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<IMS-DOCUMENT>0000898430-95-001064.txt : 19950613
<IMS-HEADER>0000898430-95-001064.hdr.sgml : 19950613
ACCESSION NUMBER: 0000898430-95-001064
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 14
CONFORMED PERIOD OF REPORT: 19950331
FILED AS OF DATE: 19950612
SROS: NASD
SROS: NYSE
SROS: PSE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MCKESSON CORP
CENTRAL INDEX KEY: 0000927653
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122]
IRS NUMBER: 943207296
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 033-86536
FILM NUMBER: 95546365
BUSINESS ADDRESS:
STREET 1: ONE POST ST
CITY: SAN FRANCISCO
STATE: CA
ZIP: 94104
BUSINESS PHONE: 4159838300
FORMER COMPANY:
FORMER CONFORMED NAME: SP VENTURES INC
DATE OF NAME CHANGE: 19940728
</IMS-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<DESCRIPTION>FORM 10-K
<TEXT>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-13252
McKESSON CORPORATION
A Delaware Corporation
I.R.S. Employer Number 94-3207296
McKesson Plaza, One Post Street, San Francisco, CA 94104
Telephone - Area Code (415) 983-8300
Securities registered pursuant to Section 12(b) of the Act:
(Name Of Each Exchange
(Title Of Each Class) On Which Registered)
Common Stock, $.01 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of voting stock held by nonaffiliates of the Registrant
at June 1, 1995: $1,734,940,620
Number of shares of common stock outstanding at June 1, 1995: 44,626,319
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Appendix to the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on July 26, 1995 are incorporated by
reference into Parts I and II of this report. Portions of the Registrant's
Proxy Statement for said meeting are incorporated by reference into Part III of
this report.
<PAGE>
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
<TABLE>
<CAPTION>
<S> <C> <C>
1. Business......................................................... 1
2. Properties....................................................... 6
3. Legal Proceedings................................................ 6
4. Submission of Matters to a Vote of Security Holders.............. 8
Executive Officers of the Registrant............................. 9
<CAPTION>
PART II
<S> <C> <C>
5. Market for the Registrant's Common Stock and Related Stockholder
Matters......................................................... 11
6. Selected Financial Data.......................................... 11
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 11
8. Financial Statements and Supplementary Data...................... 11
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 11
<CAPTION>
PART III
<S> <C> <C>
10. Directors and Executive Officers of the Registrant............... 12
11. Executive Compensation........................................... 12
12. Security Ownership of Certain Beneficial Owners and Management... 12
13. Certain Relationships and Related Transactions................... 12
<CAPTION>
PART IV
<S> <C> <C>
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 13
Signatures....................................................... 14
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
(a) General Development of Business
New McKesson (the "Company") was organized in the state of Delaware on July
7, 1994 as a wholly-owned subsidiary of McKesson Corporation, a Delaware
corporation ("McKesson"), for the purpose of owning and operating the businesses
of McKesson following the acquisition of McKesson's pharmaceutical benefits
management business ("PCS") by ECO Acquisition Corporation ("ECO"), a subsidiary
of Eli Lilly and Company ("Lilly"), for approximately $4 billion (the "PCS
Transaction"). PCS had been operated primarily by PCS Health Systems, Inc. and
Clinical Pharmaceuticals, Inc., both of which were wholly-owned subsidiaries of
McKesson.
As part of the PCS Transaction, on November 21, 1994 the Company acquired
all of the assets and liabilities of McKesson, other than those related to PCS,
and McKesson distributed to its stockholders one share of the Company's common
stock for each share of McKesson common stock held of record as of November 19,
1994 (the "Spin-Off").
Simultaneously with the Spin-Off, ECO consummated a tender offer for all
outstanding shares of McKesson common stock at a price of $76 per share (the
"Offer"). Following the completion of the Offer, McKesson merged with and into
ECO.
As a result of the PCS Transaction (i) Lilly became the indirect sole owner
of PCS, and (ii) each existing McKesson stockholder received (a) a cash payment
of $76 per share of McKesson common stock (representing the proceeds from the
sale of PCS) and (b) one share of common stock of the Company, representing
their continuing interest in the retained businesses.
For financial statement purposes, the Company is the continuing entity and
has retained the name McKesson Corporation. PCS is reflected as a discontinued
operation in the Company's consolidated financial statements.
In May 1995, the Company announced its intention to repurchase from time to
time up to 3.5 million shares of its common stock in open market or private
transactions.
Developments which could be considered significant to individual segments
of the business are described under (c)(1) "Narrative Description of Business"
on pages 1 through 6 of this report.
(b) Financial Information About Industry Segments
Financial information for the three years ended March 31, 1995 appears in
Financial Note 15, "Segments of Business", on pages 39 and 40 of the Appendix to
the Company's 1995 Proxy Statement, which note is incorporated herein by
reference.
(c) Narrative Description of Business
(1) Description of Segments of Business
The principal segments of the Company's business are:
Health Care Services
Water Products
Armor All
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Health Care Services
PRODUCTS & MARKETS
Wholesale Distribution of Pharmaceutical & Health Care Products -- Within
the United States and Canada, the Company is the largest wholesale distributor
of ethical and proprietary drugs and health and beauty care products. Its
products are distributed to chain and independent drug stores, hospitals, food
stores and mass merchandisers. This business requires large inventories,
significant amounts of which are financed by related payables. In addition, the
Company owns a 22.7% equity interest in Nadro, S.A. de C.V. the leading
pharmaceutical wholesaler in Mexico.
Using the name "Economost" and "Econolink" and a number of related service
marks, the Company has promoted electronic order entry systems and a wide range
of computerized merchandising and asset management services for drug retailers
and hospitals. The Company is also a supplier of computer systems and software
for pharmacy management.
In the United States, the Company does business under the McKesson Drug
Company tradename. In Canada, the Company does business under the name Medis
Health and Pharmaceutical Services Inc..
Voluntary Marketing Program -- Under the Valu-Rite pharmacy program, the
Company provides its independent U.S. retail drug store customers with a common
marketing identity, group advertising, purchasing programs, promotional
merchandise and access to a pharmacy provider network. At March 31, 1995,
approximately 5,000 stores were participating in the Valu-Rite program. Similar
programs are available to independent drug stores through other drug
wholesalers. The Company provides similar services to retail drug stores in
Canada.
Millbrook Distribution Services Co. -- Millbrook Distribution Services Co.
distributes health and beauty care products, general merchandise and specialty
foods to supermarkets, drug stores and discount department stores. The
distribution services provided include product recommendations, procurement,
warehousing, distribution, retail shelf management and temporary field labor.
Healthcare Delivery Systems, Inc. ("HDS") -- HDS provides services designed
to meet the needs of pharmaceutical and other healthcare manufacturers in
commercializing a product and enhancing its market position. The core activity
of HDS currently is the development of integrated systems for specialized
delivery of pharmaceutical products. These systems manage manufacturer cost and
information requirements through a variety of services including financial
assistance programs for patients, reimbursement support and patient advocacy
programs, clinical trial support services, and product hot-line and physician
and patient information programs.
Other -- Through its Sunmark operations, the Company supplies durable
medical equipment to the home health care industry. Through its Central
American operation, the Company manufactures a full line of branded generic
pharmaceuticals that is distributed directly and indirectly to retailers in
Central America. Through Zee Medical, Inc., the Company distributes first-aid
products and supplies to industrial and commercial customers.
COMPETITION
In every area of operations, the distribution businesses (not including
HDS) face strong competition both in price and service from national, regional
and local full-line, short-line and specialty wholesalers, service
merchandisers, and from manufacturers engaged in direct distribution. The
particular area in which HDS provides services is in a rapid state of
development and therefore there are no clearly defined markets in which HDS
competes. It nonetheless faces competition from various other service providers
and from pharmaceutical and other healthcare manufacturers (as well as other
potential customers of HDS) which may from time to time decide to develop, for
their own internal needs,
2
<PAGE>
those services which are provided by HDS and other competing service providers.
Price, quality of service, and, in some cases, convenience to the customer are
generally the principal competitive elements in the industry.
INTELLECTUAL PROPERTY
The principal trademarks and service marks of the Health Care Services
segment are: ECONOMOST(R), ECONOLINK(R) and VALU-RITE(R). The Health Care
Services segment also owns other registered and unregistered trademarks and
service marks and similar rights. All of the principal marks are registered in
the United States and registration has been obtained or applied for in Canada
with respect to such marks. The United States federal registrations of these
trademarks and service marks have ten or twenty year terms, depending on date of
registration; the Canadian registrations have fifteen year terms. All are
subject to unlimited renewals. The Company believes this business has taken all
necessary steps to preserve the registration and duration of its trademarks and
service marks, although no assurance can be given that it will be able to
successfully enforce or protect its rights thereunder in the event that they are
subject to third-party infringement. The Company does not consider any
particular patents, licenses, franchises or concessions to be material to the
business of the Health Care Services segment.
Water Products
PRODUCTS & MARKETS
McKesson Water Products Company is primarily engaged in the processing and
sale of bottled drinking water delivered to homes and businesses under its
Sparkletts, Alhambra, and Crystal brands in California, Arizona, Nevada and
Texas. It also sells and leases bottled water dispensers and coolers in the
foregoing states, and sells packaged water through retail stores in
approximately 40 states. In addition, under the Aqua-Vend trademark, it sells
processed water through vending machines in California, Arizona, Nevada, Texas,
Louisiana and Florida. Due to the nature of this business, it does not
generally (a) require significant amounts of inventory to meet the needs of its
customers or to meet its own internal supply requirements, (b) provide
significant extended payment terms to its customers or (c) otherwise have
significant working capital requirements.
COMPETITION
Although this business faces competition from several larger competitors,
the competition is generally widely dispersed between many different entities.
Principal among the large local competitors of the Water Products segment are:
Arrowhead (California and Arizona) and Ozarka/Oasis (Texas) (both owned by
Nestle); Hinckley & Schmitt (Arizona, Las Vegas, and Southern California) and
Sierra Springs (Northern California and Texas) (both owned by Anjou Bottled
Water Group, a subsidiary of a large French water utility); Crystal Geyser
(nationally distributed); Evian (nationally distributed) (owned by Groupe
Donone, S.A.) and Glacier Water Services, Inc.. This operation faces
significant competition in both price and service in all aspects of its
business.
INTELLECTUAL PROPERTY
The principal trademarks and service marks of the Water Products segment
are: SPARKLETTS(R), ALHAMBRA(R), CRYSTAL(TM), CRYSTAL-FRESH(R) and AQUA-
VEND(R). The McKesson Water Products Company also owns other registered and
unregistered trademarks and service marks used by the Water Products segment.
All of the principal trademarks and service marks are registered in the United
States, in addition to certain other jurisdictions. The United States federal
registrations of these trademarks have terms of ten or twenty years, depending
on date of registration, and are subject to
3
<PAGE>
unlimited renewals. The Company believes this business has taken all necessary
steps to preserve the registration and duration of its trademarks and service
marks, although no assurance can be given that it will be able to successfully
enforce or protect its rights thereunder in the event that they are subject to
third-party infringement. The Company does not consider any particular patents,
licenses, franchises or concessions to be material to the business of the Water
Products segment.
Armor All
PRODUCTS & MARKETS
The Company is engaged through its majority-owned Armor All Products
Corporation subsidiary ("Armor All") in developing and marketing a line of
branded appearance enhancement and protection products primarily for the do-it-
yourself automotive and home care markets. Its principal brand, Armor All(R),
has the leading position in the domestic automotive protectant market. A second
major brand, Rain Dance(R), is a strong competitor in the market for automotive
waxes, polishes and washes. Armor All's principal product, Armor All(R)
Protectant, is designed to protect and beautify natural and synthetic polymer
materials and is used primarily on certain automobile surfaces. Armor All's
products are marketed in the U.S. and Canada by its direct sales force and
through independent manufacturers' representatives and distributors.
International sales are effected through foreign sales offices, foreign
distributors and a marketing and distribution alliance with S.C. Johnson.
Primary customers include mass merchandise retailers, auto supply stores,
warehouse clubs, hardware stores and other retail outlets. The Company in
recent years has extended its product lines by introducing Armor All(R) Tire
Foam(R) Protectant, Armor All(R) QuickSilver(TM) Wheel Cleaner, Armor All(R)
Protectant Low-Gloss Natural Finish, Armor All(R) Spot & Wash(TM) Concentrate,
Armor All(R) Leather Care Protectant, WAX PAX(TM) Instant Car Wax and three car
polishes under the Rain Dance name. In January 1994, Armor All entered the home
care market with the acquisition of the E-Z Deck Wash(R) and E-Z D(TM) brands.
The E-Z Deck Wash product is designed to clean and restore wood surfaces such as
patio decks, siding and fences. In February 1995, Armor All introduced three
new home care products: Armor All Deck Protector, Armor All Water Proofing
Sealer and Armor All Vinyl Siding Wash. Products which comprise a majority of
Armor All's sales volume are manufactured under full service packaging
agreements whereby contract packagers generally own the raw materials and
finished goods in their possession and transfer title to Armor All just prior to
shipment to Armor All's customers. Armor All's use of contract packagers
permits it to avoid significant investments in inventory, machinery and other
fixed assets. Armor All's relationships with its three most important packagers
have lasted for 7, 10 and 22 years, respectively. Subject to contractual
arrangements, Armor All periodically reevaluates its selection of packagers, and
believes that other acceptable packagers are readily available.
COMPETITION
In the domestic protectant market, Armor All Protectant has two principal
competitors, STP(R) Son-of-a-Gun(R) Protectant and Turtle Wax(R) Formula
2001(R), and several secondary competitors. Armor All Tire Foam Protectant has
three principal competitors, No Touch(R), Turtle Wax(R) Formula 2001 and STP(R)
Son-of-a-Gun(R) Tire Care, and several secondary competitors. Armor All
QuickSilver Wheel Cleaner has four principal competitors, Eagle One(R), Turtle
Wax(R) Formula 2001, Turtle Wax(R) Wheel Brite and Espree(R), and several
secondary competitors. Armor All brand cleaner competes against many specialty
automotive cleaner products. Armor All brand wash products and all of the Rain
Dance and Rally brand products compete with numerous wash, wax and polish
products in the automotive aftermarket. Competition in international markets
varies by country. Armor All believes that brand recognition and loyalty,
access to retail shelf space, product convenience and effectiveness, trade
promotion and consumer advertising, support of customers' inventory management
and marketing efforts, and pricing are important competitive factors in the
appearance protection market. Armor All believes that it competes favorably
with respect to these factors.
4
<PAGE>
In the domestic home care products market, the E-Z Deck Wash brand product
has two principal competitors, Thompson's(R) Deck Wash and Olympic(R) Deck
Cleaner, and several secondary competitors. Armor All Deck Protector and Water
Proofing Sealer each compete against products marketed under the Thompson's,
Olympic and Behr brand names. There are no directly competitive products to
Armor All Vinyl Siding Wash.
INTELLECTUAL PROPERTY
The principal trademarks and service marks of the Armor All segment are:
ARMOR ALL(R), VIKING DESIGN(R) and related designs, RAIN DANCE(R), RALLY(R), NO.
7(R), TIRE FOAM(R), QUICKSILVER(TM), SPOT & WASH(R), WAX PAX(TM), E-Z DECK
WASH(R) and E-Z D(TM). Armor All also owns other registered and unregistered
trademarks and service marks. All of the principal trademarks and service marks
are registered in the United States and Canada. Such marks are also registered
in certain other foreign jurisdictions. The United States federal registrations
of these trademarks and service marks have ten or twenty year terms, depending
on date of registration; the Canadian registrations have fifteen year terms.
All are subject to unlimited renewals. The Company believes it has taken all
necessary steps to preserve the registration and duration of its trademarks and
service marks, although no assurance can be given that it will be able to
successfully enforce or protect its rights thereunder in the event that they are
subject to third-party infringement.
Armor All owns a process patent on ARMOR ALL Protectant and a patent on
RAIN DANCE wax, and has applied for patents on ARMOR ALL QuickSilver Wheel
Cleaner, ARMOR ALL Spot & Wash Concentrate, WAX PAX Instant Car Wax and ARMOR
ALL Vinyl Siding Wash. In addition, Armor All owns a patent on an E-D DECK WASH
product and has other domestic and foreign E-D DECK WASH patents pending. Armor
All's process patent on ARMOR ALL Protectant will expire in 1996. Armor All's
patent on RAIN DANCE wax will expire in the year 2000. The Company believes
that Armor All's trademarks are more important assets than its patents, and that
the termination or invalidity of its patents would not have a material adverse
effect on Armor All.
OWNERSHIP
In fiscal 1994, the Company sold to the public 5,175,000 shares and donated
to the McKesson Foundation 250,000 shares of common stock of Armor All. An
additional 350,000 shares of Armor All common stock were donated to the McKesson
Foundation in fiscal 1995. These transactions reduced the Company's equity
interest in Armor All from 83% to 55%. In addition, in fiscal 1994, the Company
sold $180 million of subordinated debentures that are exchangeable, at the
option of the holders, into 6.9 million additional shares of Armor All common
stock owned by the Company, subject to the Company's right to pay cash equal to
the market price of the stock in lieu of making the exchange. If all of the
debentures were exchanged, the Company's ownership interest in Armor All would
be reduced to approximately 22%. As a result of the foregoing, the Company may
not be able to exercise continued control over the business operations of Armor
All and may not be able to obtain the financial benefits it would otherwise have
received if it had maintained its controlling interest in Armor All.
(2) Other Information About the Business
Customers -- Sales to the Company's largest customer, Wal-Mart Stores,
Inc., accounted for 10% of consolidated revenues in fiscal 1995 and 1994;
however, no material part of the business is dependent upon a single or a very
few customers, the loss of any one of which could have a material adverse effect
on the Company or any of its business segments.
Environmental Legislation -- The Company sold its chemical distribution
operations in fiscal 1987. In connection with the disposition of those
operations, the Company retained responsibility for certain environmental
obligations and has entered into agreements with the EPA and certain states
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pursuant to which it is or may be required to conduct environmental assessments
and cleanups at several closed sites. These matters are described further in
Item 3 "Legal Proceedings" below. Other than any capital expenditures which may
be required in connection with those matters, the Company does not anticipate
making substantial capital expenditures for environmental control facilities or
to comply with environmental laws and regulations in the future. The amount of
capital expenditures expended by the Company for environmental compliance was
not material in fiscal 1995 and is not expected to be material in the next
fiscal year.
Employees -- At March 31, 1995, the Company employed approximately 12,200
persons.
Backlog Orders -- Each of the Company's segments seeks to promptly fill or
otherwise satisfy the orders of each such segment's customers. Accordingly,
none of the Company's segments has a significant backlog of customer orders.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
Information as to foreign operations is included in Financial Note 15,
"Segments of Business" on pages 39 and 40 of the Appendix to the Company's 1995
Proxy Statement (the "Appendix"), which notes are incorporated herein by
reference.
ITEM 2. PROPERTIES
Because of the nature of the Company's principal businesses, plant,
warehousing, office and other facilities are operated in widely dispersed
locations. The warehouses are typically owned or leased on a long-term basis.
The Company considers its operating properties to be in satisfactory condition
and adequate to meet its needs for the next several years. Information as to
material lease commitments is included in Financial Note 10, "Lease Obligations"
on page 31 of the Appendix, which note is incorporated herein by reference. Due
to the numerous warehousing, office and other facilities utilized by the Company
in its business operations, the Company does not believe that any one of its
facilities is materially important to the Company.
ITEM 3. LEGAL PROCEEDINGS
In addition to commitments and obligations in the ordinary course of
business, the Company is subject to various claims, other pending and possible
legal actions for product liability and other damages, investigations relating
to governmental laws and regulations, and other matters arising out of the
normal conduct of the Company's business.
The Company is a defendant in four civil actions filed between late 1993
and March of this year by independent pharmacies. The first proceeding,
Feitelberg v. Abbott Laboratories, is pending in the Superior Court for the
State of California (County of San Francisco) and is now referred to as
Coordinated Proceeding Special Title, Pharmaceutical Cases I, II and III. The
second proceeding, HJB, Inc. v. Abbott Laboratories (now known as MDL 997), is
pending in the United States District Court for the Northern District of
Illinois. The third proceeding, K-S Pharmacies, Inc. v. Abbott Laboratories, is
pending in the Circuit Court of Wisconsin for Dane County. A fourth action,
Adams v. Abbott Laboratories, was filed in the U.S. District Court for the
Eastern District of Arkansas. These actions were brought as purported class
actions on behalf of all other similarly-situated retail pharmacies. A class
has been certified in MDL 997. There are numerous other defendants in these
actions including pharmaceutical manufacturers, a pharmaceutical mail order
firm, and several other wholesale
6
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distributors. These cases allege, in essence, that the defendants have
unlawfully conspired together and agreed to fix the prices of brand name
pharmaceuticals sold to plaintiffs at artificially high, discriminatory, and
non-competitive levels, all in violation of various state and federal antitrust
laws. Some of the plaintiffs specifically contend that the wholesaler and
manufacturer defendants are engaged in a conspiracy to fix prices charged to
plaintiffs and members of the purported classes (independent and chain retail
drug stores) above the price levels charged to mail order pharmacies, HMOs and
other institutional buyers. The California cases allege, among other things,
violation of California antitrust law. In MDL 997 and Adams, plaintiffs allege
that defendants' actions constitute price fixing in violation of the Sherman
Act. In the K-S Pharmacies, Inc. complaint, plaintiffs allege violation of
Wisconsin antitrust law. In each of the complaints, except Adams, plaintiffs
seek certification as a class and remedies in the form of injunctive relief,
unquantified monetary damages (trebled as provided by law), and attorneys fees
and costs. In addition, the California cases seek restitution. The Company
believes it has meritorious defenses to the allegations made against it and
intends to vigorously defend itself in all of these cases. In addition, the
Company has entered into a judgment sharing agreement with certain
pharmaceutical manufacturer defendants, which provides generally that the
Company (together with the other wholesale distributor defendants) will be held
harmless by such pharmaceutical manufacturer defendants and will be indemnified
against the costs of adverse judgments, if any, against the wholesaler and
manufacturers in these or similar actions, in excess of $1 million in the
aggregate per wholesale distributor defendant. Plaintiffs have attempted to have
the court declare the judgment sharing agreement unlawful, but these efforts, to
date, have been unsuccessful.
Primarily as a result of the operation of its former chemical businesses,
which were divested in fiscal 1987, the Company is involved in numerous matters
pursuant to various environmental laws and regulations. The Company has
received various claims and demands from governmental agencies relating to
investigative and remedial actions purportedly required to address environmental
conditions alleged to exist at six (6) sites where the Company formerly
conducted operations; and the Company, by administrative order or otherwise, has
agreed to take certain actions at those sites. These actions include the
investigation and remediation of contamination from its (or its former
subsidiaries') former operations at the sites located in Newark, New Jersey,
Santa Fe Springs, California, Spartanburg, South Carolina, Syracuse, New York
and Union City, California. The site in Newark, New Jersey, is being
investigated pursuant to a New Jersey Department of Environmental Protection
administrative consent order dated August 20, 1993. The site in Santa Fe
Springs, California, is undergoing soil remediation, with an evaluation of the
ground water remediation alternatives to follow, pursuant to a California
Environmental Protection Agency Department of Toxic Substances Control consent
order dated January 8, 1990. The current owner of the site in Spartanburg,
South Carolina, has agreed to fully indemnify the Company. Pursuant to a New
York State Department of Environmental Conservation consent order dated August
31, 1987, the unsaturated soils at the Syracuse, New York location were
remediated; the saturated soils and groundwater are being addressed as part of a
separate operable unit. The site in Union City, California is undergoing soil
and ground water remediation pursuant to a California Regional Water Quality
Control Board site cleanup requirements order dated June 15, 1988 . At the
sixth site, which is undergoing a Resource Conservation and Recovery Act closure
and is located in Des Moines, Iowa, the Company has requested the EPA to
acknowledge that the site has achieved the requirements for clean closure. The
current estimate (determined by the Company's environmental staff, in
consultation with outside environmental specialists and counsel) of the upper
limit of the Company's range of reasonably possible remediation costs for these
six (6) sites is approximately $22 million, net of amounts which third parties
have agreed to pay in settlement or which the Company expects, based either on
pending settlement offers or nonrefundable contributions which are ongoing but
are not the subject of an agreement, to be contributed by third parties. The
$22 million is expected to be paid out between April 1995 and March 2027.
Another such Superfund site is a closed wood treatment facility formerly
operated by Mass Merchandisers, Inc. ("MMI") acquired by the Company in 1985.
In fiscal 1993, a consent decree was entered whereby the Company will remediate
the site at a cost estimated by the EPA to be approximately $11 million, with an
additional estimated contingent cost of approximately $4 million. Through March
31, 1995, approximately $2 million had been paid out on the remediation of this
site and approximately $9 million is expected to be paid out between April 1995
and March 1998. The $4 million additional estimated contingent cost will be
paid, if at all, between April 2000 and March
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2030. The anticipated costs of $22 million and $9 million are included in the
Company's recorded environmental reserves at March 31, 1995.
In addition to the foregoing remedial actions, the Company has been asked
by current property owners to contribute to the investigation and environmental
cleanup of eight (8) properties which the Company formerly owned or leased. At
one of these properties, the government has ordered both the Company and an
earlier former owner to investigate and remediate, and the Company is funding
the work under a reservation of rights. One of the other properties is the
subject of an order to investigate directed both to the current owner and the
Company. No determination has been made of the Company's liability, if any, in
proportion to other PRPs at any of these eight (8) former properties; however,
$2.5 million has been included in the Company's recorded environmental reserves
at March 31, 1995. The Company has also been designated as a potentially
responsible party ("PRP") by the EPA under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended (the "Superfund"
law), for environmental assessment and cleanup costs as the result of the
Company's alleged treatment or disposal of hazardous substances at twenty-six
(26) Superfund sites, at none of which the Company is the sole PRP. With
respect to each of these Superfund sites, numerous other PRPs have similarly
been designated and, while the current state of the law potentially imposes
joint and several liability upon PRPs, as a practical matter costs of these
sites are typically shared with other PRPs. In some cases the Company has
partial indemnity agreements with its insurers or an allocation or contribution
agreement with other PRPs; at 18 of the 26 sites, while there is currently no
indemnification from third parties or agreements from insurers to pay costs, the
Company's alleged waste volumes were typically small. At three (3) of these
Superfund sites another PRP has agreed to pay 45% of the allocated share of the
Company's former subsidiary; three insurers have agreed to pay collectively 80%
of the remainder. Such insurers have also agreed to pay 80% of the former
subsidiary's allocation at one other Superfund site, and have agreed to
indemnify 65% of the Company's allocation at seven (7) other Superfund sites.
The estimated dollar amount of the Company's liability at the twenty-six (26)
Superfund sites referenced in this paragraph is approximately $2.8 million, net
of amounts which the third parties have agreed, or are expected, to contribute.
Settlements and costs paid by the Company in Superfund matters to date have not
been significant.
The potential costs to the Company related to all of these environmental
matters are highly uncertain due to such factors as: the unknown magnitude of
possible pollution and cleanup costs; the complexity and evolving nature of
governmental laws and regulations and their interpretations; the timing, varying
costs and effectiveness of alternative cleanup technologies; the determination
of the Company's liability in proportion to other PRPs; and the extent, if any,
to which such costs are recoverable from insurance or other parties. The
Company has established reserves, based on estimated total future cash flows,
which it considers to be appropriate for these environmental matters, which
reserves are net of approximately $15 million at March 31, 1995, relating to
amounts third parties have agreed to pay in settlement or which the Company
expects to be contributed by third parties, where the Company believes it is
probable that the third parties will fulfill their agreements to pay.
Management believes, based on current knowledge and the advice of the
Company's counsel, that the outcome of the litigation and governmental
proceedings discussed in this Item 3 will not have a material adverse effect on
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the three months ended March 31,
1995.
8
<PAGE>
Executive Officers of the Registrant
The following table sets forth information concerning the executive
officers of the Registrant as of June 1, 1995. The number of years of service
with the Company includes service with predecessor and acquired companies,
including McKesson.
There are no family relationships between any of the executive officers or
directors of the Registrant. The executive officers are chosen annually to
serve until the first meeting of the Board of Directors following the next
annual meeting of stockholders and until their successors are elected and have
qualified, or until death, resignation or removal, whichever is sooner.
<TABLE>
<CAPTION>
Name Age Position with Registrant and Business Experience
- ----------------- ----- ---------------------------------------------------
<S> <C> <C>
Alan Seelenfreund 58 Chairman of the Board and Chief Executive Officer
since July 1994 and a Director since November 1994.
Formerly Chairman of the Board and Chief Executive
Officer (November 1989-November 1994), a Director
(July 1988-November 1994) and Chief Financial
Officer (April 1984-April 1990) of McKesson.
Service with the Company - 20 years.
David E. McDowell 52 President and Chief Operating Officer since
September 1994 and a Director since November 1994.
Formerly President and Chief Operating Officer and
a Director (January 1992-November 1994) of
McKesson. Vice President and General Manager,
Quality and Chief Information Officer, IBM
Corporation (November 1990-January 1992); President
of IBM's National Service Division (July 1987-
August 1990) and Assistant General Manager
(January-July 1987). Service with the Company -
3.5 years.
William A. Armstrong 54 Vice President Human Resources and Administration
since September 1994. Formerly Vice President Human
Resources and Administration (April 1993-November
1994), Vice President Administration (July 1991-
April 1993) and Executive Assistant to the Office
of the Chief Executive (1990-April 1992) of
McKesson. Service with the Company - 23 years.
Michael T. Dalby 49 Vice President Strategic Planning since September
1994. Principal at McKinsey & Company, Inc., an
international management consulting firm (1988-
1994). Service with the Company - 8 months.
Jon W. d'Alessio 48 Treasurer since September 1994. Formerly Treasurer
(January 1992-November 1994), Staff Vice President
Corporate Treasury (November 1991-January 1992) and
Staff Vice President and Chief Information Officer
(1990-November 1991) of McKesson. Service with the
Company - 17 years.
Kevin B. Ferrell 47 Vice President and Chief Financial Officer since
October 1994. Executive Vice President of Global
Investment Management at Bank of America (1993-
March 1994). Other positions in the last 18 years,
all associated with Bank of America: President and
Director of SeaFirst Bank, Senior Vice President
and Head of Corporate Banking in San Francisco and
Senior Vice President of Finance and Treasury.
Service with the Company - 7 months.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Name Age Position with Registrant and Business Experience
- ----------------- ----- ---------------------------------------------------
<S> <C> <C>
Richard H. Hawkins 45 Vice President and Controller of the Company since
September 1994. Formerly Vice President (April 1993-
November 1994) and Controller (April 1990-November
1994) of McKesson, Chief Financial Officer
(September 1993-November 1994) of McKesson's Drug
Company division and Vice President Finance
(February 1991-April 1993) of McKesson's
Distribution Group. Service with the Company - 11
years.
David L. Mahoney 40 Vice President and President of Healthcare Delivery
Systems, Inc., a wholly-owned subsidiary of the
Company, since September 1994. Formerly Vice
President Strategic Planning (July 1990-September
1994) of McKesson. Principal at McKinsey & Company,
Inc., an international management consulting firm
(1987-July 1990). Service with the Company - 5
years.
Ivan D. Meyerson 50 Vice President and General Counsel since July 1994.
Formerly Vice President and General Counsel
(January 1987-November 1994) of McKesson. Service
with the Company - 17 years.
Nancy A. Miller 51 Vice President and Corporate Secretary since July
1994. Formerly Vice President and Corporate
Secretary (December 1989-November 1994) of
McKesson. Service with the Company - 17 years.
Charles A. Norris 50 Vice President and President of McKesson Water
Products Company, a wholly-owned subsidiary of the
Company, since September 1994. Formerly Vice
President (April 1993-November 1994) and President
(May 1990-November 1994) of McKesson Water Products
Company, a wholly-owned subsidiary of McKesson.
President of Deer Park Water Company, a bottled
drinking water firm (1981-May 1990). Service with
the Company - 5 years.
Garret A. Scholz 55 Vice President Finance since July 1994. Formerly
Vice President Finance (April 1990-November 1994)
and Vice President and Treasurer (November 1984-
April 1990) of McKesson. Service with the Company -
22 years.
James H. Smith 51 Vice President and President of the McKesson Drug
Company division since September 1994. Formerly
Vice President and President (February-November
1994) of the McKesson Drug Company division of
McKesson. Senior Vice President of Avnet, Inc., a
distributor of electrical and computer components
(1990-February 1994); Executive Vice President of
the Hamilton Hallmark Division (1990-February 1994)
and Vice President of the Hamilton Avnet Division
(1986-1990). Service with the Company - 1.3 years.
</TABLE>
10
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
(a) Market Information
The principal market on which the Company's common stock is traded is the
New York Stock Exchange. High and low prices for the common stock by quarter
appear in Financial Note 17, "Quarterly Financial Information" on pages 43 and
44 of the Appendix which note is incorporated herein by reference.
(b) Holders
The number of record holders of the Company's common stock as of March 31,
1995 was 15,765.
(c) Dividends
Dividend information is included in Financial Note 17, "Quarterly Financial
Information" on pages 43 and 44 of the Appendix, which note is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data is shown on pages 2 to 5 of the Appendix and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of the Company's financial condition
and results of operations appears in the Financial Review on pages 6 to 16 of
the Appendix and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Supplementary Data appear on pages 20 to 44 of the
Appendix and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is incorporated by
reference from the Company's 1995 Proxy Statement (the "Proxy Statement").
Certain information relating to Executive Officers of the Company appears at
pages 9 and 10 of this Form 10-K Annual Report. The information with respect to
this item required by Item 405 of Regulation S-K is incorporated herein by
reference from the Company's 1995 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is incorporated herein by reference
from the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item is incorporated herein by reference
from the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain transactions with management is
incorporated by reference from the Company's Proxy Statement.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statement Schedules
The following consolidated financial statements of the Company and the
Independent Auditors' Report are included on pages 19 to 44 of the Appendix and
are incorporated by reference in Item 8:
Independent Auditors' Report
Consolidated Financial Statements
Statements of Consolidated Income for the years ended
March 31, 1995, 1994 and 1993
Consolidated Balance Sheets, March 31, 1995, 1994 and 1993
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1995, 1994 and 1993
Statements of Consolidated Cash Flows for the years ended
March 31, 1995, 1994 and 1993
Financial Notes
<TABLE>
<CAPTION>
The following are included herein: Page
----
<S> <C>
Independent Auditors' Report on Supplementary Financial Schedule 15
Supplementary Financial Schedule:
II Consolidated Valuation and Qualifying Accounts 16
</TABLE>
Financial statements and schedules not included or incorporated by
reference herein have been omitted because of the absence of conditions under
which they are required or because the required information, where material, is
shown in the financial statements, financial notes or supplementary financial
information.
Exhibits submitted with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings are listed on the Exhibit Index on
pages 17 through 20.
(b) Reports on Form 8-K
None.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
McKESSON CORPORATION
Date: May 26, 1995 By: /s/Kevin B. Ferrell
-------------------------------------
Kevin B. Ferrell, Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on May 26, 1995 by the following persons on behalf
of the Registrant and in the capacities indicated:
/s/Alan Seelenfreund /s/David E. McDowell
- ------------------------------------- --------------------------------------
Alan Seelenfreund, Chairman and Chief David E. McDowell, President and Chief
Executive Officer and Director Operating Officer and Director
/s/Kevin B. Ferrell /s/Richard H. Hawkins
- ------------------------------------- --------------------------------------
Kevin B. Ferrell, Vice President Richard H. Hawkins, Vice President
and Chief Financial Officer and Controller
/s/Tully M. Friedman
- ------------------------------------- --------------------------------------
Mary G.F. Bitterman, Director Tully M. Friedman, Director
/s/James R. Harvey /s/George M. Keller
- ------------------------------------- --------------------------------------
James R. Harvey, Director George M. Keller, Director
/s/Leslie L. Luttgens /s/John M. Pietruski
- ------------------------------------- --------------------------------------
Leslie L. Luttgens, Director John M. Pietruski, Director
/s/Jane E. Shaw /s/Robert H. Waterman
- ------------------------------------- --------------------------------------
Jane E. Shaw, Director Robert H. Waterman, Jr., Director
14
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY FINANCIAL SCHEDULE
The Stockholders and Board of Directors of McKesson Corporation:
We have audited the consolidated financial statements of McKesson Corporation
and subsidiaries as of March 31, 1995, 1994 and 1993, and for the years then
ended and have issued our report thereon dated May 12, 1995 which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
Corporation's change in its method of accounting for postemployment benefits;
such consolidated financial statements and report are included in the Appendix
to your Proxy Statement for the 1995 annual meeting of stockholders of the
Corporation and are incorporated herein by reference. Our audits also included
the consolidated supplementary financial schedule of McKesson Corporation,
listed in Item 14(a). This consolidated supplementary financial schedule is the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
supplementary financial schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
San Francisco, California
May 12, 1995
15
<PAGE>
Schedule II
McKESSON CORPORATION - CONSOLIDATED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1995, 1994 AND 1993
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------------------------------- ---------- ---------------------- ------------- ----------------
Additions
----------------------
Balance at Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions End of Period
- --------------------------------- ---------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
AMOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY:
Year Ended March 31, 1995
- -------------------------
Allowances for doubtful
accounts receivable $18,637 $49,452 $ - $24,505 $43,584
Other reserves 15,599 6,066 - 5,621 16,044
------- ------- ------- ------- -------
$34,236 $55,518 $ - $30,126/(1)/ $59,628/(2)/
======= ======= ======= ======= =======
Year Ended March 31, 1994
- -------------------------
Allowances for doubtful
accounts receivable $26,346 $ 9,994 $ 1 $17,704 $18,637
Other reserves 14,886 5,144 - 4,431 15,599
------- ------- ------- ------- -------
$41,232 $15,138 $ 1 $22,135/(1)/ $34,236/(2)/
======= ======= ======= ======= =======
Year Ended March 31, 1993
- -------------------------
Allowances for doubtful
accounts receivable $19,585 $17,670 $ 76 $10,985 $26,346
Other reserves 13,823 3,855 - 2,792 14,886
------- ------- ------- ------- -------
$33,408 $21,525 $ 76 $13,777/(1)/ $41,232/(2)/
======= ======= ======= ======= =======
<CAPTION>
- -------------------------------------------
NOTES: 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
1 Deductions:
Written off $27,491 $17,704 $12,995
Credited to other accounts 2,635 4,431 782
------- ------- -------
Total $30,126 $22,135 $13,777
======= ======= =======
2 Amounts shown as deductions from:
Current receivables $56,023 $30,826 $38,014
Other assets 3,605 3,410 3,218
------- ------- -------
Total $59,628 $34,236 $41,232
======= ======= =======
</TABLE>
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
<S> <C>
2.1 Restructuring and Distribution Agreement dated as of July 10, 1994, by
and among McKesson Corporation, a Delaware corporation ("Old
McKesson"), McKesson Corporation, a Maryland corporation ("Maryland"),
Clinical Pharmaceuticals, Inc. ("CPI"), PCS Health Systems, Inc.
("PCS") and the Company (Exhibit 2.1 (1)).
2.2 Amendment, dated as of October 10, 1994, by and among Old McKesson,
Maryland, CPI, PCS and the Company, which amends the Distribution
Agreement (Exhibit 2.2 (3)).
2.3 Second Amendment, dated as of November 3, 1994, by and among Old
McKesson, Maryland, CPI, PCS and the Company, which amends the
Distribution Agreement (Exhibit 2.5 (5)).
2.4 Agreement and Plan of Merger, dated as of July 10, 1994, by and among
Old McKesson, Eli Lilly and Company ("Parent") and ECO Acquisition
Corporation (the "Purchaser") (Exhibit 2.3 (4)).
2.5 Amendment, dated as of August 8, 1994, by and among Old McKesson,
Parent and Purchaser, which amends the Merger Agreement (Exhibit 2.4
(5))
3.1 Corrected Restated Certificate of Incorporation of the Company, as
filed with the Office of the Delaware Secretary of State on June 9,
1995.
3.2 Restated By-Laws of the Company, as amended through April 26, 1995.
4 Rights Agreement dated as of September 14, 1994 between the Company
and First Chicago Trust Company of New York, as Rights Agent (Exhibit
4.1 (4)).
10.1 Tax Sharing Agreement, dated as of July 10, 1994, among the Company,
Old McKesson, Parent and the Purchaser (Exhibit 10.1 (1)).
10.2 HDS Services Agreement, dated as of July 10, 1994, among Parent, PCS
and Healthcare Delivery Systems, Inc. (Exhibit 10.2 (1)).
10.3 McKesson Services Agreement, dated as of July 10, 1994, between PCS
and the Company (Exhibit 10.3 (1)).
10.4 Memorandum of Understanding, dated as of July 10, 1994, between Parent
and the Company (Exhibit 10.4 (1)).
10.5 Non-Competition Agreement, dated as of July 10, 1994, between the
Company, Old McKesson, the Purchaser and Parent (Exhibit 10.5 (1)).
10.6 McKesson Corporation 1994 Stock Option and Restricted Stock Plan
(Amended Effective April 26, 1995) (Exhibit A (6)).
10.7 McKesson Corporation Supplemental PSIP (Exhibit 10.7 (2)).
10.8 McKesson Corporation Deferred Compensation Administration Plan
(Exhibit 10.8 (2)).
</TABLE>
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
<S> <C>
10.9 McKesson Corporation Deferred Compensation Administration Plan II
(Exhibit 10.9 (2)).
10.10 McKesson Corporation Directors' Deferred Compensation Plan (Exhibit
10.10 (2)).
10.11 McKesson Corporation 1985 Directors' Elective Deferred Compensation
Plan (Exhibit 10.11 (2)).
10.12 McKesson Corporation 1994 Option Gain Deferral Plan (Exhibit 10.12
(3)).
10.13 McKesson Corporation 1985 Executives' Elective Deferred Compensation
Plan (Exhibit 10.13 (2)).
10.14 McKesson Corporation Management Deferred Compensation Plan (Exhibit
10.14 (2)).
10.15 McKesson Corporation 1984 Executive Benefit Retirement Plan (Exhibit
10.15 (2)).
10.16 McKesson Corporation 1988 Executive Survivor Benefits Plan (Exhibit
10.16 (2)).
10.17 McKesson Corporation Executive Medical Plan Summary (Exhibit 10.17
(3)).
10.18 McKesson Corporation 1988 Management Survivor Benefits Plan (Exhibit
10.18 (2)).
10.19 McKesson Corporation Severance Policy for Executive Employees (Exhibit
10.19 (2)).
10.20 McKesson Corporation 1989 Management Incentive Plan (Amended and
Restated Effective April 26, 1995) (Exhibit B (6)).
10.21 McKesson Corporation 1981 Long-Term Incentive Plan (Exhibit 10.21
(2)).
10.22 McKesson Corporation 1973 Stock Purchase Plan (Exhibit 10.22 (2)).
10.23 Form of Termination Agreement by and between the Company and certain
designated Executive Officers.
10.24 Description of McKesson Corporation Retirement Program for Nonemployee
Directors.
10.25 Credit Agreement entered into as of March 31, 1995, among the Company,
Medis Health and Pharmaceutical Services, Inc., an indirect wholly-
owned subsidiary of the Company, the several financial institutions
from time to time party to the agreement (collectively the "Banks"),
Bank of America National Trust and Savings Association, as Agent for
the Banks, Chemical Bank, as Co-Agent for the Banks and Bank of
America Canada, as Canadian Administrative Agent.
10.26 Custodial Agreement Acknowledgment entered into as of March 31, 1995,
among the Company and Bank of America National Trust and Savings
Association (the "Custodian") in its capacity as Custodian under the
Custodial Agreement and as Agent for the Banks from time to time party
to the Credit Agreement.
</TABLE>
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
<S> <C>
10.27 Pledge Agreement entered into as of March 31, 1995 among the Company
(the "Pledgor") and Bank of America National Trust and Savings
Association, as Agent for the Banks from time to time party to the
Credit Agreement.
10.28 Guaranty entered into as of March 31, 1995 by the Company (the
"Guarantor"), in favor of and for the benefit of Bank of America
National Trust and Savings Association, as Agent for and
representative of the Banks party to the Credit Agreement.
11 Computation of Earnings Per Common Share for the Five Years Ended
March 31, 1995.
13 1995 Annual Report to Security Holders Pursuant to Rule 14a-3(b). (7)
21 List of Subsidiaries of the Company.
23 Independent Auditors' Consent.
27 Financial Data Schedule.
</TABLE>
Footnotes to Exhibit Index:
(1) Incorporated by reference to designated exhibit to the Company's
Registration Statement on Form 10 filed with the Commission on July 27,
1994, File No. 1-13252.
(2) Incorporated by reference to designated exhibit to Amendment No. 1 to the
Company's Registration Statement on Form 10 filed with the Commission on
August 26, 1994, File No. 1-13252.
(3) Incorporated by reference to designated exhibit to Amendment No. 2 to the
Company's Registration Statement on Form 10 filed with the Commission on
October 11, 1994, File No. 1-13252.
(4) Incorporated by reference to designated exhibit to Amendment No. 3 to the
Company's Registration Statement on Form 10 filed with the Commission on
October 27, 1994, File No. 1-13252.
(5) Incorporated by reference to designated exhibit to Amendment No. 4 to the
Company's Registration Statement on Form 10 filed with the Commission on
November 7, 1994, File No. 1-13252.
(6) Incorporated by reference to designated exhibit attached to the Company's
definitive Proxy Statement dated June 9, 1995 for the Annual Meeting of
Stockholders to be held on July 26, 1995.
(7) Filed as an Appendix to the Company's definitive Proxy Statement dated June
9, 1995 for the Annual Meeting of Stockholders to be held on July 26, 1995,
and incorporated by reference herein.
19
<PAGE>
Executive Compensation Plans and Arrangements
1. McKesson Corporation 1994 Stock Option and Restricted Stock Plan (Amended
Effective April 26, 1995).
2. McKesson Corporation Supplemental PSIP.
3. McKesson Corporation Deferred Compensation Administration Plan.
4. McKesson Corporation Deferred Compensation Administration Plan II.
5. McKesson Corporation Directors' Deferred Compensation Plan.
6. McKesson Corporation 1985 Directors' Elective Deferred Compensation Plan.
7. McKesson Corporation 1994 Option Gain Deferral Plan.
8. McKesson Corporation 1985 Executives' Elective Deferred Compensation Plan.
9. McKesson Corporation Management Deferred Compensation Plan.
10. McKesson Corporation 1984 Executive Benefit Retirement Plan.
11. McKesson Corporation 1988 Executive Survivor Benefits Plan.
12. McKesson Corporation Executive Medical Plan Summary.
13. McKesson Corporation 1988 Management Survivor Benefits Plan.
14. McKesson Corporation Severance Policy for Executive Employees.
15. McKesson Corporation 1989 Management Incentive Plan (Amended and Restated
Effective April 26, 1995).
16. McKesson Corporation 1981 Long-Term Incentive Plan.
17. McKesson Corporation 1973 Stock Purchase Plan.
18. Form of Termination Agreement by and between the Company and certain
designated Executive Officers.
19. Description of McKesson Corporation Retirement Program for Nonemployee
Directors.
20
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<DESCRIPTION>CORRECTED RESTATED CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>
EXHIBIT 3.1
CORRECTED
RESTATED CERTIFICATION OF INCORPORATION
OF
McKESSON CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
McKesson Corporation.
2. A Restated Certification of Incorporation of the Corporation was filed with
the Secretary of State, State of Delaware, on March 29, 1995.
3. The Restated Certificate of Incorporation contained inacccuracies in the
heading and in the introductory paragraphs preceding Article I in that the
former name of the Corporation was omitted from the heading and that it
contained references to Sections 141(f) and 242. A paragraph also stated that
the Restatement was further amending the Certificate of Incorporation which was
incorrect.
4. The Restated Certificate of Incorporation is corrected in its entirety in the
form attached hereto as Exhibit A.
IN WITNESS WHEREOF, SAID McKesson Corporation has caused this Certificate
to be signed by Nancy A. Miller, its Vice President.
McKESSON CORPORATION
Date: June 9, 1995
By /s/ Nancy A. Miller
--------------------------------
Nancy A. Miller
Vice President
<PAGE>
Exhibit A
CORRECTED RESTATED
CERTIFICATE OF INCORPORATION
OF
McKESSON CORPORATION
(Originally Incorporated on July 7, 1994
Under the Name of SP Ventures, Inc.)
ARTICLE I.
The name of the Corporation is McKesson Corporation.
ARTICLE II.
The address of the registered office of the Corporation within the State of
Delaware is 32 Loockerman Square, Suite L-100, City of Dover 19901, County of
Kent. The name of the registered agent of the Corporation at such address is The
Prentice-Hall Corporation System, Inc.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV.
The total number of shares of stock of all classes which the Corporation has
authority to issue is 300,000,000 shares, divided into 100,000,000 shares of
Series Preferred Stock, par value $0.01 per share (herein called the "Series
Preferred Stock"), and 200,000,000 shares of Common Stock, par value $.01 per
share (herein called the "Common Stock"). The aggregate par value of all shares
having par value is $3,000,000.
The Board of Directors of the Corporation is expressly authorized, as shall be
stated and expressed in the resolution or resolutions it adopts, subject to
limitations prescribed by law and the provisions of this Article IV, to provide
for the issuance of the shares of Series Preferred Stock in one or more class or
series, in addition to the shares thereof specifically provided for in this
Article IV, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix for each such class or series such
voting powers, full or limited, or no voting powers, and such distinctive
designations, powers, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof,
including without limitation, the authority to provide that any such class or
series may be (i) subject to redemption at such time or times and at such price
or prices; (ii) entitled to receive dividends (which may be cumulative or non-
cumulative) at such rates, on such conditions, and at such times, and payable in
preference to, or in relation to, the dividends payable on any other class or
classes or any other series; (iii) entitled to such rights upon the dissolution
of, or upon any distribution of the assets of, the Corporation; (iv) convertible
1
<PAGE>
into, or exchangeable for, shares of any other class or classes of stock, or of
any other series of the same or any other class or classes of stock, of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments; or (v) subject to the terms and amounts of any sinking fund
provided for the purchase or redemption of the shares of such series; all as may
be stated in such resolution or resolutions.
The number of authorized shares of Series Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Series Preferred Stock, as the case may be, or of any
series thereof, unless a vote of any such holders is required pursuant to the
provisions of this Article IV or the certificate or certificates establishing
any additional series of such stock.
A description of each class of the Corporation's stock, with the powers,
designations, preferences and relative, participating, optional and other
rights, if any, and the qualifications, limitations and restrictions thereof, is
as follows:
I. SERIES PREFERRED STOCK
A. General Provisions Relating to All Series
1. The Board of Directors shall have authority to classify and reclassify any
unissued shares of the Series Preferred Stock from time to time by setting or
changing in any one or more respects the powers, designations, preferences and
relative, participating, optional and other rights, if any, and the
qualifications, limitations and restrictions of the Series Preferred Stock.
Subject to the foregoing, the power of the Board of Directors to classify and
reclassify any of the shares of Series Preferred Stock shall include, without
limitation, subject to the provisions of this Certificate of Incorporation,
authority to classify or reclassify any unissued shares of such stock into one
or more series of Series Preferred Stock, and to divide and classify shares of
any series into one or more series of Series Preferred Stock by determining,
fixing or altering one or more of the following:
(a) The distinctive designation of such series and the number of shares to
constitute such series; provided that, unless otherwise prohibited by the
terms of such or any other series, the number of shares of any series may be
decreased by the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such series
may be increased by the Board of Directors in connection with any such
classification or reclassification, and any shares of any series which have
been redeemed, purchased, otherwise acquired or converted into shares of
Common Stock or any other series shall remain part of the authorized Series
Preferred Stock and be subject to classification and reclassification as
provided in this Section.
(b) Whether or not and, if so, the rates, amounts and times at which, and the
conditions under which, dividends shall be payable on shares of such series,
whether any such dividends shall rank senior or junior to or on a parity with
the dividends payable on any other series of Series Preferred Stock, and the
status of any such dividends as cumulative, cumulative to a limited extent or
non-cumulative and as participating or non-participating.
(c) Whether or not shares of such series shall have voting rights, in addition
to any voting rights provided by law and, if so, the terms of such voting
rights.
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(d) Whether or not shares of such series shall have conversion or exchange
privileges and, if so, the terms and conditions thereof, including provision
for adjustment of the conversion or exchange rate in such events or at such
times as the Board of Directors shall determine.
(e) Whether or not shares of such series shall be subject to redemption and,
if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; and whether or not there shall
be any sinking fund or purchase account in respect thereof, and if so, the
terms thereof.
(f) The rights of the holders of shares of such series upon the liquidation,
dissolution or winding up of the affairs of, or upon any distribution of the
assets of, the Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or involuntary and, if
voluntary, may vary at different dates, and whether such rights shall rank
senior or junior to or on a parity with such rights of any other series of
Series Preferred Stock.
(g) Whether or not there shall be any limitations applicable, while shares of
such series are outstanding, upon the payment of dividends or making of
distributions on, or the acquisition of, or the use of moneys for purchase or
redemption of, any stock of the Corporation, or upon any other action of the
Corporation, including action under this Section, and, if so, the terms and
conditions thereof .
(h) Any other powers, designations, preferences and relative, participating,
optional and other rights, if any, and any other qualifications, limitations
and restrictions, on the shares of such series, not inconsistent with law and
this Certificate of Incorporation.
2. For the purposes hereof and of any certificate providing for the
classification or reclassification of any shares of Series Preferred Stock or of
any other charter document of the Corporation (unless otherwise provided in any
such certificate or document), any class or series of stock of the Corporation
shall be deemed to rank:
(a) Prior to a particular class or series of stock if the holders of such
class or classes or series shall be entitled to the receipt of dividends or of
amounts distributable in the event of any liquidation, dissolution or winding
up, as the case may be, in preference to or with priority over the holders of
such particular class or series of stock;
(b) On a parity with a particular class or series of stock, whether or not the
dividend rates, dividend payment dates, voting rights or redemption or
liquidation prices per share thereof, be different from those of such
particular class or series of stock, if the rights of holders of such class or
classes or series to the receipt of dividends or of amounts distributable in
event of any liquidation, dissolution or winding up, as the case may be, shall
be neither (i) in preference to, or with priority over, nor (ii) subject or
subordinate to, the rights of holders of such particular class or series of
stock in respect of the receipt of dividends or of amounts distributable in
the event of any liquidation, dissolution or winding up of the Corporation, as
the case may be; and
(c) Junior to a particular class or series of stock if the rights of the
holders of such class or classes or series shall be subject or subordinate to
the rights of the holders of such particular class or series of stock in
respect of the receipt of dividends or of amounts distributable in the event
of any liquidation, dissolution or winding up, as the case may be.
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B. Series A Junior Participating Preferred Stock
1. Designation and Amount. The shares of this series shall be designated as
"Series A Junior Participating Preferred Stock" and the number of shares
constituting such series shall initially be 10,000,000, par value $0.01 per
share, such number of shares to be subject to increase or decrease by action of
the Board of Directors as evidenced by a certificate or certificates evidencing
such change.
2. Dividends and Distributions.
(a) The holders of shares of Series A Junior Participating Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first business day of January, April, July and October
in each year (each such date being referred to herein as a "Series A Quarterly
Dividend Payment Date"), commencing on the first Series A Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $10.00 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Series A
Quarterly Dividend Payment Date, or, with respect to the first Series A
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. In the
event the Corporation shall at any time after November 1, 1994 (the "Rights
Declaration Date") (A) declare any dividend on Common Stock payable in shares
of Common Stock, (B) subdivide the outstanding Common Stock, or (C) combine
the outstanding Common Stock into a smaller number of shares, then in each
such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (ii) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series A
Junior Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Series A Quarterly Dividend Payment Date
and the next subsequent Series A Quarterly Dividend Payment Date, a dividend
of $10.00 per share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Series A Quarterly Dividend Payment
Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares of
Series A Junior Participating Preferred Stock from the Series A Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Series A Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Series A Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Series A Quarterly Dividend Payment Date, in either of which events such
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dividends shall begin to accrue and be cumulative from such Series A Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating Preferred Stock
in an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Junior Participating
Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each share
of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of shares of
Series A Junior Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall mark
the beginning of a period (herein called a "default period") which shall
extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Series Preferred Stock,
(including holders of the Series A Junior Participating Preferred Stock)
with dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series, shall have
the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of Series
A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(c)
or at any annual meeting of stockholders, and thereafter at annual meetings
of stockholders, provided that neither such voting right nor the right of
the holders of any other series of Series Preferred Stock, if any, to
increase, in certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent (10%) in number of shares of
Series Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Series Preferred Stock of such voting right. At
any meeting at which the holders of Series Preferred Stock shall exercise
such voting right initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
(2) Directors or, if such right is exercised at an annual meeting, to elect
two (2)
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Directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Series Preferred
Stock shall have the right to make such increase in the number of Directors
as shall be necessary to permit the election by them of the required
number. After the holders of the Series Preferred Stock shall have
exercised their right to elect Directors in any default period and during
the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Series Preferred
Stock as herein provided or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Series A Junior Participating
---- -----
Preferred Stock.
(iii) Unless the holders of Series Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series Preferred Stock outstanding, irrespective
of series, may request, the calling of a special meeting of the holders of
Series Preferred Stock, which meeting shall thereupon be called by the
President, a Vice-President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Series Preferred
Stock are entitled to vote pursuant to this paragraph (c)(iii) shall be
given to each holder of record of Series Preferred Stock by mailing a copy
of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier
than 20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (c)(iii), no such special
meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and other classes
of stock of the Corporation if applicable, shall continue to be entitled to
elect the whole number of Directors until the holders of Series Preferred
Stock shall have exercised their right to elect two (2) Directors voting as
a class, after the exercise of which right (A) the Directors so elected by
the holders of Series Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the expiration
of the default period, and (B) any vacancy in the Board of Directors may
(except as provided in paragraph (c)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director whose office shall
have become vacant. References in this paragraph (c) to Directors elected
by the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (B) of
the preceding sentence.
(v) Immediately upon the expiration of a default period, (A) the right of
the holders of Series Preferred Stock as a class to elect Directors shall
cease, (B) the term of any Directors elected by the holders of Series
Preferred Stock as a class shall terminate, and (C) the number of Directors
shall be such number as may be provided for in this Certificate of
Incorporation or the By-laws of the Corporation irrespective of any
increase made pursuant to the provisions of paragraph (c)(ii) of this
Section 3 (such number being subject, however, to change thereafter in any
manner provided by law or in this Certificate of Incorporation or the By-
laws of the Corporation). Any vacancies in the Board of Directors effected
by the provisions of clauses (B) and (C) in the preceding sentence may be
filled by a majority of the remaining Directors.
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(d) Except as set forth herein or as otherwise required by applicable law,
holders of Series A Junior Participating Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth herein)
for taking any corporate action.
4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions payable
on the Series A Junior Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or redeem
or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior Participating Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior
Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of Series A
Junior Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Junior Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Series Preferred Stock and may be reissued as part of a new
series of Series Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
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6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution or winding up
of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series
A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth
in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(a) declare any dividend on Common Stock payable in shares of Common Stock, (b)
subdivide the outstanding Common Stock, or (c) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Junior Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
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shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
8. No Redemption. The shares of Series A Junior Participating Preferred Stock
shall not be redeemable.
9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior
to all other series of the Corporation's Series Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. Amendment. This Certificate of Incorporation shall not be further amended
in any manner which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.
11. Fractional Shares. Series A Junior Participating Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Junior Participating Preferred Stock.
II. COMMON STOCK
A. Dividends. Subject to all of the rights of the Series Preferred Stock,
dividends may be paid upon the Common Stock as and when declared by the Board of
Directors out of funds legally available for the payment of dividends.
B. Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, and after the
holders of the Series Preferred Stock shall have been paid in full amounts to
which they respectively shall be entitled, or an amount sufficient to pay the
aggregate amount to which such holders shall be entitled shall have been
deposited in trust with a bank or trust company having its principal office in
the Borough of Manhattan, City, County and State of New York, having a capital,
undivided profits and surplus aggregating at least $5,000,000, for the benefit
of the holders of the Series Preferred Stock, the remaining net assets of the
Corporation shall be distributed pro rata to the holders of the Common Stock.
C. Voting Rights. Except as otherwise expressly provided with respect to the
Series Preferred Stock and except as otherwise may be required by law, the
Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes and each holder of Common Stock shall be
entitled to one vote for each share held.
ARTICLE V.
A. Board of Directors of the Corporation.
1. General Provisions. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. The exact number of
directors shall be fixed from time to time by, or in the manner provided in, the
By-Laws of the Corporation and may be increased or
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decreased as therein provided. Directors of the Corporation need not be elected
by ballot unless required by the By-laws.
2. Classification of Board of Directors. The directors shall be divided into
three classes. Each such class shall consist, as nearly as may be possible, of
one-third of the total number of directors, and any remaining directors shall be
included within such group or groups as the Board of Directors shall designate.
At the annual meeting of stockholders in 1994, a class of directors shall be
elected for a one-year term, a class of directors for a two-year term and a
class of directors for a three-year term. At each succeeding annual meeting of
stockholders, beginning in 1995, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, but in no case shall a decrease in the number of
directors shorten the term of any incumbent director. A director may be removed
from office for cause only and, subject to such removal, death, resignation,
retirement or disqualification, shall hold office until the annual meeting for
the year in which his term expires and until his successor shall be elected and
qualify. No alteration, amendment or repeal of this Article V or the By-Laws of
the Corporation shall be effective to shorten the term of any director holding
office at the time of such alteration, amendment or repeal, to permit any such
director to be removed without cause, or to increase the number of directors in
any class or in the aggregate from that existing at the time of such alteration,
amendment or repeal until the expiration of the terms of office of all directors
then holding office, unless (i) in the case of this Article V, such alteration,
amendment or repeal has been approved by the holders of all shares of stock
entitled to vote thereon, or (ii) in the case of the By-Laws, such alteration,
amendment or repeal has been approved by either the holders of all shares
entitled to vote thereon or by a vote of a majority of the entire Board of
Directors.
3. Directors Appointed by a Specific Class of Stockholders. To the extent that
any holders of any class or series of stock other than Common Stock issued by
the Corporation shall have the separate right, voting as a class or series, to
elect directors, the directors elected by such class or series shall be deemed
to constitute an additional class of directors and shall have a term of office
for one year or such other period as may be designated by the provisions of such
class or series providing such separate voting right to the holders of such
class or series of stock, and any such class of directors shall be in addition
to the classes designated above.
ARTICLE VI.
A. General Provisions. The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the Corporation and
of its directors and stockholders:
1. Amendments to the Certificate of Incorporation. Subject to the provisions
of applicable law, the Corporation reserves the right from time to time to make
any amendment to its Certificate of Incorporation, now or hereafter authorized
by law, including any amendment which alters the contract rights as expressly
set forth therein, of any outstanding stock.
2. Amendments to the By-Laws. The Board of Directors is expressly authorized
to adopt, alter and repeal the By-Laws of the Corporation in whole or in part at
any regular or special meeting of the Board of Directors, by vote of a majority
of the entire Board of Directors. Except where this Certificate of Incorporation
otherwise requires a higher vote, the By-Laws may also be adopted, altered or
repealed in whole or in part at any annual or special meeting of the
stockholders by the affirmative vote of three-fourths of the shares of the
Corporation outstanding and entitled to vote thereon.
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3. No Preemptive Rights. No holder of any class of stock of the Corporation,
whether now or hereafter authorized or outstanding, shall have any preemptive,
preferential or other right to subscribe for or purchase any class of the
Corporation's stock, whether now or hereafter authorized or outstanding, which
it may at any time issue or sell, or to subscribe for or purchase any notes,
debentures, bonds or other securities which it may at any time issue or sell,
whether or not the same be convertible into or exchangeable for or carry options
or warrants to purchase shares of any class of the Corporation's stock or other
securities, or to receive or purchase any warrants or options which may be
issued or granted evidencing the right to purchase any such stock or other
securities, it being intended by this Section 3 that all preemptive rights of
any kind applicable to securities of the Corporation are eliminated.
4. Vote Required to Take Action; Action by Written Consent. Except as
otherwise provided in this Certificate of Incorporation and except as otherwise
provided by applicable law, the Corporation may take or authorize any action
upon the affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
thereof. Action shall be taken by stockholders of the Corporation only at annual
or special meetings of stockholders, and stockholders may act in lieu of a
meeting only by unanimous written consent.
5. Compensation of Directors. The Board of Directors may determine from time
to time the amount and type of compensation which shall be paid to its members
for service on the Board of Directors. The Board of Directors shall also have
the power, in its discretion, to provide for and to pay to directors rendering
services to the Corporation not ordinarily rendered by directors, as such,
special compensation appropriate to the value of such services, as determined by
the Board from time to time.
6. Interested Transactions. Any director or officer individually, or any
partnership of which any director or officer may be a member, or any corporation
or association of which any director or officer may be an officer, director,
trustee, employee or stockholder, may be a party to, or may be pecuniarily or
otherwise interested in, any contract or transaction of the Corporation, and in
the absence of fraud no contract or other transaction shall be thereby affected
or invalidated. Any director of the Corporation who is so interested, or who is
also a director, officer, trustee, employee or stockholder of such other
corporation or association or a member of such partnership which is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize any
such contract or transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he were not such
director, officer, trustee, employee or stockholder of such other corporation or
association or not so interested or a member of a partnership so interested;
provided that in case a director, or a partnership, corporation or association
- --------
of which a director is a member, officer, director, trustee or employee is so
interested, such fact shall be disclosed or shall have been known to the Board
of Directors or a majority thereof. This paragraph shall not be construed to
invalidate any such contract or transaction which would otherwise be valid under
the common and statutory law applicable thereto.
7. Indemnification. The Corporation shall indemnify (a) its directors to the
fullest extent permitted by the laws of the State of Delaware now or hereafter
in force, including the advancement of expenses under the procedures provided by
such laws, (b) all of its officers to the same extent as it shall indemnify its
directors, and (c) its officers who are not directors to such further extent as
shall be authorized by the Board of Directors and be consistent with law.
Subject only to any limitations prescribed by the laws of the State of Delaware
now or hereafter in force, the foregoing shall not limit the authority of the
Corporation to indemnify the directors, officers and other employees and agents
of this Corporation consistent with law and shall not be deemed to be exclusive
of any rights to which those indemnified may be entitled as a matter of law or
under any resolution, By-Law provision, or agreement.
11
<PAGE>
8. Court-Ordered Meetings of Creditors and/or Stockholders. Whenever a
compromise or arrangement is proposed between this Corporation and its creditors
or any class of them and/or between this Corporation and its stockholders or any
class of them, any court of equitable jurisdiction within the State of Delaware
may, on the application in a summary way of this Corporation or of any creditor
or stockholder thereof, or on the application of any receiver or receivers
appointed for this Corporation under the provisions of Section 291 of Title 8 of
the Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as such court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which such application has
been made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this Corporation, as the case may
be, and also on this Corporation.
9. Liability of Directors. To the fullest extent permitted by Delaware
statutory or decisional law, as amended or interpreted, no director of this
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. This Section 9
does not affect the availability of equitable remedies for breach of fiduciary
duties.
ARTICLE VII.
A. Vote Required for Certain Business Combinations
1. Voting Requirements. In addition to any vote otherwise required by law or
this Certificate of Incorporation, a Business Combination (such term, and
certain other capitalized terms referred to in this Article VII, as defined in
Section 3 of this Article VII) shall be recommended by the Board of Directors
and approved by the affirmative vote of at least:
(a) 80 percent of the votes entitled to be cast by outstanding shares of
voting stock of the Corporation, voting together as a single voting group; and
(b) Two-thirds of the votes entitled to be cast by holders of voting stock
other than voting stock held by an Interested Stockholder who is (or whose
Affiliate is) a party to the Business Combination or an Affiliate or Associate
of the Interested Stockholder, voting together as a single voting group.
2. When Voting Requirements Not Applicable.
(a) The vote required by Section 1 of this Article VII does not apply to a
Business Combination if each of the following conditions is met:
(i) The aggregate amount of the cash and the Market Value as of the
Valuation Date of consideration other than cash to be received per share by
holders of common stock in such Business Combination is at least equal to
the highest of the following:
(A) The highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Stockholder for any shares of common stock of the same class or series
acquired by it: (x) within the 2 year period
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<PAGE>
immediately prior to the Announcement Date of the proposal of the
Business Combination; or (y) in the transaction in which it became an
Interested Stockholder, whichever is higher; or
(B) The Market Value per share of common stock of the same class or
series on the Announcement Date or on the Determination Date, whichever
is higher; or
(C) The price per share equal to the Market Value per share of common
stock of the same class or series determined pursuant to subparagraph
(i)(B) of this paragraph (a), multiplied by the fraction of: (x) the
highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested Stockholder
for any shares of common stock of the same class or series acquired by it
within the 2 year period immediately prior to the Announcement Date, over
(y) the Market Value per share of common stock of the same class or
series on the first day in such 2 year period on which the Interested
Stockholder acquired any shares of common stock.
(ii) The aggregate amount of the cash and the Market Value as of the
Valuation Date of consideration other than cash to be received per share by
holders of shares of any class or series of outstanding stock other than
Common Stock is at least equal to the highest of the following (whether or
not the Interested Stockholder has previously acquired any shares of a
particular class or series of stock):
(A) The highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Stockholder for any shares of such class of stock acquired by it: (x)
within the 2 year period immediately prior to the Announcement Date of
the proposal of the Business Combination; or (y) in the transaction in
which it became an Interested Stockholder, whichever is higher; or
(B) The highest preferential amount per share to which the holders of
shares of such class of stock are entitled in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation;
or
(C) The Market Value per share of such class of stock on the Announcement
Date or on the Determination Date, whichever is higher; or
(D) The price per share equal to the Market Value per share of such class
of stock determined pursuant to subparagraph (ii)(B) of this paragraph
(a), multiplied by the fraction of: (x) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for any shares of any
class of Voting Stock acquired by it within the 2 year period immediately
prior to the Announcement Date, over (y) the Market Value per share of
the same class of voting stock on the first day in such 2 year period on
which the Interested Stockholder acquired any shares of the same class of
Voting Stock.
(iii) The consideration to be received by holders of any class or series of
outstanding stock is to be in cash or in the same form as the Interested
Stockholder has previously paid for shares of the same class or series of
stock. If the Interested Stockholder has paid for shares of any class of
stock with varying forms of consideration, the form of consideration for
such class of stock shall be either cash or the form used to acquire the
largest number of shares of such class or series of stock previously
acquired by it.
13
<PAGE>
(iv) After the Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination:
(A) There shall have been: (x) no reduction in the annual rate of
dividends paid on any class or series of stock of the Corporation that is
not preferred stock (except as necessary to reflect any subdivision of
the stock); (y) an increase in such annual rate of dividends as necessary
to reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which has the
effect of reducing the number of outstanding shares of the stock; and (z)
the Interested Stockholder did not become the beneficial owner of any
additional shares of stock of the Corporation except as part of the
transaction which resulted in such Interested Stockholder becoming an
Interested Stockholder or by virtue of proportionate stock splits or
stock dividends.
(B) The provisions of subparagraphs (x) and (y) of subparagraph (iv)(A)
do not apply if no Interested Stockholder or an Affiliate or Associate of
the Interested Stockholder voted as a director of the Corporation in a
manner inconsistent with such sub-subparagraphs and the Interested
Stockholder, within 10 days after any act or failure to act inconsistent
with such sub-subparagraphs, notifies the Board of Directors of the
Corporation in writing that the Interested Stockholder disapproves
thereof and requests in good faith that the Board of Directors rectify
such act or failure to act.
(v) After the Interested Stockholder has become an Interested Stockholder,
the Interested Stockholder may not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation or any of its
Subsidiaries, whether in anticipation of or in connection with such
Business Combination or otherwise.
(b) The requirements of Section 1 of this Article VII do not apply to Business
Combinations that, as to specifically identified Interested Stockholders or
their Affiliates, have been approved or exempted therefrom by resolution of
the Board of Directors of the Corporation at any time prior to the time that
the Interested Stockholder first became an Interested Stockholder. If the
Board of Directors so provides, the resolution shall be subject to approval of
the stockholders in the manner and by the vote specified in the resolution.
3. Definitions. In this Article VII, the following words have the meanings
indicated:
(a) "Affiliate," including the term "affiliated person," means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, a specified person .
(b) "Announcement Date" means the first general public announcement of the
proposal or intention to make a proposal of the Business Combination or its
first communication generally to stockholders of the Corporation, whichever is
earlier;
(c) "Associate," when used to indicate a relationship with any person, means:
(i) Any corporation or organization (other than the Corporation or a
Subsidiary of the Corporation) of which such person is an officer,
director, or partner or is, directly or indirectly, the beneficial owner of
10 percent or more of any class of Equity Securities;
14
<PAGE>
(ii) Any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity; and
(iii) Any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the Corporation or any of its Affiliates.
(d) "Beneficial Owner," when used with respect to any Voting Stock, means a
person:
(i) That, individually or with any of its Affiliates or Associates,
beneficially owns Voting Stock, directly or indirectly; or
(ii) That, individually or with any of its Affiliates or Associates, has:
(A) The right to acquire Voting Stock (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement, or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise; or
(B) The right to vote Voting Stock pursuant to any agreement,
arrangement, or understanding; or
(iii) That has any agreement, arrangement, or understanding for the purpose
of acquiring, holding, voting or disposing of Voting Stock with any other
person that beneficially owns, or whose Affiliates or Associates
beneficially own, directly or indirectly, such shares of Voting Stock.
(e) "Business Combination" means:
(i) Unless the merger, consolidation, or share exchange does not alter the
contract rights of the stock as expressly set forth in this Certificate of
Incorporation or change or convert in whole or in part the outstanding
shares of stock of the Corporation, any merger or consolidation of the
Corporation or any Subsidiary with (A) any Interested Stockholder or (B)
any other corporation (whether or not itself an Interested Stockholder)
which is, or after the merger or consolidation, would be, an Affiliate of
an Interested Stockholder that was an Interested Stockholder prior to the
transaction.
(ii) Any sale, lease, transfer or other disposition, other than in the
ordinary course of business, in one transaction or a series of transactions
in any 12-month period, to any Interested Stockholder or any Affiliate of
any Interested Stockholder (other than the Corporation or any of its
Subsidiaries) of any assets of the Corporation or any Subsidiary having,
measured at the time the transaction or transactions are approved by the
Board of Directors of the Corporation, an aggregate book value as of the
end of the Corporation's most recently ended fiscal quarter of 10 percent
or more of the total Market Value of the outstanding stock of the
Corporation or of its net worth as of the end of its most recently ended
fiscal quarter;
(iii) The issuance or transfer by the Corporation, or any Subsidiary, in
one transaction or a series of transactions, of any Equity Securities of
the Corporation or any Subsidiary which have an aggregate Market Value of 5
percent or more of the total Market Value of the outstanding stock of the
Corporation to any Interested Stockholder or any Affiliate of any
Interested Stockholder (other than the Corporation or any of its
Subsidiaries) except pursuant to the exercise of warrants or rights to
purchase securities offered pro rata to all
15
<PAGE>
holders of the Corporation's voting stock or any other method affording
substantially proportionate treatment to the holders of Voting Stock;
(iv) The adoption of any plan or proposal for the liquidation or
dissolution of the Corporation in which anything other than cash will be
received by an Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(v) Any reclassification of securities (including any reverse stock split),
or recapitalization of the Corporation, or any merger or consolidation, of
the Corporation with any of its Subsidiaries which has the effect, directly
or indirectly, in one transaction or a series of transactions, of
increasing by 5 percent or more of the total number of outstanding shares,
the proportionate amount of the outstanding shares of any class of Equity
Securities of the Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder or any Affiliate of any
Interested Stockholder.
(f) "Common Stock" means any stock other than preferred or preference stock.
(g) "Control," including the terms "controlling," "controlled by" and "under
common control with," means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise, and the beneficial ownership of 10 percent or more of the votes
entitled to be cast by a corporation's voting stock creates a presumption of
control.
(h) "Determination Date" means the date on which an Interested Stockholder
first became an Interested Stockholder;
(i) "Equity Security" means:
(i) Any stock or similar security, certificate of interest, or
participation in any profit sharing agreement, voting trust certificate, or
certificate of deposit for an equity security;
(ii) Any security convertible, with or without consideration, into an
equity security, or any warrant or other security carrying any right to
subscribe to or purchase an equity security; or
(iii) Any put, call, straddle, or other option or privilege of buying an
equity security from or selling an equity security to another without being
bound to do so.
(j) "Interested Stockholder" means any person (other than the Corporation or
any Subsidiary) that:
(i)(A) Is the beneficial owner, directly or indirectly, of 10 percent or
more of the voting power of the outstanding voting stock of the
Corporation; or
(B) Is an Affiliate of the Corporation and at any time within the 2 year
period immediately prior to the date in question was the beneficial owner,
directly or indirectly, of 10 percent or more of the Voting Power of the
then outstanding voting stock of the Corporation.
(ii) For the purpose of determining whether a person is an Interested
Stockholder, the number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned by the person through application of
subsection (d) of this section but may not include any other shares of
Voting Stock which may be issuable pursuant to any
16
<PAGE>
agreement, arrangement, or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
(k) "Market Value" means:
(i) In the case of stock, the highest closing sale price during the 30 day
period immediately preceding the date in question of a share of such stock
on the composite tape for New York Stock Exchange listed stocks, or, if
such stock is not quoted on the composite tape, on the New York Stock
Exchange, or if such stock is not listed on such exchange, on the principal
United States securities exchange registered under the Securities Exchange
Act of 1934 on which such stock is listed, or, if such stock is not listed
on any such exchange, the highest closing bid quotation with respect to a
share of such stock during the 30 day period preceding the date in question
on the National Association of Securities Dealers, Inc. automated
quotations system or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of such
stock as determined by the Board of Directors of the Corporation in good
faith; and
(ii) In the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by the Board
of Directors of the Corporation in good faith.
(l) "Subsidiary" means any corporation of which voting stock having a majority
of the votes entitled to be cast is owned, directly or indirectly, by the
Corporation.
(m) "Valuation Date" means: (i) for a Business Combination voted upon by
stockholders, the later of the day prior to the date of the stockholders' vote
or the day 20 days prior to the consummation of the Business Combination; and
(ii) for a Business Combination not voted upon by stockholders, the date of
the consummation of the Business Combination.
(n) "Voting Stock" means shares of capital stock of the Corporation entitled
to vote generally in the election of directors.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation restates and
integrates, but does not further amend, the provisions of the Restated
Certificate of Incorporation of the Corporation as adopted by the Board of
Directors of the Corporation pursuant to Section 245 of the Delaware General
Corporation Law, and has been executed and attested to by its duly authorized
officers this 29th day of March, 1995.
McKESSON CORPORATION
By: /S/Nancy A. Miller
------------------
Nancy A. Miller
Vice President and Corporate Secretary
Attest:
/S/Lorraine E. Peetz
- --------------------
Lorraine E. Peetz
Assistant Secretary
17
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<DESCRIPTION>RESTATED BY-LAWS
<TEXT>
<PAGE>
EXHIBIT 3.2
================================================================================
- --------------------------------------------------------------------------------
RESTATED
BY-LAWS
of
McKESSON CORPORATION
A Delaware Corporation
----------------------------------------
As amended through April 26, 1995
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Offices...................................... 1
Section 1 Registered Office............................ 1
Section 2 Other Offices................................ 1
ARTICLE II Stockholders' Meetings....................... 1
Section 1 Place of Meetings............................ 1
Section 2 Annual Meetings.............................. 1
Section 3 Special Meetings............................. 1
Section 4 Notice of Meetings........................... 2
Section 5 Quorum....................................... 2
Section 6 Voting Rights................................ 3
Section 7 Voting Procedures and Inspectors
of Elections................................. 3
Section 8 List of Stockholders......................... 4
Section 9 Stockholder Proposals at
Annual Meetings.............................. 4
Section 10 Nominations of Persons for Election
to the Board of Directors.................... 5
ARTICLE III Directors.................................... 6
Section 1 General Powers............................... 6
Section 2 Number and Term of Office; Removal........... 6
Section 3 Election of Directors........................ 7
Section 4 Vacancies.................................... 7
Section 5 Resignations................................. 7
Section 6 Annual Meetings.............................. 7
Section 7 Regular Meetings............................. 7
Section 8 Special Meetings; Notice..................... 7
Section 9 Quorum and Manner of Acting.................. 8
Section 10 Consent in Writing........................... 8
Section 11 Committees................................... 8
Section 12 Telephone Meetings........................... 9
Section 13 Compensation................................. 9
Section 14 Interested Directors......................... 9
Section 15 Directors Elected by Special Class or Series. 10
ARTICLE IV Officers..................................... 10
Section 1 Designation of Officers...................... 10
Section 2 Term of Office; Resignation; Removal......... 10
Section 3 Vacancies.................................... 10
Section 4 Authority of Officers........................ 10
Section 5 Divisional Titles............................ 11
Section 6 Salaries..................................... 11
ARTICLE V Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation....... 12
Section 1 Execution of Instruments..................... 12
Section 2 Voting of Securities Owned by the Corporation 12
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI Shares of Stock and Other Securities......... 12
Section 1 Form and Execution of Certificates........... 12
Section 2 Lost Certificates............................ 12
Section 3 Transfers.................................... 13
Section 4 Fixing Record Dates.......................... 13
Section 5 Registered Stockholders...................... 13
Section 6 Regulations.................................. 13
Section 7 Other Securities of the Corporation.......... 14
ARTICLE VII Corporate Seal............................... 14
ARTICLE VIII Indemnification of Officers, Directors,
Employees and Agents....................... 14
Section 1 Power to Indemnify in Actions, Suits or
Proceedings other Than Those by or in the
Right of the Corporation................... 14
Section 2 Power to Indemnify in Actions, Suits or
Proceedings by or in the Right of the
Corporation................................ 15
Section 3 Authorization of Indemnification............. 15
Section 4 Good Faith Defined........................... 15
Section 5 Indemnification by a Court................... 15
Section 6 Expenses Payable in Advance.................. 16
Section 7 Nonexclusivity of Indemnification and
Advancement of Expenses.................... 16
Section 8 Insurance.................................... 16
Section 9 Certain Definitions.......................... 16
Section 10 Survival of Indemnification and Advancement
of Expenses................................ 17
Section 11 Limitation on Indemnification................ 17
Section 12 Indemnification of Employees and Agents...... 17
Section 13 Effect of Amendment.......................... 17
Section 14 Authority to Enter into Indemnification
Agreements................................. 17
ARTICLE IX Notices...................................... 18
ARTICLE X Amendments................................... 18
</TABLE>
ii
<PAGE>
RESTATED
BY-LAWS
OF
McKESSON CORPORATION
A Delaware Corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of McKesson Corporation
(the "Corporation") in the State of Delaware shall be in the City of Dover,
County of Kent.
SECTION 2. OTHER OFFICES. The Corporation shall also have and maintain an
office or principal place of business at One Post Street, San Francisco,
California and may also have offices at such other places, both within and
without the State of Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders of the Corporation
shall be held at such place, either within or without the State of Delaware, as
may be designated from time to time by the Board of Directors, or, if not so
designated, then at the office of the Corporation required to be maintained
pursuant to Section 2 of ARTICLE I hereof.
SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders of the
Corporation for the purpose of election of directors and for such other business
as may lawfully come before it, shall be held on such date and at such time as
may be designated from time to time by the Board of Directors, or, if not so
designated, then at 10:00 a.m. on the last Wednesday in July in each year if not
a legal holiday, and, if a legal holiday, at the same hour and place on the next
succeeding day not a holiday.
SECTION 3. SPECIAL MEETINGS. Special Meetings of the stockholders of the
Corporation may be called, for any purpose or purposes, by the Chairman of the
Board or the President or the Board of Directors at any time. Stockholders may
not call Special Meetings of the stockholders of the Corporation.
1
<PAGE>
SECTION 4. NOTICE OF MEETINGS.
(a) Except as otherwise provided by law or the Certificate of Incorporation,
written notice of each meeting of stockholders, specifying the place, date and
hour and purpose or purposes of the meeting, shall be given not less than 10 nor
more than 60 days before the date of the meeting to each stockholder entitled to
vote thereat, directed to his address as it appears upon the books of the
Corporation; except that where the matter to be acted on is a merger or
consolidation of the Corporation or a sale, lease or exchange of all or
substantially all of its assets, such notice shall be given not less than 20 nor
more than 60 days prior to such meeting.
(b) If at any meeting action is proposed to be taken which, if taken, would
entitle stockholders fulfilling the requirements of Section 262(d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.
(c) When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken unless the adjournment is for more
than thirty days, or unless after the adjournment a new record date is fixed for
the adjourned meeting, in which event a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
(d) Notice of the time, place and purpose of any meeting of stockholders may be
waived in writing, either before or after such meeting, and to the extent
permitted by law, will be waived by any stockholder by his attendance thereat,
in person or by proxy. Any stockholder so waiving notice of such meeting shall
be bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
(e) Unless and until voted, every proxy shall be revocable at the pleasure of
the person who executed it or of his legal representatives or assigns, except in
those cases where an irrevocable proxy permitted by statute has been given.
SECTION 5. QUORUM. At all meetings of stockholders, except where otherwise
provided by law, the Certificate of Incorporation, or these By-Laws, the
presence, in person or by proxy duly authorized, of the holders of a majority of
the outstanding shares of stock entitled to vote shall constitute a quorum for
the transaction of business. Shares, the voting of which at said meeting has
been enjoined, or which for any reason cannot be lawfully voted at such meeting,
shall not be counted to determine a quorum at said meeting.
In the absence of a quorum any meeting of stockholders may be adjourned, from
time to time, by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. At such
adjourned meeting at which a quorum is present or represented any business may
be transacted which might have been transacted at the original meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these By-Laws,
all action taken by the holders of a majority of the voting power represented at
any meeting at which a quorum is present shall be valid and binding upon the
Corporation.
In the event that at any meeting at which the holders of more than one class or
series of the Corporation's capital stock are entitled to vote as a class, a
quorum of any such class or series is lacking, the holders of any class or
series represented by a quorum may proceed with the
2
<PAGE>
transaction of the business to be transacted by that class or series, and if
such business is the election of directors, the director whose successors shall
not have been elected shall continue in office until their successors shall have
been duly elected and shall have qualified.
SECTION 6. VOTING RIGHTS.
(a) Except as otherwise provided by law, only persons in whose names shares
entitled to vote stand on the stock records of the Corporation on the record
date for determining the stockholders entitled to vote at said meeting shall be
entitled to vote at such meeting. Shares standing in the names of two or more
persons shall be voted or represented in accordance with the determination of
the majority of such persons, or, if only one of such persons is present in
person or represented by proxy, such person shall have the right to vote such
shares and such shares shall be deemed to be represented for the purpose of
determining a quorum.
(b) Every person entitled to vote or execute consents shall have the right to do
so either in person or by an agent or agents authorized by a written proxy
executed by such person or his duly authorized agent, which proxy shall be filed
with the Secretary of the Corporation at or before the meeting at which it is to
be used. Said proxy so appointed need not be a stockholder. No proxy shall be
voted on after three years from its date unless the proxy provides for a longer
period.
(c) Without limiting the manner in which a stockholder may authorize another
person or persons to act for him as proxy pursuant to subsection (b) of this
Section, the following shall constitute a valid means by which a stockholder may
grant such authority:
(1) A stockholder may execute a writing authorizing another person or
persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent
signing such writing or causing his or her signature to be affixed to
such writing by any reasonable means including, but not limited to, by
facsimile signature.
(2) A stockholder may authorize another person or persons to act for him
as proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy
support service organization or like agent duly authorized by the person
who will be the holder of the proxy to receive such transmission,
provided that any such telegram, cablegram or other means of electronic
transmission must either set forth or be submitted with information from
which it can be determined that the telegram, cablegram or other
electronic transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other electronic
transmissions are valid, the inspectors or, if there are no inspectors,
such other persons making that determination shall specify the
information upon which they relied.
(d) Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission created pursuant to subsection (c) of this Section may
be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission.
SECTION 7. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.
(a) The Corporation shall, in advance of any meeting of stockholders, appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Corporation may designate
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one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability.
(b) The inspectors shall (i) ascertain the number of shares outstanding and the
voting power of each, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
(c) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery upon application by a stockholder shall determine
otherwise.
(d) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the Corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this Section shall specify the
precise information considered by them including the person or persons from whom
they obtained the information, when the information was obtained, the means by
which the information was obtained and the basis for the inspectors' belief that
such information is accurate and reliable.
(e) The provisions of this Section 7 shall not apply to any annual meeting of
stockholders held prior to the annual meeting of stockholders to be held in
1995.
SECTION 8. LIST OF STOCKHOLDERS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least 10 days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least 10 days prior
to the meeting, either at a place within the city where the meeting is to be
held and which place shall be specified in the notice of the meeting, or, if not
specified, at the place where said meeting is to be held, and the list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 9. STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS. At an annual meeting of
the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors,
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otherwise properly brought before the meeting by or at the direction of the
Board of Directors or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation, not less
than 60 days nor more than 90 days prior to the meeting; provided, however, that
in the event that less than 70 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on the
10th day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. A stockholder's notice to
the Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting, (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially or of
record by the stockholder, (iv) a description of all arrangements or
understandings between the stockholder and any other person or persons
(including their names) in connection with the proposal of such business by the
stockholder and any material interest of the stockholder in such business, and
(v) a representation that the stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 9, provided, however, that nothing in this Section 9 shall
be deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedure.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 9, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 10. NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS. In
addition to any other applicable requirements, only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors, by any nominating committee or person appointed by the
Board of Directors or by any stockholder of the Corporation entitled to vote for
the election of directors at the meeting who complies with the notice procedures
set forth in this Section 10. Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of the Corporation which are beneficially owned by the person and (iv)
any other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Section 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder; and (b) as to the
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stockholder giving the notice, (i) the name and record address of the
stockholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by the stockholder,
(iii) a description of all arrangements or understandings between the
stockholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by the
stockholder, (iv) a representation that such stockholder intends to appear in
person or by proxy at the meeting to nominate the persons named in such notice
and (v) any other information relating to the stockholder that would be required
to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for the election of directors pursuant
to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee being named as a nominee and to serve as a director if elected.
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein. These provisions
shall not apply to nomination of any persons entitled to be separately elected
by holders of preferred stock.
The Chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed under the direction of its Board of Directors,
which may exercise all of the powers of the Corporation, except such as are by
law or by the Certificate of Incorporation or by these By-Laws expressly
conferred upon or reserved to the stockholders.
SECTION 2. NUMBER AND TERM OF OFFICE; REMOVAL. The number of directors of the
Corporation shall be fixed from time to time by these By-Laws but in no event
shall be less than three (3). Until these By-Laws are further amended, the
number of directors shall be ten. The directors shall be divided into three
classes. Each such class shall consist, as nearly as may be possible, of one-
third of the total number of directors, and any remaining directors shall be
included within such group or groups as the Board of Directors shall designate.
At the initial annual meeting of stockholders in 1994, a class of directors
shall be elected for a one-year term, a class of directors for a two-year term
and a class of directors for a three-year term. At each succeeding annual
meeting of stockholders, beginning in 1995, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, but in no case shall a decrease in the number
of directors shorten the term of any incumbent director. A director may be
removed from office for cause only and, subject to such removal, death,
resignation, retirement or disqualification, shall hold office until the annual
meeting for the year in which his term expires and until his successor shall be
elected and qualify. No alteration, amendment or repeal of these By-Laws shall
be effective to shorten the term of any director holding office at the time of
such alteration, amendment or repeal, to permit any such director to be removed
without cause, or to increase the number of directors in any class or in the
aggregate from that existing at the time of such alteration, amendment or repeal
until the expiration of the terms of office of all directors then
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holding office, unless such alteration, amendment or repeal has been approved by
either the holders of all shares of stock entitled to vote thereon or by a vote
of a majority of the entire Board of Directors. The provisions of this Section 2
shall not apply to directors governed by Section 15 of this ARTICLE III.
SECTION 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for the
election of directors, the directors to be elected at such meeting shall be
elected by a plurality of votes given at such election.
SECTION 4. VACANCIES. Any vacancy occurring in the Board of Directors for any
cause other than by reason of an increase in the number of directors may be
filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum, or by the stockholders. Any
vacancy occurring by reason of an increase in the number of directors may be
filled by action of a majority of the entire Board of Directors or by the
stockholders. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the expiration of the term for which he
was elected and until his successor shall have been elected and shall have
qualified. A director elected by the stockholders to fill a vacancy shall be
elected to hold office until the expiration of the term for which he was elected
and until his successor shall have been elected and shall have qualified. The
provisions of this Section 4 shall not apply to directors governed by Section 15
of this ARTICLE III.
SECTION 5. RESIGNATIONS. A director may resign at any time by giving written
notice to the Board of Directors or to the Secretary. Such resignation shall
take effect at the time specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 6. ANNUAL MEETINGS. The Board of Directors, as constituted following
the vote of stockholders at any meeting of the stockholders for the election of
directors, may hold its first meeting for the purpose of organization and the
transaction of business, if a quorum be present, immediately after such meeting
and at the same place, and notice of such meeting need not be given. Such first
meeting may be held at any other time and place specified in a notice given as
hereinafter provided for special meetings of the Board of Directors or in a
consent and waiver of notice thereof signed by all the directors.
SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors may
be held without notice at such places and times as may be fixed from time to
time by resolution of the Board.
SECTION 8. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board or the
President and shall be called by the Secretary upon the written request of any
three directors and each special meeting shall be held at such place and time as
shall be specified in the notice thereof. At least twenty-four (24) hours'
notice of each such special meeting shall be given to each director personally
or sent to him addressed to his residence or usual place of business by
telephone, telegram or facsimile transmission, or at least 120 hours' notice of
each such special meeting shall be given to each director by letter sent to him
addressed as aforesaid or on such shorter notice and by such means as the person
or persons calling such meeting may deem reasonably necessary or appropriate in
light of the circumstances. Any notice by letter or telegram shall be deemed to
be given when deposited in the United States mail so addressed or when duly
deposited at an appropriate office for transmission by telegram, as
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the case may be. Such notice need not state the business to be transacted at or
the purpose or purposes of such special meeting. No notice of any such special
meeting of the Board of Directors need be given to any director who attends in
person or who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice. No notice need
be given of an adjourned meeting of the Board of Directors.
SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the total number of
directors, but in no event less than two directors, shall constitute a quorum
for the transaction of business at any annual, regular or special meeting of the
Board of Directors. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, the act of a majority of the directors
present at any meeting, at which a quorum is present, shall be the act of the
Board of Directors. In the absence of a quorum, a majority of the directors
present may adjourn the meeting from time to time until a quorum be had.
SECTION 10. CONSENT IN WRITING. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board or such committee.
SECTION 11. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may, by resolution passed by a
majority of the whole Board, appoint an Executive Committee of not less than
three members, each of whom shall be a director. The Executive Committee, to the
extent permitted by law, shall have and may exercise when the Board of Directors
is not in session all powers of the Board in the management of the business and
affairs of the Corporation, including, without limitation, the power and
authority to declare a dividend or to authorize the issuance of stock, except
such Committee shall not have the power or authority to amend the Certificate of
Incorporation, to adopt an agreement of merger or consolidation, to recommend to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, to recommend to the stockholders of the
Corporation a dissolution of the Corporation or a revocation of a dissolution,
or to amend these By-Laws.
(B) OTHER COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, from time to time appoint such other committees as
may be permitted by law. Such other committees appointed by the Board of
Directors shall have such powers and perform such duties as may be prescribed by
the resolution or resolutions creating such committee, but in no event shall any
such committee have the powers denied to the Executive Committee in these By-
Laws.
(c) TERM. The members of all committees of the Board of Directors shall serve a
term coexistent with that of the Board of Directors which shall have appointed
such committee. The Board, subject to the provisions of subsections (a) or (b)
of this Section 11, may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee; provided, that no
committee shall consist of less than one member. The membership of a committee
member shall terminate on the date of his death or voluntary resignation, but
the Board may at any time for any reason remove any individual committee member
and the Board may fill any committee vacancy created by death, resignation,
removal or increase in the number of members of the committee. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the
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committee, and, in addition, in the absence or disqualification of any member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise provide, regular
meetings of the Executive Committee or any other committee appointed pursuant to
this Section 11 shall be held at such times and places as are determined by the
Board of Directors, or by any such committee, and when notice thereof has been
given to each member of such committee, no further notice of such regular
meetings need be given thereafter; special meetings of any such committee may be
held at the principal office of the Corporation required to be maintained
pursuant to Section 2 of ARTICLE I hereof; or at any place which has been
designated from time to time by resolution of such committee or by written
consent of all members thereof, and may be called by any director who is a
member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the manner provided for
the giving of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of any special
meeting of any committee may be waived in writing at any time after the meeting
and will be waived by any director by attendance thereat. A majority of the
authorized number of members of any such committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.
SECTION 12. TELEPHONE MEETINGS. The Board of Directors or any committee
thereof may participate in a meeting by means of a conference telephone or
similar communications equipment if all members of the Board or of such
committee, as the case may be, participating in the meeting
can hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
SECTION 13. COMPENSATION. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors and/or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 14. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or committee, and the Board of Directors or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a
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quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
SECTION 15. DIRECTORS ELECTED BY SPECIAL CLASS OR SERIES. To the extent that
any holders of any class or series of stock other than Common Stock issued by
the Corporation shall have the separate right, voting as a class or series, to
elect directors, the directors elected by such class or series shall be deemed
to constitute an additional class of directors and shall have a term of office
for one year or such other period as may be designated by the provisions of such
class or series providing such separate voting right to the holders of such
class or series of stock, and any such class of directors shall be in addition
to the classes referred to in Section 2 of this ARTICLE III. Any directors so
elected shall be subject to removal in such manner as may be provided by law or
by the Certificate of Incorporation of this Corporation. The provisions of
Sections 2 and 4 of this ARTICLE III do not apply to directors governed by this
Section 15.
ARTICLE IV
OFFICERS
SECTION 1. DESIGNATION OF OFFICERS. The officers of the Corporation, who
shall be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders, shall be a Chairman of the Board, a President, one or
more Vice Presidents, a Treasurer, a Secretary and a Controller. The Board of
Directors from time to time may choose such other officers as it shall deem
appropriate. Any one person may hold any number of offices of the Corporation
at any one time unless specifically prohibited therefrom by law. The Chairman
of the Board and the President shall be chosen from among the directors; the
other officers need not be directors.
SECTION 2. TERM OF OFFICE; RESIGNATION; REMOVAL. The term of office of each
officer shall be until the first meeting of the Board of Directors following the
next annual meeting of stockholders and until his successor is elected and shall
have qualified, or until his death, resignation or removal, whichever is sooner.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Secretary. Such resignation shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. Any officer may
be removed at any time either with or without cause by the Board of Directors.
SECTION 3. VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause, may be filled for the unexpired
portion of the term by the Board of Directors.
SECTION 4. AUTHORITY OF OFFICERS. Subject to the power of the Board of
Directors in its discretion to change and redefine the duties of the officers of
the Corporation by resolution in such manner as it may from time to time
determine, the duties of the officers of the Corporation shall be as follows:
(a) CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation, and shall execute all the powers and
perform all the duties usual to such office. Subject to the direction of the
Board of Directors, he shall have the responsibility for the general management
of the Corporation. The Chairman shall preside at meetings of the stockholders
and
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the Board of Directors. He shall recommend to the Board, for its approval, the
membership of Board committees. Subject to the direction of the Board of
Directors, he shall generally manage the affairs of the Board and perform such
other duties as are assigned by the Board.
(b) PRESIDENT. The President shall be the Chief Operating Officer of the
Corporation and shall execute all the powers and perform all the duties usual to
such office. The President shall perform such other duties as may be prescribed
or assigned to him from time to time by the Board of Directors, the Executive
Committee or the Chief Executive Officer.
(c) OTHER OFFICERS. The other officers of the Corporation shall have such powers
and shall perform such duties as generally pertain to their respective offices,
as well as such powers and duties as the Board of Directors, the Executive
Committee or the Chief Executive Officer may prescribe.
SECTION 5. DIVISIONAL TITLES. Any one of the Chief Executive Officer,
President, or Vice President Human Resources and Administration (each one an
"Appointing Person"), may from time to time confer upon any employee of a
division of the Corporation the title of President, Vice President, Treasurer or
Secretary of such division or any other divisional title or titles deemed
appropriate. Any such titles so conferred may be discontinued and withdrawn at
any time by any one Appointing Person. Any employee of a division designated by
such a divisional title shall have the powers and duties with respect to such
division as shall be prescribed by the Appointing Person. The conferring,
withdrawal or discontinuance of divisional titles shall be in writing and shall
be filed with the Secretary of the Corporation.
SECTION 6. SALARIES. The salaries and other compensation of the principal
officers of the Corporation shall be fixed from time to time by the Board of
Directors.
ARTICLE V
EXECUTION OF CORPORATE INSTRUMENTS
AND VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 1. EXECUTION OF INSTRUMENTS. The Board of Directors may in its
discretion determine the method and designate the signatory officer or officers
or other person or persons, to execute any corporate instrument or document, or
to sign the corporate name without limitation, except where otherwise provided
by law, and such execution or signature shall be binding upon the Corporation.
All checks and drafts drawn on banks or other depositories on funds to the
credit of the Corporation or in special accounts of the Corporation, shall be
signed by such person or persons as the Treasurer or such other person
designated by the Board of Directors for that purpose shall authorize so to do.
SECTION 2. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and other
securities of other corporations and business entities owned or held by the
Corporation for itself, or for other parties in any capacity, shall be voted,
and all proxies with respect thereto shall be executed, by the person authorized
to do so by resolution of the Board of Directors.
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ARTICLE VI
SHARES OF STOCK AND OTHER SECURITIES
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. Certificates for the shares of
stock of the Corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by, the Chairman of the Board (if there be such an officer
appointed), or by the President or any Vice President and by the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent, or registrar at the date of issue. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
indemnify the Corporation in such manner as it shall require and/or to give the
Corporation a surety bond in such form and amount as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
SECTION 3. TRANSFERS. Transfers of record of shares of stock of the
Corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a certificate or
certificates for a like number of shares, properly endorsed.
SECTION 4. FIXING RECORD DATES. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60
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nor less than 10 days before the date of such meeting, nor more than 60 days
prior to any other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed; (3)
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
SECTION 6. REGULATIONS. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the stock and other securities of the
Corporation, and may appoint transfer agents and registrars of any class of
stock or other securities of the Corporation.
SECTION 7. OTHER SECURITIES OF THE CORPORATION. All bonds, debentures and other
corporate securities of the Corporation, other than stock certificates, may be
signed by the Chairman of the Board (if there be such an officer appointed), or
the President or any Vice President or such other person as may be authorized by
the Board of Directors and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided,
however, that where any such bond, debenture or other corporate security shall
be authenticated by the manual signature of a trustee under an indenture
pursuant to which such bond, debenture or other corporate security shall be
issued, the signature of the persons signing and attesting the corporate seal on
such bond, debenture or other corporate security may be the imprinted facsimile
of the signatures of such persons. Interest coupons appertaining to any such
bond, debenture or other corporate security, authenticated by a trustee as
aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the
Corporation, or such other person as may be authorized by the Board of
Directors, or bear imprinted thereon the facsimile signature of such person. In
case any officer who shall have signed or attested any bond, debenture or other
corporate security or whose facsimile signature shall appear thereon shall have
ceased to be such officer before the bond, debenture or other corporate security
so signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the Corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
Corporation.
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ARTICLE VII
CORPORATE SEAL
The corporate seal shall consist of a die bearing the name of the Corporation
and the state and date of its incorporation. Said seal may be used by causing
it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE
BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director or officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
---- ----------
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. The right to
indemnification conferred in this ARTICLE VIII shall be a contract right.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
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SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this
ARTICLE VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1 or Section 2 of this
ARTICLE VIII, as the case may be. Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith, without
the necessity of authorization in the specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under Section
3 of this ARTICLE VIII, a person shall be deemed to have acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, or, with respect to any criminal action or proceeding, to
have had no reasonable cause to believe his conduct was unlawful, if his action
is based on the records or books of account of the Corporation or another
enterprise, or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
in Sections 1 or 2 of this ARTICLE VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this ARTICLE VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under Sections
1 and 2 of this ARTICLE VIII. The basis of such indemnification by a court
shall be a determination by such court that indemnification of the director or
officer is proper in the circumstances because he has met the applicable
standards of conduct set forth in Sections 1 or 2 of this ARTICLE VIII, as the
case may be. Neither a contrary determination in the specific case under
Section 3 of this ARTICLE VIII nor the absence of any determination thereunder
shall be a defense to such application or create a presumption that the director
or officer seeking indemnification has not met any applicable standard of
conduct. Notice of any application for indemnification pursuant to this Section
5 shall be given to the Corporation promptly upon the filing of such
application. If successful, in whole or in part, the director or officer
seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or
officer in defending or investigating a threatened or pending action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be
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determined that he is not entitled to be indemnified by the Corporation as
authorized in this ARTICLE VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by or granted pursuant to
this ARTICLE VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Sections 1 and 2 of
this ARTICLE VIII shall be made to the fullest extent permitted by law. The
provisions of this ARTICLE VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of this
ARTICLE VIII but whom the Corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power or the obligation to indemnify him against such liability
under the provisions of this ARTICLE VIII.
SECTION 9. CERTAIN DEFINITIONS. For purposes of this ARTICLE VIII, references
to "the Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors or
officers, so that any person who is or was a director or officer of such
constituent corporation, or is or was a director or officer of such constituent
corporation serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, shall stand in the
same position under the provisions of this ARTICLE VIII with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued. For purposes
of this ARTICLE VIII, references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director or officer with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this ARTICLE VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this ARTICLE VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
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SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything contained
in this ARTICLE VIII to the contrary, except for proceedings to enforce rights
to indemnification (which shall be governed by Section 5 hereof), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to
the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this ARTICLE VIII to
directors and officers of the Corporation.
SECTION 13. EFFECT OF AMENDMENT. Any amendment, repeal or modification of
this ARTICLE VIII shall not (a) adversely affect any right or protection of any
director or officer existing at the time of such amendment, repeal or
modification, or (b) apply to the indemnification of any such person for
liability, expense, or loss stemming from actions or omissions occurring prior
to such amendment, repeal, or modification.
SECTION 14. AUTHORITY TO ENTER INTO INDEMNIFICATION AGREEMENTS. The
Corporation may enter into indemnification agreements with the directors and
officers of the Corporation, including, without limitation, any indemnification
agreement in substantially the form set forth in Exhibit 1 attached to these By-
Laws.
ARTICLE IX
NOTICES
Whenever, under any provisions of these By-Laws, notice is required to be given
to any stockholder, the same shall be given in writing, timely and duly
deposited in the United States Mail, postage prepaid, and addressed to his last
known post office address as shown by the stock record of the Corporation or its
transfer agent. Any notice required to be given to any director may be given by
any of the methods stated in Section 8 of ARTICLE III hereof, except that such
notice other than one which is delivered personally, shall be sent to such
address or (in the case of facsimile telecommunication) facsimile telephone
number as such director shall have disclosed in writing to the Secretary of the
Corporation, or, in the absence of such filing, to the last known post office
address of such director. If no address of a stockholder or director be known,
such notice may be sent to the office of the Corporation required to be
maintained pursuant to Section 2 of ARTICLE I hereof. An affidavit of mailing,
executed by a duly authorized and competent employee of the Corporation or its
transfer agent appointed with respect to the class of stock affected, specifying
the name and address or the names and addresses of the stockholder or
stockholders, director or directors, to whom any such notice or notices was or
were given, and the time and method of giving the same, shall be conclusive
evidence of the statements therein contained. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by telegram or other means of electronic transmission shall be
deemed to have been given as at the sending time recorded by the telegraph
company or other electronic transmission equipment operator transmitting the
same. It shall not be necessary that the same method of giving be employed in
respect of all directors, but one permissible method may be employed in respect
of any one or more, and any other permissible method or methods may be employed
in respect of any other or others. The period or limitation of time within
which any stockholder may exercise any option or right, or enjoy any privilege
or benefit, or be required to
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act, or within which any director may exercise any power or right, or enjoy any
privilege, pursuant to any notice sent him in the manner above provided, shall
not be affected or extended in any manner by the failure of such a stockholder
or such director to receive such notice. Whenever any notice is required to be
given under the provisions of this statutes or of the Certificate of
Incorporation, or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Whenever notice is required
to be given, under any provision of law or of the Certificate of Incorporation
or By-Laws of the Corporation, to any person with whom communication is
unlawful, the giving of such notice to such person shall not be required and
there shall be no duty to apply to any governmental authority or agency for a
license or permit to give such notice to such person. Any action or meeting
which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the Corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.
ARTICLE X
AMENDMENTS
The Board of Directors is expressly authorized to adopt, alter and repeal the
By-Laws of the Corporation in whole or in part at any regular or special meeting
of the Board of Directors, by vote of a majority of the entire Board of
Directors. Except where ARTICLE V of the Certificate of Incorporation of the
Corporation requires a higher vote, the By-Laws may also be adopted, altered or
repealed in whole or in part at any annual or special meeting of the
stockholders by the affirmative vote of three fourths of the shares of the
Corporation outstanding and entitled to vote thereon.
CERTIFICATE OF SECRETARY
The undersigned, Vice President and Corporate Secretary of McKesson Corporation,
a Delaware corporation, hereby certifies that the foregoing is a full, true and
correct copy of the By-Laws of said Corporation, with all amendments to date of
this Certificate.
WITNESS the signature of the undersigned and the seal of the Corporation this
____ day of ___________, 19__.
----------------------------------------
Vice President and Corporate Secretary
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EXHIBIT 1
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of ______, 19__, between McKesson Corporation, a
Delaware corporation (the "Company"), and ______________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors and
officers the most capable persons available.
WHEREAS, Indemnitee is a director/officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors of public companies
in today's environment;
WHEREAS, the Certificate of Incorporation and the By-laws of the Company require
the Company to indemnify and advance expenses to its directors to the fullest
extent permitted by law and the Indemnitee has been serving and continues to
serve as a director or officer of the Company in part in reliance on such
Certificate of Incorporation and By-laws;
WHEREAS, in recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued service to the
Company in an effective manner and Indemnitee's reliance on the aforesaid
Certificate of Incorporation and By-laws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Certificate
of Incorporation and By-laws will be available to Indemnitee (regardless of,
among other things, any amendment to or revocation of such Certificate of
Incorporation and By-laws or any change in the composition of the Company's
Board of Directors or acquisition transaction relating to the Company), and in
order to induce Indemnitee to continue to provide services to the Company as a
director or officer thereof, the Company wishes to provide in this Agreement for
the indemnification of and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) permitted by law and as set forth
in this Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies.
NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing
to serve the Company directly or, at its request, with another enterprise, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power represented by the Company's then outstanding Voting Securities, or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office
<PAGE>
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company's assets.
(b) EXPENSE: include attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending, being
a witness in or participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Proceeding relating to any Indemnifiable
Event.
(c) INDEMNIFIABLE EVENT: any event or occurrence that takes place either
prior to or after the execution of this Agreement, related to the fact that
Indemnitee is or was a director or an officer of the Company, or while a
director or officer is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by Indemnitee in any such capacity.
(d) POTENTIAL CHANGE IN CONTROL: shall be deemed to have occurred if (i) the
Company enters into an agreement or arrangement, the consummation of which would
result in the occurrence of Change in Control; (ii) any person (including the
Company) publicly announces an intention to take or to consider taking actions
which if consummated would constitute Change in Control; (iii) any person, other
than a trustee or other fiduciary holding securities under an employee benefit
plan of the Company acting in such capacity or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, who is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding Voting Securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by such person on the date
hereof; or (iv) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(e) PROCEEDING: any threatened, pending or completed action, suit or
proceeding, or any inquiry, hearing or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(f) REVIEWING PARTY: any appropriate person or body consisting of a member
or members of the Company's Board of Directors or any other person or body
appointed by the Board (including the special, independent counsel referred to
in Section 3) who is not a party to the particular Proceeding with respect to
which Indemnitee is seeking indemnification.
(g) VOTING SECURITIES: any securities of the Company which vote generally in
the election of directors.
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2. AGREEMENT TO INDEMNIFY.
(a) In the event Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other
participant in, a Proceeding by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law, as soon as practicable but in any event no later than
thirty days after written demand is presented to the Company, against any and
all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Proceeding and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement (including the creation of the
Trust). Notwithstanding anything in this Agreement to the contrary and except
as provided in Section 5, prior to a Change in Control Indemnitee shall not be
entitled to indemnification pursuant to this Agreement in connection with any
Proceeding initiated by Indemnitee against the Company or any director or
officer of the Company unless the Company has joined in or consented to the
initiation of such Proceeding. If so requested by Indemnitee, the Company shall
advance (within ten business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the Company under
Section 2(a) shall be subject to the condition that the Reviewing Party shall
not have determined (in a written opinion, in any case in which the special,
independent counsel referred to in Section 3 hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an Expense Advance pursuant to Section 2(a)
shall be subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any determination made by
the Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). Indemnitee's obligation to reimburse
the Company for Expense Advances shall be unsecured and no interest shall be
charged thereon. If there has not been a Change in Control the Reviewing Party
shall be selected by the Board of Directors, and if there has been such a Change
in Control (other than a Change in Control which has been approved by a majority
of the Company's Board of Directors who were directors immediately prior to such
Change in Control), the Reviewing Party shall be the special, independent
counsel referred to in Section 3 hereof. If there has been no determination by
the Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence litigation in any
court in the States of California or Delaware having subject matter jurisdiction
thereof and in which venue is proper seeking an initial determination by the
court or challenging any such determination by the Reviewing Party or any aspect
thereof, and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise shall
be conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL. The Company agrees that if there is a Change in Control
of the Company (other than a Change in Control which has been approved by a
majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control) then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under applicable
3
<PAGE>
law or the Company's Certificate of Incorporation or By-Laws now or hereafter
in effect relating to indemnification for Indemnifiable Events, the Company
shall seek legal advice only from special, independent counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld), and who has not otherwise performed services for the Company or the
Indemnitee (other than in connection with such matters) within the last five
years. Such independent counsel shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee's rights under this Agreement. Such counsel,
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent the Indemnitee would be permitted to
be indemnified under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to indemnify
fully such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
the engagement of special, independent counsel pursuant hereto.
4. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control, the
Company shall, upon written request by Indemnitee, create a Trust for the
benefit of the Indemnitee and from time to time upon written request of
Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any Proceeding
relating to an Indemnifiable event, and any and all judgments, fines, penalties
and settlement amounts of any and all Proceedings relating to an Indemnifiable
Event from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by the
Reviewing Party, in any case in which the special, independent counsel referred
to above is involved. The terms of the Trust shall provide that upon a Change
in Control (i) the Trust shall not be revoked or the principal thereof invaded,
without the written consent of the Indemnitee, (ii) the Trustee shall advance,
within ten business days of a request by the Indemnitee, any and all Expenses to
the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under
the circumstances under which the Indemnitee would be required to reimburse the
Company under Section 2(b) of this Agreement), (iii) the Trust shall continue to
be funded by the Company in accordance with the funding obligation set forth
above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for
which the Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in such Trust shall revert
to the Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified under the terms of this Agreement. The Trustee shall be chosen by
the Indemnitee. Nothing in this Section 4 shall relieve the Company of any of
its obligations under this Agreement. All income earned on the assets held in
the Trust shall be reported as income by the Company for federal, state, local
and foreign tax purposes.
5. INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING THIS AGREEMENT. The
Company shall indemnify Indemnitee against any and all expenses (including
attorneys' fees), and, if requested by Indemnitee, shall (within ten business
days of such request) advance such expenses to Indemnitee, which are incurred by
Indemnitee in connection with any claim asserted against or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement or any other agreement or under applicable law or the
Company's Certificate of Incorporation or By-laws now or hereafter in effect
relating to indemnification for Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery,
as the case may be.
4
<PAGE>
6. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of a
Proceeding but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Proceedings relating in whole or in part to
an Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
7. DEFENSE TO INDEMNIFICATION, BURDEN OF PROOF AND PRESUMPTIONS. It shall be a
defense to any action brought by the Indemnitee against the Company to enforce
this Agreement (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the Company) that the Indemnitee has
not met the standards of conduct that make it permissible under the Delaware
General Corporation Law for the Company to indemnify the Indemnitee for the
amount claimed. In connection with any determination by the Reviewing Party or
otherwise as to whether the Indemnitee is entitled to be indemnified hereunder,
the burden of proving such a defense shall be on the Company. Neither the
failure of the Company (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action by the Indemnitee that indemnification of the
claimant is proper under the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the Indemnitee
had not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Indemnitee has not met the applicable
standard of conduct. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
8. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's Certificate
of Incorporation or By-laws or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Certificate of
Incorporation and By-laws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.
9. LIABILITY INSURANCE. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for any Company
director or officer.
10. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any affiliate of the
Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or
legal representatives after the expiration of two years from the date of accrual
of such cause of action, or such longer period as may be required by state law
under the circumstances, and any claim or cause of action of the Company or
5
<PAGE>
its affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such period; provided, however, that if
any shorter period of limitations is otherwise applicable to any such cause of
action such shorter period shall govern.
11. AMENDMENT OF THIS AGREEMENT. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
12. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, By-law or otherwise) of the amounts otherwise
indemnifiable hereunder.
14. SETTLEMENT OF CLAIMS. The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any action
or claim effected without the Company's written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent to any
proposed settlement. The Company shall not be liable to indemnify the
Indemnitee under this Agreement with regard to any judicial award if the Company
was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action.
15. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director or officer of
the Company or of any other enterprise at the Company's request.
16. SEVERABILITY. The provisions of this Agreement shall be severable in the
event that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law. Furthermore, to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that
6
<PAGE>
is not itself invalid, void or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the _______________ day of __________________, 19___.
McKESSON CORPORATION
By: ______________________
Name:
Title:
______________________
(Indemnitee)
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>4
<DESCRIPTION>TERMINATION AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 10.23
TERMINATION AGREEMENT
---------------------
THIS TERMINATION AGREEMENT, dated as of ________________ is made and
entered into by and between McKESSON CORPORATION, a Delaware corporation with
its principal office at One Post Street, San Francisco, California (the
"Company"), and ________________ ("Executive").
R E C I T A L S
- - - - - - - -
A. Company desires to enter into an agreement with Executive whereby
severance benefits will be paid to Executive on change in control of the Company
and consequent actual or constructive termination of Executive's employment.
B. This Agreement sets forth the severance benefits which the Company
agrees that it will pay to the Executive if Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Term of Agreement. This Agreement shall be effective immediately on
-----------------
the date hereof and shall continue in effect through ____________;
provided, however, that commencing on January 1, 19__ and each January 1
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless not later than September 30 of the preceding year, the
Company shall have given notice that it does not wish to extend this Agreement;
provided, further, that notwithstanding any such notice by the Company not to
extend, this Agreement shall automatically be extended for 24 months beyond the
term provided herein if a Change in Control, as defined in Section 3 of this
Agreement has occurred during the term of this Agreement.
2. Effect on Employment Rights. This Agreement is not part of any
---------------------------
employment agreement that the Company and Executive may have entered into.
Nothing in this Agreement shall confer upon Executive any right to continue in
the employ of the Company or interfere with or restrict in any way the rights of
the Company, which are hereby expressly reserved, to terminate Employee's
employment at any time prior to a Change in Control for any reason, with or
without cause.
<PAGE>
Executive agrees that, subject to the terms and conditions of this
Agreement, in the event of a potential change in control of the Company (as
defined below), Executive will remain in the employ of the Company during the
pendency of any such potential change in control and for a period of one year
after the occurrence of an actual Change in Control. For this purpose, a
"potential change in control of the Company" shall be deemed to have occurred if
(a) the Company enters into an agreement, the consummation of which would result
in the occurrence of a Change in Control, (b) any person (including the Company)
publicly announces an intention to take or consider taking action which if
consummated would constitute a Change in Control or (c) the Board of Directors
of the Company (the "Board") adopts a resolution to the effect that a potential
change in control of the Company has occurred.
3. Change in Control. For purposes of this Agreement, a "Change in
-----------------
Control" of the Company shall be deemed to have occurred if any of the events
set forth in any one of the following paragraphs shall occur:
(a) any "person" (as defined in section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as such term is
modified in sections 13(d) and 14(d) of the Exchange Act), excluding the
Company or any of its subsidiaries, a trustee or any fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, an underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or indirectly,
by stockholders of the Company in substantially the same proportions as
their ownership of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting
power of the Company's then outstanding securities; or
(b) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board and
any new director (other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this paragraph) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
<PAGE>
(c) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no person acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which, in the judgment of the
Compensation Committee of the Board, the holders of the Company's Common
Stock immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity which owns
all or substantially all of the assets of the Company immediately prior to
such transaction or series of transactions.
4. Termination of Employment Following a Change in Control. Executive
-------------------------------------------------------
shall be entitled to the benefits provided in Section 5 hereof upon the
subsequent termination of Executive's employment by the company within two years
after a Change in Control which occurs during the term of this Agreement,
provided such termination is (a) by the Company other than for Cause, as defined
below, or (b) by Executive for Good Reason, as defined below. Executive shall
not be entitled to the benefits of Section 5, any other provision of the Plan
to the contrary notwithstanding, if Executive's employment terminates: (i)
pursuant to a mandatory retirement policy in effect prior to the Change in
Control, (ii) by reason of Executive's death or (iii) by reason of Executive's
total and permanent disability. As used herein, "total and permanent
disability" means a condition which prevents Executive from performing to a
significant degree the essential duties of his or her position and is expected
to be of long-term duration or result in death. A determination of total and
permanent disability must be based on competent medical evidence.
(a) Cause.
-----
<PAGE>
(i) Definition. Termination by the Company of Executive's employment
----------
for Cause shall mean termination upon Executive's willful engaging in
misconduct which is demonstrably and materially injurious to the Company
and its subsidiaries taken as a whole. No act, or failure to act, on
Executive's part shall be considered "willful" unless done, or omitted to
be done, by Executive not in good faith and without reasonable belief that
Executive's action or omission was in the best interest of the Company or
its subsidiaries. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership
of the Board at a meeting of the Board called and held for the purpose of
making a determination of whether Cause for termination exists (after
reasonable notice to Executive and an opportunity for Executive to be heard
before the Board), finding that in the good faith opinion of the Board
Executive was guilty of misconduct as set forth above in this subsection 4
and specifying the particulars thereof in detail.
(ii) Remedy by Executive. If the Company gives Executive a Notice of
-------------------
Termination which states that the basis for terminating Executive's
employment is Cause, Executive shall have ten days after receipt of such
Notice to remedy the facts and circumstances which provided Cause. The
Board (or any duly authorized Committee thereof) shall make a good faith
reasonable determination immediately after such ten-day period whether such
facts and circumstances have been remedied and shall communicate such
determination in writing to Executive. If the Board determines that
adequate remedy has not occurred, then the initial Notice of Termination
shall remain in effect.
(b) Good Reason. After a Change in Control, Executive may terminate
-----------
employment with the Company at any time during the term of this Agreement
if Executive has made a good faith reasonable determination that Good
Reason exists for this termination.
(i) Definition. For purposes of this Agreement, "Good Reason"
----------
shall mean any of the following actions, if taken without the express
written consent of Executive:
A. any material change by the Company in Executive's functions,
duties, or responsibilities which change would cause Executive's
position with the Company to become of less dignity, responsibility,
importance, or scope from the position and attributes that applied to
<PAGE>
Executive immediately prior to the Change in Control;
B. any significant reduction in Executive's base salary, other
than a reduction effected as part of an across-the-board reduction
affecting all executive employees of the Company;
C. any material failure by the Company to comply with any of the
provisions of this Agreement (or of any employment agreement between
the parties);
D. the Company's requiring Executive to be based at any office
or location more than 25 miles from the office at which Executive is
based on the date immediately preceding the Change in Control, except
for travel reasonably required in the performance of Executive's
responsibilities and commensurate with the amount of travel required
of Executive prior to the Change in Control; or
E. any failure by the Company to obtain the express assumption
of this Agreement by any successor or assign of the Company.
Executive's right to terminate employment for Good Reason
pursuant to this subsection 4 shall not be affected by Executive's
incapacity due to physical or mental illness.
(ii) Remedy by Company. If Executive gives the Company a Notice
-----------------
of Termination which states that the basis for Executive's termination
of employment is Good Reason, the Company shall have ten days after
receipt of such Notice to remedy the facts and circumstances which
provided Good Reason. Executive shall make a good faith reasonable
determination immediately after such ten-day period whether such facts
and circumstances have been remedied and shall communicate such
determination in writing to the Company. If Executive determines that
adequate remedy has not occurred, then the initial Notice of
Termination shall remain in effect.
(iii) Determination by Executive Presumed Correct. Any
-------------------------------------------
determination by Executive pursuant to this Section 4 that Good
Reason exists for Executive's termination of employment and that
adequate remedy has not occurred shall be presumed correct and shall
govern unless the party contesting the determination shows by a clear
preponderance of the evidence that it was not a good faith reasonable
determination.
<PAGE>
(iv) Severance Payment Made Notwithstanding Dispute.
----------------------------------------------
Notwithstanding any dispute concerning whether Good Reason exists for
termination of employment or whether adequate remedy has occurred, the
Company shall immediately pay to Executive, as specified in Section
5, any amounts otherwise due under this Agreement. Executive may be
required to repay such amounts to the Company if any such dispute is
finally determined adversely to Executive.
(c) Notice of Termination. Any termination of Executive's employment
---------------------
by the Company or by Executive hereunder shall be communicated by a Notice
of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate
the specific termination provisions in this Agreement relied upon and which
sets forth (i) in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the
provision so indicated and (ii) the date of Executive's termination of
employment, which shall be no earlier than 10 days after such Notice is
received by the other party. Any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice of
Termination satisfying the requirements of this Agreement shall not be
effective. In the case of a termination for Cause, the Notice of
Termination shall also satisfy the requirements set forth in Section 4B.
5. Severance Payment Upon Termination of Employment. If Executive's
------------------------------------------------
employment with the Company is terminated during the term of this Agreement and
after a Change in Control (a) by the Company other than for Cause, or (b) by
Executive for Good Reason, then Executive shall be entitled to the following:
(a) The Company shall immediately pay to Executive in a cash lump sum
an amount equal to (i) 2.99 multiplied by Executive's "base amount"
determined pursuant to section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), less (ii) any other amount which constitutes a
"parachute payment" to Executive as defined in section 280G(b)(2) of the
Code.
(b) The Company shall continue Executive's coverage in the health and
welfare benefit plans in which Executive was a participant as of the date
of Executive's termination of employment for the period of time with
respect to which Executive would be entitled to payments under the
Company's executive severance policy if Executive's termination of
employment were covered by such policy.
(c) Executive shall continue to accrue benefits under the Executive
Benefit Retirement Plan for the
<PAGE>
period of time with respect to which Executive would be entitled to
payments under the Company's executive severance policy if Executive's
termination of employment were covered by such policy. In addition, if
Executive is age 55 or more and has 15 or more years of service (as
determined under such Plan on the date of Executive's termination of
employment), then such termination shall automatically be deemed to be an
"Approved Retirement" under the terms of such Executive Benefit Retirement
Plan.
6. Section 280G Cap. It is the intent of the parties hereto that no
----------------
amount payable pursuant to the terms of this Agreement shall cause any payment
or transfer by the Company to or for the benefit of Executive, whether paid or
payable (or transferred or transferable) pursuant to the terms of this Agreement
or otherwise (a "Payment"), to be subject to taxation under section 4999 of the
Code and as an "excess parachute payment" as defined in section 280G of the
Code. In the event that the last independent auditors selected by the Board
prior to the termination of Executive under this Agreement (the "Auditors")
determine that any such item constitutes an "excess parachute payment," and that
the limitation of this Section 6 would result in a larger after-tax benefit to
Executive, then Executive may (but is not required to) irrevocably elect to
relinquish or not exercise any payments or benefits available to Executive under
any plan, contract or program before the payment or enjoyment thereof in order
to limit such payments or benefits for the purpose of (i) eliminating any
"excess parachute payment" or (ii) causing Executive to become eligible to
receive all or any portion of the cash payment that would be made pursuant to
Section 5 of this Agreement if Executive had no "parachute payments" as defined
in section 280G(b)(2) of the Code. For purposes of these calculations, (i) all
amounts received in connection with Executive's employment by the Company or to
be received by Executive in connection with a change in the ownership or
effective control of the Company, or a change in the ownership of a substantial
portion of the assets of the Company (including but not limited to payments or
benefits that Executive becomes entitled to in connection with a "Change in
Control" as defined in Section 3 hereof) shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, except to the
extent that such amounts are (A) relinquished pursuant to the preceding sentence
or (B) identified in the written opinion of independent tax counsel selected by
the Auditors and approved by Executive (which approval shall not be unreasonably
withheld) as not constituting parachute payments or excess parachute payments
(in whole or in part), or as representing reasonable compensation for personal
services to be rendered or actually rendered before the Change in Control in
excess of the base amount, within the meaning of section 280G(b)(4)(B) of the
Code, and (ii) the value of any non-cash benefit or any deferred cash payment
included in the calculations shall be determined by the Auditors in accordance
with the principles of section 280G(d)(3) and (4) of the Code. The Company
shall bear the expense of obtaining the opinion of the independent tax counsel
referred to in the preceding sentence.
<PAGE>
7. Damages. Executive shall not be required to mitigate damages with
-------
respect to the amount of any payment provided under this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment provided
under this Agreement be reduced by retirement benefits, deferred compensation or
any compensation earned by Executive as a result of employment by another
employer.
8. Successor to Company. The Company shall require any successor or
--------------------
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this section or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
9. Heirs of Executive. This Agreement shall inure to the benefit of and
------------------
be enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts are still payable to Executive hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee or, if there be so such designee, to Executive's estate.
10. Arbitration. Any dispute, controversy or claim arising under or in
-----------
connection with this Agreement, or the breach hereof, shall be settled
exclusively by arbitration in accordance with the Rules of the American
Arbitration Association then in effect. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction. Any
arbitration held pursuant to this section in connection with Executive's
termination of employment shall take place in San Francisco, California at the
earliest possible date. If any proceeding is necessary to enforce or interpret
the terms of this Agreement, or to recover damages for breach thereof, the
prevailing party shall be entitled to reasonable attorneys fees and necessary
costs and disbursements, not to exceed in the aggregate one percent (1%) of the
net worth of the other party, in addition to any other relief to which he or it
may be entitled.
11. Notice. For purposes of this Agreement, notices and all other
------
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by messenger or in person, or when
mailed by United States registered mail, return receipt requested, postage
prepaid, as follows:
<PAGE>
If to
the Company: McKesson Corporation
One Post Street
San Francisco, CA 94104
Attention: Office of the General Counsel
If to
the Executive: ___________________
c/o McKesson Corporation
One Post Street
San Francisco, CA 94104
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
12. Legal Costs. The Company shall pay to Executive all reasonable
-----------
attorneys' fees and necessary costs and disbursements incurred by or on behalf
of Executive as a result of any dispute arising out of this Agreement. Such
fees shall be either paid directly by the Company or reimbursed to Executive as
soon as reasonably practicable after Executive has provided the Company with
satisfactory evidence that Executive has incurred liability for and paid such
fees. To the extent of any conflict, this section shall supersede the last
sentence of Section 10 of this Agreement.
13. General Provisions.
------------------
(a) Executive's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, nor shall Executive's rights be subject
to encumbrance or subject to the claims of the Company's creditors. Nothing in
this Agreement shall prevent the consolidation of the Company with, or its
merger into, any other corporation, or the sale by the Company of all or
substantially all of its properties or assets; and this Agreement shall inure to
the benefit of, be binding upon and be enforceable by, any successor surviving
or resulting corporation, or other entity to which such assets shall be
transferred. This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company.
(b) This Agreement constitutes the entire agreement between the parties
hereto in respect to the rights and obligations of the parties following a
Change in Control. This Agreement supersedes and replaces all prior oral and
written agreements, understandings, commitments, and practices between the
parties (whether or not fully performed by Executive prior to the date hereof),
which shall be of no further force or effect.
(c) The provisions of this Agreement shall be regarded as divisible, and
if any of said provisions or any part thereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts thereof and the
applicability thereof shall not be affected thereby.
<PAGE>
(d) This Agreement may not be amended or modified except by a written
instrument executed by the Company and Executive.
(e) This Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
McKESSON CORPORATION
A Delaware corporation
By ___________________________
Attest:
By ______________________________
Secretary
By the authority of the ______________________________
Compensation Committee of Executive
the Board of Directors of
McKesson Corporation
on _______________.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>5
<DESCRIPTION>RETIREMENT PROGRAM
<TEXT>
<PAGE>
EXHIBIT 10.24
RETIREMENT PROGRAM FOR NONEMPLOYEE DIRECTORS
Effective Date: July 27, 1983
Eligibility: Five years of Board service as a Nonemployee Director. The
minimum retirement age is 65.
Annual Payment For service as a Nonemployee Director prior
Amount: to July 29, 1992:
100% of annual retainer at time of retirement and an
amount equal to the sum of all Board and Committee
meeting fees paid to an eligible Director in the
preceding twelve months.
For service as a Nonemployee Director from and after July
29, 1992:
100% of annual retainer at time of retirement.
Payment Duration: Payments will be made for a period equal to length of Board
service as a Nonemployee Director with the annual amount
prorated for periods of less than one year. In the event of
the death of an eligible Director prior to retirement,
benefit payments will be made to the designated beneficiary
or to the estate. If death occurs after retirement, any
remaining benefit payments will continue to the designated
beneficiary or to the estate.
Regulations: The members of the Board who are not Nonemployee Directors,
shall construe, interpret and administer this program, and
shall have the power to adopt regulations relating thereto.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>6
<DESCRIPTION>CREDIT AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 10.25
================================================================================
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF MARCH 31, 1995
AMONG
MCKESSON CORPORATION,
MEDIS HEALTH AND PHARMACEUTICAL SERVICES INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
CHEMICAL BANK,
AS CO-AGENT,
BANK OF AMERICA CANADA,
AS CANADIAN ADMINISTRATIVE AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BA SECURITIES, INC.
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I
DEFINITIONS......................... 1
-----------
1.01 Certain Defined Terms........................................ 1
---------------------
1.02 Other Interpretive Provisions................................ 26
-----------------------------
1.03 Accounting Principles........................................ 27
---------------------
1.04 Canadian Currency Equivalents................................ 28
-----------------------------
ARTICLE II
THE CREDITS......................... 28
-----------
2.01 Amounts and Terms of Commitments............................. 28
--------------------------------
2.02 Loan Accounts................................................ 29
-------------
2.03 Procedure for Borrowing...................................... 30
-----------------------
2.04 Conversion and Continuation Elections........................ 31
-------------------------------------
2.05 Voluntary Termination or Reduction of Commitments............ 34
-------------------------------------------------
2.06 Optional Prepayments......................................... 34
--------------------
2.07 Repayment.................................................... 35
---------
2.08 Interest..................................................... 35
--------
2.09 Fees......................................................... 37
----
(a) Arrangement, Agency Fees................................ 37
------------------------
(b) Facility Fees........................................... 37
-------------
2.10 Computation of Fees and Interest............................. 39
--------------------------------
2.11 Payments by the Borrowers.................................... 40
-------------------------
2.12 Payments by the Banks to the Applicable Agent................ 41
---------------------------------------------
2.13 Sharing of Payments, Etc..................................... 42
-------------------------
2.14 Collateral Pledge............................................ 44
-----------------
2.15 Utilization of Tranche B Commitments in Canadian Dollars..... 44
--------------------------------------------------------
2.16 Currency Exchange Fluctuations............................... 45
------------------------------
2.17 Bankers' Acceptances for Medis............................... 45
------------------------------
(a) Acceptance Commitment................................... 45
(b) Drawing Notice.......................................... 46
(c) Form of Bankers' Acceptances............................ 47
(d) Acceptance and Purchase of Drafts....................... 47
(e) Payment of Drawing Purchase Price....................... 48
(f) Effective Discount Rate Determination................... 48
(g) Payment at Maturity..................................... 48
(h) Presigned Draft Forms................................... 49
(i) Conversion or Renewal of Bankers' Acceptances........... 49
(j) Circumstances Making Bankers' Acceptances
Unavailable............................................. 50
(k) Prepayments............................................. 50
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY............ 51
--------------------------------------
3.01 Taxes........................................................ 51
-----
3.02 Illegality................................................... 52
----------
3.03 Increased Costs and Reduction of Return...................... 53
---------------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
3.04 Funding Losses............................................... 55
--------------
3.05 Inability to Determine Rates................................. 56
----------------------------
3.06 Certificates of Banks........................................ 57
---------------------
3.07 Survival..................................................... 57
--------
ARTICLE IV
CONDITIONS PRECEDENT..................... 57
--------------------
4.01 Conditions of Initial Loans.................................. 57
---------------------------
(a) Credit Agreement........................................ 57
----------------
(b) Collateral Documents and Guaranty....................... 57
---------------------------------
(c) Resolutions; Incumbency................................. 57
-----------------------
(d) Organization Documents; Good Standing................... 58
-------------------------------------
(e) Legal Opinions.......................................... 58
--------------
(f) Payment of Fees......................................... 58
---------------
(g) Company Certificates.................................... 58
--------------------
(i) Notice of Election...................................... 59
------------------
(j) UCC Searches............................................ 59
------------
(k) Independent Auditor's Letter............................ 59
----------------------------
(l) Collateral Certificate.................................. 59
----------------------
(m) Other Documents......................................... 60
---------------
4.02 Conditions to All Borrowings................................. 60
----------------------------
(a) Notice of Borrowing or Conversion/Continuation.......... 60
----------------------------------------------
(b) Continuation of Representations and Warranties.......... 60
----------------------------------------------
(c) No Existing Default..................................... 60
-------------------
(d) Medis Loans............................................. 60
-----------
4.03 Conditions to Bankers' Acceptance Facility................... 60
------------------------------------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES............... 61
------------------------------
5.01 Corporate Existence and Power................................ 61
-----------------------------
5.02 Corporate Authorization; No Contravention.................... 61
-----------------------------------------
5.03 Governmental Authorization................................... 62
--------------------------
5.04 Binding Effect............................................... 62
--------------
5.05 Litigation................................................... 62
----------
5.06 No Default................................................... 62
----------
5.07 Use of Proceeds; Margin Regulations.......................... 63
-----------------------------------
5.08 Financial Condition.......................................... 63
-------------------
5.09 Regulated Entities........................................... 63
------------------
5.10 No Burdensome Restrictions................................... 63
--------------------------
5.11 Subsidiaries and Certain Liens As of the Closing Date........ 64
-----------------------------------------------------
5.12 Collateral Documents......................................... 64
--------------------
ARTICLE VI
AFFIRMATIVE COVENANTS.................... 64
---------------------
6.01 Financial Statements......................................... 64
--------------------
6.02 Certificates; Other Information.............................. 65
-------------------------------
6.03 Notices...................................................... 65
-------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
6.04 Preservation of Corporate Existence, Etc..................... 66
----------------------------------------
6.05 Insurance.................................................... 66
---------
6.06 Payment of Taxes............................................. 66
----------------
6.07 Compliance with Laws......................................... 67
--------------------
6.08 Inspection of Property and Books and Records................. 67
--------------------------------------------
6.09 Use of Proceeds.............................................. 67
---------------
6.10 Notice of Rating Change...................................... 67
-----------------------
ARTICLE VII
NEGATIVE COVENANTS...................... 68
------------------
7.01 Limitation on Liens.......................................... 68
-------------------
7.02 Consolidations and Mergers................................... 69
--------------------------
7.03 Use of Proceeds.............................................. 69
---------------
7.04 Maximum Debt to Capitalization Ratio......................... 70
------------------------------------
ARTICLE VIII
EVENTS OF DEFAULT....................... 70
-----------------
8.01 Event of Default............................................. 70
----------------
(a) Non-Payment............................................. 70
-----------
(b) Representation or Warranty.............................. 70
--------------------------
(c) Specific Defaults....................................... 70
-----------------
(d) Other Defaults.......................................... 70
--------------
(e) Cross-Default........................................... 71
-------------
(f) Insolvency; Voluntary Proceedings....................... 71
---------------------------------
(g) Involuntary Proceedings................................. 71
-----------------------
(h) ERISA................................................... 72
-----
8.02 Remedies..................................................... 72
--------
8.03 Rights Not Exclusive......................................... 72
--------------------
ARTICLE IX
THE AGENTS.......................... 73
----------
9.01 Appointment and Authorization................................ 73
-----------------------------
9.02 Delegation of Duties......................................... 73
--------------------
9.03 Liability of Agent........................................... 73
------------------
9.04 Reliance by the Agents....................................... 74
----------------------
9.05 Notice of Default............................................ 74
-----------------
9.06 Credit Decision.............................................. 75
---------------
9.07 Indemnification of Agent..................................... 75
------------------------
9.08 Agents in Individual Capacity................................ 76
-----------------------------
9.09 Successor Agent.............................................. 76
---------------
9.10 Withholding Tax.............................................. 77
---------------
9.11 Collateral Matters........................................... 79
------------------
9.12 Co-Agent..................................................... 80
--------
ARTICLE X
MISCELLANEOUS........................ 80
-------------
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
10.01 Amendments and Waivers...................................... 80
----------------------
10.02 Notices..................................................... 81
-------
10.03 No Waiver; Cumulative Remedies.............................. 82
------------------------------
10.04 Costs and Expenses.......................................... 82
------------------
10.05 Borrower Indemnification.................................... 83
------------------------
10.06 Payments Set Aside.......................................... 83
------------------
10.07 Successors and Assigns...................................... 84
----------------------
10.08 Assignments, Participations, etc............................ 84
---------------------------------
10.09 Confidentiality............................................. 86
---------------
10.10 Set-off..................................................... 87
-------
10.11 Notification of Addresses, Lending Offices, Etc............. 87
------------------------------------------------
10.12 Counterparts................................................ 88
------------
10.13 Severability................................................ 88
------------
10.14 No Third Parties Benefited.................................. 88
--------------------------
10.15 Governing Law and Jurisdiction; Language.................... 88
----------------------------------------
10.16 Waiver of Jury Trial........................................ 89
--------------------
10.17 Judgment.................................................... 89
--------
10.18 Entire Agreement............................................ 90
----------------
</TABLE>
iv
<PAGE>
McKesson Corporation
Medis Health and Pharmaceutical Services Inc.
List of Schedules and Exhibits to Credit Agreement
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 2.01 Commitments and Canadian Commitments
Schedule 5.11 Subsidiaries and Liens Securing Indebtedness for Borrowed
Money
Schedule 10.02 Lending Offices; Addresses for Notices
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of Legal Opinion of Company's Counsel
Exhibit D-2 Form of Legal Opinion of Company's Canadian Counsel
Exhibit D-3 Form of Legal Opinion re Collateral
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Company Promissory Note (Tranche A)
Exhibit F-2 Form of Company Promissory Note (Tranche B)
Exhibit F-3 Form of Medis Promissory Note (Tranche B)
Exhibit G Form of Drawing Notice
Exhibit H-1 Form of Draft
Exhibit H-2 Form of Acceptance
Exhibit I Form of Pledge Agreement
Exhibit J Form of Custodial Agreement Acknowledgement
Exhibit K Notice of Election of Projected Market Value
Exhibit L Form of Guaranty
Exhibit M Form of Independent Auditor's Letter
</TABLE>
v
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of March 31, 1995, among McKesson
Corporation, a Delaware corporation (the "Company"), Medis Health and
-------
Pharmaceutical Services Inc., an Ontario corporation and indirect wholly owned
subsidiary of the Company ("Medis"), the several financial institutions from
-----
time to time party to this Agreement (collectively, the "Banks"; individually, a
-----
"Bank"), Bank of America Canada, as administrative agent with respect to Tranche
----
B Canadian Loans and the Bankers' Acceptance Facility (as hereinafter defined),
Chemical Bank, as co-agent for the Banks, and Bank of America National Trust and
Savings Association, as agent for the Banks.
WHEREAS, the Tranche A Banks (as hereinafter defined) have agreed to make
available to the Company a revolving credit facility upon the terms and
conditions set forth in this Agreement;
WHEREAS, the Tranche B Banks (as hereinafter defined) have agreed to make
available to the Company and Medis a revolving credit facility and to Medis the
Bankers' Acceptance Facility upon the terms and conditions set forth in this
Agreement;
WHEREAS, Company has agreed to guaranty the obligations of Medis under such
revolving credit facility and the Bankers' Acceptance Facility;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.01 Certain Defined Terms . As used in this Agreement and the other Loan
----------------------
Documents, the following terms have the following meanings:
"Acceptance Usage" means, as at any date of determination, the
----------------
aggregate Face Amount of all completed Bankers' Acceptances which have not
been repaid by Medis or the Company whether or not due and whether or not
held by a Tranche B Bank. For purposes of this definition, any Bankers'
Acceptance that has been prepaid in full shall not be deemed to be
outstanding and all Bankers' Acceptances shall be valued in Dollar
Equivalents as of the applicable Computation Date.
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly, is in control of, is
1
<PAGE>
controlled by, or is under common control with, such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership
of voting securities, by contract, or otherwise.
"Affiliate Bank" means (i) with respect to any Tranche B Bank which is
--------------
a Tranche B Domestic Bank but is not a Tranche B Canadian Bank, the
affiliate of such Tranche B Domestic Bank which is serving as a Tranche B
Canadian Bank and (ii) with respect to any Tranche B Bank which is a
Tranche B Canadian Bank but is not a Tranche B Domestic Bank, the affiliate
of such Tranche B Canadian Bank which is serving as a Tranche B Domestic
Bank. The Affiliate Bank of each Tranche B Bank as of the Closing Date is
set forth on Schedule 2.01 hereof.
"Agent" means BofA in its capacity as agent for the Banks hereunder,
-----
and any successor agent arising under Section 9.09.
"Agent-Related Persons" means the Agent and the Canadian
---------------------
Administrative Agent together with their respective Affiliates (including,
in the case of BofA, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Agents" means the Agent and the Canadian Administrative Agent.
------
"Agent's Payment Office" means the address for payments set forth on
----------------------
Schedule 10.02 in relation to the Agent, or such other address as the Agent
--------------
may from time to time specify.
"Agreement" means this Credit Agreement.
---------
"Applicable Agent" shall mean the Agent in the case of Tranche A Loans
----------------
and Tranche B Domestic Loans and the Canadian Administrative Agent in the
case of Tranche B Canadian Loans and in connection with the Bankers'
Acceptance Facility.
"Applicable Currency" means, as to any particular payment or Loan,
-------------------
Dollars in the case of Tranche A Loans and Tranche B Domestic Loans and
Canadian Dollars in the case of Tranche B Canadian Loans and the Bankers'
Acceptance Facility.
"Applicable Facility Fee Margin" means, on any date (subject to
------------------------------
clauses (b) through (d) of the definition of "Applicable Rating Level"),
the applicable margin set forth below based on the Applicable Rating Level
on such date:
2
<PAGE>
<TABLE>
<CAPTION>
Applicable
Rating Level Margin
------------ ------
<S> <C>
Level I 0.0800%
Level II 0.1350%
Level III 0.2000%
</TABLE>
"Applicable Margin" means, on any date and with respect to each Loan
-----------------
or Bankers' Acceptance (subject to clauses (b) through (d) of the definition of
"Applicable Rating Level"), the applicable margin set forth below based on the
Type of Loan or, in the case of Bankers' Acceptances, under the heading Bankers'
Acceptances and the Applicable Rating Level on such date:
<TABLE>
<CAPTION>
Applicable Offshore Rate CD Rate Bankers'
Rating Level Loans Loans Acceptances
- ------------ ------------- ------- -----------
<S> <C> <C> <C>
Level I 0.1700% 0.2950% 0.1700%
Level II 0.2250% 0.3500% 0.2250%
Level III 0.3250% 0.4500% 0.3250%
</TABLE>
"Applicable Rating Level" shall mean and be determined by the ratings
-----------------------
issued from time to time by S&P and Moody's (or S&P or Moody's, if ratings shall
be available from only one of such Rating Agencies) in respect of the Company's
long-term, senior unsecured debt in accordance with the following:
<TABLE>
<CAPTION>
Rating Level S&P Moody's Duff & Phelps
- ------------ --- ------- -------------
<S> <C> <C> <C>
Level I A A2 A
or More Favorable or More Favorable or More Favorable
Level II BBB Baa2 BBB
or More Favorable or More Favorable or More Favorable
but Less Favorable than A but Less Favorable than A2 but less than A
Level III BBB- or Less Baa3 or Less BBB- or Less
Favorable Favorable Favorable
or Not Rated or Not Rated or Not Rated
</TABLE>
For purposes of the foregoing, (a) if ratings are available from both S&P
and Moody's, and the ratings available from such Rating Agencies do not
correspond to the same Rating Level, the Rating Level corresponding to the lower
rating shall be the Applicable Rating Level unless the higher rating is
consistent with the Rating Level of Duff & Phelps as set forth above; (b) if
determinative ratings shall change (other than as a result of a change in the
rating system used by any applicable Rating Agency) such that a change in the
Applicable Rating Level would result, such change shall effect a change in the
Applicable Rating Level as of the day on which the Agent receives notice of such
change (such day, a "Change Day"), and any change in the Applicable Margin shall
----------
take effect commencing on such
3
<PAGE>
Change Day and ending on the date immediately preceding the next Change
Day; (c) if the rating system of any of the Rating Agencies shall change
prior to the date all obligations hereunder have been paid and the
Commitments cancelled, the Company and the Majority Banks shall negotiate
in good faith to amend the references to specific ratings in this
definition to reflect such changed rating system, and pending such
amendment, if no Applicable Rating Level is otherwise determinable based
upon the foregoing, the most recent Applicable Rating Level in effect shall
apply; (d) if the Company shall fail to give notice to the Agent of any
change in rating by any Rating Agency in respect of the Company's long-
term, senior unsecured debt on the date required by Section 6.10, the
Applicable Rating Level shall be deemed to be Level III for the period from
the date such notice was required to be delivered to the date such notice
is received by the Agent; and (e) subject to subsection 2.08(c), upon the
occurrence of and during the existence of an Event of Default, the
Applicable Rating Level shall be deemed to be Level III.
"Approved Custodian" means BofA, in its capacity as the initial
------------------
custodian under the Custodial Agreement and its successors and assigns, any
Bank (or any Affiliate of a Bank) and any other Persons that may be
approved in writing as additional or successor custodians by the Company,
the Agent and Majority Banks.
"Arranger" means BA Securities, Inc., a Delaware corporation.
--------
"Assessment Rate" has the meaning specified in the definition of "CD
---------------
Rate."
"Assignee" has the meaning specified in subsection 10.08(a).
--------
"Attorney Costs" means and includes all reasonable fees and
--------------
disbursements of any law firm or other external counsel, the allocated
reasonable cost of internal legal services and all reasonable disbursements
of internal counsel; provided that no fees or disbursements shall qualify
--------
as Attorney Costs unless written evidence substantiating such fees and
disbursements is available to the Company upon request.
"Bank" has the meaning specified in the introductory clause hereto.
----
"Bankers' Acceptance" has the meaning assigned to that term in Section
-------------------
2.17(a).
"Bankers' Acceptance Facility" means the facility established by
----------------------------
Section 2.17.
4
<PAGE>
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
---------------
U.S.C. (S)101, et seq.).
-------
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
---------
above the Federal Funds Rate in effect for that day; and (b) the rate of
interest in effect for such day as publicly announced from time to time by
BofA in San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may
be priced at, above, or below such announced rate.) Any change in the
reference rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
--------------
Rate.
"BofA" means Bank of America National Trust and Savings Association, a
----
national banking association.
"BofA Canada" means Bank of America Canada.
-----------
"Borrower" or "Borrowers" means the Company and/or Medis.
-------- ---------
"Borrowing" means a borrowing hereunder consisting of Loans of the
---------
same Tranche and Type made to the same Borrower on the same day by the
Banks under Article II, and, other than in the case of Base Rate Loans,
having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
--------------
Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, Chicago or San Francisco
or, in the case of Tranche B Canadian Loans or in connection with the
Bankers' Acceptance Facility, Toronto or Montreal are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings in the Applicable
Currency are carried on in the applicable offshore interbank market.
"Canadian Administrative Agent" means BofA Canada in its capacity as
-----------------------------
the Canadian administrative agent for the Tranche B Canadian Banks, and any
successor arising under Section 9.09.
"Canadian Administrative Agent's Payment Office" means the address for
----------------------------------------------
payments set forth on Schedule 10.02 in
5
<PAGE>
relation to the Canadian Administrative Agent, or such other address as the
Canadian Administrative Agent may from time to time specify.
"Canadian Dollars" or "Cdn.$" means lawful money of Canada.
---------------- -----
"Canadian Prime Rate" means, for any day, with respect to any Tranche
-------------------
B Canadian Loan, the higher of (a) the rate announced by the Canadian
Administrative Agent from time to time as its prime lending rate, as in
effect from time to time, and (b) a rate equal to the effective rate that a
Bankers' Acceptance would bear if made on such day in accordance with
Section 2.17. As to any loan, the Canadian Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged
to any customer. The Canadian Administrative Agent may make commercial
loans or other loans at rates of interest at, above or below the Canadian
Prime Rate. Any change in the reference rate announced by the Canadian
Administrative Agent shall take effect at the opening of business on the
day specified in the announcement of such change.
"Canadian Prime Rate Loans" means Tranche B Canadian Loans bearing
-------------------------
interest at rates determined by reference to the Canadian Prime Rate.
"Canadian Spot Rate" means the rate quoted by BofA as the spot rate
------------------
for the purchase by BofA of such currency with another currency through its
FX Trading Office at approximately 8:00 a.m. (San Francisco time) on the
date two Business Days prior to the date as of which the foreign exchange
computation is made.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CD Rate" means, for any Interest Period with respect to CD Rate Loans
-------
comprising part of the same Borrowing, the rate of interest (rounded upward
to the next 1/100th of 1%) determined as follows:
CD Rate = Certificate of Deposit Rate + Assessment
---------------------------
1.00 - Reserve Percentage Rate
Where:
"Assessment Rate" means, for any day of such Interest Period, the
---------------
rate determined by the Agent as equal to the annual assessment rate in
effect on such
6
<PAGE>
day payable to the FDIC by a member of the Bank Insurance Fund that is
classified as adequately capitalized and within supervisory subgroup
"A" (or a comparable successor assessment risk classification within
the meaning of 12 C.F.R. (S)327.3) for insuring time deposits at
offices of such member in the United States; or, in the event that the
FDIC shall at any time hereafter cease to assess time deposits based
upon such classifications or successor classifications, equal to the
maximum annual assessment rate in effect on such day that is payable
to the FDIC by commercial banks (whether or not applicable to any
particular Bank) for insuring time deposits at offices of such banks
in the United States.
"Certificate of Deposit Rate" means the rate of interest per
---------------------------
annum determined by the Agent to be the arithmetic mean (rounded
upward to the next 1/100th of 1%) of the rates notified to the Agent
by each Reference Bank as the rates of interest bid by two or more
certificate of deposit dealers of recognized standing selected by such
Reference Bank for the purchase at face value of dollar certificates
of deposit issued by major United States banks, for a maturity
comparable to such Interest Period and in the approximate amount of
the CD Rate Loan to be made by such Reference Bank, at the time
selected by such Reference Bank on the first day of such Interest
Period.
"Reserve Percentage" means, for any day of such Interest Period,
------------------
the maximum reserve percentage (expressed as a decimal, rounded upward
to the next 1/100th of 1%), as determined by the Agent, in effect on
such day (including any ordinary, marginal, emergency, supplemental,
special and other reserve percentages), prescribed by the FRB for
determining the maximum reserves to be maintained by member banks of
the Federal Reserve System with deposits exceeding $1,000,000,000 for
new non-personal time deposits for a period comparable to such
Interest Period and in an amount of $100,000 or more.
The CD Rate shall be adjusted, as to all CD Rate Loans then
outstanding, automatically as of the effective date of any change in the
Assessment Rate or the Reserve Percentage.
"CD Rate Loan" means a Loan that bears interest based on the CD Rate.
------------
"Certificate of Deposit Rate" has the meaning specified in the
---------------------------
definition of "CD Rate."
-------
7
<PAGE>
"Change Day" has the meaning specified in the definition of
----------
"Applicable Rating Level."
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 4.01 are satisfied or waived by all Banks (or, in the case
of subsection 4.01(f), waived by the Person entitled to receive such
payment).
"Co-Agent" means Chemical Bank in its capacity as co-agent for the
--------
Banks hereunder.
"Code" means the Internal Revenue Code of 1986, and regulations
----
promulgated thereunder.
"Collateral" means all property and interests in property and proceeds
----------
thereof now owned or hereafter acquired by the Company and its Subsidiaries
that becomes subject to a Lien in favor of the Banks, or the Agent on
behalf of the Banks, whether under this Agreement, the Pledge Agreement or
any other Collateral Document; which Collateral shall not include any
deposit in a Tranche B Canadian Bank.
"Collateral Documents" means, collectively, (a) the Pledge Agreement,
--------------------
the Custodial Agreement (other than provisions that do not relate to
Collateral or any other Collateral Document), the Custodial Agreement
Acknowledgement, and all other security agreements and other similar
agreements between the Company and the Banks or the Agent for its benefit
and the benefit of the Banks now or hereafter delivered to the Banks or the
Agent pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company as debtor in favor of the Banks or the
Agent for its benefit and the benefit of the Banks as secured party, and
(b) any amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Collateral Period" means (a) the period from the Closing Date to June
-----------------
30, 1995 and (b) any calendar quarter commencing thereafter.
"Collateralize" means to pledge and deposit with or deliver to the
-------------
Agent, for the benefit of the Agents and the Banks, Collateral pursuant to
the Pledge Agreement.
"Commitment" means, as of any date of determination as to each Bank,
----------
the aggregate amount of the Tranche A Commitment of such Bank and, if
applicable, the Tranche B Commitment of such Bank in effect on such date,
and
8
<PAGE>
"Commitments" means the aggregate amount of the Commitments for each
-----------
Bank in effect on such date.
"Company" has the meaning specified in the introductory clause hereto.
-------
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit C.
"Computation Date" has the meaning specified in subsection 2.15(a).
----------------
"Contingent Obligation" means, as to any Person, any direct or
---------------------
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person (i)
to purchase, repurchase or otherwise acquire such primary obligations or
any security therefor, (ii) to advance or provide funds for the payment or
discharge of any such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
-------------------
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase
any materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations, shall be equal to the maximum
reasonably anticipated liability in respect thereof.
9
<PAGE>
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under Section
----------------------------
2.04, (i) the Company or Medis, as the case may be, converts Loans of one
Type to another Type, or (ii) the Company or Medis, as the case may be,
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Custodial Agreement" means the Custody Agreement dated as of November
-------------------
14, 1994 between the Company and BofA in its capacity as Custodian and any
other custodial agreement with an Approved Custodian, substantially in the
form of such Custody Agreement or in such other form as may be approved by
Majority Banks, which may be in effect from time to time.
"Custodial Agreement Acknowledgement" means a Custodial Agreement
-----------------------------------
Acknowledgement substantially in the form of Exhibit J and any other
custodial agreement acknowledgement among the Company, the Agent and the
Custodian substantially in the form of Exhibit J or in such other form as
may be approved by Majority Banks, which may be in effect from time to
time.
"Custodian" means BofA, in its capacity as the initial Custodian under
---------
the Custodial Agreement and Custodial Agreement Acknowledgement and any
other Approved Custodian under the Custodial Agreement and Custodial
Agreement Acknowledgement (including any successor Custodial Agreement and
Custodial Agreement Acknowledgement) appointed in accordance with the terms
hereof and the Pledge Agreement. The parties hereto acknowledge that there
may be more than one Custodian from time to time.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Dollar Equivalent" means, at any time, (a) as to any amount
-----------------
denominated in Dollars, the amount thereof at such time, and (b) as to any
amount denominated in Canadian Dollars, the equivalent amount in Dollars as
determined by the Agent at such time on the basis of the Canadian Spot Rate
for the purchase of Dollars with Canadian Dollars on the most recent
Computation Date provided for in subsection 2.15(a).
10
<PAGE>
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
"Draft" means, at any time, a blank bill of exchange, within the
-----
meaning of the Bills of Exchange Act (Canada), in substantially the form of
Exhibit H-1 annexed hereto, issued by Medis to be accepted by a Tranche B
Canadian Bank (which upon such acceptance will be a Bankers' Acceptance)
and bearing such distinguishing letters and numbers as such Tranche B
Canadian Bank may determine, but which at such time, except as otherwise
provided herein, has not been completed or accepted by a Tranche B Canadian
Bank.
"Drawing" means an acceptance of completed Drafts by a Tranche B Bank
-------
or by any other Person pursuant to Section 2.17.
"Drawing Date" means any Business Day fixed pursuant to subsection
------------
2.17(b) for a Drawing.
"Drawing Fee" means, with respect to the Drafts issued by Medis
-----------
hereunder and accepted as provided herein on any Drawing Date, an amount
equal to the Drawing Fee Rate multiplied by the aggregate Face Amount of
such Drafts, calculated, in each case, on the basis of the term to maturity
of such Draft and a year of 365 days (rounded to the nearest whole cent,
with one-half of one cent being rounded up).
"Drawing Fee Rate" means, in calculating the Drawing Fee for any
----------------
Draft, (i) with respect to any portion of the Face Amount of such Draft
that is less than or equal to the Market Value of the Qualifying Collateral
allocated to such Face Amount in accordance with the last sentence of
Section 2.08(b), if any, a rate per annum equal to 0.1250% and (ii) with
respect to any portion of the Face Amount of such Draft that exceeds the
Market Value of the Qualifying Collateral allocated to such Face Amount in
accordance with the last sentence of Section 2.08(b), if any, a rate per
annum equal to the Applicable Margin.
"Drawing Notice" has the meaning assigned to that term in subsection
--------------
2.17(b)(1).
"Drawing Purchase Price" means, in respect of Drafts to be accepted by
----------------------
a Tranche B Canadian Bank or any other Person, the difference between (i)
the result (rounded to the nearest whole cent, with one-half of one cent
being rounded up) obtained by dividing the aggregate Face Amount of such
Drafts by the sum of one plus the product of (x) the Effective Discount
Rate multiplied by (y) a fraction the numerator of which is the term of
maturity of such Drafts and the denominator of which is 365; and (ii) the
applicable Drawing Fee.
11
<PAGE>
"Duff & Phelps" means Duff & Phelps Credit Rating Co. and any
-------------
successor thereto that is a nationally recognized rating agency.
"Effective Discount Rate" means, in respect of any Bankers'
-----------------------
Acceptances to be purchased by a Tranche B Canadian Bank or any other
Person pursuant hereto, the discount rate at which the Canadian
Administrative Agent would purchase, at 10:00 a.m. (Toronto time) on the
relevant Drawing Date, its own Bankers' Acceptances having an aggregate
Face Amount equal to and with a term to maturity the same as the Bankers'
Acceptances to be acquired by such Tranche B Bank or other Person on such
Drawing Date.
"Eligible Assignee" means (i) a commercial bank organized under the
-----------------
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
OECD, or a political subdivision of any such country, and having a combined
capital and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States or Canada;
and (iii) a Person that is primarily engaged in the business of commercial
banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a
Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is
a Subsidiary; provided that an Eligible Assignee in respect of the Tranche
B Canadian Loans shall include only a Schedule I Bank, a Schedule II Bank
or another Person who is a resident of Canada or otherwise not subject to
withholding tax for purposes of the Income Tax Act (Canada) and the
regulations promulgated thereunder.
"Employee Benefit Plan" means any "employee benefit plan" as defined
---------------------
in Section 3(3) of ERISA which is, or was at any time, maintained or
contributed to by the Company or any of its ERISA Affiliates.
"Environmental Laws" means all federal, state, provincial or local
------------------
laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
-----
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Person, means (i) any corporation
---------------
which is, or was at any time, a member of a controlled group of
corporations within the meaning of
12
<PAGE>
Section 414(b) of the Code of which that Person is, or was at any time, a
member; (ii) any trade or business (whether or not incorporated) which is,
or was at any time, a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Code of which
that Person is, or was at any time, a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the
Code of which that Person, any corporation described in clause (i) above or
any trade or business described in clause (ii) above is, or was at any
time, a member; provided that an ERISA Affiliate shall not include a Person
that was a member, as referenced in clause (i), (ii) or (iii) above if the
Company or any of its Subsidiaries would not have any liability in
connection with an ERISA Event with respect to such Person.
"ERISA Event" means (i) a "reportable event" within the meaning of
-----------
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice
to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of
the Code) or the failure to make by its due date a required installment
under Section 412(m) of the Code with respect to any Pension Plan or the
failure to make any required contribution to a Multiemployer Plan; (iii)
the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by the Company or any of its ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Sections 4063 or 4064 of
ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might
constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on the Company or any of its ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c)
of ERISA; (vii) the withdrawal by the Company or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is
any potential liability therefor, or the receipt by the Company or any of
its ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042
of ERISA; (viii) the occurrence of an act or omission which could give rise
to
13
<PAGE>
the imposition on the Company or any of its ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Code or under
Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any
Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against the Company or any of
its ERISA Affiliates in connection with any such Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Code) to qualify under Section 401(a) of the
Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of
the Code or pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Reserve Percentage" has the meaning specified in the
-----------------------------
definition of "Offshore Rate."
"Event of Default" means any of the events or circumstances specified
----------------
in Section 8.01.
"Exchange Act" means the Securities and Exchange Act of 1934, and
------------
regulations promulgated thereunder.
"Exposure" means (a) (i) prior to the termination of the Tranche A
--------
Commitment, such Bank's Tranche A Commitment and (ii) after the termination
of the Tranche A Commitments, the aggregate outstanding principal amount of
the Tranche A Loans made by such Bank plus (b) (i) prior to the termination
of the Tranche B Commitment, such Bank's Tranche B Commitment and (ii)
after the termination of the Tranche B Commitments, the Total Utilization
of Tranche B Commitments for such Bank.
"Face Amount" means, in respect of a Draft or a Bankers' Acceptance,
-----------
as the case may be, the amount payable to the holder thereof on its
maturity.
"FDIC" means the Federal Deposit Insurance Corporation, and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
------------------
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be
14
<PAGE>
the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.09(a).
----------
"FRB" means the Board of Governors of the Federal Reserve System, and
---
any Governmental Authority succeeding to any of its principal functions.
"FX Trading Office" means the Foreign Exchange Trading Center #5193,
-----------------
San Francisco, California, of BofA, or such other of BofA's offices as BofA
may designate from time to time or, if BofA is no longer the Agent, the
offices of Agent as Agent may designate from time to time.
"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; provided that with
respect to Subsidiaries not organized in the United States, "GAAP" means
generally accepted accounting principles in accordance with agencies with
similar function of comparable stature and authority within the accounting
profession in the relevant jurisdiction.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty" means the Guaranty substantially in the form of Exhibit L.
--------
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation".
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
15
<PAGE>
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; provided that this clause (c) shall not
include up to $10,000,000 of non-contingent reimbursement or payment
obligations with respect to Surety Instruments that do not support
indebtedness for borrowed money to the extent that no default has occurred
with respect to the payment thereof; (d) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all obligations with respect to capital leases; (g) all
net obligations with respect to Swap Contracts; and (h) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
-----------------------
"Indemnified Person" has the meaning specified in Section 10.05.
------------------
"Independent Auditor" has the meaning specified in subsection 6.01(a).
-------------------
"Independent Auditor's Letter" means a letter substantially in the
----------------------------
form of Exhibit M.
"Ineligible Securities" has the meaning specified in subsection
---------------------
7.03(b).
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state
or foreign law, including the Bankruptcy Code.
16
<PAGE>
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan or Canadian Prime Rate Loan, the last day of each Interest Period
applicable to such Loan and, as to any Base Rate Loan or Canadian Prime
Rate Loan, the last Business Day of each calendar quarter and each date
such Loan is converted into another Type of Loan; provided, however, that
-------- -------
if any Interest Period for a CD Rate Loan or Offshore Rate Loan exceeds 90
days or three months, respectively, the date that falls 90 days or three
months (as the case may be) after the beginning of such Interest Period and
after each Interest Payment Date thereafter is also an Interest Payment
Date.
"Interest Period" means, (a) as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the applicable Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation; and (b) as to any
CD Rate Loan, the period commencing on the Borrowing Date of such Loan or
on the Conversion/Continuation Date on which the Loan is converted into or
continued as a CD Rate Loan, and ending 30, 60, 90 or 180 days thereafter,
as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the calendar month at the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond the
Revolving Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
17
<PAGE>
"Lending Office" means, as to any Bank, the office or offices of such
--------------
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 10.02, or such
--------------
other office or offices as such Bank may from time to time notify the
Company and the Agents.
"LIBOR" has the meaning specified in the definition of the "Offshore
-----
Rate."
"Lien" means any security interest, mortgage, deed of trust, pledge,
----
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a lessor
under an operating lease.
"Loan" means an extension of credit by a Bank to a Borrower under
----
Article II, and may be a Base Rate Loan, Canadian Prime Rate Loan, CD Rate
Loan or an Offshore Rate Loan (each, a "Type" of Loan) or a Tranche A Loan
----
or a Tranche B Loan.
"Loan Documents" means this Agreement, any Notes, the Collateral
--------------
Documents, the Guaranty, the Fee Letter, any Drafts, any Bankers'
Acceptances and all other documents delivered to the Agent or any Bank in
connection herewith.
"Lowest Quarterly Market Value" means, for any calendar quarter, the
-----------------------------
lowest Market Value reflected on the Valuation Summary delivered pursuant
to the Pledge Agreement in respect of such quarter.
"Majority Banks" means at any time Banks then holding more than 50% of
--------------
the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, Banks then having more than 50% of
the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation G, T, U or X of the FRB.
"Market Value" has the meaning specified in the Pledge Agreement.
------------
18
<PAGE>
"Material Adverse Effect" means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole or any Material Subsidiary; (b) a material
impairment of the ability of any Borrower to perform under any Loan
Document and to avoid any Event of Default; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability
against any Borrower of any Loan Document.
"Material Subsidiary" means, at any time, (i) Medis and (ii) any other
-------------------
Subsidiary having at such time 10% or more of Company's consolidated total
(gross) revenues for the preceding four fiscal quarter period, as of the
last day of the preceding fiscal quarter based upon the Company's most
recent annual or quarterly financial statements delivered to the Agent
under Section 6.01.
"Medis" has the meaning specified in the introductory clause hereto.
-----
"Moody's" means Moody's Investors Service, Inc. and any successor
-------
thereto that is a nationally-recognized rating agency.
"Multiemployer Plan" means a "multiemployer plan", as defined in
------------------
Section 3(37) of ERISA, to which the Company or any of its ERISA Affiliates
is contributing, or ever has contributed, or to which the Company or any of
its ERISA Affiliates has, or ever has had, an obligation to contribute.
"Net Worth" means the sum of the capital stock and additional paid in
---------
capital plus retained earnings (or minus accumulated deficits) of the
Company and its Subsidiaries determined on a consolidated basis in
conformity with GAAP on such date.
"Note" means a promissory note executed by a Borrower in favor of a
----
Bank pursuant to subsection 2.02(b), substantially in the form of Exhibit
F-1 in the case of the Company with respect to Tranche A Loans,
substantially in the form of Exhibit F-2 in the case of the Company with
respect to Tranche B Domestic Loans or substantially in the form of Exhibit
F-3 in the case of Medis with respect to Tranche B Canadian Loans.
"Notice of Borrowing" means a notice substantially in the form of
-------------------
Exhibit A.
"Notice of Conversion/Continuation" means a notice substantially in
---------------------------------
the form of Exhibit B.
19
<PAGE>
"Notice of Election of Projected Market Value" means a notice
--------------------------------------------
substantially in the form of Exhibit K.
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by either of the
Borrowers to any Bank, any Agent, or any Indemnified Person, whether direct
or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
"OECD" means the Organization for Economic Cooperation and
----
Development.
"Offshore Rate" means, for any Interest Period, with respect to
-------------
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/100th of 1%) determined by
the Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
-----------------------------
Interest Period (A) in the case of Tranche A Loans or Tranche B
Domestic Loans, the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Tranche A Bank or Tranche B
Domestic Bank) under regulations issued from time to time by the FRB
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities") and (B) in the case of Tranche B Canadian
Loans, the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (whether or
not applicable to any Tranche B Canadian Bank) under any applicable
regulations of the central bank or other relevant Governmental
Authority in Canada; and
"LIBOR" means the rate of interest per annum determined by the
-----
Agent to be the arithmetic mean (rounded upward to the next 1/16th of
1%) of the rates of interest per annum notified to the Agent by each
Reference Bank as the rate of interest at which deposits in the
Applicable Currency in the approximate amount of the amount of the
Loan to be made or continued as, or converted into, an Offshore Rate
Loan by such Reference Bank and having a maturity
20
<PAGE>
comparable to such Interest Period would be offered to major banks in
the London interbank market at their request at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate and may be a Tranche A Loan, a Tranche B Domestic Loan or a
Tranche B Canadian Loan.
"Organization Documents" means, for any corporation, the certificate
----------------------
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Other Taxes" means any present or future stamp or documentary taxes
-----------
or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
"Overnight Canadian Rate" means, for any day, the rate of interest per
-----------------------
annum at which overnight deposits in Canadian Dollars, in an amount
approximately equal to the amount with respect to which such rate is being
determined, would be offered for such day by Agent's London Branch to major
banks in the London or other applicable offshore interbank market.
"Participant" has the meaning specified in subsection 10.08(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation, or any
----
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means any Employee Benefit Plan, other than a
------------
Multiemployer Plan, which is subject to Section 412 of the Code or Section
302 of ERISA.
"Permitted Liens" has the meaning specified in Section 7.01.
---------------
"Person" means an individual, partnership, corporation, business
------
trust, limited liability company,
21
<PAGE>
joint stock company, trust, unincorporated association, joint venture or
other organization or Governmental Authority.
"Pledge Agreement" means a Pledge and Security Agreement substantially
----------------
in the form of Exhibit I.
"Projected Market Value" means the Market Value of the Collateral that
----------------------
the Company intends to pledge under the Pledge Agreement to secure the
Commitments and the Loans (if any) for the succeeding calendar quarter as
set forth in a Notice of Election of Projected Market Value.
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Qualifying Collateral" means Collateral as to which a first priority
---------------------
Lien, subject to no other Liens (except the lien in favor of the Custodian
that secures the obligations of the Company to the Custodian under the
Custodial Agreement that is equal and ratable with the Lien of the Agent
and the Lien in favor of the Custodian that secures the obligations of the
Company to the Custodian other than under the Custodial Agreement that is
junior to the Lien of the Agent), exists in favor of the Agent for the
benefit of the Agents and the Banks pursuant to the Collateral Documents,
and of a type as to which the Company has furnished an opinion of counsel
(which counsel shall be satisfactory to the Agent) addressed to the Agent
and the Banks, in the form of Exhibit D-3 or otherwise satisfactory to the
Agent and Majority Banks and opining that a perfected Lien exists or will
exist in favor of the Agent for the benefit of the Banks, and consisting of
(a) cash held in a segregated deposit account with the Agent or with the
Custodian contemplated under the Custodial Agreement and the Custodial
Agreement Acknowledgement, (b) securities issued by the United States
Government or (c) securities directly and unconditionally guaranteed by the
United States Government; provided, however, that if the Company proposes
-------- -------
to pledge Collateral of the type described in clause (b) or (c) above, such
Collateral shall not constitute Qualifying Collateral unless and until the
Company has furnished to the Agent, with sufficient copies for each Bank, a
certificate of the Company signed by a Responsible Officer to the effect
that such Collateral constitutes Collateral of such type and such other
evidence, certificates or opinions as the Agent may, at the request of any
Bank, reasonably request; and provided, further, that if any Bank shall
-------- -------
have notified the Agent that under any Capital Adequacy Regulation then in
effect with respect to such Bank, assets secured by such
22
<PAGE>
Collateral do not have a risk category with a risk weight of 20%, such
Collateral shall not be Qualifying Collateral as to that Bank, and the
provisions of subsection 3.03(c) shall apply to such Bank.
"Rating Agency" means S&P, Moody's and, to the extent provided in the
-------------
definition of Applicable Rating Level, Duff & Phelps.
"Reference Banks" means BofA and Chemical Bank.
---------------
"Relevant Calendar Quarter" has the meaning specified in subsection
-------------------------
2.09(b).
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject, including but not limited to any Environmental Law.
"Reserve Percentage" has the meaning specified in the definition of
------------------
"CD Rate."
"Responsible Officer" means the chief executive officer, the president
-------------------
or any vice president of the Company or Medis, as applicable; and, with
respect to compliance with financial covenants, the chief financial officer
or the treasurer of the Company.
"Revolving Termination Date" means the earlier to occur of:
--------------------------
(a) March 31, 2000; and
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"S&P" means Standard & Poor's Ratings Group and any successor thereto
---
that is a nationally-recognized rating agency.
"Schedule I Bank" means any Tranche B Canadian Bank that is a bank
---------------
referred to in Schedule I to the Bank Act (Canada), S.C. 1991, c.46, as
amended.
"Schedule II Bank" means any Tranche B Canadian Bank that is not a
----------------
Schedule I Bank.
"SEC" means the Securities and Exchange Commission, or any
---
Governmental Authority succeeding to any of its principal functions.
23
<PAGE>
"Subsidiary" of a Person means any corporation, association,
----------
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock or other equity interests
(in the case of Persons other than corporations), is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries of
the Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of the
Company.
"Surety Instruments" means all letters of credit (including standby
------------------
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement (including any master agreement
-------------
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option or any other,
similar agreement (including any option to enter into any of the
foregoing).
"Taxes" means any and all present or future taxes, levies, imposts,
-----
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Bank, the Agent, the Canadian
Administrative Agent and any other Person having at any time an interest in
any Tranche B Canadian Loan or any Bankers' Acceptance, such taxes
(including, without limitation, income taxes, capital taxes, minimum taxes,
branch taxes, capital gains taxes or franchise taxes) (i) as are imposed on
or measured by each Bank's (or other such Person's) net income or taxable
capital by the jurisdiction (or any political subdivision thereof) under
the laws of which such Bank (or such other Person) or the Agent, as the
case may be, is organized or in respect of which it is a resident or within
which it maintains the actual lending office or (ii) to the extent
attributable to a permanent establishment or fixed base located in any
jurisdiction (or any political subdivision thereof) identified in (i)
hereof.
"Total Capitalization", on any date, means the sum of (a) Total Debt
--------------------
and (b) the Net Worth on such date.
"Total Debt" means, on any date, all Indebtedness of the Company and
----------
its Subsidiaries determined on a consolidated basis on such date.
24
<PAGE>
"Total Utilization of Tranche B Commitments" means, (i) as to the
------------------------------------------
Tranche B Banks at any date of determination, the sum of (A) the aggregate
principal amount of all outstanding Tranche B Loans plus (B) the Acceptance
----
Usage, in each case valued in Dollar Equivalents and (ii) as to any Tranche
B Bank at any date of determination, the sum of (x) the aggregate principal
amount of all Tranche B Loans made by such Tranche B Bank or its Affiliate
Bank plus (y) the Acceptance Usage of such Tranche B Bank or its Affiliate
Bank, in each case valued in Dollar Equivalents.
"Tranche A Bank" means a Bank having a Tranche A Commitment as set
--------------
forth on Schedule 2.01 hereof and its successors and assigns.
"Tranche A Commitment", as to each Tranche A Bank, has the meaning
--------------------
specified in Section 2.01(a).
"Tranche A Loan" means any Loan made to the Company pursuant to
--------------
Section 2.01(a) which may be an Offshore Rate Loan, a Base Rate Loan or a
CD Rate Loan.
"Tranche A Pro Rata Share" means, as to any Tranche A Bank at any
------------------------
time, the percentage equivalent (expressed as a decimal, rounded to the
ninth decimal place) at such time of such Tranche A Bank's Tranche A
Commitment divided by the combined Tranche A Commitments of all Tranche A
Banks.
"Tranche B Bank" means a Bank having a Tranche B Commitment as set
--------------
forth on Schedule 2.01 hereof and its successors and assigns. With respect
to Tranche B Canadian Loans and the Bankers Acceptance Facility, Tranche B
Banks shall be the Tranche B Canadian Banks and with respect to Tranche B
Domestic Loans Tranche B Banks shall be the Tranche B Domestic Banks.
"Tranche B Canadian Bank" means each Tranche B Bank acting in the
-----------------------
capacity of a Canadian bank listed on Schedule 2.01 as a Tranche B Canadian
Bank and its successors and assigns.
"Tranche B Canadian Loan" means any Tranche B Loan made to Medis
-----------------------
pursuant to Section 2.01(b) denominated in Canadian Dollars which shall be
an Offshore Rate Loan or a Canadian Prime Rate Loan except to the extent
required under Section 2.15.
"Tranche B Commitment", as to each Bank, has the meaning specified in
--------------------
Section 2.01(b). The Tranche B Commitment for any Tranche B Bank that has
an Affiliate Bank is a single value for such Tranche B Bank and its
Affiliate Bank taken together.
25
<PAGE>
"Tranche B Domestic Bank" means each Tranche B Bank acting in the
-----------------------
capacity of a domestic bank listed on Schedule 2.01 as a Tranche B Domestic
Bank and its successors and assigns.
"Tranche B Domestic Loan" means any Tranche B Loan made to the Company
-----------------------
pursuant to Section 2.01(b) denominated in Dollars which may be an Offshore
Rate Loan, a Base Rate Loan or a CD Rate Loan.
"Tranche B Loan" means a Tranche B Domestic Loan or a Tranche B
--------------
Canadian Loan.
"Tranche B Pro Rata Share" means, as to any Tranche B Bank at any
------------------------
time, the percentage equivalent (expressed as a decimal, rounded to the
ninth decimal place) at such time of such Tranche B Bank's Tranche B
Commitment divided by the combined Tranche B Commitments of all Tranche B
Banks. The Tranche B Pro Rata Share for any Tranche B Bank shall at all
times be equal to the Tranche B Pro Rata Share of its Affiliate Bank.
"Type" has the meaning specified in the definition of "Loan."
----
"Unfunded Pension Liability" means the excess of a Plan's benefit
--------------------------
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
------------- ----
"Valuation Summary" has the meaning specified in the Pledge Agreement.
-----------------
"Wholly-Owned Subsidiary" means any corporation in which (other than
-----------------------
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions . (a) The meanings of defined terms
------------------------------
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section,
26
<PAGE>
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c)(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agents merely
because of the Agents' or Banks' involvement in their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
----------------------
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) If any changes in accounting principles from those used in the
preparation of the financial statements referred to in Section 5.08 hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions
27
<PAGE>
by or required by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors thereto or agencies
with similar functions) result in a change in the method of calculation of
financial covenants, standards or terms found in Articles I, VI and VII hereof,
the parties hereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating the Company's financial condition shall be the same
after such changes as if such changes had not been made.
(c) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
1.04 Canadian Currency Equivalents. For all purposes of the Loan
-----------------------------
Documents (but not for purposes of the preparation of any financial statements
delivered pursuant hereto), the equivalent in Canadian Dollars of an amount in
Dollars, and the equivalent in Dollars of an amount in Canadian Dollars shall be
determined at the Canadian Spot Rate.
ARTICLE II
THE CREDITS
-----------
2.01 Amounts and Terms of Commitments. (a) Each Tranche A Bank severally
--------------------------------
agrees, on and subject to the terms and conditions set forth herein, to make
Base Rate Loans, CD Rate Loans or Offshore Rate Loans denominated in Dollars to
the Company from time to time as requested by the Company in accordance with
Sections 2.03 and 10.02 on any Business Day during the period from the Closing
Date to the Revolving Termination Date, in an aggregate amount not to exceed at
any time outstanding the amount set forth opposite its name in the column under
the heading "Tranche A Commitments" on Schedule 2.01 (such amount, as the same
-------------
may be reduced under Section 2.05 or as a result of one or more assignments
under Section 10.08, the Bank's "Tranche A Commitment"); provided, however,
-------------------- -------- -------
that, after giving effect to any Borrowing, (i) the aggregate principal amount
of all outstanding Tranche A Loans to the Company shall not at any time exceed
the combined Tranche A Commitments and (ii) the sum of (A) the aggregate
principal amount of all outstanding Tranche A Loans to the Company and (B) the
Total Utilization of Tranche B Commitments shall not at any time exceed the
Commitments. Within the limits of each Bank's Tranche A Commitment, and subject
to the other terms and conditions hereof, the Company may borrow under this
Section 2.01(a), prepay under Section 2.06 and reborrow under this Section
2.01(a); provided further that no Tranche A Loan to the Company shall be
-------- -------
denominated in or payable in a currency other than Dollars.
28
<PAGE>
(b) Each Tranche B Bank severally agrees, on and subject to the terms
and conditions set forth herein, to make Tranche B Loans to the Company or Medis
from time to time as requested by the Company or Medis and the Company in
accordance with Sections 2.03 and 10.02 on any Business Day during the period
from the Closing Date to the Revolving Termination Date, in an aggregate amount
not to exceed at any time outstanding a Dollar Equivalent amount equal to the
amount set forth opposite its name in the column under the heading "Tranche B
Commitments" on Schedule 2.01 (such amount as the same may be reduced under
-------------
Section 2.05 or as a result of one or more assignments under Section 10.08, the
Bank's Tranche B Commitment); provided, however, that, (i) after giving effect
- --------------------------- -------- -------
to any Borrowing, (A) the Total Utilization of Tranche B Commitments shall not
at any time exceed the combined Tranche B Commitments and (B) in the case of
Tranche B Canadian Loans, Medis shall be a wholly-owned Subsidiary of the
Company and (C) the sum of (x) the aggregate principal amount of all outstanding
Tranche A Loans to the Company and (y) the Total Utilization of Tranche B
Commitments shall not at any time exceed the Commitments; (ii) the Total
Utilization of Tranche B Commitments of any Tranche B Banks shall not exceed its
Tranche B Commitment; (iii) all Tranche B Loans to Medis shall be made by the
Tranche B Canadian Banks and shall be Offshore Rate Loans or Canadian Prime Rate
Loans denominated and payable in Canadian Dollars and no other currency and
shall not be CD Rate Loans or Base Rate Loans (except as provided in Section
2.15); and (iv) any Tranche B Loan to the Company shall be made by the Tranche B
Domestic Banks and shall be denominated and payable in Dollars and no other
currency. Within the limits of each Bank's Tranche B Commitment, and subject to
the other terms and conditions hereof, the Company and/or Medis may borrow under
this Section 2.01(b), prepay under Section 2.06 and reborrow under this Section
2.01(b).
2.02 Loan Accounts. (a) The Loans made by each Bank shall be evidenced
-------------
by one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent, the
Canadian Administrative Agent and each Bank shall be conclusive absent manifest
error of the amount of the Loans made by the Banks to each Borrower and the
interest and payments thereon. Any failure so to record or any error in doing
so shall not, however, limit or otherwise affect the obligation of each Borrower
hereunder to pay any amount owing with respect to the Loans made to such
Borrower.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank to either or both Borrowers may be evidenced by one or more
Notes, instead of loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it and
the amount and Applicable Currency of each payment of principal made by the
applicable Borrower with respect thereto.
29
<PAGE>
Each such Bank is irrevocably authorized by the Borrowers to endorse its Note(s)
and each Bank's record shall be conclusive absent manifest error; provided,
--------
however, that the failure of a Bank to make, or an error in making, a notation
- -------
thereon with respect to any Loan shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing of a Tranche A Loan or
-----------------------
Tranche B Domestic Loan shall be made upon the Company's irrevocable written
notice delivered to the Agent in the form of a Notice of Borrowing (which notice
must be received by the Agent prior to 9:00 a.m. (San Francisco time) (A) in the
case of Tranche A Loans (i) three Business Days prior to the requested Borrowing
Date, in the case of Offshore Rate Loans; (ii) two Business Days prior to the
requested Borrowing Date, in the case of CD Rate Loans; and (iii) on the
requested Borrowing Date, in the case of Base Rate Loans, and (B) in the case of
Tranche B Domestic Loans, ten Business Days prior to the requested Borrowing.
Each Borrowing of a Tranche B Canadian Loan shall be made upon the Company's and
Medis' irrevocable written notice delivered to the Agent and the Canadian
Administrative Agent in the form of a Notice of Borrowing (which notice must be
received by the Canadian Administrative Agent and the Agent prior to 11:00 a.m.
(Toronto time) (i) one Business Day prior to the requested Borrowing Date in the
case of Canadian Prime Rate Loans and (ii) three Business Days prior to the
requested Borrowing Date in the case of Offshore Rate Loans. Each Notice of
Borrowing shall specify:
(A) the amount of the Borrowing, which shall be, in the case of a
Tranche A Loan or Tranche B Domestic Loan, in an aggregate minimum amount
of $10,000,000 or any multiple of $1,000,000 in excess thereof, and, in the
case of Tranche B Canadian Loans, in an aggregate minimum amount of
Cdn.$5,000,000 or any multiple of Cdn.$1,000,000 in excess thereof;
(B) the identity of the Borrower and the requested Borrowing
Date, which shall be a Business Day;
(C) whether the Loan is to be a Tranche A Loan or Tranche B
Domestic Loan or Tranche B Canadian Loan and the Type of Loans comprising
the Borrowing;
(D) the duration of the Interest Period applicable to such Loans
included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of CD Rate
Loans or Offshore Rate Loans, such Interest Period shall be 90 days or
three months, respectively; and
(E) the Applicable Currency.
30
<PAGE>
(b) The Agent will promptly notify (i) each Tranche A Bank of its
receipt of any Notice of Borrowing requesting a Borrowing of a Tranche A Loan
and the amount of such Bank's Tranche A Pro Rata Share of that Borrowing and
(ii) each Tranche B Bank of its receipt of any Notice of Borrowing requesting a
Borrowing of a Tranche B Domestic Loan and the amount of such Bank's Tranche B
Pro Rata Share of that Borrowing, and the Canadian Administrative Agent will
promptly notify each Tranche B Canadian Bank of its receipt of any Notice of
Borrowing requesting a Borrowing of a Tranche B Canadian Loan and the amount of
such Bank's Tranche B Pro Rata Share of that Borrowing.
(c) The Dollar Equivalent amount of any Borrowing in Canadian Dollars
will be determined by the Agent for such Borrowing on the Computation Date
therefor in accordance with subsection 2.15(a).
(d) Each Tranche A Bank or Tranche B Domestic Bank, as the case may
be, will make the amount of its Tranche A Pro Rata Share or Tranche B Pro Rata
Share, as applicable, of each Borrowing of a Tranche A Loan or Tranche B
Domestic Loan, as the case may be, available to the Agent for the account of the
Company at the Agent's Payment Office on the Borrowing Date requested by the
Company in funds immediately available to the Agent and in Dollars, by 11:00
a.m. (San Francisco time). Each Tranche B Canadian Bank will make the amount of
its Tranche B Pro Rata Share of each Borrowing of a Tranche B Canadian Loan
available to the Canadian Administrative Agent for the account of Medis in
Canadian Dollars at the Canadian Administrative Agent's Payment Office by 11:00
a.m. (Toronto time). The proceeds of all such Loans will then be made available
to the applicable Borrower on the Borrowing Date by the Applicable Agent at such
office by crediting the account of the applicable Borrower on the books of BofA
or BofA Canada, as applicable, with the aggregate of the amounts made available
to the Applicable Agent by the Banks and in like funds as received by the
Applicable Agent.
(e) After giving effect to any Borrowing, there may not be more than
five different Interest Periods in effect.
2.04 Conversion and Continuation Elections. (a) The Company may in
-------------------------------------
respect of its outstanding Loans, upon irrevocable written notice to the Agent
in accordance with subsection 2.04(c):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of any other Type of Loans, to convert any such Loans (or any part thereof
in an amount not less than $10,000,000, or that is in an integral multiple
of $1,000,000 in excess thereof) into Loans of any other Type; or
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<PAGE>
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Loans having Interest Periods expiring on such day (or any
part thereof in an amount not less than $10,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of CD Rate Loans or Offshore
- --------
Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less than $10,000,000, such CD Rate Loans or
Offshore Rate Loans shall automatically convert into Base Rate Loans, and on and
after such date the right of the Company to continue such Loans as, and convert
such Loans into, Offshore Rate Loans or CD Rate Loans, as the case may be, shall
terminate; provided further, that the Company may not elect to convert a Tranche
-------- -------
A Loan into a Tranche B Loan or convert a Tranche B Loan into a Tranche A Loan.
(b) Medis may in respect of its outstanding Loans, upon irrevocable
written notice to the Agent in accordance with subsection 2.04(c):
(i) elect, as of any Business Day, in the case of Canadian Prime
Rate Loans, or as of the last day of the applicable Interest Period, in the
case of Offshore Rate Loans, to convert any such Loans (or any part thereof
in an amount not less than Cdn.$5,000,000, or that is in an integral
multiple of Cdn.$1,000,000 in excess thereof) into Loans of another Type
(it being understood that any such Loan of another Type shall be either a
Canadian Prime Rate Loan or an Offshore Rate Loan); or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Loans having Interest Periods expiring on such day (or any
part thereof in an amount not less than Cdn.$5,000,000, or that is an
integral multiple of Cdn.$1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than Cdn.$5,000,000, such Offshore Rate Loans shall
automatically convert into Canadian Prime Rate Loans, and on and after such date
the right of Medis to continue such Loans, as, and convert such Loans into,
Offshore Rate Loans, shall terminate.
(c) The Company, in the case of a conversion or continuation of a
Tranche A Loan or Tranche B Domestic Loan, shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 9:00 a.m.
(San Francisco time) (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans denominated in Dollars; (ii) two Business Days in advance
of the Conversion/Continuation
32
<PAGE>
Date, if the Loans are to be converted into or continued as CD Rate Loans; and
(iii) on the Conversion/Continuation Date, if the Loans are to be converted into
Base Rate Loans. The Company and Medis, in the case of a continuation of a
Tranche B Canadian Loan, shall deliver a Notice of Conversion/Continuation to be
received by the Canadian Administrative Agent and the Agent not later than 11:00
a.m. (Toronto time) (i) at least three Business Days in advance of the proposed
Conversion/Continuation Date if the Loans are to be converted into or continued
as Offshore Rate Loans and (ii) at least one Business Day in advance of the
proposed Conversion/Continuation Date, if the Loans are to be converted into
Canadian Prime Rate Loans. Each Notice of Conversion/Continuation shall specify:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or renewed;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
(D) other than in the case of conversions into Base Rate Loans or
Canadian Prime Rate Loans, the duration of the requested Interest Period.
(d) If upon the expiration of any Interest Period applicable to CD
Rate Loans or Offshore Rate Loans denominated in Dollars, the Company has failed
to select in a timely manner a new Interest Period to be applicable to such CD
Rate Loans or Offshore Rate Loans, as the case may be, or if any Default or
Event of Default then exists, the Company shall be deemed to have elected to
convert such CD Rate Loans or Offshore Rate Loans into Base Rate Loans effective
as of the expiration date of such Interest Period. If Medis has failed to
select in a timely manner a new Interest Period to be applicable to Offshore
Rate Loans prior to 11:00 a.m. (Toronto time) at least three Business Days in
advance of the expiration date of the current Interest Period applicable thereto
as provided in subsection 2.04(c), or if any Default or Event of Default shall
then exist, Medis shall be deemed to have elected to convert such Offshore Rate
Loans into Canadian Prime Rate Loans effective as of the expiration date of such
Interest Period.
(e) The Applicable Agent will promptly notify each Tranche A Bank,
Tranche B Domestic Bank or Tranche B Canadian Bank, as applicable, of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by a Borrower, the Applicable Agent will promptly notify each Tranche A
Bank, Tranche B Domestic Bank or Tranche B Canadian Bank, as applicable, of the
details of any automatic conversion. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Tranche A Loans, Tranche B Domestic Loans or Tranche B Canadian Loans held
33
<PAGE>
by each Tranche A Bank, Tranche B Domestic Bank or Tranche B Canadian Bank with
respect to which the notice was given.
(f) Unless the Majority Banks otherwise agree, during the existence of
a Default or Event of Default, the Company may not elect to have a Tranche A
Loan or Tranche B Domestic Loan converted into or continued as an Offshore Rate
Loan or a CD Rate Loan, and Medis may not elect to have a Tranche B Canadian
Loan continued as an Offshore Rate Loan.
(g) After giving effect to any conversion or continuation of Loans,
there may not be more than five different Interest Periods in effect.
(h) The Dollar Equivalent amount for any conversion to or continuation
of a Borrowing in Canadian Dollars will be determined by the Agent for such
conversion or continuation on the Computation Date therefor in accordance with
subsection 2.15(a).
2.05 Voluntary Termination or Reduction of Commitments. The Company may,
-------------------------------------------------
upon not less than three Business Days' prior notice to the Agent and the
Canadian Administrative Agent, terminate or permanently reduce the Commitments,
provided that any such permanent reduction shall be in an aggregate minimum
amount of $10,000,000 or any multiple of $1,000,000 in excess thereof; unless,
------
after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding principal amount of the Tranche A
Loans would exceed the amount of the combined Tranche A Commitments then in
effect or the Total Utilization of Tranche B Commitments would exceed the amount
of the combined Tranche B Commitments then in effect. Once reduced in
accordance with this Section, the Tranche A Commitments and the Tranche B
Commitments may not be increased. The Tranche A Commitments may be terminated
only if the Tranche B Commitments are terminated simultaneously and the Tranche
B Commitments may be terminated only if the Tranche A Commitments are terminated
simultaneously. Any reduction of the Commitments shall be made ratably between
the Tranche A Commitments and the Tranche B Commitments. Any reduction of the
Tranche A Commitments shall be applied to each Tranche A Bank according to its
Tranche A Pro Rata Share. Any reduction of the Tranche B Commitments shall be
applied to each Tranche B Bank according to its Tranche B Pro Rata Share. All
accrued commitment fees to, but not including, the effective date of any
reduction or termination of Commitments shall be paid on the effective date of
such reduction or termination.
2.06 Optional Prepayments . Subject to Section 3.04, the Company may, in
---------------------
the case of Tranche A Loans or Tranche B Domestic Loans, at any time or from
time to time, upon irrevocable notice to the Agent (i) of not less than three
Business Days in the case of Offshore Rate Loans (ii) of not less than two
Business Days in the case of CD Rate Loans;
34
<PAGE>
(iii) by no later than 9:00 a.m. (San Francisco time) on the date specified for
prepayment in the case of Base Rate Loans, ratably prepay Tranche A Loans in
whole or in part, in minimum amounts of $10,000,000 or any multiple of
$1,000,000 in excess thereof. Subject to Section 3.04, Medis, in the case of
Tranche B Canadian Loans, may, at any time or from time to time, upon
irrevocable notice to the Canadian Administrative Agent and the Agent of not
less than three Business Days in the case of Tranche B Canadian Loans that are
Offshore Rate Loans and by no later than 11:00 a.m. (Toronto time) on the date
specified for prepayment in the case of Tranche B Canadian Loans that are
Canadian Prime Rate Loans, ratably prepay Tranche B Canadian Loans in whole or
in part, and if in part, in minimum amounts of Cdn.$5,000,000 or any integral
multiple of Cdn.$1,000,000 in excess thereof. Any notice of prepayment shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid and the Applicable Currency. The Applicable Agent will promptly notify
each Tranche A Bank, Tranche B Domestic Bank or Tranche B Canadian Bank of its
receipt of any such notice, and of such Bank's Tranche A Pro Rata Share or
Tranche B Pro Rata Share, as applicable of such prepayment. If such notice is
given by a Borrower, such Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to each such date on the amount prepaid
and any amounts required pursuant to Section 3.04.
2.07 Repayment. Each Borrower shall repay to the Applicable Agent for
---------
payment to the Tranche A Banks, Tranche B Domestic Banks or Tranche B Canadian
Banks, as applicable, on the Revolving Termination Date the aggregate principal
amount of Loans made to such Borrower and outstanding on such date. If on any
date Medis ceases to be a wholly-owned Subsidiary of the Company, Medis shall
repay to the Tranche B Canadian Banks (i) the aggregate principal amount of
Tranche B Canadian Loans made to Medis and outstanding on such date and (ii) the
Face Amount of all outstanding Bankers' Acceptances that have not been paid.
2.08 Interest. (a) Each Loan shall bear interest on the outstanding
--------
principal amount thereof from the applicable Borrowing Date as follows:
(i) if a Base Rate Loan, then at a rate per annum equal to the
Base Rate;
(ii) if a CD Rate Loan, then (A) with respect to the portion of
the CD Rate Loan that is less than or equal to the Market Value of the
Qualifying Collateral allocated to such CD Rate Loan in accordance with the
last sentence of Section 2.08(b), if any, at a rate per annum equal to the
CD Rate plus 0.2500% and (B) with respect to the portion of such CD Rate
----
Loan that exceeds the Market Value of the Qualifying Collateral allocated
to such CD Rate Loan in accordance with the last sentence of Section
2.08(b), if
35
<PAGE>
any, at a rate per annum equal to the CD Rate plus the Applicable Margin;
----
and
(iii) if an Offshore Rate Loan, then (A) with respect to the
portion of the Offshore Rate Loan that is less than or equal to the Market
Value of the Qualifying Collateral allocated to such Offshore Rate Loan in
accordance with the last sentence of Section 2.08(b), if any, at a rate per
annum equal to the Offshore Rate plus 0.1250% and (B) with respect to the
----
portion of such Offshore Rate Loan that exceeds the Market Value of the
Qualifying Collateral allocated to such Offshore Rate Loan in accordance
with the last sentence of Section 2.08(b), if any, at a rate per annum
equal to the Offshore Rate plus the Applicable Margin; and
----
(iv) if a Canadian Prime Rate Loan, then at a rate per annum equal
to the Canadian Prime Rate.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Loans under Section 2.06 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof and, during the existence of any
Event of Default, interest shall be paid on demand of the Agent at the request
or with the consent of the Majority Banks.
For purposes of determining the amount of interest payable on any
Interest Payment Date, the date of any prepayment or the date of any demand by
the Agent and for determining any Drawing Fee, the Market Value of the
Qualifying Collateral allocated to such Loan or the Face Amount in the case of a
Bankers' Acceptance used in the determination shall be deemed to be greater than
the aggregate principal amount of Loans or Face Amount, as the case may be,
outstanding on each day during the relevant Interest Period or portion thereof,
in the case of an Offshore Rate Loan or a CD Rate Loan, or during the applicable
term to maturity in the case of a Bankers' Acceptance. On the fifth Business
Day following the end of each Collateral Period, the portion of each Offshore
Rate Loan or CD Rate Loan or Bankers' Acceptance that was less than, equal to or
exceeded the Market Value of the Qualifying Collateral allocated to such
Offshore Rate Loan, CD Rate Loan or Bankers' Acceptance during such Collateral
Period shall be redetermined for each day during such Collateral Period on the
basis of the Lowest Quarterly Market Value for such Collateral Period; provided,
that if the Commitments shall have been terminated, such redetermination shall
be made on the date of such termination on the basis of the Lowest Quarterly
Market Value during the Collateral Period prior to the date of termination of
the Commitments. If such redetermination shall indicate that the Company or
Medis, as the case may be, paid less interest (or a lower Drawing Fee) in
respect of any day during such Collateral Period than was due, the applicable
Borrower, shall, within five Business Days after
36
<PAGE>
such redetermination is made, pay to the Applicable Agent, for distribution to
the Tranche A Banks, Tranche B Domestic Banks or Tranche B Canadian Banks, as
applicable, additional interest on the Loans or additional Drawing Fees in the
case of Bankers' Acceptances in an aggregate amount equal to the deficit. For
purposes of all determinations made pursuant to this subsection 2.08(b), the
Market Value of the Qualifying Collateral for any period shall be allocated to
the Loans and Bankers Acceptances in the following order of priority: (i) first,
to the aggregate principal amount of outstanding Offshore Rate Loans of the
Borrowers and CD Rate Loans of the Company and Face Amount of Bankers'
Acceptances outstanding on each day during such period on a pro rata basis, and
(ii) second, to the aggregate principal amount of Base Rate Loans and Canadian
Prime Rate Loans outstanding on each day during such period on a pro rata basis.
(c) Notwithstanding subsection (a) of this Section, if any amount of
principal of or interest on any Loan, or any other amount payable hereunder or
under any other Loan Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the applicable Borrower agrees
to pay interest on such unpaid principal or other amount, from the date such
amount becomes due until the date such amount is paid in full, and after as well
as before entry of judgment thereon to the extent permitted by law, payable on
demand, at a fluctuating rate per annum equal to (i) the Canadian Prime Rate
plus 1% in the case of Tranche B Canadian Loans redenominated in Canadian
- ----
Dollars and Bankers' Acceptances and (ii) the Base Rate plus 1% in the case of
----
Tranche A Loans, Tranche B Domestic Loans and Tranche B Canadian Loans
denominated in Dollars pursuant to Section 2.15 and any other Obligation.
(d) Anything herein to the contrary notwithstanding, the obligations
of each Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the applicable Borrower shall pay such Bank interest at the highest rate
permitted by applicable law.
2.09 Fees. (a) Arrangement, Agency Fees. The Company shall pay an
---- ------------------------
arrangement fee to the Arranger for the Arranger's own account, and shall pay an
agency fee to the Agent for the Agent's own account, as required by the letter
agreement ("Fee Letter") between the Company and the Arranger and Agent dated
----------
March 6, 1995.
(b) Facility Fees. The Company shall pay to the Agent for the
-------------
account of each Tranche A Bank and Tranche B Domestic Bank a facility fee
computed on a quarterly basis in
37
<PAGE>
arrears on the later of the fifth Business Day following the end of each
calendar quarter or the fifth Business Day after the Company has received from
the Agent a notice setting forth the amount of such fee equal to its Pro Rata
Share of:
(i) 0.0500% per annum with respect to the portion of the
Commitments that is less than or equal to the Market Value of the
Qualifying Collateral, if any; and
(ii) the Applicable Facility Fee Margin with respect to the
portion of the Commitments that exceeds the Market Value of the Qualifying
Collateral, if any.
Such facility fee shall accrue from the Closing Date to the Revolving
Termination Date and shall be due and payable quarterly in arrears on the date
specified above following the end of each calendar quarter through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of
-------- ----
Commitments under Section 2.05, the accrued facility fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The facility fee provided in this subsection shall accrue at all times
after the Closing Date, including at any time during which one or more
conditions in Article IV are not met. For purposes of determining the portion
of the Commitments that is less than, equal to or exceeds the Market Value of
the Qualifying Collateral in respect of any Collateral Period, the date of any
reduction or termination of the Commitments or the Revolving Termination Date,
the Market Value of the Qualifying Collateral used in the determination shall be
equal to the Lowest Quarterly Market Value of the Qualifying Collateral for such
Collateral Period and shall be allocated pro rata among the Commitments;
provided, however, that in the event the date of any reduction or termination of
- -------- -------
the Commitments or the Revolving Termination Date is not the last day of a
Collateral Period, or occurs between the last day of a Collateral Period and the
fifth Business Day of the immediately succeeding Collateral Period, the Market
Value of the Qualifying Collateral used in the determination of the accrued
facility fee payable on the date of such reduction or termination of the
Commitments or such Revolving Termination Date shall be deemed to be equal to
the Projected Market Value of the Qualifying Collateral for the Collateral
Period in which such date occurs (the "Relevant Calendar Quarter") and shall be
-------------------------
redetermined (x) in the case of a reduction of the Commitments, as of the fifth
Business Day of the immediately succeeding Collateral Period on the basis of the
Lowest Quarterly Market Value for the Relevant Calendar Quarter and (y) in the
case of the termination of the Commitments, on the date of such termination on
the basis of the Lowest Quarterly Market Value for the period during the
Relevant
38
<PAGE>
Calendar Quarter prior to the date of termination of the Commitments. If such
redetermination shall indicate that the Company paid a lower accrued facility
fee in respect of the date of such reduction or termination of the Commitments
or such Revolving Termination Date than was due, the Company shall, within five
Business Days after such redetermination is made, pay to the Agent, for
distribution to the Banks, an additional amount equal to the deficit. If such
redetermination shall indicate that the Company paid a higher accrued facility
fee in respect of such date than was due, any such excess payment shall be
credited to future facility fee payments payable to those Banks that received
overpayments thereof or shall be refunded by the Banks to the Company in the
case of an overpayment in respect of the Revolving Termination Date.
2.10 Computation of Fees and Interest. (a) All computations of interest
--------------------------------
for Canadian Prime Rate Loans, Drafts and Bankers' Acceptances and for Base Rate
Loans when the Base Rate is determined by BofA's "reference rate" shall be made
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the basis
of a 360-day year and actual days elapsed (which results in more interest being
paid than if computed on the basis of a 365-day year). Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate or a Dollar Equivalent by
the Agent or the Canadian Administrative Agent shall be conclusive and binding
on each Borrower and the Banks in the absence of manifest error.
(c) If any Reference Bank's Commitment terminates (other than on
termination of all the Commitments), or for any reason whatsoever the Reference
Bank ceases to be a Bank hereunder, that Reference Bank shall thereupon cease to
be a Reference Bank, and the Offshore Rate and CD Rate shall be determined on
the basis of the rates as notified by the remaining Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Banks fails to supply such rates to the Agent upon its request, the
rate of interest shall be determined on the basis of the quotations of the
remaining Reference Banks.
(e) For purposes of disclosure pursuant to the Interest Act (Canada),
the parties hereto acknowledge that:
(i) The nominal yearly rate of interest to which any rate of interest
based on the Offshore Rate or the Canadian Prime Rate is equivalent may be
determined by multiplying the rate otherwise determined hereunder by a
fraction, the
39
<PAGE>
numerator of which is the number of days in the calendar year in which the
period for which interest at such rate is payable under this Agreement and
the denominator of which is 360;
(ii) The nominal yearly discount rate to which the Effective Discount
Rate is equivalent may be determined by multiplying the rate otherwise
determined hereunder by a fraction, the numerator of which is the number of
days in the calendar year in which the Average Effective Discount Rate is
applied in respect of any Drafts or Bankers' Acceptances issued under this
Agreement and the denominator of which is 365.
All calculations of interest or discount hereunder shall be made on
the basis of the nominal rates of interest or discount determined hereunder and
the parties agree that the principle of deemed reinvestment shall not apply.
The parties hereto acknowledge that there is a material distinction
between nominal and effective rates of interest or discount and that they are
capable of making the calculations necessary to calculate and compare such
rates. The parties hereto further acknowledge that any rate expressed in the
definitions of Offshore Rate and Canadian Prime Rate shall be deemed to be
expressed therein as a nominal rate "per annum."
2.11 Payments by the Borrowers. (a) All payments to be made by each
-------------------------
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Tranche A Banks or the Tranche B Domestic
Banks, as the case may be, at the Agent's Payment Office, and all payments by
Medis shall be made to the Canadian Administrative Agent for the account of the
Tranche B Canadian Banks at the Canadian Administrative Agent's Payment Office,
and, with respect to principal of, interest on, and any other amounts relating
to, any Tranche B Canadian Loan or the Bankers' Acceptance Facility, shall be
made in Canadian Dollars, and, with respect to all other amounts payable
hereunder, shall be made in Dollars. Such payments shall be made in immediately
available funds, and (i) in the case of Tranche B Canadian Loan payments, no
later than 12:00 noon (Toronto time) on the dates specified herein, and (ii) in
the case of any Dollar payments, no later than 12:00 noon (San Francisco time)
on the date specified herein. The Applicable Agent will promptly distribute to
each Tranche A Bank, Tranche B Domestic Bank or Tranche B Canadian Bank, as
applicable, its Tranche A Pro Rata Share or Tranche B Pro Rata Share, as
applicable, (or other applicable share as expressly provided herein) of such
payment in like funds as received. Any payment received by the Agent later than
12:00 noon (San Francisco time), or by the Canadian Administrative Agent later
than 12:00 noon (Toronto time) shall
40
<PAGE>
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Applicable Agent receives notice from a Borrower prior
to the date on which any payment is due to the Banks that such Borrower will not
make such payment in full as and when required, the Applicable Agent may assume
that such Borrower has made such payment in full to the Applicable Agent on such
date in immediately available funds and the Applicable Agent may (but shall not
be so required), in reliance upon such assumption, distribute to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent such Borrower has not made such payment in full to the Applicable Agent,
each Bank shall repay to the Applicable Agent on demand such amount distributed
to such Bank, together with interest thereon at the Federal Funds Rate or, in
the case of a payment in Canadian Dollars, the Canadian Overnight Rate, for each
day from the date such amount is distributed to such Bank until the date repaid.
2.12 Payments by the Banks to the Applicable Agent. (a) Unless the
---------------------------------------------
Applicable Agent receives notice from a Bank at least one Business Day prior to
the date of any Borrowing, that such Bank will not make available as and when
required hereunder to the Applicable Agent for the account of the applicable
Borrower the amount of that Bank's Tranche A Pro Rata Share or Tranche B Pro
Rata Share, as applicable, of the Borrowing, the Applicable Agent may assume
that each Bank has made such amount available to the Applicable Agent in
immediately available funds on the Borrowing Date and the Applicable Agent may
(but shall not be so required), in reliance upon such assumption, make available
to such Borrower on such date a corresponding amount. If and to the extent any
Bank shall not have made its full amount available to the Applicable Agent in
immediately available funds and the Applicable Agent in such circumstances has
made available to the applicable Borrower such amount, that Bank shall on the
Business Day following such Borrowing Date make such amount available to the
Applicable Agent, together with interest at the Federal Funds Rate or, in the
case of any Borrowing consisting of Tranche B Canadian Loans or under the
Bankers' Acceptance Facility, the Overnight Canadian Rate, for each day during
such period. A notice of the Applicable Agent submitted to any Bank with
respect to amounts owing under this subsection (a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Applicable Agent shall constitute such Bank's Loan on the date of Borrowing for
all purposes of this Agreement. If such amount is not made
41
<PAGE>
available to the Applicable Agent on the Business Day following the Borrowing
Date, the Applicable Agent will notify the applicable Borrower of such failure
to fund and, upon demand by the Applicable Agent, such Borrower shall pay such
amount to the Applicable Agent for the Applicable Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.13 Sharing of Payments, Etc. (a) If, other than as expressly provided
-------------------------
elsewhere herein, any Tranche A Bank or Tranche B Bank, as the case may be,
shall obtain on account of the Loans made by it to any Borrower or the Bankers'
Acceptances Facility any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its Tranche A Pro
Rata Share or Tranche B Pro Rata Share, as applicable, such Bank shall
immediately (a) notify the Applicable Agent of such fact, and (b) purchase from
the other Tranche A Banks or Tranche B Banks such participations in the Loans
made by them to such Borrower or Bankers' Acceptances as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
-------- -------
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Tranche A Bank or Tranche B Bank, as
applicable, shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according to
the proportion of (i) the amount of such paying Bank's required repayment to
(ii) the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered; provided further that, for purposes of this subsection
2.13(a), no Bank other than a Tranche B Canadian Bank may purchase any portion
of or any interest in a Tranche B Canadian Loan or Bankers' Acceptances and no
Bank other than a Tranche B Domestic Bank may purchase any portion of or any
interest in a Tranche B Domestic Loan and no Bank other than a Tranche A Bank
may purchase any portion of or any interest in a Tranche A Loan. Each Borrower
agrees that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 10.10) with respect to such
participation as fully as if such Bank were the direct creditor of such Borrower
in the amount of such participation. The Applicable Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under
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this Section and will in each case notify the Banks following any such purchases
or repayments. For purposes of this Section 2.13(a), each Bank that has an
Affiliate Bank and such Bank's Affiliate Bank shall be deemed to be a single
Bank and such Bank shall not purchase a participation in the Loans made by its
Affiliate Bank and such Bank's Affiliate Bank shall not purchase a participation
in the Loans made by its Affiliate Bank.
(b) (1) In the event that there has occurred and is continuing (i)
any Event of Default under subsections 8.01(a), 8.01(f) or 8.01(g) or (ii) an
acceleration of the maturity of any amounts owing to the Banks under this
Agreement, a reallocation of the outstanding Loans (and accrued but unpaid
interest thereon) and any outstanding Bankers' Acceptances that have not been
paid, the Bankers' Acceptance Facility, the Tranche A Commitments and the
Tranche B Commitments shall occur such that each Bank's Pro Rata Share of the
aggregate amount of the outstanding Loans (and accrued but unpaid interest
thereon), outstanding Bankers's Acceptances that have not been paid, Bankers'
Acceptances Facility, Tranche A Commitments and Tranche B Commitments shall
equal the percentage obtained by dividing (x) such Bank's Exposure as of the
date of notification by (y) the sum of aggregate amount of Exposures of all
Banks;
(2) such reallocation of Loans (and interest), Bankers' Acceptances
and Commitments shall be deemed to be an assignment of such Loans, Bankers'
Acceptances and Commitments among the Banks pursuant to Section 10.08, and each
Bank shall execute and deliver Assignments and Acceptances (as required) to give
effect to such reallocation, and payments shall be made on any Loans or Bankers
Acceptances deemed so assigned as contemplated by Section 4 of the applicable
Assignment and Acceptance; provided that no consent of any Borrower or Agent
shall be requested under Section 10.08 or otherwise in connection with such
reallocation and that such reallocation shall be deemed to have accrued whether
or not any Assignment and Acceptance is delivered;
(3) each Bank shall identify its applicable lending office which will
be deemed to have purchased the Loans, Bankers' Acceptances and Commitments
reallocated and deemed assigned above;
(4) for the purpose of minimizing any withholding taxes, such
reallocation of Loans, Bankers' Acceptances and Commitments and any purchase of
participations pursuant to paragraph 2.13(c) shall be made to avoid, to the
maximum extent possible, (i) the reallocation of Tranche B Canadian Loans or
Bankers' Acceptances to Tranche A Banks or Tranche B Domestic Banks, (ii) the
reallocation of Tranche B Domestic Loans to Tranche A Banks or Tranche B
Canadian Banks and (iii) the reallocation of Tranche A Loans to Tranche B
Domestic Banks or Tranche B Canadian Banks; provided that if a reallocation
referred to in clause (i), (ii) or (iii) shall be required in
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accordance with this subsection 2.13(b), to the maximum extent possible, Tranche
A Loans shall be allocated to Tranche B Domestic Banks before they are
reallocated to Tranche B Canadian Banks and Tranche B Domestic Loans shall be
reallocated to Tranche A Banks before they are reallocated to Tranche B Canadian
Banks; and
(5) for purposes of determining such reallocation, the Agent shall
determine the Dollar Equivalent of all outstanding Loans and Banker's
Acceptances denominated in Canadian Dollars.
(c) In addition to the agreements set forth in paragraph (a) above,
the Banks each agree among themselves that if the reallocation set forth in
subsection 2.13(b) shall occur, if any of them shall, through the exercise of
the right of counterclaim, set-off, banker's lien, collection or other remedy by
Agent or otherwise, including the enforcement of rights under this Agreement, or
as adequate protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion of the aggregate
amount of principal and interest then due with respect to the Loans, amounts
payable in respect of such Bank's right to receive reimbursement from the
Company or Medis in respect of amounts due under or in respect of the Bankers'
Acceptance Facility (collectively, the "Aggregate Amounts Owing" to such Bank)
which is greater than the proportionate reduction of the Aggregate Amounts Owing
to any other Bank, then the Bank receiving such proportionately greater payment
shall (y) notify each other Bank and the Agent of such receipt and (z) purchase
participations (which it shall be deemed to have done simultaneously upon
receipt of any such payment) in the Aggregate Amounts Owing to the other Banks
as necessary to assure that all such recoveries and payments in respect of the
Aggregate Amounts Owing shall be ratably shared by all of the Banks as
reallocated pursuant to paragraph (b) above; provided, however, that if all or
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part of such proportionately greater payment received by such purchasing Bank is
thereafter recovered from such Bank, those purchases shall be rescinded and the
purchase prices paid for such participations shall be returned to that Bank to
the extent of such recovery, but without interest.
2.14 Collateral Pledge. The Company shall have the right on the Closing
-----------------
Date to Collateralize all or any portion of the Commitments or each Borrower's
Obligations hereunder.
2.15 Utilization of Tranche B Commitments in Canadian Dollars. (a) The
--------------------------------------------------------
Agent will determine the Dollar Equivalent amount with respect to any (i)
Borrowing comprised of Tranche B Canadian Loans that are Offshore Rate Loans as
of the date which is three Business Days prior to the requested Borrowing Date,
(ii) Bankers' Acceptance or Borrowing comprised of Tranche B Canadian Loans that
are Canadian Prime Rate Loans, one day prior to the requested Borrowing Date or
date of acceptance, (iii)
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outstanding Tranche B Canadian Loans or Bankers' Acceptances as of the last
Business Day of each month, (iv) conversions to or continuation of Tranche B
Canadian Loans as of the date the related Notice of Conversion/Continuation is
received by the Canadian Administrative Agent, and (v) outstanding Tranche B
Canadian Loans or Bankers' Acceptances as of any redenomination date pursuant to
this Section 2.15 or Section 3.05 (each such date under clauses (i) through (v)
a "Computation Date").
----------------
(b) Notwithstanding anything herein to the contrary, during the
existence of a Default or an Event of Default, upon the request of the Majority
Banks, all or any part of any outstanding Tranche B Canadian Loans consisting of
Offshore Rate Loans shall be converted into Canadian Prime Rate Loans with
effect from the last day of the Interest Period with respect to any such Tranche
B Canadian Loans. The Agent will promptly notify the Company and Medis of any
such conversion request.
2.16 Currency Exchange Fluctuations. Subject to Section 3.04, if on any
------------------------------
Computation Date the Agent or the Canadian Administrative Agent shall have
determined that the Total Utilization of Tranche B Commitments exceeds the
combined Tranche B Commitments of the Tranche B Banks by more than $500,000, due
to a change in applicable rates of exchange between Dollars and Canadian
Dollars, then the Agent shall give notice to the Borrowers that a prepayment is
----
required under this Section, and the Borrowers agree thereupon to make
prepayments of Loans such that, after giving effect to such prepayment the Total
Utilization of Tranche B Commitments does not exceed the combined Tranche B
Commitments.
2.17 Bankers' Acceptances for Medis
------------------------------
(a) Acceptance Commitment. (1) Each Tranche B Canadian Bank severally
agrees, on and subject to the terms and conditions set forth herein: (i) in the
case of a Tranche B Canadian Bank that is able to accept Drafts from Medis, to
create acceptances (each, a "Bankers' Acceptance") by accepting Drafts from
Medis and to purchase such Bankers' Acceptances in accordance with Section
2.17(d); and (ii) in the case of a Tranche B Canadian Bank that has participated
all or any part of its interest in the Bankers' Acceptance Facilities to a
participant which is able to accept Drafts from Medis, to arrange for the
creation of Bankers' Acceptances by such participant and for the purchase of
such Bankers' Acceptances by such participant, to the extent of such
participation or assignment, in accordance with Section 2.17(d). The Total
Utilization of Tranche B Commitments after any Drawing shall not exceed the
combined Tranche B Commitments then in effect.
(2) Each Drawing shall be in an aggregate Face Amount of not less
than Cdn.$5,000,000 and in integral multiples of Cdn.$1,000,000 and shall
consist of the creation and purchase of Bankers' Acceptances or the
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purchase of Drafts on the same day, effected or arranged by the Tranche B
Banks in accordance with Section 2.17(d), ratably according to their
respective Tranche B Pro Rata Shares.
(3) Anything contained in this Agreement to the contrary
notwithstanding, the Bankers' Acceptance Facility and the Tranche B Loan
Commitment shall be subject to the following limitations:
(i) The amount otherwise available for Drawing under the
Tranche B Commitment as of any time of determination shall be reduced
by an amount equal to the sum of the outstanding Tranche B Loans as of
such time of determination; and
(ii) The Total Utilization of Tranche B Commitments shall not
exceed the Tranche B Commitments then in effect.
(b) Drawing Notice. (1) Each Drawing shall be made on two Business
Days' prior written notice specified in relation to Bankers' Acceptances, given
not later than 11:00 a.m. (Toronto time), by the Company and Medis to the Agent.
Each such notice of a Drawing (a "Drawing Notice") shall be given in
substantially the form of Exhibit G annexed hereto or by telephone confirmed
promptly in writing, containing the same information as would be contained in a
Drawing Notice, and shall specify therein (i) the Drawing Date; (ii) the
aggregate Face Amount of Drafts to be accepted; and (iii) the maturity date for
such Drafts. The Canadian Administrative Agent shall give each Tranche B
Canadian Bank prompt notice of such Drawing Notice and of such Tranche B
Canadian Bank's ratable portion of Drafts to be accepted under the Drawing.
(2) Medis shall not request in a Drawing Notice a maturity date
for Drafts which would be subsequent to the Revolving Termination Date.
(3) Each Drawing Notice shall be irrevocable and binding on Medis
and the Company. Medis and the Company shall indemnify each Tranche B
Canadian Bank against any loss or expense incurred by such Tranche B
Canadian Bank as a result of any failure by Medis to fulfill or honor
before the date specified for any Drawing, the applicable conditions set
forth in this Section 2.17 or Section 4.03, if the Drawing, as a result of
such failure, is not made on such date.
(4) Medis shall repay, and there shall become due and payable, on
the Drawing Date the principal amount of any Tranche B Canadian Loans which
Medis seeks to convert, if any, in whole or in part, to Bankers'
Acceptances on such Drawing Date.
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(5) None of the Canadian Administrative Agent, the Agent or the
Tranche B Canadian Banks shall incur any liability to Medis or the Company
in acting on the telephonic notice referred to above which the Canadian
Administrative Agent, the Agent or any Tranche B Canadian Bank believes in
good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Medis or for otherwise acting in good
faith under this Section 2.17 and upon the acceptance of Drafts or Bankers'
Acceptances pursuant to any such telephonic notice, Medis shall be liable
with respect thereto as provided herein. In the event of a conflict
between the Canadian Administrative Agent's record of the applicable terms
of any Drawing and such Drawing Notice, Canadian Administrative Agent's
record shall prevail, absent manifest or demonstrable error.
(c) Form of Bankers' Acceptances . (1) Each Draft presented by Medis
shall (i) be in a minimum denomination of Cdn $150,000, (ii) be dated the date
of the Drawing; (iii) mature and be payable by Medis (in common with all other
Drafts presented in connection with such Drawing) on a Business Day which occurs
approximately 30, 60, 90, 120 or 180 days after the date thereof; and (iv) be
substantially in the form of Exhibit H-1 annexed hereto. The acceptance
endorsed by a Tranche B Canadian Bank on any Draft shall be substantially in the
form of Exhibit H-2 annexed hereto or such other form as may be agreed by Medis
and such Tranche B Canadian Bank.
(2) Medis hereby renounces, and shall not claim, any days of
grace for the payment of any Bankers' Acceptances or Drafts.
(d) Acceptance and Purchase of Drafts . (1) Not later than 11:00 a.m.
(Toronto time) on an applicable Drawing Date, each Tranche B Canadian Bank
shall, as the case may be, (i) complete one or more Drafts dated the date of
such Drawing, with the maturity date specified by the Company and Medis in the
Drawing Notice, accept such Drafts, and purchase the Bankers' Acceptances
thereby created for the Drawing Purchase Price; and (ii) arrange for its
participant to complete one or more Drafts dated the date of such Drawing, with
the maturity date specified by Medis and the Company in the Drawing Notice, to
accept such Drafts and to purchase the Bankers' Acceptances thereby created for
the Drawing Purchase Price.
(2) The failure of any Tranche B Canadian Bank to accept Drafts
or purchase Bankers' Acceptances or Drafts as part of any Drawing shall not
relieve such Tranche B Canadian Bank of its obligation, if any, to accept
Drafts and purchase Bankers' Acceptances or Drafts hereunder, but a Tranche
B Canadian Bank shall not be responsible for the failure of any other
Tranche B Canadian Bank to accept
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Drafts or purchase Bankers' Acceptance or Drafts on the Drawing Date for
any Drawing.
(e) Payment of Drawing Purchase Price. (1) Subject to Section
2.17(b)(4), each Tranche B Canadian Bank shall, before 12:00 noon (Toronto time)
on the applicable Drawing Date, pay or cause to be paid, the Drawing Purchase
Price in respect of any Bankers' Acceptances which such Tranche B Canadian Bank
has purchased or arranged to have purchased pursuant to Section 2.17(d)(1) by
depositing or causing to be deposited such amount to such account maintained by
the Canadian Administrative Agent at BofA Canada as shall have been notified to
such Tranche B Canadian Bank by the Canadian Administrative Agent, in Canadian
Dollars in same day funds. Promptly upon receipt of such funds, the Canadian
Administrative Agent shall make such funds available to Medis by debiting such
account (or causing such account to be debited), and by crediting Medis'
account, as to which Medis shall have notified the Canadian Administrative Agent
prior thereto, maintained by the Canadian Administrative Agent at BofA Canada
with like funds in the aggregate amount of such funds.
(2) Bankers' Acceptances purchased by a Tranche B Canadian Bank
or its participant hereunder may be held by such Tranche B Canadian Bank or
such participant, as the case may be, for its own account until maturity or
sold by it at any time prior thereto in any relevant market therefor in
Canada, in such Tranche B Bank's or its participant's sole discretion.
(f) Effective Discount Rate Determination. The Canadian
Administrative Agent shall give prompt notice to the Company and Medis of the
Effective Discount Rate and the Drawing Fee Rate determined by the Canadian
Administrative Agent for an applicable Drawing Date. Promptly upon request of
either Borrower, the Canadian Administrative Agent shall provide such Borrower
an indicative Effective Discount Rate, which rate shall not be binding on the
Canadian Administrative Agent, the Agent or the Banks for purposes of any
Drawing or acceptance of Drafts.
(g) Payment at Maturity. (1) Medis shall pay to the Canadian
Administrative Agent, and there shall become due and payable, at 12:00 noon
(Toronto time) on the maturity date for each Bankers' Acceptance or Draft an
amount in Canadian Dollars in same day funds equal to the Face Amount of such
Bankers' Acceptance or Draft. Medis shall make each payment hereunder in
respect of Bankers' Acceptances or Drafts by deposit of the required funds to
the Canadian Administrative Agent at the Canada Administrative Agent's Payment
Office. Upon receipt of such payment, the Canadian Administrative Agent will
promptly thereafter cause such payment to be distributed in like funds in
payment of Bankers' Acceptances and Drafts ratably (based on the proportion that
the aggregate Face Amount of Bankers'
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Acceptances held by any Tranche B Canadian Bank or any participant thereof
maturing on the relevant date bears to the aggregate Face Amount of Bankers'
Acceptances accepted or held by all Tranche B Canadian Banks or any participants
or assignees thereof maturing on such date) to Tranche B Canadian Banks for
their account and for the account of any participant, to the extent of and in
accordance with their participation. Such payment to the Canadian Administrative
Agent shall satisfy Medis' obligations under any Bankers' Acceptances to which
it relates and each Tranche B Canadian Bank that has accepted such Bankers'
Acceptances shall thereafter be solely responsible for the payment of such
Bankers' Acceptances.
(2) If Medis fails to pay any Bankers' Acceptance when due, or to
convert or renew the Face Amount of such Bankers' Acceptance pursuant to
Section 2.17(i), the unpaid amount due and payable in respect thereof shall
be converted as of such date, and without any necessity for Medis to give a
Notice of Borrowing in accordance with Section 2.03, to, and thereafter be
outstanding as, a Canadian Prime Rate Loan made by, Tranche B Canadian
Banks and shall bear interest calculated and payable as provided in Section
2.08.
(h) Presigned Draft Forms. To enable the Tranche B Banks to create
Bankers' Acceptances or complete Drafts in the manner specified in this Section
2.17, Medis shall supply each Tranche B Canadian Bank with such number of
Drafts as such Tranche B Canadian Bank may reasonably request, duly endorsed and
executed on behalf of Medis by any one or more of its authorized officers. Each
Tranche B Canadian Bank shall exercise such care in the custody and safekeeping
of Drafts as it would exercise in the custody and safekeeping of similar
property owned by it. Each Tranche B Canadian Bank will, upon request by Medis,
promptly advise Medis of the number and designations, if any, of the uncompleted
Drafts then held by it. The signatures of such officers may be mechanically
reproduced in facsimile and Drafts and Bankers' Acceptances bearing such
facsimile signatures shall be binding upon Medis as if they had been manually
signed by such officers. Notwithstanding that any of the individuals whose
manual or facsimile signature appears on any Draft or Bankers' Acceptance as one
of such officers may no longer hold office at the date thereof or at the date of
its acceptance by a Tranche B Canadian Bank or a participant hereunder or at any
time thereafter, any Draft or Bankers' Acceptance so signed shall be valid and
binding upon Medis.
(i) Conversion or Renewal of Bankers' Acceptances . Upon the maturity
of a Bankers' Acceptance, the Company and Medis may elect to (i) renew such
Bankers' Acceptance, by giving a Drawing Notice in accordance with Section
2.17(b)(1); or (ii) have all or a portion of the Face Amount of such Bankers'
Acceptance converted to an Offshore Rate Loan or Canadian Prime Rate Loan, by
giving a Notice of Borrowing in accordance with
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Section 2.03. If the Bankers' Acceptances to be converted cannot be converted
into an Offshore Rate Loan or Canadian Prime Rate Loan in an aggregate amount
which may be made as an Offshore Rate Loan or Canadian Prime Rate Loan, as the
case may be, under this Agreement, then the amount which cannot be so converted
shall be repaid to the Canadian Administrative Agent for distribution to the
Tranche B Canadian Banks in accordance with Section 2.17(g) on the date of such
conversion.
(j) Circumstances Making Bankers' Acceptances Unavailable.
(1) If the Canadian Administrative Agent determines in good
faith, which determination shall be final, conclusive and binding upon
Medis and the Company, and notifies Medis that, by reason of circumstances
affecting the money market (i) there is no market for Bankers' Acceptances;
or (ii) the demand for Bankers' Acceptances is insufficient to allow the
sale or trading of the Bankers' Acceptances created and purchased
hereunder; then,
(i) the right of the Company and Medis to request a Drawing
shall be suspended until the Canadian Administrative Agent determines
that the circumstances causing such suspension no longer exist and the
Canadian Administrative Agent so notifies Medis; and
(ii) any Drawing Notice which is outstanding shall be
cancelled and the Drawing requested therein shall not be made.
(2) The Canadian Administrative Agent shall promptly notify Medis
and the Agent of the suspension of Medis' right to request a Drawing and of
the termination of any such suspension.
(k) Prepayments. Except as required or permitted by Article VIII or
Section 2.07, no repayment of a Bankers' Acceptance shall be made by Medis to a
Tranche B Canadian Bank prior to the maturity date thereof. Any such repayment,
made as required by Article VIII or Section 2.07, shall be made (unless such
repayment has been rescinded or otherwise is required to be returned by such
Tranche B Canadian Bank to Medis for any reason) in accordance with the
provisions of Section 2.17(g)(1). Any such payment by Medis to the Canadian
Administrative Agent shall satisfy Medis' obligations under the Bankers'
Acceptance to which it relates and, in the case of a Bankers' Acceptance which
has been accepted by a Tranche B Canadian Bank or its participant, such Tranche
B Canadian Bank or such participant shall thereafter be solely responsible for
the payment of such Bankers' Acceptance and shall indemnify and hold Medis
harmless against any liabilities, costs or expenses incurred by Medis as
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a result of any failure by such Tranche B Canadian Bank or such participant to
pay such Bankers' Acceptance in accordance with its terms.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
3.01 Taxes. (a) Any and all payments by each Borrower to each Bank or
-----
the Applicable Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for any Taxes. In
addition, Borrowers jointly and severally shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless each Bank and
each of the Agents for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Bank or any of the Agents and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or such of the Agents makes written demand
therefor.
(c) If any Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank
or any of the Agents, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Bank or such of the Agents, as the case may be, receives an amount equal to
the sum it would have received had no such deductions or withholdings been
made;
(ii) such Borrower shall make such deductions and withholdings;
and
(iii) such Borrower shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) such Borrower shall also pay to such Bank or Agent at the
time the sum payable is paid, all additional amounts which the Bank or
Agent specifies as necessary to preserve the after-tax yield the Bank or
Agent would have received if such Taxes or Other Taxes had not been
imposed.
(d) Within 30 days after the date of any payment by a Borrower of
Taxes or Other Taxes, such Borrower shall furnish
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the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Agent.
(e) If a Borrower is required to pay additional amounts to any Bank or
any of the Agents pursuant to this Section 3.01, then such Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to take
such actions as are necessary to minimize such Borrower's obligations under this
Article III, including without limitation, changing the jurisdiction of its
Lending Office so as to eliminate any such additional payment by such Borrower
which may thereafter accrue, if such actions in the sole judgment of such Bank
are not otherwise disadvantageous to such Bank.
(f) Notwithstanding anything to the contrary in this Section 3.01,
neither Borrower shall be required to compensate an Assignee or Participant of a
Loan or Bankers' Acceptance for withholding taxes, if at the time of such
assignment (i) the assigning Bank was not subject to withholding taxes in
respect of any amount in respect of the Loans or Bankers' Acceptances and (ii)
the Assignee or Participant was subject to withholding taxes at the time of such
assignment in respect of such amount. In addition, notwithstanding anything to
the contrary in this Section 3.01, in no event shall any Borrower be required to
compensate a Bank or a participant of a Bankers' Acceptance as contemplated in
subsection 2.17 for withholding taxes under this Section 3.01 if such
withholding tax results from a participation as contemplated in subsection 2.17.
(g) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 3.02 shall survive the payment in full of principal and interest
hereunder and under any instrument delivered hereunder.
3.02 Illegality. (a) If any Bank determines that the introduction of any
----------
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans (including Offshore Rate Loans in Canadian Dollars), then,
on notice thereof by the Bank to the Borrowers through the Agent, any obligation
of that Bank to make Offshore Rate Loans shall be suspended until the Bank
notifies the Agent and the Borrowers that the circumstances giving rise to such
determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the applicable Borrower shall, upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Agent), either, (A)(i) in the
case of the Company, convert in full such Offshore Rate Loans into Loans
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of another Type and (ii) in the case of Tranche B Canadian Loans to Medis,
convert in full such Offshore Rate Loans into Canadian Prime Rate Loans or (B)
prepay in full such Offshore Rate Loans of that Bank then outstanding, together
with interest accrued thereon (in the case of a prepayment) and amounts required
under Section 3.04, either on the last day of the Interest Period thereof, if
the Bank may lawfully continue to maintain such Offshore Rate Loans to such day,
or immediately, if the Bank may not lawfully continue to maintain such Offshore
Rate Loan. If the applicable Borrower prepays any Offshore Rate Loan as provided
in the preceding sentence, then concurrently with such prepayment, such Borrower
shall borrow from the affected Bank, in the amount of such repayment, (i) a Base
Rate Loan in the case of the Company and (ii) a Canadian Prime Rate Loan, in the
case of Medis.
3.03 Increased Costs and Reduction of Return. (a) If any Bank determines
---------------------------------------
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation (other than any change by way of
imposition of or increase in reserve requirements included in the calculation of
the CD Rate or the Offshore Rate or in respect of the assessment rate payable by
any Bank to the FDIC for insuring U.S. deposits or any change introduced prior
to the Closing Date) or (ii) the compliance by that Bank with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law) (other than any guideline or request introduced prior
to the Closing Date), there shall be any increase in the cost to such Bank of
agreeing to make or making, funding or maintaining any Offshore Rate Loans or CD
Rate Loans, then the applicable Borrower shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the Agent),
pay to the Applicable Agent for the account of such Bank, additional amounts as
are sufficient to compensate such Bank for such increased costs; provided that
--------
no Bank shall be entitled to obtain compensation with respect to any period
prior to six (6) months prior to making such demand.
(b) If the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements,
in or in the interpretation of any law or regulation, or the compliance with any
guideline or request imposed or made from any central bank or other governmental
authority or quasi-governmental authority exercising control over banks or
financial institutions generally (whether or not having the force of law) any
reserve (including, without limitation, any reserve requirement imposed under
the Bank Act (Canada) or the Regulations thereunder), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Tranche B Canadian Bank's applicable lending office shall be
imposed or deemed applicable or any other condition affecting Drafts or Bankers'
Acceptances or such Tranche B Canadian Bank's obligation to accept Drafts shall
be imposed on such Tranche B Canadian Bank or its
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applicable lending office, in any such case after the Closing Date; and, as a
result thereof, there shall be any increase in the cost to such Tranche B
Canadian Bank of agreeing to accept or accepting, funding or maintaining Drafts
or Bankers' Acceptances, or there shall be a reduction in the amount received or
receivable by such Tranche B Canadian Bank or its applicable lending office,
then Medis shall from time to time, upon written notice from and demand by such
Tranche B Canadian Bank (with a copy of such notice to the Company, the Canadian
Administrative Agent and the Agent), pay to the Canadian Administrative Agent,
for the account of such Tranche B Canadian Bank, within five Business Days after
the date specified in such notice and demand, additional amounts sufficient to
indemnify such Tranche B Canadian Bank against such increased cost; provided,
--------
however, that neither Borrower shall have any liability to a Tranche B Canadian
- -------
Bank under this Subsection 3.03(b) with respect to the imposition of any
withholding tax to the extent Borrowers are not required to make payments to
such Tranche B Canadian Bank with respect to the imposition of such withholding
tax under Section 3.01; provided further that a Tranche B Canadian Bank shall
-------- -------
not be entitled to avail itself of the benefit of this Section 3.03(b) to the
extent that any such increased cost or reduction was incurred more than six
months prior to the time it gives notice to Medis. A certificate as to the
amount of such increased cost submitted to Medis, the Company, the Canadian
Administrative Agent and the Agent by a Tranche B Canadian Bank, shall, except
for manifest or demonstrable error, be final, conclusive and binding for all
purposes.
(c) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, in any such case, after the Closing Date, affects or would
affect the amount of capital required or expected to be maintained by the Bank
or any corporation controlling the Bank and (taking into consideration such
Bank's or such corporation's policies with respect to capital adequacy and such
Bank's desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the applicable Borrower
through the Applicable Agent, such Borrower shall pay to the Bank, from time to
time as specified by the Bank, additional amounts sufficient to compensate the
Bank for such increase; provided no Bank shall be entitled to receive additional
--------
amounts with respect to any period prior to six (6) months prior to making such
demand. Without limiting the generality of the foregoing, each Borrower agrees
that if any Bank shall have determined that (A) any of
54
<PAGE>
the events listed in clauses (i) through (iv) of this subsection have the effect
that assets secured by Collateral pledged from time to time hereunder do not
have a risk category with a risk weight of 20% (where, prior to such
determination, such Collateral constituted Qualifying Collateral) or (B) that
the method provided in the Pledge Agreement for computing the Market Value of
the Qualifying Collateral does not accurately reflect the current market value
of the Qualifying Collateral under any Capital Adequacy Regulation applicable to
such Bank, then, upon demand of such Bank to the Company through the Agent, the
Company shall pay to the Bank, from time to time as specified by the Bank, and
hereunder, as applicable, an amount equal to (1) the difference between (x) the
facility fee set forth in subsection 2.09(b) determined in accordance with
clause (i) of subsection 2.09(b), and (y) such fee determined in accordance with
clause (ii) of subsection 2.09(b), or an amount equal to the difference between
the facility fee set forth in subsection 2.09(b) computed based on the Market
Value of the Qualifying Collateral as computed under the Pledge Agreement and
such fee computed based on the current market value of the Qualifying Collateral
as determined under any Capital Adequacy Regulation applicable to such Bank and
(2) the difference between (x) the interest set forth in subsection 2.08(a)
determined in accordance with clause (i)(A), (ii)(A) or (iii)(A), as applicable,
and (y) such interest determined in accordance with clause (i)(B), (ii)(B) or
(iii)(B), as applicable, of subsection 2.08(a) or an amount equal to the
difference between the interest set forth in subsection 2.08(a) computed based
on the Market Value of the Qualifying Collateral as computed under the Pledge
Agreement and such interest computed based on the current market value of the
Qualifying Collateral as determined under any Capital Adequacy Regulation
applicable to such Bank.
(d) If any Bank requests compensation from either Borrower under
subsection 3.03(a), 3.03(b) or 3.03(c), the Company shall have the right, with
the assistance of the Agent, to seek one or more Eligible Assignees (which may
be one or more of the Banks) reasonably satisfactory to the Agent and the
Company to purchase the Loans and Bankers' Acceptances and assume the
Commitments of such Bank, and the Borrowers, the Agent, such Bank, and such
Eligible Assignee(s) shall execute and deliver an appropriately completed
Assignment and Acceptance pursuant to Section 10.08 hereof to effect the
assignment of rights to and the assumption of obligations by such Eligible
Assignee(s); provided that such requesting Bank shall be entitled to
--------
compensation under Section 3.03 for any costs incurred by it prior to its
replacement.
3.04 Funding Losses. Each Borrower shall reimburse each Bank and hold
--------------
each Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of:
55
<PAGE>
(a) the failure of such Borrower to make on a timely basis any payment
of principal of any Offshore Rate Loan or CD Rate Loan;
(b) the failure of such Borrower to borrow, continue or convert a Loan
after the Company or the Company and Medis, as the case may be, has given (or is
deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation;
(c) the failure of such Borrower to make any prepayment in accordance
with any notice delivered under Section 2.06;
(d) the prepayment or other payment (including after acceleration
thereof) of an Offshore Rate Loan or a CD Rate Loan on a day that is not the
last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore Rate
Loan or CD Rate Loan to a Base Rate Loan or Canadian Prime Rate Loan on a day
that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by such Bank to maintain its Offshore Rate Loans or CD Rate
Loans or from fees payable by such Bank to terminate the deposits from which
such funds were obtained or from charges relating to any Loans. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 3.03(a), (i) each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded, and (ii) each CD
Rate Loan made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the Certificate
of Deposit Rate used in determining the CD Rate for such CD Rate Loan by the
issuance of its certificate of deposit in a comparable amount and for a
comparable period, whether or not such CD Rate Loan is in fact so funded.
3.05 Inability to Determine Rates . If the Agent determines that for any
-----------------------------
reason adequate and reasonable means do not exist for determining the Offshore
Rate or the CD Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan or CD Rate Loan, or that the Offshore Rate or the CD Rate
applicable pursuant to subsection 2.08(a) for any requested Interest Period with
respect to a proposed Offshore Rate Loan or CD Rate Loan does not adequately and
fairly reflect the cost to the Banks of funding such Loan, the Agent will
promptly so notify the applicable Borrower and each Bank.
56
<PAGE>
Thereafter, the obligation of the Banks to make or maintain CD Rate Loans or
Offshore Rate Loans, as the case may be, hereunder shall be suspended until the
Agent revokes such notice in writing. Upon receipt of such notice, the
applicable Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation previously submitted by such Borrower. If the applicable
Borrower does not revoke such Notice, the Banks shall make, convert or continue
the Loans, as proposed by such Borrower, in the amount specified in the
applicable notice submitted by the such Borrower, but such Loans shall be made,
converted or continued as (i) Base Rate Loans in the case of Tranche A Loans or
Tranche B Domestic Loans and (ii) Canadian Prime Rate Loans in the case of
Tranche B Canadian Loans instead of CD Rate Loans or Offshore Rate Loans, as the
case may be.
3.06 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation under this Article III shall deliver to the Company and the
applicable Borrower (with a copy to the Agent) a certificate setting forth in
reasonable detail the amount payable to the Bank hereunder and such certificate
shall be conclusive and binding on the Company in the absence of manifest error.
3.07 Survival. The agreements and obligations of the Borrowers in this
--------
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.01 Conditions of Initial Loans. The obligation of each Bank to make its
---------------------------
initial Loan hereunder is subject to the condition that the Agent have received
on or before the Closing Date all of the following, in form and substance
satisfactory to the Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by each party hereto
----------------
and, if requested by any Bank, the Note(s) requested by such Bank executed by
the applicable Borrower;
(b) Collateral Documents and Guaranty. The Collateral Documents and
---------------------------------
the Guaranty executed by each party thereto;
(c) Resolutions; Incumbency.
-----------------------
(i) Copies of the resolutions of the board of directors of the
Company and the Unanimous Shareholder Declaration of Medis authorizing the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of such Borrower; and
57
<PAGE>
(ii) A certificate of the Secretary or Assistant Secretary of each
Borrower, certifying the names and true signatures of the officers of such
Borrower authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered by it hereunder;
(d) Organization Documents; Good Standing. Each of the following
-------------------------------------
documents:
(i) the articles or certificate of incorporation and the bylaws
of each Borrower as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of such Borrower as of the Closing Date;
(ii) a good standing and tax good standing certificate for the
Company from the applicable Secretary of State (or similar, applicable
Governmental Authority) of the States of Delaware and California, together
with a bring-down certificate by facsimile, dated the Closing Date; and
(iii) a certificate of status for Medis from the Ministry of
Consumer and Commercial Relations (Ontario), dated the Closing Date.
(e) Legal Opinions.
--------------
(i) an opinion of Ivan D. Meyerson, Vice President and General
Counsel of the Company, addressed to the Agent and the Banks, substantially
in the form of Exhibit D-1; and
(ii) an opinion of Blake, Cassels & Graydon, Canadian counsel to
the Company and Medis, substantially in the form of Exhibit D-2.
(iii) an opinion of Brobeck, Phleger & Harrison, counsel for the
Company, and addressed to the Agent and Banks, substantially in the form of
Exhibit D-3, with respect to the types of Qualifying Collateral initially
pledged by the Company in favor of the Agent as of the Closing Date under
the Pledge Agreement;
(f) Payment of Fees. Evidence of payment by the Company of all
---------------
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date, including any such costs, fees and expenses
arising under or referenced in Sections 2.09 and 10.04;
(g) Company Certificates. A certificate signed by a Responsible
--------------------
Officer of Company, dated as of the Closing Date, stating that:
58
<PAGE>
(i) the representations and warranties contained in Article V and
the other Loan Documents are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Default or Event of Default exists or would result from
the initial Borrowing;
(iii) there has occurred since March 31, 1994, no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect; and
(iv) designating the Closing Date;
(h) Medis Certificate. A certificate signed by a Responsible Officer
-----------------
of Medis, dated as of the Closing Date, stating that:
(i) the representations and warranties of Medis contained in
Article V are true and correct on and as of the Closing Date, as though
made on and as of such date;
(ii) no Default or Event of Default with respect to Medis or any
of its Subsidiaries exists or would result from the initial Borrowing; and
(iii) there has occurred since March 31, 1994, no event or
circumstance with respect to Medis or any of its Subsidiaries that has
resulted or could reasonably be expected to result in a Material Adverse
Effect;
(i) Notice of Election. A Notice of Election of Projected Market
------------------
Value for the period from the Closing Date to June 30, 1995;
(j) UCC Searches. Certified copies of Requests for Information or
------------
Copies, dated a date reasonably near the Closing Date, listing all effective
financing statements in the State of California which name the Company as
debtor, together with copies of such financing statements;
(k) Independent Auditor's Letter. A copy of the Independent Auditor's
----------------------------
Letter duly executed by Deloitte & Touche;
(l) Collateral Certificate. If the Company proposes to pledge
----------------------
Collateral of the type described in clause (b) or (c) of the definition of
Qualifying Collateral, a certificate signed by a Responsible Officer of the
Company to the effect that such Collateral constitutes Collateral of such type
and such other evidence, certificates or opinions as the Agent may, at the
request of any Bank, reasonably request; and
59
<PAGE>
(m) Other Documents. Such other approvals, opinions, documents or
---------------
materials as the Agent or any Bank may reasonably request.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
----------------------------
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.04 is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/Continuation
Date:
(a) Notice of Borrowing or Conversion/Continuation. The Applicable
----------------------------------------------
Agent shall have received (with, in the case of the initial Loan only, a copy
for each Bank) a Notice of Borrowing or a Notice of Conversion/Continuation, as
applicable;
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties in Article V and the other Loan Documents shall
be true and correct on and as of such Borrowing Date or Conversion/Continuation
Date with the same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date (except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be true
and correct as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall exist
-------------------
or shall result from such Borrowing or continuation or conversion; and
(d) Medis Loans. In the case of any Loan to be made to Medis, Medis
-----------
shall be a wholly-owned Subsidiary of the Company.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company or, in the case of a Canadian Loan, the Company and Medis hereunder
shall constitute a representation and warranty by the Company or, in the case of
a Canadian Loan, by the Company and Medis hereunder, as of the date of each such
notice and as of each Borrowing Date or Conversion/Continuation Date, as
applicable, that the conditions in Section 4.02 are satisfied.
4.03 Conditions to Bankers' Acceptance Facility. The obligation of
------------------------------------------
Tranche B Canadian Banks to accept and discount any Draft or Bankers' Acceptance
is subject to prior or concurrent satisfaction of all of the following
conditions:
(a) On or before the date of acceptance and discounting of the initial
Draft or Bankers' Acceptance, each of the conditions set forth in Section 4.01
shall have been satisfied.
60
<PAGE>
(b) Each of the conditions to the acceptance and discounting of such
Draft or Bankers' Acceptance set forth in Section 2.17 shall have been
satisfied.
(c) On the date of acceptance and discounting of such Draft or
Bankers' Acceptance, all conditions precedent described in Section 4.02 (other
than paragraph (a)) shall be satisfied to the same extent as though the
acceptance and discounting of such Draft or Bankers' Acceptance were the making
of a Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Each Borrower represents and warrants (which representations and warranties
in the case of Medis, shall be limited to Medis and its Subsidiaries and other
facts and circumstances known to Medis and its Subsidiaries) to the Agent and
each Bank that:
5.01 Corporate Existence and Power. The Company and each of its
-----------------------------
Subsidiaries:
(a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation;
(b) has the power and authority and all required governmental
licenses, authorizations, consents and approvals to own its assets, carry on its
business and to execute, deliver, and perform its obligations under the Loan
Documents;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and
(d) is in compliance with all Requirements of Law;
except, with respect to Subsidiaries of the Company other than Material
Subsidiaries, to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect, and, with respect to the Company and
its Material Subsidiaries in each case referred to in clause (c) or clause (d),
to the extent that the failure to do so could not reasonably be expected to have
a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution, delivery
-----------------------------------------
and performance by each Borrower of this Agreement and each other Loan Document
to which such Borrower is party, have been duly authorized by all necessary
corporate action, and do not and will not:
61
<PAGE>
(a) contravene the terms of any Borrower's Organization Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which any Borrower is a party or any order, injunction, writ or decree of any
Governmental Authority to which any Borrower or its property is subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Borrower of
the Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to which
--------------
each Borrower is a party constitute the legal, valid and binding obligations of
such Borrower, enforceable against such Borrower in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. There are no actions, suits, proceedings, claims or
----------
disputes pending, or to the best knowledge of each Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect as of the Closing Date.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06 No Default . No Default or Event of Default exists or would result
----------
from the incurring of any Obligations by the Company. As of the Closing Date,
neither the Company nor any Subsidiary is in default under or with respect to
any Contractual Obligation in any respect which, individually or
62
<PAGE>
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect as of the Closing Date, or that would, if such default had
occurred after the Closing Date, create an Event of Default under subsection
8.01(e).
5.07 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
-----------------------------------
to be used solely for the purposes set forth in Section 6.09. Neither the
Company nor any Subsidiary is generally engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
5.08 Financial Condition. (a) The (i) audited consolidated financial
-------------------
statements of the Company and its Subsidiaries dated March 31, 1994, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal year ended on that date and (ii) unaudited
consolidated financial statements of the Company and its Subsidiaries dated
December 31, 1994, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the nine months ended on
that date:
(A) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the unaudited statements to ordinary, good
faith year end audit adjustments;
(B) fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(C) show all material indebtedness and other liabilities, direct
or contingent, of the Company and its consolidated Subsidiaries as of the
date thereof required to be shown in accordance with GAAP.
(b) As of the Closing Date, since March 31, 1994, there has been no
Material Adverse Effect.
5.09 Regulated Entities. None of the Company, any Person controlling the
------------------
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. Neither Borrower is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal,
state or other statute or regulation limiting its ability to incur Indebtedness.
5.10 No Burdensome Restrictions. Neither the Company nor any Subsidiary
--------------------------
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
63
<PAGE>
5.11 Subsidiaries and Certain Liens As of the Closing Date. As of the
-----------------------------------------------------
Closing Date, the Company has no corporate Subsidiaries other than those
specifically disclosed in part (a) of Schedule 5.11 hereto. As of the Closing
-------------
Date, part (b) of Schedule 5.11 describes all outstanding Indebtedness of the
-------------
Company and its Subsidiaries for borrowed money in excess of $10,000,000 that is
secured by a Lien existing on property of the Company or any of its
Subsidiaries.
5.12 Collateral Documents. (a) The provisions of each of the Collateral
--------------------
Documents are effective to create in favor of the Agent for its benefit and the
benefit of the Banks, a legal, valid and enforceable first priority security
interest in all right, title and interest of the Company in the Collateral
described therein subject only to the equal and ratable Lien of the Custodian
and the junior Lien of the Custodian under the Custodial Agreement; and
financing statements have been filed in the offices in accordance with the
Pledge Agreement.
(b) All representations and warranties of the Company contained in the
Collateral Documents are true and correct.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation (other than Obligations under Section 10.05 that remain
contingent after termination of the Commitments and payment of all other
Obligations) shall remain unpaid or unsatisfied, unless the Majority Banks waive
compliance in writing:
6.01 Financial Statements. The Company shall deliver to the Agent, in
--------------------
form and detail satisfactory to the Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the end of
each fiscal year (commencing with the fiscal year ended March 31, 1995), a copy
of the audited consolidated balance sheet of the Company and its Subsidiaries as
at the end of such year and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year, and
accompanied by the opinion of Deloitte & Touche or another nationally-recognized
independent public accounting firm ("Independent Auditor") which report shall
-------------------
state that such consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years. Such opinion shall not be qualified or limited
because of a restricted or limited examination by the Independent
64
<PAGE>
Auditor of any material portion of the Company's or any Subsidiary's records;
and
(b) as soon as available, but not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year (commencing with the
fiscal quarter ended June 30, 1995), a copy of the unaudited consolidated
balance sheet of the Company and its Subsidiaries as at the end of such quarter
and the related consolidated statements of income or operations, shareholders'
equity and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Company and the Subsidiaries (which certification may be part of the related
Compliance Certificate delivered pursuant to Section 6.02(a)).
6.02 Certificates; Other Information. The Company shall furnish to the
-------------------------------
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer of the Company;
(b) promptly, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
the Company or any Subsidiary may make to, or file with, the SEC;
(c) on the fifteenth Business Day prior to the end of each calendar
quarter, a Notice of Election of Projected Market Value for the immediately
succeeding calendar quarter; and
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary, including
Medis, as the Agent, at the request of any Bank, may from time to time
reasonably request.
6.03 Notices. The Company and Medis shall notify the Agent and each Bank:
-------
(a) promptly, upon such occurrence, of the occurrence of any Default
or Event of Default, and of the occurrence or existence of any event or
circumstance that foreseeably will become a Default or Event of Default;
(b) promptly, upon such occurrence, of any matter that has resulted or
may result in a Material Adverse Effect;
(c) promptly upon any Responsible Officer of Company obtaining
knowledge thereof of (i) the institution of, or non-
65
<PAGE>
frivolous threat of, any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation of arbitration against or
affecting the Company or any of its Subsidiaries or any property of the Company
or any of its Subsidiaries (collectively "PROCEEDINGS") not previously disclosed
in writing by the Company to Lenders or (ii) any material development in any
Proceeding that, in the case of clause (i) or (ii) above, (1) if adversely
determined, has a reasonable possibility of giving rise to a Material Adverse
Effect; or (2) seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated hereby, together with such other information as may be reasonably
available to Company that the Agent requests to enable the Agent and the Banks
to evaluate such matters.
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries,
including but not limited to any change that has any effect on the calculation
of any financial covenant in this Agreement.
6.04 Preservation of Corporate Existence, Etc. The Company and Medis
----------------------------------------
shall, and shall cause their respective Material Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of their respective states or
jurisdictions of incorporation except, in the case of any Material Subsidiary
(other than Medis), in connection with transactions permitted by Section 7.02;
and
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
in the normal conduct of its business except in connection with transactions
permitted by Section 7.02 or except to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
6.05 Insurance. The Company and Medis shall maintain, and shall cause
---------
each of their respective Material Subsidiaries to maintain, with financially
sound and reputable insurers, insurance (including self-insurance) with respect
to its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as the Company reasonably deems prudent from time to
time.
6.06 Payment of Taxes. The Company and Medis shall, and shall cause each
----------------
of their respective Material Subsidiaries to, pay and discharge as the same
shall become due and payable, all tax liabilities, assessments and governmental
charges or levies
66
<PAGE>
upon it or its properties or assets (other than obligations that a Responsible
Officer is not aware of or are of a nominal amount), unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary.
6.07 Compliance with Laws. The Company and Medis shall comply, and shall
--------------------
cause each of their respective Subsidiaries to comply, in all material respects
with all material Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
6.08 Inspection of Property and Books and Records. The Company and Medis
--------------------------------------------
shall maintain and shall cause each of their respective Material Subsidiaries to
maintain in all material respects proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and
business of the Company and such Subsidiary. The Company and Medis shall
permit, and shall cause each of their respective Subsidiaries to permit,
representatives and independent contractors of the Agent or any Bank to visit
and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company; provided,
--------
however, when an Event of Default exists the Agent or any Bank may do any of the
- -------
foregoing at the reasonable expense of the Company at any time during normal
business hours and without advance notice.
6.09 Use of Proceeds. The Company and Medis shall use the proceeds of
---------------
the Loans for general corporate purposes not in contravention of any Requirement
of Law or of any Loan Document.
6.10 Notice of Rating Change. The Company shall, no later than ten
-----------------------
Business Days after a Responsible Officer obtains knowledge of any such change,
give notice to the Agent (by telephone, followed promptly by written notice
transmitted by facsimile with a hard copy sent promptly thereafter) of any
change in rating by any Rating Agency in respect of the Company's long-term,
senior unsecured debt, together with the details thereof, and of any
announcement by any Rating Agency that its rating in respect of such senior
unsecured long-term debt is "under review" or that any such debt rating has been
placed on a "CreditWatch List"(R) or "watch list" or that any similar action has
been taken by such Rating Agency.
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ARTICLE VII
NEGATIVE COVENANTS
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So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation (other than Obligations under Section 10.05 that remain
contingent after termination of the Commitments and payment of all other
Obligations) shall remain unpaid or unsatisfied, unless the Majority Banks waive
compliance in writing:
7.01 Limitation on Liens. The Company and Medis shall not, and shall not
-------------------
suffer or permit any of their respective Subsidiaries to directly or indirectly,
make, create, incur, assume or suffer to exist any Lien upon or with respect to
any part of its property, whether now owned or hereafter acquired, other than
the following ("Permitted Liens"):
---------------
(a) any Lien existing on property of the Company or any Subsidiary on
the Closing Date securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.07;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiary securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations on
surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business, provided all
such Liens in the aggregate would not (even if enforced) cause a Material
Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;
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(h) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
--------
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution; and
(i) Any other Liens (other than any Lien imposed by ERISA or any Lien
for taxes, fees, assessments or other governmental charges that is not expressly
permitted under Section 7.01(c)); provided that the aggregate amount of all
--------
Permitted Liens does not exceed at any time 25% of Net Worth.
7.02 Consolidations and Mergers. The Company shall not, and shall not
--------------------------
suffer or permit any of its Material Subsidiaries to, directly or indirectly,
merge, consolidate with or into, or convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or another Wholly-Owned
Subsidiary; and
(c) the Company may merge with another Person provided that the
Company shall be the continuing or surviving corporation and no Default or Event
of Default is in effect immediately prior to or on the date of or would result
from such merger.
7.03 Use of Proceeds. (a) The Company and Medis shall not, and shall not
---------------
suffer or permit any of their respective Subsidiaries to, use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Company or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
(b) The Company and Medis shall not, directly or indirectly, use any
portion of the Loan proceeds (i) knowingly
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to purchase Ineligible Securities from the Arranger during any period in which
the Arranger makes a market in such Ineligible Securities, (ii) knowingly to
purchase during the underwriting or placement period Ineligible Securities being
underwritten or privately placed by the Arranger, or (iii) to make payments of
principal or interest on Ineligible Securities underwritten or privately placed
by the Arranger and issued by or for the benefit of the Company or any Affiliate
of the Company. The Arranger is a registered broker-dealer and permitted to
underwrite and deal in certain Ineligible Securities; and "Ineligible
----------
Securities" means securities which may not be underwritten or dealt in by member
- ----------
banks of the Federal Reserve System under Section 16 of the Banking Act of 1933
(12 U.S.C. (S) 24, Seventh), as amended.
7.04 Maximum Debt to Capitalization Ratio. The Company shall not permit
------------------------------------
the ratio of Total Debt to Total Capitalization as at the last day of any
calendar month to exceed 0.565 to 1.00.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.01 Event of Default. Any of the following shall constitute an "Event
---------------- -----
of Default":
- ----------
(a) Non-Payment. Either Borrower fails to pay, (i) when and as
-----------
required to be paid herein, any amount of principal of any Loan made to such
Borrower or the amount of any Draft or Bankers' Acceptance, or (ii) within 5
days after the same becomes due, any interest, fee or any other amount payable
by such Borrower hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
--------------------------
the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
-----------------
term, covenant or agreement contained in Section 6.04(a) or in Article VII; or
(d) Other Defaults. Either Borrower fails to perform or observe any
--------------
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 20 days after the
earlier of (i) in the case of any provision in Article V or VI, the date upon
which a Responsible Officer knew of such failure or
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(ii) the date upon which written notice thereof is given to the Company by the
Agent or any Bank; or
(e) Cross-Default. The Company or any Subsidiary (i) fails to make
-------------
any payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; or (ii) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any Indebtedness
or Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $10,000,000,
if the effect of such failure, event or condition is to cause such Indebtedness
to be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or any Material
---------------------------------
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
-----------------------
Proceeding is commenced or filed against Company or any Material Subsidiary, or
any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of Company's or any Material
Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Material Subsidiary admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar Person
for itself or a substantial portion of its property or business; or
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(h) ERISA. There shall occur one or more ERISA Events which
-----
individually or in the aggregate results in or might reasonably be expected to
result in liability of the Company or any of its Subsidiaries in excess of
$25,000,000 during the term of this Agreement; or there shall exist an amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), which exceeds 5% of Net Worth.
8.02 Remedies. If any Event of Default occurs, the Agent shall, at the
--------
request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans or accept or
discount Drafts or Bankers' Acceptances to be terminated, whereupon such
commitments and the Banker's Acceptance Facility shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document (including an amount equal to the
Face Amount of all unmatured Drafts and Bankers Acceptances) to be immediately
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrowers; and
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
- -------- -------
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans or accept or discount Drafts or Bankers' Acceptances shall
automatically terminate and the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable without further act of the Agent or any Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
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ARTICLE IX
THE AGENTS
----------
9.01 Appointment and Authorization. Each Bank hereby irrevocably (subject
-----------------------------
to Section 9.09) appoints, designates and authorizes each of the Agents to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, none of the Agents shall have any
duties or responsibilities, except those expressly set forth herein, nor shall
any of the Agents have or be deemed to have any fiduciary relationship with any
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any of the Agents.
9.02 Delegation of Duties. Each of the Agents may execute any of its
--------------------
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact ("Delegate") and shall be entitled to advice of
counsel concerning all matters pertaining to such duties; provided that, no
Agent in its capacity as an Agent shall delegate its duty hereunder to make or
receive payments unless the Delegate shall be a resident of the same
jurisdiction as the Agent making such delegation. None of the Agents shall be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (a) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by any of the Agents under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Company or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or
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records of the Company or any of the Company's Subsidiaries or Affiliates.
9.04 Reliance by the Agents. (a) Each of the Agents shall be entitled
----------------------
to rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company), independent accountants and other experts selected with
reasonable care by it. Each of the Agents shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority Banks
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Each of the Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by any of the Agents to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. None of the Agents shall be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to it for the account of the Banks, unless it shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". Each of the Agents will notify the Banks of its receipt of
any such notice. The Agent shall take such action with respect to such Default
or Event of Default as may be requested by the Majority Banks in accordance with
Article VIII; provided, however, that unless and until the Agent has received
-------- -------
any such request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of the
Banks.
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9.06 Credit Decision. Each Bank acknowled