indenture, agreement or other instrument to which it is a party or by which it is bound. (5) Assuming their due execution by the Banks and the Agent, each of this Agreement and the Other Agreement constitutes a legal, valid and binding agreement of the Borrower, and the Notes (both as defined hereunder and under the Other Agreement), when duly executed on behalf of the Borrower and delivered in accordance with this Agreement and the Other Agreement, will constitute legal, valid and binding obligations of the Borrower (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity). 32 (b) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 1996 and the related consolidated statements of income and changes in financial position for the 12 months ended that date, certified by Coopers & Lybrand, copies of all of which have been delivered to the Banks, fairly present the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and the consolidated results of their operations and changes in financial position for such fiscal year, in conformity with GAAP consistently applied. (c) The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of March 31, 1997 and the related unaudited consolidated statements of income and changes in financial position for the fiscal quarter then ended, a copy of which has been delivered to each of the Banks, fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in paragraph (b) of this Section, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and changes in financial position for such fiscal quarter (subject to normal year-end adjustments). (d) Except as disclosed in writing to the Banks prior to July 23, 1997, there has been no material adverse change since December 31, 1996 and prior to July 23, 1997, in the business, operations, affairs, assets, condition (financial or otherwise) or results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole. (e) Except as disclosed in writing to the Banks prior to July 23, 1997, there is no action, suit or proceeding pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries in any court or before or by any arbitrator, governmental department, agency or instrumentality (i) which is likely to have a material adverse effect upon the Borrower's ability to pay and perform its obligations under the Bank Credit Documents in accordance with their respective terms or (ii) which in any manner draws into question the validity of any of the Bank Credit Documents. (f) No Default has occurred and is continuing. (g) No consent, authorization, order or approval of (or filing or registration with) any governmental commission, board or other regulatory authority (other than routine reporting requirements) is required for the execution, delivery and performance by the Borrower of any of the Bank Credit Documents or for borrowings thereunder by the Borrower. (h) Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the 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 Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect 33 of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the 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. (i) The Cross-Indemnification Agreement and the Tax Sharing Agreement, in the respective forms, with amendments, certified to the Banks pursuant to Section 3.01(iv), are in full force and effect in accordance with their respective terms except for (1) any amendments, modifications or waivers of the Tax Sharing Agreement which do not materially alter the rights and obligations of the Borrower thereunder which as a whole place the Borrower in the same (or more favorable) relative financial position with respect to the Parent which the Borrower would have been in if the Borrower were not consolidated with the Parent for purposes of filing federal, state or local or other income tax returns, (2) any amendments to the Cross- Indemnification Agreement for the purpose of placing the Borrower and the Parent in the same financial positions with respect to each other which they would have been in if the Borrower and the Parent were not members of the same ERISA Group, including the allocation of, and indemnification with respect to, assets and funded and unfunded liabilities among the Borrower, the Parent, Affiliates, Subsidiaries and their respective Plans in such manner as is fair and equitable to the Borrower and its Subsidiaries, (3) any amendments, modifications or waivers of the Cross-Indemnification Agreement or the Tax Sharing Agreement which do not, in the aggregate, materially reduce the rights of the Borrower thereunder against the Parent or materially increase the obligations of the Borrower thereunder to the Parent and (4) any other amendments, modifications or waivers of such instruments to which the Required Banks have consented. True and complete copies of all such amendments, modifications and waivers have been delivered to the Agent for each of the Banks. No amount that may be due under the Cross-Indemnification Agreement or the Tax Sharing Agreement from the Parent to the Borrower or to the Parent from the Borrower is delinquent, except such amount as the Borrower or the Parent may be contesting in good faith. (j) Each corporate Subsidiary 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 governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted except for licenses, authorizations, consents or approvals the absence of which will not materially and adversely affect the business of the Borrower and its Consolidated Subsidiaries taken as a whole. (k) The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (l) There are no Liens on any asset of the Borrower or any Subsidiary on July 23, 1997 which would have been prohibited if Section 5.02 of this Agreement had been in effect on the date the Borrower or such Subsidiary, as the case may be, acquired such asset. 34 (m) Except as disclosed in writing to the Banks, the description of environmental matters affecting the Borrower and its Subsidiaries contained in each of the Borrower's reports delivered to the Banks pursuant to clause (ii) of Section 5.01(c) complied in all material respects as of the date of such report with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. ARTICLE V COVENANTS The Borrower agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: SECTION 5.01. Certain Information to be Furnished by the Borrower. The --------------------------------------------------- Borrower will deliver to each Bank: (a) as soon as available and in any event within 120 days after the end of each of its fiscal years, the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, prepared in accordance with GAAP consistently applied and so certified by a nationally recognized firm of independent certified public accountants, provided, that the delivery requirement -------- described in this paragraph (a) for any fiscal year shall be deemed to have been satisfied upon delivery by the Borrower to the Banks within 120 days after the end of such fiscal year of its Annual Report on Form 10-K for such fiscal year, as filed (with exhibits) with the Securities and Exchange Commission; (b) as soon as available and in any event within 60 days after the end of each of the first three quarters of each of its fiscal years, the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal quarter, the related consolidated statement of income for such fiscal quarter and for the portion of the fiscal year ended with such quarter and the related consolidated statement of cash flows for the portion of the fiscal year ended with such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the chief financial officer or the chief accounting officer of the Borrower, provided, that the delivery requirement described in this paragraph (b) for -------- any fiscal quarter shall be deemed to have been satisfied upon delivery by the Borrower to the Banks within 60 days after the end of such fiscal quarter of its Quarterly Report on Form 10-Q for such fiscal quarter, as filed (with exhibits) with the Securities and Exchange Commission; 35 (c) promptly after the same are available, copies of all (i) financial statements, notices, reports and proxy materials sent to shareholders of the Borrower and (ii) regular and periodic reports filed by the Borrower with the Securities and Exchange Commission (or any governmental agency succeeding to the functions of such Commission); (d) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the Borrower signed by the Treasurer or other financial officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower 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 such Default then exists, specifying the nature and period of existence thereof and the action the Borrower is taking and proposes to take with respect thereto; (e) forthwith, if at any time any officer of the Borrower shall obtain knowledge of any Default, a certificate of the Treasurer or other financial officer specifying the nature and period of existence thereof and the action the Borrower is taking and proposes to take with respect thereto; (f) 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 constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth details as to such occurrence and action, if any, which the Borrower or applicable member of the ERISA Group is required or proposes to take; and (g) from time to time such further information regarding compliance with this Agreement or the business, operations, affairs, assets, condition (financial or otherwise) or 36 results of operations of the Borrower and its Consolidated Subsidiaries as the Agent, at the request of any Bank, may reasonably request. SECTION 5.02. Limitation on Liens. Neither the Borrower nor any ------------------- Subsidiary will issue, assume or guarantee any Debt secured by any Lien upon any asset of the Borrower or any Subsidiary or grant any Lien on any such asset to secure any such Debt without effectively providing that all of the Notes (together with, if the Borrower so determines, any other Debt then existing and any other Debt thereafter created ranking equally with the Notes) shall be secured equally and ratably with (or prior to) such Debt so long as such Debt shall be so secured. To the extent the following Liens would otherwise be prohibited by the foregoing provisions, the foregoing provisions shall not apply to: (a) Liens on any asset of a corporation existing at the time it becomes a Subsidiary of the Borrower or at the time it is merged into or consolidated with the Borrower or a Subsidiary and not created in contemplation of such event; (b) Liens on property existing at the time of acquisition thereof or incurred to secure payment of all or part of the purchase price thereof or to secure Debt incurred prior to, at the time of or within 24 months after acquisition thereof for the purpose of financing all or part of the purchase price thereof; (c) Liens on any property to secure all or part of the cost of construction or improvements thereon or Debt incurred to provide funds for any such purpose in a principal amount not exceeding the cost of such construction or improvements; (d) Liens which secure only Debt owing by a Subsidiary to the Borrower or another Subsidiary; (e) Liens in favor of the United States of America or any state thereof or any department, agency, instrumentality or political subdivision of any such jurisdiction to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Debt payable to the foregoing incurred for the purpose of financing all or any part of the purchase price or cost of constructing or improving the property subject to such Lien, including, without limitation, Liens to secure Debt in respect of any pollution control, industrial revenue bond or other similar type of financing; (f) Liens required by any contract or statute in order to permit the Borrower or a Subsidiary to perform any contract or subcontract made by it with or at the request of the United States of America, any state or any department, agency or instrumentality or political subdivision of either; (g) mechanics', suppliers', materialmen's and similar Liens arising in the ordinary course of business securing Debt which is not overdue or is being contested by the Borrower 37 in good faith by appropriate action, promptly initiated and diligently conducted and in connection with which adequate reserves are being maintained; (h) Liens securing obligations of the Borrower or any Subsidiary to pay the deferred purchase price of services not exceeding in the aggregate $10,000,000; (i) the Lien of any judgment or attachment in respect of any Debt, so long as (1) the Borrower in good faith by appropriate action, promptly initiated and diligently conducted, shall contest or cause to be contested the validity, amount, extent or application thereof and (2) such action shall operate to prevent the sale or foreclosure (or the posting of notices preparatory to any sale or foreclosure) of any part of any asset to satisfy such Lien prior to a final determination of such action; (j) Liens for taxes not delinquent or being contested in good faith based on the advice of counsel that such contest is meritorious and by appropriate proceedings and for which reserves adequate under GAAP are being maintained; and (k) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (a) to (h) inclusive or of any Debt secured thereby, provided that the principal amount of Debt secured thereby shall not exceed -------- the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement Lien shall be limited to all or part of substantially the same property which secured the Lien extended, renewed or replaced (plus improvements on such property); provided that the Borrower and any one or more Subsidiaries may issue, assume or - -------- guarantee Debt secured by Liens which would otherwise be subject to the foregoing restrictions or grant any such Lien to secure any such Debt in an aggregate principal amount which, together with the aggregate outstanding principal amount of all Debt of the Borrower and the Subsidiaries which would otherwise be subject to the foregoing restrictions (not including Debt permitted to be secured under clauses (a) to (g) inclusive above) and the aggregate Value of the Sale and Lease-Back Transactions (as such terms are defined in Section 5.03 hereof) in existence at such time (not including Sale and Lease-Back Transactions as to which the Borrower has complied with Section 5.03(b) hereof) does not at any one time exceed 15% of the consolidated total assets of the Borrower and its Consolidated Subsidiaries. SECTION 5.03. Limitation on Sale and Lease-Back. Neither the Borrower nor --------------------------------- any Subsidiary will enter into any arrangement with any Person (other than the Borrower or a Subsidiary), or to which any such Person is a party, providing for the leasing to the Borrower or a Subsidiary for a period of more than three years of any property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any Person (other than the Borrower or a Subsidiary), to which funds have been or are to be advanced 38 by such Person on the security of the leased property (in this Section and in Section 5.02 hereof called a "Sale and Lease-Back Transaction") unless either: (a) the Borrower or such Subsidiary would be entitled, pursuant to the provisions of Section 5.02 hereof, to incur Debt in a principal amount equal to or exceeding the Value of such Sale and Lease-Back Transaction, secured by a Lien on the property to be leased, without equally and ratably securing the Notes; or (b) the Borrower (and in any such case the Borrower covenants and agrees that it will do so) during or immediately after the expiration of four months after the effective date of such Sale and Lease-Back Transaction (whether made by the Borrower or a Subsidiary) applies to the voluntary retirement of Debt of the Borrower ranking at least pari passu with the Notes an amount equal to the Value of such Sale and Lease-Back Transaction, less the principal amount of such Debt of the Borrower voluntarily retired by the Borrower within such four-month period, excluding retirements of such Debt as a result of conversions or pursuant to mandatory sinking fund or repayment provisions or (other than in the case of commercial paper) by payment at maturity. For purposes of Section 5.02 hereof and this Section, the term "Value" shall mean, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds of the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value in the opinion of the Board of Directors of the Borrower of such property at the time of entering into such Sale and Lease-Back Transaction, in either case divided first by the number of full years of the term of the lease and then multiplied by the number of full years of such term remaining at the time of determination, without regard to any renewal or extension options contained in the lease. SECTION 5.04. Consolidation, Merger, Disposition of Assets. The Borrower -------------------------------------------- will not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer all or any substantial part of its assets (whether in a single transaction or in a series of related transactions) to any other Person; provided that the Borrower may merge with another Person if (A) the -------- Borrower is the corporation surviving such merger and (B) immediately after giving effect to such merger, no Default shall have occurred and be continuing; and provided further that the Borrower may consolidate or merge with or into the -------- ------- Parent if (A) the Parent theretofore expressly assumes the obligations of the Borrower hereunder and under the Notes by an instrument satisfactory in form and substance to the Required Banks and (B) immediately after giving effect to such consolidation or merger and such assumption, no Default shall have occurred and be continuing; and provided further that the Borrower may (A) sell its inventory -------- ------- in the ordinary course of business and (B) sell, lease or otherwise transfer such of its assets (including all or any portion of the stock of any Subsidiary) on an arms-length basis to an Internally-Funded Subsidiary. The Borrower will not permit any Subsidiary which constitutes a substantial part of its assets to consolidate or merge with or into, or transfer all or substantially all of its assets (whether in a single transaction or in a series of related transactions) to, any Person other than the Borrower or a Wholly-Owned Consolidated Subsidiary. 39 For purposes of this Section, "substantial part of its assets" means assets (including Subsidiaries or other Persons and valued at the higher of book or fair market value) (y) representing more than 25% of the consolidated assets of the Borrower and its Subsidiaries as reflected in the then most recent consolidated annual financial statements of the Borrower and its Subsidiaries delivered pursuant to Section 5.01(a) or (z) responsible for more than 25% of the consolidated net revenues or of the consolidated net income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in the preceding clause (y). Notwithstanding the foregoing, the Banks will not unreasonably withhold their consent to any sale, lease or other transfer of assets by the Borrower or any of its Subsidiaries. SECTION 5.05. Minimum Consolidated Net Worth. Consolidated Net Worth will ------------------------------ at no time be less than $1,500,000,000. SECTION 5.06. Transactions with Affiliates. The Borrower will not, and ---------------------------- will not permit any Subsidiary to, directly or indirectly, pay any funds to or for the account of, make any investment (whether by acquisition of stock or indebtedness, by loan, advance, transfer of property, Guarantee or other agreement to pay, purchase or service, directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect any transaction in connection with any joint enterprise or other joint arrangement with, any Affiliate; provided, however, that the foregoing provisions of this Section -------- ------- shall not prohibit (a) the Borrower from declaring or paying any lawful dividend to, or repurchasing its common stock from, any Affiliate so long as, after giving effect thereto, no Default shall have occurred and be continuing, (b) the Borrower or any Subsidiary (1) from making sales to or purchases from or leasing from any Affiliate and, in connection therewith, extending credit or making payments, or (2) from making payments for services rendered by any Affiliate or (3) from participating in, or effecting any transaction in connection with, any joint enterprise or other joint arrangement with any Affiliate if such sales, purchases or leases are made or such services are rendered or the Borrower or such Subsidiary participates in the ordinary course of business of the Borrower or such Subsidiary, as the case may be, and, in the aggregate during each fiscal year of the Borrower, the terms and conditions of all such sales, purchases, leases, rendered services and participations are not materially less favorable to the similar transactions with Persons who are not Affiliates and (c) the Borrower or any Subsidiary from making payments of principal, interest and premium on any Debt of the Borrower or such Subsidiary held by an Affiliate if the terms of such Debt are substantially as favorable to the Borrower or such Subsidiary as the terms which could have been obtained at the time of the creation of such Debt from a lender which was not an Affiliate. SECTION 5.07. Use of Proceeds. The proceeds of the Loans made under this --------------- Agreement will be used for general corporate purposes. 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 VI 40 DEFAULTS SECTION 6.01. Defaults. If one or more of the following events (herein -------- called "Events of Default") shall occur and be continuing: (a) Non-Payment: the Borrower shall default in the payment when due ----------- of any principal of any Loan or shall default in the payment within five days of the due date thereof of any interest on any Loan or any other amount payable hereunder; (b) Certain Covenant Violations: the Borrower shall fail to perform --------------------------- or observe any covenant or agreement to be performed or observed by it contained in Sections 5.02 to 5.05, inclusive, or Section 5.07; (c) Certain Other Covenants: the Borrower shall fail to perform or ----------------------- observe any covenant or agreement to be performed by it contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days (less, in the case of any failure to observe or perform Section 5.01(e), the number of days elapsed from the date an officer of the Borrower obtained knowledge of any Default to the date the Borrower delivered notice thereof to the Banks) after written notice of such failure is given to the Borrower by the Agent at the request of any Bank; (d) Misrepresentation: the Borrower shall have made or be deemed to ----------------- have made pursuant to this Agreement any representation or warranty in or pursuant to this Agreement, or in any certificate, financial statement or other document delivered pursuant hereto, which shall prove to have been incorrect in any material respect when made or deemed made; (e) Default With Respect to Other Borrowed Funds: the Borrower or any -------------------------------------------- Subsidiary shall fail to repay any Borrowed Funds (other than the Loans) payable or guaranteed by it, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Borrowed Funds or guarantee thereof, or any event or condition shall occur which results in the acceleration of the maturity of any Borrowed Funds (or guarantee thereof) of the Borrower or any Subsidiary; provided that (i) the -------- aggregate amount of such Borrowed Funds payable or guaranteed, including any interest or premium thereon, shall exceed $50,000,000 (or the Equivalent Amount thereof) and (ii) there shall be excluded for purposes of the foregoing any such Borrowed Funds (A) owed to any department, agency, instrumentality or political subdivision of the United States of America or any state thereof in respect of any pollution control, industrial revenue bond or other similar type of financing, so long as the obligation of the Borrower or any Subsidiary to pay or guarantee such Borrowed Funds is being contested in good faith or (B) owed to the Borrower by any Subsidiary or owed by the Borrower to any Subsidiary; 41 (f) Voluntary Bankruptcy: the Borrower, any Material Subsidiary or -------------------- any two or more Subsidiaries which, if combined, would constitute a 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; (g) Involuntary Bankruptcy: an involuntary case or other proceeding ---------------------- shall be commenced against the Borrower, any Material Subsidiary or any two or more Subsidiaries which, if combined, would constitute a 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 Borrower, any Material Subsidiary or any two or more Subsidiaries which, if combined, would constitute a Material Subsidiary, under the federal bankruptcy laws as now or hereafter in effect; (h) Termination of Plan: any member of the ERISA Group shall fail to ------------------- pay when due an amount or amounts aggregating in excess of $20,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000 (collectively, a "Material Plan") shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $20,000,000; or (i) Judgment Default: a final, non-appealable judgment or order ---------------- enforceable by the courts of the United States or the United Kingdom or any other European Community country for the payment of money in excess of $50,000,000 (or the Equivalent Amount thereof) shall be rendered against the Borrower or any Subsidiary and such judgment or order shall continue unsatisfied for a period of 30 days; 42 then, and in every such event, the Agent shall (i) if requested by Banks having at least 66-2/3% in aggregate amount of the Commitments, by notice to the Borrower terminate the Commitments, and they shall thereupon terminate, and/or (ii) if requested by Banks holding Notes evidencing at least 66-2/3% in aggregate principal amount of the Loans, by notice to the Borrower declare the full unpaid principal of and accrued interest on the Loans and the Notes and all other amounts payable hereunder to be immediately due and payable, whereupon the Commitments shall terminate and the Loans and the Notes and such other amounts shall be immediately due and payable, without further notice, presentment, demand, protest or other formality of any kind, all of which are hereby expressly waived by the Borrower; provided that in the case of the occurrence of -------- an event referred to in clause (f) or (g) above, the Commitments shall automatically terminate and the full unpaid principal of and accrued interest on the Loans and Notes and all other amounts payable hereunder shall automatically become immediately due and payable, without notice, presentment, demand, protest or other formality of any kind, all of which are hereby expressly waived by the Borrower. SECTION 6.02. Notice of Default. The Agent shall give notice to the ----------------- Borrower under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. ARTICLE VII 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 and the Notes as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. The Agent shall not have a fiduciary relationship in respect of any Bank by reason of this Agreement. SECTION 7.02. Agent and Affiliates. The First National Bank of Chicago -------------------- shall have the same rights and powers under this Agreement and its Notes as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and The First National Bank of Chicago and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or any Affiliate 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 VI. SECTION 7.04. Employment and Reliance on Agents and Counsel. The Agent --------------------------------------------- may execute any of its duties as Agent hereunder by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized 43 agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. In addition, the Agent may consult with legal counsel (who may be employees of the Agent or counsel for the 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, the Arranger, 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 (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent, the Arranger, 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 the Borrower; (iii) the satisfaction of any condition specified in Article III, 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. Neither the Agent nor the Arranger shall incur any liability by acting in reliance upon any Note, notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it in good faith to be genuine or to be signed by the proper party or parties. SECTION 7.06. Reimbursement and Indemnification. The Banks agree to --------------------------------- reimburse and indemnify the Agent ratably in proportion to their respective Commitments (i) for any amounts not reimbursed by the Borrower for which the Agent (for clarity, in its capacity as Agent, not as a Bank) is entitled to reimbursement by the Borrower under this Agreement, (ii) for any other expenses incurred by the Agent on behalf of the Banks, in connection with the administration and enforcement of this Agreement and the Notes and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement, the Notes or any other document delivered in connection herewith or the transactions contemplated hereby, or the enforcement of any of the terms hereof or of any such other documents, provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Agent. SECTION 7.07. Credit Decision. Each Bank acknowledges that it has, --------------- independently and without reliance upon the Agent, the Arranger or any other Bank, and based on the financial statements prepared by the Borrower and such other 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, the Arranger 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. 44 SECTION 7.08. Successor Agent. The Agent may resign at any time by giving --------------- written notice thereto to the Banks and the Borrower. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent who has been approved by the Borrower (such approval not to be unreasonably withheld or delayed). 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's giving notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent. The successor Agent shall be (i) a commercial bank organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least $100,000,000 and (ii) a Bank, unless the Borrower consents to the successor Agent not being a Bank, which consent may not be unreasonably withheld or delayed. Upon the acceptance by a successor Agent of its appointment as Agent hereunder, it 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. Each successor Agent shall notify promptly the Borrower of its appointment as Agent 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. Co-Agents. None of the Banks identified on the signature --------- pages of this Agreement as a "Co-Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Without limiting the foregoing, none of the Banks so identified as a "Co-Agent" shall have or be deemed to have any fiduciary relationship with any Bank. Each Bank acknowledges that it has not relied, and will not rely, on any of the Banks identified as Co-Agents in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE VIII CHANGE IN CIRCUMSTANCES SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair. -------------------------------------------------------- (a) If on or prior to the first day of any Interest Period for any Fixed Rate Borrowing (other than a Money Market Rate Loan): (1) the Agent is advised by the Reference Banks that deposits in the applicable currency (in the applicable amounts) are not being offered to the Reference Banks in the relevant market for such Interest Period, or (2) the Required Banks 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-Currency Loans or Money Market LIBOR Loans, as the case may be, for such Interest Period, 45 the Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Agent notifies the Borrower that the circumstances giving rise to such notice no longer exist: (A) the New York Interbank Offered Rate shall replace the London Interbank Offered Rate for purposes of interest rate determinations hereunder for Euro-Currency Borrowings and Money Market LIBOR Borrowings for such Interest Period (and all references herein to the London interbank market and the London Interbank Offered Rate for such purposes shall, unless the context otherwise requires, be deemed to be references to the New York interbank market and the New York Interbank Offered Rate, respectively), as the case may be, and (B) unless the 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 or that it elects to borrow in another currency such that clause (1) or (2) above is not applicable thereto, (i) if such Fixed Rate Borrowing is a Euro-Currency Borrowing, the interest rate for such Euro-Currency Borrowing shall be determined on the basis of the New York Interbank Offered Rate if all of the procedures set forth herein for a Euro-Currency Borrowing on such basis (including the required notice to the Banks) can be complied with at such time or, if clause (1) or (2) of this subsection is applicable to the New York Interbank Offered Rate at such time, such Euro-Currency Borrowing shall instead be made as a Base Rate Borrowing; provided that, if such Euro- -------- Currency Borrowing was to be denominated in a currency other than Dollars, the principal amount of the Base Rate Borrowing shall be the Dollar Amount of the principal amount of such Euro-Currency Borrowing, and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the interest rate for such Money Market LIBOR Borrowing shall be determined on the basis of the New York Interbank Offered Rate if all of the procedures set forth herein for a Money Market LIBOR Borrowing on such basis (including the required notice to the Banks) can be complied with at such time or, if clause (1) or (2) of this subsection is applicable to the New York Interbank Offered Rate at such time, the Money Market LIBOR Loans comprising such Borrowing shall be made in Dollars in a principal amount equal to the Dollar Amount of the principal amount of such Money Market LIBOR Borrowing and 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. (b) If clause (1) or (2) of subsection (a) of this Section becomes applicable when the New York Interbank Offered Rate has replaced the London Interbank Offered Rate hereunder, then the Agent shall give notice to the Borrower of such condition and the Borrower and the Agent (in consultation with the Banks) shall promptly enter into negotiations in good faith with a view to agreeing upon an alternative basis (a "Substitute Basis") acceptable to the Borrower and the Banks for determining the interest rate which shall be applicable to the affected Euro-Currency Borrowings or Money Market LIBOR Borrowings, which rate shall reflect the cost to the Banks of maintaining such Euro-Currency Borrowings plus the applicable Syndicated Margin or maintaining such Money Market LIBOR Loans plus any applicable Money Market Margin, as the case may be. If, prior to the expiration of 20 days from the date of such notice by the Agent, the Borrower and the Banks shall 46 agree upon a Substitute Basis, interest on such Euro-Currency Borrowings or Money Market LIBOR Borrowings for the affected Interest Periods commencing during the period beginning two Euro-Currency Business Days after the date of such notice and ending on the date three Euro-Currency Business Days after the Agent notifies the Borrower and the Banks that the condition specified in clause (1) or (2) of subsection (a) of this Section has ceased to be in effect shall be determined on such Substitute Basis. If no such agreement has been reached by the expiration of such 20-day period, the Agent shall so notify the Banks and each Bank shall, within ten days after the date of such notice, notify the Borrower (through the Agent) of the rate (or the basis of determining the rate) at which it is prepared to maintain such Euro-Currency Borrowings or Money Market LIBOR Borrowings held by it hereunder for the affected Interest Periods (which rate shall reflect the cost to such Bank of maintaining such Borrowings plus the applicable Syndicated Margin or plus any applicable positive Money Market Margin, as the case may be) and such rate (or basis) shall be applicable to such Euro-Currency Borrowings or Money Market LIBOR Borrowings, as the case may be, held by it for the affected Interest Periods applicable thereto referred to in the preceding sentence. The Agent shall determine the total amount of interest payable by the Borrower on each date for the payment of interest hereunder determined in accordance with this subsection (b) (to the extent it has received the necessary information from the Banks) and notify the Borrower of such total amount (provided that no Bank's right to receive any interest payable to it hereunder shall be impaired by its failure to provide such information to the Agent). The Borrower shall have the right at any time to suspend the obligation of each Bank notifying a rate (or basis) pursuant to the second preceding sentence of this subsection to make Euro-Currency Loans. SECTION 8.02. Illegality. If, after July 23, 1997, the adoption of any ---------- applicable law, rule or regulation, or any change therein, 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 make it unlawful or impossible for any Bank (or its Applicable Lending Office) to make, maintain or fund its Euro-Currency Loans and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and the Borrower, whereupon until such Bank notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Currency Loans shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise materially disadvantageous to such Bank. If such Bank shall determine that it may not lawfully continue to maintain and fund any of its outstanding Euro- Currency Loans to maturity and shall so specify in such notice, the Borrower shall immediately prepay in full the then outstanding principal amount of each such affected Euro-Currency Loan, together with accrued interest thereon. Concurrently with prepaying each such affected Euro-Currency Loan, the Borrower shall borrow a Base Rate Loan (or, subject to Section 2.03 and the willingness of such Bank in its own discretion to submit a Money Market Quote, a Money Market Rate Loan) from such Bank in a principal amount equal to the Dollar Amount of the principal amount of such affected Euro-Currency Loan for an Interest Period coincident with the 47 remaining term of the Interest Period applicable to such affected Euro-Currency Loan, and such Bank shall make such a Base Rate Loan. SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x) --------------------------------- July 23, 1997, in the case of any Syndicated Loan or any obligation to make Syndicated Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change therein, 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: (i) shall subject any Bank (or its Applicable Lending Office) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Notes or its obligation to make Euro-Currency Loans, or shall change the basis of taxation of payments to any Bank (or its Applicable Lending Office) of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Euro-Currency Loans (except for changes in the rate of tax on the overall net income of such Bank or its Applicable Lending Office imposed by the jurisdiction in which such Bank's principal executive office or Applicable Lending Office is located) or (ii) shall impose, modify or deem applicable any reserve, special deposit, deposit insurance assessment or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro- Currency Loan or Money Market LIBOR Loan any such requirement included in an applicable Euro-Currency Reserve Percentage) 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 Euro- Currency 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 Notes with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank (without duplication of amounts otherwise payable hereunder) such additional amount or amounts as will compensate such Bank for such increased cost or reduction with respect to such affected Fixed Rate Loan or such affected sum. (b) If any Bank shall have reasonably determined that, after July 23, 1997, the adoption of any applicable law, rule or regulation regarding capital adequacy or any change therein, 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 regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, 48 has or has had the effect of reducing the rate of return on the capital of such Bank (or its parent) as a consequence of its obligations hereunder to a level below that which such Bank (or its parent) could have achieved but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank (without duplication of amounts otherwise payable hereunder) such additional amount or amounts as will compensate such Bank (or its parent) for such reduction. (c) Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after July 23, 1997, 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 materially disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section, setting forth the additional amount or amounts to be paid to it hereunder and setting forth in reasonable detail a reasonable basis therefor, shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. (d) Notwithstanding any other provision of this Agreement, the Borrower shall have no obligation to make any payment under this Section 8.03 to the extent that such payment would not have been required (i) if such Bank's representation and warranty in Section 2.16(f) had been accurate, or (ii) if such Bank had complied with its obligations under Section 2.16(g). SECTION 8.04. Substitute Loans. If (i) the obligation of any Bank to make ---------------- Euro-Currency Loans has been suspended pursuant to Section 8.01(b) or 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) and the Borrower shall, by at least five Euro-Currency Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer apply: (a) all Loans denominated in Dollars which would otherwise be made by such Bank as Euro-Currency Loans shall be made instead as Base Rate Loans, (b) all Loans denominated in a currency other than Dollars which would otherwise be made by such Bank as Euro-Currency Loans shall be made instead as Base Rate Loans in Dollars in a principal amount equal to the Dollar Amount of the principal amount of such Euro-Currency Loans, and (c) after each of its Euro-Currency Loans has been repaid, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall instead be applied to repay its Loans made pursuant to Section 8.02 or clauses (a) or (b) above. SECTION 8.05. Certain Reserve Compensation. Each Bank may require the ---------------------------- Borrower to pay, contemporaneously with each payment of interest on the Euro- Currency Borrowings of the Borrower, additional interest on the related Euro- Currency Loan of such Bank at a rate per annum equal to the excess of (i)(A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro- Currency Reserve Percentage over (ii) the rate specified in clause (i)(A). In addition, each 49 Bank may require the Borrower to pay, contemporaneously with each payment of interest on the Euro-Currency Borrowings of the Borrower which are denominated in pounds sterling, additional interest on the related Euro-Currency Loan of such Bank at the percentage calculated from time to time by such Bank to be the percentage required to fully compensate such Bank for all reserve costs, liabilities, expenses and assessments which have been incurred by such Bank (or its Applicable Lending Office) in complying with any and all requirements of any relevant United Kingdom banking authority or authorities applicable to such Bank (or its Applicable Lending Office) regarding the making, funding or maintaining of such Euro-Currency Loan (including, without limitation, any and all liquid asset maintenance requirements of the Bank of England). A certificate of any Bank claiming compensation under the preceding sentence, setting forth the additional interest to be paid to it thereunder and setting forth in reasonable detail a reasonable basis therefor, shall be conclusive in the absence of manifest error, and in determining the amount of such interest, such Bank may use any reasonable averaging and attribution methods. Any Bank wishing to require payment of such additional interest (x) shall so notify the Borrower and the Agent, in which case such additional interest on the Euro-Currency Loans of such Bank shall be payable in the currency of such Loan to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least five Euro-Currency Business Days after the giving of such notice and (y) shall notify the Borrower at least five Euro- Currency Business Days prior to each date on which interest is payable on such Euro-Currency Loans of the amount (and currency thereof) then due it under this Section. SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank to -------------------- make Euro-Currency Loans has been suspended pursuant to either Section 8.01(b) or Section 8.02 of either this Agreement or the Other Agreement or (ii) any Bank has demanded compensation under any of Sections 2.16, 8.03 or 8.05 of either this Agreement or the Other Agreement, the Borrower shall have the right, with the assistance of the Agent, to seek a mutually satisfactory substitute bank or banks (which may be one or more of the Banks) to purchase and assume all of the rights and obligations of such Bank under this Agreement, the Other Agreement and such Bank's "Notes" (as defined in both this Agreement and the Other Agreement), all in accordance with the provisions of Section 9.07(c) of this Agreement and Section 9.07(c) of the Other Agreement and subject to such Bank receiving payment in full of all amounts owing to it under this Agreement, the Other Agreement, and its "Notes" (as defined in both this Agreement and the Other Agreement). ARTICLE IX MISCELLANEOUS SECTION 9.01. Notices. All notices and other communications provided for ------- herein shall be in writing (including bank wire, telex, facsimile transmission, telegraph or similar writing) and shall be given to the intended recipient: (x) in the case of the Borrower or the Agent, at its address or telex or telecopy number set forth on the signature pages hereof, (y) in the case of any Bank, at its address or telex or telecopy number set forth in its Administrative Questionnaire or (z) in the case of any party, at such other address or telex or telecopy number as shall be designated by such party in a notice to the Borrower and the Agent. All notices and other communications shall be effective (i) if given by telex or facsimile transmission, when transmitted to the telex or telecopy number 50 specified in this Section (and, in the case of telex, when the appropriate answerback is received), (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under -------- Article II or VIII hereof shall not be effective until received. SECTION 9.02. No Waiver. No failure on the part of the Agent or any Bank --------- to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any Note preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. SECTION 9.03. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE REQUESTS, ------------- INVITATIONS AND OFFERS PROVIDED FOR IN SECTION 2.03 SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. SECTION 9.04. Expenses and Indemnification. The Borrower agrees to pay, ---------------------------- or reimburse each of the Agent and the Arranger for paying, all reasonable costs and out-of-pocket expenses incurred or paid by each of the Agent and the Arranger in connection with the preparation, negotiation, execution, delivery and syndication of this Agreement and the Notes and the making of the Borrowings hereunder (including the reasonable fees, time charges and expenses of in-house or outside counsel to the Agent and the Arranger). The Borrower agrees to pay, or reimburse the Agent and the Banks for paying, all reasonable fees, time charges and expenses of in-house counsel to the Agent and such outside counsel, if any, as shall have been retained by the Agent or the Required Banks on behalf of the Banks, in connection with the amendment, modification, consent or waiver of any of the terms of this Agreement or any of the Notes. The Borrower agrees to pay, or reimburse the Agent and the Banks for paying, all reasonable costs, internal charges and out-of-pocket expenses (including the reasonable fees, time charges and expenses of in-house or outside counsel to the Agent or any Bank) paid or incurred by the Agent or any Bank in connection with the enforcement of this Agreement or any Note and any collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. The Borrower hereby agrees to indemnify the Agent, the Arranger and each Bank (and their respective directors, officers and employees) from and hold each of them harmless against any and all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Arranger or any Bank is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the Notes, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Borrowing, except to the extent any of the foregoing arises from the gross negligence or willful misconduct of the Person seeking indemnification. If and to the extent that the foregoing indemnification is unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction of each of such losses, liabilities, claims, damages or expenses which is permissible under applicable law. The obligations of the Borrower under this Section 9.04 shall survive the termination of this Agreement. 51 SECTION 9.05. Amendments, Etc. Any provision of this Agreement or the --------------- Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that the -------- Agent may, with the consent of the Borrower (which shall not be unreasonably withheld), specify by notice to the Banks modifications in the procedures set forth in Section 2.03; and provided further that no such amendment, waiver or -------- ------- modification shall, unless signed by all the Banks, (i) increase or extend the Commitment of any Bank or subject any Bank to any additional obligation (except for increases to the Commitment of any Bank pursuant to Section 8.06 to which such Bank has agreed in writing), (ii) reduce the principal of or rate of interest on any Loan or any fees or other amounts payable hereunder or change the currency of payment thereof, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder, (iv) change the definition of "Required Banks", amend this Section 9.05, or otherwise change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement, or (v) change Section 9.11 or any provision providing for the equal or ratable treatment of the Banks. SECTION 9.06. Counterparts; Effectiveness; Termination of Existing Credit ----------------------------------------------------------- Agreement. This Agreement may be executed in any number of counterparts, all of - --------- which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall become effective when (a) the Agent shall have received counterparts hereof signed by the Borrower, each Bank listed on the signature pages hereof and the Agent, and (b) all of the Borrower's obligations under the Existing Credit Agreement shall have been satisfied (except for any obligations under Article VIII, Section 2.16 and Section 9.04 therein). Each Bank that is a party to the Existing Credit Agreement acknowledges and agrees that, notwithstanding anything to the contrary therein, upon the effectiveness of this Agreement, the commitments of the banks under the Existing Credit Agreement to make loans thereunder shall be automatically terminated and any notice requirements in respect of such termination or in respect of any prepayment of loans thereunder shall be waived. The Agent shall notify the Borrower and the Banks of the effectiveness of this Agreement by delivery of a notice in the form of Exhibit H hereto. SECTION 9.07. Successors and Assigns. (a) The provisions of this ---------------------- Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks and the Agent. (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 Borrower and the Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided -------- that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (ii) 52 or (iii) of Section 9.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Sections 2.13, 2.15, 2.16, 9.04 and Article VIII to the extent of its participating interest and with such benefits to be determined as if the related Bank had not granted such participation. 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) With (and subject to) the written consent of the Borrower and the Agent (such consents not to be unreasonably withheld and, in the case of an assignment to an Affiliate, not to be required), any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank; provided, that simultaneously with each such assignment, the transferor Bank shall assign to the same Assignee the same proportionate share of all of its rights and obligations, if any, under the Other Agreement in accordance with the provisions of Section 9.07(c) of the Other Agreement. 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 Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment under this Agreement, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment equal to $1,500. (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 (without any requirement to obtain the consent of the Borrower or the Agent thereto). 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 8.05 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is (i) made with the Borrower's prior written consent or (ii) made to either (y) a Bank already party to this Agreement at the time of such assignment or (z) an affiliate of the transferor Bank. (f) If any Reference Bank assigns all of its rights and obligations under this Agreement and its Notes to an unaffiliated institution, the Agent shall, in consultation with the Borrower and with the consent of the Required Banks, appoint another Bank to act as a Reference Bank hereunder. SECTION 9.08. Survival. The obligations of the Borrower under Article -------- VIII and Sections 2.16 and 9.04 shall survive the repayment of the Loans and the termination of the Commitments. 53 SECTION 9.09. Acknowledgement. The Borrower acknowledges that the Banks --------------- have entered into this Agreement in reliance on the Borrower's assurance that it does not intend to use the proceeds of any Borrowings hereunder in a manner which would violate any applicable law or governmental rule or regulation. SECTION 9.10. Headings. The Table of Contents and Article and Section -------- headings used herein shall not affect the interpretation of any provision of this Agreement. SECTION 9.11. Sharing of Setoffs. Each Bank agrees that, if it shall, by ------------------ exercising any right of setoff or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note 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 any Note held by such other Bank (other than disproportionate payments to any Bank provided for by this Agreement), the Bank receiving such proportionately greater payment shall purchase such participations in the Notes 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 Notes 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 setoff or counterclaim it may have and to apply the amount recovered thereby to the payment of indebtedness of the Borrower other than its indebtedness under the Notes. If under any applicable bankruptcy, insolvency or other similar law, any Bank receives a secured claim in lieu of a setoff to which this Section applies, such Bank shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Banks entitled under this Section to share in the benefits of any recovery on such secured claim. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. SECTION 9.12. 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 9.13. Consent to Jurisdiction. (a) The Borrower irrevocably ----------------------- submits to the jurisdiction of any federal or Illinois state court sitting in Chicago, Illinois over any suit, action or proceeding arising out of or relating to this Agreement or any Note. The 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 suit, action or proceeding brought in such court and any claim that any suit, action or proceeding brought in such court has been brought in an inconvenient forum. The Borrower agrees that a final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Borrower and may be enforced in any federal or Illinois state court sitting in Chicago, Illinois (or any other courts to the jurisdiction of which the Borrower is or may be subject) by a suit upon such judgment, provided that service of process is effected upon the Borrower in one of the manners specified in subsection (b) of this Section or as otherwise permitted by law. 54 (b) Service of Process. The Borrower hereby consents to process being ------------------ served in any suit, action or proceeding referred to in the first sentence of subsection (a) of this Section in any federal or Illinois state court sitting in Chicago, Illinois by mailing a copy thereof by registered or certified air mail, postage prepaid, return receipt requested, to the Borrower at its address specified in Section 9.01 or to any other address of which the Borrower shall have given written notice to the Agent. The Borrower irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any such service in any such suit, action or proceeding brought by the Agent or any Bank. The Borrower agrees that such service shall be deemed in every respect effective service of process upon the Borrower in any such suit, action or proceeding and shall, to the fullest extent permitted by law, be taken and held to be valid and personal service upon and personal delivery to the Borrower. (c) No Limitation on Service or Suit. Nothing in this Article shall affect -------------------------------- the right of the Agent or any Bank to serve process in any other manner permitted by law or limit the right of the Agent or any Bank to bring proceedings against the Borrower in the courts of the jurisdiction of the Bank's Applicable Lending Office or the courts of any jurisdiction or jurisdictions in which the Borrower has any assets. SECTION 9.14. Waiver of Jury Trial. THE AGENT, THE BANKS AND THE BORROWER -------------------- HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER BANK CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE BANKS, OR THE BORROWER. 55 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. THE BORROWER ARCO CHEMICAL COMPANY By /s/ R.Remick ------------------------------------ Ronald R. Remick Vice President and Treasurer Address for Notices: 3801 West Chester Pike Newtown Square, Pennsylvania 19073 Attn: Assistant Treasurer Telex No.: 99-0756 (answerback ARCO CHEM NS1) Telephone No.: 610-359-3362 Telecopier No.: 610-359-3322 S-1 THE AGENT THE FIRST NATIONAL BANK OF CHICAGO By /s/ George R.Schanz ---------------------------------- GEORGE R. SCHANZ ---------------------------------- Title VICE PRESIDENT ---------------------------------- Address for Notices: The First National Bank of Chicago One First National Plaza Chicago, Illinois 60670 Attention: William P. Laird Mail Suite 0634 Telex No.: 4330253 (answerback FNBCUI) Telephone No.: 312-732-5635 Telecopier No.: 312-732-4840 cc: W. Walter Green, III Mail Suite 0363 Telex No.: 4330253 (answerback FNBCUI) Telephone No.: 312-732-7235 Telecopier No.: 312-732-3055 THE BANKS Commitment - ---------- $33,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO, as a Bank By /s/ George R. Schanz ------------------------------------ GEORGE R. SCHANZ --------------------------------- Title VICE PRESIDENT --------------------------------- S-2 Commitment - ---------- $30,000,000.00 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Co-Agent and a Bank By [SIGNATURE APPEARS HERE] ----------------------------------- Title Vice President -------------------------------- S-3 Commitment - ---------- $30,000,000.00 THE CHASE MANHATTAN BANK, as a Co-Agent and a Bank By /s/ Robert T. Sacks ----------------------------------- ROBERT T. SACKS ----------------------------------- Title MANAGING DIRECTOR ----------------------------------- S-4 Commitment - ---------- $30,000,000.00 DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, as a Co-Agent and a Bank By /s/ Jean M.Hannigan Ralf Hoffmann ------------------------------------ JEAN M. HANNIGAN RALF HOFFMANN -------------------------------- Title VICE PRESIDENT VICE PRESIDENT --------------------------------- S-5 Commitment - ---------- $21,000,000.00 BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Bank By /s/ M.R. Marron ---------------------------------- M.R. MARRON ------------------------------- Title VICE PRESIDENT ------------------------------- S-6 Commitment - ---------- $21,000,000.00 CREDIT LYONNAIS NEW YORK BRANCH, as a Bank By /s/ Pascal Poupelle ---------------------------------- PASCAL POUPELLE ------------------------------- Title EXECUTIVE VICE PRESIDENT ------------------------------- S-7 Commitment - ---------- $21,000,000.00 CORESTATES BANK, N.A. as a Bank By [SIGNATURE APPEARS HERE] ---------------------------------- Title VICE PRESIDENT ------------------------------- S-8 Commitment - ---------- $21,000,000.00 MARINE MIDLAND BANK, as a Bank By /s/ William M. Holland --------------------------------- WILLIAM M. HOLLAND --------------------------------- Title VICE PRESIDENT -------------------------------- S-9 Commitment - ---------- $21,000,000.00 WACHOVIA BANK, N.A., as a Bank By /s/ Adam T. Ogburn ---------------------------------- ADAM T. OGBURN ---------------------------------- Title VICE PRESIDENT ------------------------------- S-10 Commitment - ---------- $9,000,000.00 THE BANK OF NEW YORK, as a Bank By /s/ John W. Hall ------------------------------ JOHN W. HALL ------------------------------ Title VICE PRESIDENT ------------------------------ S-11 Commitment - ---------- $9,000,000.00 THE BANK OF NOVA SCOTIA, as a Bank By /s/ J. Alan Edwards -------------------------------- J. ALAN EDWARDS -------------------------------- Title AUTHORIZED SIGNATORY -------------------------------- S-12 Commitment - ---------- $9,000,000.00 CITIBANK, N.A., as a Bank By /s/ Rufus Beldam ---------------------------------- RUFUS BELDAM ---------------------------------- Title MANAGING DIRECTOR 399 Park/4th FL./Zn.4 (212) 559-1605 ---------------------------------- S-13 Commitment - ---------- $9,000,000.00 THE DAI-ICHI KANGYO BANK, LTD., LOS ANGELES AGENCY, as a Bank By /s/ Masatsugu Morishita --------------------------------- MASATSUGU MORISHITA --------------------------------- Title SR. VICE PRESIDENT JOINT GENERAL MANAGER --------------------------------- S-14 Commitment - ---------- $9,000,000.00 FIRST UNION NATIONAL BANK, as a Bank By [SIGNATURE APPEARS HERE] ---------------------------------- Title Senior Vice President ------------------------------- S-15 Commitment - ---------- $9,000,000.00 FUJI BANK, LTD., as a Bank By [SIGNATURE APPEARS HERE] ---------------------------------- Title SeniorVice President ------------------------------- S-16 Commitment - ---------- $9,000,000.00 MELLON BANK, N.A., as a Bank By /s/ John K. Walsh ---------------------------------- JOHN K. WALSH ------------------------------- Title Vice President ------------------------------- S-17 Commitment - ---------- $9,000,000.00 THE SAKURA BANK, LTD., as a Bank By /s/ Yasumasa Kikuchi ---------------------------------- YASUMASA KIKUCHI ---------------------------------- Title Senior Vice President ---------------------------------- S-18 SCHEDULE I Euro-Currency Payment Offices of the Agent Currency Euro-Currency Payment Office - -------- ---------------------------- Dollars The First National Bank of Chicago Chicago Office Account No.: 7521-7653 Ref.: ARCO Chemical Deutsche Marks To: Swiss Bank Corp. Frankfurt, Germany For: The First National Bank of Chicago Chicago Office Account No.: 103350.50.00 Ref.: ARCO Chemical Dutch Guilders To: Rabobank Nederland, N.V. Utrecht, Netherlands For: The First National Bank of Chicago Chicago Office Account No.: 3908.02.042 Ref.: ARCO Chemical French Francs To: Credit Commercial De France Paris, France For: The First National Bank of Chicago Chicago Office Account No.: 020350699000 Ref.: ARCO Chemical Japanese Yen To: Bank of Tokyo Tokyo, Japan For: The First National Bank of Chicago Chicago Office Account No.: 6530422606 Ref.: ARCO Chemical Pounds Sterling To: Midland Bank, PLC London, England For: The First National Bank of Chicago Chicago Office Account No.: 00472803 Ref.: ARCO Chemical EXHIBIT A --------- NOTE Chicago, Illinois July 23, 1997 For value received, ARCO CHEMICAL COMPANY, a Delaware 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 last day of the Interest Period relating to such Loan. 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 (i) if in Dollars, in lawful money of the United States in Federal or other immediately available funds at the main office of The First National Bank of Chicago, as Agent, in Chicago Illinois or (ii) if in any other currency, in such funds as may then be customary for the settlement of international transactions in such other currency at the place specified for payment thereof pursuant to the Credit Agreement. All Loans made by the Bank, the respective maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, prior to any transfer hereof, 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 Credit Agreement B dated as of July 23, 1997 among ARCO Chemical Company, the banks listed on the signature pages thereof and The First National Bank of Chicago, 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. ARCO CHEMICAL COMPANY By:_______________________ Title:______________ Note (cont'd) LOANS AND PAYMENTS OF PRINCIPAL Currency and Amount of Type of Amount of Principal Maturity Notation Date Loan Loan Repaid Date Made by - ---- ------- ------------ ---------- -------- -------- Page 2 EXHIBIT B --------- FORM OF MONEY MARKET QUOTE REQUEST [Date] TO: The First National Bank of Chicago (the "Agent") One First National Plaza Chicago, Illinois 60670 From: Arco Chemical Company Re: Credit Agreement B dated as of July 23, 1997 (the "Credit Agreement") among ARCO Chemical 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 Money Market Quotes for the following proposed Money Market Borrowing(s): Date of Borrowing:________________________________ Currency* Principal Amount** Interest Period*** -------- ---------------- --------------- Such Money Market Quotes should offer a Money Market [Margin] [Rate]. [The applicable base rate is the London Interbank Offered Rate.] Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. ARCO CHEMICAL COMPANY By:__________________________ Title:_____________________ _______________ * If pounds sterling, indicate whether euro-sterling or domestic sterling. ** Amount must be $10,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof). *** Not less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. EXHIBIT C --------- FORM OF INVITATION FOR MONEY MARKET QUOTES [Date] To: [Name of Bank] [address of Bank] Re: Invitation for Money Market Quotes to Arco Chemical Company (the "Borrower") Pursuant to Section 2.03 of Credit Agreement B dated as of July 23, 1997 (the "Credit Agreement") among ARCO Chemical Company, the Banks listed on the signature pages thereof and the undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s): Date of Borrowing:________________________ Currency* Principal Amount Business Period -------- ---------------- --------------- Such Money Market Quotes should offer a Money Market [Margin] [Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [3:00 p.m.] [1:00 p.m.] [9:00 a.m.] [(London time)] [(Chicago time)] on [date]. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. THE FIRST NATIONAL BANK OF CHICAGO, as Agent By:__________________________________ Authorized Officer - --------------- * If pounds sterling, indicate whether euro-sterling or domestic sterling. EXHIBIT D --------- FORM OF MONEY MARKET QUOTE To: The First National Bank of Chicago, as Agent One First National Plaza Chicago, Illinois 60670 Attention: Funding Services -- Loan Sale Group Re: Money Market Quote to Arco Chemical Company (the "Borrower") In response to your invitation on behalf of the Borrower dated ___________, ____, we hereby make the following Money Market Quote on the following terms: 1. Quoting Bank: 2. Person to contact at Quoting Bank: 3. Date of Borrowing: * 4. We hereby offer to make Money Market Loan(s) in the following principal amounts for the following Interest Periods and at the following rates: Principal Interest Money Market Currency** Amount*** Period**** [Margin+][Rate++] -------- ------- ------- ------------------- [provided that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $___________]*** ___________ * As specified in the related Invitation. ** ***[If pounds sterling, indicate whether euro-sterling or domestic sterling.]*** *** 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 will-willing to lend. Bids must be made for $1,000,000 (or the Approximate Equivalent Amount thereof) or a larger multiple thereof . **** Not less than 7 days, as specified in the related Invitation for Money Market Quotes. + Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (rounded to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". ++ Specify rate of interest per annum (rounded to the nearest 1/10,000th of 1%). We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in Credit Agreement B dated as of July 23, 1997 (the "Credit Agreement") among ARCO Chemical Company, the Banks listed on the signature pages thereof and yourselves, as Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. Very truly yours, [NAME OF BANK] Dated:_____________________ By:_________________________ Authorized Officer Page 2 EXHIBIT E --------- CERTIFICATE OF INCUMBENCY I, , [Secretary/Assistant Secretary] of ARCO CHEMICAL COMPANY, a Delaware corporation (the "Borrower"), hereby certify as follows: (1) Each of the following named individuals is an Authorized Officer (as that term is defined in Credit Agreement B, dated as of July 23, 1997 among ARCO Chemical Company, the Banks named therein and The First National Bank of Chicago, as Agent (the "Credit Agreement")) of the Borrower and each has been duly elected to and is now holding the office indicated, and the signature appearing opposite each name is the genuine signature of such Authorized Officer: Title Name Signature ----- ---- --------- _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ (2) Each of the following named individuals has been duly designated as an "Authorized Representative" (as that term is defined in the Credit Agreement) of the Borrower, and the signature appearing opposite each name is the genuine signature of such Authorized Representative: Title Name Signature ----- ---- --------- _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Borrower this day of 19 . ______________________________ Secretary/Assistant Secretary [SEAL] I, [name], [Treasurer/Assistant Secretary/Secretary] of ARCO Chemical Company, do hereby certify that is, and at all times since , 19 has been, the duly elected or appointed, qualified and acting [Secretary/Assistant Secretary] of the Borrower and that the signature set forth above is [his][her] genuine signature. IN WITNESS WHEREOF, I have hereunto set my hand this day of , 19 . _________________________________ Treasurer/Assistant Secretary Page 2 EXHIBIT F --------- OPINION OF COUNSEL FOR THE BORROWER [Dated as provided in Section 3.01 of the Credit Agreement] To the Banks and the Agent Referred to Below c/o The First National Bank of Chicago, as Agent One First National Plaza Chicago, Illinois 60670 Ladies and Gentlemen: I am [General Counsel] [Associate General Counsel-Corporate] of ARCO Chemical Company (the "Borrower") and as such have acted as counsel, or supervised attorneys who have acted as counsel, for the Borrower in connection with Credit Agreement B, dated as of July 23, 1997 (the "Credit Agreement"), among ARCO Chemical Company, the banks listed on the signature pages thereof, and The First National Bank of Chicago, as Agent. Capitalized terms used but not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement. 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. (a) The Borrower (i) is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and (ii) either is qualified to do business and in good standing in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (b) The Borrower has all corporate powers and authority, governmental permits, licenses, consents, authorizations, orders and approvals and other authorizations as are necessary to carry on its business substantially as presently conducted except for such of the foregoing the absence of which would not, in the aggregate, subject the Borrower to any material liability or disability. (c) The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes, and Borrowings under the Credit Agreement by the Borrower, are within the corporate power and authority of the Borrower and have been duly authorized by all necessary corporate proceedings by the Borrower. (d) Neither such authorization nor the execution, delivery and performance by the Borrower of the Credit Agreement or of the Notes, nor any Borrowing by the Borrower when made, will conflict with, result in a breach of or constitute a default under any of the terms, conditions or provisions of any law or any regulation, order, writ, injunction or decree of any court or governmental authority or of the Certificate of Incorporation or By-Laws of the Borrower or result in the violation or contravention of, or the acceleration of any obligation under, or cause the creation of any Lien on any of the properties of the Borrower pursuant to the provisions of, any indenture, agreement or other instrument to which it is a party or by which it is bound. (e) Assuming its due execution by the Banks and the Agent, the Credit Agreement constitutes a legal, valid and binding agreement of the Borrower and the Notes, when duly executed on behalf of the Borrower and delivered in accordance with the Credit Agreement, will constitute legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity). 2. Except as previously disclosed in writing to the Banks prior to July 23, 1997, there is no action, suit or proceeding pending or, to my knowledge, threatened against or affecting the Borrower or any of its subsidiaries in any court or before or by any arbitrator, governmental department, agency or instrumentality (i) which is likely to have a material adverse effect upon the Borrower's ability to pay and perform its obligations under the Bank Credit Documents in accordance with their respective terms or (ii) which in any manner draws into question the validity of any of the Bank Credit Documents. In this regard, the Borrower has brought to your attention the Borrower's annual report on Form 10-K for the year ended December 31, 1996, and the Borrower's quarterly report on Form 10-Q for the three months ended March 31, 1997. 3. No consent, authorization, order or approval of (or filing or registration with) any governmental commission, board or other regulatory authority (other than routine reporting requirements) is required for the execution, delivery and performance by the Borrower of the Credit Agreement or the Notes or for Borrowings under the Credit Agreement. 4. The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 5. The Cross-Indemnification Agreement, as amended to the date hereof, and the Tax Sharing Agreement are in full force and effect in accordance with their respective terms. Page 2 6. Each of the Borrower's Subsidiaries that is a corporation is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted except for licenses, authorizations, consents or approvals the absence of which will not materially and adversely affect the business of the Borrower and its Consolidated Subsidiaries taken as a whole. I am counsel admitted to practice in the Commonwealth of Pennsylvania. In giving the foregoing opinion, I express no opinion as to the effect (if any) of any laws of any jurisdiction other than the general corporate laws of the State of Delaware and the laws of the Commonwealth of Pennsylvania. I have assumed for the purposes of this opinion that the applicable laws of the State of Illinois are the same as the laws of the Commonwealth of Pennsylvania. Very truly yours, Page 3 EXHIBIT G --------- ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of __________, 19__ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), ARCO CHEMICAL COMPANY (the "Company") and THE FIRST NATIONAL BANK OF CHICAGO, as Agent (the "Agent"). WITNESSETH WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to Credit Agreement B dated as of July 23, 1997 among the Company, the Assignor and the other Banks party thereto, as Banks, and the Agent (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, Syndicated 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 Syndicated 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 Syndicated 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 an amount equal to $__________*. It is understood that facility fees with respect to the Assigned Amount 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 9.07(c) of the Credit Agreement. The execution of this Agreement by the Company and the Agent is evidence of this consent. Pursuant to Section 9.07(c) the Company agrees to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.** _________________________ * 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 . ** Delete this Section 4 if no consent is required pursuant to Section 9.07(c) of the Credit Agreement. Page 2 SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation ------------------------ or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Borrower, or the validity and enforceability of the obligations of the Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrower. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be liable for any mistake, error of judgment, or action taken or omitted to be taken in connection with any Loans, Note, Commitment or other interest under the Credit Agreement. SECTION 6. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Illinois. 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:_______________________ Page 3 ARCO CHEMICAL COMPANY By:__________________________ Title:_______________________ THE FIRST NATIONAL BANK OF CHICAGO, as Agent By:__________________________ Title:_______________________ Page 4 EXHIBIT H --------- NOTICE OF EFFECTIVENESS July 23, 1997 ARCO Chemical Company 3801 West Chester Pike Newtown Square, Pennsylvania 19073 Attention: Treasurer Dear Ladies/Gentlemen: We hereby notify you that Credit Agreement B dated as of July 23, 1997 among ARCO Chemical Company, the banks listed on the signature pages thereof and The First National Bank of Chicago, as Agent, has become effective as of the date hereof in accordance with Section 9.06 thereof. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO, as Agent By:___________________________ Title:________________________ EXHIBIT I --------- OPINION OF SPECIAL COUNSEL FOR THE AGENT [Dated as provided in Section 3.01 of the Credit Agreement] The First National Bank of Chicago, as Agent, and the other financial institutions which are parties to each of the Credit Agreements referred to below Re: ARCO Chemical Company --------------------- Ladies and Gentlemen: We have acted as special counsel to The First National Bank of Chicago, as Agent (in such capacity, the "Agent"), in connection with Credit Agreement A and Credit Agreement B (collectively, the "Credit Agreements"), each dated as of July 23, 1997, among ARCO Chemical Company (the "Borrower"), various financial institutions, and the Agent. Capitalized terms used herein and not otherwise defined shall have the meanings attributed to them in each of the Credit Agreements. In connection herewith, we have examined counterparts of each Credit Agreement executed by the Borrower, each of the Banks and the Agent; and each Note issued by the Borrower on the date hereof pursuant to the Credit Agreements (the "Notes"). In connection with such examination, we have assumed the genuineness of all signatures, the authority of the persons signing such documents and the authenticity of such documents. We also have assumed, without any independent investigation, that (a) each Credit Agreement and each Note has been duly authorized, executed and delivered by each of the parties thereto and (b) each Credit Agreement is the legal, valid and binding obligation of each party thereto other than the Borrower, enforceable against each such party in accordance with its terms. Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that, under the laws of the State of Illinois: (1) Each Credit Agreement is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. (2) The Notes are the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms. ______, 1997 Page 2 Our opinions are subject to the following qualifications: (a) Our opinions are subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing. (b) We express no opinion as to indemnification or contribution obligations which contravene public policy. (c) We express no opinion as to any provision of either Credit Agreement purporting to convey rights to Persons other than parties to such Credit Agreement. (d) We express no opinion as to any waiver of (i) the right to a jury trial, (ii) any objection to venue or (iii) any right to bring legal proceedings in any court having jurisdiction. (e) Our opinions are limited to the laws of the State of Illinois, and we express no opinion as to the laws of any other jurisdiction. This opinion letter is solely for the benefit of the addressees hereof (and their respective successors and assigns) in connection with the transactions contemplated by the Credit Agreements, and this opinion letter may not be relied upon by any other Person or for any other purpose. Very truly yours, MAYER, BROWN & PLATT RCB:DTJ Page 2 EX-10.4 5 AMENDMENT NO. 7 AMENDMENT NO. 7 TO THE ARCO CHEMICAL COMPANY 1990 LONG-TERM INCENTIVE PLAN The ARCO Chemical Company 1990 Long-Term Incentive Plan ("Plan"), as amended, is hereby amended as follows: Article II, Section 2(f) of the Plan is amended to read as follows: "(f) Termination of Employment If an optionee's employment is ------------------------- terminated prior to the expiration of the vesting period prescribed by the Long-Term Incentive Plan Administration Subcommittee with respect to any granted Stock Option, such Stock Option, and accumulated DSCs pertaining thereto, shall be cancelled unless the optionee's termination is due to (i) death, (ii) total and permanent disability, (iii) termination of employment with a right to an immediate allowance under a retirement plan of the Employer, or (iv) any other termination of employment in connection with which the Subcommittee, in its sole discretion, has determined that the optionee's Stock Options shall not be cancelled. If an optionee's employment is terminated following the expiration of the vesting period prescribed by the Long-Term Incentive Plan Administration Subcommittee with respect to any granted Stock Option, such Stock Option, and accumulated DSCs pertaining thereto, shall be cancelled if the termination is due to (i) discharge for cause, (ii) resignation without approval of the Employer (except in conjunction with a right to an immediate allowance under a retirement plan of the Employer) or (iii) resignation at the initiation of the Employer (except in conjunction with a right to an immediate allowance under a retirement plan of the Employer, an economic layoff or a reduction in force). EXHIBIT 10.4 Except as set forth herein, the Plan shall not be amended or modified and shall remain in full force and effect. Executed this 29th day of July 1997. ---- ---- ATTEST ARCO CHEMICAL COMPANY BY:/s/ Valerie H. Perry BY:/s/ Frank W. Welsh - ----------------------------- ------------------ Frank W. Welsh Vice President - Human Resources EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 88 0 592 0 513 1,230 4,107 1,554 4,273 778 806 0 0 100 1,814 4,273 1,985 1,985 1,639 1,639 0 0 42 126 43 83 0 0 0 83 0.86 0.86
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