WABCO Europe BVBA
WABCO Holdings Inc. (Form: 10-Q, Received: 05/07/2009 09:33:21)

 

 

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 March 31, 2009

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 1-33332

WABCO Holdings Inc.

(Exact name of Registrant as specified in its charter)

 

Delaware   20-8481962

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

Chaussee de Wavre, 1789

1160 Brussels, Belgium

 

One Centennial Avenue,

P.O. Box 6820, Piscataway, NJ

  08855-6820
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code +32 2 663 98 00

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.

x   Yes     ¨   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes   ¨     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

Large Accelerated Filer  x     Accelerated Filer   ¨     Non-Accelerated Filer   ¨     Smaller Reporting Company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨   Yes     x   No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Common stock, $.01 par value, outstanding at May 4, 2009

   63,999,508 shares

 

 

 


PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

WABCO HOLDINGS INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

     Three Months
Ended March 31,
 

(Amounts in millions, except share and per share data)

   2009     2008  

Sales

   $ 333.9     $ 705.4  

Cost of sales

     275.7       509.4  
                

Gross profit

     58.2       196.0  

Costs and expenses:

    

Selling and administrative expenses

     69.0       83.0  

Product engineering expenses

     17.8       24.3  

Other operating expenses, net

     1.4       5.0  
                

Operating (loss) / income

     (30.0 )     83.7  

Equity loss / (income) of unconsolidated joint ventures

     4.8       (0.6 )

Other non-operating expenses, net

     1.0       1.5  

Interest income, net

     (0.4 )     (0.6 )
                

(Loss) / income before income taxes

     (35.4 )     83.4  

Income taxes

     0.5       21.0  

Net (loss) / income including noncontrolling interests

     (35.9 )     62.4  

Less: net income attributable to noncontrolling interests

     0.5       1.1  
                

Net (loss) / income

   $ (36.4 )   $ 61.3  
                

Net (loss) / income per common share:

    

Basic

   $ (0.57 )   $ 0.92  

Diluted

   $ (0.57 )   $ 0.91  

Cash dividends per share of common stock

   $ 0.07     $ 0.07  

Common shares outstanding:

    

Basic

     63,983,036       66,456,232  

Diluted

     63,983,036       67,481,001  

See Notes to Consolidated Financial Statements.

 

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WABCO HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

 

(Amounts in millions, except share data)

   March 31,
2009
    December 31,
2008
 
   (unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 326.1     $ 392.8  

Accounts receivable, less allowance for doubtful accounts—$7.3 in 2009; $6.9 in 2008

     255.1       313.8  

Inventories:

    

Finished products

     66.5       75.1  

Products in process

     5.6       7.6  

Raw materials

     78.9       80.0  

Taxes receivable on income

     24.9       20.0  

Future income tax benefits

     4.3       4.3  

Other current assets

     48.8       54.4  
                

Total current assets

     810.2       948.0  

Facilities, less accumulated depreciation

     285.8       315.8  

Goodwill

     339.1       360.8  

Capitalized software costs, less accumulated amortization—$147.7 in 2009; $145.9 in 2008

     20.8       22.7  

Long-term future income tax benefits

     29.2       29.1  

Investments in unconsolidated joint ventures

     65.5       74.0  

Other assets

     22.0       25.6  
                

TOTAL ASSETS

   $ 1,572.6     $ 1,776.0  
                

LIABILITIES AND EQUITY

    

Current liabilities:

    

Loans payable to banks

   $ 10.3     $ 76.4  

Accounts payable

     89.9       108.3  

Accrued payroll

     72.8       89.8  

Current portion of warranties

     49.8       54.2  

Indemnification liabilities

     25.7       25.2  

Other accrued liabilities

     86.0       74.5  
                

Total current liabilities

     334.5       428.4  

Long-term debt

     163.0       173.6  

Post-retirement benefits

     300.9       319.9  

Deferred tax liabilities

     26.6       26.6  

Long-term indemnification liabilities

     34.2       35.2  

Long-term income tax liabilities

     90.4       94.1  

Other liabilities

     96.6       83.3  
                

Total liabilities

     1,046.2       1,161.1  

Commitments and contingencies

    

Shareholders’ equity:

    

Preferred stock, 4,000,000 shares authorized; none issued and outstanding

     —         —    

Common stock, $.01 par value, 400,000,000 shares authorized; shares issued: 69,956,314 in 2009; 69,921,105 in 2008; and shares outstanding: 63,999,508 in 2009; 63,964,299 in 2008

     0.7       0.7  

Capital surplus

     580.8       578.4  

Treasury stock, at cost: 5,956,806 shares in 2009; 5,956,806 shares in 2008

     (276.3 )     (276.3 )

Retained earnings

     230.6       271.4  

Accumulated other comprehensive income:

    

Foreign currency translation adjustments

     0.7       51.4  

Unrealized losses on benefit plans, net of tax

     (23.9 )     (24.1 )
                

Total shareholders’ equity

     512.6       601.5  
                

Noncontrolling interests

     13.8       13.4  
                

Total equity

     526.4       614.9  
                

TOTAL LIABILITIES AND EQUITY

   $ 1,572.6     $ 1,776.0  
                

See Notes to Consolidated Financial Statements.

 

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WABCO HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Three months
ended March 31,
 

(Amounts in millions)

   2009     2008  

Operating activities:

    

Net (loss) / income

   $ (36.4 )   $ 61.3  

Adjustments to reconcile net (loss) / income to net cash provided by operating activities:

    

Depreciation

     15.8       18.0  

Amortization of capitalized software and other intangibles

     3.6       7.1  

Equity in earnings of unconsolidated joint ventures, net of dividends received

     5.4       0.3  

Non-cash stock compensation

     2.5       1.7  

Loss on sale of facilities

     1.0       0.1  

Changes in assets and liabilities:

    

Accounts receivable

     41.3       (38.0 )

Inventories

     3.4       (22.8 )

Accounts payable

     (13.1 )     (6.2 )

Other accrued liabilities and taxes

     (1.5 )     30.8  

Post-retirement benefits

     (0.3 )     (0.9 )

Other current and long-term assets

     2.9       (2.8 )

Other long-term liabilities

     9.3       2.3  
                

Net cash provided by operating activities

     33.9       50.9  
                

Investing activities:

    

Purchases of property, plant and equipment

     (9.4 )     (16.7 )

Investments in capitalized software

     (1.2 )     (1.2 )
                

Net cash used in investing activities

     (10.6 )     (17.9 )
                

Financing activities:

    

Net (repayments) / borrowings of revolving credit facilities

     (2.0 )     30.0  

Net repayments of short-term debt

     (59.4 )     (4.8 )

Purchases of treasury stock

     —         (27.9 )

Dividend payments

     (4.5 )     (4.7 )

Proceeds from exercise of stock options

     —         5.4  
                

Net cash used by financing activities

     (65.9 )     (2.0 )
                

Effect of exchange rate changes on cash and cash equivalents

     (24.1 )     12.7  
                

Net (decrease) / increase in cash and cash equivalents

     (66.7 )     43.7  

Cash and cash equivalents at beginning of period

     392.8       183.2  
                

Cash and cash equivalents at end of period

   $ 326.1     $ 226.9  
                

Cash paid during the period for:

    

Interest

   $ 1.0     $ 1.2  

Income taxes

   $ 2.2     $ 14.3  

Non Cash Items for the period:

    

Treasury stock repurchase accrual

   $ —       $ 4.0  

See Notes to Consolidated Financial Statements.

 

4


WABCO HOLDINGS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Basis of Financial Statement Presentation

WABCO Holdings Inc. (“WABCO” or the “Company”) develops, manufactures and sells advanced braking, stability, suspension and transmission control systems primarily for commercial vehicles. WABCO’s largest selling products are braking systems (“ABS” and “EBS”), automated manual transmission controls and air suspension controls for heavy and medium-sized trucks, buses and trailers. WABCO sells its products to four groups of customers around the world: truck and bus original equipment manufacturers (“OEMs”), trailer OEMs, aftermarket distributors of replacement parts and services, and automotive OEMs.

On July 31, 2007, Trane Inc., formerly known as American Standard Companies Inc. (“Trane”) implemented the spin-off of WABCO through a tax-free stock dividend of all of WABCO’s common stock to Trane shareowners,

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, including normal recurring items, considered necessary for a fair presentation of financial data have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the entire year. For purposes of cash flow presentation, the Company has presented both cash flow activities for the revolving credit facilities and short-term debt on a net presentation basis in accordance with SFAS No. 95, Statement of Cash Flows , as these items represent cash flow activities where turnover is quick, the amounts are large, and the maturities are short. The consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, 2008, included in the Company’s Annual Report on Form 10-K.

Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis and Notes 2 and 13 to the Consolidated Financial Statements for the year ended December 31, 2008, in the Company’s Annual Report on Form 10-K, describe the most significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ materially from management’s estimates. There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the first three months of 2009.

NOTE 2. Recently Issued Accounting Standards

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 (R), Business Combinations . SFAS No. 141 (R) requires that identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree be recognized and measured as of the acquisition date at fair value regardless of the percentage of ownership. The standard also requires any shares issued for acquisition to be measured at fair value on the date of acquisition as well as any contingent consideration recognized or pre-acquisition gain or loss contingencies. In-process research and development will not be capitalized and any acquisition related transaction costs should be expensed as incurred. SFAS No. 141 (R) is effective for fiscal years beginning after December 15, 2008. The Company adopted SFAS No. 141 (R) as of January 1, 2009. There was no impact to the financial statements relating to adoption of SFAS No. 141 (R) during the first quarter of 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements . SFAS No. 160 requires that a noncontrolling interest in a consolidated subsidiary be displayed in the consolidated statement of financial position as a separate component of equity. Consistent with the FASB’s view that noncontrolling interests are part of the equity of the consolidated group, SFAS No. 160 requires that earnings attributed to the noncontrolling interests are to be reported as part of consolidated earnings and not as a separate component of income or expense. Once a subsidiary is consolidated, any change in ownership that does not result in loss of control is accounted for as an equity transaction. However, deconsolidation of a subsidiary would result in a gain or loss reflected in the Company’s Income Statement. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The Company has adopted SFAS No. 160 as of January 1, 2009. There was no material impact on the consolidated financial statements, although a change in the financial statement presentation is required. As of March 31, 2009 and December 31, 2008, the Company has classified $13.8 million and $13.4 million, respectively, of noncontrolling interests within equity which was previously classified as a liability.

 

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In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities . SFAS No. 161 enhances disclosures for derivative instruments and hedging activities, including: (i) the manner in which a company uses derivative instruments; (ii) the manner in which derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and (iii) the effect of derivative instruments and related hedged items on a company’s financial position. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The Company has adopted SFAS No. 161 as of January 1, 2009. As SFAS No. 161 relates specifically to disclosures, the adoption of this standard had no impact on our consolidated financial condition, results of operations or cash flows. There were no additional disclosures required by the Company due to adoption of SFAS No. 161.

In December 2008, the FASB issued FSP FAS 132 (R)-1, Employers Disclosures about Postretirement Benefit Plan Assets . FSP FAS 132 (R)-1 enhances disclosures for plan assets of a defined benefit pension or other postretirement plan. The objectives of the disclosures about plan assets in an employer’s defined benefit pension or other postretirement plan are to provide users of financial statements with an understanding of: (i) how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies, (ii) the major categories of plan assets, (iii) the inputs and valuation techniques used to measure the fair value of plan assets, (iv) the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period, and (v) significant concentrations of risk within plan assets. FSP FAS 132 (R)-1 is effective for fiscal years ending after December 15, 2009. As FSP FAS 132 (R)-1 relates specifically to disclosures, the adoption of this standard is not expected to have an impact on our consolidated financial condition, results of operations or cash flows.

NOTE 3. Comprehensive (Loss) / Income

Total comprehensive (loss) / income consisted of the following (amounts in millions):

 

     Three months ended
March 31,
     2009     2008

Net (loss) / income including noncontrolling interests

   $ (35.9 )   $ 62.4

Foreign currency translation effects

     (50.7 )     49.8

Foreign currency translation on benefit plans, net

     0.2       0.4
              

Comprehensive (loss) / income including noncontrolling interests

   $ (86.4 )   $ 112.6
              

Less: Comprehensive income attributable to noncontrolling interests

     0.5       1.1
              

Comprehensive (loss) / income

   $ (86.9 )   $ 111.5
              

NOTE 4. Accounts Receivable Financing Facility

On January 12, 2009, WABCO was notified of the termination of the accounts receivable financing facility arranged by ABN AMRO N.V. and Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank,” and together with ABN AMRO N.V., the “banks”) due to an event outside of WABCO’s control.

The termination of the accounts receivable financing facility resulted from the downgrading of Royal Bank of Scotland (“RBS”) by Standard & Poors (“S&P”). RBS, after acquiring ABN-AMRO, had assumed the liquidity support obligations for the special-purpose entity (“SPE”) which was established for the funding and securitization of receivables of various customers of the banks, including WABCO. The RBS downgrade in turn caused S&P to downgrade the SPE from an A-1+ to A-1 rating. Any downgrading of the SPE is a termination event stipulated in the facility agreement. In addition to working on replacing the accounts receivable financing facility, we are also pursuing other opportunities of financing.

With regard to replacing this facility, we have signed a mandate letter on April 9, 2009 for the structuring and implementation of a trade receivables program of up to €125 million. We expect to enter into definitive agreements for this program, by the end of the third quarter of 2009 however there can be no assurance in this regard. On April 15, 2009, the Company entered into a €35 million factoring program in respect to accounts receivable from one of our customers.

 

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NOTE 5. Net (Loss) / Income Per Share

Basic net (loss) / income per share has been computed using the weighted average number of WABCO common shares outstanding. The average number of outstanding shares of common stock used in computing diluted net (loss) / income per share included no weighted average incremental shares for the three months ended March 31, 2009 since the impact would be anti-dilutive and 1,024,769 weighted average incremental shares for the three months ended March 31, 2008. The weighted average incremental shares represent the net amount of shares the Company would issue upon the assumed exercise of in-the-money stock options and vesting of restricted stock units (“RSUs”) after assuming that the Company would use the proceeds from the exercise of options to repurchase treasury stock. The three month period ended March 31, 2008, excluded 1,094,125 shares due to their anti-dilutive effect. Anti-dilutive options represent those options whose exercise price was greater than the average price of the Company’s common stock during the three month period ended March 31, 2008.

NOTE 6. Capital Stock

On March 20, 2009, a dividend of $0.07 per share of common stock was paid to shareholders of record as of March 4, 2009, and totaled $4.5 million.

Following is a summary of net shares outstanding and shares issued or reacquired during the first quarter of 2009.

 

     Number of Shares of Common Stock
     Total Shares    Treasury
Shares
    Net Shares
Outstanding

Balance, December 31, 2008

   69,921,105    (5,956,806 )   63,964,299

Shares issued upon exercise of stock options

   5,654    —       5,654

Other shares issued or (reacquired), net

   29,555    —       29,555
               

Balance, March 31, 2009

   69,956,314    (5,956,806 )   63,999,508
               

The Company accounts for purchases of treasury stock under the cost method as defined in Accounting Principles Board Opinion Number 6, Status of Accounting Research Bulletins with the costs of such share purchases reflected in treasury stock in the accompanying consolidated balance sheets. When treasury shares are reissued they are recorded at the average cost of the treasury shares acquired since the inception of the share buy back programs, net of shares previously reissued and the Company reflects the difference between the average cost paid and the amount received for the reissued shares in capital surplus. As of March 31, 2009, no shares have been reissued. At March 31, 2009, the Company had an unexpended balance of $223.7 million available to repurchase shares under an authorization by the Board of Directors to repurchase up to $500 million, which expires on September 1, 2009. Currently, the Company is not making any additional share repurchases under the buy back program. Timing of future purchases will vary depending on financial conditions and other factors.

NOTE 7. Stock-Based Compensation

The Company records stock-based compensation under the provisions of Statement of Financial Accounting Standard No. 123 (Revised 2004) (“FAS 123R”), Share Based Payment using the modified prospective approach. Total stock-based compensation cost recognized during the three month period ended March 31, 2009 and 2008, of $2.5 million and $1.7 million, respectively, has been included in the Consolidated Statements of Income. The Company has recognized in expense, in the periods subsequent to the adoption of FAS 123R, expense arising from Trane Inc. common stock options, WABCO common stock options and RSUs only for those stock compensation awards held by WABCO employees. Outstanding WABCO options held by non-WABCO employees or directors arise as a result of the distribution of shares in connection with the spin-off of WABCO from Trane and are not reflected in compensation expense recognized by the Company.

 

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The total number and type of awards granted primarily in connection with the annual grant during the periods presented and the related weighted-average grant-date fair values were as follows:

 

     Three months ended
March 31, 2009
   Three months ended
March 31, 2008
     Underlying
Shares
   Weighted-
Average
Exercise
Price
   Weighted
Average
Grant Date
Fair Value
   Underlying
Shares
   Weighted-
Average
Exercise
Price
   Weighted
Average
Grant Date
Fair Value

Options Granted

   3,093,981    $ 11.75    $ 2.77    689,895    $ 42.39    $ 11.08

RSUs Granted

   409,082    $ —      $ 11.75    108,709    $ —      $ 42.39
                     

Total Awards

   3,503,063          798,604      
                     

The options for 415,923 shares granted in 2008 are exercisable in equal installments over a period of three years. Of the remaining 273,972 options granted in 2008, 136,986 of the options become exercisable after three years and 136,986 of the options become exercisable after four years. The options for 3,038,084 shares granted in 2009 are exercisable in equal annual installments over a period of three years. Of the remaining 55,897 options granted in 2009, 36,887 of the options become exercisable after two years and 19,010 become exercisable after three years. The RSUs granted in 2008 and 2009 vest ratably over a period of three years. The weighted average grant date fair value was calculated under the Black-Scholes option-pricing model.

The following table summarizes the significant assumptions used for the grants during the three month periods ended March 31, 2009 and 2008.

 

Assumption

   Three Months Ended
March 31, 2009
    Three Months Ended
March 31, 2008
 

Risk-free interest rate

   1.86 %   2.77 %

Expected volatility

   31.6 %   26.0 %

Expected holding period

   5 Years     5 Years  

Expected forfeiture rate

   0.8 %   4.0 %

Dividend yield

   2.45 %   0.66 %

On an annual basis, the Company updates the assumptions used in determination of the black-scholes values. The risk free interest rate is based on the yield of U.S. Treasury securities that correspond to the expected holding period of the options. WABCO reviewed the historic volatility of its common stock over a 12 month period, the common stock of its peer group over a 5 year period, and the implied volatility for at the money options to purchase shares of its common stock. The 5 year historical volatility period was selected since that period corresponds with the expected holding period. Based on this data, the Company chose to use a weighted average of the implied volatility of WABCO, the most recent 1 year historical volatility of WABCO and the median most recent 5 year historical volatility of WABCO’s peer group. The expected holding period was calculated by reviewing the historical exercise pattern of all holders that were granted options, the exercise pattern of domestic versus international option holders (including an analysis by country) and the exercise behavior of officers versus non-officers. The results of the analysis support one expected holding period for all groups of employees. The expected forfeiture rate was determined based on the historical stock option forfeiture data of the Company. The dividend yield was based on WABCO’s expected dividend rate for the period at the time of grant.

NOTE 8. Debt

Credit Agreements

In May 2007, WABCO entered into an unsecured, five-year $800 million, multi-currency revolving credit facility that will expire on July 31, 2012. The proceeds of the borrowings under the credit facility have been used to fund repurchases of our shares, pay quarterly dividends to our shareholders and to meet short-term cash requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee (which may be required) pursuant to a decision relating to the European Commission investigation matter as further described in Note 9 under the heading “Contingencies”. The balance outstanding on this facility as of March 31, 2009, is $31.0 million. Up to $100 million under this facility may be used for issuing letters of credit, of which $97.5 million is

 

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unused as of March 31, 2009. The Company has the ability to borrow an additional $766.5 million under this facility. Under the five year facility, the Company pays a facility fee of 0.10% per annum. Borrowings thereunder bear interest generally at the London Interbank Offered Rate (“LIBOR”) plus either 0.35% if borrowings are less than or equal to 50% of the total available balance, or 0.40% if borrowings are greater than 50% of the total available balance. The Company also pays 0.35% per annum plus issuance fees for letters of credit. The interest rate spreads above the U.S. dollar LIBOR (0.50063% at March 31, 2009) are subject to adjustments should the Company’s leverage ratio change. The Company intends to replace all or some portion of the existing five-year $800 million credit facility at the time of its expiration.

In November 2007, WABCO entered into a €50 million ($66.0 million at March 31, 2009 exchange rates), 364 day credit agreement with the Bank of Tokyo-Mitsubishi. There is no outstanding balance on this facility as of March 31, 2009. The Company redeemed the outstanding debt under the credit agreement which resulted in termination of the credit agreement on February 26, 2009.

In March 2008, WABCO entered into an unsecured, 364 day €100 million credit facility with ABN AMRO. This facility, which was unused, expired in the first quarter of 2009 and was not renewed.

In March 2008, WABCO entered into an unsecured, 364 day €100 million credit facility ($132.0 million at March 31, 2009 exchange rates) with Rabobank. The proceeds of the borrowings under the credit facility can be used for all general corporate purposes. Borrowings thereunder bear interest at the Euro Interbank Offered Rate (“EURIBOR”) (1.121% at March 31, 2009) plus 0.50%. The interest rate spreads above EURIBOR are subject to adjustments should the Company’s leverage ratio change. The balance outstanding on this facility as of March 31, 2009, is $132.0 million. As a result of the draw down on July 31, 2008, the 364 day €100.0 million credit facility with Rabobank has an expiration date of July 30, 2009. The balance outstanding on this facility is classified as long term as the Company has the ability and intent to refinance the debt using the five-year $800 million, multi-currency revolving credit facility. See below for further details on the related cross currency swap.

Our credit facilities contain various covenants that limit, among other things, liens, transactions, subsidiary indebtedness, and certain mergers and sales of assets. The covenants also require the Company to meet certain financial tests: a rolling four quarters 3 to 1 ratio of consolidated net debt to consolidated trailing four quarters adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for certain items), a 3 to 1 ratio of consolidated trailing four quarters adjusted EBITDA to consolidated net interest expense, and a liquidity test. These terms are all defined within the agreement to the five-year $800 million credit facility. The liquidity covenant for the $800 million credit facility requires us to have at least $100 million of liquidity (which includes unused commitments under the agreement and certain other committed facilities that may be entered into, as well as unrestricted cash and cash equivalents) after giving effect to any payment of a fine or any provision of a bank guarantee that may be required pursuant to a decision relating to the European Commission investigation matter. As of March 31, 2009, our trailing four quarters adjusted EBITDA is $287.4 million, which consists of $13.0 million for the first quarter of 2009, $58.2 million for the fourth quarter of 2008, $100.4 million for the third quarter of 2008 and $115.8 million for the second quarter of 2008. Given a net indebtedness of $79.3 million at March 31, 2009, this resulted in an EBITDA covenant ratio of 0.3 to 1. As of March 31, 2009, the Company was in compliance with all the covenants contained in these credit agreements.

Also, a subsidiary in Japan had borrowings from banks totaling $8.2 million. This loan supports local working capital requirements.

On July 29, 2008, the Company entered into a cross currency swap to hedge the changes in the fair value of its €100.0 million ($132.0 million at March 31, 2009 exchange rates) loan from Rabobank relating to changes in foreign currency exchange rates between the euro and U.S. dollar. Each of the critical terms in the cross currency swap, including the maturity date on the swap contract, match those of the underlying debt. Under the cross currency swap, the Company pays a one month floating rate of 1.14938% on a notional amount of $156.5 million and receives a one month floating rate of 2.321% on a notional amount of €100.0 million. The cross currency swap is designated as a fair value hedge of the changes in the fair value of the underlying debt resulting from exchange rate movements between the euro and the U.S. dollar. The euro interest received on the swap is accrued and recorded as an offset to the euro interest expense accrued and recorded on the underlying debt. The U.S. dollar interest paid on the swap is accrued and recorded as interest expense. The changes in the fair value of the swap are accrued and recorded as an offset to the changes in fair value of the underlying debt included in other non-operating expense, net. The fair value hedge is highly effective and therefore there is minimal effect on current earnings. As of March 31, 2009, the fair market value of the cross currency swap, measured using Level 2 inputs under SFAS 157, resulted in a recorded liability of approximately $24.4 million and is classified as long term within other liabilities on the balance sheet.

 

9


Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market. The balance outstanding on this cross currency swap is classified as long-term as the Company has the ability and intent to refinance the underlying debt using the five-year $800 million, multi-currency revolving credit facility.

Use of derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivative instrument will change. In a hedging relationship, the change in the value of the derivative is offset to a great extent by the change in the value of the underlying hedged item. Credit risk related to derivatives represents the possibility that the counterparty will not fulfill the terms of the contract. The Company’s current derivative instruments are with counterparties rated very highly by internationally recognized credit rating agencies.

Note 9. Warranties, Guarantees, Commitments and Contingencies

Warranties

Products sold by WABCO are covered by a basic limited warranty with terms and conditions that vary depending upon the product and country in which it was sold. The limited warranty covers the equipment, parts and labor (in certain cases) necessary to satisfy the warranty obligation generally for a period of two years. Estimated product warranty expenses are accrued in cost of goods sold at the time the related sale is recognized. Estimates of warranty expenses are based primarily on warranty claims experience and specific customer contracts. Warranty expenses include accruals for basic warranties for product sold, as well as accruals for product recalls, service campaigns and other related events when they are known and estimable. To the extent WABCO experiences changes in warranty claim activity or costs associated with servicing those claims, its warranty accrual is adjusted accordingly. Warranty accrual estimates are updated based upon the most current warranty claims information available.

Following is a summary of changes in the Company’s product warranty liability for the three months ended March 31, 2009 and 2008 (amounts in millions).

 

     Three months
ended March 31,
 
     2009     2008  

Balance of warranty costs accrued, beginning of period

   $ 57.8     $ 54.0  

Warranty costs accrued

     4.0       9.9  

Warranty claims settled

     (6.6 )     (7.3 )

Foreign exchange translation effects

     (3.3 )     4.1  
                

Balance of warranty costs accrued, end of period

     51.9       60.7  

Current portion included in current liabilities

     (49.8 )     (56.9 )
                

Long-term warranty liability

   $ 2.1     $ 3.8  
                

Guarantees and Commitments

General

There were no material changes to the disclosure on this matter made in the consolidated financial statements and accompanying notes for the year ended December 31, 2008, included in the Company’s Annual Report on Form 10-K.

Commitments

WABCO and its Indian joint venture partners, members of the TVS group (“TVS”), separated the non-brakes division from the brakes division of their Indian joint venture SCL. This was done through a plan of demerger, which was approved by the Madras High Court and became effective on March 28, 2008 under Indian law. As a result, the brakes business of SCL was transferred to a new company, WABCO-TVS (INDIA) Ltd. (“WABCO-TVS”), the shares of which were allocated proportionately in May 2008 to existing SCL shareholders and were listed in India as of October 1, 2008. Subsequent to the demerger, TVS will transfer to WABCO its shares in WABCO-TVS, and

 

10


WABCO’s percentage ownership in WABCO-TVS will increase to a minimum of approximately 64% by September 30, 2009, and expected to increase to 75% by no later than September 30, 2010. Upon WABCO obtaining control of WABCO-TVS, WABCO-TVS will be included in the consolidated financial statements of the Company. Concurrent with TVS’ share transfers to the Company, WABCO will transfer to TVS its shares in SCL post demerger, and WABCO’s percentage ownership in SCL post demerger, which consists of the non-brakes division of SCL, is expected to decrease to zero. The Company believes that the demerger should be tax-free in both India and the United States and has received a positive private letter ruling from the U.S. Internal Revenue Service during the quarter. The subsequent transfer of its shares in SCL post-demerger to TVS is likely to be taxable in the US at the time of such transfer. Additionally, depending on the trading share prices of SCL and WABCO-TVS at the time of transfer of shares, the Company may have to remit or may receive some amount of cash to or from TVS and a gain or loss on the transaction may be recognized in the income statement.

Contingencies

General

We are subject to proceedings, lawsuits and other claims related to products and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of liability to be recorded, if any, for these contingencies is made after careful analysis of each individual issue. The liabilities recorded may change in the future, possibly by significant amounts, due to new developments in any of the matters.

Litigation

As part of a multi-company investigation commenced in 2004, the former American Standard Companies Inc. (now Trane Inc.), and certain of its European subsidiaries engaged in the Bath and Kitchen business were charged by the European Commission for alleged infringements of European Union competition rules relating to the distribution of bathroom fixtures and fittings in a number of European countries. Pursuant to the Indemnification and Cooperation Agreement that was concluded in the context of the spin-off of WABCO from Trane Inc., WABCO Europe BVBA (an indirect wholly-owned subsidiary of WABCO) is responsible for, and is liable to indemnify Trane Inc. and Ideal Standard International (representing the successor to the Bath and Kitchen business, and owner of certain of the former American Standard subsidiaries) and their owners against, any fines related to this investigation.

We anticipate that this investigation may result in the imposition of a fine in 2009; however, we are unable to reasonably estimate the likely amount or range of any fine that may result from this matter for the reasons that follow. Under its 2006 Fining Guidelines, the Commission will determine a “basic amount” of the fine by considering the value of the sales of goods to which the infringement related, the gravity of the infringement and its duration. In applying the 2006 Guidelines, the Commission retains considerable discretion in calculating the fine, including the determination of the “basic amount,” the evaluation of the aggravating and mitigating circumstances, the availability of leniency and the assessment of the overall deterrent effect of the fine. Due to the specific circumstances, and the factual differences of and with published precedents so far, there is insufficient guidance to allow us to ascertain how the Commission would exercise its discretion in applying the 2006 Guidelines in the present case. If the Commission were to apply the 2006 Guidelines to the allegations as set forth in the Statement of Objections, the fine could be significant depending on whether the breadth of the allegations and the alleged duration of the infringement are maintained. American Standard and its charged European businesses presented defenses to the allegations in the Statement of Objections, as did WABCO Europe BVBA at an oral hearing with the European Commission in November 2007. It is not possible to judge the impact of these defenses on the final outcome. Following the hearing, the European Commission has requested additional information from Trane, WABCO Europe BVBA and Ideal Standard International, in June 2008 (requesting information regarding revenue of the relevant entities for the year 2007); December 2008 (requesting information of WABCO, Ideal Standard International, and Trane) regarding the spin-off of WABCO from American Standard and certain historic corporate information including data regarding the corporate structures of American Standard and its successors before and after the spin-off and the transition of entities and/or assets to Trane and Ideal Standard International, and in April 2009, further corporate information regarding composition of boards of directors and copies of articles and bylaws of all legal entities involved during the period covered by the investigation. The Commission could, among other things, issue a new Statement of Objections or request additional information before adopting a decision, or it could adopt a decision imposing a fine. We are advised that the Commission will likely request further information regarding 2008

 

11


revenue from all parties before imposing a fine. A fine would under the applicable rules be required to be paid within three months of the decision, unless imposition of any such fine were appealed within two months of the decision in which case we would be required to pay the fine or to provide a bank guarantee for the full amount of the fine plus interest. The appeals process could take as long as 5-7 years during which time WABCO would not have access to such funds or would be required to provide a bank guarantee. The Commission or the European Court of First Instance could agree to waive or suspend this requirement for reasons of financial hardship, however this outcome cannot be assured and will depend on the relevant facts at the time.

Article 23 of Council Regulation No. 1/2003 provides for a maximum fine equal to 10% of the parent company’s worldwide revenue attributable to all of its products for the fiscal year prior to the year in which the fine is imposed. It is unknown on what basis the Commission will calculate the maximum. As we have previously reported, if the Commission had issued a fine in 2007 and based it on American Standard’s reported worldwide revenue in 2006, the total potential maximum liability would have been approximately $1.1 billion subject to a probable reduction for leniency of at least 20%. American Standard no longer exists. The effect, if any, of the spin-off of WABCO from American Standard, the sale of its Bath and Kitchen business to Ideal Standard International, and the merger of Trane Inc. with Ingersoll-Rand Company Limited, all of which occurred in 2007 and 2008, on the determination of the applicable 10% cap is unclear. Furthermore, we have argued that the cap should be calculated on the basis of the revenue of the charged European businesses, rather than the parent company’s worldwide revenues.

The fine imposed by the Commission could be material to WABCO’s operating results and cash flows for the year in which the liability would be recognized or the fine paid. We are however continuing to fully cooperate with the Commission and believe the defenses we have presented to the Commission will be considered and taken into account in the determination of the fine.

As of March 31, 2009, the Company had a cash balance of $326.1 million. The Company has several credit facilities in place all of which contain covenant restrictions. The $800 million five-year revolving credit facility is a non-amortizing facility that permits utilization up to the maximum level at any time through and until expiration, subject to the stipulated financial/liquidity covenants in the credit agreement. The Company has entered into a €50 million ($66.0 million at March 31, 2009 exchange rates); 364 day credit agreement dated November 28, 2007. Additionally, on March 7, 2008, the Company entered into two separate unsecured, 364 day €100 million credit facilities ($132.0 million each at March 31 exchange rates). There is a balance of $31.0 million outstanding on the $800 million credit facility. There is a balance of $132.0 million outstanding on one of the 364 day €100 million credit facilities. There is no balance outstanding on the remaining 364 day €100 million facility as of March 31, 2009 as this facility, which was unused, expired in the first quarter of 2009 and was not renewed. There is also no balance outstanding on the €50 million 364 day credit agreement as this was redeemed and terminated on February 26, 2009.

The borrowings under our existing credit agreements are limited by covenants. The covenant which is expected to be the most restrictive, based on the current economic downturn, requires that our total net indebtedness not exceed three times a trailing four quarters adjusted EBITDA (“EBITDA covenant”), as defined in the agreement to the five year $800 million credit facility. As of March 31, 2009 our trailing four quarters adjusted EBITDA is $287.4 million, which consists of $13.0 million for the first quarter of 2009, $58.2 million for the fourth quarter of 2008, $100.4 million for the third quarter of 2008 and $115.8 million for the second quarter of 2008. Given a net indebtedness of $79.3 million at March 31, 2009, this resulted in an EBITDA covenant ratio of 0.3 to 1. We expect that this covenant will limit our ability to borrow under our existing credit agreements in 2009. The Company is proactively addressing this matter by pursuing alternative financing arrangements that would not be subject to the EBITDA covenant. As described in more detail in Note 4, Accounts Receivable Financing Facility, the Company’s accounts receivable financing facility was terminated on January 12, 2009 as a result of an event outside of the Company’s control. With regard to replacing this facility, we have signed a mandate letter on April 9, 2009 for the structuring and implementation of a trade receivables program of up to €125 million. We expect to enter into definitive agreements for this program, by the end of the third quarter of 2009 however there can be no assurance in this regard. On April 15, 2009, the Company entered into a €35 million factoring program in respect to accounts receivable from one of our customers. Additionally, other potential sources of financing that the Company is considering include but are not limited to the following: (i) factoring of additional accounts receivable balances, (ii) inventory financing programs, (iii) sale-leaseback of certain property, plant and equipment , and (iv) obtain a waiver or renegotiate the debt covenants on our existing $800 million five-year credit

 

12


facility. If a fine in excess of our funding capability were issued, the Company would seek approval from the Commission for alternative payment measures, such as payment in installments, which is available in certain circumstances. As a further option, the Company may be able to apply for a court-ordered suspension of its payment obligation to the Court of First Instance, a statutory available remedy in cases of hardship. The uncertainty of the extent and duration of the current global industry downturn requires us to observe that if the fine were to be issued in an amount in excess of our funding capability at that time, and various mitigating actions which the Company has implemented and is planning were to fail, the fine could have a material adverse effect on the financial condition and liquidity of WABCO.

Note 10. Income Taxes

Unrecognized tax benefits at March 31, 2009 amounted to $72.8 million related to the WABCO business and $17.6 million related to WABCO obligations directly to tax authorities for Trane’s Bath & Kitchen business (see Note 11). The Company does not believe that it is reasonably possible that any of such unrecognized tax benefits would be recognized within the next 12 months. As a result, these unrecognized tax benefits at March 31, 2009 are classified as long-term income tax liabilities. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. No penalties have been accrued related to these unrecognized tax benefits.

In conjunction with the Tax Sharing Agreement discussed in Note 11, WABCO is responsible for certain tax and indemnification liabilities.

The accompanying March 31, 2009 balance sheet continues to reflect a full valuation allowance for certain foreign NOLs as it has been determined as of March 31, 2009 that it is more likely than not that the losses will not be realizable in the foreseeable future.

The income tax provision includes certain discrete items which resulted in an additional tax charge of $0.5 million for the period ending March 31, 2009. These items principally relate to recording interest on unrecognized tax benefits, the recognition of a prior year unrecognized tax benefit due to the expiration of a statute of limitations, and changes in estimated tax liabilities associated with the filing of various foreign income tax returns for prior years.

The Company is subject to taxation in the US and various states and foreign jurisdictions. With no material exceptions, the Company is no longer subject to US federal, state, local or foreign examinations by tax authorities for years before 2002.

Note 11. Tax and Indemnification Liabilities Transferred from Trane to WABCO

Pursuant to a Tax Sharing Agreement between Trane and WABCO, entered into on July 16, 2007, WABCO is responsible for certain tax contingencies and indemnification liabilities. As noted above (see Note 10), the FIN 48 liabilities as of March 31, 2009 include $17.6 million related to non-US entities of Trane’s Bath & Kitchen business but for which WABCO entities have obligations directly to non-US tax authorities. In addition, as of March 31, 2009, we had indemnification liabilities of $59.9 million, of which $34.2 million is classified within long-term liabilities on the balance sheet and $25.7 million is classified within short-term liabilities.

Note 12. Streamlining Expenses

During 2008 and the first quarter of 2009, the Company incurred charges related to streamlining activities consisting of previously announced plant reductions and severance for positions that have been eliminated. The Company accounts for these charges in accordance with SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities , or FAS 112, Employers’ Accounting for Postemployment Benefits—an amendment of FASB Statements No. 5 and 43 . The following is a summary of the streamlining programs (consisting of termination payments and other employee costs) outstanding as of March 31, 2009 (amounts in millions).

 

13


2009 Streamlining Programs

      

Charges during the first three months of 2009

   $ 30.9  

Payments during the first three months of 2009

     (2.8 )
        

Balance as of March 31, 2009

   $ 28.1  
        

2008 Streamlining Programs

      

Balance as of December 31, 2008

   $ 26.5  

Charges during the first three months of 2009

     —    

Payments during the first three months of 2009

     (3.6 )
        

Balance as of March 31, 2009

   $ 22.9  
        

2007 and earlier Streamlining Programs

      

Balance as of December 31, 2008

   $ 8.8  

Charges during the first three months of 2009

     —    

Payments during the first three months of 2009

     (1.0 )
        

Balance as of March 31, 2009

   $ 7.8  
        

Total Balance as of March 31, 2009

   $ 58.8  
        

The Company incurred $30.9 million of streamlining expenses during the first quarter of 2009 of which $9.4 million has been charged to selling and administrative expenses and $21.5 million was charged to cost of sales. The Company incurred $1.2 million of streamlining expenses during the first quarter of 2008, of which $0.9 million has been charged to selling and administrative expenses and $0.3 million was charged to cost of sales. The Company expended $7.4 million of cash on streamlining activities in the first quarter of 2009. The Company expects to incur approximately $29 million to $34 million of expense during the remainder or 2009; however, payments will continue until 2013. The balance of $58.8 million is included in other liabilities and in other accrued liabilities as of March 31, 2009.

Note 13. Post-retirement Benefits

Post-retirement pension, health and life insurance costs had the following components for the three months ended March 31, 2009 and 2008 (amounts in millions):

 

     Three Months Ended March 31,
     2009     2009    2008     2008
     Pension
Benefits
    Health
& Life
Ins.
Benefits
   Pension
Benefits
    Health
& Life
Ins.
Benefits

Service cost-benefits earned during period

   $ 1.7     $ 0.1    $ 2.3     $ —  

Interest cost on projected benefit obligation

     5.6       0.4      6.8       0.3

Less assumed return on plan assets

     (1.9 )     —        (2.7 )     —  

Amortization of net loss

     0.3       —        0.5       0.1
                             

Defined benefit plan cost

   $ 5.7     $ 0.5    $ 6.9     $ 0.4
                             

Accretion expense as reflected in Selling and administrative expenses and cost of sales

   $ 3.7     $ 0.4    $ 4.1     $ 0.3
                             

The Company expects to contribute $6.3 million to foreign plans in 2009. In the first quarter of 2009, $1.6 million was contributed to foreign plans. There have been no contributions and there are no expected contributions for domestic plans.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

WABCO is a leading provider of electric and electromechanical products for the world’s leading commercial truck, trailer, bus and passenger car manufacturers. We manufacture and sell control systems, including advanced braking, stability, suspension, transmission control and air compressing and processing systems, that improve vehicle performance and safety and reduce overall vehicle operating costs. Our largest-selling products are pneumatic anti-lock braking systems (“ABS”), electronic braking systems (“EBS”), automated manual transmission systems, air disk brakes and a large variety of conventional mechanical products such as actuators, air compressors and air control valves for heavy- and medium-sized trucks, trailers and buses. We also supply advanced electronic suspension controls and vacuum pumps to the car and SUV markets in Europe and North America. In addition, we sell replacement parts, diagnostic tools training and other services to commercial vehicle aftermarket distributors, repair shops and fleet operators. Company management analyzes the performance of the business using the following general framework and describes the performance of the business in this context throughout the remainder of this discussion and analysis of financial condition and results of operations.

Sales

The Company analyzes its sales activity based on the impact of pricing, volume and mix of its products. The management of pricing conditions and the execution of a strategy to improve sales mix to more profitable products and customers are important to us in order to grow sales and profitability.

Productivity

The Company identifies the impact of key productivity programs in the areas of materials procurement, labor and other productivity programs. The successful execution of productivity programs is important to offset the impacts of price decreases, commodity inflation and other cost escalations.

Commodities

The Company uses commodities such as aluminum, copper, zinc and steel in its manufacturing process. The cost of these commodities can have a significant impact on the company’s financial performance.

Investments

The Company analyzes the costs for the development of new products, investments in sales and marketing programs and other infrastructure investments in support of productivity improvements. Investments in new products and sales are important to sustaining organic growth.

Results of Operations

The following discussion and analysis addresses changes in sales, gross profit, expenses and pre-tax income for the three months ended March 31, 2009, compared to the three months ended March 31, 2008. Approximately 92% of WABCO sales are outside the U.S. and therefore, changes in exchange rates can have a significant impact on the reported results of our operations, which are presented in U.S. Dollars. Quarter-over-quarter changes in sales, expenses and net income for 2009 compared with 2008 are presented both with and without the effects of foreign currency translation. Changes in sales, expenses and net income excluding foreign exchange effects are calculated using current year sales, expenses and net income translated at prior year exchange rates. Presenting changes in sales, expenses and net income excluding the effects of foreign currency translation is not in conformity with accounting principles generally accepted in the United States (“GAAP”), but management analyzes the data in this manner because it is useful to them for understanding the operational performance of the business. Management believes this data is also useful to shareholders for the same reason. The changes in sales, expenses and pre-tax income excluding the effects of foreign currency exchange translation are not meant to be a substitute for measurements prepared in conformity with GAAP, or to be considered in isolation.

 

15


First Quarter Results of Operations for 2009 Compared with 2008

(amounts in millions)

 

     Three months ended March 31,  
     2009     2008     % change
reported
    Excluding foreign
exchange translation
 
           2009
adjusted
Amount
    %
change
adjusted
 

Sales

   $ 333.9     $ 705.4     (52.7 )%   $ 387.5     (45.1 )%

Cost of sales

     275.7       509.4     (45.9 )%     320.9     (37.0 )%
                            

Gross profit

     58.2       196.0     (70.3 )%     66.6     (66.0 )%

Operating expenses

     88.2       112.3     (21.5 )%     101.3     (9.8 )%
                            

Operating (loss) / income

     (30.0 )     83.7       *     (34.7 )     *

Equity in loss / (income) of unconsolidated joint ventures

     4.8       (0.6 )     *     5.6       *

Other non-operating expense, net

     1.0       1.5     (33.3 )%     1.6     6.7 %

Interest (income), net

     (0.4 )     (0.6 )   (33.3 )%     (0.6 )   0.00 %
                            

(Loss) / income before income taxes

     (35.4 )     83.4       *     (41.3 )     *

Income taxes

     0.5       21.0     (97.6 )%     0.3     (98.6 )%
                            

Net (loss) / income before minority interests’ share

     (35.9 )     62.4       *     (41.6 )     *

Less: minority interests’ share

     0.5       1.1     (54.5 )%     0.4     (63.6 )%

Net (loss) / income

   $ (36.4 )   $ 61.3       *   $ (42.0 )     *
                            

 

* Percentage change not meaningful

Sales

Sales for the first quarter of 2009 were $333.9 million, a decrease of 52.7% (45.1% excluding unfavorable foreign currency translation effects) from $705.4 million in 2008. The decrease was attributable to the significant decline in commercial vehicle production that was evident across the world. In addition to the deterioration in the end market demand, inventory reductions across most commercial vehicle manufacturers contributed to the production decline. Sales in Europe, our largest market, decreased approximately 55.0% (47.0% excluding unfavorable foreign currency translation effects), which based on our estimate, was slightly better than European truck production. Sales decreased 37.5% in North America, which was less than the decrease in North American truck production. In Asia and South America sales decreased 45.8% and 51.9%, respectively (43.8% and 35.9% excluding unfavorable foreign currency translation effects, respectively). The sales decline in Asia was less than expected as a result of a smaller decrease in China sales of 28.6% (31.8% excluding favorable foreign currency translation effects) which was primarily driven by a successful introduction of the Company’s compressor product line in the market as well as the increasing penetration of ABS. Total aftermarket sales, included in the geographic numbers provided above, decline in the quarter was 26.9% (13.5% excluding the unfavorable effects of foreign currency translation effects), which was impacted by both the Original Equipment Supply channel and the Independent Aftermarket channel experiencing declines in demand. Necessary maintenance and the more severe weather conditions than normal in Europe helped the aftermarket sales outperform sales to new truck and bus manufacturers.

In the first quarter of 2009, the global commercial vehicle markets continued the significant decline that began in the latter part of 2008. The uncertainty of the development of the global economy makes it difficult to predict how demand for commercial vehicles will further develop in 2009.

Gross Profit

Gross profit decreased by $137.8 million (a decrease of $129.4 million excluding unfavorable foreign currency translation effects) in the first quarter of 2009 as compared with the first quarter of 2008. The decrease in gross profit was primarily driven by volume and mix decreases of approximately $73.0 million primarily attributable to the sales decline discussed above, overhead underabsorption, labor and other cost escalations of approximately $30.1 million, as well as higher spending on streamlining programs of approximately $25.2 million and sales price decreases of

 

16


$7.2 million. A partial offset to gross profit decline came from $11.6 million of materials and conversion productivity, which we consider a significant achievement given the very difficult market conditions experienced during the quarter, as well as approximately $5.5 million of foreign currency transaction gains related mainly to the sale of products in countries (with different currencies) outside of the country where they are manufactured.

Operating Expenses

Operating expenses, which include selling and administrative expenses, product engineering expenses and other operating expenses, decreased by $24.1 million ($11.0 million excluding favorable foreign currency translation effects) in the first quarter of 2009 as compared to the first quarter of 2008. The Company’s timely actions in anticipation of a continued market slowdown experienced in the first quarter of 2009 as well as the efficient execution of related cost cutting efforts was the primary driver of a $20.4 million decrease in operational spending. Also, the Company reduced spending on separation costs by $4.2 million. These improvements were partially offset by spending on streamlining programs of $10.0 million, and labor and other cost inflation and escalations of approximately $3.6 million.

Cost Reduction Programs and Streamlining Expenses

Based on market declines occurring in the fourth quarter of 2008, WABCO commenced a streamlining program on October 28, 2008, which began with a consultative process with works councils and employee representatives globally. The initial intent, as previously disclosed, was to reduce the Company’s global workforce by approximately 1,000 positions. As the Company continued to assess the impacts of the declining market conditions, in January 2009, the Company committed to a further reduction of 400 positions in addition to the initially disclosed 1,000 positions. As of March 31, 2009, approximately 1,200 of the 1,400 positions were terminated. In view of the continued decline in market conditions, the Company took additional measures in consultation with the relevant works councils for a further reduction of 150 employees bringing the committed total to 1,550 employees. This level of reduction in workforce represents an approximate 30% to 35% reduction in capacity, while still allowing us to continue our focus on core strategies, including technology, new products, globalization, and quality and productivity initiatives. These actions create sufficient flexibility in production and help to cope with anticipated demand volatility in 2009.

The Company continued its cost reduction program which was put in place during 2008. The Company achieved cost savings of $20 million in operating expenses. This success reflects major progress in containing the costs of our streamlining program, as well as cost reductions across our organization, including flexible work schedules, shortened work weeks in some locations, reductions in discretionary expenses, and our decision to decrease executive and senior management compensation, among other measures.

The Company incurred $30.9 million of streamlining expenses during the first quarter of 2009 which is associated with severance. Of the total costs in 2009, $9.4 million has been charged to selling and administrative expenses and $21.5 million was charged to cost of sales. The Company incurred $1.2 million of streamlining expenses during the first quarter of 2008 which is associated with severance. The majority of the 2008 plan is associated with administrative functions, with $0.9 million having been charged to selling and administrative expenses and $0.3 million charged to cost of sales. While the Company expects that its streamlining activity will be substantially completed during the second quarter of 2009, the Company expects to incur approximately $29 million to $34 million of expense during the remainder of 2009; however, payments will continue until 2013.

Equity in Net Loss / (Income) of Unconsolidated Joint Ventures

Equity in net loss / (income) of unconsolidated joint ventures decreased $5.4 million ($6.2 million excluding foreign currency translation effects) in the first quarter of 2009 as compared to the first quarter of 2008. The decrease was primarily driven by WABCO’s Indian joint venture, Sundaram-Clayton Ltd. (“SCL”) for which WABCO had to recognize a loss in the first quarter of 2009 of $4.9 million, primarily driven by the joint venture’s motorcycle activities in Indonesia and its consumer financing division. Since SCL’s activities are not related to WABCO’s core business, WABCO intends to transfer its share in SCL to its joint venture partner TVS as further explained under Commitments.

The joint ventures in South Africa (“WABCO South Africa”) and the U.S. (“Meritor WABCO”) have also been negatively impacted by the global market conditions. WABCO has recorded quarterly results for South Africa and Meritor WABCO of a $0.3 million gain and a $0.2 million loss, respectively for the quarter ended March 31, 2009.

 

17


Other Non-Operating Expenses, Net

Other non-operating expense, net decreased by $0.5 million (increased $0.1 million excluding foreign currency translation effects) in the first quarter 2009 as compared to the first quarter of 2008.

Interest Income, Net

Interest income, net decreased by $0.2 million to $(0.4) million in the first quarter 2009 compared to ($0.6) million in the first quarter 2008. Interest income was flat versus last year excluding foreign exchange translation effects.

Income Taxes

The income tax provision for the first quarter of 2009 was $0.5 million on a pre-tax loss after adjusting for minority interest of $35.9 million, compared with a provision of $21.0 million on $82.3 million of pre-tax income after adjusting for minority interest in the first quarter of 2008. The tax provision for the first quarter of 2009 is impacted due to the limited tax benefits associated with restructuring costs and the negative effect of our European supply chain structure in a year of low profitability. Additionally, the accompanying provision includes a valuation allowance for losses in certain foreign jurisdictions in which it is more likely than not that the losses will not be realizable in the foreseeable future.

Liquidity and Capital Resources

Cash Flows for the three months ended March 31, 2009

Net cash provided by operating activities was $33.9 million for the first three months of 2009. This compared with net cash provided by operating activities of $50.9 million for the first three months of 2008.

Although the Company recorded net loss of $36.4 million for the first three months of 2009 compared with net income of $61.3 million for the first three months of 2008, the Company was still able to achieve a strong cash flow. This was due to the reduction of our working capital during 2009. Due to a weakening economy in the first quarter of 2009, WABCO ended the quarter with a lower accounts receivable balance compared to prior year which was also related to the reduction of our past due bills, resulting in a reduction in days sales outstanding from the previous quarter. Additionally, the Company was able to successfully reduce inventory levels in the first quarter of 2009. Finally, the Company’s accounts payable position decreased by $13.1 million.

In addition to the change in working capital discussed above, other long term liabilities increased by $9.3 million as a result of our streamlining activities in 2009. The change in other accrued liabilities and taxes for the first three months of 2009 was $(1.5) million compared to $30.8 million for the first three months of 2008. In the first three months of 2008, the Company benefited from an increase in accruals because of higher activities in the first quarter as well as an increase in our VAT payable position.

WABCO continued to make contributions to funded pension plans. During the first three months of 2009, those contributions, and payment of benefits incurred by unfunded plans, totaled $6.7 million. The Company expects to contribute approximately an additional $20 million to foreign plans in 2009.

Within investing activities, the Company made capital expenditures of $10.6 million in the first three months of 2009 as compared to capital expenditures of $17.9 million in the first three months of 2008. Our capital expenditures for 2009 include $5.8 million of investments in tooling, $3.6 million on plant and equipment, and $1.2 million in computer software. This compared with $8.9 million of investments in tooling, $7.8 million on plant and equipment, and $2.2 million in computer software during the first three months of 2008. As a result of the downturn in the economy, the Company implemented controlled spending measures which resulted in capital expenditure reductions in the first quarter versus prior year. We intend to continue to follow these measures throughout 2009.

The net cash used by financing activities during the first three months of 2009 amounted to $65.9 million while the financing activities during the first three months of 2008 resulted in net cash used of $2.0 million.

In November 2007, WABCO entered into a €50 million, 364 day credit agreement with the Bank of Tokyo-Mitsubishi. The Company redeemed the outstanding debt of $63.5 million under the credit agreement which resulted in termination of the credit agreement on February 26, 2009.

 

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As of March 31, 2009, our total third party indebtedness was $173.3 million consisting primarily of $132.0 million of long term debt borrowed under our Rabobank facility and $31.0 million of long term debt borrowed under our $800 million 5-year credit facility. All facilities are discussed in Note 8 – Debt. Also, subsidiaries in other countries had borrowings from banks totaling $10.3 million. These loans support local working capital requirements.

The Company has paid a quarterly dividend of $4.5 million on March 20, 2009. Given the current state of the commercial vehicle industry and the pending decision by the European Commission on the civil fine discussed in Note 9—Warranties, Guarantees, Commitments and Contingencies, WABCO has decided to suspend payment of further dividends.

The Company’s Board of Directors had approved $500 million of expenditures under a program to purchase shares of the Company’s common stock in the open market. During the first three months of 2009, the Company has not repurchased any shares. Currently, the Company is not making any additional share repurchases under the buy back program. Timing of future purchases will vary depending on financial conditions and other factors. The Company received minimal option proceeds during the first three months of 2009.

We employ several means to manage our liquidity and we are not dependent upon any one source of funding. Our sources of financing include cash flows from operations, bank credit agreements and the use of operating leases.

Commitments

WABCO and its Indian joint venture partners, members of the TVS group (“TVS”), separated the non-brakes division from the brakes division of their Indian joint venture SCL, through a plan of demerger. TVS will transfer to WABCO its shares in WABCO-TVS (INDIA) Ltd. (“WABCO TVS”), and WABCO’s percentage ownership in WABCO-TVS will increase to a minimum of approximately 64% by September 30, 2009, and expected to increase to 75% by no later than September 30, 2010. Concurrent with TVS’ share transfers to the Company, WABCO will transfer to TVS its shares in SCL post demerger, and WABCO’s percentage ownership in SCL post demerger, which consists of the non-brakes division of SCL, is expected to decrease to zero. Depending on the trading share prices of SCL and WABCO-TVS at the time of transfer of shares, the Company may have to remit or may receive some amount of cash to or from TVS and a gain or loss on the transaction may be recognized in the income statement.

Liquidity with Regard to European Commission Fine

In addition to cash on hand, we have in place a number of short and longer term credit agreements designed, in part, to assist us in covering a fine expected to be imposed by the European Commission. Due to the uncertainties surrounding the timing and potential amount of the fine, and the limitations of the amounts we can draw under such credit agreements based on our covenants, as further described below, we cannot make any prediction as to whether or not the funds available under the credit agreements will be sufficient to finance the fine at such time as it becomes due.

The borrowings under our existing credit agreements are limited by covenants (See “Credit Agreements” below for an overview of the covenants). The covenant which is expected to be the most restrictive, based on the current economic downturn, requires that our total net indebtedness not exceed three times a trailing four quarters adjusted EBITDA (“EBITDA covenant”), as defined in the agreement to the five year $800 million credit facility. As of March 31, 2009 our trailing four quarters adjusted EBITDA is $287.4 million, which consists of $13.0 million for the first quarter of 2009, $58.2 million for the fourth quarter of 2008, $100.4 million for the third quarter of 2008 and $115.8 million for the second quarter of 2008. Given a net indebtedness of $79.3 million at March 31, 2009, this resulted in an EBITDA covenant ratio of 0.3 to 1. We expect that this covenant will limit our ability to borrow under our existing credit agreements in 2009. Thus, we chose not to renew our one-year facility with ABN AMRO that expired in March 2009 and we do not intend to extend our one year facilities that will come due in 2009 (See “Credit Agreements” below for more detail on one year facilities with Rabobank and Bank of Tokyo-Mitsubishi) but rather, we will focus our efforts on obtaining additional sources of liquidity which would not be subject to this EBITDA covenant and complement our $800 million five-year facility. With regard to replacing our accounts receivable financing facility that was terminated on January 12, 2009, we have signed a mandate letter on April 9, 2009 for the structuring and implementation of a trade receivables program of up to €125 million. We expect to enter into definitive agreements for this program by the end of the third quarter of 2009 however there can be no assurance in this regard. On April 15, 2009, the Company entered into a €35 million factoring program in respect to accounts receivable from one of our customers. Additionally, we are pursuing other opportunities of financing that would allow

 

19


for off balance sheet accounting treatment and would therefore not be subject to the constraints of the EBITDA covenant. These possible sources of future liquidity may come from the factoring of additional accounts receivable balances, inventory financing programs, or the sale-leaseback of certain property, plant and equipment. While there can be no assurance that we will be able to obtain these alternative sources of liquidity, based on our current discussions with other parties we believe that some of these opportunities will contribute, if needed, to our future funding requirements. We would also try to obtain waivers of our financial debt covenants. If we receive a fine from the European Commission at an amount exceeding our available liquidity at the time, we will try to negotiate a payment plan with the Commission. We are advised this possibility exists in cases of extreme hardship and substantiated financial difficulties. It is our understanding that it is not in the Commission’s interest, nor is it their intention, to force companies out of business due to fine payments, and we believe that the Commission will be sensitive to the current economic environment. However this outcome cannot be assured due to the degree of discretion inherent in the Commission’s fining and enforcement powers.

Although our available liquidity is currently adequate for our potential funding needs, future developments and no improvement in the commercial vehicle industry could negatively impact our liquidity, so we are continuing to proactively address potential constraints that may occur later during 2009.

Credit Agreements

On May 31, 2007, WABCO entered into an unsecured, five-year $800 million, multi-currency revolving credit facility that will expire on July 31, 2012. This is our primary bank credit agreement and it became available to us on August 1, 2007. The proceeds of the borrowings under the credit facility have been used to fund repurchases of our shares, pay quarterly dividends to our shareholders and to meet short-term cash requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee that may be required pursuant to a decision relating to the European Commission investigation matter as further described in Note 9— Warranties, Guarantees, Commitments and Contingencies. Up to $100 million under this facility may be used for issuing letters of credit of which $97.5 million was unused as of March 31, 2009, and up to $75 million for same-day borrowings. The balance outstanding on this facility on March 31, 2009 is $31.0 million. The Company has the ability to borrow an additional $766.5 million under this facility. The Company intends to replace all or some portion of the existing five-year $800 million credit facility at the time of its expiration.

On March 7, 2008, we entered into unsecured, 364 day credit agreements with two banks, Rabobank and ABN AMRO, totaling €200.0 million ($264.0 million at March 31, 2009 exchange rates). The balance outstanding with Rabobank is $132.0 million on March 31, 2009. As a result of the draw down on July 31, 2008, the 364 day €100.0 million credit facility with Rabobank has an expiration date of July 30, 2009. The balance outstanding is classified as long-term as the Company has the ability and intent to refinance the debt using the five-year $800 million, multi-currency revolving credit facility. We currently do not intend to renew the Rabobank facility when it expires. The facility with ABN AMRO was not renewed upon expiration during the first quarter of 2009.

On November 28, 2007 we entered into a €50.0 million ($66.0 million at March 31, 2009 exchange rates), 364 day credit agreement with the Bank of Tokyo-Mitsubishi. As of March 31, 2009, there is no outstanding balance under this facility. The Company redeemed the outstanding debt under the credit agreement which resulted in termination of the credit agreement on February 26, 2009.

Our credit facilities contain various covenants that limit, among other things, liens, transactions, subsidiary indebtedness, and certain mergers and sales of assets. The covenants also require the Company to meet certain financial tests: a rolling four quarters 3 to 1 ratio of consolidated net indebtedness to consolidated trailing four quarters adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for certain items), a 3 to 1 ratio of consolidated trailing four quarters adjusted EBITDA to consolidated net interest expense, and a liquidity test. These terms are all defined within the agreement to the five-year $800 million credit facility. The liquidity covenant for the $800 million credit facility requires us to have at least $100 million of liquidity (which includes unused commitments under the agreement and certain other committed facilities that may be entered into, as well as unrestricted cash and cash equivalents) after giving effect to any payment of a fine or any provision of a bank guarantee that may be required pursuant to a decision relating to the European Commission investigation matter. As of March 31, 2009, our trailing four quarters adjusted EBITDA is $287.4 million, which consists of $13.0 million for the first quarter of 2009, $58.2 million for the fourth quarter of 2008, $100.4 million for the third quarter of 2008 and $115.8 million for the second quarter of 2008. Given a net indebtedness of $79.3 million at March 31, 2009, this resulted in an EBITDA covenant ratio of 0.3 to 1. For additional information relating to the terms of the credit agreement we refer to the Form 8-K filed by Trane on June 5, 2007. As of March 31, 2009, the Company was in compliance with all the covenants contained in these credit agreements.

 

20


On January 12, 2009, our accounts receivable financing facility, which was entered into in the second quarter of 2008, was terminated by ABN/Royal Bank of Scotland (RBS) due to the downgrade of RBS by S&P. That agreement had provided for the financing of up to €150 million of receivables, which qualified for off balance sheet accounting treatment, and was not subject to the trailing four quarters adjusted EBITDA covenant described above.

With regard to replacing this facility, we have signed a mandate letter on April 9, 2009 for the structuring and implementation of a trade receivables program of up to €125 million. We expect to enter into definitive agreements for this program, by the end of the third quarter of 2009 however there can be no assurance in this regard. On April 15, 2009, the Company entered into a €35 million factoring program in respect to accounts receivable from one of our customers.

Cross Currency Swap

The unsecured 364 day €100.0 million credit facility entered into in March 2008 with Rabobank (discussed above under credit agreements), included a requirement to draw down on the facility within a certain time period to avoid termination of the facility. Therefore, the full €100.0 million, or $156.5 million U.S. dollars, was drawn down on July 31, 2008 and used to pay down the five-year $800 million, multi-currency revolving credit facility expiring on July 2012. As a result of the draw down on July 31, 2008, the 364 day €100.0 million credit facility with Rabobank has an expiration date of July 30, 2009. In order to avoid foreign currency risk associated with the euro denominated borrowing, the Company entered into a cross currency swap with Rabobank on July 29, 2008, and designated the swap as a fair value hedge of the changes in the fair value of the underlying debt resulting from exchange rate movements between the euro and U.S. dollar. The fair value hedge is highly effective and therefore any volatility resulting from translating the hedged debt into U.S. dollars and the remeasurement of the swap have not had a material impact to our consolidated financial statements. For additional information relating to the terms of the cross currency swap, refer to Note 8 – Debt.

Streamlining Program Initiated

On October 28, 2008, the Company commenced a consultative process with works councils and employee representatives regarding intended reductions in the Company’s global workforce by approximately 1,000 positions. Based on the continued deterioration in the industry, in January 2009 the Company has committed to a further reduction of an additional 400 employees over the initially disclosed 1,000 employees. As of March 31, 2009, approximately 1,200 of the 1,400 positions were terminated. In view of the continued decline in market conditions, the Company took additional measures in consultation with the relevant works councils for a further reduction of 150 employees bringing the committed total to 1,550 employees. In many cases, reductions in workforce can only be effected subject to completion of a formal consultation process with works councils in accordance with applicable local laws. The Company estimates that the streamlining charges and related cash payments associated with this activity will range from $80 million to $85 million. The Company recorded $26 million in the fourth quarter of 2008, of which approximately $21 million related to this program. Additionally $31 million was recorded in the first quarter of 2009. The Company anticipates annualized savings of approximately $65 million to $70 million. While the Company expects that this activity will be substantially completed during the second quarter of 2009 the Company expects to incur approximately $29 million to $34 million of expense during the remainder of 2009; however payments will continue until 2013. It is anticipated that the principal categories of associated costs would consist of termination and severance costs, costs associated with the provision of job outplacement services, and other employee benefit related costs. In specific countries the streamlining program includes early retirement programs, therefore a large portion of payments will be made after December 31, 2009.

 

21


Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of the quarter ended March 31, 2009.

Aggregate Contractual Obligations

The Company has contractual obligations for debt, operating leases, tax indemnifications, purchase obligations, unfunded pension and post-retirement benefit plans and FIN 48 tax liabilities that were summarized in a table of aggregate contractual obligations for the year ended December 31, 2008 disclosed in the Annual Report on Form 10-K. There have been no material changes to those obligations since December 31, 2008.

Information Concerning Forward Looking Statements

Certain of the statements contained in this report (other than the historical financial data and other statements of historical fact), including, without limitation, statements as to management’s expectations and beliefs, are forward-looking statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, financial condition, liquidity, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “strategies,” “prospects,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expression or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. This report includes important information as to risk factors in “Item 1. Business”, “Item 1A. Risk Factors”, and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Many important factors could cause actual results to differ materially from management’s expectations, including:

 

   

adverse developments in general business, economic and political conditions or any outbreak or escalation of hostilities on a national, regional or international basis;

 

   

changes in international or U.S. economic conditions, such as inflation, interest rate fluctuations, foreign exchange rate fluctuations or recessions in our markets;

 

   

unpredictable difficulties or delays in the development of new product technology;

 

   

pricing changes to our supplies or products or those of our competitors, and other competitive pressures on pricing and sales;

 

   

adverse developments in the business of our key customers;

 

   

changes in the environmental regulations that affect our current and future products;

 

   

competition in our existing and future lines of business and the financial resources of competitors;

 

   

our failure to comply with regulations and any changes in regulations;

 

   

our failure to complete potential future acquisitions or to realize benefits from completed acquisitions;

 

   

our ability to access credit markets or capital markets on a favorable basis or at all;

 

   

continued turmoil and instability in the credit markets;

 

   

our inability to implement our growth plan;

 

   

the loss of any of our senior management;

 

   

difficulties in obtaining or retaining the management and other human resource competencies that we need to achieve our business objectives;

 

22


   

labor relations;

 

   

risks inherent in operating in foreign countries, including exposure to local economic conditions, government regulation, currency restrictions and other restraints, changes in tax laws, expropriation, political instability and diminished ability to legally enforce our contractual rights;

 

   

the actual level of commercial vehicle production in our end-markets;

 

   

periodic changes to contingent liabilities, including those associated with litigation matters and government investigations; and

 

   

a fine assessed by the European Commission in excess of our funding capability at that time.

Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

Critical Accounting Policies and Estimates

Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis and Notes 2 and 13 to the Consolidated Financial Statements for the year ended December 31, 2008 in the Company’s Annual Report on Form 10-K, describe the most significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ materially from management’s estimates. There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the first three months of 2009, although the following item has been added to the list of critical accounting policies and estimates.

Goodwill – The Company has a significant amount of goodwill on its balance sheet that is not amortized, but subject to impairment tests each fiscal year or more often when events or circumstances indicate that the carrying amount of goodwill may not be recoverable. The Company’s impairment tests utilize the two-step approach prescribed in Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.”

The recoverability of goodwill is measured based on one reporting unit for the total Company. In order to approximate the fair value of the reporting unit for purposes of testing recoverability, we use the total market capitalization of the Company, a market approach, which is then compared to the total book value of the Company. In the event the Company’s fair value has fallen below book value, the Company will compare the estimated fair value of goodwill to its book value. If the book value of goodwill exceeds the estimated fair value of goodwill, the Company will recognize the difference as an impairment loss in operating income. There has been no impairment of goodwill for the quarter ended March 31, 2009.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes to the disclosure on this matter for the year ended December 31, 2008 made in the Company’s Annual Report on Form 10-K.

 

Item 4. Controls and Procedures

The Company has established a Disclosure Controls Committee that assists the Chief Executive Officer and Chief Financial Officer in their evaluation of the Company’s disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures, as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 13a-15(e), are effective to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

23


PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

These are further described in Note 9. There have been no significant changes since December 31, 2008.

 

Item 1A. Risk Factors

There have been no significant changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K.

 

Item 2. Changes in Securities, and Use of Proceeds and Issuer Purchases of Equity Securities

The Company’s Board of Directors has approved expenditures under a program to purchase shares of the Company’s common stock in the open market. There has been no repurchase activity for the first three months of 2009.

The authorization by the Board of Directors on July 27, 2007 approved the purchase of shares in an amount not to exceed $500,000,000 which expires on September 1, 2009. The unexpended balance under that authorization as of March 31, 2009 is $223,712,402. Currently, the Company is not making any additional share repurchases under the buy back program. Timing of future purchases will vary depending on financial conditions and other factors.

 

Item 6. Exhibits

The exhibits listed on the accompanying Index to Exhibits are filed as part of this quarterly report on Form 10-Q.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

WABCO HOLDINGS INC.

/s/ Todd Weinblatt

Todd Weinblatt
Vice President and Controller
(Principal Accounting Officer)

May 7, 2009

 

25


WABCO HOLDINGS INC.

INDEX TO EXHIBITS

(The File Number of the Registrant, WABCO Holdings Inc. is 1-33332)

 

Exhibit No.

 

Description

10.1   Non-Qualified Deferred Compensation Program for Belgian Executives (Summary of French Language Program Document).
10.2   Five-Year Credit Agreement, dated as of May 31, 2007, among WABCO Holdings Inc. and certain subsidiaries of WABCO Holdings Inc. and the financial institutions listed therein. JP Morgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J.P. Morgan Europe Limited, as London Agent, ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank, N.A. as Document Agents (previously filed as Exhibit 10.7 to the Company’s Form 10 (File No. 001-33332), filed on June 11, 2007 and refiled herein to include certain schedules omitted).
10.3   364-Day Credit Agreement, dated March 7, 2008, among WABCO Financial Services BVBA and WABCO Holdings Inc., as guarantor, Pandios Comm. V.A., as lender, and Coöperatieve Centrale Raiffeisen — Boerenleenbank B.A., as Calculation Agent (previously filed as Exhibit 10.2 to the Company’s Form 8-K (File No. 0001-33332), filed on March 12, 2008 and refiled herein to included certain schedules omitted).
31.1   Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2   Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1   Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2   Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

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Exhibit 10.1

LOGO

Drawn up on :

Feb. 2008

Categories insured:

Workers with grade 12 and more

You are entitled to a complementary group insurance scheme under your employment contract.

This brochure outlines the main conditions of the scheme :

 

LOGO   retirement benefits scheme      
LOGO   some general information :    ü    What are the vested rights in the event of leaving ?
     ü    Who are the beneficiaries in the event of death in service ?
     ü    What are the options in case of leaving ?
     ü    What is the tax treatment upon maturity of the contract ?

LOGO


LOGO

 

Retirement benefits scheme

 

What is the level of premiums paid ?

The annual employer’s premium amounts to : 50 % of the currently paid “AIP”

 

What are the benefits ?

The employer’s premiums are paid into a contract of the following insurance type :
‘Pure endowment with refund of savings’ providing for a capital payable upon being alive upon retirement or a capital amounting to the theoretical surrender value in the event of death before retirement.

The Lump sums insured depend on the amount of the premiums that have been paid into the contracts since joining, knowing that the premium is redetermined each year.

 

Each year a document called “Benefit statement” informs you of those covers as well as of the accrued profit sharing”.

 

When does the contract mature ?

Maturity of the contract is set at age 65 for both male and female insured.

LOGO

 


LOGO

 

LOGO   What are the vested rights in the event of leaving ?

The ‘retirement’ contracts are the property of the insured.

 

LOGO   Who are the beneficiaries in the event of death in service ?

The order of priority of the beneficiaries is as follows :

 

  a) the spouse (neither divorced nor judicially separated) or legal partner

 

  b) in the absence thereof, the insured’s children in equal shares

 

  c) in the absence thereof, the insured’s parents in equal shares

 

  d) in the absence thereof, the insured’s grandparents in equal shares

 

  e) in the absence thereof, the insured’s brothers and sisters in equal shares

 

  f) in the absence thereof, the legal heirs in equal shares.

Insured may modify the above-mentioned order of priority of beneficiaries.

Nevertheless, if the modification should exclude the spouse, the latter’s agreement will be required

(see law of 14 July 1976 on the respective rights and obligations of spouses).

 

LOGO   What if the insured leaves in during his/her career ?

You will have the following options:

 

LOGO  

to remain insured without paying further premiums but subject to the terms and provisions of the retirement plan and the vested rights continue to earn interest;

LOGO   to continue paying individually the premiums in full or in part;
LOGO   to transfer the accrued values to a specially formed receiving structure so that they are no longer subject to the provisions of the provident plan and you can opt for a different form of insurance (not just endowment but also a death in service cover, etc.);
LOGO   to transfer the accrued value (actuarial reserve) to your new employer’s insurance or provident organisation.

LOGO


LOGO

 

LOGO   Tax treatment : benefitss paid upon maturity or in the event of death

Currently , the withholdings amount to :

 

1. NHI CONTRIBUTION : 3.55 % on the Lumps Sum and profit sharing

 

2. SOLIDARITY CONTRIBUTION : withheld from the capital and profit sharing

Amount :

2% if the amount owed is > € 24,789.35

1 % if the amount owed is between € 2,478.94 and € 24,789.35

This contribution is not owed on amounts of less than € 2,478.94

 

3. ONE-OFF TAX :

The taxable amount is the gross available amount ( exclusive of profit sharing), less the NHI withholding and solidarity contribution on the said gross available amount.

 

4. TAX COMPUTATION :

 

Employer’s contract

(‘A’ contract)

   : 16.66 % on the Lumps Sum (*)

 

EXAMPLE
     Employer’s
contract ‘A’
    Profit shares    TOTAL

Capital

   40.000,00     7.500,00    47.500,00

NHI 3.55 %

   -1.420,00     -266,25    -1.686,25

Sol. Contr. 2 %

   -800,00     -150,00    -950,00
   37.780,00     7.083,75    44.863,75

Tax

one-off

   -16,66

-6.294,15

% (*)

 

     -6.294,15

NET

   31.485,85     7.083,75    38.569,60

 

(*)    This percentage is equal to 10,09% at the legal retirement age (ie. currently 65 for men, and until 01/01/2009, 64 for women) provided that the concerned person remains effectively active working.

LOGO

Exhibit 10.2

EXECUTION VERSION

FIVE-YEAR CREDIT AGREEMENT

dated as of

May 31, 2007

among

WABCO HOLDINGS INC.

The Borrowing Subsidiaries Party Hereto

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent, Issuing Bank and Swingline Lender

J.P. MORGAN EUROPE LIMITED,

as London Agent

ABN AMRO BANK N.V.,

as Syndication Agent

BANK OF AMERICA, N.A.

BNP PARIBAS

CITIBANK, N.A.,

as Documentation Agents

 

 

 

J.P. MORGAN SECURITIES, INC.    ABN AMRO BANK INC.

As Lead Arrangers and Joint Bookrunners

 

 


TABLE OF CONTENTS

 

     Page

ARTICLE I

Definitions

SECTION 1.01. Defined Terms

   1

SECTION 1.02. Classification of Loans and Borrowings

   24

SECTION 1.03. Terms Generally

   24

SECTION 1.04. Accounting Terms; GAAP

   25

SECTION 1.05. Exchange Rates

   25

ARTICLE II

The Credits

SECTION 2.01. Commitments

   26

SECTION 2.02. Loans and Borrowings

   26

SECTION 2.03. Requests for Revolving Borrowings

   27

SECTION 2.04. Competitive Bid Procedure

   28

SECTION 2.05. Letters of Credit

   30

SECTION 2.06. Swingline Loans

   34

SECTION 2.07. Funding of Borrowings

   36

SECTION 2.08. Interest Elections

   37

SECTION 2.09. Termination, Reduction and Increase of Commitments

   38

SECTION 2.10. Repayment of Loans; Evidence of Debt

   40

SECTION 2.11. Prepayment of Loans

   41

SECTION 2.12. Fees

   42

SECTION 2.13. Interest

   44

SECTION 2.14. Alternate Rate of Interest

   45

SECTION 2.15. Increased Costs

   45

SECTION 2.16. Break Funding Payments

   47

SECTION 2.17. Taxes

   48

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs

   49

SECTION 2.19. Mitigation Obligations; Replacement of Lenders

   51

SECTION 2.20. Borrowing Subsidiaries

   52

SECTION 2.21. Additional Reserve Costs

   52

SECTION 2.22. Redenomination of Certain Designated Foreign Currencies

   53

 

ii


ARTICLE III

Representations and Warranties

SECTION 3.01. Organization and Qualification

   54

SECTION 3.02. Corporate Authority and Validity of Obligations

   54

SECTION 3.03. Margin Stock

   55

SECTION 3.04. Financial Reports

   55

SECTION 3.05. No Material Adverse Effect

   55

SECTION 3.06. Litigation

   55

SECTION 3.07. Tax Returns

   55

SECTION 3.08. Approvals

   55

SECTION 3.09. ERISA

   56

SECTION 3.10. Environmental Matters

   56

SECTION 3.11. Properties

   56

SECTION 3.12. Compliance with Laws

   56

SECTION 3.13. Investment Company Status

   57

SECTION 3.14. Disclosure

   57

ARTICLE IV

Conditions

SECTION 4.01. Effective Date

   57

SECTION 4.02. Each Borrowing

   59

SECTION 4.03. Initial Borrowing by each Borrowing Subsidiary

   60

ARTICLE V

Affirmative Covenants

SECTION 5.01. Corporate Existence

   61

SECTION 5.02. Maintenance of Properties

   61

SECTION 5.03. Taxes

   61

SECTION 5.04. Insurance

   61

SECTION 5.05. Financial Reports and Other Information

   61

SECTION 5.06. Books and Records; Inspection Rights

   63

SECTION 5.07. Compliance with Laws

   64

ARTICLE VI

Negative Covenants

SECTION 6.01. Liens

   64

SECTION 6.02. Subsidiary Indebtedness

   66

SECTION 6.03. Fundamental Changes

   67

SECTION 6.04. Use of Proceeds

   67

SECTION 6.05. Ratio of Consolidated Net Indebtedness to Consolidated EBITDA

   68

SECTION 6.06. Ratio of Consolidated EBITDA to Consolidated Net Interest Expense

   68

SECTION 6.07. Liquidity

   68

 

iii


ARTICLE VII

Events of Default

ARTICLE VIII

The Agents

ARTICLE IX

Guarantee

ARTICLE X

Miscellaneous

SECTION 10.01. Notices

   75

SECTION 10.02. Waivers; Amendments

   76

SECTION 10.03. Expenses; Indemnity; Damage Waiver

   77

SECTION 10.04. Successors and Assigns

   80

SECTION 10.05. Survival

   83

SECTION 10.06. Counterparts; Integration; Effectiveness

   83

SECTION 10.07. Severability

   83

SECTION 10.08. Right of Setoff

   84

SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process

   84

SECTION 10.10. WAIVER OF JURY TRIAL

   85

SECTION 10.11. Headings

   85

SECTION 10.12. Confidentiality

   85

SECTION 10.13. Interest Rate Limitation

   86

SECTION 10.14. Conversion of Currencies

   86

SECTION 10.15. Termination of Certain Covenants

   87

SECTION 10.16. USA Patriot Act

   87

SCHEDULES

 

Schedule 1.01       Approved Issuing Bank Affiliates
Schedule 2.01       Commitments
Schedule 2.18       Payment Accounts
Schedule 3.10       Environmental Matters
Schedule 6.01       Existing Liens
Schedule 6.02       Existing Subsidiary Indebtedness

 

iv


EXHIBITS:

 

Exhibit A       Form of Assignment and Assumption
Exhibit B-1       Form of Borrowing Subsidiary Agreement
Exhibit B-2       Form of Borrowing Subsidiary Termination
Exhibit C       Reserve Costs
Exhibit D-1       Form of Opinion of Counsel
Exhibit D-2       Form of Opinion of McDermott Will & Emery LLP, Counsel for the Borrowers
Exhibit E       Form of Compliance Certificate
Exhibit F       Form of Note

 

v


FIVE-YEAR CREDIT AGREEMENT dated as of May 31, 2007, among WABCO HOLDINGS INC., a Delaware corporation (the “ Company” ); the BORROWING SUBSIDIARIES from time to time party hereto (the “ Borrowing Subsidiaries” , and, together with the Company, the “ Borrowers” ); the LENDERS from time to time party hereto; JPMORGAN CHASE BANK, N.A., as Administrative Agent, as Issuing Bank and as Swingline Lender; J.P. MORGAN EUROPE LIMITED, as London Agent, ABN AMRO BANK N.V., as Syndication Agent, and BANK OF AMERICA, N.A., BNP PARIBAS, and CITIBANK, N.A., as Documentation Agents.

The Borrowers have requested the Lenders (such term and each other capitalized term used and not otherwise defined herein having the meaning assigned to it in Article I) to extend credit in the form of (a) Loans in US Dollars and one or more Designated Foreign Currencies in an aggregate principal amount at any one time outstanding not in excess of US$800,000,000, (b) Letters of Credit in US Dollars, Sterling and Euro in an aggregate stated amount at any time outstanding not in excess of US$100,000,000 and (c) Swingline Loans (i) in US Dollars in an aggregate principal amount at any time outstanding not in excess of US$10,000,000 (as such amount may be adjusted from time to time pursuant to Section 2.06(d)) and (ii) in Sterling or Euro in an aggregate principal amount outstanding at any time not in excess of US$65,000,000 (as such amount may be adjusted from time to time pursuant to Section 2.06(d)). The Borrowers have also requested the Lenders to provide a procedure pursuant to which the Borrowers may invite the Lenders to bid on an uncommitted basis on short-term Loans to the Borrowers. The proceeds of Borrowings hereunder, and the Letters of Credit issued hereunder, are to be used for working capital, to fund repurchases of capital stock and for general corporate purposes.

The Lenders are willing to establish the credit facilities referred to in the preceding paragraph upon the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

1


Administrative Agent ” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder, or any successor thereto appointed in accordance with Article VIII.

Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

Agents ” means, collectively, the Administrative Agent and the London Agent.

Agreement Currency ” has the meaning assigned to such term in Section 10.14(b).

Alternate Base Rate ” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus   1 / 2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate, or the Federal Funds Effective Rate, respectively.

Applicable Agent ” means (a) with respect to any Loan, Borrowing or Letter of Credit denominated in US Dollars, or with respect to any payment that does not relate to any particular Loan or Borrowing, the Administrative Agent and (b) with respect to any Loan, Borrowing or Letter of Credit denominated in any Designated Foreign Currency, the London Agent.

Applicable Creditor ” has the meaning assigned to such term in Section 10.14(b).

Applicable Percentage ” means, with respect to any Lender, the percentage of the aggregate Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

 

2


Applicable Rate ” means, for any day, with respect to any Eurocurrency Revolving Loan or with respect to the facility fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurocurrency Spread” or “Facility Fee Rate”, as the case may be, based upon the Leverage Ratio as of the most recent determination date and the Utilization Percentage on such date:

 

Leverage Ratio

   Eurocurrency
Spread
    Facility
Fee
Rate
 
   Utilization
Percentage
£ 50%
    Utilization
Percentage
> 50%
   

Category 1 Less than 1.75:1.00

   0.350 %   0.400 %   0.100 %

Category 2 greater than or equal to 1.75:1.00 and less than 2.25:1.00

   0.440 %   0.490 %   0.110 %

Category 3 greater than or equal to 2.25:1.00 and less than or equal to 2.75:1.00

   0.500 %   0.550 %   0.125 %

Category 4 Greater than 2.75:1.00

   0.600 %   0.650 %   0.150 %

For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of the end of each fiscal quarter of the Company’s fiscal year based on the Company’s consolidated financial statements delivered pursuant to Section 5.05(a) or (b) and (ii) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the first Business Day following the date of delivery to the Administrative Agent of the consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change. Notwithstanding the foregoing, (i) until the Company shall have delivered the financial statements and certificate required under Section 5.05(a) and (c) for the fiscal year ended December 31, 2007, the “Applicable Rate” shall, except as provided in clause (ii) of this sentence, be determined by reference to Category 2, and (ii) the Leverage Ratio shall be deemed to be in Category 4 (A) on any date when an Event of Default has occurred and is continuing and (B) at the option of the Administrative Agent or at the request of the Required Lenders, if the Company fails to deliver any consolidated financial statements required to be delivered by it pursuant to Section 5.05(a) or (b), during the period from the last day on which such statements are permitted to be delivered in conformity with Section 5.05(a) or (b), as applicable, until the date on which such consolidated financial statements are delivered.

ASCI ” means American Standard Companies Inc., a Delaware corporation, which prior to the consummation of the Spin-Off, owned all of the Equity Interests in the Company.

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent and the Borrower Agent.

 

3


Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

Belgian Borrowing Subsidiary ” means a Borrowing Subsidiary that is organized under the laws of Belgium or any political subdivision thereof.

Belgian Lending Office ” means, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans in Euro and Sterling to the Belgian Borrowing Subsidiaries.

Board ” means the Board of Governors of the Federal Reserve System of the United States of America.

Borrower ” means the Company or any Borrowing Subsidiary.

Borrower Agent” means the Company, which for convenience shall act on behalf of the Borrowers for purposes of giving and receiving certain notices and taking certain other actions as more fully set forth herein.

Borrowing ” means (a) Revolving Loans of the same Type and currency made, converted or continued on the same date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect, (b) a Competitive Loan or group of Competitive Loans of the same Type and currency made on the same date and as to which a single Interest Period is in effect or (c) a Swingline Loan.

Borrowing Minimum ” means (a) in the case of a Borrowing denominated in US Dollars, US$5,000,000 (or, in the case of a Swingline Borrowing, US$1,000,000) and (b) in the case of a Borrowing denominated in any Designated Foreign Currency, the smallest integral multiple of 1,000,000 units (or, in the case of Sterling, 500,000 units) of such currency that has a US Dollar Equivalent at least equal to US$5,000,000.

Borrowing Multiple ” means (a) in the case of a Borrowing denominated in US Dollars, US$1,000,000 and (b) in the case of a Borrowing denominated in any other currency, 1,000,000 units (or, in the case of Sterling, 500,000 units) of such currency.

Borrowing Request ” means a request by a Borrower for a Revolving Borrowing in accordance with Section 2.03.

Borrowing Subsidiary ” means, at any time, each of the Subsidiaries that (a) is named on the signature pages to this Agreement or (b) has been designated as a Borrowing Subsidiary by the Borrower Agent pursuant to Section 2.20, other than any such Subsidiary that has ceased to be a Borrowing Subsidiary as provided in Section 2.20.

Borrowing Subsidiary Agreement ” means a Borrowing Subsidiary Agreement substantially in the form of Exhibit B-1.

 

4


Borrowing Subsidiary Termination ” means a Borrowing Subsidiary Termination substantially in the form of Exhibit B-2.

Business Day ” means any day that is not a Saturday or a Sunday; provided that (a) when used in connection with a Loan or Letter of Credit denominated in US Dollars, the term “Business Day” shall also exclude any day on which commercial banks in New York City are authorized or required by law to remain closed; (b) when used in connection with (i) a Eurocurrency Loan, (ii) a Fixed Rate Loan or Letter of Credit denominated in a Designated Foreign Currency or (iii) a Swingline Loan denominated in Sterling, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in the applicable currency in the London interbank market and (c) when used in connection with a Loan or Letter of Credit denominated in Euro (including a Swingline Loan denominated in Euro), the term “Business Day” shall also exclude any day on which the TARGET payment system is not open for the settlement of payments in Euro.

Calculation Date ” means (a) the last Business Day of each calendar quarter and (b) solely with respect to any Designated Foreign Currency for a requested new Borrowing for which an Exchange Rate was not established on the immediately preceding Calculation Date, the Business Day immediately preceding the date on which such Borrowing is to be made, provided that the Administrative Agent may in addition designate the last day of any other month as a Calculation Date if it reasonably determines that there has been significant volatility in the foreign currency markets since the most recent Calculation Date.

Capital Lease ”, as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP applied on a consistent basis and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP applied on a consistent basis.

Cash Pooling Arrangement ” means an arrangement among a single depository institution and two or more Non-US Subsidiaries involving the pooling of cash deposits by such Non-US Subsidiaries for cash management purposes.

A “ Change in Control ” shall be deemed to have occurred if at any time (a) any Person or group of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended, or the rules of the SEC thereunder) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC) of Equity Interests representing 50% or more in voting power of the outstanding Voting

 

5


Stock of the Company or (b) a majority of the Board of Directors of the Company shall at any time not consist of (i) individuals who shall have been members of the Board of Directors of the Company on the Effective Date and (ii) individuals whose nomination or election to such Board of Directors shall have been recommended or approved by a vote of a majority of the members of such Board of Directors described in the preceding clause (i) or in this clause (ii).

Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or any Issuing Bank, or by any lending or issuing office of such Lender or Issuing Bank or by such Lender’s or such Issuing Bank’s holding company, if any, with any request, guideline or directive of any Governmental Authority made or issued after the date of this Agreement, to the extent such request, guideline or directive has the force of law or is of a type generally complied with by financial institutions under the jurisdiction of such Governmental Authority.

Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Competitive Loans or Swingline Loans.

Code ” means the Internal Revenue Code of 1986, as amended from time to time.

Commitment ” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans pursuant to Section 2.01(a), to acquire participations in Letters of Credit pursuant to Section 2.05 and to acquire participations in Swingline Loans pursuant to Section 2.06, expressed as an amount representing the maximum aggregate permitted amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The aggregate amount of the Commitments on the date hereof is US$800,000,000.

Company ” has the meaning assigned to such term in the heading of this Agreement.

Competitive Bid ” means an offer by a Lender to make a Competitive Loan in accordance with Section 2.04.

Competitive Bid Rate ” means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid.

 

6


Competitive Bid Request ” means a request by a Borrower for Competitive Bids in accordance with Section 2.04.

Competitive Borrowing ” means a Borrowing comprised of Competitive Loans.

Competitive Loan ” means a Loan made pursuant to Section 2.04.

Competitive Loan Exposure ” means, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the outstanding Competitive Loans of such Lender denominated in US Dollars and (b) the sum of the US Dollar Equivalents of the aggregate principal amounts of the outstanding Competitive Loans of such Lender denominated in Designated Foreign Currencies.

Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) Consolidated Net Interest Expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period, (iv) any extraordinary or non-recurring non-cash charges for such period related to plant closings or other restructurings of operations or to the writedown of assets, (v) fees and expenses incurred in connection with the consummation of the Spin-Off in an aggregate amount not to exceed US$75,000,000, and (vi) cash payments or reserves for such period in respect of the EC Matter and minus (b) without duplication and to the extent not deducted in determining such Consolidated Net Income, (i) extraordinary gains for such period and (ii) any amounts paid in cash in respect of extraordinary or non-recurring non-cash charges during any earlier period related to plant closings or other restructurings of operations or to the writedown of assets, all determined on a consolidated basis in accordance with GAAP; provided that for any period including a fiscal quarter during which an acquisition or a divestiture was consummated outside of the ordinary course of business, Consolidated EBITDA and the components thereof shall be determined on a pro forma basis as if such acquisition or divestiture, as the case may be, had occurred at the beginning of such period; provided further that for purposes of determining Consolidated EBITDA for any period that includes any fiscal quarter ended prior to the date of the consummation of the Spin-Off, Consolidated EBITDA for such fiscal quarter shall be determined on the same basis as the financial statements of the Company set forth in the Form 10 were prepared.

Consolidated Liquidity ” means, on any date, the sum of (a) the aggregate amount of unused Commitments under this Agreement plus the aggregate amount of unused commitments under any other committed credit facilities then available to (x) the Company or (y) its Subsidiaries so long as the Company is also a borrower thereunder, in each case on such date and (b) the difference between (i) the aggregate amount of Unrestricted Cash and Cash Equivalents owned by the Company and its Subsidiaries on such date, excluding, however, all cash and cash equivalents subject to agreements or other arrangements that restrict the use of such cash and cash equivalents in the business of the Company and its Subsidiaries and (ii) an amount equal to the aggregate Taxes that

 

7


would become payable by the Company and its Subsidiaries in the event such Unrestricted Cash and Cash Equivalents were repatriated to the Company or a Subsidiary that is a US Person on such date, as estimated in good faith by the Company and certified by a Financial Officer of the Company to the Administrative Agent.

Consolidated Net Income ” means, with respect to any Person, for any period, the net income or loss of such Person and its consolidated Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

Consolidated Net Indebtedness ” means, on any date, (a) Consolidated Total Debt minus (b) the amount by which Unrestricted Cash and Cash Equivalents exceeds US$100,000,000; provided that in no event shall the amount subtracted pursuant to this clause (b) exceed US$100,000,000.

Consolidated Net Interest Expense ” means, with respect to any Person, for any period for which such amount is being determined, (a) total interest expense (including that properly attributable to Capital Leases in accordance with GAAP and amortization of debt discount and debt issuance costs) of such Person and its consolidated Subsidiaries, including all capitalized interest, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financings and net costs under interest rate protection agreements (including amortization of discount) minus (b) total interest income of such Person and its consolidated subsidiaries, all as determined on a consolidated basis in accordance with GAAP and, to the extent Consolidated EBITDA for any period is determined on a pro forma basis to reflect an acquisition or divestiture out of the ordinary course of business, Consolidated Net Interest Expense shall be calculated on a pro forma basis as if such acquisition or divestiture, as the case may be, had occurred at the beginning of such period; provided that for purposes of determining Consolidated Net Interest Expense for any period that includes any fiscal quarter ended prior to the date of the consummation of the Spin-Off, Consolidated Net Interest Expense for such fiscal quarter shall be determined on the same basis as the financial statements of the Company set forth in the Form 10 were prepared

Consolidated Net Tangible Assets ” means, with respect to any Person, the aggregate amount of assets of such Person (less applicable reserves and other properly deductible items) after deducting therefrom (to the extent otherwise included therein) (a) all current liabilities (other than Borrowings under this Agreement or current maturities of long-term Indebtedness), and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the books and records of such Person and its consolidated Subsidiaries and computed in accordance with GAAP.

Consolidated Total Assets ” means, with respect to any Person, the aggregate amount of assets of such Person (less applicable reserves and other properly deductible items).

 

8


Consolidated Total Debt ” means, for any Person, all Indebtedness of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP.

Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling” and “ Controlled” have meanings correlative thereto.

Controlled Group ” means all of a controlled group of corporations and all trades and businesses (whether or not incorporated) under common control that, together with the Company or any of the Subsidiaries, are treated as a single employer under Section 414 of the Code.

Covenant Termination Date ” means the first date after the first anniversary of the Effective Date that is the last day of a fiscal quarter of the Company and on which the Leverage Ratio shall not exceed 1.50:1.00.

Credit Documents ” means this Agreement, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary Termination, each Letter of Credit and each promissory note delivered pursuant to this Agreement, as such documents may be amended, modified, supplemented or restated from time to time.

Credit Event ” means each Borrowing and each issuance, extension or increase in the amount of any Letter of Credit.

Credit Parties ” means the Company and each Borrowing Subsidiary.

Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would become an Event of Default.

Designated Foreign Currency ” means Sterling and Euro.

Designated Obligations ” means, in respect of this Agreement, all Obligations of the Credit Parties in respect of (a) principal of and interest on the Loans, (b) payments required to be made hereunder in respect of Letters of Credit, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (c) facility fees and Letter of Credit participation fees in respect of this Agreement, in each case regardless of whether then due and payable. The Designated Obligations owed to any Lender under this Agreement in respect of outstanding Swingline Loans will consist of such Lender’s Swingline Exposure.

Determination Date ” has the meaning assigned to such term in Section 6.07.

EC Judgment ” has the meaning assigned to such term in Section 5.05(g).

EC Matter ” has the meaning assigned to such term in Section 3.12.

 

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EC Payment Date ” means, with respect to any payment, posting of a bond or issuance of a letter of credit, in each case in respect of any EC Judgment, the earlier to occur of (a) a date, if any, that the Company and/or any of its Subsidiaries pays all or any portion of such EC Judgment, or causes a bond or letter of credit to be posted or issued on its behalf with respect to, such EC Judgment and (b) a date that is the expiration of any period during which Company and/or any of its Subsidiaries is required to pay all or any portion of such EC Judgment, or to cause a bond or letter of credit to be posted or issued on its behalf with respect to such EC Judgment.

Effective Date ” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 10.02).

EMU Legislation ” means the legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states.

Environmental Laws ” means all federal, state, local and foreign statutes, laws (including common law), regulations, ordinances, judgments, permits and other governmental rules or restrictions relating to human health, safety (including occupational safety and health standards), and protection of the environment or to emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into the environment, including ambient air, surface or ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the cleanup or other remediation thereof.

Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Company or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Laws, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interests.

ERISA ” has the meaning assigned to such term in Section 3.09.

Euro ” or “€” means the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation.

 

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Eurocurrency ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the LIBO Rate.

Event of Default ” has the meaning assigned to such term in Article VII.

Exchange Rate ” means on any day, for purposes of determining the US Dollar Equivalent of any other currency, the rate at which such other currency may be exchanged into US Dollars, as set forth at approximately 11:00 a.m., London time, on such day on the Reuters World Currency Page for such currency. In the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower Agent, or, in the absence of such an agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m., Local Time, on such date for the purchase of US Dollars for delivery two Business Days later; provided that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct in the absence of facts or circumstances indicating that it has been made in error.

Excluded Taxes ” means, with respect to any Agent, the Issuing Bank, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Credit Party hereunder or under any other Credit Document, (a) income, franchise or similar taxes (i) imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) imposed as a result of a present or former connection between such recipient and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such recipient’s having executed, delivered or performed its obligations or received a payment under, or enforced, any Credit Document), (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above, (c) in the case of any Lender, any withholding tax imposed by the United States of America that is in effect and would apply (assuming the taking by the applicable Borrower of all actions necessary in order for any available exemption from such tax to be effective) to amounts payable by a US Borrower from an office within the United States of America to a US Lending Office of such Lender at the time such Lender becomes a Lender under this Agreement (or designates such US Lending Office), (d) in the case of any Lender, any withholding tax imposed by the United Kingdom (or any political subdivision thereof) that is in effect and would apply (assuming the taking by the applicable Borrower of all actions necessary in order for any available exemption from such tax to be effective) to amounts payable by a UK Borrowing Subsidiary from an office within the United Kingdom to a UK Lending Office of such Lender at the time

 

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such Lender becomes a Lender under this Agreement (or designates such UK Lending Office), (e) in the case of any Lender, any withholding tax imposed by Belgium (or any political subdivision thereof) that is in effect and would apply (assuming the taking by the applicable Borrower of all actions necessary in order for any available exemption from such tax to be effective) to amounts payable by a Belgian Borrowing Subsidiary from an office within Belgium to a Belgian Lending Office of such Lender at the time such Lender becomes a Lender under this Agreement (or designates such Belgian Lending Office), and (f) in the case of any Lender, any withholding tax that is attributable to such Lender’s failure to comply with Section 2.17(e); provided that in the case of clauses (c), (d) and (e) above, no withholding tax shall be an Excluded Tax if and to the extent that a Lender (or its assignor, if any) shall have been entitled, at the time it designates a new lending office (or at the time it acquires any rights hereunder by assignment), to receive additional amounts with respect to such withholding tax pursuant to Section 2.17.

Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding 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 (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

Financial Officer ” means the chief financial officer, principal accounting officer, treasurer, assistant treasurer or controller of the Company.

Fixed Rate ” means, with respect to any Competitive Loan (other than a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid.

Fixed Rate Loan ” means a Competitive Loan bearing interest at a Fixed Rate.

Foreign Lender ” means, as to any Borrower, any Lender that is organized under the laws of a jurisdiction other than that in which such Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

Form 10 ” means the Form 10 filed by WABCO with the Securities and Exchange Commission on February 26, 2007 relating to the Spin-Off and any amendments thereto.

GAAP ” means generally accepted accounting principles in the United States of America.

Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

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Guarantee ” of or by any person means any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however , that the term Guarantee shall not include endorsements for collection or deposit, in either case in the ordinary course of business. The amount of any Guarantee shall be deemed to equal the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder); provided, however , that the amount of any Guarantee that, by its terms, limits the amount payable thereunder to a stated or determinable amount shall not exceed such stated or determinable amount.

Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Laws.

Hedging Agreement ” means any interest rate protection agreement, foreign currency exchange agreement, currency swap agreement or other interest or currency exchange rate hedging arrangement. The “principal amount” of any Hedging Agreement of the Company or any Subsidiary at any time shall be deemed to be the aggregate amount at such time of the payments that would be required to be made by the Company or such Subsidiary in the event of any early termination at such time of such Hedging Agreement.

Incur ” means create, incur, assume, Guarantee or otherwise become responsible for, and “ Incurred” and “ Incurrence” shall have correlative meanings.

Indebtedness ” of any person means, without duplication, (a) all obligations of such person for money borrowed or raised (excluding all Securitization Transactions that are accounted for as true sales of accounts receivable and not as liabilities on the consolidated balance sheets of the Company, but including Securitization Transactions accounted for as liabilities on the consolidated balance sheets of the Company), (b) all obligations of such person (other than accounts payable and other similar items arising in the ordinary course of business) for the deferred payment of the purchase price of property or services which would appear as liabilities on a balance

 

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sheet of such person, (c) all Capital Lease Obligations of such person, (d) all Guarantees by such person of obligations of others that otherwise constitute Indebtedness and (e) all obligations (contingent or otherwise) of such person as an account party in respect of letters of credit issued to secure payment obligations that otherwise constitute Indebtedness.

Indemnified Taxes ” means Taxes other than Excluded Taxes.

Information Memorandum ” means the Confidential Information Memorandum dated April 2007 relating to the Company and the Transactions.

Interest Election Request ” means a request by a Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08.

Interest Payment Date ” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days’ duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days’ duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing and (d) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

Interest Period ” means (a) with respect to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three, six, or, if available from time to time from all of the Lenders, twelve months thereafter, as the applicable Borrower may elect, and (b) with respect to any Fixed Rate Borrowing, the period (which shall not be less than 7 days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

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Issuing Bank ” means JPMorgan Chase Bank, N.A. and any one or more other Lenders designated in writing by the Borrower Agent in a notice delivered to the Administrative Agent, and their respective successors in such capacity; provided that such other Lender shall have consented to such designation. The Issuing Banks may, in their respective discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Banks listed in Schedule 1.01 or approved by the Borrower Agent (such approval not to be unreasonably withheld), in which case the term “Issuing Bank” shall include any such Affiliates with respect to Letters of Credit issued by such Affiliates.

JPMEL ” means J.P. Morgan Europe Limited and its successors.

JPMCB ” means JPMorgan Chase Bank, N.A. and its successors.

Judgment Currency ” has the meaning assigned to such term in Section 10.14(b).

LC Disbursement ” means a payment made by any Issuing Bank in respect of a Letter of Credit.

LC Exposure ” means at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit denominated in US Dollars at such time, (b) the aggregate of the US Dollar Equivalents of the undrawn amounts of all outstanding Letters of Credit denominated in Sterling or Euro at such time, (c) the aggregate amount of all LC Disbursements denominated in US Dollars that have not yet been reimbursed by or on behalf of the Borrowers at such time and (d) the aggregate of the US Dollar Equivalents of the amounts of all LC Disbursements denominated in Sterling or Euro that have not yet been reimbursed by or on behalf of the Borrowers at such time. The LC Exposure of any Lender at any time shall be such Lender’s Applicable Percentage of the aggregate LC Exposure.

Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Except to the extent otherwise expressly provided for herein, the term “Lenders” includes the Swingline Lender.

Letter of Credit ” means any letter of credit issued pursuant to Section 2.05(a).

Leverage Ratio ” means, at any date that is the last day of any fiscal quarter, the ratio of (a) Consolidated Net Indebtedness on such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Company ended on such date.

LIBO Rate ” means, with respect to any Eurocurrency Borrowing for any Interest Period, (a) the rate per annum appearing under the British Bankers’ Association Interest Settlement Rates for deposits in the currency of such Borrowing at approximately

 

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11:00 a.m., London time, on the Quotation Day for such Interest Period, as reflected on the applicable Telerate screen page, for a period equal to such Interest Period (or, if an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the average (rounded upward, if necessary, to the next 1/100 of 1%) of the respective interest rates per annum at which deposits in the currency of such Borrowing are offered for such Interest Period to major banks in the London interbank market by JPMCB at approximately 11:00 a.m., London time, on the Quotation Day for such Interest Period), multiplied by (b) the Statutory Reserve Rate applicable to such Eurocurrency Borrowing; provided that for purposes of determining the interest rate applicable to any Eurocurrency Competitive Borrowing, the LIBO Rate shall be the rate determined pursuant to the foregoing clause (a) without giving effect to clause (b).

Liquidity Determination Date ” means a date which is four Business Days prior to any EC Payment Date.

Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset.

Loans ” means the loans made by the Lenders to the Borrowers pursuant to this Agreement.

Local Time ” means (a) with respect to a Loan, Borrowing or Letter of Credit denominated in US Dollars, New York City time and (b) with respect to a Loan, Borrowing or Letter of Credit denominated in any Designated Foreign Currency, London time.

London Agent ” means JPMEL, in its capacity as London agent for the Lenders hereunder, or any successor thereto appointed in accordance with Article VIII.

Margin ” means, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be added to or subtracted from the LIBO Rate to determine the rate of interest applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid.

Margin Stock ” means “ margin stock ” as defined in Regulation U of the Board of Governors of the Federal Reserve System.

Material Adverse Effect ” means any event or condition not disclosed in writing to the Lenders or in the Form 10, in each case prior to the date of this Agreement, that (a) has resulted or could reasonably be expected to result in a material adverse change in the business, assets, operations or financial condition of the Company and the Subsidiaries taken as a whole or (b) has materially impaired or could reasonably be expected to materially impair the ability of the Credit Parties to perform any of their obligations under this Agreement or the other Credit Documents, it being understood that the Spin-Off shall not be deemed to constitute a Material Adverse Effect.

 

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Material Indebtedness ” means Indebtedness (other than the Loans and Letters of Credit and Indebtedness owed to the Company or any Subsidiary), or obligations in respect of one or more Hedging Agreements, of any one or more of the Company and the Subsidiaries in an aggregate principal amount greater than US$75,000,000.

Material Subsidiary ” means, at any time, (a) each Borrowing Subsidiary and (b) each other Subsidiary exclusive of Subsidiaries that, together with their own subsidiaries, shall have accounted for less than 5% for any such Subsidiary, or 15% in the aggregate for all such Subsidiaries of Consolidated EBITDA for the period of four fiscal quarters most recently ended. For purposes of making the determinations required by clause (b) of this definition, the components of Consolidated EBITDA of Non-US Subsidiaries shall be converted into US Dollars at the rates used in preparing the consolidated balance sheets of the Company included in the applicable financial statements referred to in Section 3.04 or delivered pursuant to Section 5.05.

Maturity Date ” means the fifth anniversary of the Effective Date.

“Non-US Lending Office ” means, as to any Lender, any applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans in Designated Foreign Currencies. A Lender may designate multiple Non-US Lending Offices for Loans to different Borrowers or in different Designated Foreign Currencies; provided that (i) each Lender shall be deemed to have designated its UK Lending Offices as its Non-US Lending Offices for all Loans in Euro or Sterling (other than any such Loan by a Lender to a Belgian Borrowing Subsidiary) and (ii) each Lender shall be deemed to have designated its Belgian Lending Office as its Non-US Lending Office for all Loans in Designated Foreign Currencies to the Belgian Borrowing Subsidiaries.

Non-US Subsidiary ” means a Subsidiary that is not a US Subsidiary.

Obligations ” means (a) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (b) each payment required to be made by any Borrower under this Agreement in respect of any Letter of Credit when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (c) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of any Credit Party under this Agreement or any other Credit Document.

Other Taxes ” means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising

 

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from any payment made under any Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Credit Document.

PBGC ” has the meaning assigned to such term in Section 3.09.

Permitted Encumbrances ” means:

(a) Liens for taxes, assessments or governmental charges or claims that are not yet due and payable or are being contested in compliance with Section 5.03;

(b) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and suppliers, in each case incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith;

(c) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security programs, or to secure the performance of tenders, statutory obligations, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (other than obligations for the payment of borrowed money);

(d) leases or subleases granted to others (other than as security for Indebtedness) not interfering in any material respect with the business of the Company or any Subsidiary;

(e) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary;

(f) any interest or title of a lessor under any lease other than a Capital Lease or a lease entered into as part of a Sale and Leaseback Transaction;

(g) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(h) deed restrictions to ensure non-disturbance of legally permitted, permanent on-site waste storage/ treatment facilities; and

(i) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions.

Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

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Plan ” means, for the Company and each Subsidiary at any time, an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (a) is maintained by a member of the Controlled Group for employees of a member of the Controlled Group, (b) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, or (c) under which a member of the Controlled Group has any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years or by reason of being deemed a contributing sponsor under Section 4069 of ERISA.

Prime Rate ” means the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

Property ” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired.

Quotation Day ” means, with respect to any Eurocurrency Borrowing and any Interest Period, the day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in the currency of such Borrowing for delivery on the first day of such Interest Period. If such quotations would normally be given by prime banks on more than one day, the Quotation Day will be the last of such days.

Register ” has the meaning set forth in Section 10.04.

Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees and agents of such Person and such Person’s Affiliates.

Required Lenders ” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; provided that, for all purposes after the Loans become due and payable pursuant to Article VII or the Commitments expire or terminate, “ Required Lenders” will mean, at any time, Lenders having Revolving Credit Exposures and outstanding Competitive Loan Exposures representing more than 50% of the sum of the total Revolving Credit Exposures and outstanding Competitive Loan Exposures at such time.

Reset Date ” has the meaning assigned to such term in Section 1.05.

Revolving Borrowing ” means a Borrowing comprised of Revolving Loans.

 

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Revolving Credit Exposure ” means, at any time, the sum at such time, without duplication, of (a) the aggregate principal amount of the Revolving Loans denominated in US Dollars outstanding at such time, (b) the aggregate amount of the US Dollar Equivalents of the principal amounts of the Revolving Loans denominated in Designated Foreign Currencies outstanding at such time, (c) the aggregate LC Exposure at such time and (d) the aggregate Swingline Exposure at such time. The Revolving Credit Exposure of any Lender at any time shall be such Lender’s Applicable Percentage of the total Revolving Credit Exposure at such time.

Revolving Loan ” means a Loan made by a Lender pursuant to Section 2.01(a) and 2.03. Each Revolving Loan denominated in US Dollars shall be a Eurocurrency Loan or an ABR Loan. Each Revolving Loan denominated in a Designated Foreign Currency shall be a Eurocurrency Loan.

Sale-Leaseback Transaction ” means any arrangement whereby the Company or a Subsidiary shall sell or transfer any property, real or personal, used or useful in its business, whether now owner or hereinafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred; provided that any such arrangement entered into within 180 days after the acquisition, construction or substantial improvement of the subject property shall not be deemed to be a “Sale-Leaseback Transaction”.

SEC ” means the United States Securities and Exchange Commission or any successor Governmental Authority.

Securitization Transaction ” means (a) any transfer of accounts receivable or interests therein (i) to a trust, partnership, corporation or other entity (other than a Subsidiary), which transfer or pledge is funded by such entity in whole or in part by the issuance to one or more lenders or investors of indebtedness or other securities that are to receive payments principally from the cash flow derived from such accounts receivable or interests in accounts receivable, or (ii) directly to one or more investors or other purchasers (other than any Subsidiary), or (b) any transaction in which the Company or a Subsidiary Incurs Indebtedness or other obligations secured by Liens on accounts receivable. The “amount” of any Securitization Transaction shall be deemed at any time to be (A) in the case of a transaction described in clause (a) of the preceding sentence, the aggregate uncollected amount of the accounts receivable transferred pursuant to such Securitization Transaction, net of any such accounts receivable that have been written off as uncollectible, and (B) in the case of a transaction described in clause (b) of the preceding sentence, the aggregate outstanding principal amount of the Indebtedness secured by Liens on accounts receivable Incurred pursuant to such Securitization Transaction or, if less, the aggregate uncollected amount of the accounts receivable subject to such Liens. For purposes of this Agreement (including Sections 6.01(j) and (k)), accounts receivable shall include any and all payments owing to the Company or any Subsidiary by any and all obligors (including obligors which are federal, state or local governments or governmental agencies) under long term contracts in respect of goods or other property sold or leased or services rendered.

 

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Spin-Off ” means the distribution on a pro rata basis to ASCI’s shareholders in a tax-free transaction, on the terms described in the Form 10, of all the issued and outstanding shares of common stock of WABCO.

Statutory Reserve Rate ” means, with respect to any currency, a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the United States or of the jurisdiction of such currency or any jurisdiction in which Loans in such currency are made to which banks in such jurisdiction are subject for any category of deposits or liabilities customarily used to fund loans in such currency or by reference to which interest rates applicable to Loans in such currency are determined. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any other applicable law, rule or regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Sterling ” or “£” means the lawful money of the United Kingdom.

Sterling/Euro Swingline Exposure” means at any time, the aggregate of the US Dollar Equivalents of the principal amounts of all Swingline Loans denominated in Sterling or Euro outstanding at such time. The Sterling/Euro Swingline Exposure of any Lender at any time shall be such Lender’s Applicable Percentage of the aggregate Sterling/Euro Swingline Exposure.

Sterling/Euro Swingline Sublimit ” means US$65,000,000 as such amount may be adjusted in accordance with Section 2.06(d).

subsidiary ” means, with respect to any person (herein referred to as the “parent”), any person of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

Subsidiary ” means any direct or indirect subsidiary of the Company.

Swingline Base Rate ” means, for any day, with respect to any Swingline Loan that (a) is denominated in US Dollars, the Federal Funds Effective Rate and (b) is denominated in Sterling or Euro, a rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the interest rate per annum at which deposits in the currency in which such Swingline Loan is denominated and approximately equal in principal amount to such Swingline Loan are obtainable by the Swingline Lender on such day at its lending office for such Swingline Loan in the interbank market (or any other market for

 

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funds in such currency utilized by the Swingline Lender), adjusted to reflect any direct or indirect costs of obtaining such deposits. The Swingline Base Rate applicable to any Swingline Loan that is denominated in Sterling or Euro shall be determined for each day by the Swingline Lender and such determination shall be presumed correct in the absence of facts or circumstances indicating that it was made in error.

Swingline Exposure ” means, at any time, the sum of (a) the US Dollar Swingline Exposure at such time plus (b) the Sterling/Euro Swingline Exposure at such time. The Swingline Exposure of any Lender at any time shall be such Lender’s Applicable Percentage of the aggregate Swingline Exposure.

Swingline Lender ” means JPMCB in its capacity as lender of Swingline Loans hereunder.

Swingline Loan ” means a Loan made pursuant to Section 2.06(a)(i).

Swingline Sublimit ” means the Sterling/Euro Swingline Sublimit or the US Dollar Swingline Sublimit.

Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

Transactions ” means the execution, delivery and performance by the Credit Parties of this Agreement and the other Credit Documents, the Borrowings hereunder, the use of the proceeds thereof, the issuance of Letters of Credit hereunder and the consummation of the Spin-Off.

Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the LIBO Rate, the Alternate Base Rate or, in the case of a Competitive Loan or Borrowing, a Fixed Rate.

UK Borrowing Subsidiary ” means a Borrowing Subsidiary that is organized in the United Kingdom or a political subdivision thereof.

UK Lending Office ” means, as to any Lender, any applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans in Euro or Sterling (other than any Loan by a Lender to a Belgian Borrowing Subsidiary).

Unfunded Vested Liabilities ” means, for any Plan at any time, the amount (if any) by which (a) the present value of all vested nonforfeitable accrued benefits under such Plan exceeds (b) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA.

Unrestricted Cash and Cash Equivalents ” means cash and cash equivalents that are not, or are not required under the terms of any agreement or

 

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arrangement to be, (a) pledged to, subject to a Lien in favor of, or held in one or more accounts under the control (as defined in the New York Uniform Commercial Code) of one or more creditors of the Company or any Subsidiary, or (b) otherwise segregated from the general assets of the Company and the Subsidiaries, in one or more special accounts or otherwise, for the purpose of securing or providing a source of payment for Indebtedness or other obligations that are or from time to time may be owed to one or more creditors of the Company or any Subsidiary. It is agreed that cash and cash equivalents held in ordinary deposit or securities accounts of the Company or its Subsidiaries and not subject to any existing or contingent restrictions on transfer by the Company or its Subsidiaries will be deemed to constitute Unrestricted Cash and Cash Equivalents notwithstanding any setoff rights created by law or by applicable account agreements in favor of depositary institutions.

US Borrower ” means a Borrower that is a US Person.

US Dollar ” or “ US$ ” refers to lawful money of the United States of America.

US Dollar Equivalent ” means, on any date of determination, (a) with respect to any amount in US Dollars, such amount, and (b) with respect to any amount in any Designated Foreign Currency, the equivalent in US Dollars of such amount, determined by the Administrative Agent pursuant to Section 1.05 using the Exchange Rate with respect to such Designated Foreign Currency at the time in effect under the provisions of such Section.

US Dollar Swingline Exposure ” means, at any time, the aggregate principal amount of all Swingline Loans denominated in US Dollars outstanding at such time. The US Dollar Swingline Exposure of any Lender at any time shall be such Lender’s Applicable Percentage of the aggregate US Dollar Swingline Exposure.

US Dollar Swingline Sublimit ” shall mean US$10,000,000, as such amount may be adjusted in accordance with Section 2.06(d).

US Lending Office ” means, as to any Lender, any applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans in US Dollars. A Lender may designate multiple US Lending Offices for Loans to different Borrowers.

US Person ” means a Person incorporated or otherwise organized in the United States of America, a State thereof or the District of Columbia.

US Subsidiary ” means a Subsidiary that is a US Person or is treated as disregarded as an entity separate from a US Person or is treated as a US Person, in each case for US Federal income tax purposes.

Utilization Percentage ” means, on any day, the percentage produced by dividing (a) the aggregate Revolving Credit Exposures by (b) the total Commitments, unless the Commitments shall have been terminated, in which case the Utilization Percentage shall be 100%.

 

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Voting Stock ” of any Person means capital stock of any class or classes or other Equity Interests (however designated) having ordinary voting power for the election of members of the board of directors or the equivalent governing body of such Person, other than capital stock or other Equity Interests having such power only by reason of happening of a contingency.

Welfare Plan ” means a “ welfare plan ” as defined in Section 3(l) of ERISA.

Wholly Owned Subsidiary ” means any Subsidiary all the Equity Interests in which, other than directors’ qualifying shares and/or other nominal amounts of Equity Interests that are required to be held by Persons other than the Company and its Wholly Owned Subsidiaries under applicable law, are owned, directly or indirectly, by the Company.

SECTION 1.02. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “Revolving Loan”) or by Type ( e.g. , a “Eurocurrency Loan”) or by Class and Type ( e.g. , a “Eurocurrency Revolving Loan”). Borrowings also may be classified and referred to by Class ( e.g. , a “Revolving Borrowing”) or by Type ( e.g. , a “Eurocurrency Borrowing”) or by Class and Type ( e.g. , a “Eurocurrency Revolving Borrowing”).

SECTION 1.03. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. References herein to the taking of any action hereunder of an administrative nature by any Borrower shall be deemed to include references to the Company taking such action on such Borrower’s behalf and the Agents are expressly authorized to accept any such action taken by the Company as having the same effect as if taken by such Borrower. Each

 

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reference herein to the “ knowledge” of the Company or any Subsidiary shall be deemed to be a reference to the knowledge of any member of senior management of the Company or such Subsidiary, any Financial Officer and, in the case of any reference to knowledge of any specific subject matter, the senior manager of the department or office of the Company or such Subsidiary responsible for such matter.

SECTION 1.04. Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP as in effect from time to time; provided that, if the Borrower Agent notifies the Administrative Agent that the Borrower Agent requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower Agent that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. All Financial Statements to be furnished to the Lenders hereunder shall be prepared, and all calculations determining compliance with Article VI (including the definitions used therein) shall be made, for the relevant Person and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto; provided that except as otherwise specifically provided herein, all calculations for determining compliance with Article VI shall utilize accounting principles and policies in effect at the time of the preparation of, and in conformity with those used to prepare, the audited Financial Statements of the Company for the fiscal year ended December 31, 2006. With respect to any Subsidiary that is not a Wholly-Owned Subsidiary, only that portion of such Subsidiary’s results of operations, assets and liabilities as are equal to Holding’s ownership shall be included in making any calculation with respect to the financial covenants in Article VI.

SECTION 1.05. Exchange Rates . (a) Not later than 1:00 p.m., New York City time, on each Calculation Date (determined without regard to clause (b) of the definition of such term), the Administrative Agent shall (i) determine the Exchange Rate as of such Calculation Date with respect to Sterling, Euro and each other Designated Foreign Currency in which any outstanding Borrowing or Letter of Credit shall be denominated as of such Calculation Date and (ii) give written notice thereof to the Lenders and the Borrower Agent. Not later than 1:00 p.m., New York City time, on the Business Day immediately preceding the date of any Borrowing in a Designated Foreign Currency for which no Exchange Rate shall have been determined on the most recent Calculation Date, the Administrative Agent shall (i) determine the Exchange Rate as of such Business Day with respect to such Designated Foreign Currency and (ii) give written notice thereof to the Lenders and the Borrower Agent. The Exchange Rates so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (a “ Reset Date ”) or other date of determination, shall remain effective until the next succeeding Reset Date, and shall for all purposes of this Agreement (other than Section 10.14 or any other provision expressly requiring the use of a current Exchange Rate) be the Exchange Rates employed in converting any amounts between US Dollars and Designated Foreign Currencies.

 

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(b) Not later than 5:00 p.m., New York City time, on each Reset Date and on each date on which Revolving Loans denominated in any Designated Foreign Currency are made, or Letters of Credit denominated in any Designated Foreign Currency are issued, the Administrative Agent shall (i) determine the aggregate amount of each of the Revolving Credit Exposure and the aggregate US Dollar Equivalent of the principal amounts of the Competitive Loans denominated in Designated Foreign Currencies then outstanding (after giving effect to any Loans made or repaid or Letters of Credit issued, drawn or expired on such date) and (ii) notify the Lenders and the Borrower Agent of the results of such determination.

ARTICLE II

The Credits

SECTION 2.01. Commitments. (a) Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrowers from time to time during the Availability Period in US Dollars from its applicable US Lending Offices or in any Designated Foreign Currency from its applicable Non-US Lending Offices in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding its Commitment or (ii) the sum of the aggregate Revolving Credit Exposures and the aggregate Competitive Loan Exposures exceeding the aggregate Commitments.

(b) Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans during the Availability Period.

SECTION 2.02. Loans and Borrowings . (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders (or their Affiliates as provided in paragraph (b) below) ratably in accordance with their respective Commitments. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.04. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments and Competitive Bids of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Subject to Section 2.14, (i) each Revolving Borrowing shall be comprised entirely of Eurocurrency Loans or, in the case of Revolving Borrowings denominated in US Dollars, ABR Loans, as the applicable Borrower may request in accordance herewith; and (ii) each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or Fixed Rate Loans, as the applicable Borrower may request in accordance herewith. Each Lender at its option may make any Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan;

 

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provided that any exercise of such option shall not affect the obligation of any Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any Revolving Borrowing (other than a Swingline Loan), such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Each Competitive Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Each Swingline Loan denominated in US Dollars shall be in an amount that is an integral multiple of US$500,000, and each Swingline Loan denominated in Sterling or Euro shall be in an amount that is an integral multiple of 100,000 units of such currency; provided that any Swingline Loan made to refinance any reimbursement payment owed in respect of a Letter of Credit may be in an amount (which shall not be less that US$100,000 or 100,000 units of any Designated Foreign Currency) equal to the amount of such reimbursement payment. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be outstanding more than a total of (i) 15 Eurocurrency Revolving Borrowings denominated in US Dollars and (ii) 15 Eurocurrency Revolving Borrowings denominated in Designated Foreign Currencies.

(d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or continue, any Revolving Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date, or to request any Competitive Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

SECTION 2.03. Requests for Revolving Borrowings . To request a Revolving Borrowing, the applicable Borrower shall notify the Applicable Agent of such request by telephone or by telecopy (a) in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., Local Time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Local Time, on the date of the proposed Borrowing. Each such Borrowing Request shall be irrevocable and, if telephonic, shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Borrowing Request in a form agreed to by the Applicable Agent and the Borrower Agent and signed by the applicable Borrower, or by the Borrower Agent on behalf of the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) the Borrower requesting such Borrowing (or on whose behalf the Borrower Agent is requesting such Borrowing);

(ii) the currency and aggregate amount of the requested Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

 

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(iv) the Type of the requested Borrowing;

(v) in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(vi) the location and number of the relevant Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.

If no currency is specified with respect to any requested Eurocurrency Borrowing, then the relevant Borrower shall be deemed to have selected US Dollars. If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be (i) in the case of a Borrowing denominated in US Dollars, an ABR Borrowing and (ii) in the case of a Borrowing denominated in any other currency, a Eurocurrency Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Applicable Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04. Competitive Bid Procedure . (a) Subject to the terms and conditions set forth herein, from time to time during the Availability Period any Borrower may request Competitive Bids, and may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans, denominated in US Dollars, Sterling or Euro; provided that after giving effect to any Borrowing of Competitive Loans the sum of the aggregate Revolving Credit Exposures and the aggregate Competitive Loan Exposures shall not exceed the aggregate Commitments. To request Competitive Bids, the applicable Borrower shall notify the Administrative Agent of such request by telephone or by telecopy, in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., Local Time, four Business Days before the date of the proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., Local Time, one Business Day before the date of the proposed Borrowing; provided that the Borrowers may submit up to (but not more than) five Competitive Bid Requests on the same day, but a Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request unless any and all such previous Competitive Bid Requests shall have been withdrawn or all Competitive Bids received in response thereto rejected. Each such telephonic Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Competitive Bid Request in a form approved by the Administrative Agent and signed by the applicable Borrower, or by the Borrower Agent on behalf of the applicable Borrower. Each such telephonic and written Competitive Bid Request shall specify the following information in compliance with Section 2.02:

(i) the Borrower requesting such Borrowing (or on whose behalf the Borrower Agent is requesting such Borrowing);

 

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(ii) the aggregate principal amount of the requested Borrowing and the currency of the requested Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be a Eurocurrency Borrowing or a Fixed Rate Borrowing;

(v) the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term “Interest Period” and shall end no later than the Maturity Date; and

(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.

Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Administrative Agent shall notify the Lenders of the details thereof by telecopy, inviting the Lenders to submit Competitive Bids.

(b) Each Lender may (but shall not have any obligation to) make one or more Competitive Bids to the applicable Borrower in response to a Competitive Bid Request. Each Competitive Bid by a Lender must be in a form approved by the Administrative Agent and must be received by the Administrative Agent by telecopy, in the case of a Eurocurrency Competitive Borrowing, not later than 9:30 a.m., Local Time, three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., Local Time, on the proposed date of such Competitive Borrowing. Competitive Bids that do not conform substantially to the form approved by the Administrative Agent may be rejected by the Administrative Agent, and the Administrative Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount (which shall be an amount at least equal to the Borrowing Minimum and an integral multiple of the Borrowing Multiple and which may equal the entire principal amount of the Competitive Borrowing requested by the applicable Borrower) of the Competitive Loan or Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof.

(c) The Administrative Agent shall notify the applicable Borrower by telecopy of each Competitive Bid Rate and each principal amount specified in each Competitive Bid and the identity of the Lender that shall have made each such Competitive Bid not later than (i) in the case of a Eurocurrency Competitive Borrowing, 10:00 a.m., Local Time, three Business Days before the proposed date of such Competitive Borrowing, and (ii) in the case of a Fixed Rate Borrowing 10:00 a.m., Local Time, on the proposed date of such Competitive Borrowing.

(d) Subject only to the provisions of this paragraph, a Borrower may accept or reject any Competitive Bid. The applicable Borrower shall notify the

 

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Administrative Agent by telecopy or by telephone, confirmed by telecopy in a form approved by the Administrative Agent, whether and to what extent it has decided to accept or reject each Competitive Bid, in the case of a Eurocurrency Competitive Borrowing, not later than 11:00 a.m., Local Time, three Business Days before the date of the proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 11:00 a.m., Local Time, on the proposed date of the Competitive Borrowing; provided that (i) the failure of a Borrower to give such notice with respect to any Competitive Bid shall be deemed to be a rejection of such Competitive Bid, (ii) a Borrower shall not accept a Competitive Bid made at a particular Competitive Bid Rate if such Borrower rejects a Competitive Bid made in response to the same Competitive Bid Request at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by a Borrower shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, a Borrower may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of at least the Borrowing Minimum that is an integral multiple of the Borrowing Multiple; provided further that if a Competitive Loan must be in an amount less than the Borrowing Minimum because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of US$1,000,000 (or, in the case of a Competitive Loan denominated in Sterling or Euro, the smallest amount of such currency that (i) is an integral multiple of 1,000,000 units of such currency and (ii) has a US Dollar Equivalent in excess of US$1,000,000) or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of the Borrowing Multiple in a manner determined by the Administrative Agent. A notice given by a Borrower pursuant to this paragraph shall be irrevocable.

(e) The Administrative Agent shall promptly notify each bidding Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, on the terms hereof and subject to the conditions set forth in Section 4.02 (which conditions, insofar as they apply to any Competitive Loan, may be waived by the Lender that is to make such Competitive Loan), to make the Competitive Loan in respect of which its Competitive Bid has been accepted.

(f) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the applicable Borrower at least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Administrative Agent pursuant to paragraph (b) of this Section.

SECTION 2.05. Letters of Credit. (a)  General. Subject to the terms and conditions set forth herein, any Borrower may request the issuance (or the amendment,

 

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renewal or extension) of Letters of Credit denominated in US Dollars, Sterling or Euro in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by any Borrower to, or entered into by such Borrower with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the applicable Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to an Issuing Bank and the Applicable Agent (in any case reasonably in advance of the requested date of issuance, amendment, renewal or extension), a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount and currency of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to enable the Issuing Bank to prepare, amend, renew or extend such Letter of Credit. If requested by the applicable Issuing Bank, the applicable Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the applicable Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed US$100,000,000, (ii) the aggregate Revolving Credit Exposure will not exceed the aggregate Commitments, and (iii) the sum of the aggregate Revolving Credit Exposures and the aggregate Competitive Loan Exposures will not exceed the aggregate Commitments.

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance, renewal or extension of such Letter of Credit and (ii) the date that is five Business Days prior to the Maturity Date; provided that a Letter of Credit may provide for automatic renewals for additional periods of up to one year, subject to a right on the part of the Issuing Bank to prevent any such renewal from occurring by giving notice to the beneficiary during a period satisfactory to the Administrative Agent in advance of any such renewal and provided that in no event shall any Letter of Credit or renewal thereof expire after the date that is five Business Days prior to the Maturity Date.

(d) 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 Applicable Percentage of the

 

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aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Applicable Agent, for the account of the applicable Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the applicable Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the applicable 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 Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the applicable Borrower shall reimburse such LC Disbursement by paying to the Applicable Agent an amount equal to such LC Disbursement, in the currency in which such LC Disbursement shall have been made, not later than 12:00 noon, Local Time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., Local Time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, Local Time, on (A) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., Local Time, on the day of receipt, or (B) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt. If the Borrower fails to make such payment when due then, the Applicable Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Applicable Agent its Applicable Percentage of the payment then due from the applicable Borrower in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Applicable Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Applicable Agent of any payment from any Borrower pursuant to this paragraph, the Applicable Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse any Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse any Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve any Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrowers’ obligations to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement or any

 

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other Credit Document, or any term or provision herein or therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. None of the Agents, the Lenders or the Issuing Banks, or any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in the interpretation of the terms of any Letter of Credit or any consequence arising from causes beyond the control of the applicable Issuing Bank; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to any Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrowers) suffered by such Borrower that are caused by any Issuing Bank’s gross negligence or wilful misconduct. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, acting in good faith, either accept and make payment upon such documents without responsibility for further investigation or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The applicable Issuing Bank shall promptly notify the Applicable Agent and the applicable Borrower by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve any Borrower of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.

(h) Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, unless the applicable Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that such Borrower reimburses such LC Disbursement, at (i) in the case of any LC Disbursement denominated in US Dollars, the rate per annum then applicable to ABR Revolving Loans and (ii) in the case of any LC Disbursement denominated in Sterling or Euro, a rate per annum determined by the applicable Issuing Bank (which determination will be presumed correct in the absence of facts or circumstances indicating that it has been made in error) to represent its cost of funds plus the Applicable Rate used to

 

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determine interest applicable to Eurocurrency Revolving Loans; provided that, at all times after such Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, Section 2.13(e) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the applicable Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i) Cash Collateralization. If the Commitments shall be terminated or if any Event of Default shall occur and be continuing, on the Business Day that the Borrower Agent, on behalf of the applicable Borrowers, receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposures representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the applicable Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral with respect to the LC Exposure shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Company or any applicable Borrower described in clause (g) or (h) of Section 7.01. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Credit Parties under the Credit Documents. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and the applicable Borrowers’ risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the applicable Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrowers for the LC Exposures at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposures representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Credit Parties under the Credit Documents. If the Borrowers are required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to them within three Business Days after all Events of Default have been cured or waived.

SECTION 2.06. Swingline Loans . (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time during the Availability Period (i) in US Dollars in an aggregate principal amount at any time outstanding that will not result in the US Dollar Swingline Exposure exceeding the US Dollar Swingline Sublimit and (ii) in Sterling or Euro in an aggregate principal amount at any time outstanding that will not result in the Sterling/Euro Swingline Exposure exceeding the Sterling/Euro Swingline Sublimit, and

 

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that in each case will not result in (x) the sum of the US Dollar Equivalent of the principal amounts of outstanding Swingline Loans exceeding US$75,000,000 or (y) the sum of the aggregate Revolving Credit Exposures and the aggregate Competitive Loan Exposures exceeding the aggregate Commitments; provided that no Swingline Loan shall be made to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.

(b) To request a Swingline Loan, a Borrower shall give notice of such request by telephone (confirmed by telecopy) (i) in the case of a Swingline Loan denominated in US Dollars, to the Swingline Lender (with a copy to the Applicable Agent), not later than 12:00 noon, New York City time, (ii) in the case of Swingline Loan denominated in Sterling or Euro (other than a Swingline Loan requested by a Belgian Borrowing Subsidiary), to the Swingline Lender (with a copy to the Applicable Agent), not later than 1:00 p.m., London time, and (iii) in the case of a Swingline Loan requested by a Belgian Borrowing Subsidiary, to the Swingline Lender (with a copy to the London Agent) not later than 1:00 p.m., Brussels time, in each case on the day of the proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day), amount and currency of the requested Swingline Loan. The Swingline Lender shall make each Swingline Loan available to the applicable Borrower by means of a credit to the general deposit account of such Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by (i) 3:00 p.m., New York City time, on the requested date of such Swingline Loan in the case of a Swingline Loan denominated in US Dollars, (ii) 4:00 p.m., Local Time, on the requested date of such Swingline Loan in the case of a Swingline Loan denominated in Sterling or Euro (other than a Swingline Loan requested by a Belgian Borrowing Subsidiary) and (iii) 4:00 p.m., Brussels time, on the requested date of such Swingline Loan in the case of a Swingline Loan requested by a Belgian Borrowing Subsidiary.

(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the amounts and currencies of the Swingline Loans. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentage of each such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of each such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available

 

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funds, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower Agent of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from any Borrower (or other party on behalf of any Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the applicable Borrower of any default in the payment thereof.

(d) The Borrower Agent may from time to time, but in no event more than once during any fiscal quarter, upon ten Business Days’ prior written notice to the Administrative Agent and the Swingline Lender, increase one Swingline Sublimit and simultaneously decrease the other Swingline Sublimit in amounts that will result in the sum of the US Dollar Swingline Sublimit and the Sterling/Euro Swingline Sublimit remaining unchanged after giving effect to such increase and decrease; provided that no such adjustment shall be made that would result in (i) the US Dollar Swingline Exposure exceeding the US Dollar Swingline Sublimit or (ii) the Sterling/Euro Swingline Exposure exceeding the Sterling/Euro Swingline Sublimit. Any such notice shall set forth the amount of the increase or decrease in each Swingline Sublimit and the date on which such adjustment is requested to become effective.

SECTION 2.07. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in the applicable currency by 1:00 p.m., Local Time, to the account of the Applicable Agent most recently designated by it for such purpose by notice to the applicable Lenders; provided that Swingline Loans shall be made as provided in Section 2.06. The Applicable Agent will make such Loans available to the applicable Borrower by promptly crediting the amounts so received, in like funds, to an account of such Borrower maintained with the Applicable Agent (i) in New York City, in the case of Loans denominated in US Dollars, and (ii) in London, in the case of Loans denominated in Designated Foreign Currencies, and designated by such Borrower in the applicable Borrowing Request or Competitive Bid Request; provided that Loans made to finance the reimbursement of an LC Disbursement shall be remitted by the Applicable Agent to the applicable Issuing Bank.

(b) Unless the Applicable Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Applicable Agent such Lender’s share of such Borrowing, the Applicable Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available

 

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to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Applicable Agent, then the applicable Lender and the Borrowers severally agree to pay to the Applicable Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Applicable Agent, at (i) in the case of such Lender, a rate determined by the Applicable Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of a Borrower, the interest rate applicable to such Borrowing. If such Lender pays such amount to the Applicable Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.08. Interest Elections . (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the applicable Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing, and, in the case of a Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The applicable Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and any Loans resulting from an election made with respect to any such portion shall be considered a separate Borrowing. Notwithstanding any other provision of this Section, no Borrowing may be converted into or continued as a Borrowing with an Interest Period ending after the Maturity Date. This Section shall not apply to Competitive Borrowings or Swingline Borrowings, which may not be converted or continued.

(b) To make an election pursuant to this Section, a Borrower (or the Borrower Agent on its behalf) shall notify the Applicable Agent of such election by telephone or by telecopy by the time and date that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable and, if telephonic, shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Interest Election Request in a form approved by the Applicable Agent and signed by the applicable Borrower (or the Borrower Agent on its behalf). The provisions of this Section shall not permit any Borrower to (i) change the currency of any Borrowing, (ii) elect an Interest Period for Eurocurrency Loans that does not comply with Section 2.02(d) or (iii) convert any Borrowing of a Borrower to a Borrowing of another Borrower.

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

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(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting extension of credit is to be an ABR Borrowing or a Eurocurrency Borrowing; and

(iv) if the resulting extension of credit is a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the Applicable Agent shall advise each Lender to which such Interest Election Request relates of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If a Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period, such Borrowing shall (i) in the case of a Borrowing denominated in US Dollars, be converted to an ABR Borrowing and (ii) in the case of a Eurocurrency Borrowing denominated in any currency other than US Dollars, become due and payable on the last day of such Interest Period. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower Agent, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing denominated in US Dollars may be converted to or continued as a Eurocurrency Borrowing, (ii) no outstanding Eurocurrency Revolving Borrowing denominated in a Designated Foreign Currency may be converted to or continued as a Eurocurrency Borrowing with an Interest period of greater than one month and (iii) unless repaid, each Eurocurrency Revolving Borrowing denominated in US Dollars shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

SECTION 2.09. Termination, Reduction and Increase of Commitments. (a) (i) Unless previously terminated, the Commitments shall terminate on the Maturity Date and (ii) in the event the Spin-Off is not consummated within three Business Days after the Effective Date, the Commitments shall automatically terminate on such third Business Day.

(b) The Borrower Agent may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of US$1,000,000 and not less than US$5,000,000 and (ii) the Borrower Agent shall not terminate or reduce the

 

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Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures would exceed the total Commitments or the aggregate Revolving Credit Exposures would exceed the aggregate Commitments.

(c) The Borrower Agent shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the other Agents and the applicable Lenders of the contents thereof. Each notice delivered by the Borrower Agent pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower Agent may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower Agent (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

(d) (i) The Borrower Agent may, by written notice to the Administrative Agent, request that the total Commitments be increased (a “ Commitment Increase ”) by an amount of not less than US$25,000,000; provided that the aggregate amount of increases pursuant to this paragraph shall not exceed US$100,000,000. Such notice shall set forth the amount of the requested increase and the date (the “ Increase Effective Date ”) on which such increase is requested to become effective (which shall be not less than 10 Business Days or more than 30 days after the date of such notice), and shall offer each Lender holding a Commitment the opportunity to increase its Commitment by its Applicable Percentage of the proposed increased amount. Each such Lender shall, by notice to the Borrower Agent and the Administrative Agent given not more than 5 Business Days after the date of the Borrower Agent notice, either agree to increase its Commitment by all or a portion of the offered amount (each Lender so agreeing being an “ Increasing Lender ”) or decline to increase its Commitment (and any Lender that does not deliver such a notice within such period of 5 Business Days shall be deemed to have declined to increase its Commitment) (each Lender so declining or deemed to have declined being a “ Non-Increasing Lender ”). In the event that on the 5th Business Day after the Borrower Agent shall have delivered a notice pursuant to the first sentence of this paragraph the Lenders shall have agreed pursuant to the preceding sentence to increase their Commitments by an aggregate amount less than the increase in the total Commitments requested by the Borrower Agent, the Borrower Agent may arrange for one or more banks or other financial institutions (any such bank or other financial institution being called an “ Augmenting Lender ”), which may include any Lender, to extend Commitments in an aggregate amount equal to the unsubscribed amount; provided that each Augmenting Lender, if not already a Lender hereunder, shall be subject to the approval of the Administrative Agent, each Issuing Bank and the Swingline Lender (which approvals shall not be unreasonably withheld) and the Credit Parties and each Augmenting Lender shall execute all such documentation as the Administrative Agent and the Borrower Agent shall reasonably specify to evidence the Commitment of such Augmenting Lender and/or its status as a Lender hereunder.

 

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(ii) On any Increase Effective Date, (A) the aggregate principal amount of the Revolving Loans outstanding under which a Commitment Increase will become effective (the “ Initial Loans ”) immediately prior to giving effect to the applicable Commitment Increase on the Increase Effective Date shall be deemed to be repaid, (B) after the effectiveness of the Commitment Increase, the Borrowers holding Commitments shall be deemed to have made new Borrowings (the “ Subsequent Borrowings ”) in an aggregate principal amount equal to the aggregate principal amount of the Initial Loans and of the types and for the Interest Periods specified in a Borrowing Request delivered to the Administrative Agent in accordance with Section 2.03, (C) each Lender shall pay to the Applicable Agent in same day funds in the relevant currencies an amount equal to the difference, if positive, between (x) such Lender’s Applicable Percentage (calculated after giving effect to the Commitment Increase) of the Subsequent Borrowings and (y) such Lender’s Applicable Percentage (calculated without giving effect to the Commitment Increase) of the Initial Loans, (D) after the Applicable Agent receives the funds specified in clause (C) above, the Applicable Agent shall pay to each Lender the portion of such funds that is equal to the difference, if positive, between (1) such Lender’s Applicable Percentage (calculated without giving effect to the Commitment Increase) of the Initial Loans and (2) such Lender’s Applicable Percentage (calculated after giving effect to the Commitment Increase) of the amount of the Subsequent Borrowings, (E) each Non-Increasing Lender, each Increasing Lender and each Augmenting Lender shall be deemed to hold its Applicable Percentage of each Subsequent Borrowing (each calculated after giving effect to the Commitment Increase) and (F) each applicable Borrower shall pay each Increasing Lender and each Non-Increasing Lender any and all accrued but unpaid interest on the Initial Loans. The deemed payments made pursuant to clause (A) above in respect of each Eurocurrency Loan shall be subject to indemnification by the Borrowers pursuant to the provisions of Section 2.16 if the Increase Effective Date occurs other than on the last day of the Interest Period relating thereto and breakage costs result therefrom.

(iii) Notwithstanding the foregoing, an increase in the Commitments (or in any Commitment of any Lender) or addition of an Augmenting Lender shall become effective under this Section only if (A) on the date of such increase, the conditions set forth in paragraph (f) of Section 4.01 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Borrower Agent and (B) the Administrative Agent shall have received (with sufficient copies for each of the Lenders) documents consistent with those delivered pursuant to Section 4.03(b) in connection with the designation of a new Borrowing Subsidiary as to the corporate power and authority of the applicable Borrowers to borrow hereunder after giving effect to such increase.

SECTION 2.10. Repayment of Loans; Evidence of Debt . (a) Each Borrower hereby unconditionally promises to pay (i) to the Applicable Agent for the account of each Lender the unpaid principal amount of each Revolving Loan made by such Lender on the Maturity Date, (ii) to the Applicable Agent for the account of each

 

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Lender the unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable to such Loan and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th day or the last day of a calendar month and that is at least one Business Day after the day on which such Swingline Loan shall have been made.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period, if any, applicable thereto, and (ii) the amounts of all sums received by the Agents hereunder for the accounts of the Lenders and each Lender’s share thereof. Each other Agent shall promptly provide the Administrative Agent with all information needed to maintain such accounts in respect of the Loans administered by such Agent.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of any Borrower to repay the Loans in accordance with the terms of this Agreement.

(e) Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, each Borrower shall execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in substantially the form attached hereto as Exhibit F. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.11. Prepayment of Loans . (a) The Borrowers shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (d) of this Section and payment of any amounts required under Section 2.16; provided that the Borrowers shall not have the right to prepay any Competitive Loan without the prior consent of the Lender thereof.

(b) In the event and on each occasion that the sum of the aggregate Revolving Credit Exposures and the aggregate Competitive Loan Exposures shall exceed the aggregate Commitments, then (i) on the last day of any Interest Period applicable to any Eurocurrency Revolving Borrowing and (ii) on any other date in the event any ABR Revolving Borrowing or Swingline Borrowing shall be outstanding, the applicable Borrowers shall prepay such Revolving Borrowing or Swingline Borrowing in an

 

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aggregate amount equal to the lesser of (A) the amount of such Revolving Borrowing or Swingline Borrowing and (B) an amount sufficient to eliminate such excess. If, on any Reset Date, the aggregate Revolving Credit Exposures and the aggregate Competitive Loan Exposures shall exceed 105% of the aggregate Commitments then each applicable Borrower shall, not later than the next Business Day, prepay one or more Revolving Borrowings or Swingline Borrowings in an aggregate amount sufficient to eliminate such excess over 105%.

(c) If the Commitments are terminated pursuant to Section 2.09(a)(ii), the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable and the Borrowers hereby unconditionally promise to pay all such amounts on the day the Commitments are terminated.

(d) Prior to any optional or mandatory prepayment of Borrowings, the applicable Borrower shall select the Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (e) below.

(e) The Borrower Agent or the applicable Borrower shall, to the extent practicable, notify the Applicable Agent (and in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing, not later than 11:00 a.m., Local Time, three Business Days (or, if the date of prepayment shall be the last day of the Interest Period applicable to such Borrowing, one Business Day) before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., Local Time, on the Business Day of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13.

SECTION 2.12. Fees . (a) The Company agrees to pay to the Administrative Agent, in US Dollars, for the account of the office (or Affiliate) of each Lender from which such Lender would make Loans to the Company in US Dollars hereunder, a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitments of such Lender (whether used or unused) or, after the termination of the Commitments, on the Revolving Credit Exposure of such Lender, during the period from and including the Effective Date but excluding the Maturity Date; provided that, if

 

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such Lender shall continue to have any Revolving Credit Exposure after the Maturity Date, then such facility fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the Maturity Date to but excluding the date on which such Lender shall cease to have any Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year, on any date prior to the Maturity Date on which all the Commitments shall have terminated and on the Maturity Date, commencing on the first such date to occur after the Effective Date; provided that any facility fees accruing after the Maturity Date shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) The Borrowers agree to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to each such Lender’s participations in Letters of Credit, which fee shall accrue at the Applicable Rate used to determine the interest rate applicable to Eurocurrency Revolving Loans on the daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily aggregate amount of the LC Exposure attributable to Letters of Credit issued by such Issuing Bank (in each case excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or the processing of drawings thereunder. Participation fees and fronting fees accrued under this paragraph through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on any date on which the Commitments shall terminate and any such fees accruing after the date on which the Commitments shall have terminated shall be payable on demand. Any other fees payable to any Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees payable under this paragraph shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Company agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Company and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Person specified above for its own account or, in the case of facility fees and participation fees paid to the Agents, for distribution to the Lenders. Fees paid shall not be refundable under any circumstances.

 

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SECTION 2.13. Interest . (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate.

(b) The Loans comprising each Eurocurrency Borrowing shall bear interest (i) in the case of a Eurocurrency Revolving Borrowing, at the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate or (ii) in the case of a Eurocurrency Competitive Borrowing, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Borrowing.

(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan.

(d) Each Swingline Loan shall bear interest for each day at the Swingline Base Rate in effect for such Borrowing on such day plus the Applicable Rate that would be applicable to a Eurocurrency Revolving Borrowing on such day.

(e) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% per annum plus the rate otherwise applicable to such Loan or (ii) in the case of any other amount, 2% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(f) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (e) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(g) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest on Borrowings denominated in Sterling and (ii) interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or, except in the case of Borrowings denominated in Sterling, 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall be determined by the Applicable Agent, and such determination shall be presumed correct in the absence of facts or circumstances indicating that it has been made in error.

 

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SECTION 2.14. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurocurrency Borrowing denominated in any currency:

(a) the Applicable Agent determines (which determination shall be presumed correct in the absence of facts or circumstances indicating that it has been made in error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period; or

(b) the Applicable Agent is advised by the Required Lenders (or, in the case of a Eurocurrency Competitive Loan, the Lender that is required to make such Loan) that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Applicable Agent shall give notice thereof to the Borrower Agent and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Applicable Agent notifies the Borrower Agent and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurocurrency Borrowing in such currency shall be ineffective, and such Borrowing shall be (A) if such Borrowing is denominated in US Dollars, converted or continued on the last day of the Interest Period applicable thereto to or as an ABR Borrowing, or (B) if such Borrowing is denominated in any other currency, converted or continued on the last day of the Interest Period applicable thereto to or as a Borrowing bearing interest at such rate as the Lenders and the Borrower Agent may agree upon (or, in the absence of such agreement, repaid as of the last day of the current Interest Period applicable thereto), (ii) if any Borrowing Request requests a Eurocurrency Revolving Borrowing, (A) if such proposed Borrowing is denominated in US Dollars, such Borrowing shall be made as an ABR Borrowing, or (B) if such proposed Borrowing is denominated in any Designated Foreign Currency, such Borrowing Request shall be ineffective, and (iii) any request by a Borrower for a Eurocurrency Competitive Borrowing denominated in such currency shall be ineffective; provided that (A) if the circumstances giving rise to such notice do not affect all the Lenders, then requests by a Borrower for Eurocurrency Competitive Borrowings may be made to Lenders that are not affected thereby and (B) if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.

SECTION 2.15. Increased Costs . (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except to the extent any such reserve requirement is reflected in the LIBO Rate) or any Issuing Bank; or

(ii) impose on any Lender or any Issuing Bank or the London interbank market or any other market in which Loans of any currency and Type are funded

 

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any other condition affecting this Agreement or Eurocurrency Loans or Fixed Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan or Fixed Rate Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender or such Issuing Bank such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, on a net after-tax basis for such additional costs incurred or reduction suffered.

(b) If any Lender or any Issuing Bank determines in good faith that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.

(c) If the cost to any Lender of making or maintaining any Loan to any Borrowing Subsidiary incorporated in, or conducting business in, a jurisdiction outside the United States, or to any Issuing Bank of participating in, issuing or maintaining any Letter of Credit for the account of any such Borrowing Subsidiary, is increased or the amount of any sum received or receivable by any Lender or any Issuing Bank (or its applicable lending office) is reduced as a result of any law, rule, regulation or action of a Governmental Authority in such jurisdiction (other than through the imposition of any Excluded Tax or other imposition expressly excluded from the yield protection or indemnity provisions set forth herein) by an amount deemed in good faith by such Lender or such Issuing Bank to be material, such Borrowing Subsidiary shall indemnify such Lender or such Issuing Bank, as the case may be, for such increased cost or reduction within 15 days after demand by such Lender or such Issuing Bank (with a copy to the Administrative Agent).

(d) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a), (b) or (c) of this Section and explaining in reasonable detail the method by which such amount or amounts were determined, together with supporting documentation or computations, shall be delivered

 

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to the Borrower Agent and shall be presumed correct in the absence of facts or circumstances indicating that the determinations reflected therein have been made in error. The Borrowers shall pay such Lender or such Issuing Bank the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

(e) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 120 days prior to the date that such Lender or such Issuing Bank notifies the Borrower Agent of the Change in Law or other event or circumstance giving rise to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law or other event or circumstance giving rise to such increased costs or reductions is retroactive, then the 120-day period referred to above shall be extended to include the period of retroactive effect thereof.

(f) Notwithstanding the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any Competitive Loan if the Change in Law or other event or circumstance that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid pursuant to which such Loan was made.

SECTION 2.16. Break Funding Payments . In the event of (a) the payment of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(d) and is revoked in accordance therewith), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan, or (e) the assignment of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower Agent pursuant to Section 2.19, then, in any such event, the applicable Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in the applicable currency of a comparable amount and period from other banks in the eurocurrency market or bill rate market, as applicable. A certificate of any Lender setting forth any amount or amounts that such

 

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Lender is entitled to receive pursuant to this Section, together with supporting documentation or computations, shall be delivered to the applicable Borrower or to the Borrower Agent and shall be presumed correct in the absence of facts or circumstances indicating that the determinations reflected therein have been made in error. The applicable Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

SECTION 2.17. Taxes . (a) Any and all payments by or on account of any obligation of any Credit Party hereunder or under any other Credit Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if any Credit Party shall be required to deduct any Indemnified Taxes or Other Taxes from any such payment, then (i) the sum payable shall be increased as necessary so that after making all required deductions of Indemnified Taxes or Other Taxes (including deductions applicable to additional sums payable under this Section) the Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers will cause such Credit Party to make such deductions and (iii) the Borrowers will pay or cause such Credit Party to pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, the Borrowers shall pay any Other Taxes required to be paid by them to the relevant Governmental Authority in accordance with applicable law.

(c) The Borrowers shall indemnify each Agent, each Issuing Bank and each Lender, within 10 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by such Agent, such Issuing Bank or such Lender on or with respect to any payment by or on account of any obligation of any Credit Party hereunder or under any other Credit Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the amount and nature of such payment or liability shall be delivered to the Borrower Agent by a Lender or an Issuing Bank, or by an Agent on its own behalf or on behalf of a Lender or an Issuing Bank and shall be presumed correct in the absence of facts or circumstances indicating that the determinations reflected therein have been made in error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Credit Party to a Governmental Authority, the Borrower Agent shall deliver to the Applicable Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Applicable Agent.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is located, or

 

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any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower Agent (with a copy to the Applicable Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower Agent as will permit such payments to be made without withholding or at a reduced rate, provided, in the case of any exemption or reduction available under the laws of a jurisdiction other than the United States, the United Kingdom or Belgium that such Foreign Lender has received written notice from the Borrower Agent advising it of the availability of such exemption or reduction and containing all applicable documentation.

(f) If an Agent, an Issuing Bank or a Lender determines in good faith that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay over such refund to the Borrower Agent (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Agent, such Issuing Bank or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrowers, upon the request of such Agent, such Issuing Bank or such Lender, agree to repay the amount paid over to the Borrower Agent (plus any penalties, interest or other charges imposed by the relevant Governmental Authority not resulting from the negligence of such Agent, Issuing Bank or Lender) to such Agent, such Issuing Bank or such Lender in the event such Agent, such Issuing Bank or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require any Agent, any Issuing Bank or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to any Credit Party or any other Person.

(g) On the date it becomes a Lender hereunder, (i) each Lender will designate a US Lending Office, a UK Lending Office and a Belgian Lending Office, in each case for the Loans to be made by it such that, on such date, it will not be liable for any withholding tax referred to in clause (c), (d) or (e), as applicable, of the definition of “Excluded Taxes” in Article I (other than any withholding tax that is not an Excluded Tax under the proviso to such definition).

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . (a) Each Borrower shall make each payment required to be made by it hereunder or under any other Credit Document (whether of principal, interest or fees, or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 2:00 p.m., Local Time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Applicable Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Applicable Agent to the applicable account specified on Schedule 2.18 for the account of the applicable Lenders or, in any such case, to such other account as the Applicable Agent shall from time to time specify in a notice delivered to the Borrower Agent; provided that payments to be made to an

 

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Issuing Bank or the Swingline Lender as expressly provided herein and payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be made directly to the Persons entitled thereto. The Applicable Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Credit Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder of principal or interest in respect of any Loan or LC Disbursement (or of any breakage indemnity in respect of any Loan) shall be made in the currency of such Loan or LC Disbursement; all other payments hereunder and under each other Credit Document shall be made in US Dollars, except as otherwise expressly provided. Any payment required to be made by an Agent hereunder shall be deemed to have been made by the time required if such Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by such Agent to make such payment. Any amount payable by any Agent to one or more Lenders in the national currency of a member state of the European Union that has adopted the Euro as its lawful currency shall be paid in Euro.

(b) If at any time insufficient funds are received by and available to any Agent from any Borrower to pay fully all amounts of principal, interest, unreimbursed LC Disbursements and fees then due from such Borrower hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due from such Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due from such Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans or participations in LC Disbursements or Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans or participations in LC Disbursements or Swingline Loans, as applicable, of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans or participations in LC Disbursements or Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC

 

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Disbursements or Swingline Loans to any assignee or participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation.

(d) Unless any Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to such Agent for the account of any Lenders or an Issuing Bank hereunder that the applicable Borrower will not make such payment, such Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to such Lenders or such Issuing Bank, as applicable, the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders and each Issuing Bank severally agrees to repay to the Applicable Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank, as applicable, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to such Agent, at a rate determined by such Agent in accordance with banking industry rules on interbank compensation.

(e) If any Lender or any Issuing Bank, as applicable, shall fail to make any payment required to be made by it pursuant to Section 2.07(b) or paragraph (d) of this Section 2.18, then the Applicable Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by such Agent for the account of such Lender or Issuing Bank, as applicable, to satisfy such Lender’s or Issuing Bank’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders . (a) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or 2.21, then such Lender shall designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15, 2.17 or 2.21, as the case may be, in the future and (ii) in the reasonable judgment of such Lender, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or 2.21, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower Agent may, at its sole expense, upon notice to such Lender and the Administrative Agent, require

 

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such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower Agent shall have received the prior written consent of the Administrative Agent (and if a Revolving Commitment is being assigned, each Issuing Bank and the Swingline Lender), which consent shall not unreasonably be withheld or delayed, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans (other than Competitive Loans) and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17 or 2.21, such assignment will result in a reduction in such compensation or payments. Nothing in this Section shall limit any right or remedy that any Borrower may otherwise have against any Lender.

SECTION 2.20. Borrowing Subsidiaries . On or after the Effective Date, the Borrower Agent may designate any subsidiary of the Borrower Agent as a Borrowing Subsidiary by delivery to the Administrative Agent of a Borrowing Subsidiary Agreement executed by such Subsidiary and the Borrower Agent, and upon such delivery such Subsidiary shall for all purposes of this Agreement be a party to and a Borrowing Subsidiary under this Agreement. Upon the execution by the Borrower Agent and delivery to the Administrative Agent of a Borrowing Subsidiary Termination with respect to any Borrowing Subsidiary, such Subsidiary shall cease to be a Borrowing Subsidiary; provided that no Borrowing Subsidiary Termination will become effective as to any Borrowing Subsidiary (other than to terminate its right to make further Borrowings or to obtain further Letters of Credit under this Agreement) at a time when any principal of or interest on any Loan to such Borrowing Subsidiary or any Letter of Credit issued for the account of such Borrowing Subsidiary shall be outstanding hereunder, unless the obligations of such Borrowing Subsidiary in respect of such Loan or Letter of Credit shall have been assumed by another Borrower. In the event that any Borrowing Subsidiary shall cease to be a Subsidiary, the Borrower Agent will promptly execute and deliver to the Administrative Agent a Borrowing Subsidiary Termination terminating its status as a Borrowing Subsidiary subject to the proviso in the immediately preceding sentence. Promptly following receipt of any Borrowing Subsidiary Agreement or Borrowing Subsidiary Termination, the Administrative Agent shall send a copy thereof to each Lender.

SECTION 2.21. Additional Reserve Costs . (a) If and so long as any Lender is required after the date hereof to make special deposits with the Bank of England, to maintain reserve asset ratios or to pay fees, in each case in respect of such Lender’s Eurocurrency Loans in any Designated Foreign Currency, such Lender may require the relevant Borrower to pay, contemporaneously with each payment of interest on each of such Loans, additional interest on such Loan at a rate per annum equal to the Mandatory Costs Rate calculated in accordance with the formula and in the manner set forth in Exhibit C hereto.

 

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(b) If and so long as any Lender is required to comply with reserve assets, liquidity, cash margin or other requirements of any monetary or other authority (including any such requirement imposed by the Board or by European Central Bank or the European System of Central Banks, but excluding requirements reflected in the Mandatory Costs Rate) in respect of any of such Lender’s Eurocurrency Loans, such Lender may require the relevant Borrower to pay, contemporaneously with each payment of interest on each of such Lender’s Eurocurrency Loans subject to such requirements, additional interest on such Loan at a rate per annum specified by such Lender to be the cost to such Lender of complying with such requirements in relation to such Loan.

(c) Any additional interest owed pursuant to paragraph (a) or (b) above shall be determined by the relevant Lender, which determination shall be presumed correct in the absence of facts or circumstances indicating that it has been made in error, and notified to the relevant Borrower (with a copy to the Applicable Agent) at least five Business Days before each date on which interest is payable for the relevant Loan, and such additional interest so notified to the relevant Borrower by such Lender shall be payable to the Applicable Agent for the account of such Lender on each date on which interest is payable for such Loan.

SECTION 2.22. Redenomination of Certain Designated Foreign Currencies . (a) Each obligation of any party to this Agreement to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London Interbank Market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period.

(b) Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU Legislation and (i) without limiting the liability of any Borrower for any amount due under this Agreement and (ii) without increasing any Commitment of any Lender, all references in this Agreement to minimum amounts (or integral multiples thereof) denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall, immediately upon such adoption, be replaced by references to such minimum amounts (or integral multiples thereof) as shall be specified herein with respect to Borrowings denominated in Euro.

 

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(c) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent and the Borrower Agent, acting jointly, may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.

ARTICLE III

Representations and Warranties

The Company represents and warrants to the Lenders as to itself and each Subsidiary, and each Borrowing Subsidiary represents and warrants to the Lenders as to itself and its subsidiaries, as follows (it being understood that each reference in this Article III to the Credit Parties shall include, on any date as of which the representations and warranties set forth herein are made or deemed made, only those Persons that are Credit Parties on such date):

SECTION 3.01. Organization and Qualification . Each Credit Party and each Material Subsidiary is duly organized, validly existing and in good standing (to the extent such concept is relevant to such Person in its jurisdiction of organization) under the laws of the jurisdiction of its organization, has full and adequate corporate power to carry on its business as now conducted and is duly licensed or qualified and, to the extent relevant, in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing or qualification necessary, except where such failure to be so licensed or qualified and in good standing does not constitute and would not result in a Material Adverse Effect.

SECTION 3.02. Corporate Authority and Validity of Obligations . Each Credit Party has the corporate, company or partnership power and authority to consummate the Transactions, to enter into this Agreement and each other Credit Document to which it is a party, to make the Borrowings to be made by it hereunder, to issue its notes in evidence thereof and to perform all its obligations hereunder and under each other Credit Document to which it is a party. The execution, delivery and performance of this Agreement and the other Credit Documents have been duly authorized by all necessary corporate, company or partnership action of the Credit Parties, and this Agreement and the other Credit Documents constitute valid and binding obligations of the Credit Parties, enforceable in accordance with their terms, subject to bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights generally and to general principles of equity. None of this Agreement, any other Credit Document or the Transactions (i) will contravene any charter or by-law provision of any Credit Party, (ii) will contravene any provision of law or of any regulation or order of any Governmental Authority or any judgment, or any material covenant, indenture or agreement of or affecting any Credit Party or a substantial portion of the Properties of any Credit Party where such contravention referred to in this clause (ii) would reasonably be expected to result in a Material Adverse Effect or to affect materially and adversely the rights or interests of any Agent, Issuing Bank or Lender, or (iii) result in the creation of any Lien upon any material Property or asset of any Credit Party or Subsidiary.

 

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SECTION 3.03. Margin Stock . None of the Company, any other Credit Party or any other Material Subsidiary is engaged principally, or as one of its primary activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and neither the proceeds of any Loan nor any Letter of Credit will be used in a manner that violates any provision of Regulation U or X of the Board.

SECTION 3.04. Financial Reports . (a) The consolidated balance sheet of the Company and its Subsidiaries and the related consolidated statements of earnings, shareholders’ equity and cash flows of the Company and its Subsidiaries and accompanying notes thereto (i) as at December 31, 2006, and for the year then ended, which financial statements are accompanied by the report of Ernst & Young LLP (the “ Annual Financial Statements ”), and (ii) as at March 31, 2007, and for the fiscal quarter then ended, certified by the Company through its Chief Financial Officer, heretofore furnished to the Administrative Agent, fairly present in all material respects the consolidated financial condition of the Company and its Subsidiaries as at such dates and their consolidated results of operations, shareholders’ equity and cash flows for the periods then ended in conformity with GAAP, subject to year-end adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

(b) The pro forma balance sheet of the Company and the Subsidiaries set forth in the Second Amendment to the Form 10, filed with the SEC on May 23, 2007, was derived from the Annual Financial Statements and was prepared in good faith based upon the best information available to the Company at the time of such filing and presents fairly in all material respects on a pro forma basis, giving effect to the Spin-Off, the financial condition of the Company and the Subsidiaries as of December 31, 2006.

SECTION 3.05. No Material Adverse Effect . Since December 31, 2006, there has not occurred or become known any Material Adverse Effect.

SECTION 3.06. Litigation . There is no litigation or governmental proceeding pending, or to the knowledge of the Company or any Material Subsidiary threatened, against the Company or any Material Subsidiary which if adversely determined could (a) impair the validity or enforceability of, or materially impair the ability of the Company or any other Credit Party to perform its obligations under, this Agreement or any other Credit Document or (b) except as disclosed in the Form 10.

SECTION 3.07. Tax Returns . The Company has filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Company has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.08. Approvals . No authorization, consent, license, exemption, filing or registration with any court or governmental department, agency or instrumentality, or any other Person, is necessary to the consummation of the Transactions or the valid execution, delivery or performance by any Credit Party of this

 

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Agreement or any other Credit Document except for those obtained on or before the Effective Date or those the failure of which to obtain would not individually or in the aggregate reasonably be expected to result in a Material Adverse Effect.

SECTION 3.09. ERISA . The Company and each Subsidiary is in compliance in all material respects with the Employee Retirement Income Security Act of 1974 (“ ERISA” ) to the extent applicable to it and has received no notice to the contrary from the Pension Benefit Guaranty Corporation or any successor thereto (“ PBGC” ) or any other governmental entity or agency. No condition exists or event or transaction has occurred under or relating to any Plan which could reasonably be expected to result in the incurrence by the Company or any Subsidiary of any material liability, fine or penalty. Neither the Company nor any Subsidiary has any contingent liability for any post-retirement benefits under a Welfare Plan that would reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. Environmental Matters . Except as set forth on Schedule 3.10 or in Amendment No. 2 to the Form 10, and except with respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, none of the Company and the Material Subsidiaries (a) has failed to comply with any Environmental Laws or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Laws, (b) has become subject to any liability under any Environmental Laws, (c) has received written notice of any claim with respect to any Environmental Laws or (d) knows of any basis for any liability under any Environmental Laws.

SECTION 3.11. Properties. (a) The Company and each Material Subsidiary has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject only to Liens permitted by Section 6.01 and except for defects in title or property the absence of which would not individually or in the aggregate reasonably be expected to result in a Material Adverse Effect.

(b) The Company and each Material Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by it does not infringe upon the rights of any other Person, except for any such defects in ownership or license rights or other infringements that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.12. Compliance with Laws. The Company and each Material Subsidiary is in compliance with all laws, regulations and orders of each Governmental Authority applicable to it or its property (a) except where the failure to be in compliance, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, and (b) except for violations of law solely with respect to the European Commission matter regarding possible infringements of European Union competition rules by the Company, certain European Subsidiaries of the Company and a number of unaffiliated companies, as disclosed in the Form 10 (the “ EC Matter ”).

 

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SECTION 3.13. Investment Company Status. None of the Company and its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.14. Disclosure. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished in writing by or on behalf of the Company or any Subsidiary to any Agent, Issuing Bank or Lender in connection with the negotiation of this Agreement or any other Credit Document or delivered hereunder or thereunder, as of the date furnished and taken together with all other information so furnished or included in reports filed by the Company with the SEC on or prior to such date, including, without limitation, Amendment No. 2 to the Form 10, contained or will contain any material misstatement of fact or omitted or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading. All projections and other forward looking information contained in the Information Memorandum and any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Company or any Subsidiary to any Agent, Issuing Bank or any Lender in connection with the negotiation of this Agreement, or any other Credit Document or delivered hereunder or thereunder (as modified or supplemented from time to time by other information so furnished) have been prepared by the Company or such Subsidiary in good faith based upon assumptions that were reasonable at the time made and at the time such projections and other information were furnished.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans, and of the Issuing Banks to issue Letters of Credit, hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.02):

(a) The Administrative Agent (or its counsel) shall have received from each party hereto or to any other Credit Document either (i) a counterpart of this Agreement or such Credit Document signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission or electronic imaging of a signed signature page of this Agreement or such Credit Document) that such party has signed a counterpart of this Agreement or such Credit Document.

(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent, the Issuing Banks, the Swingline Lender and the Lenders and dated the Effective Date) of each of (i) [            ], Counsel of the Company, substantially in the form of Exhibit D-1 hereto, (ii) McDermott Will & Emery LLP, counsel for the Borrowers, substantially in the form of Exhibit D-2 hereto, and (iii) DeWolf & Partners, Belgian counsel for

 

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the Belgian Borrowing Subsidiaries, in such form as shall be acceptable to the Administrative Agent. Each Credit Party hereby requests such counsel to deliver such opinions.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing (to the extent such concept is relevant to such Person in its jurisdiction of organization) of each Credit Party (other than any Credit Party that is a Non-US Subsidiary, to the extent such matters are covered by legal opinions referred to in (b) above) and the authorization of the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Company, confirming compliance with the conditions set forth in paragraph (f) of this Section 4.01 and paragraph (b) of Section 4.02.

(e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Company or the Borrowers hereunder.

(f) The representations and warranties of the Credit Parties set forth in Article III shall be true and correct in all material respects (except that any representation given as of a particular date shall be true and correct in all material respects as of such date) and no Default shall have occurred and be continuing.

(g) The Administrative Agent, each Issuing Bank and each Lender shall have received each financial statement or report referred to in Section 3.04.

(h) The Spin-Off and all transactions to occur in connection with the Spin-Off (including the transfer by ASCI to the Company of all assets and rights to be held by it following the Spin-Off other than assets and rights not material to the Company that will be transferred at a later date consistent with the Form 10 and the Separation and Distribution Agreement between ASCI and the Company), other than (i) the effectiveness of this Agreement and (ii) the distribution of shares of the Company to the shareholders of ASCI, shall have been completed on terms and with results relating to the Company and the Subsidiaries consistent with the information contained in the Form 10 (or the most recent amendment thereto, provided that such amendment does not reflect any change in the terms or structure of the Spin-Off, any class of contingent liabilities being assumed by the Company in connection with the Spin-Off or the transactions to occur in connection therewith that is materially adverse to the rights and remedies of the Agents or the Lenders and that has not been approved by the Administrative Agent) and consistent in all material respects with the pro forma financial statements and projections delivered by ASCI and the Company to the

 

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Administrative Agent and the Lenders prior to the Effective Date. The Company shall have a reasonable good faith belief that the distribution of shares of the Company to the shareholders of ASCI will occur before the end of the next Business Day (including clause (a) of such defined term) immediately following the Effective Date, and the Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Company, to such effect.

(i) The Lenders shall have received a certificate from the chief financial officer of the Company confirming the solvency of the Company and the Subsidiaries on a consolidated basis after giving effect to the Spin-Off.

(j) The Administrative Agent shall have received a copy of the Separation and Distribution Agreement, executed by ASCI and the Company.

(k) After giving effect to any Borrowings occurring during the period commencing on the Effective Date and ending upon the consummation of the Spin-Off, the aggregate available amount of unused Commitments under this Agreement shall not be less than $700,000,000.

(l) The consummation of the Transactions shall not violate any applicable law, statute, rule or regulation in any material respect, and all material governmental and third party approvals required in connection with the Transactions shall have been obtained.

The Administrative Agent shall notify the Credit Parties, the Lenders and the Issuing Banks of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders hereunder shall not become effective unless each of the foregoing conditions shall have been satisfied (or waived pursuant to Section 10.02) at or prior to 5:00 p.m., New York City time, on August 31, 2007 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02. Each Borrowing. The obligation of each Lender to make Loans, and of the Issuing Banks to issue, increase or extend Letters of Credit, as part of each Credit Event that increases any Revolving Credit Exposure or the Competitive Loan Exposure of any Lender is subject to the satisfaction or waiver of the following conditions (which conditions, insofar as they apply to any Competitive Loan, may be waived by the Lender that is to make such Competitive Loan):

(a) The representations and warranties of the Credit Parties set forth in Article III (other than those set forth in Sections 3.05, 3.06 and 3.12, but solely as such Section 3.12 relates to the EC Matter) shall be true and correct in all material respects on and as of the date of such Credit Event (except to the extent such representations and warranties by their terms relate to an earlier date, in which case they shall be true and correct in all material respects on and as of such earlier date).

 

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(b) At the time of and immediately after giving effect to such Credit Event, no Default shall have occurred and be continuing.

(c) With respect to any Credit Event following any Liquidity Determination Date, the Company shall have delivered the certificate required under Section 5.05(h) demonstrating compliance with the requirements of Section 6.07.

Each Credit Event that increases any Revolving Credit Exposure or the Competitive Loan Exposure of any Lender shall be deemed to constitute a representation and warranty by the Company and each Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

SECTION 4.03. Initial Borrowing by each Borrowing Subsidiary . The obligation of each Lender to make Loans to or issue Letters of Credit for the account of any Borrowing Subsidiary is subject to the satisfaction (or waiver in accordance with Section 10.02) of the following conditions:

(a) The Administrative Agent (or its counsel) shall have received such Borrowing Subsidiary’s Borrowing Subsidiary Agreement, duly executed by all parties thereto.

(b) The Administrative Agent shall have received (i) a certificate of the secretary or assistant secretary of such Borrowing Subsidiary containing (A) copies of the certificate of incorporation and by-laws or other organizational documents of such Borrowing Subsidiary, certified to be complete and correct copies thereof; (B) a copy of the resolutions authorizing the Transactions insofar as they relate to such Borrowing Subsidiary, certified to be complete, correct and in full force and effect; (C) certification as to the incumbency and signatures of the officers signing the applicable Borrowing Subsidiary Agreement; and (D) evidence of the incumbency of such secretary or assistant secretary; (ii) evidence of the existence and good standing (to the extent such concept is relevant to such Borrowing Subsidiary in its jurisdiction of organization) of such Borrowing Subsidiary; and (iii) to the extent requested by the Administrative Agent, opinions of counsel, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, the Company and each Borrowing Subsidiary covenants and agrees with the Lenders (but, in the case of each Borrowing Subsidiary, only as to such Borrowing Subsidiary and its own subsidiaries), that:

 

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SECTION 5.01. Corporate Existence . The Company and each Borrowing Subsidiary will, and will cause each other Material Subsidiary to, preserve and maintain its corporate existence, subject to the provisions of Section 6.03.

SECTION 5.02. Maintenance of Properties . The Company will, and will cause each Subsidiary to, maintain, preserve and keep its Properties necessary to the proper conduct of its business in reasonably good repair, working order and condition (ordinary wear and tear and damage by casualty excepted) and will from time to time make all necessary repairs, renewals, replacements, additions and betterments thereto so that at all times such Property shall be reasonably preserved and maintained, except, in each case, to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect; provided , however , that nothing in this Section 5.02 shall prevent the Company or a Subsidiary from discontinuing the operation or maintenance of any such Property if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of the Subsidiary.

SECTION 5.03. Taxes . The Company will duly pay and discharge, and will cause each Subsidiary to pay and discharge, all material taxes, rates, assessments, fees and governmental charges upon or against the Company or such Subsidiary or against their respective Property, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and adequate reserves under GAAP are provided therefor.

SECTION 5.04. Insurance . The Company will insure, and keep insured, and will cause each Subsidiary to insure, and keep insured, with reputable insurance companies, such of its insurable Property as is of a character usually insured by companies similarly situated and operating like Property to the extent insurance is available on commercially reasonable terms. To the extent usually insured (subject to self-insured retentions) by companies similarly situated and conducting similar businesses, and to the extent insurance is available on commercially reasonable terms, the Company will also insure, and cause each Subsidiary to insure, employers’ and public and product liability risks with reputable insurance companies.

SECTION 5.05. Financial Reports and Other Information . The Company will, and will cause each Subsidiary to, maintain a standard system of accounting substantially in accordance with GAAP and will furnish to the Lenders and their respective duly authorized representatives such information respecting the business and financial condition of the Company and the Subsidiaries as they may reasonably request; and without any request will furnish to the Administrative Agent, which will make available by means of electronic posting to each Lender:

(a) within 15 days of each date the Company is required to file a report on Form 10-K for any fiscal year with the SEC, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or

 

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other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b) within 15 days of each date the Company is required to file a report on Form 10-Q for any fiscal quarter with the Securities and Exchange Commission, its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Company (i) certifying as to whether a Default has occurred since the date of the most recent certificate delivered under this paragraph and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.05 and 6.06 and setting forth in reasonable detail computations of the ratio of Consolidated Net Indebtedness to Consolidated EBITDA, the ratio of Consolidated EBITDA to Consolidated Net Interest Expense and Consolidated Net Tangible Assets and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(d) promptly after the same become publicly available, copies of all periodic and other reports (including all reports on Form 10-K, Form 10-Q and Form 8-K), proxy statements and other materials filed by the Company or any Subsidiary with the SEC, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Company to its shareholders generally, as the case may be;

(e) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Company or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent, any Issuing Bank or any Lender acting through the Administrative Agent may reasonably request;

 

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(f) prompt written notice (including a description in reasonable detail) of (i) the occurrence of any Default; (ii) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against the Company, any Subsidiary or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect; (iii) the occurrence of any “prohibited transaction” (as defined in ERISA) that would reasonably be expected to result in a Material Adverse Effect and (iv) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect. Each notice delivered under this paragraph shall be accompanied by a statement of a Financial Officer or other executive officer of the Company setting forth a summary in reasonable detail of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto;

(g) within four Business Days after the Company or any Subsidiary receives notice of any judgment of any Governmental Authority rendered in connection with the EC Matter (an “EC Judgment” ), written notice thereof, including detailed information relating to such EC Judgment and the payment requirements related thereto; and

(h) on the third Business Day prior to any EC Payment Date, a certificate demonstrating compliance with Section 6.07 as of the related Liquidity Determination Date, including detailed information regarding each component of Consolidated Liquidity and Unrestricted Cash and Cash Equivalents.

Information required to be delivered pursuant to the clauses above shall be deemed to have been delivered if such information, or one or more annual or quarterly reports containing such information, shall have been posted on the Company’s website on the Internet at http://www.wabco-auto.com (or such other address as the Company shall provide to the Lenders) or by the Administrative Agent on an IntraLinks or similar site to which the Lenders have been granted access or shall be available on the website of the Securities and Exchange Commission at http://www.sec.gov (and a confirming electronic correspondence shall have been delivered or caused to be delivered to the Administrative Agent and each Lender providing notice of such posting or availability).

Each of the financial statements furnished to the Lenders pursuant to subsections (a) and (b) of this Section 5.05 shall be accompanied by a compliance certificate in substantially the form of Exhibit E signed by a Financial Officer of the Company.

SECTION 5.06. Books and Records; Inspection Rights. The Company will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all on reasonable terms and conditions and during normal business hours.

 

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SECTION 5.07. Compliance with Laws. The Company will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of each Governmental Authority applicable to it or its property, including all Environmental Laws, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, the Company and each Borrowing Subsidiary covenants and agrees with the Lenders (but, in the case of each Borrowing Subsidiary, only as to such Borrowing Subsidiary and its own subsidiaries), that none of the Company or any Subsidiary will:

SECTION 6.01. Liens . Directly or indirectly create, incur, assume or permit to exist any Lien securing Indebtedness upon or with respect to any of its property or assets, whether now owned or hereafter acquired, except:

(a) Permitted Encumbrances;

(b) Liens created under this Agreement;

(c) Liens existing on the date hereof and set forth on Schedule 6.01 and any replacements thereof; provided that (i) no such Lien shall apply to any other property or assets of the Company or any Subsidiary other than improvements and accessions to the subject assets and proceeds thereof and (ii) no such Lien shall secure obligations other than those which it secured on the date hereof and permitted extensions, renewals and replacements thereof;

(d) Liens on assets existing at the time such assets are acquired by the Company or a Subsidiary and any replacements thereof; provided that (i) no such Lien is created in contemplation of or in connection with such acquisition, (ii) no such Lien shall apply to any other property or assets of the Company or any Subsidiary other than improvements and accessions to the subject assets and proceeds thereof and (iii) no such Lien shall secure obligations other than those which it secures on the date of such acquisition and permitted extensions, renewals and replacements thereof;

(e) Liens on assets of any Person at the time such Person becomes a Subsidiary and any replacements thereof; provided that (i) no such Lien is created in contemplation of or in connection with such Person becoming a Subsidiary, (ii) no such Lien shall apply to any other property or assets of the Company or any Subsidiary other than improvements and accessions to the subject assets and proceeds thereof and (iii) no such Lien shall secure obligations other than those which it secures on the date such Person becomes a Subsidiary and permitted extensions, renewals and replacements thereof;

 

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(f) Liens securing Indebtedness incurred to finance the purchase, of property, plant or equipment acquired after the date hereof to the extent such Liens attach only to such property, plant or equipment and improvements and accretions thereto and are created at the time of or within 180 days after the acquisition of such property, plant, equipment, improvements or accretions, as the case may be, and any replacements thereof; provided that no such Lien shall apply to any other property or assets of the Company or any Subsidiary other than improvements and accessions to the subject property or assets and proceeds thereof;

(g) customary Liens arising from or created in connection with the issuance of trade letters of credit for the account of the Company or any Subsidiary supporting obligations not constituting Indebtedness; provided that such Liens encumber only the raw materials, inventory, machinery or equipment in connection with the purchase of which such letters of credit are issued;

(h) Liens on assets associated with sales offices purchased from third parties by the Company or the Subsidiaries and securing Indebtedness of the Company or the Subsidiaries issued as consideration for such purchases;

(i) Liens on assets of Subsidiaries securing obligations owed to the Company or one or more Subsidiaries (other than Liens existing or deemed to exist in connection with Securitization Transactions); provided that no such Lien shall be created in favor of any person other than the Company or a Subsidiary;

(j) to the extent such transactions are not structured as true sales of accounts receivable, Liens existing or deemed to exist in connection with Securitization Transactions in an aggregate amount not greater at any time than US$150,000,000;

(k) to the extent such transactions are not structured as true sales of accounts receivable, Liens existing or deemed to exist in connection with Securitization Transactions in an aggregate amount greater than US$150,000,000; provided , that, to the extent such Liens are not permitted under paragraph (l) below, at the time of any such creation or deemed creation of a Lien, the Commitments shall be reduced pursuant to Section 2.09(b), and any outstanding Loans shall be prepaid pursuant to Section 2.11(a), in an amount equal to such excess;

(l) Liens securing or deemed to exist in connection with Indebtedness in an aggregate principal amount that, taken together with the aggregate Subsidiary Indebtedness permitted under Section 6.02(i), without duplication, does not exceed the greater of US$150,000,000 and 15% of Consolidated Net Tangible

 

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Assets as of the end of the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 5.05(a) or (b); and

(m) Liens securing judgments entered against the Company or the Subsidiaries so long as such judgments have not resulted in Events of Default under paragraph (i) of Article VII.

SECTION 6.02. Subsidiary Indebtedness . Permit any Subsidiary to Incur any Indebtedness or to issue any preferred stock or other preferred equity securities except:

(a) the Obligations;

(b) Indebtedness existing on the date hereof and set forth on Schedule 6.02 and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof;

(c) Indebtedness, preferred stock or preferred equity securities of Subsidiaries existing at the time they become Subsidiaries and not incurred in contemplation of their becoming Subsidiaries;

(d) Indebtedness (or preferred stock or preferred equity securities) representing the purchase price, or incurred to finance the purchase, of property, plant or equipment acquired after the date hereof or secured by a Lien on any such property, plant or equipment prior to the acquisition thereof to the extent such Lien attaches only to such property, plant or equipment and improvements and accretions thereto;

(e) Indebtedness owed to the Company or one or more other Subsidiaries (or preferred stock or preferred equity securities; provided that such preferred stock or preferred equity securities are owned by the Company or one or more Subsidiaries); provided that no Lien on any such Indebtedness (or preferred stock or preferred equity securities) shall be created in favor of any Person other than the Company or a Subsidiary;

(f) Indebtedness deemed to exist as a result of Securitization Transactions permitted under clauses (j) and (k) of Section 6.01;

(g) Indebtedness in connection with overdrafts, in the ordinary course of business, under Cash Pooling Arrangements;

(h) Indebtedness, preferred stock or other preferred equity securities of any Non-US Subsidiary, including any extensions, renewals and replacements of any such Indebtedness that do not result in an earlier maturity date or decreased weighted average life thereof, in an aggregate amount not to exceed US$150,000,000 at any time outstanding; and

 

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(i) other Indebtedness that, taken together with the aggregate Indebtedness secured by Liens permitted under Section 6.01(l), without duplication, does not exceed the greater of US$150,000,000 and 15% of Consolidated Net Tangible Assets as of the end of the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 5.05(a) or (b).

SECTION 6.03. Fundamental Changes. (a) In the case of the Company or any Material Subsidiary, merge with or into or consolidate with any other Person, or liquidate or dissolve, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of related transactions) all or substantially all of the consolidated assets of the Company and the Subsidiaries (whether now owned or hereafter acquired and whether directly or through any merger or consolidation of, or any issuance, sale, transfer, lease or other disposition of equity interests in, any Subsidiary) except that if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing, (i) any Person may merge into the Company in a transaction in which the Company is the surviving corporation, (ii) any Person (other than the Company) may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) the Company may merge into any Subsidiary in a transaction in which the surviving entity assumes the Obligations of the Company under the Credit Agreement, (iv) any Subsidiary (other than the Company) may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and the Subsidiaries and is not materially disadvantageous to the Lenders and (v) any sale of assets (or stock of a Subsidiary) permitted hereunder may be effected through the merger or consolidation of one or more Material Subsidiaries (other than the Company or any Borrowing Subsidiary) in a transaction in which the surviving person is not a Subsidiary.

(b) Sell, transfer, lease or otherwise dispose of (in one transaction or in a series of related transactions) to any Person other than the Company or a Subsidiary, assets (other than assets sold pursuant to any Securitization Transaction) with an aggregate fair market value during any fiscal year greater than 25% of the Consolidated Total Assets of the Company at the end of the immediately preceding fiscal year.

(c) Alter in a fundamental manner the character of the business of the Company and its Subsidiaries taken as a whole from that conducted immediately prior to the date hereof (it being understood that (i) the entry into other industrial businesses or businesses reasonably related, similar or ancillary to any of the businesses conducted by the Company or its Subsidiaries as of the date hereof shall not be considered a fundamental alteration and (ii) the consummation of the Spin-Off substantially in accordance with the terms of the Form 10 as in effect on the date hereof, as such terms may be hereafter modified (but not in a manner materially adverse to the rights and interests of the Lenders hereunder) shall not be considered a fundamental alteration).

SECTION 6.04. Use of Proceeds . Use the proceeds of the Loans or the Letters of Credit for any purpose other than the purposes set forth in the preamble to this Agreement, or use any part of the proceeds of any Loan, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including

 

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Regulations U and X. Permit more than 25% of the value of the assets of the Company and the Subsidiaries which are subject to any arrangement hereunder restricting the ability of the Company or such Subsidiary to sell, pledge or otherwise dispose of assets to consist of Margin Stock.

SECTION 6.05. Ratio of Consolidated Net Indebtedness to Consolidated EBITDA . Permit the ratio of (i) Consolidated Net Indebtedness of the Company on the last day of any fiscal quarter to (ii) Consolidated EBITDA of the Company for the period of four consecutive fiscal quarters ending on such day to exceed 3.00 to 1.00.

SECTION 6.06. Ratio of Consolidated EBITDA to Consolidated Net Interest Expense . Permit the ratio of (i) Consolidated EBITDA of the Company to (ii) Consolidated Net Interest Expense of the Company, in each case for any period of four consecutive fiscal quarters, to be less than 3.00 to 1.00.

SECTION 6.07. Liquidity . On any Liquidity Determination Date, permit Consolidated Liquidity (reduced by the amount of the maximum payment required in connection with the applicable EC Judgment) to be less than US$100,000,000.

ARTICLE VII

Events of Default

Events of Default. If any of the following events (“ Events of Default” ) shall occur:

(a) (i) any Borrower shall default in the payment when due of any principal on any Loan or any reimbursement obligation in respect of any LC Disbursement, whether at the stated maturity thereof or at any other time provided in this Agreement, or (ii) any Borrower shall default for a period of three days in the payment when due of interest on any Loan or LC Disbursement or of any other sum required to be paid pursuant to this Agreement;

(b) The Company or any other Borrower shall default in the observance or performance of any of the covenants set forth in Section 5.01 (with respect to the Company’s existence) or 5.05(i) or in Article VI;

(c) any Borrower shall default in the observance or performance of any provision hereof or of any other Credit Document not mentioned in (a) or (b) above, which default is not remedied within 30 days (or 60 days if (x) such default is capable of being cured, (y) a cure of such default will require more than 30 days and (z) the applicable Borrower is proceeding to effect a cure of such default) after notice thereof to the Company by the Administrative Agent or any Lender;

(d) any representation or warranty made (or deemed made) herein or in any other Credit Document by any Credit Party, or in any statement or certificate furnished by any Credit Party pursuant hereto or in connection with any Credit Event, proves untrue in any material respect as of the date of the making (or deemed making) thereof;

 

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(e) The Company or any Subsidiary shall default in the payment when due, after any applicable grace period, of any Material Indebtedness (other than Material Indebtedness owed to the Company or a Subsidiary); or there shall occur any default or other event under any indenture, agreement or other instrument under which any Material Indebtedness is outstanding and such default or event shall result in the acceleration of the maturity or the required redemption or repurchase of such Material Indebtedness (or, in the case of any such Material Indebtedness under any Hedging Agreement, the early termination of or any required payment under such Hedging Agreement);

(f) any “ reportable event” (as defined in ERISA) that constitutes grounds for the termination of any Plan by the PBGC, or for the appointment by an appropriate court of a trustee to administer or liquidate any Plan, or that could reasonably be expected to result in a Material Adverse Effect, shall have occurred and shall be continuing 30 days after written notice to such effect shall have been given to the Company by the Administrative Agent; or any Plan shall be terminated by the PBGC; or a trustee shall be appointed to administer any Plan; or the PBGC shall institute proceedings to administer or terminate any Plan; and in the case of any such event the aggregate amount of unfunded liabilities payable by the Company and the Subsidiaries under any affected Plan shall exceed (either singly or in the aggregate in the case of any such liability arising under more than one Plan) US$75,000,000; or the Company or any of its Subsidiaries or any member of the Controlled Group of any of them shall withdraw (completely or partially) from any “ multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) and the aggregate amount of the liability of the Company and its Subsidiaries to such plan under Title IV of ERISA shall exceed (either singly or in the aggregate in the case of any such liability arising under more than one such plan) US$75,000,000;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Company or any Material Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) The Company or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or

 

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petition described in clause (g) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (v) make a general assignment for the benefit of creditors;

(i) one or more judgments for the payment of money in an aggregate amount in excess of US$75,000,000 (except to the extent covered by insurance as to which the insurer has acknowledged such coverage in writing) shall be rendered against the Company, any Material Subsidiary or any combination thereof and the same shall remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Company or any Material Subsidiary to enforce any such judgment;

(j) The Company shall fail to observe or perform any covenant, condition or agreement contained in Article IX, or the guarantee of the Company hereunder shall not be (or shall be claimed by the Company not to be) valid or in full force and effect; or

(k) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Company described in clause (g) or (h) of this Section), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to Borrower Agent, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Company accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrowers; and in case of any event with respect to the Company described in clause (g) or (h) of this Section, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and each other Borrower.

 

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ARTICLE VIII

The Agents

In order to expedite the transactions contemplated by this Agreement, JPMCB is hereby appointed to act as Administrative Agent, and JPMEL is hereby appointed to act as London Agent, on behalf of the Lenders and, where applicable, the Issuing Banks. Each of the Lenders and each of the Issuing Banks hereby irrevocably authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to the Agents by the terms of the Credit Documents, together with such actions and powers as are reasonably incidental thereto.

Any Lender serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not such Agent, and such Lender and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Credit Party or any Affiliate thereof as if it were not such Agent hereunder.

The Agents shall not have any duties or obligations except those expressly set forth in the Credit Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Credit Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02), and (c) except as expressly set forth in the Credit Documents, no Agent shall have any duty to disclose, or be liable for the failure to disclose, any information relating to the Company or any Subsidiary that is communicated to or obtained by the bank serving as Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02) or in the absence of its own gross negligence or wilful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by the Borrower Agent, a Borrower or a Lender, and no such Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Credit Document, (iv) the validity, enforceability, effectiveness or genuineness of any Credit Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Credit Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument,

 

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document or other writing believed by it in good faith to be genuine and to have been signed or sent by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it in good faith to be made by the proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for any Credit Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Such Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs and the provisions of Section 10.03 shall apply to any such sub-agent and to the Related Parties of the Agents and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, any Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Company. Upon any such resignation, the Administrative Agent, or, if the Administrative Agent shall have resigned, the Required Lenders, shall have the right (in consultation with, and with the consent of (unless an Event of Default has occurred and is continuing pursuant to clause (g) or (h) of Section 7.01), the Company, which shall not be unreasonably withheld) to appoint a successor. If no successor shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may (in consultation with, and with the consent of (unless an Event of Default has occurred and is continuing pursuant to clause (g) or (h) of Section 7.01), the Company, which shall not unreasonably withhold such consent and which shall, if the retiring Agent shall so request, designate and approve a successor Agent) on behalf of the Lenders and the Issuing Banks, appoint a successor Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After an Agent’s resignation hereunder, the provisions of this Article and Section 10.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Credit Document, any related agreement or any document furnished hereunder or thereunder.

 

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None of the institutions named as Syndication Agents or Documentation Agents in the heading of this Agreement shall, in their capacities as such, have any duties or responsibilities of any kind under this Agreement.

ARTICLE IX

Guarantee

In order to induce the Lenders to extend credit to the Borrowers hereunder, the Company hereby irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, the Obligations. The Company further agrees that the due and punctual payment of the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such extension or renewal of any Obligation.

The Company waives presentment to, demand of payment from and protest to any Borrower of any of the Obligations, and also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of each of the Company hereunder shall not be affected by (a) the failure of any Lender to assert any claim or demand or to enforce any right or remedy against any Borrower under the provisions of this Agreement or any other Credit Document or otherwise; (b) any extension or renewal of any of the Obligations; (c) any rescission, waiver, amendment or modification of, or release from, any of the terms or provisions of this Agreement or any other Credit Document; (d) the failure or delay of any Lender to exercise any right or remedy against any other guarantor of the Obligations; (e) the failure of any Lender to assert any claim or demand or to enforce any remedy under any Credit Document or any other agreement or instrument; (f) any default, failure or delay, wilful or otherwise, in the performance of the Obligations; or (g) any other act, omission or delay to do any other act which may or might in any manner or to any extent vary the risk of the Company or otherwise operate as a discharge of the Company as a matter of law or equity or which would impair or eliminate any right of the Company to subrogation.

The Company further agrees that its guarantee hereunder constitutes a promise of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual or collection of any of the Obligations or operated as a discharge thereof) and not merely of collection, and waives any right to require that any resort be had by any Lender, Agent or Issuing Bank to any balance of any deposit account or credit on the books of any Lender, Agent or Issuing Bank in favor of the Company, any Borrower or Subsidiary or any other Person.

The obligations of the Company hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever, by reason of the invalidity, illegality or unenforceability of the Obligations, any impossibility in the performance of the Obligations or otherwise.

 

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The Company further agrees that its obligations hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Lender upon the bankruptcy or reorganization of the Company or any Borrower or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Lender, Agent or Issuing Bank may have at law or in equity against the Company by virtue hereof, upon the failure of any Borrower to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Company hereby promises to and will, upon receipt of written demand by the Administrative Agent, forthwith pay, or cause to be paid, to the Administrative Agent, for distribution to the Lenders, Agents or Issuing Banks, as appropriate, in cash an amount equal the unpaid principal amount of such Obligation. The Company further agrees that if payment in respect of any Obligation shall be due in a currency other than US Dollars and/or at a place of payment other than New York and if, by reason of any legal prohibition, disruption of currency or foreign exchange markets, war or civil disturbance or other event, payment of such Obligation in such currency or at such place of payment shall be impossible or, in the reasonable judgment of any Lender, Agent or Issuing Bank, not consistent with the protection of its rights or interests, then, at the election of such Lender, Agent or Issuing Bank, the Company shall make payment of such Obligation in US Dollars (based upon the applicable Exchange Rate in effect on the date of payment) and/or in New York, and shall indemnify such Lender, Agent or Issuing Bank against any losses or expenses (including losses or expenses resulting from fluctuations in exchange rates) that it shall sustain as a result of such alternative payment.

Upon payment in full by the Company of any Obligation of any Borrower, each Lender shall, in a reasonable manner, assign to the Company the amount of such Obligation owed to such Lender and so paid, such assignment to be pro tanto to the extent to which the Obligation in question was discharged by the Company or make such disposition thereof as the Company shall direct (all without recourse to any Lender and without any representation or warranty by any Lender). Upon payment by the Company of any sums as provided above, all rights of the Company against any Borrower arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full of all the Obligations owed by such Borrower to the Lenders (it being understood that, after the discharge of all the Obligations due and payable from such Borrower, such rights may be exercised by the Company notwithstanding that such Borrower may remain contingently liable for indemnity or other Obligations).

 

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ARTICLE X

Miscellaneous

SECTION 10.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Company, to it at Chaussée de Wavre 1789, B-1160 Brussels, Belgium, Attn. Malcolm Gilbert, Treasurer, (Telecopy No. 011-32-2663-9899;

(b) if to any Borrower, to it in care of the Company as provided in paragraph (a) above;

(c) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas 77002-6925, Attention of Richardo Gonzales Jr., Loan & Agency Services (Telecopy No. (713) 750-2228), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York 10017, Attention of Randolph Cates (Telecopy No. (212) 270-3279);

(d) if to the London Agent, to it at J.P. Morgan Europe Limited, 125 London Wall, London EC2Y 5AJ, United Kingdom, Attention of Vicky Barnett, Loan Agency Division (Telecopy No. 011-44-207-777-2360), with a copy to the Administrative Agent as provided in paragraph (c) above;

(e) if to any Issuing Bank, to it at the address most recently specified by it in a notice delivered to the Administrative Agent and the Company;

(f) if to the Swingline Lender, (i) in the case of Swingline Loans denominated in US Dollars, to it at JPMorgan Chase Bank, N.A., 1111 Fannin Street, 10th Floor, Houston, Texas 77002-6925, Attention of Richardo Gonzales Jr., Loan & Agency Services (Telecopy No. (713) 750-2228) and (ii) in the case of Swingline Loans denominated in Sterling or Euro, to it at JPMorgan Chase Bank, N.A., European Loan Operations, 125 London Wall, London EC2Y 5AJ, United Kingdom, Attention of The Manager (Telecopy No. 011- 44-207-492-3297); and

(g) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

 

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SECTION 10.02. Waivers; Amendments. (a) No failure or delay by any Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Credit Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents, the Issuing Banks and the Lenders hereunder and under any other Credit Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Credit Document or consent to any departure by any Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Issuing Bank or any Lender may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any other Credit Document nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Required Lenders or by the Company and the Administrative Agent with the consent of the Required Lenders and, in the case of any other Credit Document, each applicable Borrower (or the Borrower Agent on behalf of such Borrower); provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable to any Lender hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender affected thereby, (v) change Section 2.09(c) in a manner that would alter the pro rata reduction of the Commitments required thereby, without the written consent of each Lender affected thereby, (vi) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision of any Credit Document specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender or (vii) release the Company from its obligations under Article IX, in each case without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of any Agent, any Issuing Bank or the Swingline Lender hereunder without the prior written consent of such Agent, such Issuing Bank or the Swingline Lender, as the case may be. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Company, the Required Lenders and the Administrative Agent (and, if its rights or obligations are affected thereby, the London Agent) if (A) by the terms of such agreement the

 

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Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (B) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement.

(c) If, in connection with any proposed change, waiver, discharge or termination of or to any of the provisions of this Agreement as contemplated by clauses (i) through (vii), inclusive, of the first proviso to Section 10.02(b), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described in either clause (i) or (ii) below, to either:

(i) replace each such non-consenting Lender or Lenders (or, at the option of the Borrowers if any such Lender’s consent is required with respect to less than all Classes of Loans (or related Commitments), to replace only the Commitments and/or Loans of such non-consenting Lender that gave rise to the need to obtain such Lender’s individual consent) with one or more assignees pursuant to, and with the effect of an assignment under, Section 2.19 so long as at the time of such replacement, each such assignee consents to the proposed change, waiver, discharge or termination; or

(ii) terminate such nonconsenting Lender’s Commitment (if such Lender’s consent is required as a result of its Commitment) and/or repay each Class of outstanding Loans of such Lender that gave rise to the need to obtain such Lender’s consent and/or cash collateralize its LC Exposure, in accordance with Section 2.05(i), and pay all accrued interest, fees and other amounts through the date of such termination and/or repayment; provided that, unless the Commitments that are terminated and Loans that are repaid are immediately replaced in full at such time through the addition of new Lenders or the increase of the Commitments and/or outstanding Loans of existing Lenders (who in each case must specifically consent thereto), then the Required Lenders (determined after giving effect to the proposed action) shall specifically consent thereto.

Any such replacement or termination transaction described above shall be effective on the date notice is given of the relevant transaction and shall have a settlement date no earlier than five Business Days and no later than 90 days after the relevant transaction. Notwithstanding the foregoing, with respect to the Lender that is acting as the Administrative Agent, the Borrower shall not have the right to replace such Lender, terminate its Commitment or repay its Loans pursuant to this paragraph as a result of such Lender’s refusal to consent to any waiver, amendment or modification that would affect its rights and duties in its capacity as Administrative Agent.

SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Agents and their Affiliates, including the reasonable fees, charges and

 

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disbursements of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Credit Documents or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses (other than expenses usually and ordinarily incurred in the processing of drafts presented under letters of credit) incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender, including the fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent, and, if an Event of Default shall have occurred or shall be reasonably anticipated by the Administrative Agent, other counsel for any Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of the rights of any Agent, Issuing Bank or Lender in connection with the Credit Documents, including its rights under this Section, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Borrowers shall indemnify each Agent, each Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee” ) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (other than Excluded Taxes), including the reasonable and documented fees, charges and disbursements of counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the syndication of the credit facilities provided for herein, (ii) the execution or delivery of any Credit Document or any agreement or instrument contemplated thereby, the performance by the parties to the Credit Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (iii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by any Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iv) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company or any of the Subsidiaries, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto (and regardless of whether such matter is instituted by a third party or a Credit Party); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses have resulted from the wilful misconduct or gross negligence of such Indemnitee or any of its directors, officers, employees or agents. The Borrowers and each Indemnitee agree that (i) such Indemnitee will contest any claim in respect of which indemnification is sought under this paragraph if requested by the Borrower Agent, in a manner reasonably directed by the Borrower Agent, with counsel selected by the Indemnitee and approved by the Borrower Agent, which approval shall not be unreasonably withheld or (ii) the Borrower Agent, upon the request of the Indemnitee,

 

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shall retain counsel reasonably satisfactory to the Indemnitee to represent the Indemnitee in any proceeding with respect to any such claim and shall pay as incurred the reasonable fees and expenses of such counsel related to such proceeding. In any such proceeding with respect to which the Indemnitee has requested the Borrower Agent to retain counsel, any Indemnitee shall have the right to retain its own counsel at its own expense, except that the Borrower Agent shall pay as they are incurred the reasonable fees and expenses of counsel retained by the Indemnitee if (y) the Borrower and the Indemnitee agree to the retention of such counsel or (z) the named parties to any such proceeding (including any impleaded parties) include both the Borrower and the Indemnitee and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. Any Indemnitee that proposes to settle or compromise any indemnified claim for which the Borrowers may be liable for payment of indemnity shall give the Borrower Agent written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding and shall obtain the Borrower Agent’s prior written consent, which consent shall not be unreasonably withheld; provided that nothing in this sentence or the preceding sentence shall restrict the right of any person to settle or compromise any claim for which indemnity would be otherwise available on any terms if such person waives its right to indemnity from the Borrowers in respect of such claim. The Borrower Agent will not, without the prior written consent of the applicable Indemnitee (which consent shall not be unreasonably withheld), settle any proceeding with respect to which the Indemnitee has requested the Borrower Agent to retain counsel unless such settlement includes an express, complete and unconditional release of such Indemnitee with respect to all claims asserted in such proceeding.

(c) To the extent that the Borrowers fail to pay any amount required to be paid by them to any Agent, any Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent, such Issuing Bank or the Swingline Lender such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent, such Issuing Bank or the Swingline Lender in its capacity as such.

(d) To the extent permitted by applicable law, neither the Company nor any Borrower shall assert, and each hereby waives, any claim against any Indemnitee for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with or as a result of this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable promptly after written demand therefor setting forth the amount and the nature of the expense or claim, as applicable.

(f) Notwithstanding the foregoing paragraphs, nothing in this Section shall require the Company or any other Borrower to indemnify any Agent, Issuing Bank

 

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or Lender against or to reimburse any Agent, Issuing Bank or Lender for any cost or reduction in amounts received that shall result from the Changes in Law or other matters addressed in Section 2.15, 2.16 or 2.17 and that shall be expressly excluded from the amounts for which the Company and the Borrowers are liable under such Sections.

SECTION 10.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder or under any Borrowing Subsidiary Agreement (except as expressly provided herein) without the prior written consent of each Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender (or an Affiliate of a Lender that is sufficiently creditworthy that there would be no reasonable doubt as to its ability to perform its obligations hereunder), each of the Borrower Agent and the Administrative Agent (and in the case of an assignment of all or a portion of a Commitment or any Lender’s obligations in respect of its LC Exposure, the applicable Issuing Bank, and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than US$5,000,000 unless each of the Borrower Agent and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, except that this clause (iii) shall not apply to rights in respect of outstanding Competitive Loans, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of US$3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided further that any consent of the Borrower Agent otherwise required under this paragraph shall not be required if an Event of Default under clause (g) or (h) of Section 7.01 has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under

 

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this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 10.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

(c) The Administrative Agent, acting for this purpose as an agent of each Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register” ). The entries in the Register shall be conclusive, and the Borrowers, the Agents, the Issuing Banks and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by any Borrower, any Agent, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e) Any Lender may, without the consent of any Borrower or the Administrative Agent, the Issuing Banks or the Swingline Lender sell participations to one or more banks or other entities (a “ Participant” ) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Agents, the Issuing Banks, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Credit Documents and to approve any amendment, modification or waiver of any provision of the Credit Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 10.02(b)

 

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that affects such Participant. Subject to paragraph (f) of this Section, each Borrower agrees that each Participant shall be entitled to the benefits of and be subject to all the obligations of a Lender under Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.

(f) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower Agent is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Sections 2.17(e) as though it were a Lender. The provisions of Section 2.19 shall apply to each Participant as though it were a Lender.

(g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(h) Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Bank” ) may grant to a special purpose funding vehicle (an “ SPC” ) of such Granting Bank, identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Borrowers pursuant to Section 2.01; provided that (i) nothing herein shall constitute a commitment to make any Loan by any SPC and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall be deemed to utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by the Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any payment under this Agreement for which a Lender would otherwise be liable, for so long as, and to the extent, the related Granting Bank makes such payment. In furtherance of the foregoing, each party hereto hereby agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 10.04, any SPC may (i) with notice to, but without the prior written consent of, the Borrowers and the Administrative Agent and without paying any processing fee therefor, assign all or a

 

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portion of its interests in any Loans to its Granting Bank or to any financial institutions (if consented to by the Borrowers and Administrative Agent) providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans (but not relating to any Borrower, except with the Borrower Agent’s consent) to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC (and subject to the agreement of any such provider of any surety, guarantee or credit or liquidity enhancement to maintain the confidentiality of such information on substantially the terms set forth in Section 10.12).

SECTION 10.05. Survival . All covenants, agreements, representations and warranties made by the Credit Parties herein, in the other Credit Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Credit Documents and the making of any Loans and the issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Credit Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 10.07. Severability. Any provision of any Credit Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such

 

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jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions of such Credit Document; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 10.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender 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 obligations at any time owing by such Lender or Affiliate to or for the credit or the account of any Borrower (other than payroll accounts and trust accounts) against any of and all the obligations of the Borrowers now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement. The rights of each Lender under this Section are in addition to and shall not limit other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) The Company and each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Credit Document, 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 such New York State or, to the extent permitted by law, in such Federal court. 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 or any other Credit Document shall affect any right that any party to this Agreement may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against any Borrower or its properties in the courts of any jurisdiction.

(c) Each party to this Agreement hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which 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 any other Credit Document in any court referred to in paragraph (b) of this Section. 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.

(d) The Company hereby irrevocably designates, appoints and empowers The Corporation Trust Company having its address at 1209 Orange Street, Wilmington,

 

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DE 19801, Attn.: Secretary, as its process agent to receive for and on its behalf service of process in any suit, action or proceeding arising out of or relating to this Agreement or any other Credit Document.

(e) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01, and with respect to the Company, in paragraph (d) above. Nothing in this Agreement or any other Credit Document will affect the right of any party hereto or thereto to serve process in any other manner permitted by law.

SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 10.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 10.12. Confidentiality. Each of the Agents, each Issuing Bank and the Lenders agrees to maintain, and to cause its directors, officers, employees and agents to maintain, the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors on a need-to-know basis (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, subject to the delivery of notice of such required disclosure to the Borrower Agent in order that the Company or the Borrowers may have the opportunity to contest such disclosure or to seek one or more protective orders with respect thereto, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or

 

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obligations under this Agreement, (g) with the written consent of any Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source other than a Borrower. For the purposes of this Section, “ Information” means all information received from the Borrowers relating to the Borrowers or their business, other than any such information that is publicly available or available to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by a Borrower. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as a prudent Person engaged in the same business or following customary procedures for such business would accord to its own confidential information.

SECTION 10.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges” ), shall exceed the maximum lawful rate (the “ Maximum Rate” ) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 10.14. Conversion of Currencies . (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto (including any Borrowing Subsidiary) agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given.

(b) The obligations of each Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the “ Applicable Creditor” ) shall, notwithstanding any judgment in a currency (the “ Judgment Currency” ) other than the currency in which such sum is stated to be due hereunder (the “ Agreement Currency” ), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, such Borrower agrees, as a

 

86


separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrowers contained in this Section 10.14 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder.

SECTION 10.15. Termination of Certain Covenants. Upon the occurrence of a Covenant Termination Date, Sections 6.02 and 6.03(b) shall terminate and be of no further force and effect; provided that if at any time after the occurrence of a Covenant Termination Date, the Leverage Ratio shall exceed 1.50:1.00, such Sections shall be automatically reinstated on the first date of delivery to the Administrative Agent of the consolidated financial statements indicating that the Leverage Ratio exceeds 1.50:1.00.

SECTION 10.16. USA Patriot Act . Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”) hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

 

87


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

WABCO HOLDINGS INC.,
by   /s/ Malcom Gilbert
  Name: Malcom Gilbert
  Title:   Treasurer
by    
  Name:
  Title:


WABCO GROUP INC.,
by   /s/ G. Peter D’Aloia
  Name: G. Peter D’Aloia
  Title:   President and Treasurer


WABCO GROUP INTERNATIONAL INC.,
by   /s/ G. Peter D’Aloia
  Name: G. Peter D’Aloia
  Title:   President and Treasurer


AMERICAN STANDARD EUROPE BVBA,
by   /s/ Malcolm Gilbert
  Name: Malcolm Gilbert
  Title:   Proxyholder


AMERICAN STANDARD FINANCIAL SERVICES BVBA,
by   /s/ Malcolm Gilbert
  Name: Malcolm Gilbert
  Title:   Proxyholder


WABCO EUROPE HOLDINGS BV,
by   /s/ Malcolm Gilbert
  Name: Malcolm Gilbert
  Title:   Proxyholder


JPMORGAN CHASE BANK, N.A.,
individually, as Administrative Agent, as Swingline Lender and as Issuing Bank,
by   /s/ Randolph Cates
  Name: Randolph Cates
  Title:   Executive Director
J.P. MORGAN EUROPE LIMITED,
as London Agent,
by   /s/ Ching Loh
  Name: Ching Loh
  Title:   Associate
ABN AMRO N.V.,
individually and as Syndication Agent,
by   /s/ Donald Sutton / /s/ Marc Brondyke
  Name: Donald Sutton/Marc Brondyke
  Title:   Senior Relationship Banker/Associate


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:   Bank of America, N.A.
  by   /s/ Allison M. Bruneau
    Name: Allison M. Bruneau
    Title:   Vice President
For Lenders requiring a second signature:
 
  by    
    Name:
    Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:   BNP Paribas
  by   /s/ Simone Vinocour
    Name: Simone Vinocour
    Title:   Director
For Lenders requiring a second signature:
 
  by   /s/ Angela Arnold
    Name: Angela Arnold
    Title:   Director


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:   Citibank, N.A.
  by   /s/ Marc Merlino
    Name: Marc Merlino
    Title:   Vice President
For Lenders requiring a second signature:
 
  by    
    Name:
    Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Bayerische Hypo- and Vereinsbank AG
     by   /s/ Heike Wagner
       Name: Heike Wagner
       Title:   Vice President
For Lenders requiring a second signature:
 
     by   /s/ Jens
       Name: Jens
       Title:   VP


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Bank Austria Creditanstalt AG
     by   /s/ Pavel Brezina
       Name: Pavel Brezina
       Title:   Managing Director
For Lenders requiring a second signature:
 
     by   /s/ Evelyne Wininger
       Name: Evelyne Wininger
       Title:   Senior Manager


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Societè Generale
     by   /s/ Maria Iarriccio
       Name:Maria Iarriccio
       Title:   Vice President
For Lenders requiring a second signature:
 
     by    
       Name:
       Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Mizuho Corporate Bank, Ltd.
     by   /s/ Kevin Andrews
       Name: Kevin Andrews
       Title:   Director
For Lenders requiring a second signature:
 
     by    
       Name:
       Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Credit Lyonnais
     by   /s/ Eric Perrot Audet
       Name: Eric Perrot Audet
       Title:   Managing Director
For Lenders requiring a second signature:
 
     by    
       Name:
       Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Bank of Tokyo–Mitsubishi UFJ Trust Company
     by   /s/ Spencer Hughes
       Name: Spencer Hughes
       Title:   Vice President
For Lenders requiring a second signature:
 
     by    
       Name:
       Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Natixis
     by   /s/ Pieter van Tulder
       Name: Pieter van Tulder
       Title:   Managing Director
For Lenders requiring a second signature:
 
     by   /s/ Nicolas Regent
       Name: Nicolas Regent
       Title:   Director


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Lloyds TSB Bank plc
     by   /s/ Andrew J. Roberts
       Name: Andrew J. Roberts
       Title:   Director
For Lenders requiring a second signature:
 
     by   /s/ Windsor R. Davies
       Name: Windsor R. Davies
       Title:   Managing Director


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      U.S. Bank, N.A.
     by   /s/ Bonnie S. Wiskowski
       Name: Bonnie S. Wiskowski
       Title:   Officer
For Lenders requiring a second signature:
 
     by    
       Name:
       Title:


SIGNATURE PAGE TO THE
WABCO HOLDINGS INC.
FIVE-YEAR CREDIT AGREEMENT
LENDER:      Intesa Sanpaolo Spa
     by   /s/ Frank Maffei
       Name: Frank Maffei
       Title:   Vice President
For Lenders requiring a second signature:
 
     by   /s/ Francesco Di Mario
       Name: Francesco Di Mario
       Title:   First Vice President


Wabco Holdings Inc.

Five-Year Credit Agreement

Schedule 1.01: Approved Issuing Bank Affiliates

None


Wabco Holdings Inc.

Five-Year Credit Agreement

Schedule 2.01: Commitments

 

Lender

   Commitment

JPMorgan Chase Bank, N.A.

   $ 75,000,000

ABN AMRO Bank N.V.

   $ 75,000,000

Bank of America, N.A.

   $ 63,500,000

BNP Paribas

   $ 63,500,000

Citibank, N.A.

   $ 63,500,000

Bayerische Hypo- und Vereinsbank AG

   $ 47,625,000

Bank Austria Creditanstalt AG

   $ 15,875,000

Societe Generale

   $ 63,500,000

Mizuho Corporate Bank, Ltd.

   $ 52,500,000

Le Credit Lyonnais

   $ 52,500,000

The Bank of Tokyo-Mitsubishi UFJ Trust Company

   $ 52,500,000

Natixis

   $ 50,000,000

Lloyds TSB Bank plc

   $ 40,000,000

Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A

   $ 40,000,000

U.S. Bank National Association

   $ 25,000,000

Intesa Sanpaolo SpA

   $ 20,000,000

Total

   $ 800,000,000


SCHEDULE 2.05(j)

EXISTING LETTERS OF CREDIT

Nothing to disclose.


SCHEDULE 2.18

PAYMENT ACCOUNTS

US Tranche Borrowings and Swingline Loans Denominated in US Dollars

Bank Name JPMorgan Chase Bank N.A

Location New York NY

ABA Number [DELETED]

Account Number [DELETED]

Account Name WABCO Holdings Inc

Attn Loan Agency Services

Other Borrowings Denominated in Designated Foreign Currencies

To an account to be designated by the Applicable Agent


SCHEDULE 3.10

ENVIRONMENTAL MATTERS

Nothing to disclose.


SCHEDULE 6.01

EXISTING LIENS

Nothing to disclose.


SCHEDULE 6.02

EXISTING SUBSIDIARY INDEBTEDNESS

A) Indebtedness of American Standard Financial Services BVBA under the Five-Year Credit Agreement, dated as of May 31, 2007, among ASCI, American Standard Inc., American Standard International Inc., the Borrowing Subsidiaries party thereto (including American Standard Financial Services BVBA), the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, to be repaid on or about the Effective Date through initial Loans under this Agreement.

B) Intercompany Indebtedness of WABCO (China) Co Ltd. of up to $20,000,000 (which prior to the Effective Date will be replaced by third party indebtedness).

C) Other Indebtedness as follows:

 

SUBSIDIARIES

   CURRENCY    AMOUNT 1
l.c. (000)
   DEBT
USD (000)

SANWAB EBS Inc

   JPY    350,059    2,965

WABCO ESPAÑA SL

   Euro    121    161

Shangdong Weiming Automotive Products Co. Ltd

   USD    2,051    2,051

 

1

All amounts as of March 31, 2007.


EXHIBIT A

[FORM OF]

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor (as defined below) and the Assignee (as defined below). Capitalized terms used in this Assignment and Assumption and not otherwise defined herein have the meanings specified in the Five-Year Credit Agreement dated as of May 31, 2007, among WABCO Holdings Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J.P. Morgan Europe Limited, as London Agent, ABN AMRO Bank, N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the facility identified below (including any Letters of Credit or Swingline Loans included in such facility) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

  1. Assignor (the “ Assignor ”):

 

  2. Assignee (the “ Assignee ”):

Assignee is an Affiliate of: [Name of Lender]


  3. Borrowers:

 

  4. Administrative Agent:

 

  5. Assigned Interest:

 

     Aggregate Amount
of
Commitment/Loans
of all Lenders
   Amount of
Commitment/Loans
Assigned
   Percentage
Assigned of
Commitment/
Loans 1
 

Commitment

   $                 $                      %

Revolving Loans

   $                 $                      %

Effective Date:              , 200[ ] [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR].

 

 

1 Set forth, to at least 8 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

2


The terms set forth in this Assignment and Assumption are hereby agreed to:

 

[NAME OF ASSIGNOR], as Assignor,
by  

 

Name:  
Title:  
[NAME OF ASSIGNEE], as Assignee,
by  

 

Name:  
Title:  

 

3


[Consented to and] 2 Accepted:

JPMORGAN CHASE BANK, N.A.

as Administrative Agent,

by  

 

Name:  
Title:  
[Consented to:
[                    ], as Issuing Bank,
by  

 

Name:  
Title:  
[                    ], as Swingline Lender,
by  

 

Name:  
Title:] 3  

 

2 No consent of the Administrative Agent shall be required for an assignment to a Lender.
3 No consent of the Issuing Bank or Swingline Lender shall be required for an assignment to a Lender.

 

4


[WABCO HOLDINGS INC., as Borrower Agent],
by  

 

Name:  
Title:] 4  

 

4 No consent of the Company shall be required for an assignment to a Lender, an Affiliate of a Lender or, if an Event of Default under clause (g) or (h) of Article VII of the Credit Agreement has occurred and is continuing, any other assignee.

 

5


Annex 1

FIVE-YEAR CREDIT AGREEMENT 5

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, (iii) the financial condition of Holdings, the Company, ASH, the Borrowing Subsidiaries, or any of their Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or (iv) the performance or observance by Holdings, the Company, ASH, the Borrowing Subsidiaries, or any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.05 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 Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on any Agent or any other Lender, and (v) if it is a Foreign Lender, attached to this Assignment and Assumption is any documentation

 

5 Capitalized terms used in this Assignment and Assumption and not otherwise defined herein have the meanings specified in the Five-Year Credit Agreement dated as of May 31, 2007, among WABCO Holdings Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J.P. Morgan Europe Limited, as London Agent, ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).


required to be delivered by it pursuant to Section 2.17(e) of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Assignor, any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, and (ii)it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Applicable Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be construed in accordance with and governed by the law of the State of New York.

 

2


EXHIBIT B-l

[FORM OF]

BORROWING SUBSIDIARY AGREEMENT dated as of [                    ], among WABCO HOLDINGS INC., a Delaware corporation, (the “Company”), [Name of Borrowing Subsidiary], a [                                        ]

corporation (the “New Borrowing Subsidiary”), and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”).

Reference is made to the Five-Year Credit Agreement dated as of May 31, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among WABCO Holdings Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J. P. Morgan Europe Limited, as London Agent, ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

Under the Credit Agreement, the Lenders have agreed, upon the terms and subject to the conditions therein set forth, to make Loans to the Borrowing Subsidiaries. The Borrower Agent and the New Borrowing Subsidiary desire that the New Borrowing Subsidiary become a Borrowing Subsidiary under the Credit Agreement. The Borrower Agent and the New Borrowing Subsidiary represent that the New Borrowing Subsidiary is a Subsidiary organized under the laws of [                    ]. The Borrower Agent represents that the representations and warranties of the Company in the Credit Agreement (other than the representations and warranties contained in Sections 3.05, 3.06 and 3.12(b)) are true and correct in all material respects on and as of the date hereof after giving effect to this Agreement. The Borrower Agent agrees that its Guarantee contained in the Credit Agreement will apply to the Obligations of the New Borrowing Subsidiary. Upon execution of this Agreement by each of the Borrower Agent, the New Borrowing Subsidiary and the Administrative Agent, the New Borrowing Subsidiary shall be a party to the Credit Agreement and shall constitute a “Borrowing Subsidiary ” for all purposes thereof, and the New Borrowing Subsidiary hereby agrees to be bound by all provisions of the Credit Agreement.

THIS AGREEMENT SHALL BE GOVERNED BY AND

CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized officers as of the date first appearing above.

 

WABCO HOLDINGS INC., as Borrower Agent,


  By  

 

  Name:  
  Title:  
[NAME OF NEW BORROWING SUBSIDIARY],
  By  

 

  Name:  
  Title:  
JPMORGAN CHASE BANK, N.A., as Administrative Agent,
  By  

 

  Name:  
  Title:  


EXHIBIT B-2

[FORM OF]

BORROWING SUBSIDIARY TERMINATION

JPMorgan Chase Bank, N.A.,

as Administrative Agent

for the Lenders referred to below

c/o JPMorgan Chase Bank, N.A.,

as Administrative Agent

270 Park Avenue

New York, NY 10017

[Date]

Ladies and Gentlemen:

The undersigned, WABCO Holdings Inc. (the “ Company ”), refers to the Five-Year Credit Agreement dated as of May 31, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”), among WABCO Holdings Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J.P. Morgan Europe Limited, as London Agent, ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

The Borrower Agent hereby terminates the status of [            ] (the “ Terminated Borrowing Subsidiary ”) as Borrowing Subsidiary under the Credit Agreement. The Borrower Agent represents and warrants that no Loans made to, or Letters of Credit issued for the account of, the Terminated Borrowing Subsidiary are outstanding as of the date hereof and that all amounts payable by the Terminated Borrowing Subsidiary in respect of interest and/or fees or in respect of Letters of Credit (and, to the extent notified by the Administrative Agent or any Lender, any other amounts payable under the Credit Agreement) pursuant to the Credit Agreement have been paid in full on or prior to the date hereof.

 

Very truly yours,
WABCO HOLDINGS INC., BORROWER AGENT,
by    
Name:  
Title:  


EXHIBIT C

RESERVE COSTS

Reference is made to the Five-Year Credit Agreement dated as of May 31, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among WABCO Holdings Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J. P. Morgan Europe Limited, as London Agent, ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents. Capitalized terms used but not defined herein shall have the meanings specified in the Credit Agreement.

 

1. Definitions

In this Exhibit:

“Act ” means the Bank of England Act of 1998.

The terms “Eligible Liabilities ” and “Special Deposits ” have the meanings ascribed to them under or pursuant to the Act or by the Bank of England (as may be appropriate), on the day of the application of the formula.

“Fee Base ” has the meaning ascribed to it for the purposes of, and shall be calculated in accordance with, the Fees Regulations.

“Fees Regulations ” means, as appropriate, either:

 

  (a) the Banking Supervision (Fees) Regulations 1998; or

 

  (b) such regulations as from time to time may be in force, relating to the payment of fees for banking supervision in respect of periods subsequent to January 1,2000.

“FSA ” means the Financial Services Authority.

Any reference to a provision of any statute, directive, order or regulation herein is a reference to that provision as amended or re-enacted from time to time.

 

2. Calculation of the Mandatory Costs Rate

The Mandatory Costs Rate is an addition to the interest rate on each Eurocurrency Loan or any other sum on which interest is to be calculated to compensate the Lenders for the cost attributable to Eurocurrency Loan or such sum resulting from the imposition from time to time under or pursuant to the Act and/or by the Bank of England and/or the FSA (or other United Kingdom governmental authorities or agencies) of a requirement to place non-interest bearing or Special Deposits (whether interest bearing or not) with the Bank of England and/or pay fees to the FSA calculated by reference to the liabilities used to fund the relevant Eurocurrency Loan or such sum.


The “Mandatory Costs Rate ” will be the rate determined by the Administrative Agent to be equal to the rate (rounded upward, if necessary, to the next higher  1 / 16 of 1%) resulting from the application of the following formula:

For Sterling:

 

XL + S(L-D) + Fx0.01
            100-(X+S)

For other Foreign Currencies:

 

F x 0.01
  300

where on the day of application of the formula

 

X    is the percentage of Eligible Liabilities (in excess of any stated minimum) by reference to which JPMorgan Chase Bank, N.A. (“ JPMCB ”) is required under or pursuant to the Act to maintain cash ratio deposits with the Bank of England;
L    is the rate of interest (exclusive of Euro-Currency Margin and Mandatory Costs Rate) payable on that day on the related Eurocurrency Loan or unpaid sum pursuant to this Agreement;
F    is the rate of charge payable by JPMCB to the FSA pursuant to the Fees Regulations and expressed in pounds per £1 million of the Fees Base of JPMCB;
S    is the level of interest-bearing Special Deposits, expressed as a percentage of Eligible Liabilities, which JPMCB is required to maintain by the Bank of England (or other United Kingdom governmental authorities or agencies); and
D    is the percentage rate per annum payable by the Bank of England to JPMCB on Special Deposits.

(X, L, S and D are to be expressed in the formula as numbers and not as percentages. A negative result obtained from subtracting D from L shall be counted as zero.)

The Mandatory Costs Rate attributable to a Eurocurrency Loan or other sum for any period shall be calculated at or about 11:00 A.M. (London time) on the first day of such period for the duration of such period.


The determination of Mandatory Costs Rate by the Administrative Agent in relation to any period shall, in the absence of manifest error, be conclusive and binding on all parties hereto.

 

3. Change of Requirements

If there is any change in circumstance (including the imposition of alternative or additional requirements) which in the reasonable opinion of the Administrative Agent renders or will render the above formula (or any element thereof, or any defined term used therein) inappropriate or inapplicable, the Administrative Agent shall (with the written consent of the Borrower Agent, which shall not be unreasonably withheld) be entitled to vary the same. Any such variation shall, in the absence of manifest error, be conclusive and binding on all parties and shall apply from the date specified in such notice.


EXHIBIT D-1

[FORM OF]

OPINION OF MARY ELIZABETH GUSTAFSSON, COUNSEL


July 31, 2007

JPMorgan Chase Bank, N.A.

as Administrative Agent

270 Park Avenue

New York, New York 10017

and

The Lenders

party to the Credit Agreement described below

Ladies and Gentlemen:

Reference is made to the Five-Year Credit Agreement, dated as of May 31, 2007 (the “Credit Agreement”), among WABCO Holdings Inc., a Delaware corporation (“Holdings”), WABCO Group Inc., a Delaware corporation (“WGI”), WABCO Group International Inc., a Delaware corporation (“WGII,” and together with Holdings and WGI, collectively the “Domestic Credit Parties”), the other Borrowing Subsidiaries from time to time party thereto, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender; J.P. Morgan Europe Limited, as London Agent, ABN AMRO N.V., as Syndication Agent; and Bank of America, N.A., BNP Paribas and Citibank, N.A., as Documentation Agents.

I am counsel of the Domestic Credit Parties and have acted as such in connection with the Credit Agreement, and in such capacity I am familiar with the Credit Agreement. Capitalized terms used herein without other definition are used as defined in, or by reference in, the Credit Agreement.

I have also examined and relied upon the representations and warranties as to factual matters contained in and made pursuant to the Credit Agreement and have examined and relied upon the originals or copies certified, or otherwise identified to my satisfaction, of such records, documents, certificates and other instruments, and have made such other investigations, as in my judgment are necessary or appropriate to enable me to render the opinion expressed below.

Subject to and based upon the foregoing, I am of the opinion that:

1. Conflicts, etc . Neither the execution or delivery by any Domestic Credit Party of the Credit Agreement, nor its performance of its obligations thereunder or its compliance with any of the terms and provisions thereof, nor the consummation of the transactions contemplated


therein, will (a) to the best of my knowledge violate any of the provisions of any applicable order, judgment or decree of any court, arbitrator or governmental authority of the United States of America, of any state or of any governmental or regulatory body of any thereof, the consequences of which contravention would have a Material Adverse Effect, or (b) to the best of my knowledge violate any of the provisions of, or constitute a default under, or result in the creation of any Lien upon any of its assets pursuant to the terms of (i) any material indenture, material mortgage or other instrument relating to indebtedness for money borrowed to which it is a party or (ii) any other material contract to which it is a party.

2. Litigation . To the best of my knowledge, except as disclosed in Form 10 filed by Holdings with the Securities and Exchange Commission on February 26, 2007 and any amendments thereto, there is no action, suit, proceeding or governmental investigation or arbitration, whether at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality in the United States of America, pending or threatened in writing against any Domestic Credit Party or any assets of any Domestic Credit Party which is reasonably likely to result in a Material Adverse Effect. To the best of my knowledge, there does not exist any judgment, order seeking injunctive relief or other restraint pending with respect to the performance by any Domestic Credit Party of its obligations under the Credit Agreement or the making of the Loans by the Lenders.

In rendering the foregoing opinion, I have, with your approval, relied as to certain matters on information obtained from public officials, officers of the Credit Parties and their Subsidiaries and other sources believed by me to be responsible, and I have assumed, without independent verification, that the signatures on all documents examined by me are genuine.

This opinion is being delivered to you and each of the Lenders and their permitted assigns pursuant to Section 4.01(b)(i) of the Credit Agreement and may not be relied upon by any other person or entity or by you or any of the parties to which this opinion is addressed for any purpose other than in connection with the transactions contemplated by the Credit Agreement.

I am a member of the Bar of the State of New York and I express no opinion as to the laws of any jurisdiction other than the Federal laws of the United States of America and the laws of the State of New York.

 

Very truly yours,
Mary Elizabeth Gustafson

 

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EXHIBIT D-2

[FORM OF]

OPINION OF MCDERMOTT WILL & EMERY LLP

COUNSEL FOR THE BORROWERS


Boston Brussels Chicago Düsseldorf London Los Angeles Miami Munich

New York Orange County Rome San Diego Silicon Valley Washington, D.C.

Strategic alliance with MWE China Law Offices (Shanghai)

July 31, 2007

JPMorgan Chase Bank, N.A.

as Administrative Agent

270 Park Avenue

New York, New York 10017

and

The Lenders

party to the Credit Agreement described below

Re: WABCO HOLDINGS INC .

Five-Year Credit Agreement

Ladies and Gentlemen:

We have acted as special New York counsel to WABCO Holdings Inc., a Delaware corporation (“Holdings”), WABCO Group Inc., a Delaware corporation (“WGI”), and WABCO Group International Inc., a Delaware corporation (“WGII”, and together with Holdings and WGI, the “Domestic Credit Parties”), in connection with the Five-Year Credit Agreement (the “Credit Agreement”) dated as of May 31, 2007, among the Domestic Credit Parties; the other Borrowing Subsidiaries from time to time party thereto; certain financial institutions (the “Lenders”); JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender; J.P. Morgan Europe Limited, as London Agent; ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank, N.A., as Documentation Agents.

In that connection, we have examined originals or copies certified or otherwise identified to our satisfaction of the Credit Agreement and such other documents, including the documents listed in Annex I, as we have deemed necessary for purposes of this opinion. As to questions of fact relating to the Credit Parties material to this opinion, we have relied upon certificates of public officials and statements, representations (including the representations in the Credit Agreement) and certificates of officers and other representatives of the Credit Parties without independent investigation into the matters covered thereby.

We have assumed, with your permission, for purposes of this opinion that:

(i) each of the parties to the Credit Agreement (other than the Domestic Credit Parties) has been duly organized and is validly existing under the laws of the jurisdiction of its organization and has the power and authority to execute, deliver and perform its obligations under the Credit Agreement;


(ii) the Credit Agreement has been duly authorized, executed and delivered by all the parties thereto (other than the Domestic Credit Parties);

(iii) the Credit Agreement constitutes the legal, valid and binding obligation of each party thereto (other than the Credit Parties), enforceable against such parties (other than the Credit Parties) in accordance with its terms;

(iv) the execution, delivery and performance by each Credit Party of any of its obligations under the Credit Agreement does not and will not conflict with, contravene, violate or constitute a default under (A) any lease, indenture, instrument or other agreement to which such Credit Party or its property is subject, (B) any rule, law or regulation to which such Credit Party is subject (other than the laws, rules or regulations as to which we express our opinion in paragraph 6 herein) or (C) any judicial or administrative order or decree of any governmental authority;

(v) the parties to the Credit Agreement have not entered into any agreements of which we are unaware which modify the terms of the Credit Agreement and have not otherwise expressly or by implication waived, or agreed to any modification of the Credit Agreement; and

(vi) the date hereof is the Effective Date (as defined in the Credit Agreement).

We understand that you will obtain separate legal advice or opinions as to the foregoing.

We wish to advise you that we do not represent the Credit Parties on a regular basis; rather, our engagements have been limited to specific matters as to which we have been consulted by the Credit Parties and, accordingly, there may be facts and instruments and agreements of which we are not aware, and contracts that we have not reviewed, the knowledge of which might cause us to alter the statements made in such opinions.

Based on the foregoing assumptions and subject to the limitations, qualifications and exceptions herein set forth, we are of the opinion that:

1. Each of the Domestic Credit Parties is a validly existing corporation in good standing under the laws of the state of Delaware.

2. Each of the Domestic Credit Parties has the corporate power and corporate authority to execute and deliver, and has taken all necessary action to authorize the execution and delivery of the Credit Agreement and to perform its obligations thereunder. Each Domestic Credit Party has duly executed and delivered the Credit Agreement.

3. Neither the execution or delivery by any Domestic Credit Party of the Credit Agreement, nor its performance of its obligations thereunder or its compliance with any of the terms and provisions thereof, nor the consummation of the transactions contemplated therein, will violate any provision of its Organizational Documents (as defined in Annex I).

 

-2-


4. The Credit Agreement constitutes a valid and binding obligation of each Credit Party that is party thereto, enforceable against such Credit Party in accordance with its terms.

5. No consent of, or other action by, and no notice to or filing with any Delaware state, New York state or U.S. Federal court or other Delaware state, New York state or U.S. Federal government authority is required in connection with the execution and delivery by any Credit Party of the Credit Agreement or the performance of such Credit Party’s payment obligations thereunder, except for those notices, filings and consents required under the Credit Agreement which have been performed or obtained.

6. The execution, delivery and performance of the Credit Agreement by the Credit Parties do not violate (a) Regulations U and X of the Board of Governors of the Federal Reserve System or (b) the Delaware General Corporation Law or any law, rule or regulation commonly applicable to transactions of this type of the United States or the State of New York, except in the case of clause (b) to the extent that such contravention could not reasonably be expected to have a Material Adverse Effect (as defined in the Credit Agreement).

7. To the best of our knowledge, none of the Credit Parties (as defined in the Credit Agreement) is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

The foregoing opinions are subject to the following qualifications:

(A) Our opinions are subject to the effects of applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally from time to time in effect, and to 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.

(B) Insofar as provisions contained in the Credit Agreement provides for indemnification, the enforceability thereof may be limited by public policy considerations.

(C) The availability of a decree for specific performance or an injunction is subject to the discretion of the court requested to issue any such decree or injunction.

(D) We express no opinion as to the effect, if any, of any law of any jurisdiction (other than the State of New York) in which any Lender or Credit Party is located or where enforcement of the Credit Agreement may be sought that limits the rate of interest that such Lender may charge or collect.

 

-3-


(E) We express no opinion as to the enforceability of Section 10.08 of the Credit Agreement insofar as it relates to setoffs in respect of participations purchased in Loans.

(F) We express no opinion as to Section 10.09 of the Credit Agreement insofar as such Section relates to the subject matter jurisdiction of the courts of the State of New York or of the United States of America for the Southern District of New York to adjudicate any controversy related to the Credit Agreement or provides for the waiver of an inconvenient forum.

(G) We advise you that New York state courts or U.S. Federal courts applying New York law may deny or limit the enforceability of clauses or provisions that purport to require that provisions thereof be waived only in writing, to the extent that an oral agreement or an implied agreement by trade practice or course of conduct have been created modifying any provisions of such documents.

(H) We express no opinion as to the right of the Administrative Agent to collect any payment to the extent that such payment constitutes a penalty, forfeiture or similar charge.

(I) We express no opinion as to the effect on the opinions herein stated of (a) the compliance or non-compliance of any party to the Credit Agreement (other than the Credit Parties) with any Federal, state, or other laws or regulations applicable to them, or (b) the legal or regulatory status or the nature of the business of such parties.

We further note that (a) a New York statute provides that with respect to a foreign currency obligation, a court at the State of New York shall render a judgment or decree in such foreign currency and such judgment or decree shall be converted into currency of the United States at the rate of exchange prevailing on the date of entry of such judgment or decree and (b) with respect to a foreign currency obligation, a United States Federal court in New York may award judgment in Dollars, and we express no opinion as to the rate of exchange such court would apply.

We are admitted to practice only in the State of New York, and we express no opinion as to matters governed by any laws other than the Delaware General Corporation Law, the laws of the State of New York and the Federal laws of the United States of America.

This opinion is rendered only to you and your permitted transferees under the Credit Agreement, and is solely for your and their benefit. This opinion may not be relied upon by any other person or entity or for any other purpose or used, circulated, quoted or otherwise referred to for any other purpose, in each case without our prior written consent.

 

-4-


This opinion speaks only as of its date, and we do not assume any obligation to provide you with any subsequent opinion or advice by reason of any fact about which we did not have actual knowledge at that time, by reason of any change subsequent to that time in any law, other governmental requirement or interpretation thereof covered by any of our opinions or advice, or for any other reason.

 

Very truly yours,


ANNEX I

Corporate Documents

(a) with respect to each Domestic Credit Party, a certificate of the Secretary of State of Delaware, certifying as to the certificate of incorporation, as amended, of such Domestic Credit Party (collectively, the “Charters”);

(b) with respect to each Domestic Credit Party, a certificate of the [Assistant] Secretary of such Credit Party certifying as to (i) the Charters, (ii) the by-laws, as amended, of such Domestic Credit Party (collectively, together with the Charters, the “Organizational Documents”), (iii) resolutions adopted on March 22, 2007 (or May 29, 2007 in the case of WGI and WGII) by the Board of Directors of such Domestic Credit Party, and (iv) the incumbency and specimen signatures of certain officers; and

(c) with respect to each Domestic Credit Party, a certificate of the Secretary of State of Delaware, dated a recent date, attesting to the continued existence and good standing of such Domestic Credit Party in such state.


EXHIBIT E

[FORM OF]

WABCO HOLDINGS INC.

FINANCIAL OFFICER’S COMPLIANCE CERTIFICATE

Reference is made to the Five-Year Credit Agreement dated as of May 31, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among WABCO Holdings Inc. (the “Company”), the Lenders from time to time party thereto, JPMorgan Chase Bank, N. A., as Administrative Agent, Issuing Bank and Swingline Lender, J. P. Morgan Europe Limited, as London Agent, ABN AMRO Bank N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents (capitalized terms used herein have the meanings attributed thereto in the Credit Agreement unless otherwise defined herein). Pursuant to Section 5.05 of the Credit Agreement, the undersigned, in his/her capacity as a Financial Officer of the Company, certifies as follows:

 

  1. [Attached hereto as Exhibit [A] is a true and complete copy of the Company’s audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of December 31, 200[  ], setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.]

 

  2. [Attached hereto as Exhibit [B] is a true and complete copy of Company’s consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for the immediately preceding fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year. These present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.]

 

  3. Except as otherwise disclosed to the Administrative Agent in writing pursuant to the Credit Agreement, at no time during the period between [    ] and [    ] (the “Certificate Period”) did a Default or an Event of Default exist. (If unable to provide the foregoing certification, fully describe the reasons therefor and circumstances thereof and any action taken or proposed to be taken with respect thereto on Schedule A attached hereto.)


  4. The following represent true and accurate calculations, as of the last day of the Certificate Period, to be used to determine whether the Company is in compliance with the covenants set forth in Sections 6.01, 6.02, 6.05 and 6.06 of the Credit Agreement:

 

(i)    Consolidated Net Indebtedness to Consolidated EBITDA ratio.
   Consolidated Net Indebtedness=    [        ]  
   Consolidated EBITDA=    [        ]  
   Actual Ratio=    [        ] to 1.0  
   Required Ratio=    [        ] to 1.0  
(ii)    Consolidated EBITDA to Consolidated Net Interest Expense ratio.
   Consolidated EBITDA=    [        ]  
   Consolidated Net Interest Expense=    [        ]  
   Actual Ratio=    [        ] to 1.0  
   Required Ratio=    [        ] to 1.0  
(iii)    Consolidated Net Tangible Assets.  
   net aggregate assets =    [        ]  
less        
   net current liabilities =    [        ]  
   goodwill and other allowed intangibles =    [        ]  
   Total=    [        ]  

 

  5. Except as otherwise disclosed to the Administrative Agent in writing pursuant to the Credit Agreement, at no time since the date of the audited financial statements referred to in Section 3.04 of the Credit Agreement has there been a change in GAAP or in the application thereof. (If unable to provide the foregoing certification, fully describe the effect of such change on the financial statements accompanying such certificate on Schedule A attached hereto.)


IN WITNESS WHEREOF, the undersigned, in his/her capacity as a Financial Officer, has executed this certificate for and on behalf of the Company and has caused this certificate to be delivered this      day of [            ].

 

WABCO HOLDINGS INC.,
by  

 

Name:  
Title:   Financial Officer


EXHIBIT F

[FORM OF]

PROMISSORY NOTE

New York, New York

[Date]

For value received, [NAME OF BORROWER], a [            ] corporation (the “Borrower”), promises to pay to the order of [name of Lender] (the “Lender”) (i) the unpaid principal amount of each Loan made by the Lender to the Borrower under the Credit Agreement referred to below, when and as due and payable under the terms of the Credit Agreement, and (ii) interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in the currencies and to the accounts specified in the Credit Agreement, in immediately available funds.

All Loans made by the Lender, and all repayments of the principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding shall be endorsed by the Lender on the schedule attached hereto, or on a continuation of such schedule attached hereto and made a part hereof; provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement.

This note is one of the promissory notes issued pursuant to the Five-Year Credit Agreement dated as of May 31, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among WABCO Holdings Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank and Swingline Lender, J. P. Morgan Europe Limited, as London Agent, ABN AMRO Bank, N.V., as Syndication Agent, and Bank of America, N.A., BNP Paribas and Citibank N.A., as Documentation Agents. Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the mandatory and optional prepayment hereof and the acceleration of the maturity hereof.

 

[NAME OF BORROWER],
by  

 

Name:  
Title:  


SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

 

Date   Amount
of

Loan
  Amount
of
Principal
Repaid
  Unpaid
Principal
Balance
  Notations
Made By

Exhibit 10.3

EUR 100,000,000

FACILITY AGREEMENT

dated 7 March 2008

between

WABCO FINANCIAL SERVICES BVBA

as Borrower

WABCO EUROPE BVBA

and

WABCO HOLDING INC.

as Guarantors

and

PANDIOS COMM.V.A.

as Lender

and

RABOBANK INTERNATIONAL, ANTWERP BRANCH

as Calculation Agent

LOGO

Ref: DBA

Linklaters LLP

Brederodestraat 13

1000 Brussels


CONTENTS

 

CLAUSE

   PAGE
1.   Definitions and interpretation    2
2.   The Facility    10
3.   Purpose    10
4.   Conditions of Utilisation    10
5.   Utilisation    11
6.   Repayment    12
7.   Prepayment and cancellation    12
8.   Interest    14
9.   Interest Periods    16
10.   Changes to the calculation of interest    16
11.   Commitment Fee    17
12.   Tax gross-up and indemnities    18
13.   Increased costs    21
14.   Other indemnities    21
15.   Mitigation by the Lender    22
16.   Costs and expenses    22
17.   Guarantee    24
18.   Representations    27
19.   Information undertakings    29
20.   Financial covenants    31
21.   General undertakings    31
22.   Events of Default    33
23.   Changes to the Lenders    36
24.   Changes to the Obligors    37
25.   Conduct of business by the lender    38
26.   Indemnity    38
27.   Payment mechanics    39
28.   Set-off    40
29.   Notices    40
30.   Calculations and certificates    40
31.   Partial invalidity    41
32.   Remedies and waivers    41
33.   Amendments, waivers and termination of Wabco Revolving Credit Facility    41
34.   Counterparts    42
35.   Confidentiality    42
36.   Governing law    43
37.   Enforcement    43
SCHEDULE 1 Conditions Precedent    44
SCHEDULE 2 Utilisation Request    46
SCHEDULE 3 Wabco Revolving Credit Facility    47

 

- 1 -


THIS AGREEMENT is dated 7 March 2008 and made between:

 

(1) WABCO FINANCIAL SERVICES BVBA, a company organised under the laws of Belgium having its registered office at Waversesteenweg 1789, 1160 Oudergem, Belgium, with registration number 0881.425.934, as borrower (the “ Borrower ”);

 

(2) WABCO EUROPE BVBA, a company organised under the laws of Belgium having its registered office at Waversesteenweg 1789, 1160 Oudergem, Belgium, with registration number 0475.956.135, as guarantor (the “ Company ”);

 

(3) WABCO HOLDINGS INC. a corporation organised under the laws of Delaware, having its registered office at Orange Street Wilmington, United States of America, with IRS number 208481962, as guarantor (“ Wabco Holdings ”, and together with the Company, the “ Guarantors ”);

 

(4) PANDIOS COMM.V.A., a company organised under the laws of Belgium having its registered office at Uitbreidingstraat 86 box 3, 2600 Antwerp (Berchem), with registration number 0883.079.189, an indirectly wholly-owned subsidiary of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (trading as Rabobank International), as lender (the “ Lender ”); and

 

(5) COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. (TRADING AS RABOBANK INTERNATIONAL), ANTWERP BRANCH, as calculation agent (the “ Calculation Agent ”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Definitions

In this Agreement:

Affiliate ” means, in relation to any person, a Subsidiary of that person or a holding company of that person or any other Subsidiary of that holding company.

Anti-Terrorism Laws ” means the Executive Order, the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.), the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956 et seq.), the USA Patriot Act, the International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq.) the Trading with the Enemy Act (50 U.S.C. App. §§ 1 et seq.), any other law or regulation administered by OFAC, and any similar law enacted in the United States after the date of this Agreement.

Availability Period ” means the period from and including the date of this Agreement to and including the date which is 3 months after the date of this Agreement or such date as may otherwise be agreed between the Lender and the Borrower.

Available Commitment ” means the Commitment minus the amount of any Loan that is outstanding or due to be made on or before the proposed Utilisation Date.

 

- 2 -


Authorisation ” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

Break Costs ” means the amount (if any) by which:

 

  (a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

 

  (b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the European interbank market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

Business Day ” means a day (other than a Saturday or Sunday) on which banks are open for general business in Brussels, with this understanding that in case the date concerned will be a Saturday or a Sunday, then this will be the first following day that is a Business Day unless the first following Business Day is in the next calendar month, in which case that date will be the first preceding day that is a Business Day.

Commitment ” means EUR 100,000,000, in relation to any other Lender, the amount in euros of any Commitment assigned to it under this Agreement, to the extent not cancelled, reduced or assigned by it under this Agreement.

Compliance Certificate ” means a certificate delivered in accordance with Clause 19.2 ( Compliance Certificate ).

Default ” means an Event of Default or any event or circumstance specified in Clause 22 ( Events of Default ) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

Designated Person ” means a person or entity:

 

  (a) listed in the annex to, or otherwise subject to the provisions of, the Executive Order;

 

  (b) named as a “Specially Designated National and Blocked Person” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list; or

 

  (c) with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law.

Disruption Event ” means either or both of:

 

  (a) a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

- 3 -


  (b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

 

  (i) from performing its payment obligations under the Finance Documents; or

 

  (ii) from communicating with other Parties in accordance with the terms of the Finance Documents,

and wh