UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File Number: 1-5571
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RADIOSHACK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 415-3700
------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No __
The number of shares outstanding of the issuer's Common Stock, $1 par value, on
July 23, 2004 was 159,656,719.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
(In millions, except per share amounts) 2004 2003 2004 2003
--------------------------------------- -------- -------- -------- --------
Net sales and operating revenues $1,053.8 $1,025.0 $2,146.4 $2,095.3
Cost of products sold 514.2 503.8 1,053.8 1,046.7
-------- -------- -------- --------
Gross profit 539.6 521.2 1,092.6 1,048.6
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 402.2 406.6 815.1 814.4
Depreciation and amortization 24.8 22.9 48.9 45.5
-------- -------- -------- --------
Total operating expenses 427.0 429.5 864.0 859.9
-------- -------- -------- --------
Operating income 112.6 91.7 228.6 188.7
Interest income 2.7 8.0 4.2 9.5
Interest expense (7.1) (9.8) (14.5) (19.4)
Other income 2.0 0.7 2.0 3.1
-------- -------- -------- --------
Income before income taxes 110.2 90.6 220.3 181.9
Provision for income taxes 41.9 33.1 83.7 67.8
-------- -------- -------- --------
Net income $ 68.3 $ 57.5 $ 136.6 $ 114.1
======== ======== ======== ========
Net income per share:
Basic $ 0.42 $ 0.34 $ 0.84 $ 0.67
======== ======== ======== ========
Diluted $ 0.42 $ 0.34 $ 0.83 $ 0.67
======== ======== ======== ========
Weighted average shares used in computing earnings
per share:
Basic 161.7 168.9 162.3 170.1
======== ======== ======== ========
Diluted 163.2 169.8 164.2 170.8
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
June 30, December 31, June 30,
(In millions, except for share amounts) 2004 2003 2003
-------------------------------------- ----------- ----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 439.7 $ 634.7 $ 524.3
Accounts and notes receivable, net 161.7 182.4 137.5
Inventories, net 856.0 766.5 811.1
Other current assets 90.5 83.0 88.0
----------- ----------- -----------
Total current assets 1,547.9 1,666.6 1,560.9
Property, plant and equipment, net 563.5 513.1 422.0
Other assets, net 61.1 64.2 98.4
----------- ----------- -----------
Total assets $ 2,172.5 $ 2,243.9 $ 2,081.3
=========== =========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including current maturities of
long-term debt $ 110.5 $ 77.4 $ --
Accounts payable 288.8 300.2 284.1
Accrued expenses 267.1 343.0 253.6
Income taxes payable 95.9 137.5 140.8
----------- ----------- -----------
Total current liabilities 762.3 858.1 678.5
Long-term debt, excluding current maturities 502.6 541.3 590.5
Other non-current liabilities 79.2 75.2 80.3
----------- ----------- -----------
Total liabilities 1,344.1 1,474.6 1,349.3
----------- ----------- -----------
Commitments and contingent liabilities (see Note 9)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized:
Series A junior participating, 300,000
shares designated and none issued -- -- --
Common stock, $1 par value, 650,000,000 shares
authorized; 191,033,000, 191,033,000, 236,033,000
shares issued, respectively 191.0 191.0 236.0
Additional paid-in capital 80.2 75.2 67.8
Retained earnings 1,347.2 1,210.6 2,116.6
Treasury stock, at cost; 30,556,000, 28,481,000
and 69,249,000 shares, respectively (789.6) (707.2) (1,687.8)
Accumulated other comprehensive loss (0.4) (0.3) (0.6)
----------- ----------- -----------
Total stockholders' equity 828.4 769.3 732.0
----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,172.5 $ 2,243.9 $ 2,081.3
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
--------------------
(In millions) 2004 2003
------------- -------- --------
Cash flows from operating activities:
Net income $ 136.6 $ 114.1
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization 48.9 45.5
Provision for credit losses and bad debt 0.3 --
Other items 8.8 9.4
Changes in operating assets and liabilities:
Accounts and notes receivable 20.7 68.7
Inventories (89.5) 160.1
Other current assets (8.3) (7.9)
Accounts payable, accrued expenses and income taxes payable (119.2) (121.3)
-------- --------
Net cash (used in) provided by operating activities (1.7) 268.6
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (103.2) (47.7)
Proceeds from sale of property, plant and equipment 2.2 0.1
Other investing activities (3.9) (0.2)
-------- --------
Net cash used in investing activities (104.9) (47.8)
-------- --------
Cash flows from financing activities:
Purchases of treasury stock (146.8) (127.1)
Sale of treasury stock to employee benefit plans 19.4 18.8
Proceeds from exercise of stock options 37.6 1.3
Changes in short-term borrowings, net 1.5 (16.0)
Repayments of long-term borrowings (0.1) (20.0)
-------- --------
Net cash used in financing activities (88.4) (143.0)
-------- --------
Net (decrease) increase in cash and cash equivalents (195.0) 77.8
Cash and cash equivalents, beginning of period 634.7 446.5
-------- --------
Cash and cash equivalents, end of period $ 439.7 $ 524.3
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF FINANCIAL STATEMENTS
We prepared the accompanying unaudited consolidated financial statements, which
include the accounts of RadioShack Corporation, all majority-owned domestic and
foreign subsidiaries and, as applicable, variable interest entities, in
accordance with the rules of the Securities and Exchange Commission ("SEC").
Accordingly, we did not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
management's opinion, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair statement are included. However,
our operating results for the six months ended June 30, 2004 and 2003, do not
necessarily indicate the results you might expect for the full year. If you
desire further information, you should refer to our consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations included in our Annual Report on Form 10-K for the year
ended December 31, 2003.
NOTE 2 - STOCK-BASED COMPENSATION
We account for our stock-based employee compensation plans under the intrinsic
value method. Accordingly, no compensation expense has been recognized for our
fixed price stock option plans, as the exercise price of options must be equal
to or greater than the average of the high and low stock prices on the date of
grant under our incentive stock plans. The table below illustrates the effect on
net income and net income per share as if we had accounted for our stock-based
employee compensation under the fair value recognition provisions of Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation."
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
(In millions, except per share amounts) 2004 2003 2004 2003
--------------------------------------- ------------ ------------ ------------ ------------
Net income, as reported $ 68.3 $ 57.5 $136.6 $114.1
Stock-based employee compensation expense
included in reported net income, net of related tax
effects 3.0 3.2 6.1 5.8
Total stock-based employee compensation expense
determined under fair value method for all awards,
net of related tax effects (8.4) (12.9) (18.7) (25.6)
------------ ------------ ------------ -------------
Pro forma net income $ 62.9 $ 47.8 $124.0 $ 94.3
============ ============ ============ =============
Net income per share:
Basic - as reported $ 0.42 $ 0.34 $ 0.84 $ 0.67
Basic - pro forma $ 0.39 $ 0.28 $ 0.76 $ 0.55
Diluted - as reported $ 0.42 $ 0.34 $ 0.83 $ 0.67
Diluted - pro forma $ 0.39 $ 0.28 $ 0.76 $ 0.55
NOTE 3 - BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share is computed based only on the weighted average number
of common shares outstanding for each period presented. Diluted earnings per
share reflects the potential dilution that would have occurred if securities or
other contracts to issue common stock were exercised, converted, or resulted in
the issuance of common stock that would have then shared in our earnings. The
following tables reconcile the numerator and denominator used in the basic and
diluted earnings per share calculations for the periods presented.
Three Months Ended Three Months Ended
June 30, 2004 June 30, 2003
------------------------------------- -------------------------------------
Income Shares Per Share Income Shares Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Basic EPS
Net income $ 68.3 161.7 $ 0.42 $ 57.5 168.9 $ 0.34
=========== ===========
Effect of dilutive securities:
Plus: Assumed exercise of stock options 1.5 0.9
----------- ----------- ----------- -----------
Diluted EPS
Net income plus assumed conversions $ 68.3 163.2 $ 0.42 $ 57.5 169.8 $ 0.34
=========== =========== =========== =========== =========== ===========
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------------------------------- -------------------------------------
Income Shares Per Share Income Shares Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Basic EPS
Net income $136.6 162.3 $ 0.84 $114.1 170.1 $ 0.67
=========== ===========
Effect of dilutive securities:
Plus: Assumed conversion of stock options 1.9 0.7
----------- ----------- ----------- -----------
Diluted EPS
Net income plus assumed conversions $136.6 164.2 $ 0.83 $114.1 170.8 $ 0.67
=========== ============ =========== =========== =========== ===========
Options to purchase 11.6 million and 11.2 million shares of common stock for the
quarter and six month periods ended June 30, 2004, respectively, as compared to
options to purchase 19.6 million and 19.8 million shares of common stock for the
corresponding prior year periods, were not included in the computation of
diluted earnings per share because the option exercise price was greater than
the average market price of the common stock during the periods reported.
NOTE 4 - REVOLVING CREDIT FACILITY
In the second quarter of 2004, we replaced our existing $300.0 million 364-day
revolving credit facility with a new five-year credit facility maturing in June
2009. The terms of this revolving credit facility are substantially similar to
the previous facility. This credit facility, in addition to our existing $300.0
million five-year credit facility which expires in June 2007, will support
commercial paper borrowings and is otherwise available for general corporate
purposes.
NOTE 5 - COMPREHENSIVE INCOME
Comprehensive income for the three months ended June 30, 2004 and 2003, was
$68.2 million and $57.4 million, respectively, and comprehensive income for the
six months ended June 30, 2004 and 2003, was $136.5 million and $114.0 million,
respectively. Aside from net income, the only other component of comprehensive
income during 2004 was the foreign currency translation adjustments; the only
other component of comprehensive income during 2003 was the accretion of the
gain on the 2001 interest rate swap transactions included in net income, as
reported.
NOTE 6 - BUSINESS RESTRUCTURINGS
At June 30, 2004, the balance in the restructuring reserve related to the
closure of various McDuff, Computer City and Incredible Universe retail stores
in 1996 and 1997 was $6.9 million. This reserve represents the expected costs to
be paid in connection with the remaining real estate lease obligations. If these
facilities' sublease income declines in their respective markets or if it takes
longer than expected to sublease or dispose of these facilities, the actual
losses could exceed this reserve estimate. Costs will continue to be incurred
over the remaining terms of the related leases. During the six months ended June
30, 2004, costs of $10.1 million were charged against this reserve, principally
relating to the settlement of one location in Miami, Florida.
NOTE 7 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation 46, "Consolidation of Variable Interest Entities - An
Interpretation of ARB No. 51." FIN 46 is intended to clarify the application of
ARB No. 51, "Consolidated Financial Statements," to certain entities in which
equity investors do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support. For those
entities, a controlling financial interest cannot be identified based on an
evaluation of voting interests and may be achieved through arrangements that do
not involve voting interests. The consolidation requirement of FIN 46 is
effective immediately to variable interests in variable interest entities
("VIEs") created or obtained after January 31, 2003. FIN 46 also sets forth
certain disclosures regarding interests in VIEs that are deemed significant,
even if consolidation is not required. In December 2003, the FASB issued FIN 46
(revised December 2003), "Consolidation of Variable Interest Entities" (FIN
46R), which delayed the effective date of the application to us of FIN 46 to
non-special purpose VIEs acquired or created before February 1, 2003, to the
interim period ending on March 31, 2004, and provided additional technical
clarifications to implementation issues. We have determined that FIN 46 does not
apply to our dealer/franchise outlets, and we did not make any adjustments to
our consolidated financial statements as a result of the adoption of this
interpretation.
NOTE 8 - LITIGATION
We are currently a party to a class action lawsuit, styled Alphonse L. Perez, et
al. v. RadioShack Corporation, filed in the United States District Court for the
Northern District of Illinois on October 31, 2002, alleging that we
misclassified certain RadioShack store managers as exempt from overtime in
violation of the Fair Labor Standards Act. While the alleged damages in this
lawsuit are undetermined, they could be substantial. We believe that we have
meritorious defenses, and we are vigorously defending this case. Furthermore, we
fully expect this case to be favorably determined as a matter of federal law.
If, however, an adverse resolution of the litigation occurs, we believe it could
have a material adverse effect on our results of operations for the year in
which resolution occurs. However, we do not believe that such an adverse
resolution would have a material impact on our financial condition or liquidity.
The liability, if any, associated with this matter was not determinable at June
30, 2004.
We have various other pending claims, lawsuits, disputes with third parties,
investigations and actions incidental to the operation of our business. Although
occasional adverse settlements or resolutions may occur and negatively impact
earnings in the year of settlement, it is our opinion that their ultimate
resolution will not have a material adverse effect on our financial condition or
liquidity.
NOTE 9 - COMMITMENTS AND CONTINGENT LIABILITIES
We have contingent liabilities related to retail leases of locations which were
assigned to other businesses. The majority of these contingent liabilities
relate to various lease obligations arising from leases that were assigned to
CompUSA, Inc. as part of the sale of our Computer City, Inc. subsidiary to
CompUSA, Inc. in August 1998. In the event CompUSA or the other assignees, as
applicable, are unable to fulfill these obligations, we would be responsible for
rent due under the leases. Our rent exposure from the remaining undiscounted
lease commitments with no projected sublease income is approximately $170
million. However, we have no reason to believe that CompUSA or the other
assignees will not fulfill their obligations under these leases or that we would
be unable to sublet the properties; consequently, we do not believe there will
be a material impact on our consolidated financial statements as a result of the
eventual resolution of these lease obligations.
NOTE 10 - RADIOSHACK INVESTMENT PLAN
On April 30, 2004, we amended our employee stock purchase plan and renamed it
the RadioShack Investment Plan (the "Plan"). Only employees participating in the
former plan as of April 29, 2004, may participate in the Plan. New employees
will not be eligible to participate in the Plan. Participants contribute from 1%
to 7% of their annual compensation, based on the amount of their election in the
employee stock purchase plan as of April 29, 2004. Participants may decrease,
but not increase, the amount of their election. Participants may annually elect
to receive their contributions either in the form of cash or our common stock.
We match 40%, 60% or 80% of each participant's contribution, depending on the
participant's length of continuous participation in the employee stock purchase
plan as of April 29, 2004. This matching contribution is in the form of either
cash or our common stock, based on the participant's election to receive his or
her contribution in cash or common stock, as described above.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ("MD&A")
RadioShack is primarily a retailer of consumer electronics goods and services.
We seek to differentiate ourselves from our various competitors by focusing on
dominating cost-effective solutions to meet everyone's routine electronics needs
and families' distinct electronics wants. This strategy allows us to take
advantage of the unique opportunities provided by our extensive retail presence,
specially-trained sales staff and relationships with reputable vendors. We
believe this strategy will provide us with the opportunity to increase our
market share in the highly competitive consumer electronics area. In addition,
we continue to focus on methods to reduce our costs of products sold and
selling, general and administrative expense. Furthermore, we believe that, by
focusing on opportunities such as innovative products, new markets, licensing
opportunities and creative distribution channels, we can ultimately generate
increased financial returns for our shareholders over the long term.
This section of our report discusses certain factors that may affect our future
results (including economic and industry-wide factors), the results of our
operations, our liquidity and financial condition, and our risk management
practices.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Matters discussed in MD&A and in other parts of this report include
forward-looking statements within the meaning of the federal securities laws.
These matters include statements concerning management's plans and objectives
relating to our operations or economic performance and related assumptions. We
specifically disclaim any duty to update any of the information set forth in
this report, including any forward-looking statements. Forward-looking
statements are made based on management's current expectations and beliefs
concerning future events and, therefore, involve a number of risks and
uncertainties. Management cautions that forward-looking statements are not
guarantees, and our actual results could differ materially from those expressed
or implied in the forward-looking statements. Important factors that could cause
our actual results of operations or financial condition to differ include, but
are not necessarily limited to, the following factors.
General Business Factors
o Changes in national or regional U.S. economic conditions, including, but
not limited to, recessionary or inflationary trends, level of the equity
markets, consumer credit availability, interest rates, consumers'
disposable income and spending levels, job security and unemployment, and
overall consumer confidence;
o changes in the amount and degree of promotional intensity exerted by
current competitors and potential new competition from both retail stores
and alternative methods or channels of distribution, such as e-commerce,
telephone shopping services and mail order;
o the inability to attract, retain and grow an effective management team in a
dynamic environment or changes in the cost or availability of a suitable
workforce to manage and support our service-driven operating strategies;
o any potential tariffs imposed on products that we import from China, as
well as the potential strengthening of China's currency against the U.S.
dollar;
o continuing terrorist activities in the U.S., as well as the international
war on terrorism;
o the disruption of international, national or regional transportation
systems;
o the lack of availability or access to sources of inventory;
o changes in the financial markets that would reduce or eliminate access to
longer term capital or short-term credit availability;
o the imposition of new restrictions or regulations regarding the products
and/or services we sell or changes in tax rules and regulations applicable
to us; and
o the occurrence of severe weather events or natural disasters which could
significantly damage or destroy outlets or prohibit consumers from
traveling to our retail locations, especially during the peak winter
holiday season.
RadioShack Specific Factors
o The inability to successfully execute our solutions strategy to dominate
cost-effective solutions to meet everyone's routine electronics needs and
families' distinct electronics wants;
o the failure to differentiate ourselves as an electronics specialty retailer
in the U.S. marketplace;
o the inability to create, maintain or renew profitable contracts or execute
business plans with providers of third-party branded products and with
service providers relating to cellular and PCS telephones;
o the presence or absence of new services or products and product features in
the merchandise categories we sell and unexpected changes in our actual
merchandise sales mix;
o the inability to collect the level of anticipated residual income,
subscriber acquisition fees, and rebates for products and third-party
services offered by us;
o the existence of contingent lease obligations related to our discontinued
retail operations arising from an assignee's or a sub-lessee's failure to
fulfill its lease commitments, or from our inability to identify suitable
sub-lessees for vacant facilities;
o the inability to successfully identify and analyze emerging growth
opportunities in the areas of strategic business alliances, acquisitions,
licensing opportunities, new markets, non-store sales channels, and
innovative products;
o the inability to successfully identify and enter into relationships with
developers of new technologies or the failure of these new technologies to
be adopted by the market;
o the failure to maintain or increase the level of sales in our non-wireless
business categories; and
o any reductions or changes in the growth rate of the wireless industry and
changes in the wireless communications industry dynamics, including the
effects of industry consolidation.
OVERVIEW OF QUARTERLY FINANCIAL PERFORMANCE
Management reviews a number of key indicators to evaluate our financial
performance, including:
o net sales and operating revenues,
o gross margin,
o selling, general and administrative ("SG&A") expense, and
o operating margin.
RadioShack's net sales and operating revenues increased 2.8%, and our gross
margin improved to 51.2%, for the quarter ended June 30, 2004. Our SG&A expense
decreased to 38.2% of net sales, contributing to the increase in our operating
margin to 10.7%.
In managing our business, management uses various metrics for company-operated
stores, including average tickets per store and average sales per ticket. See
the table below for a summary of these statistics for the periods indicated.
Three Months Ended June 30,
----------------------------------
2004 2003 2002
--------- --------- ---------
Average tickets per store per day 62 66 66
Average sales per ticket $32.95 $29.79 $28.62
For a more detailed discussion of our financial performance, please continue
reading our MD&A, as well as our Consolidated Financial Statements and Notes to
Consolidated Financial Statements.
RadioShack Retail Outlets
The table below shows RadioShack's retail locations separated between
company-operated stores and dealer/franchise outlets. While the dealer outlets
represent approximately 27% of the total number of retail locations, our sales
to dealer/franchisees are less than 10% of our net sales and operating revenues.
June 30, March 31, December 31, September 30, June 30,
2004 2004 2003 2003 2003
--------- --------- --------- --------- ---------
Company-operated 5,081 5,095 5,121 5,132 5,142
Dealer/franchise outlets 1,849 1,884 1,921 1,935 1,956
--------- --------- --------- --------- ---------
Total number of retail locations 6,930 6,979 7,042 7,067 7,098
========= ========= ========= ========= =========
In addition to our company-operated stores and dealer/franchise outlets, our
existing sales channels include our www.radioshack.com Web site and catalog
operations, as well as our outbound and inbound telephone call centers.
RESULTS OF OPERATIONS
Net sales and operating revenues by channel of distribution are as follows:
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- --------------------------
(In millions) 2004 2003 2004 2003
------------- -------- -------- -------- --------
Company-operated store sales $ 990.4 $ 963.1 $2,023.1 $1,969.4
Dealer/franchise and other sales 63.4 61.9 123.3 125.9
-------- -------- -------- --------
Net sales and operating revenues $1,053.8 $1,025.0 $2,146.4 $2,095.3
======== ======== ======== ========
Net Sales and Operating Revenues
Sales increased 2.8% to $1,053.8 million for the quarter ended June 30, 2004,
compared to $1,025.0 million in the corresponding prior year period. For the six
months ended June 30, 2004, our overall sales increased 2.4% to $2,146.4
million, compared to $2,095.3 million for the same period in 2003. Comparable
store sales increased 3.1% for the quarter and 2.9% for the six months ended
June 30, 2004, respectively, when compared to the corresponding prior year
periods. These increases were primarily the result of increases in wireless
department sales and, to a lesser extent, increased sales in our computer
department, as described below. These sales increases were partially offset by
decreased sales in our remaining departments. We expect a sales gain for 2004 as
discussed in further detail below.
Sales in the wireless communication department, which consists of wireless
handsets (including related services), accessories, and wireless services such
as prepaid airtime and bill payments, increased approximately 16% and 21% for
the quarter and six months ended June 30, 2004, respectively, when compared to
the corresponding prior year periods. These sales increases were due primarily
to higher sales per handset, as well as an increase in the number of handsets
sold over the prior year. In addition, wireless accessories sales increased over
the prior year. We believe our plans featuring new technologies, sales
promotions, and carrier compensation models will result in a wireless sales
increase greater than 8% for 2004.
Sales in the wired communication department, which includes residential
telephones, answering machines and other related telephony products, decreased
approximately 10% and 11% for the quarter and six months ended June 30, 2004,
respectively, when compared to the corresponding prior year periods. These
decreases were the result of a decline in sales of wire-line telephones and
accessories. We anticipate that sales in this department will be lower for 2004,
compared to 2003, as customers continue to migrate to more advanced wireless and
internet technologies.
Sales in the radio communication department decreased approximately 12% and 11%
for the quarter and six months ended June 30, 2004, respectively, when compared
to the corresponding prior year periods. These decreases were primarily the
result of a decrease in sales of Family Radio Service ("FRS") and other two-way
radios. We believe sales in this department will be lower for 2004, compared to
2003.
Sales in the home entertainment department, which consists of all home audio and
video end-products and accessories, including DTH hardware and installation,
decreased approximately 15% and 20% for the quarter and six months ended June
30, 2004, respectively, when compared to the corresponding prior year periods.
These decreases were primarily attributable to the elimination of sales of
DirecTV satellite dishes and their related installation services. Additionally,
lower sales from home audio and home entertainment accessories contributed to
the sales decreases. We anticipate that sales in the home entertainment
department will be lower for 2004, compared to 2003.
Sales in the computer department, which includes desktop, laptop, handheld
computers and related accessories, in addition to digital cameras and home
networking products, increased 14% and 7% for the quarter and six months ended
June 30, 2004, respectively, when compared to the corresponding prior year
periods. These increases were due primarily to increased sales of digital
imaging, home networking and computer accessory products. These increases were
partially offset by a decrease in sales of desktop CPUs, monitors and laptop
computers. We expect that sales in the computer department will increase in
2004, compared to 2003.
Sales for the power and technical department decreased approximately 2% and 3%
for the quarter and six months ended June 30, 2004, respectively, when compared
to the corresponding prior year periods. These decreases were primarily due to
decreased sales in the technical product category. In addition, sales of
radio-controlled toy specialty batteries were lower as a result of lower sales
of end-products requiring them. We anticipate that sales will increase in this
department in 2004, compared to 2003.
Sales in the personal electronics, toys and music department decreased
approximately 12% and 15% for the quarter and six months ended June 30, 2004,
respectively, when compared to the corresponding prior year periods. These
decreases were broadly due to a lack of consumer response to our assortment plan
and poor product transitions. The sales decreases in 2004 were partially offset
by wellness products sold under our LifeWise(TM) brand. We believe sales growth
over the prior year in this department will be less than three percent.
Gross Profit
For the quarter ended June 30, 2004, gross profit dollars increased $18.4
million and gross margin improved 0.4 percentage points to 51.2% from 50.8% in
the corresponding 2003 period. For the six months ended June 30, 2004, gross
profit dollars increased $44.0 million and gross margin improved 0.9 percentage
points to 50.9% from 50.0% in the corresponding 2003 period.
We continue to experience a benefit from our supply chain vendor and strategic
pricing initiatives. In connection with these initiatives, we have consolidated
vendors, utilized online reverse auctions, realized more favorable terms from
vendors, improved the impact of markdowns, priced our products more effectively,
and utilized other techniques and incentives to optimize gross profit.
We anticipate that our gross margin rate during 2004 will continue to be above
our 2003 gross margin rate, due primarily to the impact of additional supply
chain management initiatives, particularly in vendor relations and end-of-life
inventory management.
Selling, General and Administrative Expense
Our selling, general and administrative ("SG&A") expense decreased 1.1% or $4.4
million for the quarter, but increased 0.1% or $0.7 million for the six months
ended June 30, 2004, when compared to the corresponding prior year periods. This
represents 1.5 and 0.9 percentage point decreases to 38.2% and 38.0% of net
sales and operating revenues for the quarter and six months ended June 30, 2004,
respectively, when compared to the corresponding prior year periods. These
percentage decreases were primarily due to higher overall sales in the current
periods. The second quarter dollar decrease was primarily due to better expense
management. The dollar increase for the six months was primarily due to an
increase in property taxes and state unemployment tax rates. Advertising expense
increased in dollars, but remained the same as a percentage of net sales and
operating revenues for both the quarter and six months ended June 30, 2004, as
spending levels were not lowered. Insurance expense decreased in both dollars
and as a percentage of net sales and operating revenues as a result of fewer
health-related claims. We have managed SG&A expense growth by, among other
items, improving productivity, reducing employee headcount, lowering our
absorption of increased health insurance costs, and consolidating and
outsourcing certain functions and operations. Management will continue to review
additional opportunities to reduce SG&A expense in the future. Compared to 2003,
we expect our 2004 SG&A expense to increase 1.5% to 2.5% in dollars, but to
decrease slightly as a percentage of net sales and operating revenues due to
increased sales volume.
Net Interest Expense
Interest expense, net of interest income, for the quarter and six months ended
June 30, 2004, was $4.4 million and $10.3 million, respectively, versus $1.8
million and $9.9 million for the comparable prior year periods.
Interest expense decreased $2.7 million and $4.9 million for the quarter and six
months ended June 30, 2004, respectively. The decrease in interest expense was
primarily due to the favorable impact of our interest rate swaps, reduced debt
levels, and the capitalization of interest expense related to the construction
of our new corporate campus.
Interest income decreased $5.3 million for both the quarter and six months ended
June 30, 2004, compared to the prior year periods. This decrease was the result
of $6.2 million received in the second quarter of 2003, compared to $1.4 million
received in the second quarter of 2004, both from tax settlements.
Interest expense, net of interest income, is expected to be flat in 2004, when
compared to 2003. We anticipate that interest expense will increase in 2005,
when compared to 2004, primarily due to the elimination of capitalized interest
as a result of the scheduled completion of our new corporate headquarters.
Other Income
During the quarter and six months ended June 30, 2004, we received payments and
recorded income of $2.0 million under our tax sharing agreement with O'Sullivan
Industries Holdings, Inc. ("O'Sullivan"), compared to $0.7 million and $3.1
million, respectively, received and recorded in the corresponding prior year
periods. Future payments under the tax sharing agreement will vary based on the
level of O'Sullivan's future earnings and are also dependent on O'Sullivan's
overall financial condition and ability to pay. We cannot give any assurances as
to the amount or frequency of payment, if any, that may be received each
quarter.
Provision for Income Taxes
The provision for income taxes for each quarterly period is based on our current
estimate of the annual effective tax rate for the full year. Our effective tax
rate for the quarter and six months ended June 30, 2004, was approximately
38.0%. The effective tax rate for the quarter and six months ended June 30,
2003, was 36.5% and 37.3%, respectively. The lower effective tax rate for both
the quarter and six months ended June 30, 2003, was the result of an IRS
settlement in 2003 related to prior years' tax matters.
Recently-Issued Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation 46, "Consolidation of Variable Interest Entities - An
Interpretation of ARB No. 51." FIN 46 is intended to clarify the application of
ARB No. 51, "Consolidated Financial Statements," to certain entities in which
equity investors do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support. For those
entities, a controlling financial interest cannot be identified based on an
evaluation of voting interests and may be achieved through arrangements that do
not involve voting interests. The consolidation requirement of FIN 46 is
effective immediately to variable interests in variable interest entities
("VIEs") created or obtained after January 31, 2003. FIN 46 also sets forth
certain disclosures regarding interests in VIEs that are deemed significant,
even if consolidation is not required. In December 2003, the FASB issued FIN 46
(revised December 2003), "Consolidation of Variable Interest Entities" (FIN
46R), which delayed the effective date of the application to us of FIN 46 to
non-special purpose VIEs acquired or created before February 1, 2003, to the
interim period ending on March 31, 2004, and provided additional technical
clarifications to implementation issues. We have determined that FIN 46 does not
apply to our dealer/franchise outlets, and we did not make any adjustments to
our consolidated financial statements as a result of the adoption of this
interpretation.
FINANCIAL CONDITION
Cash Flow - Operating Activities
Cash used in operating activities was $1.7 million for the six month period
ended June 30, 2004, compared to $268.6 million provided by operating activities
in the prior year comparable period.
At June 30, 2004, changes in accounts receivable provided $20.7 million in cash
since December 31, 2003, compared to $68.7 million in cash provided for the six
months ended June 30, 2003. Cash provided by accounts receivable was down for
the six month period ended June 30, 2004, due to reductions in both
dealer/franchise receivables and trade receivables resulting from lower sales in
those areas and, to a lesser extent, improved collection efforts.
An increase in inventory since December 2003 used $89.5 million in cash for the
six months ended June 30, 2004, compared to $160.1 million in cash provided by
an inventory reduction for the six months ended June 30, 2003. A lower inventory
position at December 31, 2003, when compared to target levels, prompted the
inventory increase in the first half of 2004.
In addition, during the first half of 2004, $25.1 million less in cash was used
in accounts payable, while $7.1 million and $15.9 million more were used in
accrued expenses and taxes payable, respectively.
Cash Flow - Investing Activities
Cash used in investing activities for the six months ended June 30, 2004, was
$104.9 million, compared to $47.8 million in the previous year. Investing
activities for the six months ended June 30, 2004, included capital expenditures
totaling $103.2 million, compared to $47.7 million in 2003, primarily for the
construction of our new corporate campus and, to a lesser extent, store and
information systems upgrades. We anticipate that our capital expenditure
requirements for 2004 will be approximately $285.0 million, compared to $190.0
million for 2003. This $95.0 million increase over 2003 primarily relates to the
construction of our new corporate headquarters. Store remodels and relocations
and updated information systems account for almost half of the balance of our
anticipated 2004 capital expenditures, which we plan to finance through cash
from operations and, if needed, existing cash and cash equivalents.
Cash Flow - Financing Activities
Cash used in financing activities for the six months ended June 30, 2004, was
$88.4 million, compared to $143.0 million in the previous year. We repurchased
$146.8 million of common stock during the six months ended June 30, 2004,
compared to $127.1 million during the same period of 2003, under our employee
programs and our board approved repurchase programs. These repurchases were
partially funded by $57.0 million and $20.1 million received, respectively, from
the sale of treasury stock to employee benefit plans and from stock option
exercises during the corresponding prior year periods.
We intend to execute share repurchases from time to time, as determined by
management. The timing and terms of the transactions depend on market
conditions, our liquidity and other considerations. We anticipate that we will
repurchase, under our authorized repurchase program, between $200.0 million and
$250.0 million of our common stock during 2004. The funding required for this
share repurchase program will come from cash generated from net sales and
operating revenues and cash and cash equivalents. In addition to the program
described above, we will also repurchase shares in the open market to offset the
sales of shares to our employee benefit plans.
Other Financial Condition Information
We had $439.7 million in cash and cash equivalents at June 30, 2004, as a
resource for our funding needs. Additionally, borrowings are available under our
$600.0 million dollar commercial paper program, which is supported by bank
credit facilities and could be utilized in the event the commercial paper market
is unavailable to us. However, we currently do not expect that the commercial
paper market would be unavailable to us, thus causing us to utilize the credit
facilities. As of June 30, 2004, we had no commercial paper outstanding and had
not utilized our credit facilities.
In the second quarter of 2004, we replaced our existing $300.0 million 364-day
revolving credit facility with a new five-year credit facility maturing in June
2009. The terms of this revolving credit facility are substantially similar to
the previous facility. This credit facility, in addition to our existing $300.0
million five-year credit facility which expires in June 2007, will support
commercial paper borrowings and is otherwise available for general corporate
purposes.
At June 30, 2004, total capitalization was $1,441.5 million, which consisted of
$613.1 million of debt and $828.4 million of stockholders' equity, resulting in
a total debt to capitalization ratio of 42.5%. The debt to capitalization ratio
was 44.6% at December 31, 2003, and 44.7% at June 30, 2003. These ratio
decreases were primarily the result of an increase in stockholders' equity of
$59.1 million and $96.4 million since December 31, 2003, and June 30, 2003,
respectively. Long-term debt as a percentage of capitalization was 34.9% at June
30, 2004, 39.0% at December 31, 2003, and 44.7% at June 30, 2003. The ratio
decreases since June 30, 2003, and December 31, 2003, were both due to the
repayment of long term debt and an increase in stockholders' equity.
Our free cash flow, defined as cash flow from operating activities less
dividends paid and capital expenditures for property, plant and equipment, was a
cash usage of $104.9 million for the six months ended June 30, 2004, compared to
$220.9 million provided by the corresponding period in 2003. This change in free
cash flow primarily resulted from a cash usage within our working capital
components in 2004, compared to cash provided from working capital in the
corresponding prior year period. Inventory, the largest component of working
capital, began fiscal year 2004 lower than the prior year, when compared to
management's desired inventory levels, and its increase resulted in a cash usage
of $89.5 million, when compared to $160.1 million in cash provided by inventory
in the corresponding prior year period. Additionally, free cash flow was
impacted by an increase in capital expenditures, when compared to the
corresponding prior year period. We expect free cash flow to be approximately
$70.0 million for 2004. After 2004, we anticipate a return to a more historical
annual free cash flow level of approximately $200.0 million to $250.0 million.
We believe free cash flow provides useful information to investors regarding our
financial condition and operating results because it is an appropriate
indication of our ability to fund share repurchases, repay maturing debt, change
dividend payments or fund other uses of capital that management believes will
enhance shareholder value. The comparable financial measure to free cash flow
under generally accepted accounting principles is cash flow from operating
activities, which was a usage of $1.7 million for the six months ended June 30,
2004, compared to $268.6 million provided during the corresponding prior year
period. We do not intend the presentation of free cash flow, a non-GAAP
financial measure, to be considered in isolation or as a substitute for measures
prepared in accordance with GAAP.
The following table is a reconciliation of cash flows from operating activities
to free cash flow.
Six Months Ended June 30, Year Ended December 31,
------------------------ ----------------------
(In millions) 2004 2003 2003
------------- ---------- ---------- ----------
Net cash (used in) provided by operating
activities $ (1.7) $ 268.6 $ 651.9
Less:
Additions to property, plant and equipment 103.2 47.7 189.6
Dividends paid -- -- 40.8
---------- ---------- ----------
Free cash flow $(104.9) $ 220.9 $ 421.5
========== ========== ==========
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risk principally from fluctuations in interest rates
which could affect our cash flows and consolidated financial statements. We
manage our exposure to interest rate risk, which results from changes in
short-term interest rates, by managing our portfolio of fixed rate debt and,
when we consider it appropriate, through the use of interest rate swaps to
convert a portion of our long-term debt from fixed to variable rates to reduce
our overall borrowing costs. At June 30, 2004, we did not have any derivative
instruments that materially increased our exposure to market risks for interest
rates, foreign currency rates, commodity prices or other market price risks,
other than the interest rate swaps noted in Management's Discussion and Analysis
of Financial Condition and Results of Operations in our Annual Report on Form
10-K for the year ended December 31, 2003. We do not use derivatives for
speculative purposes. We may continue to utilize interest rate swaps in the
future as market conditions permit.
The fair value of our fixed rate long-term debt is sensitive to interest rate
changes. Interest rate changes would result in increases or decreases in the
fair value of our debt, due to differences between market interest rates and
rates in effect at the inception of our debt obligation. Changes in the fair
value of our fixed rate debt have no impact on our current cash flows or
consolidated financial statements.
ITEM 4. CONTROLS AND PROCEDURES.
a) We have established a system of disclosure controls and procedures that
are designed to ensure that material information relating to the
Company, which is required to be timely disclosed, is accumulated and
communicated to management in a timely fashion. An evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange
Act of 1934 ("Exchange Act")) was performed as of the end of the period
covered by this report. This evaluation was performed under the
supervision and with the participation of management, including our
Chief Executive Officer and Acting Chief Financial Officer. Based upon
that evaluation, our CEO and Acting CFO have concluded that these
disclosure controls and procedures are effective in ensuring that
information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified by the SEC's rules and forms.
b) There were no changes in our internal control over financial reporting
that occurred during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are currently a party to a class action lawsuit, styled Alphonse L. Perez, et
al. v. RadioShack Corporation, filed in the United States District Court for the
Northern District of Illinois on October 31, 2002, alleging that we
misclassified certain RadioShack store managers as exempt from overtime in
violation of the Fair Labor Standards Act. While the alleged damages in this
lawsuit are undetermined, they could be substantial. We believe that we have
meritorious defenses and we are vigorously defending this case. Furthermore, we
fully expect this case to be favorably determined as a matter of federal law.
If, however, an adverse resolution of the litigation occurs, we believe it could
have a material adverse effect on our results of operations for the year in
which resolution occurs. However, we do not believe that such an adverse
resolution would have a material impact on our financial condition or liquidity.
The liability, if any, associated with this matter was not determinable at June
30, 2004.
We have various other pending claims, lawsuits, disputes with third parties,
investigations and actions incident to the operation of our business. Although
occasional adverse settlements or resolutions may occur and negatively impact
earnings in the year of settlement, it is our opinion that their ultimate
resolution will not have a material adverse effect on our financial condition or
liquidity.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
The following table sets forth information concerning purchases made by or on
behalf of RadioShack or any affiliated purchaser (as defined in the SEC's rules)
of RadioShack common stock for the periods indicated.
PURCHASES OF EQUITY SECURITIES BY RADIOSHACK
Total Number Maximum
of Shares Number of
Purchased as Shares that
Part of May Yet Be
Publicly Purchased
Total Number Average Announced Under the
of Shares Price Paid Plans or Plans or
Purchased (1) per Share Programs (2) Programs (2)
-------------- -------------- -------------- --------------
April 1 - 30, 2004 850,000 $ 32.23 850,000 7,161,400
May 1 - 31, 2004 725,000 $ 29.57 725,000 6,436,400
June 1 - 30, 2004 500,000 $ 29.76 350,000 6,086,400
-------------- -------------- -------------
Total 2,075,000 $ 30.71 1,925,000
============== ============== =============
(1)The total number of shares purchased includes all repurchases made during the
periods indicated. In June 2004, 150,000 shares were repurchased through
other than a publicly announced plan or program in open-market transactions.
These repurchases were used to satisfy our obligations under our employee
benefit plans.
(2)These publicly announced plans or programs consist of RadioShack's 15 million
share repurchase program. This program was announced on February 20, 2003,
and has no expiration date. During the period covered by the table, no
publicly announced plan or program expired or was terminated, and no
determination was made by the Company to suspend or cancel purchases under
our program.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
a) We held our Annual Meeting of Stockholders on May 20, 2004.
b) (1) At the meeting, stockholders elected thirteen directors to serve
for the ensuing year. Out of the 162,190,570 eligible votes,
140,118,380 votes were cast at the meeting either by proxies solicited
in accordance with Regulation 14A under the Securities Act of 1934, or
by security holders voting in person. In the case of directors,
abstentions are treated as votes withheld and are included in the
table. The tabulation of votes of the matters submitted to a vote of
security holders is set forth below:
VOTES VOTES
NAME OF DIRECTOR FOR WITHHELD
-------------------------- ----------------- -----------------
Frank J. Belatti 127,357,000 12,761,380
Ronald E. Elmquist 130,507,325 9,611,055
Robert S. Falcone 132,003,197 8,115,183
Daniel R. Feehan 127,012,361 13,106,019
Richard J. Hernandez 130,570,215 9,548,165
Lawrence V. Jackson 76,330,529 63,787,851
Robert J. Kamerschen 130,065,027 10,053,353
H. Eugene Lockhart 132,119,662 7,998,718
Jack L. Messman 129,584,083 10,534,297
William G. Morton, Jr. 132,181,673 7,936,707
Thomas G. Plaskett 132,879,840 7,238,540
Leonard H. Roberts 133,404,569 6,713,811
Edwina D. Woodbury 131,554,973 8,563,407
(2) The stockholders also voted to approve the adoption of the RadioShack
Corporation 2004 Deferred Stock Unit Plan for Non-Employee Directors:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
101,435,059 21,168,644 2,231,831 15,282,846
(3) Additionally, the stockholders voted to approve the adoption of the
RadioShack Corporation 2004 Annual and Long-Term Incentive Compensation
Plan:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
122,404,671 15,587,283 2,126,426 0
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation S-K.
A list of the exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Index to Exhibits
on page 18, which immediately precedes such exhibits.
b) Reports on Form 8-K.
We furnished a Form 8-K to the SEC on April 20, 2004, in which we
disclosed an earnings release reporting our results of operations
for the quarter ended March 31, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RadioShack Corporation
(Registrant)
Date: August 6, 2004 By /s/ David P. Johnson
-------------------------------
David P. Johnson
Senior Vice President, Acting Chief Financial
Officer and Controller
(Principal Financial and Accounting Officer)
Date: August 6, 2004 /s/ Martin O. Moad
--------------------------------
Martin O. Moad
Vice President and Treasurer
(Authorized Officer)
RADIOSHACK CORPORATION
INDEX TO EXHIBITS
Exhibit
Number Description
3a Certificate of Amendment of Restated Certificate of Incorporation
dated May 18, 2000 (filed as Exhibit 3a to RadioShack's Form 10-Q
filed on August 11, 2000 for the fiscal quarter ended June 30,
2000).
3a(i) Restated Certificate of Incorporation of RadioShack Corporation
dated July 26, 1999 (filed as Exhibit 3a(i) to RadioShack's
Form 10-Q filed on August 11, 1999 for the fiscal quarter ended
June 30, 1999).
3b RadioShack Corporation Bylaws, amended and restated as of
October 17, 2003 (filed as Exhibit 3b to RadioShack's Form 10-Q
filed on November 12, 2003 for the fiscal quarter ended
September 30, 2003).
10(a)* Five Year Credit Agreement dated as of June 16, 2004 among
RadioShack Corporation, Citibank, N.A., as Administrative Agent,
Paying Agent and Lender, Bank of America, N.A. as Administrative
Agent, Initial Issuing Bank and Lender, Wachovia Bank, National
Association as Co-Syndication Agent, Initial Issuing Bank and
Lender, Keybank National Association and Suntrust Bank, as
Co-Syndication Agents and Lenders, Citigroup Global Markets Inc.
and Bank of America Securities, LLC as Joint Lead Arrangers and
Bookrunners.
10(b) RadioShack Corporation 2004 Deferred Stock Unit Plan for
Non-Employee Directors (filed as Appendix B to RadioShack's Proxy
Statement filed on April 8, 2004 for the 2004 Annual Meeting
of Stockholders and incorporated herein by reference).
10(c) RadioShack 2004 Annual and Long-Term Incentive Compensation Plan
(the written description of which is contained on pages 26 through
29 of RadioShack's Proxy Statement filed on April 8, 2004 for the
2004 Annual Meeting of Stockholders and is incorporated herein by
reference).
10(d)* RadioShack Investment Plan.
31(a)* Rule 13a-14(a) Certification of the Chief Executive Officer of
RadioShack Corporation.
31(b)* Rule 13a-14(a) Certification of the Acting Chief Financial Officer
of RadioShack Corporation.
32* Section 1350 Certifications.**
----------------------------
* Filed with this report
** These Certifications shall not be deemed "filed" for purposes of
Section 18 of the Exchange Act, as amended, or otherwise subject to the
liability of that section. These Certifications shall not be deemed to
be incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except to the extent that the
Company specifically incorporates them by reference.
EXHIBIT 10(a)
FIVE YEAR CREDIT AGREEMENT
Dated as of June 16, 2004
RADIOSHACK CORPORATION, a Delaware corporation (the "Borrower"),
the banks, financial institutions and other institutional lenders (the "Initial
Lenders")and issuers of letters of credit (the "Initial Issuing Banks") listed
on the signature pages hereof, BANK OF AMERICA, N.A., as administrative agent,
WACHOVIA BANK, NATIONAL ASSOCIATION, KEYBANK NATIONAL ASSOCIATION and SUNTRUST
BANK, as co-syndication agents, CITIGROUP GLOBAL MARKETS INC. and BANC OF
AMERICA SECURITIES LLC, as joint lead arrangers and bookrunners, and CITIBANK,
N.A. ("Citibank"), as administrative agent and as paying agent (the "Agent") for
the Lenders (as hereinafter defined), agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Advance" means a Revolving Credit Advance or a Competitive Bid
Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under
common control with such Person or is a director or officer of
such Person. For purposes of this definition, the term "control"
(including the terms "controlling", "controlled by" and "under common
control with") of a Person means the possession, direct or indirect, of
the power to vote 5% or more of the Voting Stock of such Person or to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Stock, by contract or
otherwise.
"Agent's Account" means the account of the Agent maintained by
the Agent at Citibank at its office at 388 Greenwich Street, New York,
New York 10013, Account No. 36852248, Attention: Bank Loan Syndications.
"Applicable Lending Office" means, with respect to each Lender,
such Lender's Domestic Lending Office in the case of a Base Rate Advance
and such Lender's Eurodollar Lending Office in the case of a Eurodollar
Rate Advance and, in the case of a Competitive Bid Advance, the office
of such Lender notified by such Lender to the Agent as its Applicable
Lending Office with respect to such Competitive Bid Advance.
"Applicable Margin" means (a) for Base Rate Advances, 0% per annum
and (b) for Eurodollar Rate Advances, as of any date, a percentage per
annum determined by reference to the Borrower's Rating Level in effect
on such date as set forth below:
-------------------------- --------------------------
Rating Level Applicable Margin for
Eurodollar Rate Advances
-------------------------- --------------------------
Level 1
A/A2/A or above 0.195%
-------------------------- --------------------------
Level 2
A-/A3/A- 0.300%
-------------------------- --------------------------
Level 3
BBB+/Baa1/BBB+ 0.500%
-------------------------- --------------------------
Level 4
BBB/Baa2/BBB 0.600%
-------------------------- --------------------------
Level 5
Lower than Level 4 0.800%
-------------------------- --------------------------
"Applicable Percentage" means, as of any date a percentage per
annum determined by reference to the Borrower's Rating Level in effect
on such date as set forth below:
-------------------------- --------------------------
Rating Level Applicable
Percentage
-------------------------- --------------------------
Level 1
A/A2/A or above 0.080%
-------------------------- --------------------------
Level 2
A-/A3/A- 0.100%
-------------------------- --------------------------
Level 3
BBB+/Baa1/BBB+ 0.125%
-------------------------- --------------------------
Level 4
BBB/Baa2/BBB 0.150%
-------------------------- --------------------------
Level 5
Lower than Level 4 0.200%
-------------------------- --------------------------
"Applicable Utilization Fee" means, as of any date that the sum of
the aggregate Advances plus the Available Amount of all Letters of
Credit exceeds 50% of the aggregate Revolving Credit Commitments, a
percentage per annum determined by reference to the Borrower's Rating
Level in effect on such date as set forth below:
-------------------------- --------------------------
Rating Level Applicable
Utilization Fee
-------------------------- --------------------------
Level 1
A/A2/A or above 0.050%
-------------------------- --------------------------
Level 2
A-/A3/A- 0.100%
-------------------------- --------------------------
Level 3
BBB+/Baa1/BBB+ 0.125%
-------------------------- --------------------------
Level 4
BBB/Baa2/BBB 0.125%
-------------------------- --------------------------
Level 5
Lower than Level 4 0.250%
-------------------------- --------------------------
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit C hereto.
"Assuming Lender" has the meaning specified in Section 2.19(c).
"Assumption Agreement" has the meaning specified in Section
2.19(c).
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to
the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is
no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of
1% per annum, plus (ii) the rate obtained by dividing (A) the
latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week
moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business
Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published
by the Federal Reserve Bank of New York or, if such publication
shall be suspended or terminated, on the basis of quotations for
such rates received by Citibank from three New York certificate of
deposit dealers of recognized standing selected by Citibank, by
(B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank with respect to liabilities consisting of
or including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment
rates estimated by Citibank for determining the then current annual
assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring U.S. dollar deposits of
Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Credit Advance that bears
interest as provided in Section 2.08(a)(i).
"Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances or LIBO
Rate Advances, on which dealings are carried on in the London interbank
market.
"Capital Lease" means any lease required to be accounted for as a
capital lease.
"Commitment" means a Revolving Credit Commitment or a Letter of
Credit Commitment.
"Competitive Bid Advance" means an advance by a Lender to the
Borrower as part of a Competitive Bid Borrowing resulting from the
competitive bidding procedure described in Section 2.03 and refers to a
Fixed Rate Advance or a LIBO Rate Advance.
"Competitive Bid Borrowing" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose
offer to make one or more Competitive Bid Advances as part of such
borrowing has been accepted under the competitive bidding procedure
described in Section 2.03.
"Competitive Bid Note" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of
Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such
Lender resulting from a Competitive Bid Advance made by such Lender.
"Confidential Information" means information that the Borrower
furnishes to the Agent or any Lender in a writing designated as
confidential, but does not include any such information that is or
becomes generally available to the public or that is or becomes
available to the Agent or such Lender from a source other than the
Borrower.
"Consenting Lender" has the meaning specified in Section 2.19(b).
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Consolidated EBITDA" means, for any period, for the Borrower
and its Subsidiaries, calculated on a Consolidated basis, the sum of
(without duplication) the following: (a) Pretax Net Income (excluding
therefrom, to the extent included in determining Pretax Net Income, any
items of extraordinary gain, including net gains on the sale of assets
other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any
items of extraordinary loss, including net losses on the sale of assets
other than asset sales in the ordinary course of business), plus (b) to
the extent included in determining Pretax Net Income, interest expense
(including interest expense in respect of Capital Leases), plus (c) to
the extent included in determining Pretax Net Income, depreciation and
amortization and other non-cash charges, minus (d) to the extent
included in determining Pretax Net Income, non-cash credits.
"Consolidated EBITDAR" means, for any period, for the Borrower
and its Subsidiaries, calculated on a Consolidated basis, the sum of
(without duplication) the following: (a) Consolidated EBITDA plus (b)
to the extent included in determining Pretax Net Income, rental expense
(including rental expense in respect of Capital Leases).
"Consolidated Funded Debt" means, at any date, for the Borrower and
its Subsidiaries on a Consolidated basis, Debt of the types described
in clauses (a), (b), (c) and (e) of the definition of "Debt".
"Consolidated Tangible Net Worth" means, at any time, the total
Consolidated stockholders' equity less the total amount of Consolidated
intangible assets and plus the total amount of any subordinated
indebtedness unless already included in stockholders' equity, in each
case calculated for the Borrower and its Subsidiaries taken as a whole.
Intangible assets shall include unamortized debt discount and expense,
unamortized deferred charges and goodwill.
"Convert", "Conversion" and "Converted" each refers to a
conversion of Revolving Credit Advances of one Type into Revolving
Credit Advances of the other Type pursuant to Section 2.09 or 2.10.
"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services
(other than trade payables not overdue by more than 60 days incurred in
the ordinary course of such Person's business), (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under Capital Leases, (f) all
obligations, contingent or otherwise, of such Person in respect of
acceptances, letters of credit or similar extensions of credit, (g) all
obligations of such Person in respect of Hedge Agreements, (h) all Debt
of others referred to in clauses (a) through (g) above or clause (i)
below and other payment obligations guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (1) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of
such Debt, (2) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (3) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received
or such services are rendered) or (4) otherwise to assure a creditor
against loss, and (i) all Debt referred to in clauses (a) through (h)
above secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable
for the payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assumption Agreement
or the Assignment and Acceptance pursuant to which it became a Lender,
or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Effective Date" has the meaning specified in Section 3.01.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 8.07, the Borrower,
such approval not to be unreasonably withheld or delayed; provided,
however, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law, Environmental Permit or Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response,
remedial or other actions or damages and (b) by any governmental or
regulatory authority or any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment,
decree or judicial or agency interpretation, policy or guidance
relating to pollution or protection of the environment, health, safety
or natural resources, including, without limitation, those relating to
the use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC, or (ii) the requirements of subsection (1)of
Section 4043(b) of ERISA (without regard to subsection (2) of such
Section) are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver
with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (d) the cessation
of operations at a facility of the Borrower or any ERISA Affiliate in
the circumstances described in Section 4062(e) of ERISA; (e) the
withdrawal by the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
for the imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to
a Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA
that constitutes grounds for the termination of, or the appointment of
a trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assumption Agreement
or the Assignment and Acceptance pursuant to which it became a Lender
(or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Revolving Credit
Borrowing, an interest rate per annum equal to the rate per annum
obtained by dividing (a) the rate per annum (rounded upward to the
nearest whole multiple of 1/16 of 1% per annum) appearing on Telerate
Markets Page 3750 (or any successor page) as the London interbank
offered rate for deposits in U.S. dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period or, if for any
reason such rate is not available, the average (rounded upward to the
nearest whole multiple of 1/16 of 1% per annum, if such average is not
such a multiple) of the rate per annum at which deposits in U.S.
dollars are offered by the principal office of each of the Reference
Banks in London, England to prime banks in the London interbank market
at 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to such Reference
Bank's Eurodollar Rate Advance comprising part of such Revolving Credit
Borrowing to be outstanding during such Interest Period and for a
period equal to such Interest Period by (b) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period.
If the Telerate Markets Page 3750 (or any successor page) is
unavailable, the Eurodollar Rate for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Revolving Credit
Borrowing shall be determined by the Agent on the basis of applicable
rates furnished to and received by the Agent from the Reference Banks
two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.09.
"Eurodollar Rate Advance" means a Revolving Credit Advance that
bears interest as provided in Section 2.08(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period
for all Eurodollar Rate Advances or LIBO Rate Advances comprising part
of the same Borrowing means the reserve percentage applicable two
Business Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurodollar
Rate Advances or LIBO Rate Advances is determined) having a term equal
to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Extension Date" has the meaning specified in Section 2.19(b).
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fitch" means Fitch, Inc.
"Fixed Rate Advances" has the meaning specified in Section
2.03(a)(i).
"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Information Memorandum" means the information memorandum dated
May 13, 2004 used by the Agent in connection with the syndication
of the Commitments.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Revolving Credit Borrowing and each LIBO
Rate Advance comprising part of the same Competitive Bid Borrowing, the
period commencing on the date of such Eurodollar Rate Advance or LIBO
Rate Advance or the date of the Conversion of any Base Rate Advance
into such Eurodollar Rate Advance and ending on the last day of the
period selected by the Borrower pursuant to the provisions below and,
thereafter, with respect to Eurodollar Rate Advances, each subsequent
period commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be one, two, three or six months, and subject to
clause (c) of this definition, nine or twelve months, as the Borrower
may, upon notice received by the Agent not later than 12:00 noon (New
York City time) on the third Business Day prior to the first day of
such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period that ends
after the Termination Date;
(b) Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Revolving Credit
Borrowing or for LIBO Rate Advances comprising part of the same
Competitive Bid Borrowing shall be of the same duration;
(c) in the case of any such Revolving Credit Borrowing, the
Borrower shall not be entitled to select an Interest Period having
duration of nine or twelve months unless, by 2:00 P.M. (New York
City time) on the third Business Day prior to the first day of such
Interest Period, each Lender notifies the Agent that such Lender
will be providing funding for such Revolving Credit Borrowing with
such Interest Period (the failure of any Lender to so respond by
such time being deemed for all purposes of this Agreement as an
objection by such Lender to the requested duration of such Interest
Period); provided that, if any or all of the Lenders object to the
requested duration of such Interest Period, the duration of the
Interest Period for such Revolving Credit Borrowing shall be one,
two, three or six months, as specified by the Borrower in the
applicable Notice of Revolving Credit Borrowing as the desired
alternative to an Interest Period of nine or twelve months;
(d) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(e) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of
months in such Interest Period, such Interest Period shall end on
the last Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Issuing Bank" means each Initial Issuing Bank or any Eligible
Assignee to which a portion of the Letter of Credit Commitment
hereunder has been assigned pursuant to Section 8.07 so long as such
Eligible Assignee expressly agrees to perform in accordance with their
terms all of the obligations that by the terms of this Agreement are
required to be performed by it as an Issuing Bank and notifies the
Agent of its Applicable Lending Office (which information shall be
recorded by the Agent in the Register), for so long as such Initial
Issuing Bank or Eligible Assignee, as the case may be, shall have a
Letter of Credit Commitment.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities or all or
substantially all of the assets of such Person, any capital
contribution to such Person or any other investment in such Person,
including, without limitation, any arrangement pursuant to which the
investor incurs Debt of the types referred to in clauses (h) and (i) of
the definition of "Debt" in respect of such Person.
"L/C Cash Collateral Account" means an interest bearing cash
collateral account to be established and maintained by the Agent, over
which the Agent shall have sole dominion and control, upon terms as may
be satisfactory to the Agent.
"L/C Related Documents" has the meaning specified in Section
2.08(b)(i).
"Lenders" means the Initial Lenders, the Issuing Banks, each
Assuming Lender that shall become a party hereto pursuant to Section
2.19 and each Person that shall become a party hereto pursuant to
Section 8.07.
"Letter of Credit" has the meaning specified in Section 2.01(b).
"Letter of Credit Agreement" has the meaning specified in Section
2.04(a).
"Letter of Credit Commitment" means, with respect to each Initial
Issuing Bank, the amount set forth opposite such Initial Issuing Bank's
name on the signature pages hereto under the caption "Letter of Credit
Commitment" or, if such Initial Issuing Bank has entered into one or
more Assignment and Acceptances, the amount set forth for such Issuing
Bank in the Register maintained by the Agent pursuant to Section 8.07(d)
as such Issuing Bank's "Letter of Credit Commitment", as such amount may
be reduced at or prior to such time pursuant to Section 2.07.
"Letter of Credit Facility" means, at any time, an amount equal to
the lesser of (a) the amount of the Issuing Banks' Letter of Credit
Commitments at such time and (b) $100,000,000, as such amount may be
reduced at or prior to such time pursuant to Section 2.07.
"LIBO Rate" means, for any Interest Period for all LIBO Rate
Advances comprising part of the same Competitive Bid Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum) appearing on Telerate Markets Page
3750 (or any successor page) as the London interbank offered rate for
deposits in U.S. dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period or, if for any reason such rate is
not available, the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in U.S. dollars
offered by the principal office of each of the Reference Banks in
London, England to prime banks in the London interbank market at 11:00
A.M. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to the amount that
would be the Reference Banks' respective ratable shares of such
Borrowing if such Borrowing were to be a Revolving Credit Borrowing to
be outstanding during such Interest Period and for a period equal to
such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period. If the
Telerate Markets Page 3750 (or any successor page) is unavailable, the
LIBO Rate for any Interest Period for each LIBO Rate Advance comprising
part of the same Competitive Bid Borrowing shall be determined by the
Agent on the basis of applicable rates furnished to and received by the
Agent from the Reference Banks two Business Days before the first day
of such Interest Period, subject, however, to the provisions of Section
2.09.
"LIBO Rate Advance" means a Competitive Bid Advance bearing
interest based on the LIBO Rate.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
"Marketable Securities" means any of the following, to the extent
owned by the Borrower or any of its Subsidiaries free and clear of all
Liens and having a maturity of not greater than 360 days from the date
of acquisition thereof: (a) readily marketable direct obligations of the
Government of the United States or any agency or instrumentality
thereof or obligations unconditionally guaranteed by the full faith and
credit of the Government of the United States, (b) certificates of
deposit of or time deposits with any commercial bank that is a Lender or
a member of the Federal Reserve System, issues (or the parent of which
issues) commercial paper rated as described in clause (c), is organized
or licensed under the laws of the United States or any State thereof and
has combined capital and surplus of at least $1 billion, (c) commercial
paper in an aggregate amount of no more than $10,000,000 per issuer
outstanding at any time, issued by any corporation organized under the
laws of any State of the United States and rated at least "Prime-1" (or
the then equivalent grade) by Moody's, "A-1" (or the then equivalent
grade) by S&P or F-1 (or the then equivalent grade) by Fitch, (d) money
market mutual funds with a minimum of $500,000,000 net asset value rated
at least Aaa by Moody's, AAA by S&P or AAA by Fitch, (e) readily
marketable direct obligations of Federal National Mortgage Association,
Federal Home Loan Mortgage Corporation and Student Loan Marketing
Association, which have an implied backing of the Government of the
United States, or (f) asset backed obligations or certificates of
interest in such asset backed obligations, rated at least Aaa by
Moody's, AAA by S&P or AAA by Fitch, issued by states, counties and
municipalities, with a maturity not to exceed 180 days and with not more
than $15,000,000 in any one issuer.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole, (b) the rights and remedies of
the Agent or any Lender under this Agreement or any Note or (c) the
ability of the Borrower to perform its obligations under this Agreement
or any Note.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Borrower or any ERISA Affiliate and at least one
Person other than the Borrower and the ERISA Affiliates or (b) was so
maintained and in respect of which the Borrower or any ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"Non-Consenting Lender" has the meaning specified in Section
2.19(b).
"Note" means a Revolving Credit Note or a Competitive Bid Note.
"Notice of Competitive Bid Borrowing" has the meaning specified in
Section 2.03(a).
"Notice of Revolving Credit Borrowing" has the meaning specified in
Section 2.02(a).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) Liens for taxes, assessments and
governmental charges or levies to the extent not required to be paid
under Section 5.01(b) hereof; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 90
days; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations; and (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pretax Net Income" means, for any period, net income (or loss)
before taxes of the Borrower and its Subsidiaries, on a Consolidated
basis for such period taken as a single accounting period, excluding,
however, net income (or loss) attributable to any Person (other than the
Borrower or any of its Subsidiaries) in which the Borrower or any of its
Subsidiaries has a minority interest, except to the extent of the amount
of cash dividends or other cash distributions actually paid to the
Borrower or such Subsidiary by such other Person.
"Pro Rata Share" of any amount means, with respect to any Lender at
any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Revolving Credit Commitment at such
time (or, if the Revolving Credit Commitments shall have been terminated
pursuant to Section 2.07 or 6.01, such Lender's Revolving Credit
Commitment as in effect immediately prior to such termination) and the
denominator of which is the aggregate amount of all Revolving Credit
Commitments at such time (or, if the Revolving Credit Commitments shall
have been terminated pursuant to Section 2.07 or 6.01, the aggregate
amount of all Revolving Credit Commitments as in effect immediately
prior to such termination).
"Public Debt Rating" means, as of any date, the rating that has
been most recently announced by either S&P, Moody's or Fitch, as the
case may be, for any class of non-credit enhanced long-term senior
unsecured debt issued by the Borrower or, if any such rating agency
shall have issued more than one such rating, the lowest such rating
issued by such rating agency. For purposes of the foregoing, (a) if
only one of S&P, Moody's or Fitch shall have in effect a Public Debt
Rating, the Applicable Margin, the Applicable Percentage and the
Applicable Utilization Fee shall be determined by reference to the
available rating; (b) if none of S&P, Moody's or Fitch shall have in
effect a Public Debt Rating, the Applicable Margin, the Applicable
Percentage and the Applicable Utilization Fee will be set in accordance
with Level 5 under the definition of "Applicable Margin", "Applicable
Percentage" or "Applicable Utilization Fee", as the case may be; (c) if
only two of S&P, Moody's or Fitch shall have in effect a Public Debt
Rating, the Applicable Margin, the Applicable Percentage and the
Applicable Utilization Fee shall be determined by reference to the
higher rating unless such ratings differ by two or more levels, in
which case the applicable level will be deemed to be one level below
the higher of such levels, (d) if the ratings established by S&P,
Moody's and Fitch shall fall within different levels, and two of the
three are within the same level, the Applicable Margin, the Applicable
Percentage and the Applicable Utilization Fee shall be based upon the
rating of those two such agencies and if the ratings of no two agencies
fall within the same level, the rating of the agency that is neither
the highest nor the lowest shall apply and the Applicable, Margin, the
Applicable Percentage and the Applicable Utilization Fee shall be based
upon the rating of that agency; (e) if any rating established by S&P,
Moody's or Fitch shall be changed, such change shall be effective as of
the date on which such change is first announced publicly by the rating
agency making such change; and (f) if S&P, Moody's or Fitch shall
change the basis on which ratings are established, each reference to
the Public Debt Rating announced by S&P, Moody's or Fitch, as the case
may be, shall refer to the then equivalent rating by S&P, Moody's or
Fitch, as the case may be.
"Rating Level" means, as of any date of determination, the
numerically lowest level set forth below as then in effect, as
determined in accordance with the following provisions of this
definition:
Level 1 The Public Debt Rating is A, A2 or A or better by two of S&P,
Moody's and Fitch, respectively;
Level 2 The Public Debt Rating is A-, A3 or A- by two of S&P, Moody's
and Fitch, respectively;
Level 3 The Public Debt Rating is BBB+, Baa1 or BBB+ by two of S&P,
Moody's and Fitch, respectively;
Level 4 The Public Debt Rating is BBB, Baa2 or BBB by two of S&P,
Moody's and Fitch, respectively;
Level 5 The Public Debt Rating is lower than Level 4.
"Reference Banks" means Citibank, Bank of America, N.A. and
Wachovia Bank, National Association.
"Register" has the meaning specified in Section 8.07(d).
"Required Lenders" means at any time Lenders owed at least a
majority in interest of the then aggregate unpaid principal amount of
the Revolving Credit Advances owing to Lenders or, if no such principal
amount is then outstanding, Lenders having at least a majority in
interest of the Revolving Credit Commitments.
"Revolving Credit Advance" means an advance by a Lender to the
Borrower as part of a Revolving Credit Borrowing and refers to a Base
Rate Advance or a Eurodollar Rate Advance (each of which shall be a
"Type" of Revolving Credit Advance).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of
the Lenders pursuant to Section 2.01.
"Revolving Credit Commitment" means, with respect to any Lender at
any time, the amount set forth opposite such Lender's name on the
signature pages hereto under the caption "Revolving Credit Commitment"
or, if such Lender has entered into one or more Assignment and
Acceptances, set forth for such Lender in the Register maintained by the
Agent pursuant to Section 8.07(d) as such Lender's "Revolving Credit
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.06.
"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of any Lender, delivered pursuant to a request made
under Section 2.17 in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
the Borrower or any ERISA Affiliate and no Person other than the
Borrower and the ERISA Affiliates or (b) was so maintained and in
respect of which the Borrower or any ERISA Affiliate could have
liability under Section 4069 of ERISA in the event such plan has been or
were to be terminated.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such limited liability
company, partnership or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Termination Date" means the earlier of (a) June 16, 2009,
subject to the extension thereof pursuant to Section 2.19 and (b) the
date of termination in whole of the Commitments pursuant to Section
2.06 or 6.01; provided, however, that the Termination Date of any
Lender that is a Non-Consenting Lender to any requested extension
pursuant to Section 2.19 shall be the Termination Date in effect
immediately prior to the applicable Extension Date for all purposes of
this Agreement.
"Unused Commitment" means, with respect to each Lender at any
time, (a) such Lender's Revolving Credit Commitment at such time minus
(b) the sum of (i) the aggregate principal amount of all Revolving
Credit Advances made by such Lender (in its capacity as a Lender) and
outstanding at such time, plus (ii) such Lender's Pro Rata Share of (A)
the aggregate Available Amount of all the Letters of Credit outstanding
at such time, (B) the aggregate principal amount of all Revolving
Credit Advances made by each Issuing Bank pursuant to Section 2.04(c)
that have not been ratably funded by such Lender and outstanding at
such time and (C) the aggregate principal amount of Competitive Bid
Advances then outstanding.
"Usage" means, at any time the sum of the aggregate principal
amount of the Advances then outstanding plus the Available Amount of
the outstanding Letters of Credit.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the
happening of such a contingency.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Credit Advances and Letters of Credit.
(a) Revolving Credit Advances. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Revolving Credit Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate amount not to exceed
at any time such Lender's Unused Commitment at such time. Each Revolving Credit
Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances
of the same Type made on the same day by the Lenders ratably according to their
respective Revolving Credit Commitments. Within the limits of each Lender's
Revolving Credit Commitment, the Borrower may borrow under this Section 2.01,
prepay pursuant to Section 2.11 and reborrow under this Section 2.01.
(b) Letters of Credit. Each Issuing Bank agrees, on the terms and
conditions hereinafter set forth, in reliance upon the agreements of the other
Lenders set forth in this Agreement, to issue letters of credit (each, a "Letter
of Credit") for the account of the Borrower from time to time on any Business
Day during the period from the Effective Date until 30 days before the
Termination Date in an aggregate Available Amount (i) for all Letters of Credit
issued by each Issuing Bank not to exceed at any time the lesser of (x) the
Letter of Credit Facility at such time and (y) such Issuing Bank's Letter of
Credit Commitment at such time and (ii) for each such Letter of Credit not to
exceed an amount equal to the Unused Commitments of the Lenders at such time. No
Letter of Credit shall have an expiration date (including all rights of the
Borrower or the beneficiary to require renewal) later than 10 Business Days
before the Termination Date. Within the limits referred to above, the Borrower
may request the issuance of Letters of Credit under this Section 2.01(b), repay
any Revolving Credit Advances resulting from drawings thereunder pursuant to
Section 2.04(c) and request the issuance of additional Letters of Credit under
this Section 2.01(b).
SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Revolving Credit Borrowing shall be made on notice, given not later than (x)
12:00 noon (New York City time) on the third Business Day prior to the date of
the proposed Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing consisting of Eurodollar Rate Advances or (y) 12:00 noon (New York
City time) on the date of the proposed Revolving Credit Borrowing in the case of
a Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower
to the Agent, which shall give to each Lender prompt notice thereof by
telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice
of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in
writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto,
specifying therein the requested (i) date of such Revolving Credit Borrowing,
(ii) Type of Advances comprising such Revolving Credit Borrowing, (iii)
aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall,
before 1:00 P.M. (New York City time) on the date of such Revolving Credit
Borrowing make available for the account of its Applicable Lending Office to the
Agent at the Agent's Account, in same day funds, such Lender's ratable portion
of such Revolving Credit Borrowing. After the Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in Article III, the
Agent will make such funds available to the Borrower at the Agent's address
referred to in Section 8.02.
(b) Anything in subsection (a) above to the contrary
notwithstanding, the Borrower may not select Eurodollar Rate Advances for any
Revolving Credit Borrowing if the aggregate amount of such Revolving Credit
Borrowing is less than $5,000,000 or if the obligation of the Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or
2.13.
(c) Each Notice of Revolving Credit Borrowing shall be
irrevocable and binding on the Borrower. In the case of any Revolving Credit
Borrowing that the related Notice of Revolving Credit Borrowing specifies is to
be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in such Notice of
Revolving Credit Borrowing for such Revolving Credit Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Revolving Credit
Advance to be made by such Lender as part of such Revolving Credit Borrowing
when such Revolving Credit Advance, as a result of such failure, is not made on
such date. The loss of a Lender shall include an amount equal to the excess, if
any, as reasonably determined by such Lender of (A) its cost of obtaining funds
for the Revolving Credit Advance not borrowed, to the last day of the Interest
Period for such Revolving Credit Advance which would have commenced on the date
of such failure to borrow over (B) the amount of interest (as reasonably
determined by such Lender) that could be realized by such Lender in reemploying
during such period the funds not borrowed.
(d) Unless the Agent shall have received notice from a Lender
prior to the time of any Revolving Credit Borrowing that such Lender will not
make available to the Agent such Lender's ratable portion of such Revolving
Credit Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date of such Revolving Credit Borrowing in
accordance with subsection (a) of this Section 2.02 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Agent, such Lender and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Revolving Credit Advances comprising such Revolving Credit Borrowing and
(ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Revolving Credit Advance as part of such Revolving
Credit Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the Revolving Credit
Advance to be made by it as part of any Revolving Credit Borrowing shall not
relieve any other Lender of its obligation hereunder to make its Revolving
Credit Advance on the date of such Revolving Credit Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Revolving
Credit Advance to be made by such other Lender on the date of any Revolving
Credit Borrowing.
SECTION 2.03. The Competitive Bid Advances. (a) Each Lender
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Termination Date
in the manner set forth below; provided that, following the making of each
Competitive Bid Borrowing, the Usage shall not exceed the aggregate amount of
the Revolving Credit Commitments of the Lenders.
(i) The Borrower may request a Competitive Bid Borrowing under
this Section 2.03 by delivering to the Agent, by telecopier or telex, a
notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid
Borrowing"), in substantially the form of Exhibit B-2 hereto,
specifying therein the requested (v) date of such proposed Competitive
Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid
Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of
LIBO Rate Advances, Interest Period, or in the case of a Competitive
Bid Borrowing consisting of Fixed Rate Advances, maturity date for
repayment of each Fixed Rate Advance to be made as part of such
Competitive Bid Borrowing (which maturity date may not be earlier than
the date occurring 7 days after the date of such Competitive Bid
Borrowing or later than the earlier of (I) 180 days after the date of
such Competitive Bid Borrowing and (II) the Termination Date), (y)
interest payment date or dates relating thereto, and (z) other terms
(if any) to be applicable to such Competitive Bid Borrowing, not later
than 11:00 A.M. (New York City time) (A) at least one Business Day
prior to the date of the proposed Competitive Bid Borrowing, if the
Borrower shall specify in the Notice of Competitive Bid Borrowing that
the rates of interest to be offered by the Lenders shall be fixed rates
per annum (the Advances comprising any such Competitive Bid Borrowing
being referred to herein as "Fixed Rate Advances") and (B) at least
four Business Days prior to the date of the proposed Competitive Bid
Borrowing, if the Borrower shall instead specify in the Notice of
Competitive Bid Borrowing that the Advances comprising such Competitive
Bid Borrowing shall be LIBO Rate Advances. Each Notice of Competitive
Bid Borrowing shall be irrevocable and binding on the Borrower. The
Agent shall in turn promptly notify each Lender of each request for a
Competitive Bid Borrowing received by it from the Borrower by sending
such Lender a copy of the related Notice of Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more Competitive Bid Advances
to the Borrower as part of such proposed Competitive Bid Borrowing at a
rate or rates of interest specified by such Lender in its sole
discretion, by notifying the Agent (which shall give prompt notice
thereof to the Borrower), (A) before 10:30 A.M. (New York City time) on
the date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of Fixed Rate Advances and (B)
before 11:00 A.M. (New York City time) three Business Days before the
date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of LIBO Rate Advances, of the
minimum amount and maximum amount of each Competitive Bid Advance which
such Lender would be willing to make as part of such proposed
Competitive Bid Borrowing (which amounts may, subject to the proviso to
the first sentence of this Section 2.03(a), exceed such Lender's
Commitment), the rate or rates of interest therefor and such Lender's
Applicable Lending Office with respect to such Competitive Bid Advance;
provided that if the Agent in its capacity as a Lender shall, in its
sole discretion, elect to make any such offer, it shall notify the
Borrower of such offer at least 30 minutes before the time and on the
date on which notice of such election is to be given to the Agent, by
the other Lenders. If any Lender shall elect not to make such an offer,
such Lender shall so notify the Agent before 11:00 A.M. (New York City
time) on the date on which notice of such election is to be given to
the Agent by the other Lenders, and such Lender shall not be obligated
to, and shall not, make any Competitive Bid Advance as part of such
Competitive Bid Borrowing; provided that the failure by any Lender to
give such notice shall not cause such Lender to be obligated to make
any Competitive Bid Advance as part of such proposed Competitive Bid
Borrowing.
(iii) The Borrower shall, in turn, (A) before 11:30 A.M. (New
York City time) on the date of such proposed Competitive Bid Borrowing,
in the case of a Competitive Bid Borrowing consisting of Fixed Rate
Advances and (B) before 12:00 noon (New York City time) three Business
Days before the date of such proposed Competitive Bid Borrowing, in the
case of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
either:
(x) cancel such Competitive Bid Borrowing by giving the
Agent notice to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion,
by giving notice to the Agent of the amount of each Competitive Bid
Advance (which amount shall be equal to or greater than the minimum
amount, and equal to or less than the maximum amount, notified to
the Borrower by the Agent on behalf of such Lender for such
Competitive Bid Advance pursuant to paragraph (ii) above) to be
made by each Lender as part of such Competitive Bid Borrowing, and
reject any remaining offers made by Lenders pursuant to paragraph
(ii) above by giving the Agent notice to that effect. The Borrower
shall accept the offers made by any Lender or Lenders to make
Competitive Bid Advances in order of the lowest to the highest
rates of interest offered by such Lenders. If two or more Lenders
have offered the same interest rate, the amount to be borrowed at
such interest rate will be allocated among such Lenders in
proportion to the amount that each such Lender offered at such
interest rate.
(iv) If the Borrower notifies the Agent that such Competitive
Bid Borrowing is cancelled pursuant to paragraph (iii)(x) above, the
Agent shall give prompt notice thereof to the Lenders and such
Competitive Bid Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent
shall in turn promptly notify (A) each Lender that has made an offer as
described in paragraph (ii) above, of the date and aggregate amount of
such Competitive Bid Borrowing and whether or not any offer or offers
made by such Lender pursuant to paragraph (ii) above have been accepted
by the Borrower, (B) each Lender that is to make a Competitive Bid
Advance as part of such Competitive Bid Borrowing, of the amount of
each Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing, and (C) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, upon
receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III. Each Lender
that is to make a Competitive Bid Advance as part of such Competitive
Bid Borrowing shall, before 1:00 P.M. (New York City time) on the date
of such Competitive Bid Borrowing specified in the notice received from
the Agent pursuant to clause (A) of the preceding sentence or any later
time when such Lender shall have received notice from the Agent
pursuant to clause (C) of the preceding sentence, make available for
the account of its Applicable Lending Office to the Agent at the
Agent's Account, in same day funds, such Lender's portion of such
Competitive Bid Borrowing. Upon fulfillment of the applicable
conditions set forth in Article III and after receipt by the Agent of
such funds, the Agent will make such funds available to the Borrower at
the Agent's address referred to in Section 8.02. Promptly after each
Competitive Bid Borrowing the Agent will notify each Lender of the
amount of the Competitive Bid Borrowing and the dates upon which such
Competitive Bid Borrowing commenced and will terminate.
(vi) If the Borrower notifies the Agent that it accepts one or
more of the offers made by any Lender or Lenders pursuant to paragraph
(iii)(y) above, such notice of acceptance shall be irrevocable and
binding on the Borrower. The Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result
of any failure to fulfill on or before the date specified in the
related Notice of Competitive Bid Borrowing for such Competitive Bid
Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Competitive Bid Advance to be made
by such Lender as part of such Competitive Bid Borrowing when such
Competitive Bid Advance, as a result of such failure, is not made on
such date. The loss of a Lender shall include an amount equal to the
excess, if any, as reasonably determined by such Lender of (A) its cost
of obtaining funds for the Competitive Bid Advance not borrowed, to the
last day of the Interest Period for such Competitive Bid Advance which
would have commenced on the date of such failure to borrow over (B) the
amount of interest (as reasonably determined by such Lender) that could
be realized by such Lender in reemploying during such period the funds
not borrowed.
(b) Each Competitive Bid Borrowing shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrower shall
be in compliance with the limitation set forth in the proviso to the first
sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this
Section 2.03, the Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (d) below, and reborrow under this
Section 2.03, provided that a Competitive Bid Borrowing shall not be made within
three Business Days of the date of any other Competitive Bid Borrowing.
(d) The Borrower shall repay to the Agent for the account of
each Lender that has made a Competitive Bid Advance, on the maturity date of
each Competitive Bid Advance (such maturity date being that specified by the
Borrower for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and
provided in the Competitive Bid Note evidencing such Competitive Bid Advance),
the then unpaid principal amount of such Competitive Bid Advance. The Borrower
shall have no right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by the Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Advance.
(e) The Borrower shall pay interest on the unpaid principal
amount of each Competitive Bid Advance from the date of such Competitive Bid
Advance to the date the principal amount of such Competitive Bid Advance is
repaid in full, at the rate of interest for such Competitive Bid Advance
specified by the Lender making such Competitive Bid Advance in its notice with
respect thereto delivered pursuant to subsection (a)(ii) above, payable on the
interest payment date or dates specified by the Borrower for such Competitive
Bid Advance in the related Notice of Competitive Bid Borrowing delivered
pursuant to subsection (a)(i) above, as provided in the Competitive Bid Note
evidencing such Competitive Bid Advance. Upon the occurrence and during the
continuance of an Event of Default under Section 6.01(a), the Borrower shall pay
interest on the amount of unpaid principal of and interest on each Competitive
Bid Advance owing to a Lender, payable in arrears on the date or dates interest
is payable thereon, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on such Competitive Bid Advance under the
terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless
otherwise agreed in such Competitive Bid Note.
(f) The indebtedness of the Borrower resulting from each
Competitive Bid Advance made to the Borrower as part of a Competitive Bid
Borrowing shall be evidenced by a separate Competitive Bid Note of the Borrower
payable to the order of the Lender making such Competitive Bid Advance.
SECTION 2.04. Issuance of and Drawings and Reimbursement Under
Letters of Credit(a) Request for Issuance. (i) Each Letter of Credit shall be
issued upon notice, given not later than 12:00 noon (New York City time) on the
third Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, and such Issuing Bank shall give
the Agent, prompt notice thereof by telex, telecopier, telephone or cable. Each
such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be
by telex, telecopier, telephone or cable, confirmed immediately in writing,
specifying therein the requested (A) date of such issuance (which shall be a
Business Day), (B) Available Amount of such Letter of Credit, (C) expiration
date of such Letter of Credit, (D) name and address of the beneficiary of such
Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied
by such application and agreement for letter of credit as such Issuing Bank may
reasonably specify to the Borrower for use in connection with such requested
Letter of Credit (a "Letter of Credit Agreement"). If the requested form of such
Letter of Credit is acceptable to such Issuing Bank in its sole discretion, such
Issuing Bank will, upon fulfillment of the applicable conditions set forth in
Article III, make such Letter of Credit available to the Borrower at its office
referred to in Section 8.02 or as otherwise agreed with the Borrower in
connection with such issuance. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this Agreement,
the provisions of this Agreement shall govern.
(b) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the applicable Issuing Bank or the Lenders,
such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires
from such Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Pro Rata Share of the aggregate amount available to be drawn under such
Letter of Credit. The Borrower hereby agrees to each such participation. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Agent, for the account of such Issuing
Bank, such Lender's Pro Rata Share of each drawing made under a Letter of Credit
funded by such Issuing Bank and not reimbursed by the Borrower on the date made,
or of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Credit Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(c) Drawing and Reimbursement. The payment by an Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by any such Issuing Bank of a Revolving Credit
Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon
written demand by such Issuing Bank, with a copy of such demand to the Agent,
each Lender shall pay to the Agent such Lender's Pro Rata Share of such
outstanding Revolving Credit Advance, by making available for the account of its
Applicable Lending Office to the Agent for the account of such Issuing Bank, by
deposit to the Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Revolving Credit Advance to
be funded by such Lender. Promptly after receipt thereof, the Agent shall
transfer such funds to such Issuing Bank. Each Lender agrees to fund its Pro
Rata Share of an outstanding Revolving Credit Advance on (i) the Business Day on
which demand therefor is made by such Issuing Bank, provided that notice of such
demand is given not later than 12:00 noon (New York City time) on such Business
Day, or (ii) the first Business Day next succeeding such demand if notice of
such demand is given after such time. If and to the extent that any Lender shall
not have so made the amount of such Revolving Credit Advance available to the
Agent, such Lender agrees to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by any such
Issuing Bank until the date such amount is paid to the Agent, at the Federal
Funds Rate for its account or the account of such Issuing Bank, as applicable.
If such Lender shall pay to the Agent such amount for the account of any such
Issuing Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Revolving Credit Advance made by such Lender on such Business
Day for purposes of this Agreement, and the outstanding principal amount of the
Revolving Credit Advance made by such Issuing Bank shall be reduced by such
amount on such Business Day.
(d) Letter of Credit Reports. Each Issuing Bank shall furnish
(A) to the Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (B) to
each Lender on the first Business Day of each month a written report summarizing
issuance and expiration dates of Letters of Credit during the preceding month
and drawings during such month under all Letters of Credit and (C) to the Agent
and each Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit.
(e) Failure to Make Revolving Credit Advances. The failure of
any Lender to make the Revolving Credit Advance to be made by it on the date
specified in Section 2.04(c) shall not relieve any other Lender of its
obligation hereunder to make its Revolving Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Revolving Credit Advance to be made by such other Lender on such date.
SECTION 2.05. Fees. (a) Facility Fee. The Borrower agrees to pay to
the Agent for the account of each Lender a facility fee on the aggregate amount
of such Lender's Revolving Credit Commitment from the date hereof in the case of
each Initial Lender and from the effective date specified in the Assumption
Agreement or in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date at a rate per
annum equal to the Applicable Percentage in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing June 30, 2004, and on the Termination Date.
(b) Letter of Credit Fees (i) The Borrower shall pay to the
Agent for the account of each Lender a commission on such Lender's Pro Rata
Share of the average daily aggregate Available Amount of all Letters of Credit
outstanding from time to time at a rate per annum equal to the Applicable Margin
for Eurocurrency Rate Advances in effect from time to time plus the Applicable
Utilization Fee, if any, payable in arrears quarterly on the last day of each
March, June, September and December, commencing June 30, 2004, and on the
Termination Date.
(ii) The Borrower shall pay to each Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and such Issuing Bank shall agree.
(c) Agent's Fees. The Borrower shall pay to the Agent for its
own account such fees as may from time to time be agreed between the Borrower
and the Agent.
SECTION 2.06. Optional Termination or Reduction of the Commitments.
The Borrower shall have the right, upon at least three Business Days' notice to
the Agent, to terminate in whole or permanently reduce ratably in part the
Unused Commitments of the Lenders, provided that each partial reduction shall be
in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof.
SECTION 2.07. Repayment of Revolving Credit Advances. (a) The
Borrower shall repay to the Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.
(b) The obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances (it being understood
that any such payment by the Borrower is without prejudice to, and does not
constitute a waiver of, any rights the Borrower might have or might acquire as a
result of the payment by any Lender of any draft or the reimbursement by the
Borrower thereof):
(i) any lack of validity or enforceability of this Agreement,
any Note, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for which any such
beneficiary or any such transferee may be acting), any Issuing Bank,
any Agent, any Lender or any other Person, whether in connection with
the transactions contemplated by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the obligations of the
Borrower in respect of the L/C Related Documents; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
SECTION 2.08. Interest on Revolving Credit Advances. (a)
Scheduled Interest. The Borrower shall pay interest on the unpaid principal
amount of each Revolving Credit Advance owing to each Lender from the date of
such Revolving Credit Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Revolving
Credit Advance is a Base Rate Advance, a rate per annum equal at all
times to the sum of (x) the Base Rate in effect from time to time plus
(y) the Applicable Margin in effect from time to time plus (z) the
Applicable Utilization Fee in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and
December during such periods and on the date such Base Rate Advance
shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
equal at all times during each Interest Period for such Revolving
Credit Advance to the sum of (x) the Eurodollar Rate for such Interest
Period for such Revolving Credit Advance plus (y) the Applicable Margin
in effect from time to time plus (z) the Applicable Utilization Fee in
effect from time to time, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a duration of more
than three months, on each day that occurs during such Interest Period
every three months from the first day of such Interest Period and on
the date such Eurodollar Rate Advance shall be Converted or paid in
full.
(b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default under Section 6.01(a), the Agent may, and
upon the request of the Required Lenders shall, require the Borrower to pay
interest ("Default Interest") on (i) the unpaid principal amount of each
Revolving Credit Advance owing to each Lender, payable in arrears on the dates
referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on such
Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to
the fullest extent permitted by law, the amount of any interest, fee or other
amount payable hereunder that is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all times to 2% per annum above the rate per annum required to be paid on
Base Rate Advances pursuant to clause (a)(i) above, provided, however, that
following acceleration of the Advances pursuant to Section 6.01, Default
Interest shall accrue and be payable hereunder whether or not previously
required by the Agent.
SECTION 2.09. Interest Rate Determination. (a) Each Reference
Bank agrees to furnish to the Agent timely information for the purpose of
determining each Eurodollar Rate and each LIBO Rate. If any one or more of the
Reference Banks shall not furnish such timely information to the Agent for the
purpose of determining any such interest rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the remaining
Reference Banks. The Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.08(a)(i) or (ii), and the rate, if any, furnished by each Reference
Bank for the purpose of determining the interest rate under Section 2.08(a)(ii).
(b) If, with respect to any Eurodollar Rate Advances, the
Required Lenders notify the Agent that the Eurodollar Rate for any Interest
Period for such Advances will not adequately reflect the cost to such Required
Lenders of making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Agent shall forthwith so notify the
Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to
make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances
shall be suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
(c) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Lenders and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, have a subsequent Interest Period of one month.
(d) Upon the occurrence and during the continuance of any
Event of Default, (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended.
(e) If Telerate Markets Page 3750 is unavailable and fewer
than two Reference Banks furnish timely information to the Agent for determining
the Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate
Advances, as the case may be,
(i) the Agent shall forthwith notify the Borrower and the
Lenders that the interest rate cannot be determined for such Eurodollar
Rate Advances or LIBO Rate Advances, as the case may be,
(ii) with respect to Eurodollar Rate Advances, each such
Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance (or if such
Advance is then a Base Rate Advance, will continue as a Base Rate
Advance), and
(iii) the obligation of the Lenders to make Eurodollar Rate
Advances or LIBO Rate Advances or to Convert Revolving Credit Advances
into Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 2.10. Optional Conversion of Revolving Credit
Advances. The Borrower may on any Business Day, upon notice given to the Agent
not later than 12:00 noon (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Sections
2.09 and 2.13, Convert all Revolving Credit Advances of one Type comprising the
same Borrowing into Revolving Credit Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances and any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b). Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Revolving
Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
Borrower.
SECTION 2.11. Prepayments of Revolving Credit Advances. The
Borrower may, upon notice at least two Business Days' prior to the date of such
prepayment, in the case of Eurodollar Rate Advances, and not later than 12:00
noon (New York City time) on the date of such prepayment, in the case of Base
Rate Advances, to the Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amount of the Revolving Credit Advances comprising
part of the same Revolving Credit Borrowing in whole or ratably in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid; provided, however, that (x) each partial prepayment shall be in
an aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and (y) in the event of any such prepayment of a
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(c).
SECTION 2.12. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining Eurodollar Rate Advances or LIBO Rate Advances or
of agreeing to issue or of issuing or maintaining or participating in Letters of
Credit (excluding for purposes of this Section 2.12 any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 2.15 shall govern)
and (ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or by the foreign jurisdiction or state under the
laws of which such Lender is organized or has its Applicable Lending Office or
any political subdivision thereof), then the Borrower shall from time to time,
upon demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrower and the Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Lender (with a copy of such demand to the Agent), the Borrower shall pay to the
Agent for the account of such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. A certificate as to such amounts
submitted to the Borrower and the Agent by such Lender shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.13. Illegality. Notwithstanding any other provision of
this Agreement, if any Lender shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or
to fund or maintain Eurodollar Rate Advances or LIBO Rate Advances hereunder,
(a) each Eurodollar Rate Advance or LIBO Rate Advance, as the case may be, will
automatically, upon such demand, Convert into a Base Rate Advance or an Advance
that bears interest at the rate set forth in Section 2.08(a)(i), as the case may
be, and (b) the obligation of the Lenders to make Eurodollar Rate Advances or
LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist;
provided, however, that before making any such demand, each Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Eurodollar Lending Office if the making
of such a designation would allow such Lender or its Eurodollar Lending Office
to continue to perform its obligations to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances and would not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.14. Payments and Computations. (a) The Borrower shall
make each payment hereunder, irrespective of any right of counterclaim or
set-off, not later than 12:00 noon (New York City time) on the day when due in
U.S. dollars to the Agent at the Agent's Account in same day funds. The Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal, interest, facility fees or letter of credit commissions
ratably (other than amounts payable pursuant to Section 2.03, 2.12, 2.15 or
8.04(c)) to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon any
Assuming Lender becoming a Lender hereunder as a result of an extension of the
Termination Date pursuant to Section 2.19, and upon the Agent's receipt of such
Lender's Assumption Agreement and recording of the information contained therein
in the Register, from and after the applicable Extension Date, the Agent shall
make all payments hereunder and under any Notes issued in connection therewith
in respect of the interest assumed thereby to the Assuming Lender. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(c), from and after
the effective date specified in such Assignment and Acceptance, the Agent shall
make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made by the Borrower to the Agent when
due hereunder or under the Note held by such Lender, to charge from time to time
against any or all of the Borrower's accounts with such Lender any amount so
due.
(c) All computations of interest based on clause (i) of the
definition of Base Rate shall be made by the Agent on the basis of a year of 365
or 366 days, as the case may be, and all computations of interest based on the
Eurodollar Rate, the LIBO Rate, the Federal Funds Rate or clause (ii) of the
definition of Base Rate or in respect of Fixed Rate Advances and of fees and
Letter of Credit commissions shall be made by the Agent on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest,
fees or commissions are payable. Each determination by the Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, provided, however, that, if such extension
would cause payment of interest on or principal of Eurodollar Rate Advances or
LIBO Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day, and such extension or decrease
of time shall in such case be included in the computation of payment of
interest, fee or commission, as the case may be.
(e) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Lenders hereunder
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrower shall not have so made such payment in full to
the Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.15. Taxes. (a) Any and all payments by the Borrower to or
for the account of any Lender or the Agent hereunder or under the Notes or any
other documents to be delivered hereunder shall be made, in accordance with
Section 2.14 or the applicable provisions of such other documents, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, apart from Excluded Taxes. As used in this Section 2.15, "Excluded
Taxes" means with respect to each Lender and the Agent, (x) taxes imposed on its
overall net income, and franchise taxes imposed on it in lieu of net income
taxes, by the jurisdiction under the laws of which such Lender or the Agent (as
the case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its overall net income, and franchise
taxes imposed on it in lieu of net income taxes, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof and (y)
taxes that are directly attributable to such Lender's failure to comply with the
provisions of Section 2.15(e), (f) and (g) (all such taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes, other than Excluded Taxes, being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note or any
other documents to be delivered hereunder to any Lender or the Agent, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.15) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under the Notes or
any other documents to be delivered hereunder or from the execution, delivery or
registration of, performing under, or otherwise with respect to, this Agreement
or the Notes or any other documents to be delivered hereunder (hereinafter
referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender and the Agent for
and hold it harmless against the full amount of Taxes or Other Taxes (including,
without limitation, taxes of any kind imposed or asserted by any jurisdiction on
amounts payable under this Section 2.15) imposed on or paid by such Lender or
the Agent (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be made within 30 days from the date such Lender or the Agent (as the case
may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing such payment to the
extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Agent. For purposes of this
subsection (d) and subsection (e), the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender and on the date of the
Assumption Agreement or the Assignment and Acceptance pursuant to which it
becomes a Lender in the case of each other Lender, and from time to time
thereafter as reasonably requested in writing by the Borrower (but only so long
as such Lender remains lawfully able to do so), shall provide each of the Agent
and the Borrower with two original Internal Revenue Service forms W-8BEN or
W-8ECI, as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Lender is exempt from or entitled
to a reduced rate of United States withholding tax on payments pursuant to this
Agreement or the Notes. If the form provided by a Lender at the time such Lender
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered Excluded Taxes unless and until such Lender provides the appropriate
forms certifying that a lesser rate applies, whereupon withholding tax at such
lesser rate only shall be considered Excluded Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender assignee becomes a party to this Agreement, the
Lender assignor was entitled to payments under subsection (a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender assignee on such date.
(f) For any period with respect to which a Lender has failed
to provide the Borrower with the appropriate form, certificate or other document
described in Section 2.15(e) (other than if such failure is due to a change in
law, or in the interpretation or application thereof, occurring subsequent to
the date on which a form, certificate or other document originally was required
to be provided, or if such form, certificate or other document otherwise is not
required under subsection (e) above), such Lender shall not be entitled to
indemnification under Section 2.15(a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form,
certificate or other document required hereunder, the Borrower, at the Lender's
expense, shall take such steps as the Lender shall reasonably request to assist
the Lender to recover such Taxes.
(g) Any Lender claiming any additional amounts payable pursuant
to this Section 2.15 agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to file any certificate
or document requested by the Borrower or to change the jurisdiction of its
Eurodollar Lending Office if the making of such a filing or change would avoid
the need for, or reduce the amount of, any such additional amounts that may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender.
(h) If any Lender determines, in its sole discretion, that it
has actually and finally realized, by reason of a refund, deduction or credit of
any Taxes paid or reimbursed by the Borrower pursuant to subjection (a) or (c)
above in respect of payments under the Credit Agreement or the Notes, a current
monetary benefit that it would otherwise not have obtained, and that would
result in the total payments under this Section 2.15 exceeding the amount needed
to make such Lender whole, such Lender shall pay to the Borrower, with
reasonable promptness following the date on which it actually realizes such
benefit, an amount equal to the lesser of the amount of such benefit or the
amount of such excess, in each case net of all out-of-pocket expenses in
securing such refund, deduction or credit. Nothing in this paragraph (h) shall
be construed to require the Agent, any Lender or any Issuing Bank to make
available its tax returns (or any other information relating to is taxes which
it deems confidential) to the Borrower or any other Person.
SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Revolving Credit Advances owing to
it (other than pursuant to Section 2.12, 2.15 or 8.04(c)) in excess of its
ratable share of payments on account of the Revolving Credit Advances obtained
by all the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Revolving Credit Advances owing to them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.16 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.17. Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Revolving Credit
Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Revolving Credit Advances. The Borrower agrees that upon
notice by any Lender to the Borrower (with a copy of such notice to the Agent)
to the effect that a Revolving Credit Note is required or appropriate in order
for such Lender to evidence (whether for purposes of pledge, enforcement or
otherwise) the Revolving Credit Advances owing to, or to be made by, such
Lender, the Borrower shall promptly execute and deliver to such Lender a
Revolving Credit Note payable to the order of such Lender in a principal amount
up to the Revolving Credit Commitment of such Lender.
(b) The Register maintained by the Agent pursuant to Section
8.07(d) shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, the Type of Advances comprising such
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assumption Agreement and each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iv) the amount of any sum received by the Agent from the Borrower hereunder
and each Lender's share thereof.
(c) Entries made in good faith by the Agent in the Register
pursuant to subsection (b) above, and by each Lender in its account or accounts
pursuant to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.
SECTION 2.18. Use of Proceeds. The proceeds of the Advances and
issuances of Letters of Credit shall be available (and the Borrower agrees that
it shall use such proceeds) solely for general corporate purposes (which shall
include refunding of commercial paper) of the Borrower and its Subsidiaries.
SECTION 2.19. Extension of Termination Date. (a) At least 60 days
but not more than 90 days prior to any anniversary of the Effective Date, the
Borrower, by written notice to the Agent, may request an extension of the
Termination Date in effect at such time by one year from its then scheduled
expiration. The Agent shall promptly notify each Lender of such request, and
each Lender shall in turn, in its sole discretion, not later than 20 days prior
to such anniversary date, notify the Borrower and the Agent in writing as to
whether such Lender will consent to such extension. If any Lender shall fail to
notify the Agent and the Borrower in writing of its consent to any such request
for extension of the Termination Date at least 20 days prior to such anniversary
date, such Lender shall be deemed to be a Non-Consenting Lender with respect to
such request. The Agent shall notify the Borrower not later than 15 days prior
to such anniversary date of the decision of the Lenders regarding the Borrower's
request for an extension of the Termination Date.
(b) If all the Lenders consent in writing to any such request
in accordance with subsection (a) of this Section 2.19, the Termination Date in
effect at such time shall, effective as at the applicable anniversary date (the
"Extension Date"), be extended for one year; provided that on each Extension
Date the applicable conditions set forth in Article III shall be satisfied. If
less than all of the Lenders consent in writing to any such request in
accordance with subsection (a) of this Section 2.19, the Termination Date in
effect at such time shall, effective as at the applicable Extension Date and
subject to subsection (d) of this Section 2.19, be extended as to those Lenders
that so consented (each a "Consenting Lender") but shall not be extended as to
any other Lender (each a "Non-Consenting Lender"). To the extent that the
Termination Date is not extended as to any Lender pursuant to this Section 2.19
and the Revolving Credit Commitment of such Lender is not assumed in accordance
with subsection (c) of this Section 2.19 on or prior to the applicable Extension
Date, the Revolving Credit Commitment of such Non-Consenting Lender shall
automatically terminate in whole on such unextended Termination Date without any
further notice or other action by the Borrower, such Lender or any other Person;
provided that such Non-Consenting Lender's rights under Sections 2.12, 2.15 and
8.04, and its obligations under Section 7.05, shall survive the Termination Date
for such Lender as to matters occurring prior to such date. It is understood and
agreed that no Lender shall have any obligation whatsoever to agree to any
request made by the Borrower for any requested extension of the Termination
Date.
(c) If less than all of the Lenders consent to any such
request pursuant to subsection (a) of this Section 2.19, the Agent shall
promptly so notify the Consenting Lenders, and each Consenting Lender may, in
its sole discretion, give written notice to the Agent not later than 10 days
prior to the Extension Date of the amount of the Non-Consenting Lenders'
Revolving Credit Commitments for which it is willing to accept an assignment. If
the Consenting Lenders notify the Agent that they are willing to accept
assignments of Commitments in an aggregate amount that exceeds the amount of the
Revolving Credit Commitments of the Non-Consenting Lenders, such Revolving
Credit Commitments shall be allocated among the Consenting Lenders willing to
accept such assignments in such amounts as are agreed between the Borrower and
the Agent. If after giving effect to the assignments of Revolving Credit
Commitments described above there remains any Revolving Credit Commitments of
Non-Consenting Lenders, the Borrower may arrange for one or more Consenting
Lenders or other Eligible Assignees (an "Assuming Lender") to assume, effective
as of the Extension Date, any Non-Consenting Lender's Revolving Credit
Commitment and all of the obligations of such Non-Consenting Lender under this
Agreement thereafter arising, without recourse to or warranty by, or expense to,
such Non-Consenting Lender; provided, however, that the amount of the Revolving
Credit Commitment of any such Assuming Lender as a result of such substitution
shall in no event be less than $10,000,000 unless the amount of the Commitment
of such Non-Consenting Lender is less than $1,000,000,10,000,000, in which case
such Assuming Lender shall assume all of such lesser amount; and provided
further that:
(i) any such Consenting Lender or Assuming Lender shall have
paid to such Non-Consenting Lender (A) the aggregate principal amount
of, and any interest accrued and unpaid to the effective date of the
assignment on, the outstanding Advances, if any, of such Non-Consenting
Lender plus (B) any accrued but unpaid facility fees and letter of
credit commissions owing to such Non-Consenting Lender as of the
effective date of such assignment;
(ii) all additional costs, reimbursements, expense reimbursements
and indemnities payable to such Non-Consenting Lender, and all other
accrued and unpaid amounts owing to such Non-Consenting Lender
hereunder, as of the effective date of such assignment shall have been
paid to such Non-Consenting Lender; and
(iii) with respect to any such Assuming Lender, the applicable
processing and recordation fee required under Section 8.07(a) for such
assignment shall have been paid;
provided further that such Non-Consenting Lender's rights under Sections 2.12,
2.15 and 8.04, and its obligations under Section 7.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if any, shall have delivered to the Borrower and the Agent an agreement (an
"Assumption Agreement") in form and substance satisfactory to the Borrower and
the Agent, duly executed by such Assuming Lender, such Non-Consenting Lender,
the Borrower and the Agent, (B) any such Consenting Lender shall have delivered
confirmation in writing satisfactory to the Borrower and the Agent as to the
increase in the amount of its Revolving Credit Commitment and (C) each
Non-Consenting Lender being replaced pursuant to this Section 2.19 shall have
delivered to the Agent any Note or Notes held by such Non-Consenting Lender.
Upon the payment or prepayment of all amounts referred to in clauses (i), (ii)
and (iii) of the immediately preceding sentence, each such Consenting Lender or
Assuming Lender, as of the Extension Date, will be substituted for such
Non-Consenting Lender under this Agreement and shall be a Lender for all
purposes of this Agreement, without any further acknowledgment by or the consent
of the other Lenders, and the obligations of each such Non-Consenting Lender
hereunder shall, by the provisions hereof, be released and discharged.
(d) If (after giving effect to any assignments or assumptions
pursuant to subsection (c) of this Section 2.19) Lenders having Revolving Credit
Commitments equal to at least 75% of the Revolving Credit Commitments in effect
immediately prior to the Extension Date consent in writing to a requested
extension (whether by execution or delivery of an Assumption Agreement or
otherwise) not later than one Business Day prior to such Extension Date, the
Agent shall so notify the Borrower, and, subject to the satisfaction of the
applicable conditions in Article III, the Termination Date then in effect shall
be extended for the additional one year period as described in subsection (a) of
this Section 2.19, and all references in this Agreement and in the Notes, if
any, to the "Termination Date" shall, with respect to each Consenting Lender and
each Assuming Lender for such Extension Date, refer to the Termination Date as
so extended. Promptly following each Extension Date, the Agent shall notify the
Lenders (including, without limitation, each Assuming Lender) of the extension
of the scheduled Termination Date in effect immediately prior thereto and shall
thereupon record in the Register the relevant information with respect to each
such Consenting Lender and each such Assuming Lender.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Sections
2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective
on and as of the first date (the "Effective Date") on which the following
conditions precedent have been satisfied:
(a) There shall have occurred no Material Adverse Change since
December 31, 2003.
(b) There shall exist no action, suit, investigation,
litigation or proceeding affecting the Borrower or any of its
Subsidiaries pending or threatened before any court, governmental
agency or arbitrator that (i) could be reasonably likely to have a
Material Adverse Effect or (ii) purports to affect the legality,
validity or enforceability of this Agreement or any Note or the
consummation of the transactions contemplated hereby.
(c) Nothing shall have come to the attention of the Lenders
during the course of their due diligence investigation to lead them to
believe that the Information Memorandum was or has become misleading,
incorrect or incomplete in any material respect; without limiting the
generality of the foregoing, the Lenders shall have been given such
access to the management, records, books of account, contracts and
properties of the Borrower and its Subsidiaries as they shall have
requested.
(d) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any conditions that are
not acceptable to the Lenders) and shall remain in effect, and no law
or regulation shall be applicable in the reasonable judgment of the
Lenders that restrains, prevents or imposes materially adverse
conditions upon the transactions contemplated hereby.
(e) The Borrower shall have notified each Lender and the Agent
in writing as to the proposed Effective Date.
(f) The Borrower shall have paid all accrued fees and expenses
of the Agent and the Lenders (including the accrued fees and expenses
of counsel to the Agent) that have been billed to the Borrower.
(g) On the Effective Date, the following statements shall be
true and the Agent shall have received for the account of each Lender a
certificate signed by a duly authorized officer of the Borrower, dated
the Effective Date, stating that:
(i) The representations and warranties contained in
Section 4.01 are correct on and as of the Effective Date, and
(ii) No event has occurred and is continuing that
constitutes a Default.
(h) The Agent shall have received on or before the Effective
Date the following, each dated such day, in form and substance
satisfactory to the Agent and (except for the Revolving Credit Notes)
in sufficient copies for each Lender:
(i) The Revolving Credit Notes to the order of the
Lenders to the extent requested by any Lender pursuant to
Section 2.17.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower approving this Agreement and the
Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign
this Agreement and the Notes and the other documents to be
delivered hereunder.
(iv) A favorable opinion of Mark C. Hill, Vice
President, Secretary and General Counsel of the Borrower,
substantially in the form of Exhibit D hereto and as to such
other matters as any Lender through the Agent may reasonably
request.
(v) A favorable opinion of Shearman & Sterling LLP,
counsel for the Agent, in form and substance satisfactory to
the Agent.
(i) The termination of the commitments of the lenders
and the payment in full of all Debt outstanding under (i) the
$300,000,000 Revolving364-Day Credit Agreement (Facility A)
dated as of June 25, 1998 among the Borrower, the lenders
parties thereto19, 2002, amended and NationsBank, N.A, as
administrative agent, and (ii) $300,000,000 Revolving Credit
Agreement (Facility B) datedrestated as of June 25,18,
19982003, among the Borrower, the lenders parties thereto and
NationsBankCitibank, N.A, as administrative agent. By
execution of this Agreement, each of the Lenders that is a
lender under athe credit agreement referred to in clause (i)
or (ii) above hereby waives any requirement set forth in such
credit agreement of prior notice relating to the termination
of their commitments thereunder.
SECTION 3.02. Conditions Precedent to Each Revolving Credit
Borrowing, Letter of Credit Issuance and Extension Date. The obligation of each
Lender to make a Revolving Credit Advance on the occasion of each Revolving
Credit Borrowing, the obligation of each Issuing Bank to issue a Letter of
Credit and each extension of Revolving Credit Commitments pursuant to Section
2.19 shall be subject to the conditions precedent that the Effective Date shall
have occurred and on the date of such Revolving Credit Borrowing, issuance or
the applicable Extension Date (a) the following statements shall be true (and
each of the giving of the applicable Notice of Revolving Credit Borrowing,
Notice of Issuance, request for Commitment Extension and the acceptance by the
Borrower of the proceeds of such Revolving Credit Borrowing or Letter of Credit
shall constitute a representation and warranty by the Borrower that on the date
of such Borrowing, such issuance or such Extension Date such statements are
true):
(i) the representations and warranties contained in Section
4.01 (except, in the case of Revolving Credit Borrowings and the
issuance of a Letter of Credit, the representation set forth in
subsection (j) thereof) are correct on and as of such date, before and
after giving effect to such Revolving Credit Borrowing, such issuance
or such Extension Date and to the application of the proceeds
therefrom, as though made on and as of such date, and
(ii) no event has occurred and is continuing, or would result
from such Revolving Credit Borrowing, such issuance or such Extension
Date or from the application of the proceeds therefrom, that
constitutes a Default;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.03. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (i) the Agent shall have received the written
confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on
or before the date of such Competitive Bid Borrowing, but prior to such
Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note
payable to the order of such Lender for each of the one or more Competitive Bid
Advances to be made by such Lender as part of such Competitive Bid Borrowing, in
a principal amount equal to the principal amount of the Competitive Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed to for such
Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date
of such Competitive Bid Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Competitive Bid Borrowing such statements are true):
(a) the representations and warranties contained in Section
4.01(a) through (i) are correct on and as of the date of such
Competitive Bid Borrowing, before and after giving effect to such
Competitive Bid Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date,
(b) no event has occurred and is continuing, or would result
from such Competitive Bid Borrowing or from the application of the
proceeds therefrom, that constitutes a Default, and
(c) no event has occurred and no circumstance exists of which
the Borrower has become aware, as a result of which the information
concerning the Borrower that has been provided to the Agent and each
Lender by the Borrower in connection herewith is shown to contain an
untrue statement of a material fact or is shown to have omitted to
state any material fact or any fact necessary to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading as if the date such information was provided.
SECTION 3.04. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by the Borrower of
this Agreement and the Notes to be delivered by it, and the
consummation of the transactions contemplated hereby, are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower's charter or
by-laws or (ii) law or any contractual restriction binding on or
affecting the Borrower.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for the due execution, delivery
and performance by the Borrower of this Agreement or the Notes to be
delivered by it.
(d) This Agreement has been, and each of the Notes to be
delivered by it when delivered hereunder will have been, duly executed
and delivered by the Borrower. This Agreement is, and each of the Notes
when delivered hereunder will be, the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in
accordance with their respective terms (subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, moratorium and
similar laws affecting creditors rights generally).
(e) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2003, and the related Consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for the fiscal year then ended, accompanied by an opinion
of PricewaterhouseCoopers LLP, independent public accountants, and the
Consolidated balance sheet of the Borrower and its Subsidiaries as at
March 31, 2004, and the related Consolidated statements of income and
cash flows of the Borrower and its Subsidiaries for the three months
then ended, duly certified by the chief financial officer of the
Borrower, copies of which have been furnished to each Lender, fairly
present, subject, in the case of said balance sheet as at March 31,
2004, and said statements of income and cash flows for the three months
then ended, to year-end audit adjustments, the Consolidated financial
condition of the Borrower and its Subsidiaries as at such dates and the
Consolidated results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance
with generally accepted accounting principles consistently applied.
(f) There is no pending or threatened action, suit,
investigation, litigation or proceeding, including, without limitation,
any Environmental Action, affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator that
(i) could be reasonably likely to have a Material Adverse Effect or
(ii) purports to affect the legality, validity or enforceability of
this Agreement or any Note or the consummation of the transactions
contemplated hereby.
(g) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
(h) The Borrower is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(i) Neither this Agreement, the Information Memorandum nor any
other document delivered by or on behalf of the Borrower or any of its
Subsidiaries in connection with this Agreement or included therein
contained or contains any material misstatement of fact or omitted or
omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(j) Since December 31, 2003, there has been no Material
Adverse Change.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder or any
Letter of Credit shall be outstanding, the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and Environmental Laws.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property;
provided, however, that neither the Borrower nor any of its Subsidiaries
shall be required to pay or discharge any such tax, assessment, charge
or claim that is being contested in good faith and by proper proceedings
and as to which appropriate reserves are being maintained, unless and
until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors.
(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided, however, that the Borrower and its Subsidiaries may
consummate any merger or consolidation permitted under Section 5.02(b)
and provided further that neither the Borrower nor any of its
Subsidiaries shall be required to preserve any right or franchise if
the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lenders.
(e) Visitation Rights. At any reasonable time during normal
business hours and from time to time upon reasonable notice, permit the
Agent or any of the Lenders or any agents or representatives thereof,
to examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, the Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrower and any of its Subsidiaries with any of their officers and
with their independent certified public accountants.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with
generally accepted accounting principles in effect from time to time.
(g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(h) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under
this Agreement with any of their Affiliates (other than the Borrower
and its Subsidiaries) on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
(i) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within 45
days after the end of each of the first three quarters of each
fiscal year of the Borrower, the Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such quarter
and Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for the period commencing at the
end of the previous fiscal year and ending with the end of such
quarter, duly certified (subject to year-end audit adjustments)
by the chief financial officer or treasurer of the Borrower as
having been prepared in accordance with generally accepted
accounting principles and certificates of the chief financial
officer or treasurer of the Borrower as to compliance with the
terms of this Agreement and setting forth in reasonable detail
the calculations necessary to demonstrate compliance with
Section 5.03, provided that in the event of any change in
generally accepted accounting principles used in the preparation
of such financial statements, the Borrower shall also provide
within a reasonable time, if necessary for the determination of
compliance with Section 5.03, a statement of reconciliation
conforming such financial statements to GAAP;
(ii) as soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, a copy
of the annual audit report for such year for the Borrower and
its Subsidiaries, containing the Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal
year and Consolidated statements of income and cash flows of
the Borrower and its Subsidiaries for such fiscal year, in
each case accompanied by an opinion acceptable to the Required
Lenders by PricewaterhouseCoopers LLP or other independent
public accountants acceptable to the Required Lenders and
certificates of the chief financial officer or treasurer of
the Borrower as to compliance with the terms of this Agreement
and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Section 5.03, provided
that in the event of any change in generally accepted accounting
principles used in the preparation of such financial statements,
the Borrower shall also provide within a reasonable time, if
necessary for the determination of compliance with Section 5.03,
a statement of reconciliation conforming such financial
statements to GAAP;
(iii) as soon as possible and in any event within five
days after the occurrence of each Default continuing on the date
of such statement, a statement of the chief financial officer of
the Borrower setting forth details of such Default and the
action that the Borrower has taken and proposes to take with
respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all reports that the Borrower sends to any of its
securityholders, and copies of all reports and registration
statements that the Borrower or any Subsidiary files with the
Securities and Exchange Commission or any national securities
exchange;
(v) promptly after the commencement thereof, notice
of all actions and proceedings before any court, governmental
agency or arbitrator affecting the Borrower or any of its
Subsidiaries of the type described in Section 4.01(f); and
(vi) such other information respecting the Borrower or
any of its Subsidiaries as any Lender through the Agent may
from time to time reasonably request.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder or any Letter of
Credit shall be outstanding, the Borrower will not:
(a) Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Lien on or with
respect to any of its properties, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any
right to receive income, other than:
(i) Permitted Liens,
(ii) purchase money Liens upon or in any real property or
equipment acquired or held by the Borrower or any Subsidiary in
the ordinary course of business to secure the purchase price of
such property or equipment or to secure Debt incurred solely for
the purpose of financing the acquisition of such property or
equipment, or Liens existing on such property or equipment at
the time of its acquisition (other than any such Liens created
in contemplation of such acquisition that were not incurred to
finance the acquisition of such property) or extensions,
renewals or replacements of any of the foregoing for the same or
a lesser amount, provided, however, that no such Lien shall
extend to or cover any properties of any character other than
the real property or equipment being acquired, and no such
extension, renewal or replacement shall extend to or cover any
properties not theretofore subject to the Lien being extended,
renewed or replaced, provided further that the aggregate
principal amount of the indebtedness secured by the Liens
referred to in this clause (ii) shall not exceed $100,000,000 at
any time outstanding,
(iii) the Liens existing on the Effective Date and
described on Schedule 5.02(a) hereto,
(iv) other Liens securing Debt in an aggregate
principal amount not to exceed $50,000,000,
(v) the replacement, extension or renewal of any Lien
permitted by clause (iii) above upon or in the same property
theretofore subject thereto or the replacement, extension or
renewal (without increase in the amount or change in any
direct or contingent obligor) of the Debt secured thereby, and
(vi) Liens secured by property occupied or to be occupied
by the Borrower as its corporate headquarters, securing
obligations incurred to acquire or construct and finishout such
headquarters.
(b) Mergers, Etc. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or any substantial part
of its assets (whether now owned or hereafter acquired) to, any Person,
or permit any of its Subsidiaries to do so, except that (x)(i) the
Borrower or any of its Subsidiaries may sell or transfer real property
including improvements thereon in connection with a sale and leaseback
transaction, (ii) any Subsidiary of the Borrower may merge or
consolidate with or into, or dispose of assets to, any other Subsidiary
of the Borrower, (iii) any Subsidiary of the Borrower may merge into or
dispose of assets to the Borrower and (iv) the Borrower may merge with
any other Person so long as the Borrower is the surviving corporation,
provided, in each case, that no Default shall have occurred and be
continuing at the time of such proposed transaction or would result
therefrom and (y) the Borrower and its Subsidiaries may (1) sell
inventory in the ordinary course of business and (2) sell, transfer,
convey, lease or otherwise dispose of less than any substantial part of
the assets of the Borrower and its Subsidiaries, taken as a whole.
For purposes of this subsection (b), a sale, transfer, conveyance,
lease or other disposition of assets shall be deemed to be a
"substantial part" of the assets of the Borrower and its Subsidiaries
only if the value of such assets, when added to the value of all other
assets sold, transferred, conveyed, leased or otherwise disposed of by
the Borrower and its Subsidiaries (other than as expressly permitted
pursuant to this subsection (b)) during the same fiscal year, exceeds
15% of the Borrower's consolidated total assets determined as of the
end of the immediately preceding fiscal year. As used in the preceding
sentence, the term "value" shall mean, with respect to any asset
disposed of, the greater of such asset's book or fair market value as
of the date of disposition, with "book value" being the value of such
asset as would appear immediately prior to such disposition on a
balance sheet of the owner of such asset prepared in accordance with
generally accepted accounting principles.
(c) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally
accepted accounting principles.
(d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business
as carried on at the date hereof.
(e) Investments in Other Persons. Make or hold, or permit any
of its Subsidiaries to make or hold, any Investment in any Person other
than:
(i) Investments by the Borrower and its Subsidiaries
in their Subsidiaries outstanding on the date hereof and
additional Investments in directly or indirectly wholly-owned
Subsidiaries;
(ii) loans and advances to employees in the ordinary
course of the business of the Borrower and its Subsidiaries as
presently conducted in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding;
(iii) Investments in Marketable Securities;
(iv) Investments consisting of extensions or credit
in the nature of accounts receivable or notes receivable
arising from the sale of goods and services, or shares of
stock, obligations or other securities received in settlement
of claims, in each case, arising in the ordinary course of
business;
(v) Investments existing on the Effective Date and
described on Schedule 5.02(e) hereto;
(vi) deposits in bank accounts maintained for
operational purposes, within the limits established by the
Borrower's corporate cash investment policy; and
(vii) other Investments in an aggregate amount
invested not to exceed 15% of Consolidated Tangible Net Worth
at any time.
SECTION 5.03. Financial Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder or
any Letter of Credit shall be outstanding, the Borrower will:
(a) Leverage Ratio. Maintain a ratio of Consolidated Funded
Debt to Consolidated EBITDA for the period of four fiscal quarters most
recently ended of not more than the 3.0:1.0.
(b) Fixed Charge Coverage Ratio. Maintain a ratio of
Consolidated EBITDAR of the Borrower and its Subsidiaries to the sum of
(i) interest payable on, and amortization of debt discount in respect
of, all Debt during the period of four fiscal quarters most recently
ended plus (ii) rentals payable under leases of real or personal, or
mixed, property during such period, in each case, by the Borrower and
its Subsidiaries of not less than 2.0:1.0.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any
Advance when the same becomes due and payable; or the Borrower shall
fail to pay any interest on any Advance or make any other payment of
fees or other amounts payable under this Agreement or any Note within
three Business Days after the same becomes due and payable; or
(b) Any representation or warranty made by the Borrower herein
or by the Borrower (or any of its officers) in connection with this
Agreement shall prove to have been incorrect in any material respect
when made; or
(c) (i) The Borrower shall fail to perform or observe any
term, covenant or agreement contained in Section 5.01(d) (as to the
Borrower's corporate existence), (e), (h) or (i), 5.02 or 5.03, or (ii)
the Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or
observed if such failure shall remain unremedied for 10 days after
written notice thereof shall have been given to the Borrower by the
Agent or any Lender; or
(d) The Borrower or any of its Subsidiaries shall fail to pay
any principal of or premium or interest on any Debt that is outstanding
in a principal or notional amount of at least $50,000,000 in the
aggregate (but excluding Debt outstanding hereunder) of the Borrower or
such Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or
(e) The Borrower or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or
the Borrower or any of its Subsidiaries shall take any corporate action
to authorize any of the actions set forth above in this subsection (e);
or
(f) Judgments or orders for the payment of money in excess of
$50,000,000 in the aggregate shall be rendered against the Borrower or
any of its Subsidiaries and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii)
there shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such
judgment or order shall not be an Event of Default under this Section
6.01(f) if and for so long as (i) the amount of such judgment or order
is covered by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (ii) such
insurer, which shall be rated at least "A" by A.M. Best Company, has
been notified of, and has not disputed the claim made for payment of,
the amount of such judgment or order; or
(g) (i) Any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of Voting Stock of the
Borrower (or other securities convertible into such Voting Stock)
representing 20% or more of the combined voting power of all Voting
Stock of the Borrower; or (ii) during any period of up to 24
consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 24-month period
were directors of the Borrower shall cease for any reason to constitute
a majority of the board of directors of the Borrower (except to the
extent that individuals who at the beginning of such 24-month period
were replaced by individuals (x) elected by 66-2/3% of the remaining
members of the board of directors of the Borrower or (y) nominated for
election by a majority of the remaining members of the board of
directors of the Borrower and thereafter elected as directors by the
shareholders of the Borrower); or
(i) The Borrower or any of its ERISA Affiliates shall incur,
or shall be reasonably likely to incur, liability in excess of
$50,000,000 in the aggregate as a result of one or more of the
following: (i) the occurrence of any ERISA Event; (ii) the partial or
complete withdrawal of the Borrower or any of its ERISA Affiliates from
a Multiemployer Plan; or (iii) the reorganization or termination of a
Multiemployer Plan;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances (other than Revolving Credit Advances
by an Issuing Bank or a Lender pursuant to Section 2.02(b)) and of the Issuing
Banks to issue Letters of Credit to be terminated, whereupon the same shall
forthwith terminate, and (ii) shall at the request, or may with the consent, of
the Required Lenders, by notice to the Borrower, declare the Advances, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Advances, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances
(other than Revolving Credit Advances by an Issuing Bank or a Lender pursuant to
Section 2.02(b)) and of the Issuing Banks to issue Letters of Credit shall
automatically be terminated and (B) the Advances, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Agent may with the consent, or shall at the request, of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, (a) pay to the Agent on behalf of the Lender
PartiesLenders in same day funds at the Agent's office designated in such
demand, for deposit in the L/C Cash Collateral Account, an amount equal to the
aggregate Available Amount of all Letters of Credit then outstanding or (b) make
such other arrangements in respect of the outstanding Letters of Credit as shall
be acceptable to the Required Lenders. If at any time the Agent determines that
any funds held in the L/C Cash Collateral Account are subject to any right or
claim of any Person other than the Agent and the Lender PartiesLenders or that
the total amount of such funds is less than the aggregate Available Amount of
all Letters of Credit, the Borrower will, forthwith upon demand by the Agent,
pay to the Agent, as additional funds to be deposited and held in the L/C Cash
Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Agent determines to be free and clear of
any such right and claim. Upon the drawing of any Letter of Credit, to the
extent funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Banks to the extent permitted by applicable
law.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender (in its
capacities as a Lender and Issuing Bank (as applicable)) hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Agent receives and accepts an Assumption Agreement entered into by an
Assuming Lender as provided in Section 2.19 or an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 8.07; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance, observance or satisfaction of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or the existence at any
time of any Default or to inspect the property (including the books and records)
of the Borrower; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 7.03. Citibank and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Citibank shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Citibank in its
individual capacity. Citibank and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if Citibank were not
the Agent and without any duty to account therefor to the Lenders. The Agent
shall have no duty to disclose information obtained or received by it or any of
its Affiliates relating to the Borrower or its Subsidiaries to the extent such
information was obtained or received in any capacity other than as Agent.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) The Lenders ratably agree
to indemnify the Agent (to the extent not reimbursed by the Borrower) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement (collectively, the
"Indemnified Costs"), provided that no Lender shall be liable for any portion of
the Indemnified Costs resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, to the extent that the Agent is not reimbursed for such expenses
by the Borrower. In the case of any investigation, litigation or proceeding
giving rise to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by the Agent, any Lender or a
third party.
(b) Each Lender severally agrees to indemnify the Issuing
Banks (to the extent not promptly reimbursed by the Borrower) from and against
such Lender's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against any such Issuing Bank in any way
relating to or arising out of this Agreement or any action taken or omitted by
such Issuing Bank hereunder or in connection herewith; provided, however, that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Issuing Bank's gross negligence or willful
misconduct as found in a final, non-appealable judgment by a court of competent
jurisdiction. Without limitation of the foregoing, each Lender agrees to
reimburse any such Issuing Bank promptly upon demand for its ratable share of
any costs and expenses (including, without limitation, reasonable fees and
expenses of counsel) payable by the Borrower under Section 8.04, to the extent
that such Issuing Bank is not promptly reimbursed for such costs and expenses by
the Borrower.
(c) For purposes of this Section 7.05, the Lenders' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (i) the aggregate principal amount of the Advances (other than
Competitive Bid Advances) outstanding at such time and owing to the respective
Lenders, (ii) their respective Pro Rata Shares of the aggregate Available Amount
of all Letters of Credit outstanding at such time and (iii) their respective
Unused Commitments at such time; provided that the aggregate principal amount of
Revolving Credit Advances owing to the Issuing Banks as a result of drawings
under Letters of Credit shall be considered to be owed to the Lenders ratably in
accordance with their respective Revolving Credit Commitments. The failure of
any Lender to reimburse the Agent or any such Issuing Bank, as the case may be,
promptly upon demand for its ratable share of any amount required to be paid by
the Lenders to the Agent or such Issuing Bank, as the case may be, as provided
herein shall not relieve any other Lender of its obligation hereunder to
reimburse the Agent or such Issuing Bank, as the case may be, for its ratable
share of such amount, but no Lender shall be responsible for the failure of any
other Lender to reimburse the Agent or any such Issuing Bank, as the case may
be, for such other Lender's ratable share of such amount. Without prejudice to
the survival of any other agreement of any Lender hereunder, the agreement and
obligations of each Lender contained in this Section 7.05 shall survive the
payment in full of principal, interest and all other amounts payable hereunder
and under the Notes.
SECTION 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
SECTION 7.07. Other Agents. Each Lender hereby acknowledges that
neither any syndication agent nor any other Lender designated as any "Agent" on
the signaturecover pagespage hereof has any liability hereunder other than in
its capacity as a Lender.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Revolving Credit Notes, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Lenders, do any of the
following: (a) waive any of the conditions specified in Section 3.01, (b)
increase the Commitments of the Lenders, (c) reduce the principal of, or
interest on, the Revolving Credit Advances or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Revolving Credit Advances or any fees or other amounts payable
hereunder, (e) change the percentage of the Revolving Credit Commitments, the
aggregate Available Amount of outstanding Letters of Credit or the aggregate
unpaid principal amount of the Revolving Credit Advances, or the number of
Lenders, that shall be required for the Lenders or any of them to take any
action hereunder or (f) amend this Section 8.01; and provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Agent under this Agreement or any Note; and provided further that
no amendment, waiver or consent shall, unless in writing and signed by the
Issuing Banks in addition to the Lenders required above to take such action,
affect the rights or obligation of the Issuing Banks under this Agreement.
SECTION 8.02. Notices, Etc. (a) All notices and other
communications provided for hereunder shall be either (x) in writing (including
telecopier, telegraphic or telex communication) and mailed, telecopied,
telegraphed, telexed or delivered or (y) as and to the extent set forth in
Section 8.02(b) and in the proviso to this Section 8.02(a), if to the Borrower,
at its address at 100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102,
Attention: Martin Moad, Treasurer, if to any Initial Lender, at its Domestic
Lending Office specified opposite its name on Schedule I hereto; if to any other
Lender, at its Domestic Lending Office specified in the Assumption Agreement or
the Assignment and Acceptance pursuant to which it became a Lender; and if to
the Agent, at its address at Two Penns Way, New Castle, Delaware 19720,
Attention: Bank Loan Syndications Department; or, as to the Borrower or the
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Agent, provided that materials required to be delivered pursuant to Section
5.01(i)(i), (ii) or (iv) shall be delivered to the Agent as specified in Section
8.02(b) or as otherwise specified to the Borrower by the Agent. All such notices
and communications shall, when mailed, telecopied, telegraphed or e-mailed, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company or confirmed by e-mail, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
(b) So long as Citicorp or any of its Affiliates is the Agent,
materials required to be delivered pursuant to Section 5.01(i)(i), (ii) and (iv)
(the "Communications") may be delivered to the Agent in an electronic medium in
a format acceptable to the Agent and the Lenders by e-mail at
oploanswebadmin@citigroup.com. The Borrower agrees that the Agent may make such
materials, as well as any other written information, documents, instruments and
other material relating to the Borrower, any of its Subsidiaries or any other
materials or matters relating to this Agreement, the Notes or any of the
transactions contemplated hereby available to the Lenders by posting such
notices on Intralinks, "e-Disclosure", the Agent's internet delivery system that
is part of Fixed Income Direct, Global Fixed Income's primary web portal, or a
substantially similar electronic system (the "Platform"). The Borrower
acknowledges that (i) the distribution of material through an electronic medium
is not necessarily secure and that there are confidentiality and other risks
associated with such distribution, (ii) the Platform is provided "as is" and "as
available" and (iii) neither the Agent nor any of its Affiliates warrants the
accuracy, adequacy or completeness of the Communications or the Platform and
each expressly disclaims liability for errors or omissions in the Communications
or the Platform. No warranty of any kind, express, implied or statutory,
including, without limitation, any warranty of merchantability, fitness for a
particular purpose, non-infringement of third party rights or freedom from
viruses or other code defects, is made by the Agent or any of its Affiliates in
connection with the Platform.
(c) Each Lender agrees that notice to it (as provided in the
next sentence) (a "Notice") specifying that any Communications have been posted
to the Platform shall constitute effective delivery of such information,
documents or other materials to such Lender for purposes of this Agreement;
provided that if requested by any Lender the Agent shall deliver a copy of the
Communications to such Lender by email or telecopier. Each Lender agrees (i) to
notify the Agent in writing of such Lender's e-mail address to which a Notice
may be sent by electronic transmission (including by electronic communication)
on or before the date such Lender becomes a party to this Agreement (and from
time to time thereafter to ensure that the Agent has on record an effective
e-mail address for such Lender) and (ii) that any Notice may be sent to such
e-mail address.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand all reasonable costs and expenses of the Agent in connection with
the preparation, execution, delivery, administration, modification and amendment
of this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all reasonable due diligence, syndication
(including printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under this
Agreement. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other documents to be delivered hereunder, including, without limitation,
reasonable fees and expenses of counsel for the Agent and each Lender in
connection with the enforcement of rights under this Section 8.04(a).
(b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances or the Letters of Credit or (ii) the actual or alleged
presence of Hazardous Materials on any property of the Borrower or any of its
Subsidiaries or any Environmental Action relating in any way to the Borrower or
any of its Subsidiaries, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, equityholders or creditors
or an Indemnified Party or any other Person, whether or not any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. The Borrower also agrees not to assert any
claim for special, indirect, consequential or punitive damages against the
Agent, any Lender, any of their Affiliates, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, arising out of or otherwise relating to the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or LIBO Rate Advance is made by the Borrower to or for
the account of a Lender other than on the last day of the Interest Period for
such Advance, as a result of a payment or Conversion pursuant to Section 2.09(d)
or (e), 2.11 or 2.13, acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender
other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to Section
8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), the
Borrower shall, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Advance. The loss of a Lender shall include an amount equal to the
excess, if any, as reasonably determined by such Lender of (A) its cost of
obtaining the funds for the Advance paid or Converted on other than the last day
of an Interest Period, to the last day of such Interest Period over (B) the
amount of interest (as reasonably determined by such Lender) that could be
realized by such Lender in reemploying during such period the funds paid or
Converted.
(d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in Sections 2.12, 2.15 and 8.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the Notes.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Agent to declare the Advances due and payable pursuant to the provisions of
Section 6.01, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender or such Affiliate to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement and the Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective (other than Sections 2.01 and 2.03, which shall only become effective
upon satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.
SECTION 8.07. Assignments and Participations. (a) Each Lender
may and, if demanded by the Borrower (following a demand by such Lender pursuant
to Section 2.12 or 2.15, or an assertion by such Lender of illegality under
Section 2.13) upon at least five Business Days' notice to such Lender and the
Agent, will assign to one or more Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Credit Commitment, the Revolving Credit Advances owing
to it and the Revolving Credit Note or Notes held by it); provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all rights and obligations under this Agreement (other than any
right to make Competitive Bid Advances, Competitive Bid Advances owing to it and
Competitive Bid Notes), (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all
of a Lender's rights and obligations under this Agreement, the amount of the
Revolving Credit Commitment of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof unless the Borrower and the
Agent otherwise agree, (iii) each such assignment shall be to an Eligible
Assignee, (iv) each such assignment made as a result of a demand by the Borrower
pursuant to this Section 8.07(a) shall be arranged by the Borrower after
consultation with the Agent and shall be either an assignment of all of the
rights and obligations of the assigning Lender under this Agreement or an
assignment of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments that together cover all of the
rights and obligations of the assigning Lender under this Agreement, (v) no
Lender shall be obligated to make any such assignment as a result of a demand by
the Borrower pursuant to this Section 8.07(a) unless and until such Lender shall
have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, and (vi) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Revolving Credit Note subject to such assignment and a processing and
recordation fee of $3,500 payable by the parties to each such assignment,
provided, however, that in the case of each assignment made as a result of a
demand by the Borrower, such recordation fee shall be payable by the Borrower
except that no such recordation fee shall be payable in the case of an
assignment made at the request of the Borrower to an Eligible Assignee that is
an existing Lender, and (vii) any Lender may, without the approval of the
Borrower and the Agent, assign all or a portion of its rights to any of its
Affiliates. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Sections 2.12, 2.15 and 8.04
to the extent any claim thereunder relates to an event arising prior such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender or as an Issuing Bank,
as the case may be.
(c) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with any Revolving Credit Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(d) The Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assumption Agreement and each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and the Commitment of, and principal
amount of the Advances owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent demonstrable error, and the Borrower, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Each Lender may sell participations to one or more banks
or other entities (other than the Borrower or any of its Affiliates) in or to
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitments, the Advances owing to
it and any Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Revolving
Credit Commitment to the Borrower hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of this Agreement or
any Note, or any consent to any departure by the Borrower therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Advances or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, or postpone any date
fixed for any payment of principal of, or interest on, the Advances or any fees
or other amounts payable hereunder, in each case to the extent subject to such
participation.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information relating to the
Borrower received by it from such Lender.
(g) Each Issuing Bank may assign to an Eligible Assignee its
rights and obligations or any portion of the undrawn Letter of Credit Commitment
at any time; provided, however, that (i) the amount of the Letter of Credit
Commitment of the assigning Issuing Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (ii) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,500.
(h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and any Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 8.08. Confidentiality. Neither the Agent nor any Lender
shall disclose any Confidential Information to any other Person without the
written consent of the Borrower, other than (a) to the Agent's or such Lender's
Affiliates and to their officers, directors, employees, agents and advisors as
are necessary and appropriate for the administration of this Agreement and, as
contemplated by Section 8.07(f), to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any law,
rule or regulation or judicial process, (c) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking and
(d) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder.
SECTION 8.09. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. The Borrower does business in the State of New York
through numerous locations in such State. The Borrower has appointed Ct
Corporation System as its agent for service of process in the State of New York,
and until such time as the Borrower notifies the Agent of a change in agent for
service of process, the Borrower hereby agrees that service of process in any
such action or proceeding brought in the any such New York State court or in
such federal court may be made upon CT Corporation System at its offices at 111
Eighth Avenue, 13th Floor, New York, New York 10011 (the "Process Agent") and
agrees that the failure of the Process Agent to give any notice of any such
service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. The Borrower shall
give the Agent notice of any change in agent for service of process in the State
of New York. The Borrower hereby further irrevocably consents to the service of
process in any action or proceeding in such courts by the mailing thereof by any
parties hereto by registered or certified mail, postage prepaid, to the Borrower
at its address specified pursuant to Section 8.02. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the Notes in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the Notes
in any New York State or federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
SECTION 8.12. No Liability of the Issuing Banks. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
an Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against such Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential, damages suffered by the Borrower that the Borrower proves were
caused by (i) such Issuing Bank's willful misconduct or gross negligence as
determined in a final, non-appealable judgment by a court of competent
jurisdiction in determining whether documents presented under any Letter of
Credit comply with the terms of such Letter of Credit or (ii) such Issuing
Bank's willful failure to make lawful payment under a Letter of Credit after the
presentation to it of a draft and certificates strictly complying with the terms
and conditions of the Letter of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary.
SECTION 8.13. Patriot Act. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies each borrower,
guarantor or grantor (the "Loan Parties"), which information includes the name
and address of each Loan Party and other information that will allow such Lender
to identify such Loan Party in accordance with the Act.
SECTION 8.14. Waiver of Jury Trial. Each of the Borrower, the
Agent and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
RADIOSHACK CORPORATION
By __________________________
Title:
CITIBANK, N.A.,
as Agent
By __________________________
Title:
Initial Issuing Banks
Letter of Credit Commitment
$50,000,000 BANK OF AMERICA, N.A.
By __________________________
Title:
$50,000,000 WACHOVIA BANK, NATIONAL ASSOCIATION
By __________________________
Title:
$100,000,000 Total of the Letter of Credit Commitments
Initial Lenders
Commitment
$42,000,000 CITIBANK, N.A.
By __________________________
Title:
$42,000,000 BANK OF AMERICA, N.A.
By __________________________
Title:
$27,500,000 KEYBANK NATIONAL ASSOCIATION
By __________________________
Title:
$27,500,000 WACHOVIA BANK, NATIONAL ASSOCIATION
By __________________________
Title:
$27,500,000 SUNTRUST BANK
By __________________________
Title:
$18,000,000 WELLS FARGO BANK, N.A.
By __________________________
Title:
$18,000,000 THE ROYAL BANK OF CANADA
By __________________________
Title:
$15,000,000 U.S. BANK, NATIONAL ASSOCIATION
By __________________________
Title:
$15,000,000 COMERICA BANK
By __________________________
Title:
$15,000,000 CALYON NEW YORK BRANCH
By __________________________
Title:
By __________________________
Title:
$12,500,000 FIFTH THIRD BANK
By __________________________
Title:
$12,500,000 NATIONAL CITY BANK
By __________________________
Title:
$10,000,000 THE BANK OF NEW YORK
By __________________________
Title:
$10,000,000 BANK OF TEXAS, N.A.
By __________________________
Title:
$7,500,000 HIBERNIA NATIONAL BANK
By __________________________
Title:
$300,000,000 Total of the Commitments
SCHEDULE I
RADIOSHACK CORPORATION
FIVE YEAR CREDIT AGREEMENT
APPLICABLE LENDING OFFICES
---------------------------------------- --------------------------------------- -----------------------------------
Name of Initial Lender Domestic Lending Office Eurodollar Lending Office
---------------------------------------- --------------------------------------- -----------------------------------
---------------------------------------- --------------------------------------- -----------------------------------
Bank of America, N.A. 1850 Gateway Blvd, 5th Floor 1850 Gateway Blvd, 5th Floor
Concord, CA 84520 Concord, CA 84520
Attn: Nina Lemmer Attn: Jessical Voulgarelis
T: 925 675-7817 T: 925 675-7817
F: 888 969-9317 F: 888 969-9317
---------------------------------------- --------------------------------------- -----------------------------------
The Bank of New York One Wall Street - 8th floor One Wall Street - 8th floor
New York, NY 10286 New York, NY 10286
Attn: Diane Burgess Attn: Diane Burgess
T: 212 635-1311 T: 212 635-1311
F: 212 635-1483 F: 212 635-1483
---------------------------------------- --------------------------------------- -----------------------------------
Bank of Texas, N.A.
---------------------------------------- --------------------------------------- -----------------------------------
Calyon New York Branch
---------------------------------------- --------------------------------------- -----------------------------------
Citibank, N.A. Two Penns Way, Suite 200 Two Penns Way, Suite 200
New Castle, DE 19720 New Castle, DE 19720
Attn: Vincent Farrell Attn: Vincent Farrell
T: 302 894-6032 T: 302 894-6032
F: 302 894-6120 F: 302 894-6120
---------------------------------------- --------------------------------------- -----------------------------------
Comerica Bank 4100 Spring Valley Road 4100 Spring Valley Road
Suite 400 Suite 400
Dallas, TX 75244 Dallas, TX 75244
Attn: Pat Britton Attn: Pat Britton
T: 972 361-2598 T: 972 361-2598
F: 972 361-2519 F: 972 361-2519
---------------------------------------- --------------------------------------- -----------------------------------
Fifth Third Bank 38 Fountain Square Plaza 38 Fountain Square Plaza
MD 10906 MD 10906
Cincinnati, OH 45202 Cincinnati, OH 45202
Attn: Andrew Jones Attn: Andrew Jones
T: 513 534-0836 T: 513 534-0836
F: 513 534-5947 F: 513 534-5947
---------------------------------------- --------------------------------------- -----------------------------------
Hibernia National Bank 313 Carondelet Street 313 Carondelet Street
New Orleans, LA 70130 New Orleans, LA 70130
Attn: Shelly Strada Attn: Shelly Strada
T: 504 533-2808 T: 504 533-2808
F: 504 533-5344 F: 504 533-5344
---------------------------------------- --------------------------------------- -----------------------------------
KeyBank National Association 127 Public Square 127 Public Square
Cleveland, OH 44114 Cleveland, OH 44114
Attn: Laura Binkley Attn: Laura Binkley
T: 216 689-4448 T: 216 689-4448
F: 216 689-4981 F: 216 689-4981
---------------------------------------- --------------------------------------- -----------------------------------
National City Bank 155 East Broad Street 155 East Broad Street
Columbus, OH Columbus, OH
Attn: Vicki Niemela Attn: Vicki Niemela
T: 614 463-7133 T: 614 463-7133
F: 614 463-8572 F: 614 463-8572
---------------------------------------- --------------------------------------- -----------------------------------
---------------------------------------- --------------------------------------- -----------------------------------
The Royal Bank of Canada Royal Bank of Canada Royal Bank of Canada
New York Branch New York Branch
One Liberty Plaza One Liberty Plaza
New York, NY 10006-1404 New York, NY 10006-1404
Address for Notices: Address for Notices:
Royal Bank of Canada Royal Bank of Canada
New York Branch New York Branch
One Liberty Plaza, 3rd Floor One Liberty Plaza, 3rd Floor
New York, NY 10006 New York, NY 10006
Attn: David Banning Attn: David Banning
T: 212 428-6369 T: 212-428-6369
F: 212 428-2372 F: 212 428-2372
With a copy to: With a copy to:
Royal Bank of Canada Royal Bank of Canada
One Liberty Plaza, 3rd Floor One Liberty Plaza, 3rd Floor
New York, NY 10006 New York, NY 10006
Attn: B. Lund Attn: B. Lund
T: 212 428-6509 T: 212 428-6509
F: 212 428-2319 F: 212 428-2319
---------------------------------------- --------------------------------------- -----------------------------------
SunTrust Bank 303 Peachtree Street, 10th Floor 303 Peachtree Street, 10th Floor
Atlanta, GA 30302 Atlanta, GA 30302
Attn: Shonda Bankston Attn: Shonda Bankston
T: 404 230-1938 T: 404 230-1938
F: 4040 575-2730 F: 4040 575-2730
---------------------------------------- --------------------------------------- -----------------------------------
U.S. Bank, National Association 400 City Center 400 City Center
Mail Code: OS-WI-CCO Mail Code: OS-WI-CCO
Oshkosh, WI 54901 Oshkosh, WI 54901
Attn: Connie Sweeney Attn: Connie Sweeney
T: 920 237-7604 T: 920 237-7604
F: 920 237-7993 F: 920 237-7993
---------------------------------------- --------------------------------------- -----------------------------------
Wachovia Bank, National Association 201 S. College Street, CP-17 201 S. College Street, CP-17
Charlotte, NC 28288 Charlotte, NC 28288
Attn: Cynthia Rawson Attn: Cynthia Rawson
T: 704 374-4425 T: 704 374-4425
F: 704 383-7997 F: 704 383-7997
---------------------------------------- --------------------------------------- -----------------------------------
Wells Fargo Bank, N.A. 201 Third Street, 8th Floor 201 Third Street, 8th Floor
MAC A0187-081 MAC A0187-081
San Francisco, CA 94103 San Francisco, CA 94103
Attn: Rosanna Roxas Attn: Rosanna Roxas
T: 415 477-5425 T: 415 477-5425
F: 415 979-0675 F: 415 979-0675
---------------------------------------- --------------------------------------- -----------------------------------
Schedule 5.02(e)
Investments as of June 16, 2004
---------------------------------------- --------------------------------------- --------------------------
Investment made as part of a community Note amount $ 330,000.00
effort to provide low income housing, Ltd. Partnership $ 1,598,375.00
including a note maturing on 9-30-2022,
and a limited partnership interest.
---------------------------------------- --------------------------------------- --------------------------
RadioShack de Mexico S.A. de $ 7,653,410.00
C.V.
---------------------------------------- --------------------------------------- --------------------------
Loan to Leonard Roberts Children's Trust $ 2,000,000.00
---------------------------------------- --------------------------------------- --------------------------
Total investments $11,581,785.00
---------------------------------------- --------------------------------------- --------------------------
Schedule 5.02(a)
Existing Liens
None
EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE
U.S.$_______________ Dated: _______________, 200_
FOR VALUE RECEIVED, the undersigned, Radioshack Corporation, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order
of_________________________ (the "Lender") for the account of its Applicable
Lending Office on the Termination Date (each as defined in the Credit Agreement
referred to below) the principal sum of U.S.$[amount of the Lender's Commitment
in figures] or, if less, the aggregate principal amount of the Revolving Credit
Advances made by the Lender to the Borrower pursuant to the Five Year Credit
Agreement dated as of June 16, 2004 among the Borrower, the Lender and certain
other lenders parties thereto, Bank of America, N.A., as administrative agent,
Wachovia Bank, National Association, KeyBank National Association and SunTrust
Bank, as co-syndication agents, Citigroup Global Markets Inc. and Banc of
America Securities LLC, as joint lead arrangers and bookrunners, and Citibank,
N.A., as Agent for the Lender and such other lenders (as amended or modified
from time to time, the "Credit Agreement"; the terms defined therein being used
herein as therein defined) outstanding on such date.
The Borrower promises to pay interest on the unpaid principal
amount of each Revolving Credit Advance from the date of such Revolving Credit
Advance until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citibank, as Agent, at 388 Greenwich Street, New
York, New York 10013, in same day funds. Each Revolving Credit Advance owing to
the Lender by the Borrower pursuant to the Credit Agreement, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto which is part of
this Promissory Note.
This Promissory Note is one of the Revolving Credit Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things, (i) provides for the making of Revolving
Credit Advances by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Revolving
Credit Advance being evidenced by this Promissory Note and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
RADIOSHACK CORPORATION
By __________________________
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
--------------------------- ------------------------ ------------------------ ------------------------- ------------------------
Amount of
Date Amount of Principal Paid Unpaid Principal Notation
Advance or Prepaid Balance Made By
--------------------------- ------------------------ ------------------------ ------------------------- ------------------------
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EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE
U.S.$_______________ Dated: _______________, 200_
FOR VALUE RECEIVED, the undersigned, Radioshack Corporation, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
________________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Five Year Credit Agreement dated as of June
16, 2004 among the Borrower, the Lender and certain other lenders parties
thereto, Bank of America, N.A., as administrative agent, Wachovia Bank, National
Association, KeyBank National Association and SunTrust Bank, as co-syndication
agents, Citigroup Global Markets Inc. and Banc of America Securities LLC, as
joint lead arrangers and bookrunners, and Citibank, N.A., as Agent for the
Lender and such other lenders (as amended or modified from time to time, the
"Credit Agreement"; the terms defined therein being used herein as therein
defined)), on _______________, 200_, the principal amount of
U.S.$_______________].
The Borrower promises to pay interest on the unpaid principal
amount hereof from the date hereof until such principal amount is paid in full,
at the interest rate and payable on the interest payment date or dates provided
below:
Interest Rate: _____% per annum (calculated on the basis of a
year of _____ days for the actual number of days elapsed).
Both principal and interest are payable in lawful money of the
United States of America to Citibank, as agent, for the account of the Lender at
the office of Citibank, at 388 Greenwich Street, New York, New York 10013 in
same day funds.
This Promissory Note is one of the Competitive Bid Notes referred
to in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
The Borrower hereby waives presentment, demand, protest and
notice of any kind. No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
RADIOSHACK CORPORATION
By __________________________
Title:
EXHIBIT B-1 - FORM OF NOTICE OF
REVOLVING CREDIT BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720
[Date]
Attention: Bank Loan Syndications Department
Ladies and Gentlemen:
The undersigned, Radioshack Corporation, refers to the Five Year
Credit Agreement, dated as of June 16, 2004 (as amended or modified from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties thereto, Bank
of America, N.A., as administrative agent, Wachovia Bank, National Association,
KeyBank National Association and SunTrust Bank, as co-syndication agents,
Citigroup Global Markets Inc. and Banc of America Securities LLC, as joint lead
arrangers and bookrunners, and Citibank, N.A., as Agent for said Lenders, and
hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit
Agreement that the undersigned hereby requests a Revolving Credit Borrowing
under the Credit Agreement, and in that connection sets forth below the
information relating to such Revolving Credit Borrowing (the "Proposed Revolving
Credit Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Revolving Credit Borrowing
is _______________, 200_.
(ii) The Type of Advances comprising the Proposed Revolving
Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Revolving Credit
Borrowing is $_______________.
[(iv) The initial Interest Period for each Eurodollar Rate
Advance made as part of the Proposed Revolving Credit Borrowing is
_____ month[s].]
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Revolving Credit Borrowing:
(A) the representations and warranties contained in Section
4.01(a) through (i) of the Credit Agreement are correct, before and
after giving effect to the Proposed Revolving Credit Borrowing and to
the application of the proceeds therefrom, as though made on and as of
such date; and
(B) no event has occurred and is continuing, or would result
from such Proposed Revolving Credit Borrowing or from the application
of the proceeds therefrom, that constitutes a Default.
Very truly yours,
RADIOSHACK CORPORATION
By __________________________
Title:
EXHIBIT B-2 - FORM OF NOTICE OF
COMPETITIVE BID BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720
[Date]
Attention: Bank Loan Syndications Department
Ladies and Gentlemen:
The undersigned, Radioshack Corporation, refers to the Five Year
Credit Agreement, dated as of June 16, 2004 (as amended or modified from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties thereto, Bank
of America, N.A., as administrative agent, Wachovia Bank, National Association,
KeyBank National Association and SunTrust Bank, as co-syndication agents,
Citigroup Global Markets Inc. and Banc of America Securities LLC, as joint lead
arrangers and bookrunners, and Citibank, N.A., as Agent for said Lenders, and
hereby gives you notice, irrevocably, pursuant to Section 2.03 of the Credit
Agreement that the undersigned hereby requests a Competitive Bid Borrowing under
the Credit Agreement, and in that connection sets forth the terms on which such
Competitive Bid Borrowing (the "Proposed Competitive Bid Borrowing") is
requested to be made:
(A) Date of Competitive Bid Borrowing ________________________
(B) Amount of Competitive Bid Borrowing ________________________
(C) [Maturity Date] [Interest Period] ________________________
(D) Interest Rate Basis ________________________
(E) Interest Payment Date(s) ________________________
(F) ___________________ ________________________
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Competitive Bid Borrowing:
(a) the representations and warranties contained in Section
4.01(a) through (i) of the Credit Agreement are correct, before and
after giving effect to the Proposed Competitive Bid Borrowing and to
the application of the proceeds therefrom, as though made on and as of
such date;
(b) no event has occurred and is continuing, or would result
from the Proposed Competitive Bid Borrowing or from the application of
the proceeds therefrom, that constitutes a Default;
(c) no event has occurred and no circumstance exists of which
the Borrower has become aware, as a result of which the information
concerning the Borrower that has been provided to the Agent and each
Lender by the Borrower in connection herewith is shown to contain an
untrue statement of a material fact or is shown to have omitted to
state any material fact or any fact necessary to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading as if the date such information was provided;
and
(d) the aggregate amount of the Proposed Competitive Bid
Borrowing and all other Borrowings to be made on the same day under the
Credit Agreement is within the aggregate amount of the Unused
Commitments of the Lenders.
The undersigned hereby confirms that the Proposed Competitive Bid
Borrowing is to be made available to it in accordance with Section 2.03(a) (v)
of the Credit Agreement.
Very truly yours,
RADIOSHACK CORPORATION
By __________________________
Title:
EXHIBIT C - FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Five Year Credit Agreement dated as of
June 16, 2004 (as amended or modified from time to time, the "Credit Agreement")
among Radioshack Corporation, a Delaware corporation (the "Borrower"), the
Lenders and Initial Issuing Banks (each as defined in the Credit Agreement),
Bank of America, N.A., as administrative agent, Wachovia Bank, National
Association, KeyBank National Association and SunTrust Bank, as co-syndication
agents, Citigroup Global Markets Inc. and Banc of America Securities LLC, as
joint lead arrangers and bookrunners, and Citibank, N.A., as agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein
with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule I
hereto agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof (other than in respect of Competitive Bid Advances and Competitive Bid
Notes) equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement (other than in
respect of Competitive Bid Advances and Competitive Bid Notes) together with
participations in Letters of Credit held by the Assignor on the date hereof.
After giving effect to such sale and assignment, the Assignee's Revolving Credit
Commitment and the amount of the Revolving Credit Advances owing to the Assignee
will be as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Revolving Credit Note, if any, held by the Assignor [and
requests that the Agent exchange such Revolving Credit Note for a new Revolving
Credit Note payable to the order of [the Assignee in an amount equal to the
Revolving Credit Commitment assumed by the Assignee pursuant hereto or new
Revolving Credit Notes payable to the order of the Assignee in an amount equal
to the Revolving Credit Commitment assumed by the Assignee pursuant hereto and]
the Assignor in an amount equal to the Revolving Credit Commitment retained by
the Assignor under the Credit Agreement[, respectively,] as specified on
Schedule 1 hereto].
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (v) agrees that it will perform
in accordance with their terms all of the obligations that by the terms of the
Credit Agreement are required to be performed by it as a Lender; and (vi)
attaches any U.S. Internal Revenue Service forms required under Section 2.15 of
the Credit Agreement.
4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Revolving Credit Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest,
facility fees and letter of credit commissions with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement and the Revolving Credit Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
Schedule 1
to
Assignment and Acceptance for
Five Year Credit Agreement, dated as of June 16, 2004
among Radioshack Corporation, the Lenders parties thereto
and Citibank, N.A., as Agent
Percentage interest assigned: _____%
Assignee's Revolving Credit Commitment: $______
Aggregate outstanding principal amount of Revolving Credit
Advances assigned: $______
Principal amount of Revolving Credit Note payable to Assignee: $______
Principal amount of Revolving Credit Note payable to Assignor: $______
Effective Date*: _______________, 200_
[NAME OF ASSIGNOR], as Assignor
By __________________________
Title:
Dated: _______________, 200_
[NAME OF ASSIGNEE], as Assignee
By __________________________
Title:
Dated: _______________, 200_
Domestic Lending Office:
[Address]
Eurodollar Lending Office:
[Address]
--------------------
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent.
Accepted [and Approved]** this
__________ day of _______________, 200_
CITIBANK, N.A., as Agent
By
------------------------------------------
Title:
[Approved this __________ day
of _______________, 200_
RADIOSHACK CORPORATION
By ]*
------------------------------------------
Title:
--------------------
** Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee".
* Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee".
EXHIBIT D - FORM OF
OPINION OF COUNSEL
FOR THE BORROWER
[Effective Date]
To each of the Lenders parties
to the Credit Agreement dated
as of June 16, 2004
among Radioshack Corporation,
said Lenders and Citibank, N.A.,
as Agent for said Lenders, and
to Citibank, N.A., as Agent
Radioshack Corporation
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(h)(iv)
of the Five Year Credit Agreement, dated as of June 16, 2004 (the "Credit
Agreement"), among Radioshack Corporation (the "Borrower"), the Lenders parties
thereto, Bank of America, N.A., as administrative agent, Wachovia Bank, National
Association, KeyBank National Association and SunTrust Bank, as co-syndication
agents, Citigroup Global Markets Inc. and Banc of America Securities LLC, as
joint lead arrangers and bookrunners, and Citibank, N.A., as Agent for said
Lenders. Terms defined in the Credit Agreement are used herein as therein
defined.
We have acted as counsel for the Borrower in connection with the
preparation, execution and delivery of the Credit Agreement.
In that connection, we have examined:
(1) The Credit Agreement.
(2) The documents furnished by the Borrower pursuant to
Article III of the Credit Agreement.
(3) The [Articles] [Certificate] of Incorporation of the
Borrower and all amendments thereto (the "Charter").
(4) The by-laws of the Borrower and all amendments thereto
(the "By-laws").
(5) A certificate of the Secretary of State of Delaware, dated
_______________, 2004, attesting to the continued corporate existence
and good standing of the Borrower in that State.
We have also examined the originals, or copies certified to our
satisfaction, of the indentures, loan or credit agreements, leases, guarantees,
mortgages, security agreements, bonds, notes and other agreements or
instruments, and orders, writs, judgments, awards, injunctions and decrees, that
affect or purport to affect the Borrower's right to borrow money or the
Borrower's obligations under the Credit Agreement or the Notes. In addition, we
have examined the originals, or copies certified to our satisfaction, of such
other corporate records of the Borrower, certificates of public officials and of
officers of the Borrower, and agreements, instruments and other documents, as we
have deemed necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, we have, when relevant facts were
not independently established by us, relied upon certificates of the Borrower or
its officers or of public officials. We have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement by the Initial
Lenders and the Agent.
Our opinions expressed below are limited to the law of the State
of Texas, the General Corporation Law of the State of Delaware and the Federal
law of the United States.
Based upon the foregoing and upon such investigation as we have
deemed necessary, we are of the following opinion:
1. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes, and the consummation of the
transactions contemplated thereby, are within the Borrower's corporate
powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Charter or the By-laws or (ii) any law,
rule or regulation applicable to the Borrower (including, without
limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or (iii) any contractual or legal restriction binding
on or affecting the Borrower. The Credit Agreement and the Notes have
been duly executed and delivered on behalf of the Borrower.
3. No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for the due execution, delivery
and performance by the Borrower of the Credit Agreement and the Notes.
4. To the best of our knowledge, there are no pending or
overtly threatened actions or proceedings against the Borrower or any
of its Subsidiaries before any court, governmental agency or arbitrator
that purport to affect the legality, validity, binding effect or
enforceability of the Credit Agreement or any of the Notes or the
consummation of the transactions contemplated thereby or that are
likely to have a materially adverse effect upon the financial condition
or operations of the Borrower or any of its Subsidiaries.
5. In any action or proceeding arising out of or relating to
the Credit Agreement or the Notes in any court of the State of Texas or
in any Federal court sitting in the State of Texas, such court would
recognize and give effect to the provisions of Section 8.09 of the
Credit Agreement wherein the parties thereto agree that the Credit
Agreement and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York. Without limiting
the generality of the foregoing, a court of the State of Texas or a
Federal court sitting in the State of Texas would apply the usury law
of the State of New York, and would not apply the usury law of the
State of Texas, to the Credit Agreement and the Notes. However, if a
court of the State of Texas or a Federal court sitting in the State of
Texas were to hold that the Credit Agreement and the Notes are governed
by, and to be construed in accordance with, the laws of the State of
Texas, the Credit Agreement and the Notes would be, under the laws of
the State of Texas, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their
respective terms provided that the rate of interest charged under the
Credit Agreement and the Notes does not exceed the highest lawful rate
then in effect in the State of Texas, which rate is equal to twice the
rate of interest paid in respect of U.S. treasury bills, but is not
less than 18%, nor more than 28% per annum.
The opinions set forth above are subject to the following
qualifications:
(a) Our opinion in paragraph 5 above as to enforceability is
subject to the effect of any applicable bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar law affecting
creditors' rights generally.
(b) Our opinion in paragraph 5 above as to enforceability is
subject to the effect of general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith
and fair dealing (regardless of whether considered in a proceeding in
equity or at law).
(c) We express no opinion as to (i) Section 2.16 of the Credit
Agreement insofar as it provides that any Lender purchasing a
participation from another Lender pursuant thereto may exercise set-off
or similar rights with respect to such participation and (ii) the
effect of the law of any jurisdiction other than the State of Texas
wherein any Lender may be located or wherein enforcement of the Credit
Agreement or the Notes may be sought that limits the rates of interest
legally chargeable or collectible.
Very truly yours,
DRAFT
EXECUTION 6/7/04COPY
U.S. $300,000,000
FIVE YEAR CREDIT AGREEMENT
Dated as of June 16, 2004
Among
RADIOSHACK CORPORATION
as Borrower
and
THE INITIAL LENDERS NAMED HEREIN
as Initial Lenders
and
CITIBANK, N.A.
as Administrative Agent and Paying Agent
and
BANK OF AMERICA, N.A.
as Administrative Agent and Initial Issuing Bank
and
WACHOVIA BANK, NATIONAL ASSOCIATION
as Co-Syndication Agent and Initial Issuing Bank
and
KEYBANK NATIONAL ASSOCIATION
and
SUNTRUST BANK
as Co-Syndication Agents
and
CITIGROUP GLOBAL MARKETS INC.
and
BANC OF AMERICA SECURITIES LLC
as Joint Lead Arrangers and Bookrunners
TABLE OF CONTENTS
ARTICLE I
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Computation of Time Periods 13
SECTION 1.03. Accounting Terms 13
ARTICLE II
SECTION 2.01. The Revolving Credit Advances and Letters of Credit 13
SECTION 2.02. Making the Revolving Credit Advances 13
SECTION 2.03. The Competitive Bid Advances 14
SECTION 2.04. Issuance of and Drawings and Reimbursement Under
Letters of Credit 17
SECTION 2.05. Fees 18
SECTION 2.06. Termination or Reduction of the Commitments 19
SECTION 2.07. Repayment of Revolving Credit Advances 19
SECTION 2.08. Interest on Revolving Credit Advances 20
SECTION 2.09. Interest Rate Determination 20
SECTION 2.10. Optional Conversion of Revolving Credit Advances 21
SECTION 2.11. Prepayments of Revolving Credit Advances 21
SECTION 2.12. Increased Costs 21
SECTION 2.13. Illegality 22
SECTION 2.14. Payments and Computations 22
SECTION 2.15. Taxes 23
SECTION 2.16. Sharing of Payments, Etc. 25
SECTION 2.17. Evidence of Debt 25
SECTION 2.18. Use of Proceeds 25
SECTION 2.19. Extension of Termination Date 25
ARTICLE III
SECTION 3.01. Conditions Precedent to Effectiveness of Sections
2.01 and 2.03 27
SECTION 3.02. Conditions Precedent to Each Revolving Credit
Borrowing, Letter of Credit Issuance and Extension
Date. 28
SECTION 3.03. Conditions Precedent to Each Competitive Bid
Borrowing 29
SECTION 3.04. Determinations Under Section 3.01 29
ARTICLE IV
SECTION 4.01. Representations and Warranties of the Borrower 30
ARTICLE V
SECTION 5.01. Affirmative Covenants 31
SECTION 5.02. Negative Covenants 33
SECTION 5.03. Financial Covenants 34
ARTICLE VI
SECTION 6.01. Events of Default 35
SECTION 6.02. Actions in Respect of the Letters of Credit
upon Default 36
ARTICLE VII
SECTION 7.01. Authorization and Action 37
SECTION 7.02. Agent's Reliance, Etc. 37
SECTION 7.03. Citibank and Affiliates 37
SECTION 7.04. Lender Credit Decision 38
SECTION 7.05. Indemnification 38
SECTION 7.06. Successor Agent 38
SECTION 7.07. Other Agents. 39
ARTICLE VIII
SECTION 8.01. Amendments, Etc. 39
SECTION 8.02. Notices, Etc. 39
SECTION 8.03. No Waiver; Remedies 40
SECTION 8.04. Costs and Expenses 40
SECTION 8.05. Right of Set-off 41
SECTION 8.06. Binding Effect 41
SECTION 8.07. Assignments and Participations 41
SECTION 8.08. Confidentiality 43
SECTION 8.09. Governing Law 44
SECTION 8.10. Execution in Counterparts 44
SECTION 8.11. Jurisdiction, Etc. 44
SECTION 8.12. No Liability of the Lenders as Letter of
Credit Issuers 44
SECTION 8.13. Patriot Act 45
SECTION 8.14. Waiver of Jury Trial 46
Schedules
Schedule I - List of Applicable Lending Offices
Schedule 5.02(a) - Existing Liens
Schedule 5.02(e) - Existing Investments
Exhibits
Exhibit A-1 - Form of Revolving Credit Promissory Note
Exhibit A-2 - Form of Competitive Bid Promissory Note
Exhibit B-1 - Form of Notice of Revolving Credit Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Opinion of Counsel for the Borrower
--------
* This date should be no earlier than five Business Days after the delivery of
this Assignment and Acceptance to the Agent.
** Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee". * Required if the Assignee is an
Eligible Assignee solely by reason of clause (iii) of the definition of
"Eligible Assignee".
EXHIBIT 10(d)
RADIOSHACK INVESTMENT PLAN
Amended and Restated Effective as of April 30, 2004
I.
PURPOSE AND SCOPE
The RadioShack Investment Plan (the "Plan") provides certain
Employees of RadioShack Corporation ("RadioShack") and any Participating Company
(collectively with RadioShack, the "Company") an opportunity to conveniently
contribute a portion of their paychecks and receive Company Contributions on
those contributions, which amounts may be used, at the election of such
Employees, to invest in the common stock of RadioShack Corporation ("Stock").
Capitalized terms not otherwise defined herein shall have the definitions set
forth in Section XVIII.
The Plan enables Employees to receive Company Contributions on
Employee Payroll Deductions, which they may use to monthly purchase Stock.
The Plan provides for Company Contributions from 40% to 80% of
Employee Payroll Deductions.
Effective April 30, 2004, participation in the Plan is frozen. Only
employees of the Company participating in the Plan on April 29, 2004 are
eligible to participate in the Plan on and after April 30, 2004.
II.
PARTICIPATION IN THE PLAN
A. ADOPTION OF PLAN. Prior to April 30, 2004, RadioShack and each of
its divisions, subsidiaries and affiliates could adopt the Plan for all or some
of its employees to the extent such adoption was approved by the Board of
Directors of RadioShack (the "Board"). On and after April 30, 2004,
participation in the Plan is frozen and no additional divisions, subsidiaries
and affiliates of RadioShack may adopt the Plan on and after April 30, 2004.
B. ELIGIBILITY. Effective April 30, 2004, only those Employees of the
Company who were participating in the Plan on April 29, 2004 (a "Participant")
may continue participating in the Plan on and after April 30, 2004. Any
Participant who withdraws from the Plan pursuant to Section VIII will no longer
be eligible to participate in the Plan following such withdrawal.
C. ANNUAL ELECTION FOR PARTICIPATION. An eligible Employee must annually
make an investment election, or be deemed to have made an election, to purchase
Stock, or must make an election not to purchase Stock (such election, an "Annual
Election") at the beginning of each Plan year during a specified time frame as
determined by the Plan Administrator. If a Participant does not timely complete
an Annual Election form for any Plan Year, he will be deemed to have elected to
purchase Stock. The Annual Election shall evidence the Employee's:
1. Intent to continue participation in the Plan;
2. Consent for Employee Payroll Deductions (as defined in Section
III below);
3. Intent to (a) make monthly purchases of Stock and therefore
receive the distribution of the Employee's Plan account in Stock, or (b) to
make and receive monthly cash contributions in order to receive the
distribution of the Employee's Plan account in cash; and
4. Acknowledgment and consent to pay the taxes resulting from the
Company Contributions (and/or Other Deferrals) during the taxable year in
which the Company Contributions (and/or Other Deferrals) are made, in
accordance with Section 451 of the Internal Revenue Code of 1986, as
amended, or its successor provision.
For payroll periods ending during the period beginning on April 30, 2004
and ending on the earlier of the date an eligible Employee makes an initial
Annual Election pursuant to this Section II.C. or May 28, 2004, an eligible
Employee will be deemed to have elected to participate in the Plan by making
Employee Payroll Deductions at the level in effect on April 29, 2004 to be used
(along with Company Contributions and Other Contributions) to purchase Stock. If
no initial election, with respect to the Plan as amended and restated effective
as of April 30, 2004, is received for an eligible Employee on or before May 28,
2004, such eligible Employee will be deemed to have elected to participate in
the Plan for the first Plan Year by making Employee Payroll Deductions at the
level in effect on April 29, 2004 to be used (along with Company Contributions
and Other Contributions) to purchase Stock.
III.
INVESTMENT OPTIONS
A. RATE OF PAYROLL DEDUCTION. The rate of payroll deduction authorized by
a Participant (an "Employee Payroll Deduction") and in effect as of April 29,
2004 shall continue in effect for each Plan Year, notwithstanding any change in
the Participant's Earnings, until the Participant authorizes a decrease in his
or her rate of Employee Payroll Deductions (or a suspension of Employee Payroll
Deductions), as provided in Section III.B. Participants may not elect to
increase Employee Payroll Deductions; provided, however, when a Participant
automatically resumes participation after suspending participation, the
Participant will resume participation at the same rate of Employee Payroll
Deductions in effect immediately prior to such suspension and such resumption of
participation will not be deemed an increase in Employee Payroll Deductions.
RadioShack's Chief Executive Officer may, with respect to all or any group of
Employees, limit the maximum authorized payroll deduction to a percentage less
than 7% of Earnings (the maximum rate of payroll deductions in effect on April
29, 2004) which reduction will automatically reduce the Employee Payroll
Deductions exceeding the new limit to the new limit established by the Chief
Executive Officer. Upon the adoption of any such limitation, prompt notice
thereof shall be given to the affected Employees.
B. CHANGES IN RATE OF DEDUCTIONS. Without withdrawing from the Plan, a
Participant may suspend or decrease contributions to the Plan pursuant to
procedures established by the Plan Administrator. A Participant may:
1. Suspend Employee Payroll Deductions, effective as soon as
administratively feasible following the date on which receipt of notice
to suspend is received by the Plan Administrator in the form and
manner specified by the Plan Administrator. The suspension shall be
for a period of six (6) months. At the beginning of the first pay period
immediately following the six (6) month suspension, Employee Payroll
Deductions will automatically be resumed at the rate in effect
immediately prior to the suspension and the Participant's Annual
Election to purchase Stock or receive a cash distribution will be
retained; provided, however, if the Participant's automatic resumption
of participation occurs in a Plan Year following the Plan Year in which
the suspension election was made, the Participant's Annual Election at
the beginning of such later plan year shall govern. A Participant may
have only one (1) six (6) month suspension in any twelve (12) month period.
2. Permanently reduce the percentage rate of Employee Payroll
Deductions, effective as soon as administratively feasible following
receipt of the election by the Plan Administrator in the form and manner
specified by the Plan Administrator. Participants may not increase their
rate of Employee Payroll Deductions under the Plan. Any reduction in
Employee Payroll Deductions will be irrevocable and a Participant will not
be entitled to increase Employee Payroll Deductions after electing a
reduction.
IV.
CREDITS TO PARTICIPANTS
As of the end of each calendar month, the following credits shall be made
to each Participant's account:
A. EMPLOYEE PAYROLL DEDUCTION. The amount of Employee Payroll Deductions
withheld during such month shall be credited to each Participant's account.
B. COMPANY CONTRIBUTION. A monthly amount (the "Company Contribution")
calculated in accordance with Section IV.B.1. below shall be credited to each
Participant's account.
The amount of the Company Contribution shall be determined on the basis
of each payroll period by multiplying the following appropriate percentage times
each Employee Payroll Deduction:
Period of Continuous
Participation in the Plan Amount of
As of April 29, 2004 Company's Contribution
-------------------- ----------------------
Day One (1) through Three (3) Years Forty Percent (40%) of Employee
Payroll Deductions
Over Three (3) Years through Five Sixty Percent (60%) of Employee
(5) Years Payroll Deductions
Over Five (5) Years Eighty Percent (80%) of Employee
Payroll Deductions
Effective April 30, 2004, the percentage of Company Contributions matching
Employee Payroll Deductions with respect to each Participant will be frozen
and only the period of continuous participation in the Plan as of April 29,
2004 will be used to determine the amount of Company Contributions.
Therefore, continuous participation in the Plan on and after April 30, 2004
will not result in any increase in the amount of Company Contributions.
C. Employee Payroll Deductions and Company Contributions are to be
credited to the Participant's account monthly as soon as administratively
feasible following the end of the last payroll period of the month.
D. OTHER CONTRIBUTIONS-DIVIDEND INCOME ON STOCK. All cash dividends on
all Stock credited to the account of a Participant on the record date
designated by RadioShack for such dividend shall be allocated to the
Participant's account on the date of payment (such dividend payments are
referred to as "Other Contributions") and applied to the purchase of Stock
in accordance with Section VII.B.3. The amount allocated as Other Contributions
shall be reduced by any required withholding of taxes. These Other Contributions
will not be subject to matching Company Contributions. Participants electing
not to purchase Stock under the Plan will not receive dividends on cash amounts
credited to their Plan accounts.
E. DIVIDENDS OTHER THAN CASH AND STOCK. All dividends on Stock not
payable in cash or Stock shall be allocated to a Participant's account as a
credit in an amount equal to the fair market value of such property. The amount
of such credit shall be applied to a Participant's account as Other
Contributions and used to purchase Stock in accordance with Section VII.B.3.
Participants electing not to purchase Stock under the Plan will not receive
dividends on cash amounts credited to their Plan accounts.
V.
TRANSFERS TO RADIOSHACK
A. EMPLOYEE PAYROLL DEDUCTIONS. The Company shall transfer to RadioShack
the Employee Payroll Deductions of each Participant as soon as practicable after
the last payroll period of the calendar month in which such Employee Payroll
Deductions are withheld.
B. COMPANY CONTRIBUTIONS. The Company shall transfer to RadioShack the
Company Contribution for each Participant as soon as practicable after the last
payroll period of the calendar month in which such Employee Payroll Deduction is
withheld.
VI.
INVESTMENT
A. STOCK.
1. Up to 10,000,000 shares of Stock may be purchased under this
Plan. In the event that the number or kind of outstanding shares of Stock
shall be changed by reason of recapitalization, reorganization,
redesignation, merger, consolidation, stock split, stock dividend,
combination or exchange of shares, exchange for other securities, or the
like, the number and kind of Stock that may thereafter be distributed under
this Plan, may be appropriately adjusted as determined by RadioShack so as
to reflect such change.
2. Any Stock required for the purposes of the Plan may be treasury
shares or original issue shares.
B. OTHER INTEREST AND INCOME. Except as herein expressly provided
otherwise, no interest or other income will be paid or credited on account of an
Employees' Payroll Deductions, Company Contributions, Other Contributions or any
other amount payable or credited to Participants.
VII.
MAINTENANCE OF ACCOUNTS
A. ACCOUNTS. RadioShack shall maintain Participant accounts with respect
to the Annual Election (including a deemed election) for a Plan Year commencing
on the first day of each Plan Year and ending on the date of distribution with
respect to such Plan Year (e.g., Participant accounts created through an Annual
Election for Plan Year 2005 will be maintained through February 15, 2006, the
date of distribution).
B. DISTRIBUTIONS AND PURCHASE OF STOCK.
1. By making an Annual Election (including a deemed election)
pursuant to Article II with respect to any Plan Year, each Participant will
elect to either (a) make monthly purchases of Stock pursuant to Section
VII.B.3 and receive a distribution of such Stock following the end of the
Plan Year, or (b) not purchase Stock and instead receive a cash
distribution of all Employee Payroll Deductions and Company Contributions
for such Plan Year following the end of the Plan Year.
2. The amount of any cash distribution will equal the sum of all
Employee Payroll Deductions and Company Contributions credited to a
Participant's account for the Plan Year. For any Participant electing to
receive cash pursuant to an Annual Election, a check shall be mailed to the
Participant as promptly as practicable, which will be on or about the
February 15 following the end of the Plan Year to which the Annual Election
relates.
3. If a Participant elects to purchase Stock pursuant to an Annual
Election (including a deemed election), then the Employee Payroll
Deductions, Company Contributions and Other Contributions credited to
his or her Plan account for each month during the Plan Year to which the
Annual Election relates will be used to make a monthly purchase of
Stock. Such Stock shall be purchased by the Participant on the last
trading day of each month at a price per share of Stock equal to the
closing price of the Stock reported on the New York Stock Exchange
Composite Tape for the last trading day of such month. Distributions of
Stock will occur as soon as practicable following the end of a Plan Year,
which will be on or about the February 15 following the end of the Plan
Year to which the Annual Election relates. Any credits for fractional
shares remaining in a Participant's account following the last Stock
purchase of the Plan Year shall remain in the Participant's account to be
utilized in the subsequent Plan Year.
4. Subject to Article XIX, all shares credited to Participant
accounts as of April 29, 2004 for the period beginning January 1, 2004 will
be distributed to Participants as soon as practicable following April 29,
2004.
VIII.
WITHDRAWALS AND PAYMENTS
A. WITHDRAWALS. The Plan provides for a full withdrawal of a
Participant's account upon the Participant's (a) death, (b) termination of
employment, or (c) retirement at age 62 or older. If a Participant made an
Annual Election to receive cash with respect to the Plan Year, the Participant
(or the Participant's beneficiary, as applicable) will receive a distribution in
cash as soon as practicable following the end of the month in which such
withdrawal event occurred in an amount equal to the Employee Payroll Deductions
and Company Contributions credited to his or her account under the Plan. If the
Participant made an Annual Election (including a deemed election) to purchase
Stock during the Plan Year, the Participant's account will be distributed in
Stock to the Participant (or the Participant's beneficiary, as applicable) as
soon as practicable following the end of the month in which such withdrawal
event occurred.
B. VOLUNTARY EMPLOYEE WITHDRAWAL. The Plan also provides that an Employee
may withdraw his or her account when notice is sent to the Plan Administrator on
the forms and in the manner specified by the Plan Administrator. If a
Participant made an Annual Election to receive cash with respect to the Plan
Year, upon withdrawal from the Plan the Participant shall receive a payment in
cash as soon as practicable following the end of the month in which such
withdrawal occurred in an amount equal to the Employee Payroll Deductions and
Company Contributions credited to his or her account under the Plan. If the
Participant made an Annual Election to purchase Stock during the Plan Year, the
Participant's account will be distributed in Stock as soon as practicable
following the end of the month in which such withdrawal occurred. An Employee
making a withdrawal pursuant to this Section VIII.B. will be ineligible to
participate in the Plan and may not re-enroll in the Plan in any subsequent Plan
Year.
C. RECIPIENT OF PAYMENT. All withdrawal payments will be made to the
Participant except withdrawal payments resulting from the death of the
Participant, in which event the payment will be made to the beneficiary
designated by the Participant or as otherwise provided by the Plan. In event of
the death of a Participant, the Participant's beneficiary may act on behalf of
the Participant. Payment to the Participant or his or her beneficiary pursuant
to Section VIII.A. shall be made as soon as practicable following the end of the
month after the withdrawal event occurred.
IX.
BENEFICIARY
A. DESIGNATION OF BENEFICIARY. Participants shall file with the Plan
Administrator a written designation of beneficiary designating who is to receive
any Stock or any cash to the Participant's credit under the Plan in the event of
the Participant's death prior to the delivery of such Stock or cash.
B. CHANGE OF BENEFICIARY. A Participant may change his or her beneficiary
designation at any time in the form and manner specified by, the Plan
Administrator. Such change shall take effect as of the date the Participant
signed such written notice, whether or not the Participant is living at the time
of receipt of such notice by the Plan Administrator, but without prejudice to
RadioShack on account of payments made before such receipt.
C. PAYMENT TO BENEFICIARY. Upon the death of a Participant and upon
receipt of proof deemed adequate by RadioShack of the identity and existence, at
the time of Participant's death, of a beneficiary or beneficiaries validly
designated by the Participant under the Plan, payment will be made to the
beneficiary or beneficiaries in the manner and form as set forth in Section VIII
hereof.
D. ABSENCE OF BENEFICIARY. In the absence of a beneficiary designation
under the Plan or when a beneficiary has pre-deceased the Participant, payment
shall be made to the executor or administrator of the estate of the Participant.
If no executor or administrator has been appointed to the knowledge of
RadioShack (or in the event such executor or administrator has been
disqualified), payment may be made to such person or persons as RadioShack, in
its sole discretion, shall be satisfied is or are legally entitled thereto.
E. INTEREST OF BENEFICIARY IN PLAN. No designated beneficiary shall,
prior to the death of the Participant by whom he or she has been designated as
such, acquire any interest in the Stock or cash credited to the account of the
Participant under the Plan.
X.
OWNERSHIP OF STOCK
On and after the purchase of Stock by any Participant, the Participant
shall have all rights of ownership with respect to such Stock, including the
right to receive dividends and other distributions with respect to such Stock
and the right to vote such Stock; provided, however, nothing in this Article X
will entitle a Participant to receive delivery of Stock prior to the time set
forth in Section VII.B.3. RadioShack will deliver to each Participant owning
Stock held under the Plan all notices of meetings, proxy statements, and other
material distributed by RadioShack to its stockholders.
XI.
ADMINISTRATION
A. ADMINISTRATION BY RADIOSHACK. The Plan shall be administered by
RadioShack through its Chief Executive Officer, President, an Administrative
Committee, or such other person(s) as may be designated, from time to time, by
RadioShack. RadioShack has presently designated an Administrative Committee as
the Plan Administrator to administer the Plan, and RadioShack shall have the
right at any time in its sole discretion to change or remove the designated Plan
Administrator. The Plan Administrator may, from time to time, delegate all or
portion of its duties.
B. POWERS OF ADMINISTRATOR. The powers of RadioShack with respect to the
administration of this Plan shall include, in addition to those conferred
elsewhere in the Plan, but shall not be limited to:
1. Authorizing delivery and payment of Stock and cash under the
Plan;
2. Making, amending and enforcing all appropriate rules and
regulations for the administration of the Plan; and
3. Deciding or resolving any and all questions as may arise in
connection with the Plan.
C. AUTHORITY OF RADIOSHACK. Any determination, decision or action of
RadioShack concerning or with respect to any question arising out of or in
connection with the construction, interpretation, administration and application
of the Plan and of its rules and regulations or any delivery of Stock or
payments hereunder, shall lie within the sole and absolute discretion of
RadioShack and shall be final, conclusive and binding upon all Participants and
any and all persons claiming by, through or under any Participant. Any delivery
or payment made hereunder shall operate as a complete discharge of the
obligations of RadioShack. If RadioShack has any doubt as to the proper person
to receive deliveries or payments hereunder, RadioShack may bring a suit for
interpleader in any appropriate court, pay any amounts due to court, and
RadioShack shall have the right to recover its reasonable attorneys' fees from
such proceeds so paid or to be paid. Any delivery or payment made by RadioShack,
in good faith and in accordance with this Plan, shall fully discharge RadioShack
from all further obligations with respect to such deliveries or payments.
D. COSTS OF ADMINISTRATION. All costs of administration of the Plan shall
be borne by RadioShack.
E. PAYMENTS TO LEGALLY DISABLED PARTICIPANTS. Whenever any Participant
that is entitled to Stock or payments under the Plan is under legal disability
or in the sole judgment of RadioShack shall otherwise be unable to apply such
Stock or payments to his or her own best interest and advantage (as in the case
of illness, whether mental or physical, or where the person not under legal
disability is unable to preserve his or her estate for his or her own best
interest), RadioShack may, in the exercise of its sole and absolute discretion,
direct all or any portion of such Stock or payments to be made in any one or
more of the following ways unless claims shall have been made therefor by an
existing and duly appointed guardian, conservator, committee or other duly
appointed legal representative, in which event Stock or payment shall be
delivered or made:
1. directly to such Participant unless such Participant shall have
been legally adjudicated incompetent at the time of the deliveries or
payment;
2. to the spouse, child, parent or other blood relative to be
expended on behalf of the Participant entitled or on behalf of those
dependents as to whom the Participant entitled has duty of support;
3. to a recognized charity or governmental institution to be
expended for the benefit of the Participant entitled or for the benefit of
those dependents as to whom the Participant entitled has the duty of
support; or
4. to any other institution, approved by RadioShack to be expended
for the benefit of the Participant entitled or for the benefit of those
dependents, as to whom the Participant entitled has the duty of support.
F. IMMUNITY FROM LIABILITY. No member of the Administrative Committee
shall incur any liability for any action or failure to act, excepting liability
for his or her own gross negligence or willful misconduct. RadioShack shall
indemnify each member of the Administrative Committee against any and all
claims, losses, damages, expenses and liabilities, including any amounts paid in
settlement with the Administrative Committee's approval, arising from any action
or failure to act, except when the same is judicially determined to be due to
the gross negligence or willful misconduct of such member. The Administrative
Committee may, at its discretion, require the written approval or disapproval of
RadioShack prior to taking action in any particular matter made the subject of
its responsibility hereunder.
XII.
PARTICIPATION BY AFFILIATED COMPANIES
This Plan shall apply to any company or corporation a portion of whose
voting stock is owned directly or indirectly by RadioShack, and any of its
affiliates, if such company or corporation shall elect to participate and if,
and so long as, such participation shall be approved by RadioShack (a
"Participating Company"). A Participating Company shall be bound by the terms of
this document. Effective April 30, 2004, the Plan was frozen and no company or
corporation which was not a Participating Company on April 29, 2004 may elect to
participate in the Plan thereafter.
XIII.
NO WARRANTY OF SECURITY VALUES
None of RadioShack, the Company, any Participating Company, or their
respective officers, directors, agents or servants warrants or represents in any
way that the value of Stock in which the Participant may have an interest will
increase or will not decrease. Each Participant assumes all risk in connection
with any changes in the value of Stock to the extent he or she may have an
interest therein, and each Participant acknowledges such risk by virtue of his
or her participation in the Plan.
XIV.
GENERAL PROVISIONS
A. EXTENT OF CERTAIN RIGHTS OF PARTICIPANTS. Participation in the Plan
shall not entitle any Employee to be retained in the service of RadioShack or
the Company or of any Participating Company. The right and power of RadioShack,
the Company and of each Participating Company to dismiss or discharge any
Employee is specifically reserved.
B. LIMITATION OF PARTICIPANT'S RIGHTS. No Participant nor any person
claiming by, through or under the Participant shall have any right or interest
under the Plan that is not otherwise herein expressly granted.
C. ASSIGNMENT. No interest in any Stock or cash held under the Plan prior
to delivery to the Participant as hereinabove provided, shall be assigned,
alienated, pledged, or otherwise encumbered in whole or in part, directly or
indirectly, by operation of law, or otherwise. If any attempt is made by a
Participant to assign, alienate, pledge, or otherwise encumber his or her
interest in such Stock or cash prior to such delivery, for his or her debts,
liabilities in tort or contract, or otherwise, then RadioShack (in its sole and
absolute discretion) may treat such attempt as an election by the Participant to
withdraw from the Plan and submit to any loss of rights as provided in the Plan.
D. QUARTERLY STATEMENT OF ACCOUNT. As soon as practicable after the end
of each calendar quarter, each Participant shall be furnished with a statement
of his or her account under the Plan.
E. REGISTRATION OF STOCK. Stock to be delivered to a Participant will be
registered in his or her name alone or, in the event of his or her death prior
to such delivery, the Stock will be registered in the name of the person or
persons entitled thereto.
F. MISCELLANEOUS.
1. The Company, its Employees and agents and the Plan Administrator
may rely upon the authenticity of any information supplied to them by any
Participant or a Company in connection with the operation of the Plan, and
shall be fully protected in relying upon such information.
2. No individual or Plan Administrator administering, or aiding in
the administration of, the Plan shall have any liability, except as
provided in Section XIV.F.3. below. As a condition precedent to
participation in the Plan or the receipt of benefits thereunder, such
liability, if any, is expressly waived and released by each Participant
and by any and all persons claiming by, through or under any participant,
such waiver and release to be conclusively evidenced by the act of
participation or the acceptance of benefits under the Plan.
3. No individual or Plan Administrator administering, or aiding in
the administration of, the Plan shall be liable except for his or her own
acts or omissions and then only for willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his or her office. As used herein, "individual administering, or aiding in
the administration of the Plan" shall include any Stock owner, director,
officer, employee or agent of the Company as well as the Plan
Administrator.
4. RadioShack may require compliance with any legal requirements
which it deems necessary as a condition for delivery of, or payment for,
any Stock or cash to the credit of a Participant under the Plan.
5. By a Participant's act of participating in the Plan or by the
acceptance of any of the benefits thereunder, such Participant and any
and all persons claiming by, through or under any such Participant, shall
thereby be conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, the application of the provisions of the
Plan.
6. For the purposes of the Plan, unless the contrary is clearly
indicated by the context, the use of the masculine gender shall also
include within its meaning the feminine, and the use of the singular shall
also include within its meaning the plural, and vice versa.
XV.
NOTICES AND COMMUNICATIONS
A. TO PARTICIPANTS. All notices, reports and other communications to a
Participant under or in connection with the Plan shall be deemed to have been
duly given, made or delivered when sent to by the Participant physically or by
electronic means.
B. BY PARTICIPANTS. All Notices, instructions or other communications by
a Participant to RadioShack under or in connection with the Plan shall be duly
given, made or delivered when received by the Corporate Secretary of RadioShack
(300 RadioShack Circle, Fort Worth, Texas 76102) or when received in the form
and at the location specified by RadioShack, or by the person, designated for
receipt of such notice, instruction or other communication by RadioShack.
XVI.
AMENDMENT, SUSPENSION OR TERMINATION
A. AUTHORITY TO AMEND, SUSPEND OR TERMINATE. Participants may make
contributions under this Plan until April 29, 2014. Notwithstanding the
preceding, the Board may amend, suspend or terminate the Plan at any time, or
from time to time. Without limitation, such amendment may change (a) the rates
of Employee Payroll Deductions which may be designated by all Participants or
(b) the rates of Company Contributions, or (c) any other provisions of the Plan.
B. DELEGATION OF AUTHORITY. The Board may delegate to the Chairman of the
Board, Chief Executive Officer, the President or such other person(s) designated
by the Board the authority to amend any provision of this Plan, provided such
amendment is (a) of an administrative nature or (b) does not result in any
material increase in the Company's costs.
C. AMENDMENTS. No amendment, suspension or termination shall adversely
affect any rights of a Participant to Stock or cash to his or her credit under
the Plan as of the date of amendment, suspension or termination. Upon any
termination, all Stock and cash to the credit of each Participant under the Plan
shall be promptly paid over to the Participant.
D. LIMITATION ON PLAN AMENDMENT. No amendment shall increase the maximum
number of shares of Stock that may be distributed under this Plan without the
further approval of the Board. Furthermore, any amendment to this Plan that
causes this Plan to be deemed to be an "equity compensation plan" (or any
successor definition) under the listing requirements of the New York Stock
Exchange shall be approved by the stockholders of RadioShack as required by such
listing requirements.
XVII.
APPLICABLE LAW
Any question concerning or in respect of the validity, construction,
interpretation, administration and effect of the Plan, and of its rules and
regulations, and the rights of any or all persons having or claiming to have an
interest therein or thereunder, shall be governed exclusively and solely in
accordance with the laws of the State of Texas without regard to its choice of
laws provisions.
XVIII.
DEFINITIONS
For the purposes of the Plan, unless some other meaning is clearly
indicated by the context, the following definitions shall be applicable:
"Annual Election" is defined in Section II.C.
"Board" is defined in Section II.A.
"Company" is defined in Section I.
"Company Contribution" is defined in Section IV.B.
"Earnings" means the amount which an Employee is receiving as salary or
wages from the Company, including payment for overtime, vacation pay, night
shift bonus, and any cost of living adjustment including incentive compensation,
other variable compensation or bonds. Notwithstanding the preceding, Earnings
shall in no event include living allowances, prizes, moving expenses, tuition
reimbursement, relocation pay, retainers, and special payments made for services
performed outside his or her regular duties and any other special payments;
provided, however, that such amounts shall be included in Earnings to the extent
that such amounts are specifically approved by the Chief Executive Officer of
the Company for such Employees of the Company as he may authorize in writing.
Commissions shall be included as Earnings only to the extent approved by the
Chief Executive Officer of the Company for such Employees of the Company as he
may authorize in writing.
Earnings shall not include Company Contributions or distributions to or
from this Plan and any Company contributions under or distributions from the
RadioShack Supplemental Stock Program, nor shall Earnings include (w) any
proceeds from stock option exercises or restricted stock or proceeds therefrom,
(x) any compensation deferred under the RadioShack Corporation Executive
Deferred Compensation Plan, the RadioShack Corporation Executive Deferred Stock
Plan, or any nonqualified agreements between the Company or any Participant or
Employee which provides for the deferral of compensation (collectively), the
("Deferred Compensation Plans"), (y) any Company contributions made under the
Deferred Compensation Plans and (z) any distributions or payments under the
Deferred Compensation Plans.
Additionally, the Chief Executive Officer, in his or her sole and absolute
discretion, may exclude or include any amounts or items in or from Earnings as
he or she deems appropriate.
"Employee" means a regular employee of the Company receiving wages or
salary, but shall not include any person compensated pursuant to a contract
other than an employment contract with the Company under the terms of which
compensation is paid on a regular fixed salary or wage basis. As used above,
"Employee" shall also include, without limitation, any salesperson who is a bona
fide employee of the Company and recognized as such for Social Security
purposes.
"Employee Payroll Deduction" is defined in Section III.A.
"Other Contributions" is defined in Section IV.C.
"Participant" is defined in Section II.B.
"Participating Company" is defined in Section XII.
"Plan" is defined in Section I.
"Plan Administrator" is the individual or committee appointed by
RadioShack to administer the Plan pursuant to Section XI.A.
"Plan Year" means the twelve months beginning January 1 and ending
December 31 for each year beginning on and after January 1, 2005; provided,
however, the first "Plan Year" means the period beginning April 30, 2004 and
ending December 31, 2004.
"RadioShack" is defined in Section I.
"Stock" is defined in Section I.
XIX.
EFFECTIVE DATE
The Plan, as amended and restated, shall become effective as of April 30,
2004. All amounts credited to Participant accounts in 2004 prior to April 30,
2004 will be subject to the terms of the Plan effective prior to April 30, 2004;
provided, however, that all amounts credited to a Participant's account on April
30, 2004, relating to services performed prior to April 30, 2004, will be
subject to the terms of the Plan as amended and restated as of April 30, 2004
and will be used to purchase Stock.
XX.
CHANGE IN CONTROL
A. IMMEDIATE DISTRIBUTION OF CASH. Notwithstanding anything contained in
the Plan to the contrary, if a Participant has elected a cash distribution
pursuant to an Annual Election, amounts credited to a Participant's account
shall be immediately distributable in cash upon the occurrence of the earlier of
(a) a Change in Control (as hereinafter defined) or (b) the commencement of a
Tender Offer (as hereinafter defined). Amounts credited to a Participant's
account during the Plan Year following the commencement of a Tender Offer and
prior to the consummation and during the pendency thereof shall be distributable
in cash immediately prior to the consummation of the Tender Offer; provided,
however, that in the event RadioShack is unable to distribute such amounts prior
to consummation of the Tender Offer, RadioShack shall take such other reasonable
steps as may be necessary to assure that Participants receive the same economic
benefits an immediate distribution of such amounts would have provided to
Participants. To the extent a Participant has elected to purchase Stock pursuant
to an Annual Election (including a deemed election), amounts credited to a
Participant's account before the Change in Control or commencement of a Tender
Offer or during the pendency of the Tender Offer will be used to purchase Stock,
and Stock purchased before the Change in Control or commencement of a Tender
Offer or during the pendency of the Tender Offer will be delivered, each in
accordance with Article VII.B.3.
B. DEFINITIONS. For purposes of the Plan,
1. For purpose of the Plan, a "Change in Control" shall mean any of the
following events:
(a) An acquisition (other than directly from RadioShack Corporation
(for purposes of this Section XX B. "the Company")) of any voting
securities of the Company (the "Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately
after which such Person has "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more
of the combined voting power of the Company's then outstanding Voting
Securities; provided, however, in determining whether a Change in Control
has occurred, Voting Securities which are acquired in a Non-Control
Acquisition (as hereinafter defined) shall not constitute an acquisition
which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other Person of which a majority
of its voting power or its voting equity securities or equity interest is
owned, directly or indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or its Subsidiaries, or (iii)
any Person in connection with a Non-Control Transaction (as hereinafter
defined);
(b) The individuals who, as of April 30, 2004 are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any new director
was approved by a vote of at least two-thirds of the Incumbent Board, such
new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation, reorganization or other business
combination with or into the Company or in which securities of the Company
are issued, unless
(A) the stockholders of the Company, immediately before
such merger, consolidation, reorganization or other business combination,
own directly or indirectly immediately following such merger,
consolidation, reorganization or other business combination, at least
sixty percent (60%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger or
consolidation, reorganization or other business combination (the
"Surviving Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
consolidation, reorganization or other business combination,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such
merger, consolidation, reorganization or other business combination
constitute at least two-thirds of the members of the board of directors of
the Surviving Corporation, or a corporation beneficially directly or
indirectly owning a majority of the combined voting power of the
outstanding voting securities of the Surviving Corporation, or
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust forming a part
thereof) that, immediately prior to such merger, consolidation,
reorganization or other business combination was maintained by the Company,
the Surviving Corporation, or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation, reorganization or other
business combination had Beneficial Ownership of fifteen percent (15%) or
more of the then outstanding Voting Securities, has Beneficial Ownership of
fifteen percent (15%) or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities, and
A transaction described in clauses (A) through (C) shall herein
be referred to as a "Non-Control Transaction."
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all
of the assets of the Company to any Person (other than (i) any such sale or
disposition that results in at least fifty percent (50%) of the Company's assets
being owned by one or more subsidiaries or (ii) a distribution to the Company's
stockholders of the stock of a subsidiary or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Voting Securities (X)
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this subsection (X)) as
a result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur, or (Y) and such Subject Person (1) within
fourteen (14) Business Days (or such greater period of time as may be determined
by action of the Board) after such Subject Person would otherwise have caused a
Change in Control (but for the operation of this clause (Y)), such Subject
Person notifies the Board that such Subject Person did so inadvertently, and (2)
within seven (7) Business Days after such notification (or such greater period
of time as may be determined by action of the Board), such Subject Person
divests itself of a sufficient number of Voting Securities so that such Subject
Person is no longer the Beneficial Owner of more than the permitted amount of
the outstanding Voting Securities.
2. A "Tender Offer" shall occur when any Person, either alone
or in conjunction with others, makes a tender offer, or
exchange offer, or otherwise offers to purchase, or solicits
an offer to sell to such person, one percent or more of the
outstanding shares of RadioShack Corporation securities.
C. WITHDRAWAL. No Participant shall be deemed to have withdrawn from the
Plan by reason of receiving a cash or Stock distribution pursuant to Section
XX.A.
D. AMENDMENT OR TERMINATION. Notwithstanding any provision contained in
the Plan to the contrary, for a period of one (1) year following a Change in
Control the Plan may not be terminated or amended in any way that would
adversely affect the computation or amount of, or entitlement to, benefits
hereunder, including, but not limited to, (a) any reduction in the right to make
Employee Payroll Deductions by any individual who was an Employee on the date
immediately prior to a Change in Control, (b) a reduction in the level of
Company Contributions with respect to such individuals or (c) any change in the
distribution or withdrawal provisions; provided, however, that if the Stock
ceases to be publicly traded, there may be substituted for Stock under the Plan
one or more reasonable investments. Any amendment or termination of the Plan
that (i) was at the request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in Control or (ii)
otherwise arose in connection with, or in anticipation of, a Change in Control
shall be null and void, and shall have no effect whatsoever.
E. AMENDMENT TO ARTICLE XX. Notwithstanding any provision contained in
the Plan to the contrary, no provision of this Article XX may be amended at any
time in any manner that would adversely affect the right to or amount of any
benefits upon a Change in Control.
F. SUCCESSORS AND ASSIGNS. Notwithstanding any provision contained in the
Plan to the contrary, the provisions of this Article XX shall be binding upon
the Company and its successors and assigns.
G. SEVERABILITY. Notwithstanding any provision contained in the Plan to
the contrary, the provisions of the Plan shall be deemed severable and the
validity or un-enforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
H. CONTRARY PROVISIONS. The provisions of this Article XX shall govern
notwithstanding anything contained in the Plan to the contrary.
Exhibit 31(a)
CERTIFICATIONS
I, Leonard H. Roberts, certify that:
1. I have reviewed this quarterly report on Form 10-Q of RadioShack
Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing
the equivalent functions):
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 5, 2004 By /s/ Leonard H. Roberts
--------------------------------
Leonard H. Roberts
Chief Executive Officer
Exhibit 31(b)
CERTIFICATIONS
I, David P. Johnson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of RadioShack
Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing
the equivalent functions):
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 5, 2004 By /s/ David P. Johnson
-------------------------------
David P. Johnson
Acting Chief Financial Officer
Exhibit 32
SECTION 1350 CERTIFICATIONS
In connection with the Quarterly Report of RadioShack Corporation (the
"Company") on Form 10-Q for the period ended June 30, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), we,
Leonard H. Roberts, Chief Executive Officer of the Company, and David P.
Johnson, Acting Chief Financial Officer of the Company, certify to our
knowledge, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Leonard H. Roberts
Leonard H. Roberts
Chief Executive Officer
August 5, 2004
/s/ David P. Johnson
David P. Johnson
Acting Chief Financial Officer
August 5, 2004
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.