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cit Mar200410Q Document Transcript

  • 1. 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, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-31369 CIT Group Inc. (Exact name of Registrant as specified in its charter) Delaware 65-1051192 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 1 CIT Drive, Livingston, New Jersey, 07039 (Address of Registrant's principal executive offices) (973) 740-5000 (Registrant's telephone number) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Securities Exchange Act of 1934. Yes X No ___ As of April 30, 2004, there were 211,725,186 shares of the Registrant's common stock outstanding. © 2004. EDGAR Online, Inc.
  • 2. CIT GROUP INC. AND SUBSIDIARIES TABLE OF CONTENTS Page ---- Part I--Financial Information: Item 1. Consolidated Financial Statements .............................. 1 Consolidated Balance Sheets (Unaudited)......................... 1 Consolidated Statements of Income (Unaudited)................... 2 Consolidated Statements of Stockholders' Equity (Unaudited)..... 3 Consolidated Statements of Cash Flows (Unaudited)............... 4 Notes to Consolidated Financial Statements...................... 5-18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosure about Market Risk.................................. 19-46 Item 4. Controls and Procedures......................................... 47 Part II--Other Information: Item 1. Legal Proceedings............................................... 48 Item 2. Common Stock Repurchase Activity................................ 48 Item 6. Exhibits and Reports on Form 8-K................................ 49 Signatures...................................................... 50 i © 2004. EDGAR Online, Inc.
  • 3. PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements CIT GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ($ in millions -- except share data) March 31, December 31, 2004 2003 --------- ------------ ASSETS Financing and leasing assets: Finance receivables........................................................ $32,187.4 $31,300.2 Reserve for credit losses.................................................. (636.7) (643.7) --------- --------- Net finance receivables.................................................... 31,550.7 30,656.5 Operating lease equipment, net............................................. 7,576.2 7,615.5 Finance receivables held for sale.......................................... 1,006.2 918.3 Cash and cash equivalents..................................................... 1,356.5 1,973.7 Retained interest in securitizations.......................................... 1,364.6 1,380.8 Goodwill and intangible assets................................................ 485.5 487.7 Other assets.................................................................. 2,912.7 3,310.3 --------- --------- Total Assets.................................................................. $46,252.4 $46,342.8 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Debt: Commercial paper........................................................... $ 4,820.2 $ 4,173.9 Variable-rate senior notes................................................. 9,170.7 9,408.4 Fixed-rate senior notes.................................................... 19,829.8 19,830.8 Preferred capital securities............................................... 255.1 255.5 --------- --------- Total debt.................................................................... 34,075.8 33,668.6 Credit balances of factoring clients.......................................... 3,619.4 3,894.6 Accrued liabilities and payables.............................................. 3,025.9 3,346.4 --------- --------- Total Liabilities.......................................................... 40,721.1 40,909.6 --------- --------- Commitments and Contingencies (Note 10) Minority interest............................................................. 38.6 39.0 Stockholders' Equity: Preferred stock: $0.01 par value, 100,000,000 authorized, none issued...... -- -- Common stock: $0.01 par value, 600,000,000 authorized, 211,849,987 issued, 211,832,465 outstanding.............................. 2.1 2.1 Paid-in capital, net of deferred compensation of $52.8 and $30.6........... 10,668.2 10,677.0 Accumulated deficit........................................................ (4,980.5) (5,141.8) Accumulated other comprehensive loss....................................... (196.4) (141.6) Less: Treasury stock, 17,522 and 43,529 shares, at cost.................... (0.7) (1.5) --------- --------- Total Stockholders' Equity................................................. 5,492.7 5,394.2 --------- --------- Total Liabilities and Stockholders' Equity................................. $46,252.4 $46,342.8 ========= ========= See Notes to Consolidated Financial Statements. 1 © 2004. EDGAR Online, Inc.
  • 4. CIT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ($ in millions-- except per share data) For the Quarters Ended March 31, -------------------------------- 2004 2003 -------- -------- Finance income................................................................ $ 902.9 $ 939.2 Interest expense.............................................................. 298.0 354.7 -------- -------- Net finance income............................................................ 604.9 584.5 Depreciation on operating lease equipment..................................... 234.5 278.8 -------- -------- Net finance margin............................................................ 370.4 305.7 Provision for credit losses................................................... 85.6 103.0 -------- -------- Net finance margin after provision for credit losses.......................... 284.8 202.7 Other revenue................................................................. 230.4 239.9 Gain (loss) on venture capital investments.................................... 0.7 (4.4) -------- -------- Operating margin.............................................................. 515.9 438.2 Salaries and general operating expenses....................................... 247.3 225.6 Gain on redemption of debt.................................................... 41.8 -- -------- -------- Income before provision for income taxes...................................... 310.4 212.6 Provision for income taxes.................................................... (121.1) (82.9) Dividends on preferred capital securities, after tax.......................... -- (2.7) -------- -------- Net income.................................................................... $ 189.3 $ 127.0 ======== ======== Earnings per share Basic earnings per share...................................................... $ 0.89 $ 0.60 ======== ======== Diluted earnings per share.................................................... $ 0.88 $ 0.60 ======== ======== Number of shares - basic (thousands).......................................... 211,839 211,573 ======== ======== Number of shares - diluted (thousands)........................................ 215,809 211,899 ======== ======== Dividends per common share.................................................... $ 0.13 $ 0.12 ======== ======== See Notes to Consolidated Financial Statements. 2 © 2004. EDGAR Online, Inc.
  • 5. CIT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) ($ in millions) Accumulated Total Total Common Paid-in Treasury (Deficit)/ Comprehensive Stockholders' Stock Capital Stock Earnings (Loss)/Income Equity ------ --------- -------- ----------- ------------- ------------- Balance December 31, 2003......... $ 2.1 $10,677.0 $ (1.5) $(5,141.8) $(141.6) $5,394.2 Net income........................ -- -- -- 189.3 -- 189.3 Foreign currency translation adjustments..................... -- -- -- -- 1.4 1.4 Change in fair values of derivatives qualifying as cash flow hedges................ -- -- -- -- (61.6) (61.6) Unrealized gains on equity and securitization investments, net................ -- -- -- -- 5.4 5.4 -------- Total comprehensive income........ -- -- -- -- -- 134.5 -------- Cash dividends.................... -- -- -- (28.0) -- (28.0) Restricted common stock grants.................... -- 6.6 -- -- -- 6.6 Treasury stock purchased, at cost......................... -- -- (37.1) -- -- (37.1) Exercise of stock option awards................... -- (15.4) 37.9 -- -- 22.5 ----- --------- ------ --------- ------- -------- Balance March 31, 2004............ $ 2.1 $10,668.2 $ (0.7) $(4,980.5) $(196.4) $5,492.7 ===== ========= ====== ========= ======= ======== See Notes to Consolidated Financial Statements. 3 © 2004. EDGAR Online, Inc.
  • 6. CIT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ($ in millions) For the Quarters Ended March 31, -------------------------- 2004 2003 ---------- ---------- Cash Flows From Operations Net income.................................................................... $ 189.3 $ 127.0 Adjustments to reconcile net income to net cash flows from operations: Depreciation and amortization.............................................. 248.2 288.8 Provision for credit losses................................................ 85.6 103.0 Provision for deferred federal income taxes................................ 95.4 74.7 Gains on equipment, receivable and investment sales........................ (62.5) (60.7) Gain on debt redemption.................................................... (41.8) -- Decrease (increase) in other assets........................................ 303.1 (116.7) (Decrease) increase in accrued liabilities and payables.................... (346.6) 61.1 Other...................................................................... (26.0) 21.5 ---------- ---------- Net cash flows provided by operations......................................... 444.7 498.7 ---------- ---------- Cash Flows From Investing Activities Loans extended................................................................ (12,699.8) (12,341.1) Collections on loans.......................................................... 10,829.8 10,233.4 Proceeds from asset and receivable sales...................................... 1,731.9 1,699.2 Purchases of finance receivable portfolios.................................... (595.1) (360.8) Net decrease in short-term factoring receivables.............................. (400.8) (182.7) Purchases of assets to be leased.............................................. (268.7) (333.4) Other ...................................................................... (1.1) (41.4) ---------- ---------- Net cash flows (used for) investing activities................................ (1,403.8) (1,326.8) ---------- ---------- Cash Flows From Financing Activities Repayments of variable and fixed-rate notes................................... (3,011.5) (2,997.8) Proceeds from the issuance of variable and fixed-rate notes................... 2,804.2 4,352.4 © 2004. EDGAR Online, Inc.
  • 7. Net decrease in commercial paper.............................................. 646.3 (484.1) Net repayments of non-recourse leveraged lease debt........................... (61.1) (28.2) Cash dividends paid........................................................... (28.0) (25.4) Other ...................................................................... (8.0) -- ---------- ---------- Net cash flows provided by financing activities............................... 341.9 816.9 ---------- ---------- Net (decrease) in cash and cash equivalents................................... (617.2) (11.2) Cash and cash equivalents, beginning of period................................ 1,973.7 2,036.6 ---------- ---------- Cash and cash equivalents, end of period...................................... $ 1,356.5 $ 2,025.4 ========== ========== Supplementary Cash Flow Disclosure Interest paid................................................................. $ 287.5 $ 331.2 Federal, foreign, state and local income taxes paid, net...................... $ 24.7 $ 18.9 See Notes to Consolidated Financial Statements. 4 © 2004. EDGAR Online, Inc.
  • 8. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 -- Summary of Significant Accounting Policies CIT Group Inc., a Delaware corporation (quot;we,quot; quot;CITquot; or the quot;Companyquot;), is a global commercial and consumer finance company that was founded in 1908. CIT provides financing and leasing capital for companies in a wide variety of industries, offering vendor, equipment, commercial, factoring, consumer, and structured financing products. CIT operates primarily in North America, with locations in Europe, Latin America, Australia and the Asia-Pacific region. These financial statements, which have been prepared in accordance with the instructions to Form 10-Q, do not include all of the information and note disclosures required by accounting principles generally accepted in the United States (quot;GAAPquot;) and should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Financial statements in this Form 10-Q have not been examined by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of CIT's financial position and results of operations. Certain prior period amounts have been reclassified to conform to the current presentation. In accordance with the provisions of FASB Interpretation No. 46R (quot;FIN 46quot;), quot;Consolidation of Variable Interest Entities,quot; CIT consolidates variable interest entities for which management has concluded that CIT is the primary beneficiary. Entities that do not meet the definition of a variable interest entity are subject to the provisions of Accounting Research Bulletin No. 51 (quot;ARB 51quot;), quot;Consolidated Financial Statementsquot; and are consolidated when management has determined that it has the controlling financial interest. Entities which do not meet the consolidation criteria in either FIN 46 or ARB 51 but which are significantly influenced by the Company, generally those entities that are twenty to fifty percent owned by CIT, are included in other assets at cost for securities not readily marketable and presented at the corresponding share of equity plus loans and advances. Investments in entities which management does not have significant influence are included in other assets at cost, less declines in value that are other than temporary. In accordance with Statement of Financial Accounting Standards (quot;SFASquot;) No. 140, quot;Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilitiesquot;, qualifying special purpose entities utilized in securitizations are not consolidated. Inter-company transactions have been eliminated. Stock Based Compensation CIT has elected to apply Accounting Principles Board Opinion 25 (quot;APB 25quot;) rather than the optional provisions of SFAS No. 123 quot;Accounting for Stock-Based Compensationquot; (quot;SFAS 123quot;), as amended by SFAS No. 148, quot;Accounting for Stock-Based Compensation -- Transition and Disclosurequot; in accounting for its stock-based compensation plans. Under APB 25, CIT does not recognize compensation expense on the issuance of its stock options because the option terms are fixed and the exercise price equals the market price of the underlying stock on the grant date. The following table presents the pro forma information required by SFAS 123 as if CIT had accounted for stock options granted under the fair value method of SFAS 123, as amended ($ in millions, except per share data): For the Quarters Ended March 31, -------------------------------- 2004 2003 ------ ------ Net income as reported.......................................................... $189.3 $127.0 Stock-based compensation expense-- fair value method, after tax................. 5.1 6.7 ------ ------ Pro forma net income............................................................ $184.2 $120.3 ====== ====== Basic earnings per share as reported............................................ $ 0.89 $ 0.60 ====== ====== Basic earnings per share pro forma.............................................. $ 0.87 $ 0.57 ====== ====== Diluted earnings per share as reported.......................................... $ 0.88 $ 0.60 ====== ====== Diluted earnings per share pro forma............................................ $ 0.85 $ 0.57 ====== ====== 5 © 2004. EDGAR Online, Inc.
  • 9. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) For the quarters ended March 31, 2004 and 2003, net income includes $4.0 million and $0.5 million of after-tax compensation cost related to restricted stock awards. Recent Accounting Pronouncements In March 2004, the SEC issued Staff Accounting Bulletin 105 quot;Application of Accounting Principles to Loan Commitmentsquot; (quot;SAB 105quot;). SAB 105 requires that certain mortgage loan commitments issued after March 31, 2004 be accounted for as derivatives until the loan is made or they expire unexercised. Management does not expect the adoption of SAB 105 to have a material financial statement impact. In January 2004, the FASB issued FASB Staff Position No. FAS 106-1, quot;Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003quot; (FSP 106-1). FSP 106-1 permits employers that sponsor postretirement benefit plans providing prescription drug benefits to retirees to make a one-time election to defer accounting for any effects of the Medicare Prescription Drug Improvement and Modernization Act of 2003. CIT has elected to defer the related accounting pending further guidance from the FASB. In December 2003, the FASB revised SFAS No. 132 quot;Employers' Disclosures about Pensions and Other Postretirement Benefits.quot; This revision requires interim disclosures regarding certain components of net periodic pension costs and the employer's contribution paid, or expected to be paid during the current fiscal year, if significantly different from amounts previously disclosed for interim periods beginning after December 15, 2003. The additional required disclosures are included in Note 9 -- Post Retirement and Other Benefit Plans. In December 2003, the SEC issued Staff Accounting Bulletin 104 quot;Revenue Recognitionquot; (quot;SAB 104quot;), which revises or rescinds portions of related interpretive guidance in order to be consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The adoption of SAB 104 as of January 1, 2004 did not have a material financial statement impact. In May 2003, the FASB issued SFAS No. 150, quot;Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.quot; This pronouncement establishes standards for classifying and measuring certain financial instruments as a liability (or an asset in some circumstances). This pronouncement requires CIT to display the Preferred Capital Securities (previously described as quot;Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Companyquot;) within the debt section on the face of the Consolidated Balance Sheets and show the related expense with interest expense on a pre-tax basis. There was no impact to net income upon adoption. This pronouncement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Prior period restatement is not permitted. On November 7, 2003, certain measurement and classification provisions of SFAS 150, relating to certain mandatorily redeemable non-controlling interests, were deferred indefinitely. The adoption of these delayed provisions, which relate primarily to minority interests associated with finite-lived entities, is not expected to have a significant impact on the financial position or results of operations. Note 2 -- Earnings Per Share Basic earnings per share (quot;EPSquot;) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. The diluted EPS computation includes the potential impact of dilutive securities, including stock options and restricted stock grants. The dilutive effect of stock options is computed using the treasury stock method, which assumes the repurchase of common shares by CIT at the average market price for the period. Options that do not have a dilutive effect (because the exercise price is above the market price) are not included in the denominator and averaged approximately 16.1 million shares for the quarter ended March 31, 2004 and 17.3 million shares for the quarter ended March 31, 2003. 6 © 2004. EDGAR Online, Inc.
  • 10. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) The reconciliation of the numerator and denominator of basic EPS with that of diluted EPS is presented ($ in millions, except per share amounts, which are in whole dollars; weighted-average share balances in thousands): Quarter Ended March 31, 2004 Quarter Ended March 31, 2003 --------------------------------------- --------------------------------------- Income Shares Per Share Income Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- --------- ----------- ------------- --------- Basic EPS: Income available to common stockholders.................... $189.3 211,839 $ 0.89 $127.0 211,573 $0.60 Effect of Dilutive Securities: Restricted shares................. -- 540 -- -- 326 -- Stock options..................... -- 3,430 (0.01) -- -- -- ------ ------- ------ ------ ------- ----- Diluted EPS.......................... $189.3 215,809 $ 0.88 $127.0 211,899 $0.60 ====== ======= ====== ====== ======= ===== Note 3 -- Business Segment Information The selected financial information by business segment presented below is based upon a fixed leverage ratio across business units and the allocation of most corporate expenses. Corporate and Other includes operating losses on venture capital investments, although those assets are included within Structured Finance, which manages the assets ($ in millions). Total Specialty Commercial Equipment Capital Structured Business Corporate Finance Finance Finance Finance Finance Segments and Other Consolidated --------- ---------- --------- ------- ---------- -------- --------- ------------ At and for the quarter ended March 31, 2004 Operating margin ........... $ 228.1 $ 142.3 $ 47.3 $ 48.3 $ 26.5 $ 492.5 $23.4 $ 515.9 Income taxes ............... 44.7 37.5 9.8 9.8 6.8 108.6 12.5 121.1 Net income ................. 78.2 60.6 15.2 19.0 10.1 183.1 6.2 189.3 Total financing and leasing assets .......... 13,048.1 10,555.9 6,871.7 7,229.2 3,316.7 41,021.6 -- 41,021.6 Total managed assets ....... 19,062.6 10,555.9 9,924.2 7,229.2 3,316.7 50,088.6 -- 50,088.6 At and for the quarter ended March 31, 2003 Operating margin ........... $ 190.5 $ 129.9 $ 40.2 $ 28.9 $ 28.3 $ 417.8 $20.4 $ 438.2 Income taxes ............... 33.4 34.6 6.8 4.9 7.8 87.5 (4.6) 82.9 Net income (loss) .......... 52.2 54.1 10.7 7.7 12.2 136.9 (9.9) 127.0 Total financing and leasing assets .......... 11,925.8 8,682.7 6,928.2 6,196.7 3,359.9 37,093.3 -- 37,093.3 Total managed assets ....... 18,336.3 8,682.7 10,905.4 6,196.7 3,359.9 47,481.0 -- 47,481.0 7 © 2004. EDGAR Online, Inc.
  • 11. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) Note 4 -- Concentrations The following table summarizes the geographic and industry compositions (by obligor) of financing and leasing portfolio assets ($ in millions): March 31, 2004 December 31, 2003 -------------------- -------------------- Amount Percent Amount Percent --------- ------- --------- ------- Geographic North America: Northeast............................................... $ 8,166.6 19.9% $ 8,319.8 20.8% West.................................................... 7,870.8 19.2% 7,485.5 18.7% Midwest................................................. 6,271.5 15.3% 5,996.2 14.9% Southeast............................................... 5,782.7 14.1% 5,558.6 13.9% Southwest............................................... 4,643.1 11.3% 4,423.1 11.0% Canada.................................................. 2,009.6 4.9% 2,055.5 5.1% --------- ----- --------- ----- Total North America........................................ 34,744.3 84.7% 33,838.7 84.4% Foreign.................................................... 6,277.3 15.3% 6,245.2 15.6% --------- ----- --------- ----- Total................................................... $41,021.6 100.0% $40,083.9 100.0% ========= ===== ========= ===== March 31, 2004 December 31, 2003 -------------------- -------------------- Amount Percent Amount Percent --------- ------- --------- ------- Industry Manufacturing(1) (no industry greater than 2.9%)........... $ 7,416.7 18.1% $ 7,340.6 18.3% Retail(2).................................................. 5,700.7 13.9% 5,630.9 14.0% Commercial airlines (including regional airlines).......... 5,029.6 12.3% 5,039.3 12.6% Consumer based lending-- home mortgage..................... 3,465.1 8.4% 2,830.8 7.1% Transportation(3).......................................... 2,920.8 7.1% 2,934.9 7.3% Service industries......................................... 2,678.9 6.5% 2,608.3 6.5% Consumer based lending-- non-real estate(4)................ 1,856.9 4.5% 1,710.9 4.3% Construction equipment..................................... 1,471.3 3.6% 1,571.2 3.9% Wholesaling................................................ 1,431.8 3.5% 1,374.7 3.4% Communications(5).......................................... 1,317.7 3.2% 1,386.5 3.5% Automotive Services........................................ 1,212.7 3.0% 1,152.3 2.9% Other (no industry greater than 3.0%)(6)................... 6,519.4 15.9% 6,503.5 16.2% --------- ----- --------- ----- Total................................................... $41,021.6 100.0% $40,083.9 100.0% ========= ===== ========= ===== (1) Includes manufacturers of textiles and apparel, industrial machinery and equipment, electrical and electronic equipment and other industries. (2) Includes retailers of apparel (5.9%) and general merchandise (4.1%). (3) Includes rail, bus, over-the-road trucking industries and business aircraft. (4) Includes receivables from consumers for products in various industries such as manufactured housing, recreational vehicles, marine and computers and related equipment. (5) Includes $500.0 million and $556.3 million of equipment financed for the telecommunications industry at March 31, 2004 and December 31, 2003, respectively, but excludes telecommunications equipment financed for other industries. (6) Included in quot;Otherquot; above are financing and leasing assets in the energy, power and utilities sectors, which totaled $956.6 million, or 2.3% of total financing and leasing assets at March 31, 2004. This amount includes approximately $630.2 million in project financing and $269.0 million in rail cars on lease. 8 © 2004. EDGAR Online, Inc.
  • 12. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) Note 5 -- Retained Interests in Securitizations The following table details the components of retained interests in securitizations ($ in millions): March 31, December 31, 2004 2003 --------- ------------ Retained interests in commercial loans: Retained subordinated securities.......................................... $ 456.1 $ 536.6 Interest-only strips...................................................... 371.9 366.8 Cash reserve accounts..................................................... 303.3 226.3 -------- -------- Sub total................................................................. 1,131.3 1,129.7 -------- -------- Retained interests in consumer loans: Retained subordinated securities.......................................... 89.9 86.7 Interest-only strips...................................................... 49.9 58.9 Cash reserve accounts..................................................... 26.1 34.0 -------- -------- Sub total................................................................. 165.9 179.6 -------- -------- Aerospace equipment trust certificates....................................... 67.4 71.5 -------- -------- Total..................................................................... $1,364.6 $1,380.8 ======== ======== Note 6 -- Accumulated Other Comprehensive Loss The following table details the components of accumulated other comprehensive loss, net of tax ($ in millions): March 31, December 31, 2004 2003 --------- ------------ Foreign currency translation adjustments..................................... $(104.4) $(105.8) © 2004. EDGAR Online, Inc.
  • 13. Changes in fair values of derivatives qualifying as cash flow hedges......... (102.9) (41.3) Unrealized gain on equity and securitization investments..................... 11.7 6.3 Minimum pension liability adjustments........................................ (0.8) (0.8) ------- ------- Total accumulated other comprehensive loss................................ $(196.4) $(141.6) ======= ======= Note 7 -- Derivative Financial Instruments As part of managing exposure to interest rate, foreign currency, and, in limited instances, credit risk, CIT, as an end-user, enters into various derivative transactions, all of which are transacted in over-the-counter markets with other financial institutions acting as principal counter parties. Derivatives are utilized for hedging purposes only, and policy prohibits entering into derivative financial instruments for trading or speculative purposes. To ensure both appropriate use as a hedge and to achieve hedge accounting treatment, whenever possible, substantially all derivatives entered into are designated according to a hedge objective against a specific or forecasted liability or, in limited instances, assets. The notional amounts, rates, indices, and maturities of our derivatives closely match the related terms of the underlying hedged items. CIT utilizes interest rate swaps to exchange variable-rate interest underlying forecasted issuances of commercial paper, specific variable-rate debt instruments, and, in limited instances, variable-rate assets for fixed-rate amounts. These interest rate swaps are designated as cash flow hedges and changes in fair value of these swaps, to the extent they are effective as a hedge, are recorded in other comprehensive income. Ineffective amounts are recorded in interest expense. Interest rate swaps are also utilized to convert fixed-rate interest on specific debt instruments to variable-rate amounts. These interest rate swaps are designated as fair value hedges and changes in fair value of these swaps are recorded as basis adjustments to the underlying debt balance. 9 © 2004. EDGAR Online, Inc.
  • 14. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) The following table presents the notional principal amounts of interest rate swaps by class and the corresponding hedged liability position ($ in millions): Notional Amount ---------------------------------- March 31, 2004 December 31, 2003 -------------- ----------------- Effectively converts the interest rate on an equivalent amount of forecasted commercial paper Floating to fixed-rate swaps-- issuances, variable-rate notes and cash flow hedges..................... $2,585.5 $2,615.0 selected assets to a fixed rate. Effectively converts the interest rate on an equivalent amount of Fixed to floating-rate swaps-- fixed-rate notes and selected assets fair value hedges ................... 6,751.2 6,758.2 to a variable rate. -------- -------- Total interest rate swaps.............. $9,336.7 $9,373.2 ======== ======== In addition to the swaps in the table above, in conjunction with securitizations, CIT entered into $2.8 billion in notional amount of interest rate swaps with the related trusts to protect the trusts against interest rate risk. CIT is insulated from this risk by entering into offsetting swap transactions with third parties totaling $2.8 billion in notional amount at March 31, 2004. CIT utilizes foreign currency exchange forward contracts to hedge currency risk underlying foreign currency loans to subsidiaries and the net investments in foreign operations. These contracts are designated as foreign currency cash flow hedges or net investment hedges and changes in fair value of these contracts are recorded in other comprehensive income along with the translation gains and losses on the underlying hedged items. CIT also utilizes cross currency interest rate swaps to hedge currency risk underlying foreign currency debt. These swaps are designated as foreign currency cash flow hedges or foreign currency fair value hedges and changes in fair value of these contracts are recorded in other comprehensive income along with the translation gains and losses on the underlying hedged items. The components of the adjustment to Accumulated Other Comprehensive Loss for derivatives qualifying as cash flow hedges are presented in the following table ($ in millions). Fair Value Total Adjustments Income Tax Unrealized of Derivatives Effects Loss -------------- ---------- ---------- Balance at December 31, 2003-- unrealized loss..................... $ 64.6 $(23.3) $ 41.3 Changes in values of derivatives qualifying as cash flow hedges.... 101.0 (39.4) 61.6 ------ ------ ------ Balance at March 31, 2004-- unrealized loss........................ $165.6 $(62.7) $102.9 ====== ====== ====== The unrealized loss as of March 31, 2004, presented in the preceding table, primarily reflects our use of interest rate swaps to convert © 2004. EDGAR Online, Inc.
  • 15. variable-rate debt to fixed-rate debt, followed by lower market interest rates. For the quarter ended March 31, 2004, the ineffective portion of changes in the fair value of cash flow hedges amounted to $0.3 million and has been recorded as a decrease to interest expense. Assuming no change in interest rates, approximately $43.3 million, net of tax, of Accumulated Other Comprehensive Loss is expected to be reclassified to earnings over the next twelve months as contractual cash payments are made. The Accumulated Other Comprehensive Loss (along with the corresponding swap liability) will be adjusted as market interest rates change over the remaining life of the swaps. During the first quarter of 2004, CIT entered into credit default swaps, with a combined notional value of $35.0 million and terms of 5 years, to economically hedge certain credit exposures. These swaps do not meet the requirements for hedge accounting treatment and therefore are recorded at fair value, with both realized and unrealized gains or losses recorded in other revenue in the consolidated statement of income. The fair value adjustment as of March 31, 2004 was not significant. 10 © 2004. EDGAR Online, Inc.
  • 16. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) Note 8 -- Certain Relationships and Related Transactions CIT is a partner with Dell Inc. (quot;Dellquot;) in Dell Financial Services L.P. (quot;DFSquot;), a joint venture that offers financing to Dell customers. The joint venture provides Dell with financing and leasing capabilities that are complementary to its product offerings and provides CIT with a steady source of new financings. CIT acquired this relationship through an acquisition during November 1999, and the current agreement extends until October 2005. CIT regularly purchases finance receivables from DFS at a premium, portions of which are typically securitized within 90 days of purchase from DFS. CIT has limited recourse to DFS on defaulted contracts. In accordance with the joint venture agreement, net income generated by DFS as determined under GAAP is allocated 70% to Dell and 30% to CIT, after CIT has recovered any cumulative losses. The DFS board of directors voting representation is equally weighted between designees of CIT and Dell, with one independent director. Any losses generated by DFS as determined under GAAP are allocated to CIT. DFS is not consolidated in CIT's March 31, 2004 financial statements and is accounted for under the equity method. At March 31, 2004, financing and leasing assets related to the DFS program (included in the CIT Consolidated Balance Sheet) were $1.6 billion and securitized assets included in managed assets were $2.4 billion. In addition to the owned and securitized assets acquired from DFS, CIT's maximum exposure to loss with respect to activities of the joint venture is approximately $202 million pretax at March 31, 2004, which is comprised of the investment in and loans to the joint venture. CIT also has a joint venture arrangement with Snap-on Incorporated (quot;Snap-onquot;) that has a similar business purpose and model to the DFS arrangement described above, including credit recourse on defaulted receivables. CIT acquired this relationship through an acquisition during November 1999. The agreement with Snap-on extends until January 2007. CIT and Snap-on have 50% ownership interests, 50% board of directors representation and share income and losses equally. The Snap-on joint venture is accounted for under the equity method and is not consolidated in CIT's financial statements. As of March 31, 2004, the related financing and leasing assets and securitized assets were $1.1 billion and $0.1 billion, respectively. In addition to the owned and securitized assets purchased from the Snap-on joint venture, CIT's maximum exposure to loss with respect to activities of the joint venture is approximately $21 million pretax at March 31, 2004, which is comprised of the investment in and loans to the joint venture. Since December 2000, CIT has been a joint venture partner with Canadian Imperial Bank of Commerce (quot;CIBCquot;) in an entity that is engaged in asset-based lending in Canada. Both CIT and CIBC have a 50% ownership interest in the joint venture and share income and losses equally. This entity is not consolidated in CIT's financial statements and is accounted for under the equity method. As of March 31, 2004, CIT's maximum exposure to loss with respect to activities of the joint venture is $142 million pretax, which is comprised of the investment in and loans to the joint venture. CIT invests in various trusts, partnerships, and limited liability corporations established in conjunction with structured financing transactions of equipment, power and infrastructure projects. CIT's interests in certain of these entities were acquired by CIT in November 1999, and others were subsequently entered into in the normal course of business. At March 31, 2004, other assets included $22 million of investments in non-consolidated entities relating to such transactions that are accounted for under the equity or cost methods. This investment is CIT's maximum exposure to loss with respect to these interests as of March 31, 2004. Certain shareholders of CIT provide investment management services in conjunction with employee benefit plans. These services are provided in the normal course of business. 11 © 2004. EDGAR Online, Inc.
  • 17. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) Note 9 -- Post retirement and Other Benefit Plans The following table discloses various components of pension expense ($ in millions). For the Quarters Ended March 31, -------------------------------- 2004 2003 ---- ---- Retirement Plans Service cost.................................. $ 4.5 $ 3.9 Interest cost................................. 3.9 3.6 Expected return on plan assets................ (4.1) (2.3) Amortization of net loss...................... 0.7 0.9 ----- ----- Net periodic benefit cost..................... $ 5.0 $ 6.1 ===== ===== Postretirement Plans Service cost.................................. $ 0.5 $ 0.4 Interest cost................................. 0.8 0.7 Amortization of net loss...................... 0.3 0.1 ----- ----- Net periodic benefit cost..................... $ 1.6 $ 1.2 ===== ===== Note 10 -- Commitments and Contingencies In the normal course of meeting the financing needs of its customers, CIT enters into various credit-related commitments, including standby letters of credit, which obligate CIT to pay the beneficiary of the letter of credit in the event that a CIT client to which the letter of credit was issued does not meet its related obligation to the beneficiary. These financial instruments generate fees and involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated balance sheets. To minimize potential credit risk, CIT generally requires collateral and other credit-related terms and conditions from the customer. At the time credit-related commitments are granted, the fair value of the underlying collateral and guarantees typically approximates or exceeds the contractual amount of the commitment. In the event a customer defaults on the underlying transaction, the maximum potential loss will generally be limited to the contractual amount outstanding less the value of all underlying collateral and guarantees. Guarantees are issued primarily in conjunction with CIT's factoring product, whereby CIT provides the client with credit protection for its trade receivables without actually purchasing the receivables. The trade terms are generally sixty days or less. In the event that the customer is unable to pay according to the contractual terms, then the receivables would be purchased. As of March 31, 2004, there were no outstanding liabilities relating to these credit-related commitments or guarantees, as amounts are generally billed and collected on a monthly basis. The accompanying table summarizes the contractual amounts of credit-related commitments ($ in millions). At December 31, At March 31, 2004 2003 ------------------------------------ ------------ Due to Expire --------------------- Within After Total Total One Year One Year Outstanding Outstanding -------- -------- ----------- ----------- © 2004. EDGAR Online, Inc.
  • 18. Financing and leasing assets............................ $1,428.8 $5,486.0 $6,914.8 $5,934.3 Letters of credit and acceptances: Standby letters of credit............................. 508.5 22.3 530.8 508.7 Other letters of credit............................... 627.2 72.8 700.0 694.0 Acceptances........................................... 11.2 -- 11.2 9.3 Guarantees.............................................. 97.5 12.4 109.9 133.2 Venture capital fund commitments........................ 3.4 113.7 117.1 124.2 12 © 2004. EDGAR Online, Inc.
  • 19. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) As of March 31, 2004, commitments to purchase commercial aircraft from both Airbus Industrie and The Boeing Company are detailed below ($ in millions). Calendar Year: Amount Number -------------- ------ ------ 2004............................................. $ 715.0 17 2005............................................. 918.0 18 2006............................................. 996.0 20 2007............................................. 260.0 5 -------- -- Total............................................ $2,889.0 60 ======== == The order amounts exclude CIT's options to purchase additional aircraft. Outstanding commitments to purchase equipment, other than the aircraft detailed above, totaled $206.7 million at March 31, 2004. CIT is party to a railcar sale-leaseback transaction under which it is obligated to pay a remaining total of $465.7 million, approximately $28 million per year through 2010 and declining thereafter through 2024, which is more than offset by CIT's re-lease of the assets, contingent on its ability to maintain railcar usage. In conjunction with this sale-leaseback transaction, CIT has guaranteed all obligations of the related consolidated lessee entity. CIT has guaranteed the public and private debt securities of a number of its wholly-owned, consolidated subsidiaries, including those disclosed in Note 14 -- Summarized Financial Information of Subsidiaries. In the normal course of business, various consolidated CIT subsidiaries have entered into other credit agreements and certain derivative transactions with financial institutions that are guaranteed by CIT. These transactions are generally used by CIT's subsidiaries outside of the U.S. to allow the local subsidiary to borrow funds in local currencies. In addition, CIT has guaranteed, on behalf of certain non-consolidated subsidiaries, $11.9 million of third party debt, which is not reflected in the consolidated balance sheet at March 31, 2004. Note 11 -- Legal Proceedings On April 10, 2003, a putative class action lawsuit, asserting claims under the Securities Act of 1933, was filed in the United States District Court for the Southern District of New York against CIT, its Chief Executive Officer and its Chief Financial Officer. The lawsuit contained allegations that the registration statement and prospectus prepared and filed in connection with CIT's 2002 IPO were materially false and misleading, principally with respect to the adequacy of CIT's telecommunications-related loan loss reserves at the time. The lawsuit purported to have been brought on behalf of all those who purchased CIT common stock in or traceable to the IPO, and sought, among other relief, unspecified damages or rescission for those alleged class members who still hold CIT stock and unspecified damages for other alleged class members. On June 25, 2003, by order of the United States District Court, the lawsuit was consolidated with five other substantially similar suits, all of which had been filed after April 10, 2003 and one of which named as defendants some of the underwriters in the IPO and certain former directors of CIT. Glickenhaus & Co., a privately held investment firm, has been named lead plaintiff in the consolidated action. On September 16, 2003, an amended and consolidated complaint was filed. That complaint contains substantially the same allegations as the original complaints. In addition to the foregoing, two similar suits were brought by certain shareholders on behalf of CIT against CIT and some of its present and former directors under Delaware corporate law. CIT believes that the allegations in each of these actions are without merit and that its disclosures were proper, complete and accurate. CIT intends to vigorously defend itself in these actions. In addition, there are various legal proceedings pending against CIT, which have arisen in the ordinary course of business. Management believes that the aggregate liabilities, if any, arising from such actions, including the class action suit above, will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of CIT. © 2004. EDGAR Online, Inc.
  • 20. 13 © 2004. EDGAR Online, Inc.
  • 21. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) Note 12 -- Severance and Facility Restructuring Reserves The following table summarizes purchase accounting liabilities (pre-tax) related to severance of employees and closing facilities that were recorded in connection with the acquisition of CIT by Tyco, as well as utilization during the current quarter ($ in millions): Severance Facilities -------------------- --------------------- Number of Number of Total Employees Reserve Facilities Reserve Reserves --------- ------- ---------- ------- -------- Balance December 31, 2003......................... 43 $ 2.3 12 $ 7.2 $ 9.5 Utilization....................................... (12) (0.8) (2) (4.2) (5.0) --- ----- -- ----- ----- Balance at March 31, 2004......................... 31 $ 1.5 10 $ 3.0 $ 4.5 == ===== == ===== ===== The reserves remaining at March 31, 2004 relate largely to the restructuring of the European operations. Severance reserves include amounts payable within the next year to individuals who chose to receive payments on a periodic basis. The facility reserves relate primarily to shortfalls in sublease transactions and will be utilized over the remaining lease terms, generally within 6 years. Note 13 -- Goodwill and Intangible Assets Goodwill and intangible assets totaled $485.5 million and $487.7 million at March 31, 2004 and December 31, 2003, respectively. The Company periodically reviews and evaluates its goodwill and other intangible assets for potential impairment. Effective October 1, 2001, the Company adopted SFAS No. 142, quot;Goodwill and Other Intangible Assetsquot; (quot;SFAS 142quot;), under which goodwill is no longer amortized but instead is assessed for impairment at least annually. As part of the adoption, the Company allocated its existing goodwill to each of its reporting units as of October 1, 2001. Under the transition provisions of SFAS 142, there was no goodwill impairment as of October 1, 2001. The most recent goodwill impairment analysis was performed during the fourth quarter of 2003, which indicated that the fair value of goodwill was in excess of the carrying value. There were no changes in the carrying values of goodwill during the quarter ended March 31, 2004. The following table summarizes the remaining goodwill balance by segment ($ in millions): Specialty Commercial Finance Finance Total --------- ---------- ----- Balance as of March 31, 2004............ $12.7 $370.4 $383.1 Other intangible assets, net, comprised primarily of acquired customer relationships, proprietary computer software and related transaction processes, totaled $102.4 million and $104.6 million, at March 31, 2004 and December 31, 2003, and are included in Goodwill and Intangible Assets in the Consolidated Balance Sheets. Other intangible assets are being amortized in relation to the related revenue streams over their respective lives that range from five to twenty years. Amortization expense totaled $2.2 million for the quarter ended March 31, 2004 versus $1.1 million for the quarter ended March 31, 2003. The projected amortization for the years ended December 31, 2004 through December 31, 2008 are: $9.1 million for 2004 and 2005; $8.0 million for 2006; and $4.7 million for 2007 and 2008. Note 14 -- Summarized Financial Information of Subsidiaries The following presents condensed consolidating financial information for CIT Holdings LLC and Capita Corporation (formerly AT&T Capital Corporation). CIT has guaranteed on a full and unconditional basis the existing debt securities that were registered under the Securities Act of 1933 and certain other indebtedness of these subsidiaries. CIT has not presented related financial statements or other © 2004. EDGAR Online, Inc.
  • 22. information for these subsidiaries on a stand-alone basis ($ in millions). 14 © 2004. EDGAR Online, Inc.
  • 23. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) CIT CONSOLIDATING CIT Capita Holdings Other BALANCE SHEETS Group Inc. Corporation LLC Subsidiaries Eliminations Total -------------- ---------- ----------- -------- ------------ ------------ ----- March 31, 2004 ASSETS Net finance receivables.............. $ 1,203.3 $3,523.0 $1,300.4 $25,524.0 $ -- $31,550.7 Operating lease equipment, net....... -- 586.9 117.4 6,871.9 -- 7,576.2 Finance receivables held for sale.... -- 74.6 77.0 854.6 -- 1,006.2 Cash and cash equivalents............ 633.2 472.6 256.3 (5.6) -- 1,356.5 Other assets......................... 7,648.8 310.4 349.5 1,946.8 (5,492.7) 4,762.8 ---------- -------- -------- --------- --------- --------- Total Assets...................... $ 9,485.3 $4,967.5 $2,100.6 $35,191.7 $(5,492.7) $46,252.4 ========== ======== ======== ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Debt................................. $ 31,879.4 $ 536.3 $1,433.4 $ 226.7 $ -- $34,075.8 Credit balances of factoring clients................. -- -- -- 3,619.4 -- 3,619.4 Accrued liabilities and payables..... (27,886.8) 3,829.2 (555.6) 27,639.1 -- 3,025.9 ---------- -------- -------- --------- --------- --------- Total Liabilities................. 3,992.6 4,365.5 877.8 31,485.2 -- 40,721.1 Minority interest.................... -- -- -- 38.6 -- 38.6 Total Stockholders' Equity........... 5,492.7 602.0 1,222.8 3,667.9 (5,492.7) 5,492.7 ---------- -------- -------- --------- --------- --------- Total Liabilities and Stockholders' Equity.............. $ 9,485.3 $4,967.5 $2,100.6 $35,191.7 $(5,492.7) $46,252.4 ========== ======== ======== ========= ========= ========= December 31, 2003 ASSETS Net finance receivables.............. $ 1,581.3 $3,755.4 $1,208.8 $24,111.0 $ -- $30,656.5 Operating lease equipment, net....... -- 580.3 146.4 6,888.8 -- 7,615.5 Finance receivables held for sale.... -- 80.0 163.8 674.5 -- 918.3 Cash and cash equivalents............ 1,479.9 410.6 227.5 (144.3) -- 1,973.7 Other assets......................... 8,308.2 198.1 174.1 1,892.6 (5,394.2) 5,178.8 ---------- -------- -------- --------- --------- --------- Total Assets...................... $ 11,369.4 $5,024.4 $1,920.6 $33,422.6 $(5,394.2) $46,342.8 ========== ======== ======== ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Debt................................. $ 30,656.7 $1,003.5 $1,407.7 $ 600.7 $ -- $33,668.6 Credit balances of factoring clients................. -- -- -- 3,894.6 -- 3,894.6 Accrued liabilities and payables..... (24,681.5) 3,412.0 (701.2) 25,317.1 -- 3,346.4 ---------- -------- -------- --------- --------- --------- Total Liabilities................. 5,975.2 4,415.5 706.5 29,812.4 -- 40,909.6 Minority interest.................... -- -- -- 39.0 -- 39.0 Total Stockholders' Equity........... 5,394.2 608.9 1,214.1 3,571.2 (5,394.2) 5,394.2 ---------- -------- -------- --------- --------- --------- Total Liabilities and Stockholders' Equity.............. $ 11,369.4 $5,024.4 $1,920.6 $33,422.6 $(5,394.2) $46,342.8 ========== ======== ======== ========= ========= ========= 15 © 2004. EDGAR Online, Inc.
  • 24. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) CIT CONSOLIDATING CIT Capita Holdings Other STATEMENTS OF INCOME Group Inc. Corporation LLC Subsidiaries Eliminations Total -------------------- ---------- ----------- -------- ------------ ------------ ----- Quarter Ended March 31, 2004 Finance income....................... $ 9.5 $184.4 $47.6 $661.4 $ -- $902.9 Interest expense..................... (22.9) 54.1 3.9 262.9 -- 298.0 ------ ------ ----- ------ ------- ------ Net finance income................... 32.4 130.3 43.7 398.5 -- 604.9 Depreciation on operating lease equipment................... -- 84.6 11.1 138.8 -- 234.5 ------ ------ ----- ------ ------- ------ Net finance margin................... 32.4 45.7 32.6 259.7 -- 370.4 Provision for credit losses.......... 4.2 10.7 2.6 68.1 -- 85.6 ------ ------ ----- ------ ------- ------ Net finance margin, after provision for credit losses................. 28.2 35.0 30.0 191.6 -- 284.8 Equity in net income of subsidiaries................... 155.6 -- -- -- (155.6) -- Other revenue........................ 0.6 31.3 32.6 165.9 -- 230.4 Gain on venture capital investments....................... -- -- -- 0.7 -- 0.7 ------ ------ ----- ------ ------- ------ Operating margin..................... 184.4 66.3 62.6 358.2 (155.6) 515.9 Operating expenses................... 18.6 36.7 23.2 168.8 -- 247.3 Gain on redemption of debt........... 41.8 -- -- -- -- 41.8 ------ ------ ----- ------ ------- ------ Income (loss) before provision for income taxes.................. 207.6 29.6 39.4 189.4 (155.6) 310.4 Provision for income taxes........... 18.3 11.5 15.4 75.9 -- 121.1 ------ ------ ----- ------ ------- ------ Net income (loss).................... $189.3 $ 18.1 $24.0 $113.5 $(155.6) $189.3 ====== ====== ===== ====== ======= ====== Quarter Ended March 31, 2003 Finance income....................... $ 29.7 $202.6 $48.5 $658.4 $ -- $939.2 Interest expense..................... (2.1) 88.9 (2.7) 270.6 -- 354.7 ------ ------ ----- ------ ------- ------ Net finance income................... 31.8 113.7 51.2 387.8 -- 584.5 Depreciation on operating lease equipment................... -- 98.2 20.1 160.5 -- 278.8 ------ ------ ----- ------ ------- ------ Net finance margin................... 31.8 15.5 31.1 227.3 -- 305.7 Provision for credit losses.......... 12.7 13.3 2.7 74.3 -- 103.0 ------ ------ ----- ------ ------- ------ Net finance margin, after provision for credit losses....... 19.1 2.2 28.4 153.0 -- 202.7 Equity in net income of subsidiaries...................... 107.7 -- -- -- (107.7) -- Other revenue........................ 0.6 34.0 21.1 184.2 -- 239.9 Loss on venture capital investments....................... -- -- -- (4.4) -- (4.4) ------ ------ ----- ------ ------- ------ Operating margin..................... 127.4 36.2 49.5 332.8 (107.7) 438.2 Operating expenses................... (1.9) 40.1 40.0 147.4 -- 225.6 ------ ------ ----- ------ ------- ------ Income (loss) before provision for income taxes...................... 129.3 (3.9) 9.5 185.4 (107.7) 212.6 Provision (benefit) for income taxes. 2.3 (1.5) 3.7 78.4 -- 82.9 Dividends on preferred capital securities, after tax............. -- -- -- (2.7) -- (2.7) ------ ------ ----- ------ ------- ------ Net income (loss).................... $127.0 $ (2.4) $ 5.8 $104.3 $(107.7) $127.0 ====== ====== ===== ====== ======= ====== 16 © 2004. EDGAR Online, Inc.
  • 25. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) CIT CONSOLIDATING STATEMENT CIT Capita Holdings Other OF CASH FLOWS Group Inc. Corporation LLC Subsidiaries Eliminations Total ----------------------- ---------- ----------- -------- ------------ ------------ ----- Quarter Ended March 31, 2004 Cash Flows From Operating Activities: Net cash flows provided by (used for) operations............. $ 65.0 $ (83.3) $(141.1) $ 604.1 $ -- $ 444.7 --------- ------- ------- --------- --------- --------- Cash Flows From Investing Activities: Net (increase) decrease in financing and leasing assets................ 374.0 154.4 18.1 (1,949.2) -- (1,402.7) Decrease in inter-company loans and investments................... (2,508.4) -- -- -- 2,508.4 Other................................ -- -- -- (1.1) -- (1.1) --------- ------- ------- --------- --------- --------- Net cash flows (used for) provided by investing activities........... (2,134.4) 154.4 18.1 (1,950.3) 2,508.4 (1,403.8) --------- ------- ------- --------- --------- --------- Cash Flows From Financing Activities: Net increase (decrease) in debt...... 1,222.7 (467.2) 25.7 (403.3) -- 377.9 Inter-company financing.............. -- 458.1 126.1 1,924.2 (2,508.4) -- Cash dividends paid.................. -- -- -- (28.0) -- (28.0) Other................................ -- -- -- (8.0) -- (8.0) --------- ------- ------- --------- --------- --------- Net cash flows provided by (used for) financing activities... 1,222.7 (9.1) 151.8 1,484.9 (2,508.4) 341.9 --------- ------- ------- --------- --------- --------- Net (decrease) increase in cash and cash equivalents.............. (846.7) 62.0 28.8 138.7 -- (617.2) Cash and cash equivalents, beginning of period............... 1,479.9 410.6 227.5 (144.3) -- 1,973.7 --------- ------- ------- --------- --------- --------- Cash and cash equivalents, end of period..................... $ 633.2 $ 472.6 $ 256.3 $ (5.6) $ -- $ 1,356.5 ========= ======= ======= ========= ========= ========= 17 © 2004. EDGAR Online, Inc.
  • 26. CIT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued) CIT CONSOLIDATING STATEMENT CIT Capita Holdings Other OF CASH FLOWS Group Inc. Corporation LLC Subsidiaries Eliminations Total ----------------------- ---------- ----------- -------- ------------ ------------ ----- Quarter Ended March 31, 2003 Cash Flows From Operating Activities: Net cash flows provided by (used for) operations.......... $ (534.5) $ 466.3 $ (77.4) $ 644.3 $ -- $ 498.7 -------- ------- ------- --------- ------- --------- Cash Flows From Investing Activities: Net decrease in financing and leasing assets.................... (2.2) (12.6) (42.1) (1,228.5) -- (1,285.4) Decrease in inter-company loans and investments................... (430.9) -- -- -- 430.9 -- Other................................ -- -- -- (41.4) -- (41.4) -------- ------- ------- --------- ------- --------- Net cash flows (used for) investing activities.............. (433.1) (12.6) (42.1) (1,269.9) 430.9 (1,326.8) -------- ------- ------- --------- ------- --------- Cash Flows From Financing Activities: Net increase (decrease) in debt...... 1,073.3 (16.4) (249.0) 34.4 -- 842.3 Inter-company financing.............. -- (379.9) 146.9 663.9 (430.9) -- Cash dividends paid.................. -- -- -- (25.4) -- (25.4) -------- ------- ------- --------- ------- --------- Net cash flows provided by (used for) financing activities... 1,073.3 (396.3) (102.1) 672.9 (430.9) 816.9 -------- ------- ------- --------- ------- --------- Net (decrease) increase in cash and cash equivalents.............. 105.7 57.4 (221.6) 47.3 -- (11.2) Cash and cash equivalents, beginning of period............... 1,310.9 231.1 293.7 200.9 -- 2,036.6 -------- ------- ------- --------- ------- --------- Cash and cash equivalents, end of period..................... $1,416.6 $ 288.5 $ 72.1 $ 248.2 $ -- $ 2,025.4 ======== ======= ======= ========= ======= ========= 18 © 2004. EDGAR Online, Inc.
  • 27. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosure about Market Risk The following discussion uses financial terms that we believe to be relevant to our business. A glossary of other key terms used in our business can be found following the quot;Introductionquot; section. Introduction CIT is a global commercial and consumer finance company that was founded in 1908. We provide financing and leasing capital for companies in a wide variety of industries, offering vendor, equipment, commercial, factoring, consumer, and structured financing products. Our primary sources of revenue are interest and rental income related to collateralized lending and equipment leasing. Finance receivables (loans and capital leases) and operating lease equipment (operating leases) are the two major asset types that generate this revenue. In the case of finance receivables (which are financial assets), the substantive risks and rewards of equipment and other collateralized asset ownership belong to the customer and we retain predominantly the borrower credit risk. With operating lease equipment, we retain the substantive risks and rewards of equipment ownership, including the right to take depreciation and the risk of damage or obsolescence. We fund our leasing and lending activity via the global capital markets, using commercial paper, unsecured term debt, and securitizations. We refer to the excess of our interest and rental income over our interest expense as quot;net finance margin.quot; This revenue is supplemented by other quot;non-spreadquot; sources of revenue such as syndication fees, gains from dispositions of equipment, factoring commissions, servicing of loans and other fees. We measure our overall level of profitability with the following metrics: o Net income as a percentage of average earning assets (AEA); o Net income per common share (EPS); and o Net income as a percentage of average tangible equity (ROTE). The keys to enhancing profitability in our business are as follows: Net Interest Margin -- Our ability to lend money at rates in excess of our cost of borrowing. We measure this with the following ratios: o Finance income as a percentage of AEA; and o Net finance income as a percentage of AEA. Funding and Market Rate Risk Management -- Our ability to access funding sources at competitive rates, which depends on maintaining high quality assets, strong capital ratios and high credit ratings. This profitability key is also a function of interest rate risk management, where the goal is to substantially insulate our interest margins and profits from movements in market interest rates and foreign currency exchange rates. We gauge our funding and interest rate risk management activities with various measurements, including the following: o Interest expense as a percentage of AEA; o Quality spread trends (our interest rate costs over comparable term U.S. Treasury rates); o Net finance margin as a percentage of AEA; and o Various interest sensitivity and liquidity measurements that are discussed in Risk Management. Credit Risk Management -- Our ability to evaluate the creditworthiness of our customers, both during the credit granting process and periodically after the advancement of funds, and to maintain high quality assets. We assess our credit risk management activities with the following measurements: o Delinquent assets as a percentage of finance receivables; o Non-performing assets as a percentage of finance receivables; and o Net charge-offs as a percentage of average finance receivables. © 2004. EDGAR Online, Inc.
  • 28. 19 © 2004. EDGAR Online, Inc.
  • 29. Expense Management -- Our ability to maintain efficient operating platforms and infrastructure in order to run our business at competitive cost levels. We track our efficiency with the following measurements: o Efficiency ratio, which is the ratio of salaries and general operating expenses to operating margin excluding the provision for credit losses; and o Operating expenses as a percentage of average managed assets (AMA). Equipment and Residual Risk Management -- Our ability to evaluate collateral risk in leasing and lending transactions and to remarket equipment at lease termination. We measure these activities with the following: o Operating lease margin as a percentage of average leased equipment; o Gains and losses on equipment sales; and o Equipment utilization/value of equipment off lease. Asset Generation and Growth -- Our ability to originate new business and build our earning assets in a focused and prudent manner. We measure our performance in these areas with the following: o Origination volumes; o Levels of financing and leasing assets and managed assets (including securitized finance receivables that we continue to manage); and o Levels of non-spread and other revenue. Capital Management -- Our ability to maintain a strong capital base and adequate credit loss reserve levels. We measure our performance in these areas with the following: o Debt to tangible equity ratio; o Tangible equity to managed assets ratio; and o Reserve for credit losses as a percentage of finance receivables, of delinquent assets, and of non-performing assets. Glossary of Key Terms Term Description ----- ---------- Average Earning Assets (AEA)........ quot;AEAquot; is the average during the reporting period of finance receivables, operating lease equipment, finance receivables held for sale and certain investments, less credit balances of factoring clients. The average is used for certain key profitability ratios, including return on AEA and margins as a percentage of AEA. Average Finance Receivables (AFR)... quot;AFRquot; is the average during the reporting period of finance receivables © 2004. EDGAR Online, Inc.
  • 30. and includes loans and finance leases. It excludes operating lease equipment. The average is used to measure the rate of charge-offs for the period. Average Managed Assets (AMA)........ quot;AMAquot; is the average earning assets plus the average of finance receivables previously securitized and still managed by us. The average is used to measure the rate of charge-offs on a managed basis for the period to monitor overall credit performance, and to monitor expense control. Derivative Contracts................ Derivatives are entered into to reduce interest rate or foreign currency risks and more recently to hedge credit risk. Derivative contracts used by CIT include interest rate swaps, cross currency swaps, foreign exchange forward contracts and credit default swaps. 20 © 2004. EDGAR Online, Inc.
  • 31. Term Description ----- ---------- Efficiency Ratio.................... The efficiency ratio measures the level of expenses in relation to revenue earned, and is calculated as the percentage of salaries and general operating expenses to operating margin, excluding the provision for credit losses. Finance Income...................... Finance income includes both interest income on finance receivables and rental income on operating leases. Financing and Leasing Assets........ Financing and leasing assets include loans, capital and finance leases, leveraged leases, operating leases, assets held for sale and certain investments. Leases -- capital and finance....... Lease designation describing financing structures whereby substantially all of the economic benefits and risks of ownership are passed to the lessee. Leases -- leveraged................. Similar to capital leases except a third party, long-term creditor is involved and provides debt financing. CIT is party to these lease types as creditor or as lessor, depending on the transaction. Leases -- tax-optimized leveraged... Tax-optimized leveraged leases where we are the lessor and have increased risk in comparison to other leveraged lease structures, as the creditor in © 2004. EDGAR Online, Inc.
  • 32. these structures has a priority recourse to the leased equipment. Leases -- operating................. Lease designation where CIT maintains ownership of the asset, collects rent payments, recognizes depreciation on the asset, and assumes the risks of ownership, including obsolescence. Non-GAAP Financial Measures......... Non-GAAP financial measures are balances that do not readily agree to balances disclosed in financial statements presented in accordance with accounting principles generally accepted in the U.S. These measures are disclosed to provide additional information and insight relative to historical operating results and financial position of the business. Non-performing Assets............... Non-performing assets include loans placed on non-accrual status, due to doubt of collectibility of principal and interest, and repossessed assets. Non-spread Revenue.................. Non-spread revenues include syndication fees, gains from dispositions of equipment, factoring commissions, loan servicing and other fees and are reported in Other Revenue. Quality Spreads..................... Interest costs we incur on borrowings in excess of comparable term U.S. Treasury rates measured in percentage terms. These incremental costs typically reflect our debt credit ratings. © 2004. EDGAR Online, Inc.
  • 33. Retained Interest................... The portion of the interest in assets sold in a securitization transaction that is retained by CIT. Residual Values..................... Residual values represent the estimated value of equipment at the end of the lease term. For operating leases, it is the value to which the asset is depreciated at the end of its useful economic life (i.e. quot;salvagequot; or quot;scrap valuequot;). Risk Adjusted Margin................ Net finance margin after provision for credit losses. 21 © 2004. EDGAR Online, Inc.
  • 34. Term Description ----- ---------- Special Purpose Entity (SPE)........ Distinct legal entities created for a specific purpose in order to isolate the risks and rewards of owning its assets and incurring its liabilities. SPEs are typically used in securitization transactions, joint venture relationships and certain structured leasing transactions. Tangible Equity..................... Tangible stockholders' equity excludes goodwill and other intangible assets, and certain other comprehensive income items and includes preferred capital securities. Tangible equity is utilized in leverage ratios and return ratios. Yield-related Fees.................. In certain transactions, in addition to interest income, yield-related fees are collected for the assumption of underwriting risk. Yield-related fees are reported in Finance Income and are recognized over the life of the lending transaction. Profitability and Key Business Trends Net income for the quarter ended March 31, 2004 included a $25.5 million after-tax gain recognized on the early redemption of debt. Aside from this item, our improved profitability reflected higher asset levels, lower charge-offs and lower borrowing costs. Our profitability measurements for the respective periods are presented in the table below: Quarters Ended March 31, © 2004. EDGAR Online, Inc.
  • 35. ------------------------ 2004 2003 ----- ----- Net income per diluted share(1).................. $0.88 $0.60 Net income as a percentage of AEA(1)............. 2.05% 1.47% Return on average tangible equity(1)............. 15.1% 11.0% (1) For the quarter ended March 31, 2004, net income per diluted share, net income as a percentage of AEA and return on tangible equity, excluding gain on redemption of debt, were $0.76, 1.78% and 13.1%, respectively. This quot;Management's Discussion and Analysis of Financial Condition and Results of Operationsquot; and quot;Quantitative and Qualitative Disclosure about Market Riskquot; contain certain non-GAAP financial measures. See quot;Non-GAAP Financial Measurementsquot; for additional information. The sections that follow analyze our results by financial statement caption and are referenced back to the profitability keys that are discussed in quot;Introduction.quot; The following table summarizes the impact of various items for the respective reporting periods that affect the comparability of our financial results under GAAP. We are presenting these items as a supplement to the GAAP results to facilitate the comparability of results between periods. As noted above, during the quarter ended March 31, 2004, we recognized a gain on the early redemption of debt. While this gain is significant, it does not represent income from our core business, and does not occur on a regular basis. Venture capital gains and losses relate to private equity investments that we are in the process of running off, through both the systematic liquidation of the private fund investments and the sale of the direct investment portfolio. For these reasons, we believe that this table, in addition to the GAAP results, aids in the analysis of comparing the results in our business over the periods presented ($ in millions): Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Net income (loss) GAAP basis..................... $189.3 $127.0 Charges (gains) included in net income/loss Gain on debt redemption........................ (25.5) -- Venture capital (gains) losses.................. (0.4) 2.7 ------ ------ Net Income-- before gains/losses............... $163.4 $129.7 ====== ====== 22 © 2004. EDGAR Online, Inc.
  • 36. Net Finance Margin An analysis of net finance margin is set forth below ($ in millions): Quarters Ended March 31, -------------------------- 2004 2003 --------- --------- Finance income.................................. $ 902.9 $ 939.2 Interest expense................................ 298.0 354.7 --------- --------- Net finance income............................ 604.9 584.5 Depreciation on operating lease equipment....... 234.5 278.8 --------- --------- Net finance margin............................ $ 370.4 $ 305.7 ========= ========= Average Earnings Asset (quot;AEAquot;).................. $36,865.1 $34,600.6 ========= ========= As a % of AEA: Finance income.................................. 9.80% 10.86% Interest expense................................ 3.23% 4.11% ---- ----- Net finance income............................ 6.57% 6.75% Depreciation on operating lease equipment....... 2.55% 3.22% ---- ----- Net finance margin.............................. 4.02% 3.53% ==== ===== Net finance margin improved by $64.7 million and 49 basis points (as a percentage of AEA) from the first quarter of 2003 due primarily to reduced borrowing costs. Year over year growth in financing and leasing assets was offset by lower finance income and operating lease rentals, which declined correspondingly with market interest rates. Lower operating lease rentals reduced finance income by $33.7 million or 37 basis points from the first quarter of 2003. Operating lease margin, while down modestly as a percentage of operating lease equipment, increased $10.6 million from 2003. See quot;Operating Leasesquot; for additional information regarding operating lease margin. The trend in net finance margin as a percentage of AEA, excluding the impact of operating lease rentals, reflects a greater decline in interest expense than in finance income yield, due to the narrowing (improvement) of our credit spreads, the refinancing of higher-cost debt and a reduced level of excess liquidity represented by a lower cash balance. The increase in AEA reflects growth in the latter part of 2003 and 2004. For the March 2004 quarter, we made a reporting change to reclassify debt commissions from general operating expense to interest expense to reflect all-in funding costs in margin. This change was also made in the historical comparative data and does not impact net income. As a result of this change, prior year interest expense was increased by approximately $8 million and was roughly 10 basis points higher than historically reported ratios. The following table summarizes the trend in our quality spreads in relation to 5-year U.S. Treasuries. Amounts are in basis points and represent the average spread or cost of funds over comparable term U.S. Treasury securities: Quarter Year Quarter Year Nine Months Ended Ended Ended Ended Ended March 31, December 31, December 31, September 30, September 30, © 2004. EDGAR Online, Inc.
  • 37. 2004 2003 2002 2002 2001 --------- ------------ ------------ ------------- ------------- Average spread over U.S. Treasuries...................... 78 138 302 313 147 As the table shows, our borrowing spreads have improved since the funding base disruption in the first half of 2002. 23 © 2004. EDGAR Online, Inc.
  • 38. Additional information regarding our borrowing costs is shown in the following table ($ in millions). Quarter Ended Quarter Ended March 31, 2004 March 31, 2003 --------------- --------------- Before Swaps Commercial paper, variable-rate senior notes and bank credit facilities................... $13,704.2 1.56% $12,704.5 1.94% Fixed-rate senior and subordinated notes....... 18,948.1 5.70% 19,695.7 6.32% --------- --------- Composite...................................... $32,652.3 3.96% $32,400.2 4.61% ========= ========= After Swaps Commercial paper, variable-rate senior notes and bank credit facilities................... $17,823.7 2.26% $14,751.9 2.80% Fixed-rate senior and subordinated notes....... 14,828.6 5.34% 17,648.3 6.10% --------- --------- Composite...................................... $32,652.3 3.66% $32,400.2 4.60% ========= ========= Operating Leases The table below summarizes operating lease margin, both in amount and as a percentage of average operating lease equipment ($ in millions): Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Rental income............................... $ 346.3 $ 380.0 Depreciation expense........................ 234.5 278.8 -------- -------- Operating lease margin.................... $ 111.8 $ 101.2 ======== ======== Average operating lease equipment........... $7,590.0 $6,712.6 ======== ======== As a % of Average Operating Lease Equipment: Rental income............................... 18.25% 22.65% Depreciation expense........................ 12.36% 16.62% -------- -------- Operating lease margin.................... 5.89% 6.03% ======== ======== © 2004. EDGAR Online, Inc.
  • 39. The decline in operating lease margin and its components for the above periods reflects lower rentals on the Capital Finance aerospace portfolio due to the commercial airline industry downturn and the change in equipment mix to a greater proportion of aircraft and rail assets with an average depreciable life of 25 and 40 years, respectively, compared to smaller-ticket assets with lives generally of 3 years in the Specialty Finance and Equipment Finance portfolios. Aerospace rentals have trended downward following September 11, 2001, but have recently shown some stability. The following table summarizes the total operating lease portfolio by segment ($ in millions). March 31, March 31, 2004 2003 --------- --------- Capital Finance -- Aerospace................. $3,991.6 $3,400.2 Capital Finance -- Rail and Other............ 2,150.5 1,572.8 Specialty Finance............................ 919.1 1,227.6 Equipment Finance............................ 385.6 527.4 Structured Finance........................... 129.4 103.4 -------- -------- Total........................................ $7,576.2 $6,831.4 ======== ======== o The increase in the Capital Finance aerospace portfolio reflects deliveries of new commercial aircraft. o The increase in the Capital Finance rail and other portfolio was due primarily to a second quarter 2003 rail acquisition. o The decline in the Specialty Finance and Equipment Finance operating lease portfolios are a result of the continued trend toward financing equipment through finance leases and loans in these segments. 24 © 2004. EDGAR Online, Inc.
  • 40. Maximizing equipment utilization levels is a prime component of operating lease portfolio profitability. Equipment not subject to lease agreements totaled $231.1 million and $265.9 million, at March 31, 2004 and December 31, 2003, respectively. The current weakness in the commercial airline industry could adversely impact prospective rental and utilization rates. Net Finance Margin after Provision for Credit Losses (Risk-adjusted Margin) The following table summarizes risk-adjusted margin, both in amount and as a percentage of AEA ($ in millions): Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Net finance margin............................. $370.4 $305.7 Provision for credit losses.................... 85.6 103.0 ------ ------ Risk-adjusted margin......................... $284.8 $202.7 ====== ====== As a percentage of AEA: Net finance margin............................. 4.02% 3.53% Provision for credit losses.................... 0.93% 1.19% ------ ------ Risk-adjusted margin......................... 3.09% 2.34% ====== ====== The improvement to 3.09% for the March 31, 2004 quarter primarily reflects the previously discussed improvement in net finance margin, as well as incremental benefit from a lower provision for charge-offs, which is discussed further in quot;Credit Metricsquot;. Discounts related to the liquidating portfolios, recorded under fresh start accounting in conjunction with the June 2001 acquisition by Tyco, are being accreted into income as the portfolios liquidate. These portfolios totaled $874 million and $923 million at March 31, 2004 and December 31, 2003. For the quarter ended March 31, 2004, this finance income accretion was 13 basis points (as a percentage of consolidated AEA) and was completely offset by liquidating portfolio charge-offs. For the quarter ended March 31, 2003 finance income accretion of 22 basis points was largely offset by 17 basis points in liquidating portfolio charge-offs. In addition, risk-adjusted interest margin was impacted positively due to fair value adjustments to mark receivables and debt to market in conjunction with the 2001 acquisition by approximately six basis points for the quarter ended March 31, 2004 and 19 basis points for the quarter ended March 31, 2003. See quot;Financing and Leasing Assetsquot; for additional information regarding the liquidating portfolios. Other Revenue The components of other revenue are set forth in the following table ($ in millions). Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Fees and other income........................... $126.7 $144.7 Factoring commissions........................... 55.0 46.9 Gains on sales of leasing equipment............. 27.3 17.6 Gains on securitizations........................ 21.4 30.7 ------ ------ Total......................................... $230.4 $239.9 ====== ====== Total Other Revenue as % of AEA................. 2.50% 2.77% © 2004. EDGAR Online, Inc.
  • 41. ====== ====== The following table presents information regarding gains on securitizations ($ in millions): Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Total volume securitized........................ $1,236.4 $1,237.4 Gains........................................... $ 21.4 $ 30.7 Gains as a percentage of volume securitized..... 1.73% 2.48% Gains as a percentage of pre-tax income......... 6.9% 14.4% 25 © 2004. EDGAR Online, Inc.
  • 42. We continue to emphasize growth and diversification of other revenues to improve our overall profitability. o Fees and other income include servicing fees, miscellaneous fees, syndication fees and gains from asset sales. The reduction from the prior year reflects lower fees in our Business Credit unit and in Equipment Finance. In line with the improving economy, business has generally returned to smaller working capital asset-based lending activities, away from the larger-ticket, debtor-in-possession lending. Reduced fees and other income also reflect lower fee revenue related to securitizations consistent with the runoff in securitized asset balances. o Higher factoring commissions benefited from two large acquisitions completed during the second half of 2003. o Securitization volume, while essentially unchanged from the prior year, is comprised of a higher proportion of commercial assets, as we continue to fund home equity growth entirely on-balance sheet. 2003 volume includes $0.4 billion of home equity loans. o Gains on sales of leasing equipment increased from 2003 due to higher commercial aircraft equipment gains as well as general strengthening of equipment values. Venture Capital Investments We announced on January 15, 2004, that we signed a purchase and sale agreement for the disposition of the direct investment portfolio at an amount approximating the carrying value at December 31, 2003. We are working toward a closing in the second quarter of 2004. Results from venture capital investments include realized and unrealized gains and losses on both direct investments and venture capital fund investments for both quarters presented. Provision for Credit Losses Our provision for credit losses and reserve for credit losses is presented in the following table ($ in millions). Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Balance beginning of period............................................... $643.7 $760.8 ------ ------ Provision for credit losses............................................... 85.6 103.0 Reserves relating to acquisitions, other.................................. 6.7 7.5 ------ ------ Additions to reserve for credit losses, net............................. 92.3 110.5 ------ ------ Net credit losses: Specialty Finance......................................................... 38.7 44.0 Commercial Finance........................................................ 12.5 16.6 Equipment Finance......................................................... 26.3 38.1 Capital Finance........................................................... -- 1.8 Structured Finance........................................................ 21.8 13.8 ------ ------ Total net credit losses................................................. 99.3 114.3 © 2004. EDGAR Online, Inc.
  • 43. ------ ------ Balance end of period..................................................... $636.7 $757.0 ====== ====== Reserve for credit losses as a percentage of finance receivables.......... 1.98% 2.64% ====== ====== Reserve for credit losses as a percentage of past due receivables (60 days or more)(1).................................................... 104.5% 77.9% ====== ====== Reserve for credit losses as a percentage of non-performing assets(2)..... 95.4% 75.2% ====== ====== (1) The reserve for credit losses as a percentage of past due receivables (60 days or more), excluding telecommunication and Argentine reserves and corresponding delinquencies, was 89.9% at March 31, 2004 and 51.5% at March 31, 2003. (2) The reserve for credit losses as a percentage of non-performing assets, excluding telecommunication and Argentine reserves and corresponding non-performing assets, was 88.3% at March 31, 2004 and 52.4% at March 31, 2003. The decreased provision for the quarter ended March 31, 2004 in relation to 2003 reflects lower charge-offs and improving credit metrics. See 'Credit Metrics' for further discussion on net charge-offs and other related statistics. 26 © 2004. EDGAR Online, Inc.
  • 44. Reserve for Credit Losses The following table presents the components of the reserve for credit losses, both in amount and as a percentage of corresponding finance receivables ($ in millions): March 31, 2004 December 31, 2003 March 31, 2003 -------------- ----------------- -------------- Amount % Amount % Amount % ------ ----- ------ ----- ------ ----- Finance receivables..... $531.4 1.68% $524.6 1.71% $482.2 1.74% Telecommunications(1)... 92.8 18.56% 106.6 19.16% 139.8 21.33% Argentina(2)............ 12.5 69.83% 12.5 55.07% 135.0 72.50% ------ ------ ------ Total................... $636.7 1.98% $643.7 2.06% $757.0 2.64% ====== ====== ====== (1) Percentage of finance receivables in telecommunications portfolio. (2) Percentage of finance receivables in Argentina. The decline in the reserve for credit losses at March 31, 2004 from the 2003 periods, in both amount and percentage, was due to telecommunication charge-offs taken against the previously established specific reserve and the improving credit metrics. The 2003 decline in the specific Argentine reserve resulted largely from the fourth quarter 2003 charge-off of $101.0 million. Reserve for Credit Losses -- Finance Receivables The reserve for credit losses is determined based on three key components: (1) specific reserves for collateral dependent loans which are impaired under SFAS 114, (2) reserves for estimated losses inherent in the portfolio based upon historical and projected credit trends and (3) reserves for general economic environment and other factors. The reserve includes specific reserves relating to impaired loans (excluding telecommunication and Argentine) of $50.2 million at March 31, 2004, compared to $66.4 million at December 31, 2003 and $52.8 million at March 31, 2003. The changes in the inherent estimated loss and estimation risk components of the reserve reflect trends in our key credit metrics. The consolidated reserve for credit losses is intended to provide for losses inherent in the portfolio, which requires the application of estimates and significant judgment as to the ultimate outcome of collection efforts and realization of collateral values, among other things. Therefore, changes in economic conditions or credit metrics, including past due and non-performing accounts, or other events affecting specific obligors or industries may necessitate additions or reductions to the consolidated reserve for credit losses. Management continues to believe that the credit risk characteristics of the portfolio are well diversified by geography, industry, borrower and equipment type. Refer to quot;Concentrationsquot; for more information. Based on currently available information, management believes that our total reserve for credit losses is adequate. Reserve for Credit Losses -- Telecommunications We added $200.0 million to the reserve for credit losses during the quarter ended June 30, 2002 in light of the continued deterioration in the telecommunications sector at that time, particularly with respect to our CLEC portfolio. In the subsequent quarters through March 31, 2004, we have recorded net charge-offs of $107.2 million against this specific reserve. Our telecommunications portfolio is included in quot;Communicationsquot; in the industry composition table included in Note 4 to the Consolidated Financial Statements. This portfolio includes lending and leasing transactions to the telecommunications sector. Lending and leasing of telecommunication equipment to non-telecom companies is conducted in our Specialty Finance business and is categorized according to the customer's (quot;obligor'squot;) industry in the industry composition table. Certain statistical data is presented in the following table ($ in millions). © 2004. EDGAR Online, Inc.
  • 45. 27 © 2004. EDGAR Online, Inc.
  • 46. March 31, December 31, March 31, 2004 2003 2003 --------- ------------ --------- CLEC accounts............................................. $191.3 $197.8 $238.0 Other telecommunication accounts.......................... 327.3 381.2 440.7 ------ ------ ------ Total telecommunications portfolio........................ $518.6 $579.0 $678.7 ====== ====== ====== Portfolio as a % of total financing and leasing assets.... 1.3% 1.5% 1.8% Number of accounts........................................ 42 44 53 Top 10 accounts........................................... $236.8 $253.4 $265.6 Largest account exposure.................................. $ 30.6 $ 31.0 $ 33.4 Non-performing accounts................................... $ 65.7 $ 57.2 $ 85.5 Number of non-performing accounts......................... 8 6 9 Non-performing accounts as a percentage of portfolio...... 12.7% 9.9% 12.6% Reserve for Credit Losses -- Argentina We established a $135.0 million specific reserve for Argentine exposure in the first half of 2002 to reflect the geopolitical risks associated with collecting our peso-based assets and repatriating them into U.S. dollars that resulted from the Argentine government instituting certain economic reforms. When established, the reserve was about two-thirds of our combined currency and credit exposure. During the fourth quarter of 2003, based on the substantial progress with collection and work out efforts, we recorded a $101.0 million charge-off against this specific reserve and transferred $21.5 million to the Reserve for Credit Losses -- Finance Receivables. At March 31, 2004, we have $17.9 million in Argentine loans that remains to be collected and repatriated, down slightly from December 31, 2003. Collections efforts of remaining balances are ongoing. On April 20, 2004, we signed an agreement to sell the portfolio to an Argentine bank at a price approximating our book value. The sale is subject to certain Argentine regulatory approvals. Credit Metrics Net Charge-offs Net charge-offs, both in amount and as a percentage of average finance receivables, are shown in the following tables ($ in millions): Quarter Ended March 31, 2004 ----------------------------------------------------------- Before Liquidating and Liquidating and Total Telecommunications Telecommunications ----------------- ------------------ © 2004. EDGAR Online, Inc.
  • 47. ------------------ Specialty Finance -- commercial................ $22.0 1.24% $21.5 1.21% $ 0.5 -- Commercial Finance............................. 12.5 0.48% 12.5 0.48% -- -- Equipment Finance.............................. 26.3 1.67% 21.0 1.37% 5.3 12.35% Capital Finance................................ -- -- -- -- -- -- Structured Finance............................. 21.8 2.96% 8.1 1.34% 13.7 10.38% ----- ----- ----- Total Commercial Segments................... 82.6 1.19% 63.1 0.93% 19.5 11.13% Specialty Finance -- consumer.................. 16.7 1.84% 10.2 1.42% 6.5 3.45% ----- ----- ----- Total....................................... $99.3 1.26% $73.3 0.98% $26.0 7.16% ===== ===== ===== Quarter Ended March 31, 2003 ------------------------------------------------------------ Before Liquidating and Liquidating and Total Telecommunications Telecommunications ------------------ ------------------ ------------------ Specialty Finance -- commercial................ $ 31.0 1.73% $30.6 1.76% $ 0.4 8.65% Commercial Finance............................. 16.6 0.80% 16.6 0.80% -- -- Equipment Finance.............................. 38.1 2.39% 29.7 2.02% 8.4 6.48% Capital Finance................................ 1.8 0.55% 1.8 0.55% -- -- Structured Finance............................. 13.8 1.90% -- -- 13.8 8.23% ------ ----- ----- Total Commercial Segments................... 101.3 1.55% 78.7 1.27% 22.6 7.48% Specialty Finance -- consumer.................. 13.0 2.36% 6.6 1.92% 6.4 3.09% ------ ----- ----- Total....................................... $114.3 1.61% $85.3 1.30% $29.0 5.70% ====== ===== ===== 28 © 2004. EDGAR Online, Inc.
  • 48. Charge-offs were 1.26% for the first quarter of 2004, reflecting improvements across virtually all segments: o Specialty Finance -- commercial improvements were primarily in the small-ticket and international portfolios. o Commercial Finance charge-offs fell well below the prior year in both the asset-based lending and factoring business. o Equipment Finance improvement was considerable in relation to prior year due to reductions across all product lines, but charge-off levels remain above management's expectations. o Structured Finance charge-offs continue to be driven primarily by telecommunication charge-offs, with the 2004 increase due to a project finance portfolio write-off. o Specialty Finance-consumer charge-offs, while up in absolute amounts, were down as a percentage of finance receivables from the prior year reflecting the return to on balance sheet funding of this portfolio. Past Due and Non-performing Assets The following table sets forth certain information concerning our past due (sixty days or more) and non-performing assets and the related percentages of finance receivables ($ in millions): March 31, 2004 December 31, 2003 March 31, 2003 ---------------- ----------------- ---------------- Past Dues: Specialty Finance-- commercial.............. $185.8 2.60% $226.4 3.17% $ 264.7 3.68% Commercial Finance.......................... 107.2 1.02% 105.9 1.03% 152.8 1.76% Equipment Finance........................... 113.8 1.79% 137.9 2.18% 292.5 4.69% Capital Finance............................. 10.7 0.98% 9.5 0.87% 74.0 6.05% Structured Finance.......................... 32.9 1.12% 47.0 1.59% 55.2 1.89% ------ ------ -------- Total Commercial Segments................... 450.4 1.60% 526.7 1.90% 839.2 3.19% Specialty Finance -- consumer............... 159.0 3.87% 149.6 4.26% 132.0 5.53% ------ ------ -------- Total....................................... $609.4 1.89% $676.3 2.16% $ 971.2 3.39% ====== ====== ======== Non-performing assets: Specialty Finance-- commercial.............. $102.3 1.43% $119.8 1.68% $ 160.4 2.23% Commercial Finance.......................... 77.0 0.73% 75.6 0.74% 128.0 1.47% Equipment Finance........................... 213.9 3.36% 218.3 3.46% 338.5 5.43% Capital Finance............................. 3.4 0.31% 3.6 0.33% 86.9 7.10% Structured Finance.......................... 104.9 3.57% 103.0 3.48% 143.4 4.91% ------ ------ -------- Total Commercial Segments................... 501.5 1.79% 520.3 1.87% 857.2 3.26% Specialty Finance-- consumer................ 165.9 4.04% 156.2 4.45% 149.2 6.25% ------ ------ -------- Total....................................... $667.4 2.07% $676.5 2.16% $1,006.4 3.51% ====== ====== ======== Non accrual loans.............................. $558.8 $566.5 $ 851.3 © 2004. EDGAR Online, Inc.
  • 49. Repossessed assets............................. 108.6 110.0 155.1 ------ ------ -------- Total non-performing assets................. $667.4 $676.5 $1,006.4 ====== ====== ======== The March 31, 2004 delinquency rate of 1.89% marked the sixth consecutive quarter of improvement, with the most notable declines in Specialty Finance -- commercial and Equipment Finance. o Specialty Finance -- commercial delinquency improvement from both prior year periods was driven primarily by the decline in past dues in the international portfolios, most notably in our European operations, where servicing was centralized during 2003, and in the Small Business Lending portfolio. o Commercial Finance past due levels, while flat with December 2003, were down considerably from March 2003 due to improvements in both the Commercial Services (factoring) and Business Credit (asset-based lending) units. o Equipment Finance delinquency improved across virtually all product lines in relation to both 2003 periods and was down 61% in absolute amounts from March 2003. 29 © 2004. EDGAR Online, Inc.
  • 50. o Structured Finance improvement during the March 2004 quarter reflected a project finance charge-off, and lower delinquency in the telecommunications and media portfolios. o Specialty Finance -- consumer delinquency was up in dollar amount but down as a percentage of finance receivables from 2003, reflecting a return to on-balance growth in the home equity portfolio. However, consumer delinquency on a managed basis has been relatively stable in percentage terms over the periods presented. Non-performing assets also declined for the sixth consecutive quarter, reflecting the same trends discussed above. Non-performing telecommunications accounts (in Structured Finance) totaled $65.7 million, $57.2 million and $85.5 million at March 31, 2004, December 31, 2003, and March 31, 2003, respectively. Managed past due loans in dollar amount and as a percentage managed financial assets are shown in the table below ($ in millions). March 31, 2004 December 31, 2003 March 31, 2003 ---------------- ----------------- ----------------- Past Dues: Specialty Finance-- commercial.............. $273.7 2.35% $ 321.2 2.77% $ 343.0 3.04% Commercial Finance.......................... 107.2 1.02% 105.9 1.03% 152.8 1.76% Equipment Finance........................... 199.1 2.09% 243.6 2.49% 466.7 4.50% Capital Finance............................. 10.7 0.98% 9.5 0.87% 74.0 6.05% Structured Finance.......................... 32.9 1.12% 47.0 1.59% 55.2 1.89% ------ -------- -------- Total Commercial............................ 623.6 1.74% 727.2 2.04% 1,091.7 3.16% Specialty Finance-- consumer................ 304.2 4.68% 294.8 4.78% 269.6 4.64% ------ -------- -------- Total....................................... $927.8 2.20% $1,022.0 2.44% $1,361.3 3.38% ====== ======== ======== Managed past due loans decreased both in dollar amount and as a percentage of managed financial assets, reflecting the same factors that are discussed in the owned delinquency analysis. Salaries and General Operating Expenses The efficiency ratio and the ratio of salaries and general operating expenses to average managed assets (quot;AMAquot;) are summarized in the following table ($ in millions). Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Efficiency ratio.......................................................... 41.1% 41.7% Salaries and general operating expenses as a percentage of AMA............ 2.15% © 2004. EDGAR Online, Inc.
  • 51. 2.01% Salaries and general operating expenses................................... $ 247.3 $ 225.6 Average Managed Assets.................................................... $46,104.0 $44,967.8 Salaries and general operating expenses for the quarter ended March 31, 2004 increased from the prior year quarter primarily due to higher incentive-based compensation, including restricted stock awards, acquisition activities, and higher corporate expenses reflecting increased governance and compliance-related costs. Personnel decreased to approximately 5,795 at March 31, 2004, from 5,845 at March 31, 2003. Beginning with the March 2004 quarter, we made a reporting change to reclassify debt commissions from general operating expense to interest expense to reflect all-in funding costs in margin. This change was also made in the historical comparative data and does not impact net income. As a result of this change, prior year salaries and general operating expenses were reduced by approximately $8 million and are roughly 7 basis points lower (as a percentage of AMA) than historically reported ratios. Expenses are monitored closely by business unit and corporate management and are reviewed monthly. An approval and review procedure is in place for major capital expenditures, such as computer equipment and software, including post-implementation evaluations. We continue to target an improved efficiency ratio in the mid 30% area and an AMA ratio of under 2.00%, as we have existing capacity to grow assets without commensurate expense increases. 30 © 2004. EDGAR Online, Inc.
  • 52. Gain on Redemption of Debt In January 2004 and December 2003, we called at par $1.25 billion of term debt securities. These notes were listed on the New York Stock Exchange under the ticker symbols CIC and CIP and are commonly known as PINEs (quot;Public Income Notesquot;). The securities carried coupon rates of 8.25% and 8.125%, but were marked down to a market interest rate yield of approximately 7.5% in our financial statements through purchase accounting. In light of the high coupon rates, we called the securities for redemption pursuant to the terms outlined in the prospectuses. The call of the $512 million on January 15, 2004 resulted in a pretax gain of $41.8 million ($25.5 million after tax). The December call of $735 million resulted in a pretax gain of $50.4 million ($30.8 million after tax) during the fourth quarter of 2003. Income Taxes The following table sets for the certain information concerning our income taxes ($ in millions): Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Provision for income taxes...................... $121.1 $82.9 Effective tax rate.............................. 39.0% 39.0% The effective tax rate exceeds the U.S. Federal tax rate of 35% primarily due to state and local and foreign income taxes. At March 31, 2004, CIT had U.S. federal net operating losses of approximately $1,937.7 million, which expire in various years beginning in 2011. In addition, CIT has various state net operating losses that will expire in various years beginning in 2004. Federal and state operating losses may be subject to annual use limitations under section 382 of the Internal Revenue Code of 1986, as amended, and other limitations under certain state laws. Management believes that CIT will have sufficient taxable income in future years and can avail itself of tax planning strategies in order to fully utilize these losses. Accordingly, we do not believe a valuation allowance is required with respect to these net operating losses. In connection with the June 2001 acquisition by Tyco, our income tax compliance, reporting and planning function was transferred to Tyco. Following our 2002 IPO, we classified our tax reporting as a quot;reportable conditionquot;, as defined by standards established by the American Institute of Certified Public Accountants. We have made substantial progress in rebuilding our tax reporting and compliance functions, including hiring and training personnel, rebuilding tax reporting systems, preparing amendments to prior period U.S. Federal income tax returns, and implementing processes and controls with respect to income tax reporting and compliance. During the quarter, we completed processes and developed the data for preparing a tax basis balance sheet to complete the analysis of deferred tax assets and liabilities as of December 31, 2003. Further work continues in the areas of quality control, proof and reconciliation and the tax basis balance sheet analysis is nearing completion. Future income tax return filings and the completion of the aforementioned analysis of deferred tax assets and liabilities could result in reclassifications amongst deferred tax assets and liabilities. 31 © 2004. EDGAR Online, Inc.
  • 53. Results by Business Segment The tables that follow summarize selected financial information by business segment, based upon a fixed leverage ratio across business units, and the allocation of most corporate expenses ($ in millions). Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Net Income Specialty Finance............................... $ 78.2 $ 52.2 Commercial Finance.............................. 60.6 54.1 Equipment Finance............................... 15.2 10.7 Capital Finance................................. 19.0 7.7 Structured Finance.............................. 10.1 12.2 ------ ------ Total Segments................................ 183.1 136.9 Corporate, including certain charges............ 6.2 (9.9) ------ ------ Total......................................... $189.3 $127.0 ====== ====== Return on AEA Specialty Finance............................... 2.47% 1.75% Commercial Finance.............................. 3.62% 3.58% Equipment Finance............................... 0.88% 0.60% Capital Finance................................. 1.04% 0.50% Structured Finance.............................. 1.31% 1.63% Total Segments................................ 1.99% 1.60% Corporate, including certain charges............ 0.06% (0.13)% Total......................................... 2.05% 1.47% For all periods shown, Corporate includes the operating results of the venture capital business including gains and losses of venture capital investments (losses of $3.8 million and $8.9 million after tax for the quarters ended March 31, 2004 and 2003) and unallocated corporate operating expenses. For the quarter ended March 31, 2004, Corporate also includes the gain on the early redemption of debt ($25.5 million after tax). Noteworthy trends by segment are as follows: o Specialty Finance profitability showed broad based improvement across the vendor finance business, Small Business Lending and the small-ticket leasing businesses. o Commercial Finance earnings remained strong, benefiting from continued high returns in both the factoring and asset-based lending businesses. The current year results also benefited from last year's factoring acquisitions. o Equipment Finance returns, while still below management's expectations, improved from the prior year, reflecting lower charge-offs and higher equipment gains. o Capital Finance earnings reflected improved aerospace profitability due to higher asset levels and increased aircraft equipment gains. o Structured Finance returns for 2004 were below the prior year due to increased project finance charge-offs. Results continued to benefit from strong fee activity. In April 2004, we initiated the combination of Structured Finance into Capital Finance, and the transfer of the Communication and Media business of Structured Finance to the Business Credit unit of Commercial Finance. This will better align our business with the markets that we serve. © 2004. EDGAR Online, Inc.
  • 54. 32 © 2004. EDGAR Online, Inc.
  • 55. Financing and Leasing Assets The managed assets of our business segments and the corresponding strategic business units are presented in the following table ($ in millions). Percentage Change -------------------------- March 31, December 31, March 31, March 04 vs. March 04 vs. 2004 2003 2003 Dec. 03 March 03 --------- ------------ --------- ----------- ------------ Specialty Finance Commercial Finance receivables................... $ 7,135.6 $ 7,150.0 $ 7,201.5 (0.2)% (0.9)% Operating lease equipment, net........ 919.1 959.5 1,227.6 (4.2)% (25.1)% Finance receivables held for sale..... 737.1 548.1 899.6 34.5% (18.1)% --------- --------- --------- Owned assets........................ 8,791.8 8,657.6 9,328.7 1.6% (5.8)% Finance receivables securitized and managed by CIT.................. 3,769.0 3,915.4 3,191.7 (3.7)% 18.1% --------- --------- --------- Managed assets...................... 12,560.8 12,573.0 12,520.4 (0.1)% 0.3% --------- --------- --------- Consumer Finance receivables-- home equity..... 3,315.1 2,664.3 1,391.3 24.4% 138.3% Finance receivables-- other........... 791.2 846.5 995.8 (6.5)% (20.5)% Finance receivables held for sale..... 150.0 150.0 210.0 -- (28.6)% --------- --------- --------- Owned assets........................ 4,256.3 3,660.8 2,597.1 16.3% 63.9% Home equity finance receivables securitized and managed by CIT...... 1,651.9 1,867.6 2,358.6 (11.5)% (30.0)% Other finance receivables securitized and managed by CIT.................. 593.6 642.5 860.2 (7.6)% (31.0)% --------- --------- --------- Managed assets...................... 6,501.8 6,170.9 5,815.9 5.4% 11.8% --------- --------- --------- Commercial Finance Commercial Services Finance receivables................... 6,450.0 6,325.8 4,726.1 2.0% 36.5% Business Credit Finance receivables................... 4,105.9 3,936.1 3,956.6 4.3% 3.8% --------- --------- --------- Owned assets........................ 10,555.9 10,261.9 8,682.7 2.9% 21.6% --------- --------- --------- Equipment Finance Finance receivables................... 6,367.0 6,317.9 6,237.4 0.8% 2.1% Operating lease equipment, net........ 385.6 419.6 527.4 (8.1)% (26.9)% Finance receivables held for sale..... 119.1 220.2 163.4 (45.9)% (27.1)% --------- --------- --------- Owned assets........................ 6,871.7 6,957.7 6,928.2 (1.2)% (0.8)% Finance receivables securitized and managed by CIT.................. 3,052.5 3,226.2 3,977.2 (5.4)% (23.3)% --------- --------- --------- Managed assets...................... 9,924.2 10,183.9 10,905.4 (2.6)% (9.0) --------- --------- --------- Capital Finance Finance receivables................... 1,087.1 1,097.4 1,223.7 (0.9)% (11.2)% Operating lease equipment, net........ 6,142.1 6,103.8 4,973.0 0.6% 23.5% --------- --------- --------- Owned assets........................ 7,229.2 7,201.2 6,196.7 0.4% 16.7% --------- --------- --------- Structured Finance Finance receivables................... 2,935.5 2,962.2 2,922.2 (0.9)% 0.5% Operating lease equipment, net........ 129.4 132.6 103.4 (2.4)% 25.1% --------- --------- --------- Owned assets........................ 3,064.9 3,094.8 3,025.6 (1.0)% 1.3% --------- --------- --------- Other-- Equity Investments............... 251.8 249.9 334.3 0.8% (24.7)% --------- --------- --------- Total Managed Assets.................. $50,088.6 $49,735.6 $47,481.0 0.7% 5.5% ========= ========= ========= Finance receivables...................... $32,187.4 $31,300.2 $28,654.6 2.8% 12.3% Operating lease equipment, net........... 7,576.2 7,615.5 6,831.4 (0.5)% 10.9% Finance receivables held for sale........ 1,006.2 918.3 1,273.0 9.6% (21.0)% --------- --------- --------- Financing and leasing assets excluding equity investments.................... 40,769.8 39,834.0 36,759.0 2.3% 10.9% Equity investments (included in © 2004. EDGAR Online, Inc.
  • 56. other assets)......................... 251.8 249.9 334.3 0.8% (24.7)% --------- --------- --------- Owned assets.......................... 41,021.6 40,083.9 37,093.3 2.3% 10.6% Finance receivables securitized and managed by CIT........................ 9,067.0 9,651.7 10,387.7 (6.1)% (12.7)% --------- --------- --------- Total Managed Assets.................. $50,088.6 $49,735.6 $47,481.0 0.7% 5.5% ========= ========= ========= 33 © 2004. EDGAR Online, Inc.
  • 57. The increase in owned assets from 2003 was driven by: the combination of a strong mortgage refinancing market and acquisitions in the Specialty Finance home equity portfolio; two factoring acquisitions in Commercial Services; and deliveries of aerospace assets in Capital Finance. The decline in receivables securitized reflects our return to funding home equity growth on balance sheet. The table below summarizes the targeted non-strategic business lines. In addition, during 2001 we ceased making new venture capital investments beyond existing commitments. During the fourth quarter of 2003, we decided to accelerate the liquidation of the venture capital direct investment portfolio. See quot;Losses on Venture Capital Investmentsquot; for more information ($ in millions): March 31, December 31, March 31, 2004 2003 2003 --------- ------------ --------- Portfolio Manufactured housing...................................... $578 $584 $ 613 Recreational vehicle...................................... 52 58 51 Recreational marine....................................... 79 86 114 Wholesale inventory finance............................... -- 2 4 Franchise finance......................................... 98 102 316 Owner-operator trucking................................... 67 91 184 ---- ---- ------ Total on-balance sheet financing and leasing assets..... $874 $923 $1,282 ==== ==== ====== The following table presents new business volume (excluding factoring) by segment ($ in millions). Quarters Ended March 31, ------------------------ 2004 2003 ------ ------ Specialty Finance............................... $3,575.9 $3,073.0 Commercial Finance.............................. 374.0 227.0 Equipment Finance............................... 922.1 828.9 Capital Finance................................. 102.0 280.5 Structured Finance.............................. 242.8 100.2 -------- -------- Total new business volume..................... $5,216.8 $4,509.6 ======== © 2004. EDGAR Online, Inc.
  • 58. ======== New origination volume for the quarter ended March 31, 2004 included stronger volume from our Specialty Finance vendor finance, international and home equity units, as well as improved demand for financing in Equipment Finance and working capital financings in the Business Credit unit of Commercial Finance. 34 © 2004. EDGAR Online, Inc.
  • 59. Concentrations Ten Largest Accounts Our ten largest financing and leasing asset accounts in the aggregate represented 5.5% of our total financing and leasing assets at March 31, 2004 (the largest account being less than 1.0%), 5.2% at December 31, 2003, and 5.0% at March 31, 2003. Leveraged Leases As of March 31, 2004, net investments in leveraged leases totaled $1.1 billion, or 3.5% of finance receivables, with the major components being (i) $453.9 million in commercial aerospace transactions, including $218.9 million of tax-optimization leveraged leases (which generally have increased risk for lessors in relation to conventional lease structures due to additional leverage in the transactions); (ii) $325.3 million of project finance transactions, primarily in the power and utility sector; and (iii) $227.8 million in rail transactions. Joint Venture Relationships Our strategic relationships with industry-leading equipment vendors are a significant origination channel for our financing and leasing activities. These vendor alliances include traditional vendor finance programs, joint ventures and profit sharing structures. Our vendor programs with Dell, Snap-on and Avaya Inc. are among our largest alliances. The joint venture agreements with Dell and Snap-on run until October 2005 and January 2007, respectively. The Avaya agreement, which relates to profit sharing on a CIT direct origination program, extends through September 2006. At March 31, 2004, our financing and leasing assets included $1,587.4 million, $1,099.1 million and $770.1 million related to the Dell, Snap-on and Avaya programs, respectively. These amounts include receivables originated directly by CIT as well as receivables purchased from joint venture entities. Securitized assets included $2,408.5 million, $70.8 million and $669.5 million from the Dell, Snap-on and Avaya origination sources, respectively. A significant reduction in origination volumes from any of these alliances could have a material impact on our asset and net income levels. For additional information regarding certain of our joint venture activities, see Note 8 -- Certain Relationships and Related Transactions. Geographic Composition The following table summarizes significant state concentrations greater than 5.0% and foreign concentrations in excess of 1.0% of our owned financing and leasing portfolio assets at March 31, 2004, December 31, 2003 and March 31, 2003. For each period presented, our managed asset geographic composition did not differ significantly from our owned asset geographic composition. March 31, December 31, March 31, 2004 2003 2003 --------- ------------ --------- State California...................... 10.3% 10.2% 9.7% Texas........................... 7.8% 7.7% 7.5% New York........................ 6.6% 7.4% 6.9% Total United States................ 79.8% 79.3% 79.6% Country Canada.......................... 4.9% 5.1% 5.0% England......................... 2.6% 2.8% 3.3% Australia....................... 1.4% 1.3% 1.3% Germany......................... 1.1% 1.0% 1.0% Mexico.......................... 1.1% 1.0% (1) France.......................... 1.0% 1.1% 1.0% China........................... (1) (1) 1.2% Brazil.......................... (1) (1) 1.0% Total Outside U.S.................. 20.2% 20.7% 20.4% © 2004. EDGAR Online, Inc.
  • 60. (1) The applicable balances are less than 1.0%. 35 © 2004. EDGAR Online, Inc.
  • 61. Industry Composition The following discussions provide information with respect to selected industry compositions. Aerospace At March 31, 2004, our commercial aerospace portfolio in Capital Finance consists of financing and leasing assets of $4,700.9 million covering 209 aircraft, with an average age of approximately 7 years (based on a dollar value weighted average). The portfolio was comprised of 85 accounts, with the majority placed with major airlines around the world. The commercial aerospace portfolio at December 31, 2003 was $4,716.1 million of financing and leasing assets, which included 209 aircraft and 84 customers, with a weighted average age of approximately 6 years. The commercial aircraft all comply with stage III noise regulations. The following table summarizes the composition of the commercial aerospace portfolio ($ in millions): March 31, 2004 December 31, 2003 March 31, 2003 ------------------- ------------------- ------------------- Net Net Net Investment Number Investment Number Investment Number ---------- ------ ---------- ------ ---------- ------ Commercial Aerospace Portfolio: By Region: Europe................................ $1,994.8 66 $1,991.0 65 $1,537.4 51 North America(1)...................... 1,001.7 72 1,029.7 72 1,110.1 78 Asia Pacific.......................... 1,040.8 40 1,013.6 40 886.5 36 Latin America......................... 606.5 28 612.7 28 572.5 26 Africa/Middle East.................... 57.1 3 69.1 4 73.2 4 -------- --- -------- --- -------- --- Total.................................... $4,700.9 209 $4,716.1 209 $4,179.7 195 ======== === ======== === ======== === By Manufacturer: Boeing................................ $2,577.0 140 $2,581.7 140 $2,514.2 138 Airbus................................ 2,104.8 57 2,114.6 57 1,640.8 42 Other................................. 19.1 12 19.8 12 24.7 15 -------- --- -------- --- -------- --- Total.................................... $4,700.9 209 $4,716.1 209 $4,179.7 195 ======== === ======== === ======== === By Body Type(2): Narrow body........................... $3,416.5 159 $3,415.7 159 $2,909.8 144 Intermediate body..................... 866.5 18 877.0 18 871.6 18 Wide body............................. 398.8 20 403.6 20 373.6 18 Other................................. 19.1 12 19.8 12 24.7 15 -------- --- -------- --- -------- --- © 2004. EDGAR Online, Inc.
  • 62. Total.................................... $4,700.9 209 $4,716.1 209 $4,179.7 195 ======== === ======== === ======== === (1) Comprised of net investments in the U.S. and Canada of $781.2 million (65 aircraft) and $220.5 million (7 aircraft) at March 31, 2004, $822.7 million (66 aircraft) and $207.0 million (6 aircraft) at December 31, 2003, and $902.0 million (72 aircraft) and $208.1 million (6 aircraft) at March 31. 2003, respectively. (2) Narrow body are single aisle design and consist primarily of Boeing 737 and 757 series and Airbus A320 series aircraft. Intermediate body are smaller twin aisle design and consist primarily of Boeing 767 series and Airbus A330 series aircraft. Wide body are large twin aisle design and consist primarily of Boeing 747 and 777 series and McDonnell Douglass DC10 series aircraft. As of March 31, 2004, operating leases were approximately 85% of the portfolio, with the remainder consisting of capital leases (including leveraged leases) and loans. Total leveraged leases were $453.9 million or 9.7% of the aerospace portfolio including tax optimization structures of approximately $218.9 million. Of the 209 aircraft, four are off-lease, one of which has been remarketed with a lease pending as of March 31, 2004. In general, the use of leverage increases the risk of a loss in the event of a default, with the greatest risk incurred in tax-optimization leveraged leases. The top five commercial aerospace exposures totaled $1,057.7 million at March 31, 2004, the largest of which was $266.6 million. All top five are to carriers outside of the U.S. and the top three are to European carriers. The largest exposure to a U.S. carrier at December 31, 2003 was $160.8 million. Future revenues and aircraft values could be impacted by the actions of the carriers, management's actions with respect to re-marketing the aircraft, airline industry performance and aircraft utilization. 36 © 2004. EDGAR Online, Inc.
  • 63. The regional aircraft portfolio at March 31, 2004 consists of 119 planes with a net investment of $291.7 million, relatively unchanged from December 31, 2003, and is concentrated primarily in Structured Finance. The carriers are primarily located in North America and Europe. Operating leases account for about 43% of the portfolio, with the rest capital leases or loans. There are currently 13 aircraft off-lease with a total book value of approximately $51.3 million. The following is a list of our exposure to bankrupt aerospace carriers and the current status of the related aircraft at March 31, 2004. o UAL Corp. -- United Airlines leases 4 CIT-owned narrow body aircraft (2 Boeing 757 aircraft and 2 Boeing 737 aircraft) with a net investment of $85.8 million. o Avianca Airlines -- Lessee of one MD 80 aircraft and one Boeing 757, with a combined net investment of $31.9 million. o Air Canada -- Our net investment in aircraft is approximately $49.1 million, relating to one Boeing 767 aircraft which was converted from an investment in a non-accrual leveraged lease (not a tax-optimized structure) to a performing operating lease during 2003, and a $1.8 million loan collateralized by 12 Bombardier Dash 8 aircraft. The loan is collateralized by the Bombardier aircraft and fully guaranteed by the Canadian government. o Sobelair -- Filed a bankruptcy proceeding in Belgium, in January 2004, which resulted in a liquidation of the airline. By agreement with Sobelair's trustee, we took possession of our two Boeing 737 aircraft on operating lease with the carrier in January 2004. We have leased one aircraft and have agreed to lease terms for the other aircraft. Additionally, we hold Senior A tranche Enhanced Equipment Trust Certificates (quot;EETCsquot;) issued by United Airlines, which are debt instruments collateralized by aircraft operated by the airline, with a fair value of $45.7 million. In connection with United Airlines' filing under Chapter 11, we are a co-arranger in a $1.2 billion secured revolving and term loan facility with a commitment of $102.0 million. This debtor-in-possession facility, with an outstanding balance of $25.8 million at March 31, 2004, is secured by, among other collateral, previously unencumbered aircraft. Our aerospace assets include both operating leases and capital leases. Management monitors economic conditions affecting equipment values, trends in equipment values, and periodically obtains third party appraisals of commercial aerospace equipment, which include projected rental rates. We adjust the depreciation schedules of commercial aerospace equipment on operating leases or residual values underlying capital leases, when required. Aerospace assets are reviewed for impairment annually, or more often when events or circumstances warrant. An aerospace asset is defined as impaired when the expected undiscounted cash flow over its expected remaining life is less than its book value. Both historical information and current economic trends are factored into the assumptions and analyses used when determining the expected undiscounted cash flow. Included among these assumptions are the following: o Lease terms o Remaining life of the asset o Lease rates supplied by independent appraisers o Remarketing prospects o Maintenance costs An impairment loss is recognized if circumstances indicate that the carrying amount of the asset may not be recoverable. Commercial aerospace equipment utilization is high, with only four aircraft off-lease at March 31, 2004 (one of which has a letter of intent signed), which demonstrates our ability to place aircraft. However, current placements are at compressed rental rates, which reflects current market conditions. Generally, leases are being written for terms between three and five years. See table in quot;Risk Managementquot; section for additional information regarding commitments to purchase additional aircraft. 37 © 2004. EDGAR Online, Inc.
  • 64. Equity and Venture Capital Investments Our portfolio of direct and private fund venture capital equity investments is summarized in the following table ($ in millions). March 31, December 31, March 31, 2004 2003 2003 --------- ------------ --------- Equity and Venture Capital Investments: Total investment balance...................................... $251.8 $249.9 $334.3 Direct investments............................................ $100.6 $101.1 $179.6 Number of companies........................................... 47 47 57 Private equity funds.......................................... $151.2 $148.8 $154.7 Number of funds............................................... 52 52 52 Remaining fund and equity commitments......................... $117.1 $124.2 $153.7 See Note 4 -- Concentrations for further discussion on concentrations. Other Assets Other assets totaled $2.9 billion at March 31, 2004 and $3.3 billion at December 31, 2003. The decline in other assets is primarily due to lower receivables from derivative counterparties in 2004. Other assets primarily consisted of the following at March 31, 2004: investments in and receivables from non-consolidated subsidiaries of $0.7 billion, accrued interest and receivables from derivative counterparties of $0.4 billion, deposits on commercial aerospace flight equipment of $0.3 billion, direct and private fund equity investments of $0.3 billion, prepaid expenses of $0.1 billion and repossessed assets and off-lease equipment of $0.1 billion. The remaining balance includes furniture and fixtures, miscellaneous receivables and other assets. Risk Management Our risk management process is described in more detail in our 2003 Annual Report on Form 10-K. Interest Rate Risk Management -- We monitor our interest rate sensitivity on a regular basis by analyzing the impact of interest rate changes upon the financial performance of the business. We also consider factors such as the strength of the economy, customer prepayment behavior and re-pricing characteristics of our assets and liabilities. We evaluate and monitor various risk metrics: o Value at Risk (VAR), which measures the net economic value of assets by assessing the duration of assets and liabilities. Our asset portfolio is generally comprised of loans and leases of short to intermediate term. As such, the duration of our asset portfolio is generally less than three years. We target to closely match the duration of our liability portfolio with that of our asset portfolio. As of March 31, 2004 our liability portfolio duration was slightly longer than our asset portfolio duration. o Margin at Risk (MAR), which measures the impact of changing interest rates upon interest income over the subsequent twelve months. At the date that interest rate sensitivity is modeled, net interest income is derived considering the current level of interest-sensitive assets and related run-off (including both contractual repayment and historical prepayment experience), the current level of interest-sensitive liabilities and related maturities, and the current level of derivatives. Market interest rates are then raised 100 basis © 2004. EDGAR Online, Inc.
  • 65. points instantaneously and parallel across the entire yield curve, and a quot;rate shockedquot; simulation is run. An immediate hypothetical 100 basis point parallel increase in the yield curve on April 1, 2004 modeled against interest rate sensitive assets and liabilities as shown in the table below would reduce net income by an estimated $15 million after-tax over the next twelve months. A corresponding decrease in the yield curve would cause an increase in net income of a like amount. Although management believes that this measure provides an estimate of our interest rate sensitivity, there are certain limitations inherent in this sensitivity analysis, as it is unlikely that rate movements would be instantaneous or parallel, nor would our assets and debt reprice immediately. Additionally, it does not consider any potential remedial actions that management could take such as the pre-funding of liabilities and other business developments consistent with an increasing rate environment that may affect net income, for example asset 38 © 2004. EDGAR Online, Inc.
  • 66. growth and changes to our liability durations. Further, it does not account for potential changes in the credit quality, size, composition and prepayment characteristics of the balance sheet. Accordingly, no assurance can be given that actual results would not differ materially from the estimated outcomes of our simulations. Such simulations do not represent management's current view of future market interest rate movements. The following table summarizes the composition of our interest sensitive assets (including operating leases) and liabilities (excluding equity) before and after derivatives: Before Derivatives After Derivatives -------------------------- -------------------------- Fixed Rate Floating Rate Fixed Rate Floating Rate ---------- ------------- ---------- ------------- March 31, 2004 Assets................ 56% 44% 56% 44% Liabilities........... 61% 39% 48% 52% December 31, 2003 Assets................ 57% 43% 57% 43% Liabilities........... 63% 37% 49% 51% Total interest sensitive assets were $37.9 billion and $36.7 billion at March 31, 2004 and December 31, 2003, while total interest sensitive liabilities were $32.6 billion and $31.5 billion at March 31, 2004 and December 31, 2003. Certain December 31, 2003 amounts have been adjusted to conform to the current period presentation. Liquidity Risk Management -- Liquidity risk refers to the risk of being unable to meet potential cash outflows promptly and cost-effectively. Factors that could cause such a risk to arise might be a disruption of a securities market or other source of funds. We actively manage and mitigate liquidity risk by maintaining diversified sources of funding and committed alternate sources of funding, and we maintain and periodically review a contingency funding plan to be implemented in the event of any form of market disruption. The primary funding sources are commercial paper (U.S., Canada and Australia), long-term debt (U.S. and International) and asset-backed securities (U.S. and Canada). Outstanding commercial paper totaled $4.8 million at March 31, 2004 and $4.2 billion at December 31, 2003. Our targeted U.S. program size remains at $5.0 billion with modest foreign programs aggregating $500 million to be maintained in Canada and Australia. Our goal is to maintain committed bank lines in excess of aggregate outstanding commercial paper. Consistent with our liquidity management strategy to extend our maturity profile, on April 14, 2004 we retired a $2.0 billion bank facility due in March 2005, and $2.1 billion due in October 2004, and we negotiated two new $2.1 billion facilities due April 2009 and April 2005. CIT now has aggregate U.S. bank facilities of $6.3 billion with $4.2 billion in multi-year facilities. CIT maintains registration statements with the Securities and Exchange Commission (quot;SECquot;) covering debt securities that we may sell in the future. At March 31, 2004, we had $7.4 billion of registered, but unissued, debt securities available under a shelf registration statement. Term-debt issued during the quarter totaled $2.8 billion: $1.5 billion in variable-rate medium-term notes and $1.3 billion in fixed-rate notes. To further strengthen our funding capabilities, we maintain committed asset backed facilities and shelf registration statements, which cover a range of assets from equipment to consumer home equity receivables and trade accounts receivable. While these are predominantly in the U.S., we also maintain facilities for Canadian domiciled assets. As of March 31, 2004, we had approximately $3.7 billion of availability in our committed asset-backed facilities, including $1.0 billion relating to our trade receivable facility, and $2.9 billion of registered, but unissued, securities available under public shelf registration statements relating to our asset-backed securitization program. Our committed asset-backed commercial paper programs in the U.S. and Canada provide a substantial source of alternate liquidity. We also maintain committed bank lines of credit to provide backstop support of commercial paper borrowings and local bank lines to support our international operations. Additional sources of liquidity are loan and lease payments from customers, whole-loan asset sales and loan syndications. © 2004. EDGAR Online, Inc.
  • 67. We also target and monitor certain liquidity metrics to ensure both a balanced liability profile and adequate alternate liquidity availability as outlined in the following table. March 31, December 31, Liquidity Measurement Current Target 2004 2003 --------------------- -------------- --------- ------------ Commercial paper to total debt............................. Maximum of 15% 14% 13% Short-term debt to total debt.............................. Maximum of 45% 39% 36% Bank lines to short-term debt.............................. Minimum of 45% 76% 76% Aggregate alternate liquidity* to short-term debt.......... Minimum of 75% 86% 93% * Aggregate alternative liquidity includes available bank facilities, asset-backed conduit facilities and cash. 39 © 2004. EDGAR Online, Inc.
  • 68. Our credit ratings are an important factor in meeting our margin targets as better ratings generally correlate to lower cost of funds (see Net Finance Margin, interest expense discussion). The following credit ratings have been in place since September 30, 2002. Short-Term Long-Term Outlook ---------- --------- ------- Moody's........................... P-1 A2 Stable Standard & Poor's................. A-1 A Stable Fitch............................. F1 A Stable The credit ratings stated above are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating. We have certain covenants contained in our legal documents that govern our funding sources. The most significant covenant in CIT's indentures and credit agreements is a negative pledge provision, which limits granting or permitting liens on our assets, but provides for exceptions for certain ordinary course liens needed to operate our business. In addition, our credit agreements also contain a minimum net worth test of $4.0 billion. The following tables summarize various contractual obligations, selected contractual cash receipts and contractual commitments as of March 31, 2004 ($ in millions): Contractual Payments and Collections by Period -------------------------------------------------------------------- Total(3) 2004 2005 2006 2007 2008+ --------- --------- --------- -------- --------- --------- Commercial Paper........................ $ 4,820.2 $ 4,820.2 $ -- $ -- $ -- $ -- Variable-rate term debt................. 9,170.7 3,112.3 3,350.8 1,451.3 1,042.1 214.2 Fixed-rate term debt.................... 19,829.8 2,742.1 4,251.2 2,619.3 3,467.6 6,749.6 Preferred securities.................... 255.1 -- -- -- -- 255.1 Lease rental expense.................... 162.9 37.5 42.6 30.8 24.2 27.8 --------- --------- --------- -------- --------- --------- Total contractual obligations........ 34,238.7 10,712.1 7,644.6 4,101.4 4,533.9 7,246.7 --------- --------- --------- -------- --------- --------- Finance receivables(1).................. 32,187.4 10,555.9 4,765.5 3,767.3 2,488.1 10,610.6 Operating lease rental income........... 2,522.4 641.1 645.5 442.7 280.2 512.9 Finance receivables held for sale(2).... 1,006.2 1,006.2 -- -- -- -- Cash-- current balance.................. 1,356.5 1,356.5 -- -- -- -- Retained interest in securitizations.... 1,364.6 527.5 367.8 212.2 131.3 125.8 --------- --------- --------- -------- --------- --------- Total projected cash availability.... 38,437.1 14,087.2 5,778.8 4,422.2 2,899.6 11,249.3 --------- --------- --------- -------- --------- © 2004. EDGAR Online, Inc.
  • 69. --------- Net projected cash inflow (outflow)..... $ 4,198.4 $ 3,375.1 $(1,865.8) $ 320.8 $(1,634.3) $ 4,002.6 ========= ========= ========= ======== ========= ========= (1) Based upon contractual cash flows; amounts could differ due to prepayments, extensions of credit, charge-offs and other factors. (2) Based upon management's intent to sell rather than contractual maturities of underlying assets. (3) Projected proceeds from the sale of operating lease equipment, interest revenue from finance receivables, debt interest expense and other items are excluded. Obligations relating to postretirement programs are also excluded. Commitment Expiration by Period -------------------------------------------------------------------- After Total 2004 2005 2006 2007 2007 --------- -------- -------- -------- -------- -------- Credit extensions....................... $ 6,914.8 $1,428.8 $ 754.0 $ 940.4 $ 776.0 $3,015.6 Aircraft purchases...................... 2,889.0 715.0 918.0 996.0 260.0 -- Letters of credit....................... 1,230.8 1,135.7 21.5 73.2 0.2 0.2 Sale-leaseback payments................. 465.7 7.9 28.5 28.5 28.5 372.3 Manufacturer purchase commitments....... 206.7 206.7 -- -- -- -- Venture capital commitments............. 117.1 3.4 0.5 -- 3.0 110.2 Guarantees.............................. 109.9 97.5 -- -- 10.5 1.9 Acceptances............................. 11.2 11.2 -- -- -- -- --------- -------- -------- -------- -------- -------- Total contractual commitments........... $11,945.2 $3,606.2 $1,722.5 $2,038.1 $1,078.2 $3,500.2 ========= ======== ======== ======== ======== ======== 40 © 2004. EDGAR Online, Inc.
  • 70. Internal Controls The Internal Controls Committee is responsible for monitoring and improving internal controls and overseeing the internal controls attestation mandated by Section 404 of the Sarbanes-Oxley Act of 2002 (quot;SARBOXquot;), for which the implementation year is 2004. The committee, which is chaired by the Controller, includes the CFO, the Director of Internal Audit and other senior executives in finance, legal, risk management and information technology. We are currently finalizing the documentation phase of the SARBOX project and have entered the testing phase. Our management self-assessment is targeted to be completed during the second half of 2004. Off-Balance Sheet Arrangements Securitization Program We fund asset originations on our balance sheet by accessing various sectors of the capital markets, including the term debt and commercial paper markets. In an effort to broaden funding sources and provide an additional source of liquidity, we use an array of securitization programs, including both asset-backed commercial paper and term structures, to access both the public and private asset-backed securitization markets. Current products in these programs include receivables and leases secured by equipment as well as consumer loans secured by residential real estate. The following table summarizes data relating to our securitization balance and activity ($ in millions). At or for the Quarters Ended March 31, ---------------------------- 2004 2003 -------- --------- Securitized Assets: Specialty Finance-- commercial................... $3,769.0 $ 3,191.7 Specialty Finance-- consumer..................... 2,245.5 3,218.8 Equipment Finance................................ 3,052.5 3,977.2 -------- --------- Total securitized assets......................... $9,067.0 $10,387.7 ======== ========= Securitized assets as a % of managed assets...... 18.1% 21.9% ======== ========= Volume Securitized: Specialty Finance-- commercial................... $ 963.3 $ 409.3 Specialty Finance-- consumer..................... -- 367.1 Equipment Finance................................ 273.1 461.0 ======== ========= Total volume securitized......................... $1,236.4 $ 1,237.4 ======== ========= Our securitization activity relating to commercial finance receivables was $1.2 billion, as the economics remained favorable to complete these sales. During the second half of 2003 we decided to grow the consumer home equity portfolio on-balance sheet. Under our typical asset-backed securitization, we sell a quot;poolquot; of secured loans or leases to a special-purpose entity, typically a trust. The special-purpose entity, in turn, issues certificates and/or notes that are collateralized by the pool and entitle the holders thereof to participate in certain pool cash flows. We retain the servicing of the securitized contracts, for which we earn a servicing fee. We also participate in certain quot;residualquot; cash flows (cash flows after payment of principal and interest to certificate and/or note holders, servicing fees and other credit-related disbursements). At the date of securitization, we estimate the quot;residualquot; cash flows to be received over the life of the securitization, record the present value of these cash flows as a retained interest in the securitization (retained interests can include bonds issued by the special-purpose entity, cash reserve accounts on deposit in the special-purpose entity or interest only receivables) and typically recognize a gain. In estimating residual cash flows and the value of the retained interests, we make a variety of financial assumptions, including pool credit losses, prepayment speeds and discount rates. These assumptions are supported by both our historical experience and © 2004. EDGAR Online, Inc.
  • 71. anticipated trends relative to the particular products securitized. Subsequent to recording the retained interests, we review them quarterly for impairment based on estimated fair value. These 41 © 2004. EDGAR Online, Inc.
  • 72. reviews are performed on a disaggregated basis. Fair values of retained interests are estimated utilizing current pool demographics, actual note/certificate outstandings, current and anticipated credit losses, prepayment speeds and discount rates. The key assumptions used in measuring the retained interests at the date of securitization for transactions completed during the quarter ended March 31, 2004 were as follows: Commercial Equipment ------------------------- Specialty Equipment Finance Finance --------- --------- Weighted average prepayment speed............... 40.10% 11.62% Weighted average expected credit losses......... 0.44% 0.84% Weighted average discount rate.................. 6.82% 9.00% Weighted average life (in years)................ 1.25 1.84 Key assumptions used in calculating the fair value of the retained interests in securitized assets by product type at March 31, 2004 were as follows: Commercial Equipment Consumer ---------------------- ------------------------------- Home Equity and Recreational Specialty Equipment Manufactured Vehicles and Finance Finance Housing Boat --------- --------- --------------- ------------ Weighted average prepayment speed......... 25.68% 13.38% 26.27% 17.77% Weighted average expected credit losses... 1.13% 1.50% 1.33% 1.13% Weighted average discount rate............ 7.92% 9.76% 13.09% 14.18% Weighted average life (in years).......... 1.08 1.40 3.08 3.04 The Specialty Finance -- commercial securitized assets include receivables originated to consumers through DFS. Securitization and Joint Venture Activities We utilize special purpose entities (quot;SPEsquot;) and joint ventures in the normal course of business to execute securitization transactions and conduct business in key vendor relationships. Securitization Transactions -- SPEs are used to achieve quot;true salequot; requirements for these transactions in accordance with SFAS No. 140, quot;Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.quot; Pools of assets are originated or acquired and sold to SPEs, which in turn issue debt securities to investors solely backed by asset pools. Accordingly, CIT has no legal obligations to repay the securities in the event of a default by the SPE. CIT retains the servicing rights and participates in certain cash flows of the pools. The present value of expected net cash flows that exceeds the estimated cost of servicing is recorded in other assets as a quot;retained interest.quot; Assets securitized are shown in our managed assets and our capitalization ratios on a managed basis. © 2004. EDGAR Online, Inc.
  • 73. Under the recently issued rules relating to consolidation and SPEs, non-qualifying securitization entities have to be consolidated. We believe that all of our existing asset-backed SPE structures meet the definition of a qualifying special purpose entity (quot;QSPEquot;) as defined by SFAS No. 140 and therefore will continue to qualify as off-balance sheet transactions. As part of these related activities, CIT entered into $2.8 billion in notional amount of hedge transactions to protect the related trusts against interest rate risk. CIT is insulated from this risk by entering into offsetting swap transactions with third parties totaling $2.8 billion in notional amount at March 31, 2004. Joint Ventures -- We utilize joint ventures organized through distinct legal entities to conduct financing activities with certain strategic vendor partners. Receivables are originated by the joint venture and purchased by CIT. The vendor partner and CIT jointly own these distinct legal entities, and there is no third-party debt involved. These arrangements are accounted for using the equity method, with profits and losses distributed according to the joint venture agreement. See disclosure in Item 1. Financial Statements, Note 8 -- Certain Relationships and Related Transactions. 42 © 2004. EDGAR Online, Inc.
  • 74. Capitalization The following table presents information regarding our capital structure ($ in millions). March 31, December 31, 2004 2003 --------- ------------ Commercial paper................................................................ $ 4,820.2 $ 4,173.9 Term debt....................................................................... 29,000.5 29,239.2 Preferred Capital Securities.................................................... 255.1 255.5 Stockholders' equity(1)......................................................... 5,584.3 5,427.8 --------- --------- Total capitalization............................................................ 39,660.1 39,096.4 Goodwill and other intangible assets............................................ (485.5) (487.7) --------- --------- Total tangible capitalization................................................... $39,174.6 $38,608.7 ========= ========= Tangible stockholders' equity(1) and Preferred Capital Securities to managed assets............................................................. 10.69% 10.45% Total debt (excluding overnight deposits) to tangible stockholders' equity(1) and Preferred Capital Securities.................................... 6.15x 6.14x (1) Stockholders' equity excludes the impact of the accounting change for derivative financial instruments described in Note 7 to the Consolidated Financial Statements and certain unrealized gains or losses on retained interests and investments, as these amounts are not necessarily indicative of amounts that will be realized. See quot;Non-GAAP Financial Measurements.quot; The preferred capital securities are 7.70% Preferred Capital Securities issued in 1997 by CIT Capital Trust I, a wholly-owned subsidiary. CIT Capital Trust I invested the proceeds of that issue in Junior Subordinated Debentures of CIT having identical rates and payment dates. Consistent with rating agency measurements, preferred capital securities are included in tangible equity in our leverage ratios. See quot;Non-GAAP Financial Measurementsquot; for additional information. See quot;Liquidity Risk Managementquot; for discussion of risks impacting our liquidity and capitalization. Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect reported amounts of assets and liabilities, the reported amounts of income and expense during the reporting period and the disclosure of contingent assets and liabilities at the date of the financial statements. We consider accounting estimates relating to the following to be critical in applying our accounting policies: o Investments o Charge-off of Finance Receivables o Impaired Loans o Reserve for Credit Losses o Retained Interests in Securitizations o Lease Residual Values o Goodwill o Deferred Income Taxes There have been no significant changes to the methodologies and processes used in developing estimates relating to these items from what is described in our 2003 Annual Report on Form 10-K. 43 © 2004. EDGAR Online, Inc.
  • 75. Statistical Data The following table presents components of net income as a percent of AEA, along with other selected financial data ($ in millions): Quarters Ended March 31, ------------------------ 2004 2003 ---------- ---------- Finance income..................................................... 9.80% 10.86% Interest expense................................................... 3.23% 4.11% --------- --------- Net finance income............................................... 6.57% 6.75% Depreciation on operating lease equipment.......................... 2.55% 3.22% --------- --------- Net finance margin............................................... 4.02% 3.53% Provision for credit losses........................................ 0.93% 1.19% --------- --------- Net finance margin after provision for credit losses............... 3.09% 2.34% Other revenue...................................................... 2.50% 2.77% Gain (loss) on venture capital investments......................... 0.01% (0.05)% --------- --------- Operating margin................................................... 5.60% 5.06% --------- --------- Salaries and general operating expenses............................ 2.68% 2.60% Gain on redemption of debt......................................... 0.45% -- --------- --------- Income (loss) before provision for income taxes.................... 3.37% 2.46% Provision for income taxes......................................... (1.32)% (0.96)% Dividends on preferred capital securities, after tax............... -- (0.03)% --------- --------- Net income (loss)................................................ 2.05% 1.47% ========= ========= Average Earning Assets............................................. $36,865.1 $34,600.6 ========= ========= Non-GAAP Financial Measurements The SEC adopted Regulation G, which applies to any public disclosure or release of material information that includes a non-GAAP financial measure. The accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosure about Market Risk contain certain non-GAAP financial measures. The SEC defines a non-GAAP financial measure as a numerical measure of a company's historical or future financial performance, financial position, or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the financial statements or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Non-GAAP financial measures disclosed in this report are meant to provide additional information and insight relative to historical operating results and financial position of the business, are used by management in its analysis and, in certain cases, to provide financial information that is presented to rating agencies and other users of financial information. These measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies. 44 © 2004. EDGAR Online, Inc.
  • 76. Selected non-GAAP disclosures are presented and reconciled in the table below ($ in millions): March 31, December 31, March 31, 2004 2003 2003 --------- ------------ --------- Managed assets(1): Finance receivables.......................................... $32,187.4 $31,300.2 $28,654.6 Operating lease equipment, net............................... 7,576.2 7,615.5 6,831.4 Finance receivables held for sale............................ 1,006.2 918.3 1,273.0 Equity and venture capital investments (included in other assets) 251.8 249.9 334.3 --------- -------- --------- Total financing and leasing portfolio assets................. 41,021.6 40,083.9 37,093.3 Securitized assets........................................... 9,067.0 9,651.7 10,387.7 --------- -------- --------- Managed Assets............................................... $50,088.6 $49,735.6 $47,481.0 ========= ========= ========= Earning assets(2): Total financing and leasing portfolio assets................. $41,021.6 $40,083.9 $37,093.3 Credit balances of factoring clients......................... (3,619.4) (3,894.6) (2,437.9) --------- --------- --------- Earning assets............................................... $37,402.2 $36,189.3 $34,655.4 ========= ========= ========= Tangible equity(3): Total equity................................................. $ 5,492.7 $ 5,394.2 $ 4,996.6 Other comprehensive loss relating to derivative financial instruments.................................................. 102.9 41.3 92.6 Unrealized gain on securitization investments................ (11.3) (7.7) (12.5) Goodwill and intangible assets............................... (485.5) (487.7) (399.8) --------- --------- --------- Tangible common equity....................................... 5,098.8 4,940.1 4,676.9 Preferred capital securities................................. 255.1 255.5 256.8 --------- --------- --------- Tangible equity.............................................. $ 5,353.9 $ 5,195.6 $ 4,933.7 ========= ========= ========= Debt, net of overnight deposits(4): Total Debt................................................... $34,075.8 $33,668.6 $32,551.8 Overnight deposits........................................... (884.0) (1,529.4) (1,432.5) © 2004. EDGAR Online, Inc.
  • 77. Preferred capital securities................................. (255.1) (255.5) -- --------- --------- --------- Debt, net of overnight deposits.............................. $32,936.7 $31,883.7 $31,119.3 ========= ========= ========= Earnings per share, excluding certain items(5) GAAP Earnings per share...................................... $ 0.88 $ 0.72 $ 0.60 Gain on debt redemption...................................... (0.12) (0.14) -- Loss on venture capital investments.......................... -- 0.17 0.01 --------- --------- --------- Adjusted earnings per share.................................. $ 0.76 $ 0.75 $ 0.61 ========= ========= ========= (1) Managed assets are utilized in certain credit and expense ratios. Securitized assets are included in managed assets because CIT retains certain credit risk and the servicing related to assets that are funded through securitizations. (2) Earning assets are utilized in certain revenue and earnings ratios. Earning assets are net of credit balances of factoring clients. This net amount, which corresponds to amounts funded, is a basis for revenues earned, such as finance income and factoring commissions. (3) Tangible equity is utilized in leverage ratios, and is consistent with our presentation to rating agencies. Other comprehensive losses and unrealized gains on securitization investments (both included in the separate component of equity) are excluded from the calculation, as these amounts are not necessarily indicative of amounts which will be realized. (4) Debt, net of overnight deposits, is utilized in certain leverage ratios. Overnight deposits are excluded from these calculations, as these amounts are retained by the Company to repay debt. Overnight deposits are reflected in both debt and cash and cash equivalents. (5) The EPS related to the items listed are shown separately, as the items are not indicative of our on-going operations. 45 © 2004. EDGAR Online, Inc.
  • 78. Forward-Looking Statements Certain statements contained in this document are quot;forward-looking statementsquot; within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. All statements contained herein that are not clearly historical in nature are forward-looking and the words quot;anticipate,quot; quot;believe,quot; quot;expect,quot; quot;estimatequot; and similar expressions are generally intended to identify forward-looking statements. Any forward-looking statements contained herein, in press releases, written statements or other documents filed with the Securities and Exchange Commission or in communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls, concerning our operations, economic performance and financial condition are subject to known and unknown risks, uncertainties and contingencies. Forward-looking statements are included, for example, in the discussions about: o our liquidity risk management, o our credit risk management, o our asset/liability risk management, o our funding, borrowing costs and net finance margin o our capital, leverage and credit ratings, o our operational and legal risks, o our commitments to extend credit or purchase equipment, and o how we may be affected by legal proceedings. All forward-looking statements involve risks and uncertainties, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Also, forward-looking statements are based upon management's estimates of fair values and of future costs, using currently available information. Therefore, actual results may differ materially from those expressed or implied in those statements. Factors that could cause such differences include, but are not limited to: o risks of economic slowdown, downturn or recession, o industry cycles and trends, o risks inherent in changes in market interest rates and quality spreads, o funding opportunities and borrowing costs, o changes in funding markets, including commercial paper, term debt and the asset-backed securitization markets, o uncertainties associated with risk management, including credit, prepayment, asset/liability, interest rate and currency risks, o adequacy of reserves for credit losses, o risks associated with the value and recoverability of leased equipment and lease residual values, o changes in laws or regulations governing our business and operations, o changes in competitive factors, and o future acquisitions and dispositions of businesses or asset portfolios. 46 © 2004. EDGAR Online, Inc.
  • 79. Item 4. Controls and Procedures As of the end of the period covered by this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company's disclosure controls and procedures are designed to ensure that the information that the Company must disclose in its reports filed under the Securities Exchange Act is communicated and processed in a timely manner. Albert R. Gamper Jr. Chairman and Chief Executive Officer, and Joseph M. Leone, Vice Chairman and Chief Financial Officer, participated in this evaluation. Based on this evaluation, Messrs. Gamper and Leone concluded that, during the last fiscal quarter covered by this report, the Company's disclosure controls and procedures were effective, except as noted in the next paragraph. Since the date of the evaluation described above, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect those controls. In connection with the June 2001 acquisition by Tyco, our income tax compliance, reporting and planning function was transferred to Tyco. Following our 2002 IPO, we classified our tax reporting as a quot;reportable conditionquot;, as defined by standards established by the American Institute of Certified Public Accountants. We have made substantial progress in rebuilding our tax reporting and compliance functions, including hiring and training personnel, rebuilding tax reporting systems, preparing amendments to prior period U.S. Federal income tax returns, and implementing processes and controls with respect to income tax reporting and compliance. During the quarter, we completed processes and developed the data for preparing a tax basis balance sheet to complete the analysis of deferred tax assets and liabilities as of December 31, 2003. Further work continues in the areas of quality control, proof and reconciliation and the tax basis balance sheet analysis is nearing completion. Future income tax return filings and the completion of the aforementioned analysis of deferred tax assets and liabilities could result in reclassifications amongst deferred tax assets and liabilities. 47 © 2004. EDGAR Online, Inc.
  • 80. PART II. OTHER INFORMATION Item 1. Legal Proceedings On April 10, 2003, a putative class action lawsuit, asserting claims under the Securities Act of 1933, was filed in the United States District Court for the Southern District of New York against CIT, its Chief Executive Officer and its Chief Financial Officer. The lawsuit contained allegations that the registration statement and prospectus prepared and filed in connection with CIT's 2002 IPO were materially false and misleading, principally with respect to the adequacy of CIT's telecommunications-related loan loss reserves at the time. The lawsuit purported to have been brought on behalf of all those who purchased CIT common stock in or traceable to the IPO, and sought, among other relief, unspecified damages or rescission for those alleged class members who still hold CIT stock and unspecified damages for other alleged class members. On June 25, 2003, by order of the United States District Court, the lawsuit was consolidated with five other substantially similar suits, all of which had been filed after April 10, 2003 and one of which named as defendants some of the underwriters in the IPO and certain former directors of CIT. Glickenhaus & Co., a privately held investment firm, has been named lead plaintiff in the consolidated action. On September 16, 2003, an amended and consolidated complaint was filed. That complaint contains substantially the same allegations as the original complaints. In addition to the foregoing, two similar suits were brought by certain shareholders on behalf of CIT against CIT and some of its present and former directors under Delaware corporate law. CIT believes that the allegations in each of these actions are without merit and that its disclosures were proper, complete and accurate. CIT intends to vigorously defend itself in these actions. In addition, there are various legal proceedings pending against CIT, which have arisen in the ordinary course of business. Management believes that the aggregate liabilities, if any, arising from such actions, including the class action suit above, will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of CIT. Item 2. Common Stock Repurchase Activity The following table details the repurchase activity of CIT common stock during the quarter ($ in millions, except average price which is in whole dollars). Number of Average Shares Price Amount ---------- ------- ------ Balance at December 31, 2003........ 43,529 $35.48 $ 1.5 -------- ------ ------ Purchases related to exercise of options and other benefit plans January.......................... 544,000 $39.16 21.3 February......................... 221,800 $38.46 8.5 March............................ 185,000 $39.12 7.3 -------- ------ ------ Total Purchases.................. 950,800 $38.99 37.1 -------- ------ ------ Re-issuances........................ (976,807) $38.83 (37.9) -------- ------ ------ Balance at March 31, 2004........... 17,522 $39.08 $ 0.7 ======== ====== ====== None of the above activity relates to the recently announced program described below. On April 21, 2004, our Board of Directors approved a common stock repurchase program to acquire up to three million shares of our outstanding common stock. The program authorizes the company to purchase shares on the open market from time to time over a two-year period beginning April 23, 2004. The repurchased common stock will be held as treasury shares and may be used for the issuance of shares under CIT's employee stock plans. Acquisitions under the share repurchase program will be made from time to time at prevailing prices as permitted by applicable laws, and subject to market conditions and other factors. The program may be © 2004. EDGAR Online, Inc.
  • 81. discontinued at any time and is not expected to have a significant impact on our capitalization. 48 © 2004. EDGAR Online, Inc.
  • 82. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1 Second Restated Certificate of Incorporation of the Company (incorporated by reference to Form 10-Q filed by CIT on August 12, 2003). 3.2 Amended and Restated By-laws of the Company (incorporated by reference to Form 10-Q filed by CIT on August 12, 2003). 4.1 Indenture dated as of August 26, 2002 by and among CIT Group Inc., Bank One Trust Company, N.A., as Trustee and Bank One NA, London Branch, as London Paying Agent and London Calculation Agent, for the issuance of unsecured and unsubordinated debt securities (incorporated by reference to Exhibit 4.18 to Form 10-K filed by CIT on February 26, 2003). 4.2 Form of 364-Day Credit Agreement, dated as of April 14, 2004, among CIT Group Inc., the several banks and financial institutions named therein, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers and bookrunners, JPMorgan Chase Bank as administrative agent, Bank of America, N.A. and Citibank, N.A. as syndication agents and Barclays Bank PLC as documentation agent. 4.3 Form of 5-Year Credit Agreement, dated as of April 14, 2004, among CIT Group Inc., the several banks and financial institutions named therein, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as joint lead arrangers and bookrunners, JPMorgan Chase Bank, as administrative agent, Bank of America, N.A. and Citibank, N.A. as syndication agents and Barclays Bank PLC, as documentation agent. 12.1 CIT Group Inc. and Subsidiaries Computation of Earnings to Fixed Charges. 31.1 Certification of Albert R. Gamper, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Joseph M. Leone pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Albert R. Gamper, Jr. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Joseph M. Leone pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K Current Report on Form 8-K filed January 22, 2004, reporting (i) that CIT declared a dividend of $0.13 per share, payable February 27, 2004 to shareholders of record on February 15, 2004, and (ii) the financial results of CIT as of and for the quarter and year ended December 31, 2003. 49 © 2004. EDGAR Online, Inc.
  • 83. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CIT GROUP INC. By: /s/ Joseph M. Leone ......................................... Joseph M. Leone Vice Chairman and Chief Financial Officer By: /s/ William J. Taylor ......................................... William J. Taylor Executive Vice President, Controller and Principal Accounting Officer May 7, 2004 50 © 2004. EDGAR Online, Inc.
  • 84. Exhibit 4.2 Execution Copy CIT GROUP INC. $2,100,000,000 364-DAY CREDIT AGREEMENT Dated as of April 14, 2004 J.P. MORGAN SECURITIES INC., as Joint Lead Arranger and Bookrunner BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Bookrunner JPMORGAN CHASE BANK, as Administrative Agent BANK OF AMERICA, N.A., as Syndication Agent CITIBANK, N.A., as Syndication Agent and BARCLAYS BANK PLC, as Documentation Agent © 2004. EDGAR Online, Inc.
  • 85. ii TABLE OF CONTENTS Page SECTION 1. DEFINITIONS.........................................................1 1.1. Defined Terms......................................................1 1.2. Other Definitional Provisions.....................................12 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS....................................12 2.1. Commitments.......................................................12 2.2. Revolving Credit Borrowing Procedure..............................14 2.3. Competitive Bid Borrowing Procedure...............................15 2.4. Repayment of Loans; Evidence of Debt..............................17 2.5. Facility Fee; Administrative Agent's Fee..........................18 2.6. Utilization Fee...................................................18 2.7. Extension of Termination Date.....................................18 2.8. Termination or Reduction of Commitments...........................20 2.9. Optional Prepayments of Revolving Credit Loans....................20 2.10. Conversion and Continuation Options...............................21 2.11. Applicable Interest Rate Margins, Facility Fee Rate and Utilization Fee................................................21 2.12. Minimum Amounts of Tranches.......................................22 2.13. Interest Rates and Payment Dates..................................22 2.14. Computation of Interest and Fees..................................23 2.15. Inability to Determine Interest Rate..............................23 2.16. Pro Rata Treatment and Payments...................................24 2.17. Illegality........................................................25 2.18. Requirements of Law...............................................25 2.19. Taxes.............................................................27 2.20. Indemnity.........................................................29 © 2004. EDGAR Online, Inc.
  • 86. 2.21. Actions of Banks..................................................30 2.22. Lending Installations.............................................30 2.23. Removal of Banks..................................................30 2.24. Replacement of Banks..............................................30 SECTION 3. REPRESENTATIONS AND WARRANTIES.....................................31 3.1. Financial Condition...............................................31 3.2. No Change.........................................................31 3.3. Corporate Existence; Compliance with Law; Significant Subsidiaries.......................................31 3.4. Corporate Power; Authorization; Enforceable Obligations...........31 3.5. No Legal Bar......................................................32 3.6. No Material Litigation............................................32 3.7. No Default........................................................32 3.8. Aggregation of the Representations and Warranties Relating to Net Worth..........................................32 3.9. Federal Regulations...............................................32 © 2004. EDGAR Online, Inc.
  • 87. iii 3.10. ERISA.............................................................33 3.11. Investment Company Act............................................33 3.12. Purpose of Loans..................................................33 SECTION 4. CONDITIONS PRECEDENT...............................................33 4.1. Conditions to Initial Loans.......................................33 4.2. Conditions to Each Loan...........................................34 SECTION 5. AFFIRMATIVE COVENANTS..............................................35 5.1. Financial Statements..............................................35 5.2. Payment of Obligations............................................36 5.3. Conduct of Business and Maintenance of Existence..................36 5.4. Notices...........................................................37 5.5. Status of Obligations.............................................37 5.6. Maintenance of Property...........................................37 5.7. Payment of Taxes..................................................38 5.8. Use of Proceeds...................................................38 SECTION 6. NEGATIVE COVENANTS.................................................38 6.1. Negative Pledge...................................................38 6.2. Consolidations, Mergers and Sales of Assets.......................41 6.3. Net Worth.........................................................41 SECTION 7. EVENTS OF DEFAULT..................................................41 SECTION 8. THE AGENTS.........................................................43 8.1. Appointment.......................................................43 © 2004. EDGAR Online, Inc.
  • 88. 8.2. Delegation of Duties..............................................44 8.3. Exculpatory Provisions............................................44 8.4. Reliance by Administrative Agent..................................44 8.5. Notice of Default.................................................44 8.6. Non-Reliance on Administrative Agent and Other Banks..............45 8.7. Indemnification...................................................45 8.8. Administrative Agent in Its Individual Capacity...................46 8.9. Successor Administrative Agent....................................46 SECTION 9. MISCELLANEOUS......................................................46 9.1. Amendments and Waivers............................................46 9.2. Notices...........................................................47 9.3. No Waiver; Cumulative Remedies....................................48 9.4. Survival of Representations and Warranties........................48 9.5. Payment of Expenses and Taxes.....................................48 9.6. Successors and Assigns; Participations; Purchasing Banks..........49 © 2004. EDGAR Online, Inc.
  • 89. iv 9.7. Dissemination of Information; Confidentiality.....................51 9.8. Adjustments.......................................................52 9.9. Counterparts......................................................53 9.10. Severability......................................................53 9.11. Integration.......................................................53 9.12. GOVERNING LAW.....................................................53 9.13. Submission To Jurisdiction; Waivers...............................53 9.14. WAIVERS OF JURY TRIAL.............................................54 9.15. USA PATRIOT Act...................................................54 SCHEDULES I. Commitments and Bank Information II. List of Significant Subsidiaries EXHIBITS A-1 Form of Revolving Credit Note A-2 Form of Competitive Bid Note B-1 Form of Opinion of Counsel to the Company B-2 Form of Opinion of Simpson Thacher & Bartlett LLP C Form of Commitment Transfer Supplement D-1 Form of Officer's Certificate D-2 Form of Secretary's Certificate E Form of Incumbency Certificate F Form of Borrowing Notice G Form of Competitive Bid Request H Form of Notice of Competitive Bid Request I Form of Competitive Bid J Form of Competitive Bid Accept/Reject Letter K Form of Exemption Certificate © 2004. EDGAR Online, Inc.
  • 90. 364-DAY CREDIT AGREEMENT, dated as of April 14, 2004, among CIT GROUP INC., a Delaware corporation (the quot;Companyquot;), the several banks and other financial institutions from time to time on Schedule I to this Agreement (the quot;Banksquot;), J.P. MORGAN SECURITIES INC. and BANC OF AMERICA SECURITIES LLC, as joint lead arrangers and bookrunners, (in such capacity, the quot;Joint Lead Arrangersquot;), CITIBANK, N.A. and BANK OF AMERICA, N.A., as syndication agents (in such capacity, the quot;Syndication Agentsquot;), BARCLAYS BANK PLC, as documentation agent (in such capacity, the quot;Documentation Agentquot;) and JPMORGAN CHASE BANK, as administrative agent (in such capacity, the quot;Administrative Agentquot;). W I T N E S S E T H: WHEREAS, the Company has requested $2,100,000,000 in senior unsecured revolving credit facilities from the Banks for general corporate purposes; and WHEREAS, the Banks are willing to provide the requested senior unsecured revolving credit facilities on the terms and conditions set forth herein; NOW, THEREFORE, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: quot;Additional Bankquot;: as defined in subsection 2.1(c)(ii). quot;Additional Bank Agreementquot;: as defined in subsection 2.1(c)(ii). quot;Administrative Agentquot;: as defined in the preamble hereto. quot;Affiliatequot;: as to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. quot;Agentsquot;: the collective reference to the Administrative Agent, the Syndication Agents, the Documentation Agent and the Joint Lead Arrangers. quot;Aggregate Available Commitmentquot;: at any time, the excess, if any, of (a) the Aggregate Commitment over (b) the aggregate principal amount of all Loans then outstanding. quot;Aggregate Commitmentquot;: the aggregate amount of the Banks' Commitments. © 2004. EDGAR Online, Inc.
  • 91. 2 quot;Agreementquot;: this 364-Day Credit Agreement, as amended, supplemented or otherwise modified from time to time. quot;Agreement Accounting Principlesquot;: GAAP applied in a manner consistent with those principles used in the preparation of the financial statements referred to in subsection 3.1. quot;Applicable Eurodollar Marginquot;: as defined in subsection 2.11. quot;Applicable Facility Fee Ratequot;: as defined in subsection 2.11. quot;Applicable Marginquot;: as defined in subsection 2.11. quot;Applicable Ratequot;: as defined in subsection 2.11. quot;Applicable Utilization Fee Ratequot;: as defined in subsection 2.11. quot;Banksquot;: as defined in the preamble hereto and any Person becoming party hereto as a lender pursuant to Section 9.6(c). quot;Barclaysquot;: Barclays Bank PLC. quot;Base Ratequot;: a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Corporate Base Rate in effect on such day, and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Corporate Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Corporate Base Rate or the Federal Funds Effective Rate, respectively. The Administrative Agent will give notice promptly to the Company and the Banks of changes in the Base Rate. quot;Base Rate Loanquot;: any Revolving Credit Loan bearing interest at a rate determined by reference to the Base Rate in accordance with Section 2. quot;BofAquot;: Bank of America, N.A. quot;Borrowingquot;: a group of Loans of a single type made by the Banks (or, in the case of a Competitive Bid Borrowing, by the Bank or Banks whose Competitive Bids have been accepted pursuant to subsection 2.3) on a single date and as to which a single Interest Period is in effect. quot;Borrowing Datequot;: a date on which a Borrowing is made hereunder. © 2004. EDGAR Online, Inc.
  • 92. 3 quot;Business Dayquot;: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. quot;Citibankquot;: Citibank, N.A. quot;Closing Datequot;: the date on which the conditions precedent set forth in subsection 4.1 is satisfied. quot;Codequot;: the Internal Revenue Code of 1986, as amended from time to time. quot;Commitmentquot;: as to any Bank, the obligation of such Bank to make Revolving Credit Loans to the Company in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Bank's name on Schedule I or in any assignment and acceptance to which any Bank may be a party, as the same may be increased from time to time in accordance with subsection 2.1(c) or decreased or terminated from time to time in accordance with subsection 2.8. quot;Commitment Increase Supplementquot;: as defined in subsection 2.1(c)(ii). quot;Commitment Percentagequot;: as to any Bank, (a) at any time prior to the expiration or termination of the Commitments (expressed as a percentage), the ratio of such Bank's Commitment to the Aggregate Commitment, and (b) at any time after the expiration or termination of the Commitments (expressed as a percentage), the ratio of (x) the aggregate principal amount of such Bank's Loans then outstanding to (y) the aggregate principal amount of the Loans then outstanding. quot;Commitment Periodquot;: the period from and including the last to occur of (i) the Closing Date and (ii) April 15, 2004, to but not including the Termination Date or such earlier date on which the Aggregate Commitment shall terminate as provided herein. quot;Commitment Transfer Supplementquot;: as defined in subsection 9.6(c) hereto. quot;Commonly Controlled Entityquot;: an entity, whether or not incorporated, which is under common control with the Company within the meaning of Section 4001 of ERISA or is part of a group which includes the Company and which is treated as a single employer under Section 414 of the Code. quot;Competitive Bidquot;: an offer by a Bank to make a Competitive Bid Loan pursuant to subsection 2.3. quot;Competitive Bid Accept/Reject Letterquot;: a notification made by the Company pursuant to subsection 2.3(d) in the form of Exhibit J. quot;Competitive Bid Borrowingquot;: a Borrowing consisting of a Competitive Bid Loan or concurrent Competitive Bid Loans from the Bank or Banks whose Competitive Bids for such Borrowing have been accepted by the Company under the bidding procedure described in subsection 2.3. © 2004. EDGAR Online, Inc.
  • 93. 4 quot;Competitive Bid Loanquot;: a Loan made by a Bank to the Company pursuant to the bidding procedure described in subsection 2.3. Each Competitive Bid Loan shall be a Eurodollar Competitive Bid Loan or a Fixed Rate Loan. quot;Competitive Bid Maturity Datequot;: as to each Competitive Bid Loan, the maturity date specified by the Company for such Competitive Bid Loan in the related Competitive Bid Request. quot;Competitive Bid Ratequot;: as to any Competitive Bid made by a Bank pursuant to subsection 2.3(b), (i) in the case of a Eurodollar Competitive Bid Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest offered by the Bank making such Competitive Bid. quot;Competitive Bid Requestquot;: a request made pursuant to subsection 2.3 in the form of Exhibit G. quot;Continuing Banksquot;: as defined in subsection 2.7(a). quot;Contractual Obligationquot;: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. quot;Corporate Base Ratequot;: the rate of interest from time to time announced by JPMorgan Chase Bank at its principal office as its prime commercial lending rate. quot;Debt Ratingsquot;: the collective reference to LT Ratings and ST Ratings. The Debt Ratings shall be determined from the most recent public announcement of any changes in the Debt Ratings. If the rating system of S&P or Moody's shall change, the Company and the Administrative Agent shall negotiate in good faith to amend this definition to reflect such changed rating system and, pending the effectiveness of such amendment (which shall require the approval of Required Banks), the Debt Rating shall be determined by reference to the rating most recently in effect prior to such change. quot;Defaultquot;: any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. quot;Documentation Agentquot;: as defined in the preamble hereto. quot;Dollarsquot; and quot;$quot;: dollars in lawful currency of the United States. quot;ERISAquot;: the Employee Retirement Income Security Act of 1974, as amended from time to time. quot;Eurodollar Borrowingquot;: a Borrowing comprised of Eurodollar Loans. quot;Eurodollar Competitive Bid Borrowingquot;: a Borrowing comprised of Eurodollar Competitive Bid Loans. © 2004. EDGAR Online, Inc.
  • 94. 5 quot;Eurodollar Competitive Bid Loanquot;: any Competitive Bid Loan bearing interest at a rate determined by reference to the Eurodollar Rate in accordance with the provisions of Section 2. quot;Eurodollar Loanquot;: any Eurodollar Competitive Bid Loan or Eurodollar Revolving Credit Loan. quot;Eurodollar Ratequot;: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Working Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the quot;Eurodollar Ratequot; shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and the Company or, in the absence of such agreement, the quot;Eurodollar Ratequot; shall instead be the rate per annum equal to the average (rounded to the nearest 1/100th of 1%) of the respective rates notified to the Administrative Agent by each of the Reference Banks as the rate at which such Reference Bank is offered Dollar deposits at or about 10:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of its Eurodollar Loan to be outstanding during such Interest Period. quot;Eurodollar Revolving Credit Borrowingquot;: a Borrowing comprised of Eurodollar Revolving Credit Loans. quot;Eurodollar Revolving Credit Loanquot;: any Revolving Credit Loan bearing interest at a rate determined by reference to the Eurodollar Rate in accordance with the provisions of Section 2. quot;Event of Defaultquot;: any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. quot;Existing 364-Day Credit Agreementquot;: the 364-Day Credit Agreement, dated as of October 10, 2003, among the Company, the banks parties thereto, Citibank and BofA, as syndication agents, Barclays, as documentation agent and JPMorgan Chase Bank, as administrative agent, as amended, supplemented or otherwise modified from time to time. quot;Existing 5-Year Credit Agreementquot;: the 5-Year Credit Agreement, dated as of March 28, 2000, as amended, among the Company, the banks parties thereto, Barclays Bank PLC, BofA, Citibank and MIZUHO Corporate Bank, Ltd. (f/k/a The Dai-Ichi Kangyo Bank, Limited), as syndication agents and JPMorgan Chase Bank (f/k/a The Chase Manhattan Bank), as administrative agent. © 2004. EDGAR Online, Inc.
  • 95. 6 quot;Extension Noticequot;: as defined in subsection 2.7(a). quot;Federal Funds Effective Ratequot;: for any day, a rate per annum equal to (i) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York; or (ii) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day at approximately 10:00 A.M., New York City time, on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. quot;Fee Payment Datequot;: the last day of each calendar quarter, commencing June 30, 2004, the Termination Date and the Maturity Date. quot;Financing Leasequot;: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. quot;Fixed Rate Borrowingquot;: a Borrowing comprised of Fixed Rate Loans. quot;Fixed Rate Loanquot;: any Competitive Bid Loan bearing interest at a fixed percentage rate per annum (expressed in the form of a decimal to no more than four decimal places) specified by the Bank making such Loan in its Competitive Bid. quot;GAAPquot;: generally accepted accounting principles in the United States in effect from time to time. quot;Governmental Authorityquot;: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. quot;Hedging Agreementquot;: any swap, cap, collar, floor or other hedging agreement in respect of interest rates or currency exchange rates. For purposes of this Agreement, the amount of any obligations or liabilities in respect of any Hedging Agreement shall be the amounts, including any termination payments, that would be required to be paid to a counterparty upon early termination (in accordance with customary industry standards) rather than any notional amount with regard to which payments may be calculated. quot;Increasing Bankquot;: as defined in subsection 2.1(c)(ii). quot;Indebtednessquot;: of a Person means such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property or services other than accounts payable arising in the ordinary course of such Person's business, (iii) obligations, whether or not assumed, secured by Liens on property now or hereafter owned or acquired by such Person (other than carriers', warehousemen's, mechanics', repairmen's or other like nonconsensual statutory Liens arising in the ordinary course of business), (iv) obligations which are evidenced by notes, acceptances, or other similar instruments, (v) capitalized lease obligations, (vi) contingent obligations with respect to © 2004. EDGAR Online, Inc.
  • 96. 7 the Indebtedness of another Person, including but not limited to the obligation or liability of another which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes contingently liable upon; provided that any Indebtedness owing by the Company to any of its Subsidiaries or by any Subsidiary of the Company to the Company or by any Subsidiary of the Company to any other Subsidiary of the Company or any contingent obligation in respect thereof shall not constitute Indebtedness for purposes of this Agreement, and (vii) obligations for which such Person is obligated in respect of a letter of credit. For purposes of this Agreement, Indebtedness shall not include (A) any indebtedness of such Person to the extent (I) such indebtedness does not appear on the financial statement of such Person, (II) such indebtedness is recourse only to certain assets of such Person, and (III) the assets to which such indebtedness is recourse only appear on the financial statements of such Person net of such indebtedness, or (B) any indebtedness or other obligations issued by any Person (or by a trust or other entity established by such Person or any of its affiliates) which are primarily serviced by the cash flows of a discrete pool of receivables, leases or other financial assets which have been sold or transferred by the Company or any Subsidiary in securitization transactions which, in accordance with GAAP, are accounted for as sales for financial reporting purposes. It is understood and agreed that (1) the amount of any Indebtedness described in clause (iii) for which recourse is limited to certain property of such Person shall be the lower of (x) the amount of the obligation and (y) the fair market value of the property of such Person securing such obligation, and (2) the amount of any obligation described in clause (vi) shall be the lower of (x) the stated or determinable amount of the primary obligation in respect of which such contingent obligation is made, and (y) the maximum amount for which such Person may be liable pursuant to the terms of the agreement embodying such contingent obligation unless such primary obligation and the maximum amount for which such Person may be liable are not stated or determinable, in which case the amount of such contingent obligation shall be such Person's maximum, reasonably anticipated liability in respect thereof as determined by such Person in good faith. quot;Insolvencyquot;: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. quot;Interest Payment Datequot;: (a) as to any Base Rate Loan, the last day of each calendar quarter during which such Loan is outstanding and the Termination Date, and (b) as to any Loan other than a Base Rate Loan, the last day of the Interest Period applicable thereto and, in the case of a Eurodollar Loan with an Interest Period of more than three months, each day that would have been an Interest Payment Date for such Loan had successive Interest Periods of three months been applicable to such Loan and, in addition, the date the Company converts any Loan into a Loan of a different Type or having a different Interest Period. quot;Interest Periodquot;: (a) with respect to any Eurodollar Loan, (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Company in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter in the case of a Eurodollar Revolving Credit Loan, © 2004. EDGAR Online, Inc.
  • 97. 8 each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Company by irrevocable notice to the Administrative Agent not less than three Working Days prior to the last day of the then current Interest Period with respect thereto; and (b) with respect to any Fixed Rate Loan, the period commencing on the date of such Loan and ending on the date specified in the Competitive Bids in which the offer to make the Fixed Rate Loans comprising such Borrowing were extended, which shall not be earlier than fifteen days after the date of such Loan; provided that all of the foregoing provisions relating to Interest Periods are subject to the following: (A) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Working Day, such Interest Period shall be extended to the next succeeding Working Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Working Day; (B) any Interest Period that would otherwise extend beyond the Maturity Date shall end on the Maturity Date; and (C) any Interest Period pertaining to a Eurodollar Loan that begins on the last Working Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Working Day of a calendar month. quot;Joint Lead Arrangersquot;: as defined in the preamble hereto. quot;JPMorgan Chase Bankquot;: as defined in the preamble hereto. quot;Lending Installationquot;: any branch or office of any Bank selected by such Bank to be a Lending Installation in accordance with subsection 2.22. quot;Lienquot;: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). quot;Loanquot;: a Competitive Bid Loan, or a Revolving Credit Loan, whether made as a Eurodollar Loan, a Fixed Rate Loan or a Base Rate Loan, as permitted hereby. quot;LT Ratingquot;: as of any date of determination, the rating as determined by either S&P or Moody's (collectively, the quot;LT Ratingsquot;) of senior, unsecured long-term indebtedness for borrowed money of the Company, without third-party credit enhancement. © 2004. EDGAR Online, Inc.
  • 98. 9 quot;Marginquot;: as to any Eurodollar Competitive Bid Loan, the margin (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) to be added to or subtracted from the Eurodollar Rate to determine the interest rate applicable to such Loan, as specified in the Competitive Bid relating to such Loan. quot;Material Adverse Effectquot;: (a) a material adverse effect on the ability of the Company to perform its obligations under this Agreement (other than any such material adverse effect arising as a result of a general disruption in capital markets), or (b) a material adverse effect on the validity or enforceability against the Company of this Agreement or the material rights or remedies of the Administrative Agent or the Banks hereunder. quot;Maturity Datequot;: the first anniversary of the Termination Date (as extended from time to time). quot;Moody'squot;: Moody's Investors Service, Inc. and its successors. quot;Multiemployer Planquot;: a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. quot;Net Worthquot;: at any date of determination, total shareholders' equity of the Company and its Subsidiaries on a consolidated basis determined in accordance with Agreement Accounting Principles. quot;New 5-Year Credit Agreementquot;: the 5-Year Credit Agreement, dated as of April 14, 2004, among the Company, the several banks and other financial institutions parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as joint lead arrangers, BofA and Citibank, as syndication agents, Barclays, as documentation agent and JPMorgan Chase Bank, as administrative agent, as amended, supplemented or otherwise modified from time to time. quot;Non-Extending Banksquot;: as defined in subsection 2.7(a). quot;Non-U.S. Lenderquot;: as defined in subsection 2.19(b). quot;Other Bankquot;: as defined in subsection 2.1(c)(i). quot;Participantquot;: as defined in subsection 9.6(b). quot;PBGCquot;: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. quot;Personquot;: an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. quot;Planquot;: at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Company or a Commonly Controlled Entity is (or, if © 2004. EDGAR Online, Inc.
  • 99. 10 such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an quot;employerquot; as defined in Section 3(5) of ERISA. quot;Reference Banksquot;: JPMorgan Chase Bank, Barclays, BofA and Citibank. quot;Registerquot;: as defined in subsection 9.6(d). quot;Regulation Uquot;: Regulation U of the Board of Governors of the Federal Reserve System. quot;Reorganizationquot;: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. quot;Reportable Eventquot;: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsection .23, .24, .26, .28 or .30 of PBGC Reg.ss.4043. quot;Required Banksquot;: at a particular time, Banks whose Commitment Percentages aggregate at least 51% or, if the Aggregate Commitment has been terminated or for purposes of any decision to accelerate the Loans pursuant to Section 7, Banks in the aggregate holding at least 51% of the aggregate unpaid principal amount of the outstanding Loans. quot;Requirement of Lawquot;: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or final determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any material portion of its property or to which such Person or any material portion of its property is subject. quot;Responsible Officerquot;: the chief executive officer, the vice chairman, the president, any vice president of the Company or, with respect to financial matters, (a) the chief financial officer of the Company, (b) the treasurer of the Company, or (c) the controller of the Company. quot;Revolving Credit Borrowingquot;: a Borrowing consisting of simultaneous Revolving Credit Loans from each of the Banks. quot;Revolving Credit Loanquot;: a revolving credit loan made by a Bank to the Company pursuant to subsection 2.1. Each Revolving Credit Loan shall be a Eurodollar Revolving Credit Loan or a Base Rate Loan. quot;SECquot;: the Securities and Exchange Commission and any succeeding or analogous governmental body or agency. quot;S&Pquot;: Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc., and its successors. © 2004. EDGAR Online, Inc.
  • 100. 11 quot;Significant Subsidiariesquot;: (i) any Subsidiary listed on Schedule II attached hereto, and (ii) any other Subsidiary which fits the definition of Significant Subsidiary contained in Rule 1-02 of Regulation S-X promulgated by the SEC, other than a Subsidiary that is a special purpose entity formed for the purpose of securitizing, selling for securitization or otherwise facilitating the securitization of assets of the Company or any other Subsidiary. quot;Single Employer Planquot;: any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. quot;ST Ratingquot;: as of any date of determination, the rating as determined by either S&P or Moody's (collectively, the quot;ST Ratingsquot;) of senior, unsecured short-term indebtedness for borrowed money of the Company, without third-party credit enhancement. quot;Subsidiaryquot;: as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a quot;Subsidiaryquot; or to quot;Subsidiariesquot; in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. quot;Syndication Agentsquot;: as defined in the preamble hereto. quot;Termination Datequot;: April 13, 2005, as such date may be extended from time to time in accordance with subsection 2.7. quot;Tranchequot;: the collective reference to Loans or portions thereof the Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). quot;Transfer Effective Datequot;: as defined in subsection 9.6(c) hereto. quot;Transfereequot;: as defined in subsection 9.6(f). quot;Typequot;: when used in respect of any Loan or Borrowing, means the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, quot;Ratequot; shall include the Eurodollar Rate, the Base Rate and any fixed rate. quot;United Statesquot;: the United States of America. quot;Utilization Feequot;: as defined in subsection 2.6. quot;Working Dayquot;: any Business Day on which dealings in U.S. dollars and © 2004. EDGAR Online, Inc.
  • 101. 12 exchange between banks may be carried on in London, England. 1.2. Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Company and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words quot;hereofquot;, quot;hereinquot; and quot;hereunderquot; and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 2.1. Commitments. (a). Subject to the terms and conditions hereof, each Bank severally agrees to make Revolving Credit Loans to the Company from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not exceeding the amount of such Bank's Commitment. Notwithstanding anything to the contrary contained in this subsection 2.1, at no time shall the sum of (A) the outstanding aggregate principal amount of all Revolving Credit Loans made by all Banks, plus (B) the outstanding aggregate principal amount of all Competitive Bid Loans made by all Banks, exceed the Aggregate Commitment. During the Commitment Period the Company may borrow, pay or prepay and reborrow hereunder, all in accordance with the terms and conditions set forth in this Agreement. (b) The Revolving Credit Loans may from time to time be Eurodollar Revolving Credit Loans and/or Base Rate Loans, as determined by the Company and notified to the Administrative Agent in accordance with subsections 2.2 and 2.10, provided that no Loan shall be made as a Eurodollar Revolving Credit Loan after the day that is one month prior to the Termination Date. (c) (i) Notwithstanding anything to the contrary contained in this Agreement, the Company may request from time to time that the Aggregate Commitment be increased by an amount not less than $25,000,000 or a whole multiple of $10,000,000 in excess thereof, provided that the Company may only request such an increase once in any six-month period and in no event shall the Aggregate Commitment exceed $3,000,000,000. Such increase in the Aggregate Commitment shall be effected as follows: the Company may (I) request one or more of the Banks to increase the amount of its Commitment (which request shall be in writing and sent to the Administrative Agent to forward to such © 2004. EDGAR Online, Inc.
  • 102. 13 Bank or Banks) and/or (II) arrange for one or more banks or financial institutions not a party hereto (an quot;Other Bankquot;) to become parties to and lenders under this Agreement, provided that (w) the Administrative Agent shall have approved such Other Bank, which approval shall not be unreasonably withheld, (x) the minimum Commitment of such Other Bank equals or exceeds $15,000,000 and (y) after giving effect to such increase, no Bank shall have a Commitment hereunder which exceeds an amount equal to 20% of the Aggregate Commitment. In no event may any Bank's Commitment be increased without the prior written consent of such Bank, and the failure of any Bank to respond to the Company's request for an increase shall be deemed a rejection by such Bank of the Company's request. The Aggregate Commitment may not be increased if, at the time of any proposed increase hereunder, a Default or Event of Default has occurred and is continuing, or either of the Company's LT Ratings from Moody's or S&P is less than A3 or A-, respectively. Upon any request by the Company to increase the Aggregate Commitment hereunder, the Company shall be deemed to have represented and warranted on and as of the date of such request that no Default or Event of Default has occurred and is continuing. Notwithstanding anything contained in this Agreement to the contrary, no Bank shall have any obligation whatsoever to increase the amount of its Commitment, and each Bank may at its option, unconditionally and without cause, decline to increase its Commitment. (ii) If any Bank is willing, in its sole and absolute discretion, to increase the amount of its Commitment hereunder (such a Bank hereinafter referred to as an quot;Increasing Bankquot;), it shall enter into a written agreement to that effect with the Company and the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (a quot;Commitment Increase Supplementquot;), which agreement shall specify, among other things, the amount of the increased Commitment of such Increasing Bank. Upon the effectiveness of such Increasing Bank's increase in Commitment, Schedule I hereto shall, without further action, be deemed to have been amended as appropriate to reflect the increased Commitment of such Increasing Bank. Any Other Bank which is willing to become a party hereto and a lender hereunder and that has been approved by the Agent (which approval shall not be unreasonably withheld) shall enter into a written agreement with the Company and the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (an quot;Additional Bank Agreementquot;), which agreement shall specify, among other things, its Commitment hereunder. When such Other Bank becomes a Bank hereunder as set forth in the Additional Bank Agreement, Schedule I shall, without further action, be deemed to have been amended as appropriate to reflect the Commitment of such Other Bank. Upon the execution by the Administrative Agent, the Company and such Other Bank of such Additional Bank Agreement, such Other Bank shall become and be deemed a party hereto and a quot;Bankquot; hereunder for all purposes hereof and shall enjoy all rights and assume all obligations on the part of the Banks set forth in this Agreement, and its Commitment shall be the amount specified in its Additional Bank Agreement. Each Other Bank which executes and delivers an Additional Bank Agreement and becomes a party hereto and a quot;Bankquot; hereunder pursuant to such Additional Bank Agreement is hereinafter referred to as an quot;Additional Bank.quot; (iii) In no event shall an increase in a Bank's Commitment or the Commitment of an Other Bank pursuant to this subsection 2.1(c) become effective until the Administrative Agent shall have received a favorable written opinion of counsel for the © 2004. EDGAR Online, Inc.
  • 103. 14 Company, addressed to the Banks, with respect to the matters set forth in paragraphs 2 and 3 of Exhibit B-1 as they relate to this Agreement and the borrowings hereunder after giving effect to the increase in the Aggregate Commitment resulting from the increase in such Bank's Commitment or the extension of a Commitment by such Other Bank. In no event shall an increase in a Bank's Commitment or the Commitment of an Other Bank which results in the Aggregate Commitment exceeding the amount which is authorized at such time in resolutions previously delivered to the Administrative Agent become effective until the Administrative Agent shall have received a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Company authorizing the borrowings contemplated pursuant to such increase, certified by the Secretary or an Assistant Secretary of the Company. Concurrently with the execution by an Increasing Bank of a Commitment Increase Supplement or by an Additional Bank of an Additional Bank Agreement, the Company shall make such borrowing from such Increasing Bank or Additional Bank, and/or shall make such prepayment of outstanding Revolving Credit Loans, as shall be required to cause the aggregate outstanding principal amount of Revolving Credit Loans owing to each Bank (including each such Increasing Bank and Additional Bank) to be proportional to such Bank's share of the Aggregate Commitment after giving effect to any increase thereof. The Company agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense incurred as a result of any such prepayment in accordance with subsection 2.20, as applicable. (iv) No Other Bank may become an Additional Bank unless the Administrative Agent and the Company consent (which consent of the Administrative Agent shall not be unreasonably withheld) thereto by executing the Additional Bank Agreement signed by such bank or financial institution (or counterparts thereof), but no consent of any of the other Banks hereunder shall be required therefor. In no event shall the Commitment of any Bank be increased by reason of any bank or financial institution becoming an Additional Bank, or otherwise, but the Aggregate Commitment shall be increased by the amount of each Additional Bank's Commitment. Upon any Bank entering into a Commitment Increase Supplement or any Additional Bank becoming a party hereto, the Administrative Agent shall notify each other Bank thereof and shall deliver to each Bank a copy of the Additional Bank Agreement executed by such Additional Bank and the Commitment Increase Supplement executed by such Increasing Bank. 2.2. Revolving Credit Borrowing Procedure. Subject to the terms and conditions hereof, the Company may request Revolving Credit Loans during the Commitment Period on any Working Day, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Loans, or on any Business Day, otherwise, provided that the Company shall give the Administrative Agent irrevocable notice, substantially in the form of Exhibit F, (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, (a) three Working Days prior to the requested Borrowing Date, if all or any part of the requested Loans are to be initially Eurodollar Revolving Credit Loans or (b) on the Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the Borrowing is to be of Eurodollar Revolving Credit Loans, Base Rate Loans or a combination thereof and (iv) if the Borrowing is to be entirely or partly of Eurodollar Revolving Credit Loans, the amount of such Type of Loan and the length of the initial Interest Period therefor. Each Borrowing of Revolving Credit Loans shall be in an amount equal to (x) in the case of Base Rate Loans, $25,000,000 or a whole multiple of $5,000,000 in excess thereof (or, if © 2004. EDGAR Online, Inc.
  • 104. 15 the then Aggregate Available Commitment is less than $25,000,000, such lesser amount) and (y) in the case of Eurodollar Revolving Credit Loans, $25,000,000 or a whole multiple of $5,000,000 in excess thereof. Upon receipt of any such notice from the Company, the Administrative Agent shall promptly notify the Lending Installation of each Bank thereof. Each Bank will make the amount of its pro rata share of each Borrowing of Revolving Credit Loans available to the Administrative Agent at the office of the Administrative Agent specified in subsection 9.2 prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the Company in funds immediately available to the Administrative Agent. The Administrative Agent shall make the funds so received from the Banks immediately available to the Company at the Administrative Agent's aforesaid address or to an account designated by the Company. 2.3. Competitive Bid Borrowing Procedure. (a) To request Competitive Bids, the Company shall deliver to the Administrative Agent a Competitive Bid Request, substantially in the form of Exhibit G, to be received by the Administrative Agent (i) in the case of a Eurodollar Competitive Bid Borrowing, not later than 10:00 a.m, New York City time, four Working Days before a proposed Competitive Bid Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m, New York City time, one Business Day before a proposed Competitive Bid Borrowing. No Base Rate Loan shall be requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that does not conform substantially to the format of Exhibit G may be rejected in the Administrative Agent's sole discretion, and the Administrative Agent shall promptly notify the Company of such rejection by telecopier. Such request shall in each case refer to this Agreement and specify (x) whether the Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing (which shall be a Business Day and, in the case of a Eurodollar Competitive Bid Loan, a Working Day) and the aggregate principal amount thereof, which shall be a minimum principal amount of $25,000,000 and in an integral multiple of $5,000,000 (or an aggregate principal amount equal to the remaining balance of the available Commitments) and which will not cause the aggregate principal of all outstanding Loans to exceed the Aggregate Commitment, and (z) the Interest Period with respect thereto (which may not end after the Termination Date). The Competitive Bid Maturity Date for each Competitive Bid Loan shall be the date set forth therefor in the relevant Competitive Bid Request, which date shall be not less than fifteen days after the date of the Competitive Bid Borrowing and, in any event, shall not be later than the Termination Date. Promptly after its receipt of a Competitive Bid Request that is not rejected as aforesaid, the Administrative Agent shall invite by telecopier (in the form set forth in Exhibit H) the Banks to bid, on the terms and conditions of this Agreement, to make Competitive Bid Loans pursuant to the Competitive Bid Request. (b) Each Bank may, in its sole and absolute discretion, make one or more Competitive Bids to the Company responsive to a Competitive Bid Request. Each Competitive Bid by a Bank must be received by the Administrative Agent via telecopier, in the form of Exhibit I, (i) in the case of a Eurodollar Competitive Bid Borrowing, not later than 9:30 a.m., New York City time, three Working Days before a proposed Competitive Bid Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the Business Day of a proposed Competitive Bid Borrowing. Multiple bids will be accepted by the Administrative Agent. Competitive Bids that do not conform substantially to the format of Exhibit I may be rejected by the Administrative Agent after conferring with, and upon the instruction of, the Company, © 2004. EDGAR Online, Inc.
  • 105. 16 and the Administrative Agent shall notify the Bank making such nonconforming bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount (which shall be in a minimum principal amount of $5,000,000 and in integral multiples of $1,000,000, which may exceed such Bank's Commitment and which may equal the entire principal amount of the Competitive Bid Borrowing requested by the Company) of the Competitive Bid Loan or Loans that the applicable Bank is willing to make to the Company, (y) the Competitive Bid Rate or Rates at which such Bank is prepared to make the Competitive Bid Loan or Loans and (z) the Interest Period and the last day thereof. A Competitive Bid submitted by a Bank pursuant to this paragraph (b) shall be irrevocable. (c) The Administrative Agent shall promptly notify the Company by telecopier of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each Competitive Bid Loan in respect of which a Competitive Bid was made and the identity of the Bank that made each bid. The Administrative Agent shall send a copy of all Competitive Bids (or a summary of such bids) to the Company for its records as soon as practicable after completion of the bidding process set forth in this subsection 2.3. (d) The Company may in its sole and absolute discretion, subject only to the provisions of this paragraph (d), accept or reject any Competitive Bid referred to in paragraph (c) above. The Company shall notify the Administrative Agent by telephone, confirmed by telecopier in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject any or all of the bids referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive Bid Borrowing, not later than 10:30 a.m., New York City time, three Business Days before a proposed Competitive Bid Borrowing and (y) in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the day of a proposed Competitive Bid Borrowing; provided, however, that (i) the failure by the Company to give such notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii) the Company shall not accept a bid made at a particular Competitive Bid Rate if the Company has decided to reject a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Company shall not exceed the principal amount specified in the Competitive Bid Request, (iv) if the Company shall accept a bid or bids made at a particular Competitive Bid Rate and such bid or bids would cause the total amount of accepted bids to exceed the amount specified in the Competitive Bid Request, then the aggregate amount of the bids made at such Competitive Bid Rates shall be reduced ratably as necessary to eliminate such excess, and (v) except pursuant to clause (iv) above, no bid shall be accepted for a Competitive Bid Loan unless such Competitive Bid Loan is in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000; provided further, however, that if a Competitive Bid Loan must be in an amount less than $5,000,000 because of the provisions of clause (iv) above, such Competitive Bid Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv) the amount shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of the Company. A notice given by the Company pursuant to this paragraph (d) shall be irrevocable. © 2004. EDGAR Online, Inc.
  • 106. 17 (e) The Administrative Agent shall promptly notify each bidding Bank whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate) by telecopy sent by the Administrative Agent, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Bid Loan in respect of which its bid has been accepted. (f) A Competitive Bid Request shall not be made within two Business Days after the date of any previous Competitive Bid Request. (g) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Bank, it shall submit such bid directly to the Company one quarter of an hour earlier than the latest time at which the other Banks are required to submit their bids to the Administrative Agent pursuant to paragraph (b) above. (h) All notices required by this subsection 2.3 shall be given in accordance with subsection 9.2. 2.4. Repayment of Loans; Evidence of Debt. (a) The Company unconditionally promises to pay to the Administrative Agent for the account of the relevant Bank (i) on the Maturity Date (or such earlier date on which the Loans become due and payable pursuant to subsection 2.9 or Section 7), the unpaid principal amount of each Revolving Credit Loan made to it by such Bank; provided, that, on or before the Termination Date, the Company shall give the Administrative Agent written notice stating whether it intends or does not intend to repay, on the Termination Date, the unpaid principal amount of all Revolving Credit Loans, and (ii) on the last day of the Interest Period thereof, the unpaid principal amount of each Competitive Bid Loan made to it by such Bank. The Company shall have no right to prepay any principal of any Competitive Bid Loan. The Company further agrees to pay interest in immediately available funds at the office of the Administrative Agent on the unpaid principal amount of the Loans from time to time from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.13. (b) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Company to such Bank resulting from the Loans made by such Bank to the Company, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder. (c) The Administrative Agent shall maintain the Register pursuant to subsection 9.6(d), and a subaccount for each Bank, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, whether such Loan is a Revolving Credit Loan or a Competitive Bid Loan, the Type of each Loan made and the Interest Period or maturity date (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Company and each Bank's share thereof. (d) The entries made in the Register and the accounts maintained pursuant to paragraphs (b) and (c) of this subsection shall be prima facie evidence of the items © 2004. EDGAR Online, Inc.
  • 107. 18 contained therein; provided, however, that the failure of any Bank or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the Loan made to the Company by such Bank in accordance with the terms of this Agreement. (e) If requested by any Bank for purposes of subsection 9.6(g), the Company shall execute and deliver, at the Company's expense, to such Bank (and deliver a copy thereof to the Administrative Agent) one or more promissory notes evidencing the Loans owing to such Bank pursuant to this Agreement. Any such note shall be substantially in the form of Exhibit A-1, or A-2, as applicable, and shall be entitled to all of the rights and benefits of this Agreement. 2.5. Facility Fee; Administrative Agent's Fee. (a) The Company agrees to pay to the Administrative Agent for the account of each Bank a non-refundable facility fee at the Applicable Facility Fee Rate per annum (i) on the daily average amount of such Bank's Commitment (whether borrowed or unborrowed) from and including the date hereof to and excluding the Termination Date and (ii) on the daily average amount of each Bank's outstanding Loans from and including the Termination Date to and excluding the earlier of (A) the Maturity Date and (B) the first date upon which no Loans are outstanding, in each case payable quarterly in arrears and on each Fee Payment Date. (b) The Company will pay to the Administrative Agent, for its own account, an agent's fee equal to the amount agreed upon in writing between the Company and the Administrative Agent, payable to the Administrative Agent in such manner as the Company and the Administrative Agent may agree. Each Bank acknowledges that the Administrative Agent is being paid certain other fees for its own account in connection with the financing pursuant to this Agreement in addition to the fees described in this Agreement. 2.6. Utilization Fee. If the average daily aggregate principal amount of the Loans outstanding for the calendar quarter preceding a Fee Payment Date (or such shorter period beginning with the date hereof or ending with the earlier of (A) the Maturity Date and (B) the first date after the Termination Date upon which no Loans are outstanding) is (i) in excess of 33.3% but less than 66.7% or (ii) equal to or greater than 66.7%, as the case may be, of the average daily Aggregate Commitment for such calendar quarter or period (or in any case for any period after the Termination Date), the Company agrees to pay to the Administrative Agent for the account of the Banks a non-refundable utilization fee (the quot;Utilization Feequot;) at the Applicable Utilization Fee Rate on such average daily aggregate principal amount of the Loans outstanding during such calendar quarter (or shorter period), payable in arrears on each Fee Payment Date. 2.7. Extension of Termination Date. (a) The Company may, by written notice to the Administrative Agent (such notice being an quot;Extension Noticequot;) given no earlier than sixty days and no later than forty-five days prior to the Termination Date, request the Banks to consider an extension of the then applicable Termination Date to a date 364 days after the then applicable Termination Date. The Administrative Agent shall promptly transmit any Extension © 2004. EDGAR Online, Inc.
  • 108. 19 Notice to each Bank. Each Bank shall notify the Administrative Agent whether it wishes to extend the then applicable Termination Date no earlier than thirty days, and no later than twenty days, prior to such Termination Date, and any such notice given by a Bank to the Administrative Agent, once given, shall be irrevocable as to such Bank. Any Bank which does not expressly notify the Administrative Agent prior to such twenty day period that it wishes to so extend the then applicable Termination Date shall be deemed to have rejected the Company's request for extension of such Termination Date. Banks consenting to extend the then applicable Termination Date are hereinafter referred to as quot;Continuing Banksquot;, and Banks declining to consent to extend such Termination Date (or Banks deemed to have so declined) are hereinafter referred to as quot;Non-Extending Banksquot;. If the Required Banks have elected (in their sole and absolute discretion) to so extend the Termination Date, the Administrative Agent shall notify the Company of such election by such Required Banks no later than fifteen days prior to such Termination Date, and effective on the date of such notice by the Administrative Agent to the Company, the Termination Date shall be automatically and immediately so extended. No extension will be permitted hereunder without the consent of the Required Banks and in no event shall the Termination Date be extended beyond three years minus three days following the Closing Date. Upon the delivery of an Extension Notice and upon the extension of the Termination Date pursuant to this subsection 2.7, the Company shall be deemed to have represented and warranted on and as of the date of such Extension Notice and the effective date of such extension, as the case may be, that no Default or Event of Default has occurred and is continuing. Notwithstanding anything contained in this Agreement to the contrary, no Bank shall have any obligation to extend the Termination Date, and each Bank may, in its sole and absolute discretion, unconditionally and without cause, decline to extend the Termination Date. (b) If the Termination Date shall have been extended in accordance with subsection 2.7(a), all references herein to the quot;Termination Datequot; shall refer to the Termination Date as so extended. (c) If any Bank shall determine not to extend the Termination Date as requested by any Extension Notice given by the Company pursuant to subsection 2.7(a), the Commitment of such Bank shall terminate on the Termination Date without giving any effect to such proposed extension, and the Company shall on such date pay to the Administrative Agent, for the account of such Bank, the principal amount of, and accrued interest on, such Bank's Loans, together with any amounts payable to such Bank pursuant to subsection 2.20 and any fees or other amounts owing to such Bank under this Agreement; provided that if the Company has replaced such Non-Extending Bank pursuant to subsection 2.7(d) below then the provisions of such subsection shall apply. The Aggregate Commitment shall be reduced by the amount of the Commitment of such Non-Extending Bank to the extent the Commitment of such Non-Extending Bank has not been transferred to one or more Continuing Banks pursuant to subsection 2.7(d) below. (d) A Non-Extending Bank shall be obligated, at the request of the Company and subject to payment by the Company to the Administrative Agent for the account of such Non-Extending Bank the principal amount of, and accrued interest on, such Bank's Loans, together with any amounts payable to such Bank pursuant to subsection 2.20 and any fees or other amounts owing to such Bank under this Agreement, to transfer without recourse, representation, warranty (other than good title to its Loans) or expense to such © 2004. EDGAR Online, Inc.
  • 109. 20 Non-Extending Bank, at any time prior to the Termination Date applicable to such Non-Extending Bank, all of its rights and obligations hereunder to another financial institution or group of financial institutions nominated by the Company and willing to participate in the facility in the place of such Non-Extending Bank; provided that, if such transferee is not a Bank, such transferee(s) satisfies all the requirements of this Agreement and the Administrative Agent shall have consented to such transfer, which consent shall not be unreasonably withheld. Each such transferee shall become a Continuing Bank hereunder in replacement of the Non-Extending Bank and shall enjoy all rights and assume all obligations on the part of the Banks set forth in this Agreement. Simultaneously with such transfer, each such transferee shall execute and deliver to the Administrative Agent a written agreement assuming all obligations of the Non-Extending Bank it is replacing set forth in this Agreement, which agreement shall be reasonably satisfactory in form and substance to the Administrative Agent. (e) If the Termination Date shall have been extended in respect of Continuing Banks in accordance with subsection 2.7(a), any notice of borrowing pursuant to subsection 2.2 or 2.3 specifying a Borrowing Date occurring after the Termination Date applicable to a Non-Extending Bank or requesting an Interest Period extending beyond such date shall (a) have no effect in respect of such Non-Extending Bank and (b) not specify a requested aggregate principal amount exceeding the Aggregate Available Commitment (calculated on the basis of the Commitments of the Continuing Banks). 2.8. Termination or Reduction of Commitments. The Company shall have the right, upon not less than three Business Days' notice to the Administrative Agent, to terminate the Aggregate Commitment or, from time to time, to reduce the amount of the Aggregate Commitment, provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments made in respect of the Loans on the effective date of such termination or reduction, the aggregate principal amount of the Loans would exceed the Aggregate Commitment then in effect. Any such reduction shall be in an amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Commitments then in effect. 2.9. Optional Prepayments of Revolving Credit Loans. The Company may at any time and from time to time prepay the Revolving Credit Loans, in whole or in part, without premium or penalty, upon irrevocable notice to the Administrative Agent given not less that three Business Days prior to the prepayment date, in the case of prepayments of Eurodollar Revolving Credit Loans, or on the prepayment date, in the case of prepayments of Base Rate Loans, specifying the date and amount of prepayment and whether the prepayment is of Base Rate Loans, Eurodollar Revolving Credit Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Prepayments made in respect of any Eurodollar Loans on any day other than the last day of the applicable Interest Period shall be accompanied by amounts, if any, payable pursuant to subsection 2.20(d). The Company shall not have the right to prepay any Competitive Bid Loan without consent of the Bank that made such Competitive Bid Loan. © 2004. EDGAR Online, Inc.
  • 110. 21 2.10. Conversion and Continuation Options. (a) The Company may elect from time to time to convert Eurodollar Revolving Credit Loans to Base Rate Loans by giving the Administrative Agent at least one Business Day's prior irrevocable notice of such election, provided that any such conversion of Eurodollar Revolving Credit Loans may only be made on the last day of an Interest Period with respect thereto. The Company may elect from time to time to convert Base Rate Loans to Eurodollar Revolving Credit Loans by giving the Administrative Agent at least three Working Days' prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Revolving Credit Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of such notice the Administrative Agent shall promptly notify each Bank thereof. All or any part of outstanding Eurodollar Revolving Credit Loans and Base Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a Eurodollar Revolving Credit Loan when any Event of Default has occurred and is continuing unless the Administrative Agent or the Required Banks have determined that such a conversion is appropriate, (ii) any such conversion may only be made if, after giving effect thereto, subsection 2.12 shall not have been contravened and (iii) no Revolving Credit Loan may be converted into a Eurodollar Revolving Credit Loan after the date that is one month prior to the Maturity Date. (b) Any Eurodollar Revolving Credit Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Company giving notice to the Administrative Agent, in accordance with the applicable provisions of the term quot;Interest Periodquot; set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Revolving Credit Loan may be continued as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent or the Required Banks have determined that such a continuation is not appropriate, (ii) if, after giving effect thereto, subsection 2.12 would be contravened or (iii) after the date that is one month prior to the Maturity Date. If the Company shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. 2.11. Applicable Interest Rate Margins, Facility Fee Rate and Utilization Fee. The Applicable Eurodollar Margin, the Applicable Facility Fee Rate and the Applicable Utilization Fee Rate (the Applicable Eurodollar Margin, the Applicable Facility Fee Rate and the Applicable Utilization Fee Rate, individually or collectively, the quot;Applicable Marginquot; or quot;Applicable Ratequot;) shall be equal to the percentage per annum set forth below (in basis points). ----------------------------------------------------------------------------------------------------- Eurodollar Utilization Utilization Pricing LT Ratings ST Ratings Facility Rate Loan Fee (> Fee (> Level S&P/Moody's S&P/Moody's Fee Margin 33.3%) 66.7%) ----------------------------------------------------------------------------------------------------- 1 AA-/Aa3 and A-1/P-1 5.0 20.0 7.5 15.0 2 A+/A1 and A-1/P-1 6.0 24.0 7.5 15.0 3 A/A2 and A-1/P-1 7.0 28.0 7.5 15.0 4 A-/A3 N/A 8.0 32.0 12.5 25.0 ----------------------------------------------------------------------------------------------------- © 2004. EDGAR Online, Inc.
  • 111. 22 ----------------------------------------------------------------------------------------------------- Eurodollar Utilization Utilization Pricing LT Ratings ST Ratings Facility Rate Loan Fee (> Fee (> Level S&P/Moody's S&P/Moody's Fee Margin 33.3%) 66.7%) ----------------------------------------------------------------------------------------------------- 5 BBB+/Baa1 N/A 10.0 40.0 12.5 25.0 6 BBB/Baa2 N/A 15.0 60.0 12.5 25.0 7 BBB-/Baa3 N/A 25.0 80.0 12.5 25.0 ----------------------------------------------------------------------------------------------------- For purposes of the foregoing, if the Debt Ratings fall within different pricing levels, then the highest of such pricing levels (i.e., the pricing level having the lowest numerical designation above) shall apply. Notwithstanding the foregoing, following the Termination Date the Applicable Margin for Eurodollar Loans shall be increased by 25 basis points at each Debt Rating level and the Utilization Fee shall be equal to 25 basis points at each Debt Rating level. 2.12. Minimum Amounts of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Tranche shall be equal to $25,000,000 or a whole multiple of $5,000,000 in excess thereof. 2.13. Interest Rates and Payment Dates. (a) The Loans comprising each Eurodollar Borrowing shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to (i) in the case of each Eurodollar Revolving Credit Loan, the Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin and (ii) in the case of each Eurodollar Competitive Bid Loan, the Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Margin offered by the Bank making such Loan and accepted by the Company pursuant to subsection 2.3. (b) Each Base Rate Loan shall bear interest for each day during which such Base Rate Loan is outstanding at a rate per annum equal to the Base Rate. (c) Each Fixed Rate Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the fixed rate of interest offered by the Bank making such Loan and accepted by the Company pursuant to subsection 2.3. (d) If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon, any fee or any other amount payable pursuant to the terms of this Agreement (other than attorneys' fees incurred in connection with the enforcement of the terms hereof) shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of any overdue interest, fee or other amount, the rate described in paragraph (b) of this subsection plus 2%, in each case from the date of such non-payment until such amount is paid in full (after as well as before judgment). © 2004. EDGAR Online, Inc.
  • 112. 23 (e) Interest on each Loan shall be payable in arrears on each Interest Payment Date applicable to such Loan, the Maturity Date and upon any prepayment of such Loan, provided that interest accruing pursuant to paragraph (d) of this subsection shall be payable on demand. 2.14. Computation of Interest and Fees. (a) Interest on Base Rate Loans shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. Interest on Eurodollar Loans, Fixed Rate Loans and all fees shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Company and the Banks of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change in the Base Rate is announced. The Administrative Agent shall as soon as practicable notify the Company and the Banks of the effective date and the amount of each such change in interest rate. Notwithstanding anything to the contrary in this Agreement, interest paid or becoming due hereunder shall in no event exceed the maximum rate permitted by applicable law. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Company and the Banks in the absence of manifest error. The Administrative Agent shall, at the request of the Company, deliver to the Company a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.13. (c) If any Reference Bank's Commitment shall terminate or all its Loans shall be assigned for any reason whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank, and if, as a result of the foregoing, there shall only be one Reference Bank remaining, the Administrative Agent (after consultation with the Company and the Banks) shall, by notice to the Company and the Banks, designate another Bank acceptable to the Company, as a Reference Bank so that there shall at all times be at least two Reference Banks. (d) Each Reference Bank shall use its best efforts to furnish quotations of rates to the Administrative Agent as contemplated hereby. If any of the Reference Banks shall be unable or shall otherwise fail to supply such rates to the Administrative Agent upon its request, the rate of interest shall, subject to the provisions of subsection 2.15, be determined on the basis of the quotations of the remaining Reference Banks or Reference Bank. 2.15. Inability to Determine Interest Rate. In the event that prior to the first day of any Interest Period the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Company) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, the Administrative Agent shall give telex, telecopy or telephonic notice thereof to the Company and the Banks as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans (including any Eurodollar Competitive Bid Loan) requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans © 2004. EDGAR Online, Inc.
  • 113. 24 shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted on the first day of such Interest Period to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Company have the right to convert Loans to Eurodollar Loans. 2.16. Pro Rata Treatment and Payments. (a) Each Revolving Credit Borrowing by the Company from the Banks hereunder, each payment by the Company on account of any fee hereunder and, except as contemplated by subsections 2.1(c)(iii), 2.7(c), 2.21, 2.23 and 2.24 any reduction of the Commitments of the Banks shall be made pro rata according to the respective Commitment Percentages of the Banks. Except as contemplated by subsections 2.1(c)(iii), 2.7(c), 2.21, 2.23 and 2.24, each payment (including each prepayment) by the Company on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Credit Loans then held by the Banks. Each payment of principal of any Competitive Bid Borrowing shall be allocated pro rata among the Banks participating in such Borrowing in accordance with the respective principal amounts of their outstanding Competitive Bid Loans comprising such Borrowing. Each payment of interest on any Competitive Bid Borrowing shall be allocated pro rata among the Banks participating in such Borrowing in accordance with the respective amounts of accrued and unpaid interest on their outstanding Competitive Bid Loans comprising such Borrowing. Each Bank agrees that in computing such Bank's portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Bank's percentage of such Borrowing to the next higher or lower whole dollar amount. All payments (including prepayments) to be made by the Company hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Banks, at the Administrative Agent's office specified in subsection 9.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lending Installation of the Banks promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Working Day, the maturity thereof shall be extended to the next succeeding Working Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Working Day. (b) Unless the Administrative Agent shall have been notified in writing by any Bank prior to a Borrowing Date that such Bank will not make the amount that would constitute its Commitment Percentage of the Borrowing on such date available to the Administrative Agent, the Administrative Agent may assume that such Bank has made such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Company a corresponding amount. If such amount is made available to the Administrative Agent on a date after such Borrowing Date, such Bank shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average Federal funds rate during such period as quoted by the Administrative Agent, times (ii) © 2004. EDGAR Online, Inc.
  • 114. 25 the amount of such Bank's Commitment Percentage of such Borrowing, times (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to the date on which such Bank's Commitment Percentage of such Borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Bank with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Bank's Commitment Percentage of such Borrowing is not in fact made available to the Administrative Agent by such Bank within three Business Days of such Borrowing Date, the Administrative Agent shall notify the Company of such Bank's failure to fund, and shall be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Company. 2.17. Illegality. Notwithstanding any other provision herein, if any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled, (b) the Loans of such Bank then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law and (c) such Bank shall promptly notify the Administrative Agent of any such cancellation and conversion pursuant to this subsection 2.17. 2.18. Requirements of Law. (a) In the event that after the date hereof any change in any Requirement of Law or in the interpretation or application thereof by any Governmental Authority charged with the administration or interpretation thereof or compliance by any Bank or the Lending Installation of any Bank with any request or directive (whether or not having the force of law) from any such Governmental Authority made subsequent to the date hereof: (i) shall subject any Bank or the Lending Installation of any Bank to any tax of any kind whatsoever with respect to this Agreement or any Eurodollar Loan or Fixed Rate Loan made by it, or change the basis of taxation of payments to such Bank or the Lending Installation of such Bank in respect thereof (except for taxes covered by subsection 2.19 and changes in the rate of tax on the net income of such Bank or the Lending Installation of such Bank); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Bank or the Lending Installation of such Bank which is not otherwise included in the determination of interest on the Eurodollar Rate Loans or Fixed Rate Loans hereunder; or (iii) shall impose on such Bank or the Lending Installation of such Bank any other condition; © 2004. EDGAR Online, Inc.
  • 115. 26 and the result of any of the foregoing is to increase the cost to such Bank or the Lending Installation of such Bank, by an amount which such Bank deems to be material, of making, converting into, continuing or maintaining any Eurodollar Loan or Fixed Rate Loan or to reduce any amount receivable hereunder in respect thereof then, in any such case, the Company shall pay such Bank, within 30 days after its demand, any additional amounts necessary to compensate such Bank for such increased cost or reduced amount receivable. If any Bank becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Company, through the Administrative Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by such Bank, through the Administrative Agent, to the Company shall set forth, in reasonable detail, the basis for such claim and the method of computation thereof and be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. Notwithstanding the foregoing, no Bank shall be entitled to request compensation under this Section with respect to any Competitive Bid Loan if it shall have been aware of the change giving rise to such request at the time of submission of such Bank's Competitive Bid pursuant to which such Competitive Loan shall have been made. (b) In the event that any Bank shall have determined that any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Bank or the Lending Installation of such Bank or any corporation controlling such Bank with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority, in each case, made subsequent to the date hereof, does or shall have the effect of reducing the rate of return on such Bank's, such Lending Installation's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Bank, such Lending Installation or such corporation could have achieved but for such change or compliance (taking into consideration such Bank's, such Lending Installation's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, after submission by such Bank to the Company of a written request therefor, the Company shall pay to such Bank within 90 days after demand such additional amount or amounts as will compensate such Bank for such reduction. Each such request shall be accompanied by such information in respect of the basis for the claim made thereby and the method of computation thereof as such Bank shall at the time customarily provide to other borrowers deemed by it to be similarly situated. This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. (c) Each Bank, through the Administrative Agent, will promptly notify the Company of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this subsection. Notwithstanding the foregoing, no Bank shall be entitled to any compensation described in this Section unless, at the time it requests such compensation, it is the policy or general practice of such Bank to request compensation for comparable costs in similar circumstances under comparable provisions of other credit agreements for comparable customers (as determined by such Bank) unless specific facts or circumstances applicable to the Company or the transactions contemplated by this Agreement would alter such policy or general practice. If any Bank fails to give the notice described in subsection 2.18(c) within 90 days after it © 2004. EDGAR Online, Inc.
  • 116. 27 obtains such actual knowledge of the event required to be described in such notice, such Bank shall, with respect to any compensation that would otherwise be owing to such Bank under this subsection 2.18, only be entitled to payment for increased costs incurred from and after the date that such Bank does give such notice. If the Company shall reimburse any Bank pursuant to this Section for any cost and such Bank shall subsequently receive a refund in respect thereof, such Bank shall so notify the Company and, upon its request, will pay to the Company the portion of such refund that such Bank shall determine in good faith to be allocable to the costs so reimbursed. 2.19. Taxes. (a) All payments made by the Company under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding, in the case of the Administrative Agent and each Bank, taxes based on or measured by net income imposed on the Administrative Agent or such Bank, as the case may be, as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Administrative Agent or such Bank (excluding a connection arising solely from the Administrative Agent or such Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called quot;Taxesquot;). If any Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Bank hereunder, the amounts so payable to the Administrative Agent or such Bank shall be increased to the extent necessary to yield to the Administrative Agent or such Bank (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement; provided, however, that the Company shall not be required to increase any amounts payable to any Non-U.S. Lender (as defined in subsection 2.19(b)) with respect to any Taxes that would not have been imposed but for such Non-U.S. Lender's failure to provide to the Company the Internal Revenue Service Forms required to be provided to the Company pursuant to subsection 2.19(b). Whenever any Taxes are payable by the Company, promptly thereafter the Company shall send to the Administrative Agent for its own account or for the account of such Bank, as the case may be, a certified copy of an original official receipt received by the Company showing payment thereof. If such evidence of payment is unavailable, other evidence of such payment, satisfactory to the Administrative Agent, shall be provided by the Company. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Company shall indemnify the Administrative Agent and the Banks for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Bank as a result of any such failure. (b) Each Bank represents and warrants to the Company that under currently applicable law and treaties no Taxes will be required to be withheld by the Company with respect to any payments to be made to such Bank hereunder. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes (each, a quot;Non-U.S. Lenderquot;) agrees to deliver to the Company and the Administrative Agent on or prior to the Closing Date or, in the case of © 2004. EDGAR Online, Inc.
  • 117. 28 a Non-U.S. Lender that is an assignee or transferee of, or purchaser of a participation in, an interest under this Agreement pursuant to subsection 9.6 (unless such Non-U.S. Lender was already a Bank hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Non-U.S. Lender, (i) two (2) accurate and complete original signed copies of Internal Revenue Service Form W-8ECI or Form W-8BEN (or successor forms) certifying that such Non-U.S. Lender is entitled as of such date to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement, or (ii) if such Non-U.S. Lender is not a quot;bankquot; within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption under an income tax treaty) (or any successor forms) pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit K (any such certificate, an quot;Exemption Certificatequot;), and (y) two (2) accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (with respect to the portfolio interest exemption) (or successor form) certifying that such Non-U.S. Lender is entitled as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement. In addition, each Non-U.S. Lender agrees that from time to time after the Closing Date, when the passage of time or a change in facts or circumstances renders the previous certification obsolete or inaccurate in any material respect, such Non-U.S. Lender will deliver to the Company and the Administrative Agent two (2) new accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to a complete exemption under an income tax treaty), or Form W-8BEN (with respect to the portfolio interest exemption) and an Exemption Certificate, as the case may be, and such other forms as may be required in order to confirm or establish that such Non-U.S. Lender is entitled to a continued exemption from United States withholding tax with respect to payments under this Agreement, or such Non-U.S. Lender shall immediately notify the Company and the Administrative Agent of its inability to deliver any such form or Exemption Certificate, in which case such Non-U.S. Lender shall not be required to deliver any such form or Exemption Certificate. Notwithstanding anything to the contrary contained in this subsection 2.19, the Company agrees to pay any additional amounts and to indemnify each Non-U.S. Lender in the manner set forth in subsection 2.19(a) in respect of any United States Taxes deducted or withheld by them if such Taxes would not have been deducted or withheld but for any change after the Closing Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof. (c) If any Bank (or Transferee) or the Administrative Agent shall become aware that it is entitled to receive a refund or credit (such credit to include any increase in any foreign tax credit) as a result of Taxes (including any penalties or interest with respect thereto) as to which it has been indemnified by the Company pursuant to this subsection 2.19, it shall promptly notify the Company of the availability of such refund or credit and shall, within 30 days after receipt of a request by the Company, apply for such refund or credit at the Company's expense, and in the case of any application for such refund or credit by the Company, shall, if legally able to do so, deliver to the Company such certificates, forms or other documentation as may be reasonably necessary to assist the Company in such application. If any Bank (or Transferee) or the Administrative Agent © 2004. EDGAR Online, Inc.
  • 118. 29 receives a refund or credit (such credit to include any increase in any foreign tax credit) in respect to any Taxes as to which it has been indemnified by the Company pursuant to this subsection 2.19, it shall promptly notify the Company of such refund or credit and shall, within 60 days after receipt of such refund or the benefit of such credit (such benefit to include any reduction of the taxes for which any Bank (or Transferee) or the Administrative Agent would otherwise be liable due to any increase in any foreign tax credit available to such Bank (or Transferee) or the Administrative Agent), repay the amount of such refund or benefit of such credit (with respect to the credit, as determined by the Bank, Transferee or Administrative Agent in its sole, reasonable judgment) to the Company (to the extent of amounts that have been paid by the Company under this subsection 2.19 with respect to Taxes giving rise to such refund or credit), plus any interest received with respect thereto, net of all reasonable out-of-pocket expenses of such Bank (or Transferee) or the Administrative Agent and without interest (other than interest actually received from the relevant taxing authority or other Governmental Authority with respect to such refund or credit); provided, however, that the Company, upon the request of such Bank (or Transferee) or the Administrative Agent, agrees to return the amount of such refund or benefit of such credit (plus interest) to such Bank (or Transferee) or the Administrative Agent in the event such Bank (or Transferee) or the Administrative Agent is required to repay the amount of such refund or benefit of such credit to the relevant taxing authority or other Governmental Authority. (d) The agreements in this subsection shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. 2.20. Indemnity. The Company agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of (a) default by the Company in payment when due of the principal amount of or interest on any Eurodollar Loan or Fixed Rate Loan, (b) default by the Company in making a borrowing of, conversion into or continuation of any Eurodollar Loan, or any borrowing of a Fixed Rate Loan, after the Company has given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by the Company in making any prepayment after the Company has given a notice thereof in accordance with the provisions of this Agreement or (d) the making of a prepayment of a Eurodollar Loan or Fixed Rate Loan on a day which is not the last day of an Interest Period with respect thereto, including, in each case, any such loss or expense arising from the reemployment of funds obtained by it (or which it has arranged to obtain) or from fees payable to terminate the deposits from which such funds were obtained (or which it has arranged to obtain). Such indemnification shall exclude any loss of margin hereunder, but shall include an amount equal to the excess, if any, as reasonably determined by such Bank, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed, converted or continued or transferred or assigned (assumed to be the Eurodollar Rate or, in the case of a Fixed Rate Loan, the fixed rate of interest applicable thereto) for the period from the date of such payment, prepayment or conversion or failure to borrow, convert, or continue or transfer or assignment to the last day of the current or anticipated Interest Period for such Loan) over (ii) the amount of interest (as reasonably determined by such Bank) that would be realized by such Bank in reemploying the funds so paid, prepaid, converted or not borrowed, converted or continued or transferred or assigned for such period or Interest Period, as the case may be. Nothing in this Section shall be deemed to give the Company any right to prepay any © 2004. EDGAR Online, Inc.
  • 119. 30 Competitive Bid Loan or other Loan the prepayment of which is otherwise prohibited pursuant to the terms of this Credit Agreement. This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. 2.21. Actions of Banks. Each Bank agrees to use reasonable efforts (including reasonable efforts to change the Lending Installation for its Loans) to avoid or minimize any illegality pursuant to subsection 2.17 or any amounts which might otherwise be payable pursuant to subsection 2.18 or 2.19; provided, however, that such efforts shall not cause the imposition on such Bank of any additional costs or legal or regulatory burdens deemed by such Bank to be material. In the event that such reasonable efforts are insufficient to avoid all such illegality, all such events or circumstances or all amounts that might be payable pursuant to subsection 2.18 or 2.19, then the Company may remove any such Bank pursuant to subsection 2.23 or replace any such Bank pursuant to subsection 2.24. 2.22. Lending Installations. Each Bank may hold its Loans at any Lending Installation selected by it and may change its Lending Installation from time to time, provided that no such Bank shall be entitled to receive any greater amount under subsections 2.18, 2.19, 2.20 or 9.5 as a result of a transfer of any such Loans to a different office of such Bank than it would be entitled to immediately prior thereto unless such claim would have arisen even if such transfer had not occurred. All provisions of this Agreement shall apply to any such Lending Installation. Each Bank may, by written or telex notice to the Company and the Administrative Agent, designate a Lending Installation through which the Loans will be made by it and for whose account payments are to be made. 2.23. Removal of Banks. The Company shall be permitted, from time to time in its discretion, to remove Banks from this Agreement and to reduce the Aggregate Commitment; provided, that (a) the Aggregate Commitment may not be reduced below $1,000,000,000 as a result of removal of one or more Banks from this Agreement pursuant to this Section, (b) after giving effect to such removal, no Bank shall have a Commitment hereunder which exceeds an amount equal to 20% of the Aggregate Commitment and (c) a Bank may not be removed from this Agreement at any time a Default or an Event of Default exists and remains uncured or unwaived under this Agreement. If the Company elects to terminate the Commitment of a Bank, it shall give not less than 30 days written notice to the Administrative Agent and such Bank. On the effective date of such termination, the Company shall pay to the Administrative Agent, for the account of such Bank, in immediately available funds, an amount equal to all Loans and other amounts (including accrued interest and fees) owing to such Bank plus the amounts, if any, owing to such Bank under subsections 2.18, 2.19, 2.20 and 9.5. Notwithstanding the removal of any Bank pursuant to this subsection, such Bank shall continue to have all such rights as would survive the termination of this Agreement under subsections 2.18, 2.19, 2.20 and 9.5. 2.24. Replacement of Banks. In the event that any Bank (a quot;Notifying Bankquot;) (a) shall demand payment by the Company of any amount pursuant to subsection 2.18 or 2.19, (b) shall cause the suspension of the availability of any Type pursuant to subsection 2.17, (c) shall have excused itself from funding a Loan pursuant to subsection 2.17, (d) shall have failed to make available a Loan on the date on which it was obligated to do so or (e) shall have failed to consent to any waiver, amendment or modification of this Agreement that has been consented to by the Required Banks, the Company may, upon notice to such Notifying Bank and the © 2004. EDGAR Online, Inc.
  • 120. 31 Administrative Agent, nominate a new financial institution or group of financial institutions willing to participate in the facility in the place of such Notifying Bank (quot;Replacement Bankquot;). Upon receipt of such notice from the Company and upon the consent of the Administrative Agent as to the Replacement Bank, which consent shall not be unreasonably withheld, such Notifying Bank shall be obligated to transfer without recourse, representation, warranty (other than that it has not in any way transferred, assigned, encumbered, sold or conveyed its rights under its Loans) or expense to such Notifying Bank, all of its rights (other than rights that would survive the termination of this Agreement pursuant to subsections 2.18, 2.19, 2.20 and 9.5) and obligations hereunder to the Replacement Bank; provided that the Replacement Bank satisfies all of the requirements of this Agreement and pays such Notifying Bank all amounts owing to such Notifying Bank under this Agreement and the Company pays such Notifying Bank any funding losses incurred pursuant to subsection 2.20, if any, as a result of such replacement. This subsection 2.24 shall in no way affect the right of the Company to replace, remove or add a Bank pursuant to any other provision of this Agreement. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Banks to enter into this Agreement and to make the Loans hereunder, the Company hereby represents and warrants to the Administrative Agent and each Bank that: 3.1. Financial Condition. The consolidated balance sheet of the Company and its consolidated Subsidiaries as of December 31, 2003, and the related consolidated statements of income and of cash flows for the period ended on such date, reported on by PricewaterhouseCoopers LLP, copies of which have heretofore been furnished to each Bank, present fairly the consolidated financial condition of the Company and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). 3.2. No Change. Since December 31, 2003 and until the date of this Agreement, except to the extent publicly disclosed on or prior to December 31, 2003 through filings made by the Company with the SEC or press releases issued by the Company there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect. 3.3. Corporate Existence; Compliance with Law; Significant Subsidiaries. Each of the Company and its Significant Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and (b) has the power and authority to conduct the business in which it is currently engaged. Each Significant Subsidiary as of December 31, 2003 is listed on Schedule II hereto. 3.4. Corporate Power; Authorization; Enforceable Obligations. The Company has the corporate power and authority to make, deliver and perform this Agreement and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the © 2004. EDGAR Online, Inc.
  • 121. 32 terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement. No consent or authorization of, filing with or other act by or in respect of, any Governmental Authority or any other Person is required on the part of the Company in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement. This Agreement has been duly executed and delivered on behalf of the Company. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 3.5. No Legal Bar. The execution, delivery and performance of this Agreement, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or material Contractual Obligation of the Company or of any of its Significant Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their material respective properties or revenues pursuant to any such Requirement of Law or material Contractual Obligation. 3.6. No Material Litigation. (a) No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company or any of its Significant Subsidiaries or against any of its or their respective properties or revenues, in any case that involves this Agreement, the execution, delivery and performance of this Agreement or the Borrowings hereunder. (b) No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company or any of its Significant Subsidiaries or against any of its or their respective properties or revenues which could reasonably be expected to result in a violation of subsection 6.3, except to the extent publicly disclosed prior to the date of this Agreement through filings made by the Company with the SEC or press releases issued by the Company. 3.7. No Default. (a) Neither the Company nor any of its Significant Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to result in a violation of subsection 6.3. (b) No Default or Event of Default has occurred and is continuing. 3.8. Aggregation of the Representations and Warranties Relating to Net Worth. The total effect of each event or circumstance referred to in subsections 3.6(b) and 3.7(a) is not, when taken together in the aggregate, reasonably expected to result in a violation of subsection 6.3. 3.9. Federal Regulations. No part of the proceeds of any Loans will be used for quot;purchasingquot; or quot;carryingquot; any quot;margin stockquot; within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as © 2004. EDGAR Online, Inc.
  • 122. 33 now and from time to time hereafter in effect in violation of the provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System. 3.10. ERISA. Each Plan complies in all material respects with all applicable provisions of ERISA and the Code, no Reportable Event has occurred with respect to any Plan, neither the Company nor any other members of any Commonly Controlled Entity has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to terminate any Plan, except in any case to the extent that such failures could not, in the aggregate, reasonably be expected to result in a violation of subsection 6.3. 3.11. Investment Company Act. The Company is not an quot;investment companyquot; within the meaning of the Investment Company Act of 1940, as amended. 3.12. Purpose of Loans. The proceeds of the Loans shall be used by the Company for general corporate purposes and to repay outstanding Indebtedness. SECTION 4. CONDITIONS PRECEDENT 4.1. Conditions to Initial Loans. The agreement of each Bank to make the initial Loan requested to be made by it is subject to the satisfaction of the following conditions precedent: (a) Credit Agreement. The Administrative Agent shall have received this Agreement, executed and delivered by a duly authorized officer of the Company, with a counterpart for each Bank. (b) Corporate Proceedings of the Company. The Administrative Agent shall have received, with a counterpart for each Bank, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Company authorizing (i) the execution, delivery and performance of this Agreement, and (ii) the borrowings contemplated hereunder, certified by the Secretary or an Assistant Secretary of the Company as of the Closing Date pursuant to a certificate substantially in the form of Exhibit D-2, which certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (c) Corporate Documents. The Administrative Agent shall have received, with a counterpart for each Bank, true and complete copies of the certificate of incorporation and by-laws of the Company, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of the Company. (d) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Bank, (i) the executed legal opinion of the general counsel of the Company, substantially in the form of Exhibit B-1, and (ii) the executed legal opinion of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent, substantially in the form of Exhibit B-2. © 2004. EDGAR Online, Inc.
  • 123. 34 (e) Certificates. The Administrative Agent shall have received, with a counterpart for each Bank, an officer's certificate of the chief financial officer, treasurer or controller of the Company, substantially in the form of Exhibit D-1, and a certificate of incumbency of the Company, substantially in the form of Exhibit E. (f) Existing 364-Day Credit Agreement. The Existing 364-Day Credit Agreement shall have been terminated and all amounts, if any, owing by the Company thereunder shall have been paid in full. (g) Existing 5-Year Credit Agreement. The Existing 5-Year Credit Agreement shall have been terminated and all amounts, if any, owing by the Company thereunder shall have been paid in full. (h) Transfer Instructions. The Administrative Agent shall have received written money transfer instructions addressed to the Administrative Agent and signed by a duly authorized officer, together with such other related money transfer authorizations as the Administrative Agent may have reasonably requested. (i) New 5-Year Credit Agreement. The New 5-Year Credit Agreement shall have been duly executed and delivered to JPMorgan Chase Bank, as administrative agent of the New 5-Year Credit Agreement. 4.2. Conditions to Each Loan. The agreement of each Bank to make any Loan requested to it on any date (including, without limitation, its initial Loan) is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by the Company in Section 3 of this Agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date except (i) to the extent such representations and warranties expressly relate to an earlier date, (ii) for changes in the Schedules hereto reflecting transactions permitted by this Agreement and (iii) subsequent to the Closing Date, for the representations and warranties contained in subsection 3.2. (b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans requested to be made on such date. (c) Borrowing Notice. The Administrative Agent shall have received a notice of borrowing from the Company, substantially in the form of Exhibit F. Each Borrowing by the Company hereunder shall constitute a representation and warranty by the Company as of the date of such Loan that the conditions contained in this subsection 4.2 have been satisfied. It is understood and agreed that conversions and continuations of Revolving Credit Loans pursuant to subsection 2.10 shall not be subject to the conditions set forth in this subsection 4.2. © 2004. EDGAR Online, Inc.
  • 124. 35 SECTION 5. AFFIRMATIVE COVENANTS The Company hereby agrees that, so long as any Commitment shall remain in effect or any principal of or interest on any Loan or any other amount shall be unpaid hereunder, the Company shall: 5.1. Financial Statements. Furnish to: (a) each Bank, promptly after becoming available, each annual and quarterly report which the Company files with the SEC; (b) each Bank, promptly after becoming available and in any event within 120 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the SEC by PricewaterhouseCoopers LLP or other independent public accountants of nationally recognized standing (provided that no such financial statements of the Company need be so delivered if the Company shall have delivered to such Bank its annual report for the relevant year containing such financial statements pursuant to subsection 5.1(a)); (c) each Bank, promptly after becoming available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Company, (i) a consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of such quarter and (ii) the related consolidated statements of income and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in comparative form (i) in the case of clause (i) above, the figures for the previous fiscal year end, and (ii) in the case of clause (ii) above, the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to the absence of footnotes and normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Company (the quot;Certificatequot;) (provided that no such financial statements of the Company or the Certificate need be so delivered if the Company shall have delivered to such Bank its quarterly report for the relevant quarter containing such financial statements pursuant to subsection 5.1(a); all such financial statements to fairly present in all material respects the financial condition and results of operations of the Company and to be prepared in reasonable detail and in accordance with Agreement Accounting Principles (except as approved by such accountants or officer, as the case may be, and disclosed therein); (d) the Administrative Agent (for distribution to each Bank), each Report on Form 8-K (if any) which the Company files with the SEC; © 2004. EDGAR Online, Inc.
  • 125. 36 (e) the Administrative Agent (for distribution to each Bank), upon specific request, copies of all financial statements and reports which the Company has sent to holders of its publicly issued debt securities, and after the same are filed, copies of all financial statements and reports which the Company may make to, or file with, the SEC; and (f) the Administrative Agent (for distribution to each Bank requesting such information), promptly, such other information regarding the operations, business affairs and financial condition of the Company as any Bank may from time to time reasonably request through the Administrative Agent. Any financial statement required to be furnished pursuant to this Section 5.1 shall be deemed to have been furnished on the date on which the Company gives notice to the Administrative Agent (who shall then give notice to the Banks) that the Company has posted such financial statement, or provided a link thereto, on the Company's website or on the Company's behalf on the Intralinks website on the Internet at www.intralinks.com or another relevant website, if any, to which each Bank and the Administrative Agent have access. Notwithstanding the foregoing, the Company shall deliver paper copies of any financial statement referred to in this Section 5.1 to any Bank if the Administrative Agent, on behalf of such Bank, requests the Company to furnish such paper copies. Except as provided in the preceding sentence, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to in Section 5.1, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Bank shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. 5.2. Payment of Obligations. Pay, discharge or otherwise satisfy, and cause each of its Significant Subsidiaries to pay, discharge or otherwise satisfy, at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Company or its Significant Subsidiaries, as the case may be, or except to the extent that the failure to pay, discharge or otherwise satisfy the same could not, in the aggregate, reasonably be expected to result in a violation of subsection 6.3. 5.3. Conduct of Business and Maintenance of Existence. Preserve, renew and keep in full force and effect, and cause each of its Significant Subsidiaries to preserve, renew and keep in full force and effect, its corporate existence and take, and cause each of its Significant Subsidiaries to take, all reasonable action to maintain all rights, privileges and franchises material to the normal conduct of its significant businesses, provided, however, that notwithstanding this subsection 5.3, the Company or any Significant Subsidiary may (a) discontinue any of its businesses that are no longer deemed advantageous to it (such determination to be in the sole and absolute discretion of the Company or such Significant Subsidiary) and (b) sell or dispose of any assets, subsidiaries or the capital stock thereof, or consolidate with, accept a merger of, or permit the merger of such Person into any other Person in a transaction permitted pursuant to subsection 6.2; and comply, and cause each of its Significant Subsidiaries to comply, in all material respects with all Requirements of Law © 2004. EDGAR Online, Inc.
  • 126. 37 (including, but not limited to, ERISA), except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to result in a violation of subsection 6.3. 5.4. Notices. Promptly give notice (or in the case of subsection 5.4(d), a copy) to the Administrative Agent of: (a) the occurrence of any Default or Event of Default; (b) any litigation, investigation or proceeding affecting the Company or any of its Significant Subsidiaries which could reasonably be expected to result in a violation of subsection 6.3; (c) the following events, as soon as possible and in any event within 30 days after the Company knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan, in any event which could reasonably be expected to result in a Material Adverse Effect; and (d) as soon as possible and in any event within 30 days after receipt by the Company, a copy of (i) any notice or claim to the effect that the Company or any Subsidiary is or may be liable to any Person as a result of the release by the Company, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (ii) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Company or any Subsidiary, which could reasonably be expected to result in a claim, liability or loss that will, in the case of clauses (i) or (ii), when aggregated with the effect of any failure by the Company to (x) maintain and preserve all property material to the conduct of its business, (y) keep such property in good repair, working order and condition and (z) from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto, result in a violation of subsection 6.3. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto. 5.5. Status of Obligations. Ensure that its obligations under this Agreement shall at all times be direct and general obligations of the Company and shall at all times rank at least pari passu in all respects with all other outstanding unsecured and unsubordinated indebtedness of the Company. 5.6. Maintenance of Property. At all times maintain and preserve, and cause each of its Significant Subsidiaries to maintain and preserve, all property material to the conduct of its business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto except where the failure to do so would not result in a © 2004. EDGAR Online, Inc.
  • 127. 38 violation of subsection 6.3; provided, however, that nothing in this subsection 5.6 shall prevent the Company or any Subsidiary from (a) discontinuing the operation and maintenance of any of its properties no longer deemed useful in the conduct of its business or (b) selling or disposing of any assets, subsidiaries or the capital stock thereof in a transaction permitted pursuant to subsection 6.2. 5.7. Payment of Taxes. Pay and discharge promptly when due, and cause each of its Significant Subsidiaries to pay and discharge promptly when due, all taxes, assessments and governmental charges or levies the amounts of which are material to the business, assets, operations, prospects or condition, financial or otherwise, of the Company and the Subsidiaries taken as a whole, imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default; provided, however, that such payment and discharge shall not be required with respect to any such tax, assessment, charge, or levy so long as the validity or amount thereof shall be contested in good faith by appropriate actions or proceedings and the Company shall have set aside on its books appropriate reserves with respect thereto. 5.8. Use of Proceeds. Use the proceeds of the Loans for general corporate purposes and to repay outstanding Indebtedness. The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Loans to purchase or carry any quot;margin stockquot; (as defined in Regulation U) in violation of the provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System. SECTION 6. NEGATIVE COVENANTS The Company hereby agrees that, so long as any Commitment remains in effect or any principal of or interest on any Loan or any other amount shall be unpaid hereunder, the Company shall not: 6.1. Negative Pledge. (a) (1) Create, incur or suffer to exist any Lien upon any of its property or assets to secure indebtedness for money borrowed, incurred, issued, assumed or guaranteed by the Company or (2) create any Lien upon any of its property or assets to secure any indebtedness or other obligations of any Person if such Lien is a Lien created by any action of the Company (including any grant by the Company of any Lien pursuant to a written instrument or by the pledge by the Company of property, but excluding Liens arising by operation of law), without, in the case of any Lien described in the foregoing clauses (1) and (2), thereby expressly securing the due and punctual payment of the principal of and interest on the Loans and all other amounts payable by the Company hereunder equally and ratably with any and all other obligations and indebtedness secured by such Lien, so long as any such other obligations and indebtedness shall be so secured; provided, however, that this restriction shall not prohibit or otherwise restrict: (i) the Company from creating, incurring or suffering to exist upon any of its property or assets any Lien in favor of any subsidiary of the Company; © 2004. EDGAR Online, Inc.
  • 128. 39 (ii) the Company (A) from creating, incurring or suffering to exist a purchase money Lien upon any such property, assets, capital stock or indebtedness acquired by the Company prior to, at the time of, or within one year after (1) in the case of physical property or assets, the later of the acquisition, completion of construction (including any improvements on existing property) or commencement of commercial operation of such property or (2) in the case of shares of capital stock, indebtedness or other property or assets, the acquisition of such shares of capital stock, indebtedness, property or assets, (B) from acquiring property or assets subject to Liens existing thereon at the date of acquisition thereof, whether or not the indebtedness secured by any such Lien is assumed or guaranteed by the Company, or (C) from creating, incurring or suffering to exist Liens upon any property of any Person, which Liens exist at the time any such Person is merged with or into or consolidated with the Company (or becomes a subsidiary of the Company) or which Liens exist at the time of a sale or transfer of the properties of any such Person as an entirety or substantially as an entirety to the Company; (iii) the Company from creating, incurring or suffering to exist upon any of its property or assets Liens in favor of the United States of America or any State thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute (including maintaining self-insurance or participating in any fund in connection with worker's compensation, disability benefits, unemployment insurance, old age pensions or other types of social benefits, or joining in any other provisions or benefits available to companies participating in any such arrangements); (iv) the Company from creating, incurring or suffering to exist upon any of its property or assets Liens securing the performance of letters of credit, bids, tenders, sales contracts, purchase agreements, repurchase agreements, reverse repurchase agreements, bankers' acceptances, leases, surety and performance bonds, and other similar obligations incurred in the ordinary course of business; (v) the Company from creating, incurring or suffering to exist Liens upon any real property acquired or constructed by the Company primarily for use in the conduct of its business; (vi) the Company from entering into any arrangement with any Person providing for the leasing by the Company of any property or assets, which property or assets have been or will be sold or transferred by the Company to such Person with the intention that such property or assets will be leased back to the Company, if the obligations in respect of such lease would not be included as liabilities on a consolidated balance sheet of the Company; (vii) the Company from creating, incurring or suffering to exist upon any of its property or assets Liens to secure non-recourse debt in connection with the Company engaging in any leveraged or single-investor or other lease transactions, whether (in the case of Liens on or relating to leases or groups of leases or the particular properties subject thereto) such Liens are on the particular properties subject to any leases © 2004. EDGAR Online, Inc.
  • 129. 40 involved in any of such transactions and/or the rental or other payments or rights under such leases or, in the case of any group of related or unrelated leases, on the properties subject to the leases comprising such group and/or on the rental or other payments or rights under such leases, or on any direct or indirect interest therein, and whether (in any case) (A) such Liens are created prior to, at the time of, or at any time after the entering into of such lease transactions and/or (B) such leases are in existence prior to, or are entered into by the Company at the time of or at any time after, the purchase or other acquisition by the Company of the properties subject to such leases; (viii) the Company from creating, incurring or suffering to exist (A) other consensual Liens in the ordinary course of business of the Company that secure indebtedness that, in accordance with generally accepted accounting principles, would not be included in total liabilities as shown on the Company's consolidated balance sheet, or (B) Liens created by the Company in connection with any transaction intended by the Company to be a sale of property or assets of the Company, provided that such Liens are upon any or all of the property or assets intended to be sold, the income from such property or assets and/or the proceeds of such property or assets; (ix) the Company from creating, incurring or suffering to exist Liens on property or assets financed through tax-exempt municipal obligations, provided that such Liens are only on the property or assets so financed; (x) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any of the foregoing; provided, however, that any such extension, renewal or replacement shall be limited to all or a part of the property or assets (or substitutions therefor) which secured the Lien so extended, renewed or replaced (plus improvements on such property); and (xi) the Company from creating, incurring or suffering to exist any other Lien not otherwise permitted by any of the foregoing clauses (i) through (ix) above if the aggregate amount of all secured debt of the Company secured by such Liens would not exceed 10% of the excess of the Company's consolidated assets over the consolidated liabilities as shown on the Company's most recent audited consolidated financial statements in accordance with generally accepted accounting principles. (b) For the purposes of this subsection 6.1, any contract by which title is retained as security (whether by lease, purchase, title retention agreement or otherwise) for the payment of a purchase price shall be deemed to be a purchase money Lien. Nothing in this subsection 6.1 shall apply to any Lien of any kind upon any of the properties of any character of the Company existing on the date of execution and delivery of this Agreement. (c) Subject to subsection 6.3, nothing contained in this subsection 6.1 or elsewhere in this Agreement shall prevent or be deemed to prohibit the creation, assumption or guaranty by the Company of any indebtedness not secured by a Lien or the issuance by the Company of any debentures, notes or other evidences of indebtedness not secured by a Lien, whether in the ordinary course of business or otherwise. © 2004. EDGAR Online, Inc.
  • 130. 41 6.2. Consolidations, Mergers and Sales of Assets. Consolidate with any other corporation or limited liability company or accept a merger of any other corporation or limited liability company into the Company or permit the Company to be merged into any other corporation or limited liability company, or sell its properties and assets as, or substantially as, an entirety; provided, however, that subject to the provisions of subsection 6.1, nothing contained in this Agreement shall be deemed to prevent (i) the merger into the Company of another corporation or limited liability company, (ii) the consolidation of the Company and another corporation or limited liability company, (iii) the merger of the Company into another corporation or limited liability company or (iv) the sale of the property or assets of the Company to another corporation or limited liability company, so long as (a) no Default or Event or Default shall have occurred and be continuing and (b) with respect to clauses (ii), (iii) and (iv) above, the surviving corporation or limited liability company of the merger or the purchaser of the Company's assets, as the case may be, shall expressly assume the obligations of the Company under this Agreement and expressly agree to be bound by all other provisions applicable to the Company under this Agreement. 6.3. Net Worth. Permit Net Worth at any time to be less than $4,000,000,000. SECTION 7. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Company shall (i) fail to pay any principal of any Loan when due in accordance with the terms hereof; (ii) fail to pay any interest on any Loan, any Utilization Fee or any Facility Fee within five Business Days after any such interest or fee becomes due in accordance with the terms hereof; or (iii) fail to pay any expenses or other amounts payable under this Agreement to the Administrative Agent or any Bank within fifteen days after such expenses or other amounts become due in accordance with the terms hereof; or (b) Any representation or warranty made or deemed made by the Company herein or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Company shall default in the observance or performance of any agreement contained in Section 6; or (d) The Company shall default in the observance or performance of any other agreement contained in this Agreement (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice shall have been given to the Company by the Administrative Agent; or (e) Any event or condition shall occur which results in the acceleration of the maturity of any Indebtedness of the Company or any of its Significant Subsidiaries in an aggregate principal amount equal to or greater than $100,000,000; or the Company or any © 2004. EDGAR Online, Inc.
  • 131. 42 of its Significant Subsidiaries shall not make any liquidation or termination payment or payments in an aggregate amount equal to or greater than $100,000,000 when it becomes due (any applicable grace period having expired) under one or more Hedging Agreements; or the Company or any of its Significant Subsidiaries shall not pay the principal of or interest on any Indebtedness with respect to Indebtedness in an aggregate principal amount in excess of $100,000,000 when it becomes due and beyond any period of grace with respect thereto; or (f) (i) The Company or any of its Significant Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Company or any of its Significant Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company or any of its Significant Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company or any of its Significant Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company or any of its Significant Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company or any of its Significant Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any quot;prohibited transactionquot; (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any quot;accumulated funding deficiencyquot; (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist, with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to result in a violation of subsection 6.3; or © 2004. EDGAR Online, Inc.
  • 132. 43 (h) One or more judgments or decrees shall be entered against the Company or any of its Significant Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $100,000,000 or more and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 90 days from the entry thereof; or (i) If at any time the Company and its Significant Subsidiaries shall become liable for remediation and/or environmental compliance expenses and/or fines, penalties or other charges which, in the aggregate, could reasonably be expected to result in a violation of subsection 6.3; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Company, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Banks, the Administrative Agent may, or upon the request of the Required Banks the Administrative Agent shall, by notice to the Company declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Banks, the Administrative Agent may, or upon the request of the Required Banks the Administrative Agent shall, by notice of default to the Company, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 8. THE AGENTS 8.1. Appointment. Each Bank hereby designates and appoints JPMorgan Chase Bank as the Administrative Agent of such Bank under this Agreement, and each such Bank authorizes JPMorgan Chase Bank as the Administrative Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. The Joint Lead Arrangers, the Syndication Agents and the Documentation Agent, in their respective capacities as such, shall not have any duties or responsibilities hereunder nor any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Joint Lead Arrangers, the Syndication Agents or the Documentation Agent in their respective capacities as such. © 2004. EDGAR Online, Inc.
  • 133. 44 8.2. Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 8.3. Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Company or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or for any failure of the Company to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Company. 8.4. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of the Bank specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Required Banks as it deems appropriate and it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks and all future holders of the obligations owing by the Company hereunder. 8.5. Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a quot;notice of defaultquot;. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Banks. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Banks; provided that unless and until the Administrative Agent shall have received such © 2004. EDGAR Online, Inc.
  • 134. 45 directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Banks. 8.6. Non-Reliance on Administrative Agent and Other Banks. Each Bank expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Company, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Bank. Each Bank represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Company and made its own decision to make its Loans hereunder and enter into this Agreement. Each Bank also represents that it will, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly required to be furnished to the Banks by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Company which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 8.7. Indemnification. The Banks agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitment shall have terminated and the Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans and all other amounts owing hereunder) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. © 2004. EDGAR Online, Inc.
  • 135. 46 8.8. Administrative Agent in Its Individual Capacity. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Company as though the Administrative Agent were not the Administrative Agent hereunder. With respect to its Loans made or renewed by it, the Administrative Agent shall have the same rights and powers under this Agreement as any Bank and may exercise the same as though it were not the Administrative Agent, and the terms quot;Bankquot; and quot;Banksquot; shall include the Administrative Agent in its individual capacity. 8.9. Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon thirty days' notice to the Banks, and may be removed at any time with or without cause by the Required Banks. Upon any resignation or removal of the Administrative Agent, the Required Banks shall appoint from among the Banks a successor Administrative Agent for the Banks, which successor Administrative Agent shall be approved by the Company. If no successor Administrative Agent shall have been so approved by the Company and shall have accepted such appointment within thirty days after the resignation of the Administrative Agent, then in place or the Required Banks' removal of the retiring Administrative Agent, such retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent (which shall be a commercial bank or trust company organized or licensed under the laws of the United States or any state thereof) which appointment shall be subject to the approval of the Company such approval not to be unreasonably withheld. Upon the acceptance of any appointment as Administrative Agent hereunder, such successor Administrative Agent shall succeed to the rights, powers and duties of the Administrative Agent and the term quot;Administrative Agentquot; shall mean such successor agent effective upon its appointment, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the obligations owing hereunder. After any retiring Administrative Agent's resignation or removal as Administrative Agent, the provisions of this subsection shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. SECTION 9. MISCELLANEOUS 9.1. Amendments and Waivers. Neither this Agreement, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. With the written consent of the Required Banks, the Administrative Agent and the Company may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or adding any financial institution (other than as provided for herein) as a Bank hereunder (thereby increasing the Aggregate Commitment) or changing in any manner the rights of the Banks or of the Company hereunder or thereunder or waiving, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (a) reduce the amount or extend the maturity of any Loan or any installment thereof, or reduce the rate of interest (other than default interest rates) thereon or extend the time of payment of interest or fees thereon, or reduce any fee © 2004. EDGAR Online, Inc.
  • 136. 47 payable to any Bank hereunder, or change the amount of any Bank's Commitment, in each case without the written consent of the Bank affected thereby, or (b) amend, modify or waive any provision of subsection 2.7, subsection 2.1(c) or this subsection 9.1, amend the definition of Required Banks or consent to the assignment or transfer by the Company of any of its rights and obligations under this Agreement (other than as set forth in subsection 6.2), in each case without the written consent of all the Banks or (c) amend, modify or waive any provision of Section 8 or any reference to the Administrative Agent, the Syndication Agents or the Documentation Agent in any other provision of this Agreement which alters the duties or obligations of the Administrative Agent, the Syndication Agents or the Documentation Agent without the written consent of the then Administrative Agent, the Syndication Agents or the Documentation Agent, as the case may be. Nothing in this subsection 9.1 shall prevent or prohibit the Administrative Agent, the Company or any Bank from taking any action in accordance with subsection 2.1(c), 2.7, 2.21, 2.23 or 2.24 notwithstanding anything contained in this subsection 9.1 to the contrary, including, without limitation (i) allowing the Administrative Agent to increase the Aggregate Commitment, (ii) allowing any Bank to increase its Commitment and allowing the execution and delivery of any Commitment Increase Supplement, (iii) allowing an Other Bank to become an Additional Bank and allowing the execution and delivery of an Additional Bank Agreement, (iv) allowing a Non-Extending Bank to transfer its rights and obligations hereunder to a Continuing Bank, (v) allowing a Notifying Bank to transfer its rights and obligations to a Replacement Bank, or (vi) the modification, amendment or supplement of this Agreement (including, without limitation, Schedule I), in each case solely in accordance with, or upon a transfer by a Bank of its rights and obligations hereunder pursuant to, the applicable provisions of subsection 2.1(c), 2.7, 2.21, 2.23 or 2.24. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Banks and shall be binding upon the Company, the Banks, the Agents and all future holders of the obligations owing hereunder. In the case of any waiver, the Company, the Banks and the Agents shall be restored to their former position and rights hereunder, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 9.2. Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy, telegraph or telex), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, or, in the case of telegraphic notice, when delivered to the telegraph company, or, in the case of telex notice, when sent, answerback received, addressed, in the case of the Company and the Administrative Agent, as follows, and as set forth on Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the obligations owing hereunder: The Administrative Agent: JPMorgan Chase Bank Agency Services Group 1111 Fannin - 10th Floor Houston, Texas 77002 Attention: Eleanor Fiore Telecopy: (713) 750-2223 © 2004. EDGAR Online, Inc.
  • 137. 48 The Company: CIT Group Inc. 1 CIT Drive Livingston, New Jersey 07039 Attention: Executive Vice President and Treasurer Telecopy: (973) 535-3761 with a copy to: CIT Group Inc. 1 CIT Drive Livingston, New Jersey 07039 Attention: General Counsel Telecopy: (973) 740-5148 Notices and other communications to the Banks hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 or subsection 8.5 unless otherwise agreed by the Administrative Agent and the applicable Bank. The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. 9.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Bank, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 9.4. Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 9.5. Payment of Expenses and Taxes. The Company agrees (a) to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith (including, without limitation, any Commitment Increase Supplement or Additional Bank Agreement pursuant to subsection 2.1), including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse each Bank and the Agents for all its reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents prepared in connection herewith, including, without limitation, reasonable fees and disbursements (including the allocated costs and expenses of in-house counsel) of counsel to the Administrative Agent and © 2004. EDGAR Online, Inc.
  • 138. 49 to the several Banks, (c) to pay, indemnify, and hold each Bank and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement and any such other documents prepared in connection herewith, and (d) to pay, indemnify, and hold each Bank and the Administrative Agent, and each of their respective Affiliates, officers, directors and employees, harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable legal fees and expenses), with respect to the execution, delivery, enforcement, performance and administration of this Agreement, any Loan (including the use of proceeds thereof) and any such other documents prepared in connection herewith (all the foregoing, collectively, the quot;indemnified liabilitiesquot;), provided, that the Company shall have no obligation hereunder to any Administrative Agent or any Bank with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of such Administrative Agent or such Bank, (ii) legal proceedings commenced against any Administrative Agent or any Bank by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such, or (iii) legal proceedings commenced against any Agent or any Bank by any other Bank or by any Transferee. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 9.6. Successors and Assigns; Participations; Purchasing Banks. (a) This Agreement shall be binding upon and inure to the benefit of the Company, the Administrative Agent, the Banks, all future holders of the obligations owing hereunder and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Bank (except as provided in subsection 6.2). (b) Any Bank may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities (quot;Participantsquot;) participating interests in any Loan owing to such Bank, any Commitment of such Bank or any other interest of such Bank hereunder. In the event of any such sale by a Bank of participating interests to the Participant, such Bank's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any obligation owing to it hereunder for all purposes under this Agreement, and the Company and the Administrative Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement; provided, that such Bank shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Credit Agreement other than, as may be agreed to by such Bank and Participant, any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment or postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment. © 2004. EDGAR Online, Inc.
  • 139. 50 The Company agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. The Company also agrees that each Participant shall be entitled to the benefits of subsections 2.18, 2.19, 2.20 and 9.5 with respect to its participation in the Commitment and the Loans outstanding from time to time; provided, that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Bank would have been entitled to receive in respect of the amount of the participation transferred by the transferor Bank to such Participant had no such transfer occurred. (c) Any Bank may, in the ordinary course of its business and in accordance with applicable law, at any time sell, to any Bank or any Affiliate thereof and, unless an Event of Default has occurred and is continuing, with the consent of the Company and the Administrative Agent (which consents shall not be unreasonably withheld or delayed), to one or more additional banks or financial institutions (quot;Purchasing Banksquot;) all or any part of its rights and obligations under this Agreement pursuant to a Commitment Transfer Supplement, substantially in the form of Exhibit C (a quot;Commitment Transfer Supplementquot;), executed by such Purchasing Bank and such transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank or an Affiliate thereof, by the Company and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register. Each such assignment shall be in a minimum amount of $5,000,000 (other than in the case of an assignment of all of a Bank's interests under this Agreement) and the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance, a Commitment Transfer Supplement, and the transferor Bank or the Purchasing Bank, as agreed between them, shall deliver to the Administrative Agent a processing and recordation fee of $3,500. After giving effect to any such assignment (other than an assignment of all of a Bank's interests under this Agreement), the assigning Bank (together with any Bank which is an Affiliate of such assigning Bank) shall retain Revolving Credit Loans and/or Commitments aggregating not less than $15,000,000. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date determined pursuant to such Commitment Transfer Supplement (the quot;Transfer Effective Datequot;), (x) the Purchasing Bank thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Bank hereunder with a Commitment as set forth therein, and (y) the transferor Bank thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Bank's rights and obligations under this Agreement, such transferor Bank shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of Commitment Percentages arising from the purchase by such Purchasing Bank of all or a portion of the rights and obligations of such transferor Bank under this Agreement. Notwithstanding any provision of this subsection 9.6, the consent of the © 2004. EDGAR Online, Inc.
  • 140. 51 Company shall not be required for any assignment which occurs at any time when any of the events described in Section 7(f) shall have occurred and be continuing. (d) The Administrative Agent shall maintain at its address referred to in subsection 9.2 a copy of each Commitment Transfer Supplement delivered to it and a register (the quot;Registerquot;) for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the Loans owing to, each Bank from time to time. The entries in the Register shall constitute prima facie evidence of the items contained therein, and the Company, the Administrative Agent and the Banks shall treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a Commitment Transfer Supplement executed by a transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank or an Affiliate thereof, by the Company and the Administrative Agent), the Administrative Agent shall (i) promptly accept such Commitment Transfer Supplement and (ii) on the Transfer Effective Date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Banks and the Company. (f) If, pursuant to this subsection, any interest in this Agreement is transferred to any Participant or Assignee (each, a quot;Transfereequot;) which is organized under the laws of any jurisdiction other than the United States or any state thereof, the transferor Bank shall cause such Transferee, concurrently with the effectiveness of such transfer, (i) to represent to the transferor Bank (for the benefit of the transferor Bank and the Company) that under applicable law and treaties no taxes will be required to be withheld by the Company or the transferor Bank with respect to any payments to be made to such Transferee in respect of the Loans (except to the extent that such Transferee's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Company with respect to Taxes pursuant to subsection 2.19(a)) and (ii) to furnish to the transferor Bank (and, in the case of any Assignee, to the Company) the forms and certificates required to be delivered pursuant to subsection 2.19(b). (g) Nothing herein shall prohibit any Bank from pledging or assigning all or any portion of its Loans to any Federal Reserve Bank in accordance with applicable law. 9.7. Dissemination of Information; Confidentiality. (a) The Company authorizes each Bank to disclose to any Participant or Purchasing Bank or any other Person acquiring an interest in this Agreement by operation of law, or (with the consent of the Company; provided that such consent shall not be unreasonably withheld and shall not be required for any disclosure which occurs at any time when any of the events described in Section 7(f) shall have occurred and be continuing) any contractual counterparty to any swap, hedge, securitization or other derivative transaction entered into by such Bank in connection with this Agreement (each a quot;Transfereequot;) and any prospective Transferee any and all information in such Bank's possession concerning the creditworthiness of the Company and its Subsidiaries, © 2004. EDGAR Online, Inc.
  • 141. 52 provided that such Transferee or prospective Transferee agrees to be bound by this subsection 9.7 with respect to such information as though such Transferee or prospective Transferee were a Bank hereunder. (b) Each Bank and each Transferee that receives information which is not publicly available and which has been identified by the Company as confidential (quot;Proprietary Informationquot;) will be bound to treat such Proprietary Information in a confidential manner and to use such Proprietary Information only for the purpose of evaluating and monitoring the creditworthiness of the Company and its Subsidiaries in connection with such Bank's or such Transferee's extensions of credit pursuant to this Agreement or such Bank's or Transferee's other agreements with the Company, or as otherwise may be required by law, regulation or court order; provided, that if any Bank or Transferee shall be required to disclose any Proprietary Information by a court order (i) such Bank or Transferee shall, unless prohibited by applicable law, applicable regulation or the terms of the applicable court order, communicate such fact to the Administrative Agent and the Administrative Agent shall communicate such fact to the Company and (ii) such Bank or Transferee shall disclose only such Proprietary Information which it is requested to disclose or advised by counsel to disclose; provided, further, that any Bank or Transferee may disclose such information which it is requested to disclose or is advised by counsel to disclose to an auditor, examiner or regulator if it has advised such auditor, examiner or regulator that such information is confidential; provided, further, that any Bank or Transferee may disclose Proprietary Information (A) to Affiliates of such Bank or Transferee provided that such Affiliates agree to keep the Proprietary Information confidential as set forth herein, (B) with the written consent of the Company, (C) in connection with any litigation involving the Company and such Bank or Transferee, (D) to legal counsel to such Bank or Transferee if it advises such legal counsel that such information is confidential, (E) if such Proprietary Information was in the possession of such Bank or Transferee on a non-confidential basis prior to the Company furnishing it to such Bank or Transferee as shown by clear and convincing evidence, or (F) if such Proprietary Information is received by such Bank or Transferee, without restriction as to its disclosure or use, from a Person who, to such Bank's or Transferee's knowledge or reasonable belief, was not prohibited from disclosing it by any duty of confidentiality. 9.8. Adjustments. (a) If any Bank (a quot;benefitted Bankquot;) shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Bank, if any, in respect of such other Bank's Loans, or interest thereon, such benefitted Bank shall purchase for cash from the other Banks such portion of each such other Bank's Loan, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Bank to share the excess payment or benefits of such collateral or proceeds ratably with each of the Banks; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Bank, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Notwithstanding anything contained in this Agreement to the contrary, this subsection 9.8 shall © 2004. EDGAR Online, Inc.
  • 142. 53 only be applicable to (i) payments received by a Bank in respect of the obligations of the Company under this Agreement and (ii) collateral received from the Company, if any, to secure obligations of the Company under this Agreement. (b) In addition to any rights and remedies of the Banks provided by law, upon (i) the occurrence and during the continuance of an Event of Default, and (ii) the declaration by the Administrative Agent that the Loans are immediately due and payable pursuant to the last paragraph of Section 7, or the occurrence and continuance of an Event of Default specified in clause (i) or (ii) of paragraph (f) of Section 7, each Bank shall have the right, without prior notice to the Company, any such notice being expressly waived by the Company to the extent permitted by applicable law (but without waiving any notices specified in Section 7), upon any amount becoming due and payable by the Company hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether matured or unmatured, at any time held or owing by such Bank or any branch or agency thereof to or for the credit or the account of the Company. Each Bank agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Bank, provided that the failure to give such notice shall not affect the validity of such set-off and application. 9.9. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent. 9.10. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.11. Integration. This Agreement represents the agreement of the Company, the Agents and the Banks with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Company, the Agents or any Bank relative to subject matter hereof not expressly set forth or referred to herein other than any agreements referred to in subsection 2.5(b). 9.12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 9.13. Submission To Jurisdiction; Waivers. The Company hereby irrevocably and unconditionally: © 2004. EDGAR Online, Inc.
  • 143. 54 (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address set forth in subsection 9.2 or at such other address of which the Bank shall have been notified pursuant thereto; and (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. 9.14. WAIVERS OF JURY TRIAL. THE COMPANY, THE AGENTS AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 9.15. USA PATRIOT Act. Each Bank hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the quot;Actquot;), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Bank to identify the Company in accordance with the Act. © 2004. EDGAR Online, Inc.
  • 144. Signature page to the 364-Day Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, Bank of America, N.A. and Citibank, NA, as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. CIT GROUP INC. By: _________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 145. Signature page to the 364-Day Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, Bank of America, N.A., and Citibank, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. JPMORGAN CHASE BANK, as Administrative Agent and as a Bank By: ___________________ Name: Title: J.P. MORGAN SECURITIES INC., as Joint Lead Arranger By: ___________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 146. Signature page to the 364-Day Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, Bank of America, N.A., and Citibank, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger By: _____________________________ Name: Title: BANK OF AMERICA, N.A., as Syndication Agent and as a Bank By: ___________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 147. Signature page to the 364-Day Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A. and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. CITIBANK, N.A., as Syndication Agent By: ___________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 148. Signature page to the 364-Day Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, Citibank, N.A. and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. BARCLAYS BANK PLC, as Documentation Agent and as a Bank By: ___________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 149. Signature page to the 364-Day Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, Citibank, N.A. and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. Name of Bank: By: ___________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 150. Exhibit 4.3 Execution Copy CIT GROUP INC. $2,100,000,000 5-YEAR CREDIT AGREEMENT Dated as of April 14, 2004 J.P. MORGAN SECURITIES INC., as Joint Lead Arranger and Bookrunner CITIGROUP GLOBAL MARKETS INC., as Joint Lead Arranger and Bookrunner JPMORGAN CHASE BANK, as Administrative Agent BANK OF AMERICA, N.A., as Syndication Agent CITIBANK, N.A., as Syndication Agent and BARCLAYS BANK PLC as Documentation Agent © 2004. EDGAR Online, Inc.
  • 151. TABLE OF CONTENTS Page SECTION 1. DEFINITIONS.......................................................1 1.1. Defined Terms................................................1 1.2. Other Definitional Provisions...............................12 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..................................13 2.1. Commitments.................................................13 2.2. Revolving Credit Borrowing Procedure........................15 2.3. Competitive Bid Borrowing Procedure.........................15 2.4. Repayment of Loans; Evidence of Debt........................17 2.5. Facility Fee; Administrative Agent's Fee....................18 2.6. Utilization Fee.............................................18 2.7. Termination or Reduction of Commitments.....................19 2.8. Optional Prepayments of Revolving Credit Loans..............19 2.9. Conversion and Continuation Options.........................19 2.10. Applicable Interest Rate Margins, Facility Fee Rate and Utilization Fee..................................20 2.11. Minimum Amounts of Tranches.................................20 2.12. Interest Rates and Payment Dates............................21 2.13. Computation of Interest and Fees............................21 2.14. Inability to Determine Interest Rate........................22 2.15. Pro Rata Treatment and Payments.............................22 2.16. Illegality..................................................23 2.17. Requirements of Law.........................................23 2.18. Taxes.......................................................25 2.19. Indemnity...................................................27 2.20. Actions of Banks............................................28 2.21. Lending © 2004. EDGAR Online, Inc.
  • 152. Installations.......................................28 2.22. Removal of Banks............................................28 2.23. Replacement of Banks........................................29 SECTION 3. LETTERS OF CREDIT................................................29 3.1. L/C Commitment..............................................29 3.2. Procedure for Issuance of Letter of Credit..................30 3.3. Fees and Other Charges......................................30 3.4. L/C Participations..........................................30 3.5. Reimbursement Obligation of the Company.....................31 3.6. Obligations Absolute........................................31 3.7. Letter of Credit Payments...................................32 3.8. Applications................................................32 3.9. Cash-Collateralization......................................32 i © 2004. EDGAR Online, Inc.
  • 153. SECTION 4. REPRESENTATIONS AND WARRANTIES...................................33 4.1. Financial Condition.........................................33 4.2. No Change...................................................33 4.3. Corporate Existence; Compliance with Law; Significant Subsidiaries..................................33 4.4. Corporate Power; Authorization; Enforceable Obligations.....33 4.5. No Legal Bar................................................33 4.6. No Material Litigation......................................34 4.7. No Default..................................................34 4.8. Aggregation of the Representations and Warranties Relating to Net Worth.....................................34 4.9. Federal Regulations.........................................34 4.10. ERISA.......................................................34 4.11. Investment Company Act......................................34 4.12. Purpose of Loans............................................34 SECTION 5. CONDITIONS PRECEDENT.............................................35 5.1. Conditions to Initial Loans.................................35 5.2. Conditions to Each Loan.....................................36 SECTION 6. AFFIRMATIVE COVENANTS............................................36 6.1. Financial Statements........................................36 6.2. Payment of Obligations......................................38 6.3. Conduct of Business and Maintenance of Existence............38 6.4. Notices.....................................................38 6.5. Status of Obligations.......................................39 6.6. Maintenance of Property.....................................39 6.7. Payment of Taxes............................................39 6.8. Use of © 2004. EDGAR Online, Inc.
  • 154. Proceeds.............................................39 SECTION 7. NEGATIVE COVENANTS...............................................40 7.1. Negative Pledge.............................................40 7.2. Consolidations, Mergers and Sales of Assets.................42 7.3. Net Worth...................................................42 SECTION 8. EVENTS OF DEFAULT................................................43 SECTION 9. THE AGENTS.......................................................45 9.1. Appointment.................................................45 9.2. Delegation of Duties........................................45 9.3. Exculpatory Provisions......................................45 9.4. Reliance by Administrative Agent............................46 9.5. Notice of Default...........................................46 9.6. Non-Reliance on Administrative Agent and Other Banks........46 9.7. Indemnification.............................................47 ii © 2004. EDGAR Online, Inc.
  • 155. 9.8. Administrative Agent in Its Individual Capacity.............47 9.9. Successor Administrative Agent..............................47 SECTION 10. MISCELLANEOUS...................................................48 10.1. Amendments and Waivers......................................48 10.2. Notices.....................................................49 10.3. No Waiver; Cumulative Remedies..............................50 10.4. Survival of Representations and Warranties..................50 10.5. Payment of Expenses and Taxes...............................50 10.6. Successors and Assigns; Participations; Purchasing Banks....51 10.7. Dissemination of Information; Confidentiality...............53 10.8. Adjustments.................................................54 10.9. Counterparts................................................54 10.10. Severability................................................55 10.11. Integration.................................................55 10.12. GOVERNING LAW...............................................55 10.13. Submission To Jurisdiction; Waivers.........................55 10.14. WAIVERS OF JURY TRIAL.......................................55 10.15. USA PATRIOT Act.............................................55 SCHEDULES I. Commitments and Bank Information II. List of Significant Subsidiaries III. Existing Letters of Credit EXHIBITS A-1 Form of Revolving Credit Note A-2 Form of Competitive Bid Note B-1 Form of Opinion of Counsel to the Company B-2 Form of Opinion of Simpson Thacher & Bartlett LLP C Form of Commitment Transfer Supplement D-1 Form of Officer's Certificate D-2 Form of Secretary's Certificate E Form of Incumbency Certificate F Form of Borrowing Notice © 2004. EDGAR Online, Inc.
  • 156. G Form of Competitive Bid Request H Form of Notice of Competitive Bid Request I Form of Competitive Bid J Form of Competitive Bid Accept/Reject Letter K Form of Exemption Certificate iii © 2004. EDGAR Online, Inc.
  • 157. 5-YEAR CREDIT AGREEMENT, dated as of April 14, 2004, among CIT GROUP INC., a Delaware corporation (the quot;Companyquot;), the several banks and other financial institutions from time to time on Schedule I to this Agreement (the quot;Banksquot;), J.P. MORGAN SECURITIES INC. and CITIGROUP GLOBAL MARKETS INC., acting as joint lead arrangers and bookrunners (in such capacity, the quot;Joint Lead Arrangersquot;), CITIBANK, N.A., and BANK OF AMERICA, N.A., as syndication agents (in such capacity, the quot;Syndication Agentsquot;), BARCLAYS BANK PLC, as documentation agent (in such capacity, the quot;Documentation Agentquot;) and JPMORGAN CHASE BANK, as administrative agent (in such capacity, the quot;Administrative Agentquot;). W I T N E S S E T H: WHEREAS, the Company has requested $2,100,000,000 in senior unsecured revolving credit facilities from the Banks for general corporate purposes; and WHEREAS, the Banks are willing to provide the requested senior unsecured revolving credit facilities on the terms and conditions set forth herein; NOW, THEREFORE, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: quot;Additional Bankquot;: as defined in subsection 2.1(c)(ii). quot;Additional Bank Agreementquot;: as defined in subsection 2.1(c)(ii). quot;Administrative Agentquot;: as defined in the preamble hereto. quot;Affiliatequot;: as to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. quot;Agentsquot;: the collective reference to the Administrative Agent, the Syndication Agents, the Documentation Agent and the Joint Lead Arrangers. quot;Aggregate Available Commitmentquot;: at any time, the excess, if any, of (a) the Aggregate Commitment over (b) the aggregate principal amount of all Loans and L/C Obligations then outstanding. quot;Aggregate Commitmentquot;: the aggregate amount of the Banks' Commitments. quot;Agreementquot;: this 5-Year Credit Agreement, as amended, supplemented or otherwise modified from time to time. © 2004. EDGAR Online, Inc.
  • 158. 2 quot;Agreement Accounting Principlesquot;: GAAP applied in a manner consistent with those principles used in the preparation of the financial statements referred to in subsection 4.1. quot;Applicable Eurodollar Marginquot;: as defined in subsection 2.10. quot;Applicable Facility Fee Ratequot;: as defined in subsection 2.10. quot;Applicable Marginquot;: as defined in subsection 2.10. quot;Applicable Ratequot;: as defined in subsection 2.10. quot;Applicable Utilization Fee Ratequot;: as defined in subsection 2.10. quot;Applicationquot;: an application, in such form as the Issuing Bank may reasonably specify from time to time, requesting the Issuing Bank to open a Letter of Credit. quot;Banksquot;: as defined in the preamble hereto and any Person becoming party hereto as a lender pursuant to Section 10.6(c). quot;Barclaysquot;: Barclays Bank PLC. quot;Base Ratequot;: a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Corporate Base Rate in effect on such day, and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Corporate Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Corporate Base Rate or the Federal Funds Effective Rate, respectively. The Administrative Agent will give notice promptly to the Company and the Banks of changes in the Base Rate. quot;Base Rate Loanquot;: any Revolving Credit Loan bearing interest at a rate determined by reference to the Base Rate in accordance with Section 2. quot;BofAquot;: Bank of America, N.A. quot;Borrowingquot;: a group of Loans of a single type made by the Banks (or, in the case of a Competitive Bid Borrowing, by the Bank or Banks whose Competitive Bids have been accepted pursuant to subsection 2.3) on a single date and as to which a single Interest Period is in effect. quot;Borrowing Datequot;: a date on which a Borrowing is made hereunder. © 2004. EDGAR Online, Inc.
  • 159. 3 quot;Business Dayquot;: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. quot;Cash Collateral Accountquot;: is defined in subsection 3.9. quot;Citibankquot;: Citibank, N.A. quot;Closing Datequot;: the date on which the conditions precedent set forth in subsection 5.1 are satisfied. quot;Codequot;: the Internal Revenue Code of 1986, as amended from time to time. quot;Commitmentquot;: as to any Bank, the obligation of such Bank to make Revolving Credit Loans to the Company and to acquire participations in Letters of Credit hereunder in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Bank's name on Schedule I or in any assignment and acceptance to which any Bank may be a party, as the same may be increased from time to time in accordance with subsection 2.1(c) or decreased or terminated from time to time in accordance with subsection 2.7. quot;Commitment Increase Supplementquot;: as defined in subsection 2.1(c)(ii). quot;Commitment Percentagequot;: as to any Bank, (a) at any time prior to the expiration or termination of the Commitments (expressed as a percentage), the ratio of such Bank's Commitment to the Aggregate Commitment, and (b) at any time after the expiration or termination of the Commitments (expressed as a percentage), the ratio of (x) the sum of the aggregate principal amount of such Bank's Loans then outstanding and the aggregate of such Bank's participations in L/C Obligations then outstanding that are not cash-collateralized pursuant to subsection 3.9 to (y) the sum of the aggregate principal amount of the Loans then outstanding and the aggregate L/C Obligations then outstanding that are not cash-collateralized pursuant to subsection 3.9. quot;Commitment Periodquot;: the period from and including the last to occur of (i) the Closing Date and (ii) April 15, 2004, to but not including the Termination Date or such earlier date on which the Aggregate Commitment shall terminate as provided herein. quot;Commitment Transfer Supplementquot;: as defined in subsection 10.6(c) hereto. quot;Commonly Controlled Entityquot;: an entity, whether or not incorporated, which is under common control with the Company within the meaning of Section 4001 of ERISA or is part of a group which includes the Company and which is treated as a single employer under Section 414 of the Code. quot;Competitive Bidquot;: an offer by a Bank to make a Competitive Bid Loan pursuant to subsection 2.3. quot;Competitive Bid Accept/Reject Letterquot;: a notification made by the Company pursuant to subsection 2.3(d) in the form of Exhibit J. © 2004. EDGAR Online, Inc.
  • 160. 4 quot;Competitive Bid Borrowingquot;: a Borrowing consisting of a Competitive Bid Loan or concurrent Competitive Bid Loans from the Bank or Banks whose Competitive Bids for such Borrowing have been accepted by the Company under the bidding procedure described in subsection 2.3. quot;Competitive Bid Loanquot;: a Loan made by a Bank to the Company pursuant to the bidding procedure described in subsection 2.3. Each Competitive Bid Loan shall be a Eurodollar Competitive Bid Loan or a Fixed Rate Loan. quot;Competitive Bid Maturity Datequot;: as to each Competitive Bid Loan, the maturity date specified by the Company for such Competitive Bid Loan in the related Competitive Bid Request. quot;Competitive Bid Ratequot;: as to any Competitive Bid made by a Bank pursuant to subsection 2.3(b), (i) in the case of a Eurodollar Competitive Bid Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest offered by the Bank making such Competitive Bid. quot;Competitive Bid Requestquot;: a request made pursuant to subsection 2.3 in the form of Exhibit G. quot;Contractual Obligationquot;: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. quot;Corporate Base Ratequot;: the rate of interest from time to time announced by JPMorgan Chase Bank at its principal office as its prime commercial lending rate. quot;Debt Ratingsquot;: the collective reference to LT Ratings and ST Ratings. The Debt Ratings shall be determined from the most recent public announcement of any changes in the Debt Ratings. If the rating system of S&P or Moody's shall change, the Company and the Administrative Agent shall negotiate in good faith to amend this definition to reflect such changed rating system and, pending the effectiveness of such amendment (which shall require the approval of Required Banks), the Debt Rating shall be determined by reference to the rating most recently in effect prior to such change. quot;Defaultquot;: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. quot;Documentation Agentquot;: as defined in the preamble hereto. quot;Dollarsquot; and quot;$quot;: dollars in lawful currency of the United States. quot;ERISAquot;: the Employee Retirement Income Security Act of 1974, as amended from time to time. quot;Eurodollar Borrowingquot;: a Borrowing comprised of Eurodollar Loans. © 2004. EDGAR Online, Inc.
  • 161. 5 quot;Eurodollar Competitive Bid Borrowingquot;: a Borrowing comprised of Eurodollar Competitive Bid Loans. quot;Eurodollar Competitive Bid Loanquot;: any Competitive Bid Loan bearing interest at a rate determined by reference to the Eurodollar Rate in accordance with the provisions of Section 2. quot;Eurodollar Loanquot;: any Eurodollar Competitive Bid Loan or Eurodollar Revolving Credit Loan. quot;Eurodollar Ratequot;: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Working Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the quot;Eurodollar Ratequot; shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and the Company or, in the absence of such agreement, the quot;Eurodollar Ratequot; shall instead be the rate per annum equal to the average (rounded to the nearest 1/100th of 1%) of the respective rates notified to the Administrative Agent by each of the Reference Banks as the rate at which such Reference Bank is offered Dollar deposits at or about 10:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of its Eurodollar Loan to be outstanding during such Interest Period. quot;Eurodollar Revolving Credit Borrowingquot;: a Borrowing comprised of Eurodollar Revolving Credit Loans. quot;Eurodollar Revolving Credit Loanquot;: any Revolving Credit Loan bearing interest at a rate determined by reference to the Eurodollar Rate in accordance with the provisions of Section 2. quot;Event of Defaultquot;: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. quot;Existing 364-Day Agreementquot;: the 364-Day Credit Agreement, dated as of October 10, 2003, among the Company, the banks parties thereto, BofA, N.A. and Citibank, as syndication agents, Barclays Bank PLC, as documentation agent, and JPMorgan Chase Bank, as administrative agent, as amended, supplemented or otherwise modified from time to time. quot;Existing 5-Year Credit Agreementquot;: the 5-Year Credit Agreement, dated as of March 28, 2000, as amended, among the Company, the banks parties thereto, Barclays © 2004. EDGAR Online, Inc.
  • 162. 6 Bank PLC, BofA, Citibank and MIZUHO Corporate Bank, Ltd. (f/k/a The Dai-Ichi Kangyo Bank, Limited), as syndication agents and JPMorgan Chase Bank (f/k/a The Chase Manhattan Bank), as administrative agent. quot;Existing Letters of Creditquot;: the Letters of Credit described in Schedule III. quot;Federal Funds Effective Ratequot;: for any day, a rate per annum equal to (i) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York; or (ii) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day at approximately 10:00 A.M., New York City time, on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. quot;Fee Payment Datequot;: the last day of each calendar quarter, commencing June 30, 2004 and the Termination Date. quot;Financing Leasequot;: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. quot;Fixed Rate Borrowingquot;: a Borrowing comprised of Fixed Rate Loans. quot;Fixed Rate Loanquot;: any Competitive Bid Loan bearing interest at a fixed percentage rate per annum (expressed in the form of a decimal to no more than four decimal places) specified by the Bank making such Loan in its Competitive Bid. quot;GAAPquot;: generally accepted accounting principles in the United States in effect from time to time. quot;Governmental Authorityquot;: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. quot;Hedging Agreementquot;: any swap, cap, collar, floor or other hedging agreement in respect of interest rates or currency exchange rates. For purposes of this Agreement, the amount of any obligations or liabilities in respect of any Hedging Agreement shall be the amounts, including any termination payments, that would be required to be paid to a counterparty upon early termination (in accordance with customary industry standards) rather than any notional amount with regard to which payments may be calculated. quot;Increasing Bankquot;: as defined in subsection 2.1(c)(ii). quot;Indebtednessquot;: of a Person means such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property or services other than accounts payable arising in the ordinary course of such Person's business, (iii) obligations, whether or not assumed, secured by Liens on property now or hereafter © 2004. EDGAR Online, Inc.
  • 163. 7 owned or acquired by such Person (other than carriers', warehousemen's, mechanics', repairmen's or other like nonconsensual statutory Liens arising in the ordinary course of business), (iv) obligations which are evidenced by notes, acceptances, or other similar instruments, (v) capitalized lease obligations, (vi) contingent obligations with respect to the Indebtedness of another Person, including but not limited to the obligation or liability of another which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes contingently liable upon; provided that any Indebtedness owing by the Company to any of its Subsidiaries or by any Subsidiary of the Company to the Company or by any Subsidiary of the Company to any other Subsidiary of the Company or any contingent obligation in respect thereof shall not constitute Indebtedness for purposes of this Agreement, and (vii) obligations for which such Person is obligated in respect of a letter of credit. For purposes of this Agreement, Indebtedness shall not include (A) any indebtedness of such Person to the extent (I) such indebtedness does not appear on the financial statement of such Person, (II) such indebtedness is recourse only to certain assets of such Person, and (III) the assets to which such indebtedness is recourse only appear on the financial statements of such Person net of such indebtedness, or (B) any indebtedness or other obligations issued by any Person (or by a trust or other entity established by such Person or any of its affiliates) which are primarily serviced by the cash flows of a discrete pool of receivables, leases or other financial assets which have been sold or transferred by the Company or any Subsidiary in securitization transactions which, in accordance with GAAP, are accounted for as sales for financial reporting purposes. It is understood and agreed that (1) the amount of any Indebtedness described in clause (iii) for which recourse is limited to certain property of such Person shall be the lower of (x) the amount of the obligation and (y) the fair market value of the property of such Person securing such obligation, and (2) the amount of any obligation described in clause (vi) shall be the lower of (x) the stated or determinable amount of the primary obligation in respect of which such contingent obligation is made, and (y) the maximum amount for which such Person may be liable pursuant to the terms of the agreement embodying such contingent obligation unless such primary obligation and the maximum amount for which such Person may be liable are not stated or determinable, in which case the amount of such contingent obligation shall be such Person's maximum, reasonably anticipated liability in respect thereof as determined by such Person in good faith. quot;Insolvencyquot;: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. quot;Interest Payment Datequot;: (a) as to any Base Rate Loan, the last day of each calendar quarter during which such Loan is outstanding and the Termination Date, and (b) as to any Loan other than a Base Rate Loan, the last day of the Interest Period applicable thereto and, in the case of a Eurodollar Loan with an Interest Period of more than three months, each day that would have been an Interest Payment Date for such Loan had successive Interest Periods of three months been applicable to such Loan and, in addition, the date the Company converts any Loan into a Loan of a different Type or having a different Interest Period. © 2004. EDGAR Online, Inc.
  • 164. 8 quot;Interest Periodquot;: (a) with respect to any Eurodollar Loan, (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Company in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter in the case of a Eurodollar Revolving Credit Loan, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Company by irrevocable notice to the Administrative Agent not less than three Working Days prior to the last day of the then current Interest Period with respect thereto; and (b) with respect to any Fixed Rate Loan, the period commencing on the date of such Loan and ending on the date specified in the Competitive Bids in which the offer to make the Fixed Rate Loans comprising such Borrowing were extended, which shall not be earlier than fifteen days after the date of such Loan; provided that all of the foregoing provisions relating to Interest Periods are subject to the following: (A) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Working Day, such Interest Period shall be extended to the next succeeding Working Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Working Day; (B) any Interest Period that would otherwise extend beyond the Termination Date shall end on the Termination Date; and (C) any Interest Period pertaining to a Eurodollar Loan that begins on the last Working Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Working Day of a calendar month. quot;Issuing Bankquot;: JPMorgan Chase Bank or any affiliate thereof reasonably acceptable to the Company, in its capacity as issuer of any Letter of Credit. quot;Joint Lead Arrangersquot;: as defined in the preamble hereto. quot;JPMorgan Chase Bankquot;: as defined in the preamble hereto. quot;L/C Commitmentquot;: $400,000,000. quot;L/C Obligationsquot;: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to subsection 3.5. © 2004. EDGAR Online, Inc.
  • 165. 9 quot;L/C Participantsquot;: the collective reference to all the Banks other than the Issuing Bank. quot;Lending Installationquot;: any branch or office of any Bank selected by such Bank to be a Lending Installation in accordance with subsection 2.21. quot;Letters of Creditquot;: as defined in subsection 3.1(a). quot;Lienquot;: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). quot;Loanquot;: a Competitive Bid Loan, or a Revolving Credit Loan, whether made as a Eurodollar Loan, a Fixed Rate Loan or a Base Rate Loan, as permitted hereby. quot;LT Ratingquot;: as of any date of determination, the rating as determined by either S&P or Moody's (collectively, the quot;LT Ratingsquot;) of senior, unsecured long-term indebtedness for borrowed money of the Company, without third-party credit enhancement. quot;Marginquot;: as to any Eurodollar Competitive Bid Loan, the margin (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) to be added to or subtracted from the Eurodollar Rate to determine the interest rate applicable to such Loan, as specified in the Competitive Bid relating to such Loan. quot;Material Adverse Effectquot;: (a) a material adverse effect on the ability of the Company to perform its obligations under this Agreement (other than any such material adverse effect arising as a result of a general disruption in capital markets), or (b) a material adverse effect on the validity or enforceability against the Company of this Agreement or the material rights or remedies of the Administrative Agent or the Banks hereunder. quot;Moody'squot;: Moody's Investors Service, Inc. and its successors. quot;Multiemployer Planquot;: a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. quot;Net Worthquot;: at any date of determination, total shareholders' equity of the Company and its Subsidiaries on a consolidated basis determined in accordance with Agreement Accounting Principles. quot;New 364-Day Credit Agreementquot;: the 364-Day Credit Agreement, dated as of April 14, 2004, among the Company, the several banks and other financial institutions parties thereto, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers, BofA and Citibank, as syndication agents, Barclays, as documentation © 2004. EDGAR Online, Inc.
  • 166. 10 agent and JPMorgan Chase Bank, as administrative agent, as amended, supplemented or otherwise modified from time to time. quot;Non-U.S. Lenderquot;: as defined in subsection 2.18(b). quot;Other Bankquot;: as defined in subsection 2.1(c)(i). quot;Participantquot;: as defined in subsection 10.6(b). quot;PBGCquot;: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. quot;Personquot;: an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. quot;Planquot;: at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an quot;employerquot; as defined in Section 3(5) of ERISA. quot;Reference Banksquot;: JPMorgan Chase Bank, Barclays, BofA and Citibank. quot;Registerquot;: as defined in subsection 10.6(d). quot;Reimbursement Obligationquot;: the obligation of the Company to reimburse the Issuing Bank pursuant to subsection 3.5 for amounts drawn under Letters of Credit. quot;Regulation Uquot;: Regulation U of the Board of Governors of the Federal Reserve System. quot;Reorganizationquot;: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. quot;Reportable Eventquot;: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsection .23, .24, .26, .28 or .30 of PBGC Reg.ss.4043. quot;Required Banksquot;: at a particular time, Banks whose Commitment Percentages aggregate at least 51% or, if the Aggregate Commitment has been terminated or for purposes of any decision to accelerate the Loans pursuant to Section 8, Banks in the aggregate holding at least 51% of the aggregate unpaid principal amount of the outstanding Loans. quot;Requirement of Lawquot;: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or final determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any © 2004. EDGAR Online, Inc.
  • 167. 11 material portion of its property or to which such Person or any material portion of its property is subject. quot;Responsible Officerquot;: the chief executive officer, the vice chairman, the president, any vice president of the Company or, with respect to financial matters, (a) the chief financial officer of the Company, (b) the treasurer of the Company, or (c) the controller of the Company. quot;Revolving Credit Borrowingquot;: a Borrowing consisting of simultaneous Revolving Credit Loans from each of the Banks. quot;Revolving Credit Loanquot;: a revolving credit loan made by a Bank to the Company pursuant to subsection 2.1. Each Revolving Credit Loan shall be a Eurodollar Revolving Credit Loan or a Base Rate Loan. quot;SECquot;: the Securities and Exchange Commission and any succeeding or analogous governmental body or agency. quot;S&Pquot;: Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc., and its successors. quot;Significant Subsidiariesquot;: (i) any Subsidiary listed on Schedule II attached hereto, and (ii) any other Subsidiary which fits the definition of Significant Subsidiary contained in Rule 1-02 of Regulation S-X promulgated by the SEC, other than a Subsidiary that is a special purpose entity formed for the purpose of securitizing, selling for securitization or otherwise facilitating the securitization of assets of the Company or any other Subsidiary. quot;Single Employer Planquot;: any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. quot;ST Ratingquot;: as of any date of determination, the rating as determined by either S&P or Moody's (collectively, the quot;ST Ratingsquot;) of senior, unsecured short-term indebtedness for borrowed money of the Company, without third-party credit enhancement. quot;Subsidiaryquot;: as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a quot;Subsidiaryquot; or to quot;Subsidiariesquot; in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. quot;Syndication Agentsquot;: as defined in the preamble hereto. © 2004. EDGAR Online, Inc.
  • 168. 12 quot;Termination Datequot;: April 14, 2009. quot;Tranchequot;: the collective reference to Loans or portions thereof the Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). quot;Transfer Effective Datequot;: as defined in subsection 10.6(c) hereto. quot;Transfereequot;: as defined in subsection 10.6(f). quot;Typequot;: when used in respect of any Loan or Borrowing, means the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, quot;Ratequot; shall include the Eurodollar Rate, the Base Rate and any fixed rate. quot;Uniform Customsquot;: the Uniform Customs and Practice for Documentary Credits (1993 Revisions), International Chamber of Commerce Publication No. 500, the International Standby Practices 1998, or the most recent version thereof or successor thereto which shall be in effect from time to time, in each case as amended or otherwise modified from time to time and as selected in the applicable Letter of Credit. quot;United Statesquot;: the United States of America. quot;Utilization Feequot;: as defined in subsection 2.6. quot;Working Dayquot;: any Business Day on which dealings in U.S. dollars and exchange between banks may be carried on in London, England. 1.2. Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Company and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words quot;hereofquot;, quot;hereinquot; and quot;hereunderquot; and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. © 2004. EDGAR Online, Inc.
  • 169. 13 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 2.1. Commitments. (a) Subject to the terms and conditions hereof, each Bank severally agrees to make Revolving Credit Loans to the Company from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding, which, when added to such Bank's Commitment Percentage of the L/C Obligations, does not exceed the amount of such Bank's Commitment. Notwithstanding anything to the contrary contained in this subsection 2.1, at no time shall the sum of (A) the outstanding aggregate principal amount of all Revolving Credit Loans made by all Banks, plus (B) the aggregate outstanding amount of L/C Obligations plus (C) the outstanding aggregate principal amount of all Competitive Bid Loans made by all Banks, exceed the Aggregate Commitment. During the Commitment Period the Company may borrow, pay or prepay and reborrow hereunder, all in accordance with the terms and conditions set forth in this Agreement. (b) The Revolving Credit Loans may from time to time be Eurodollar Revolving Credit Loans and/or Base Rate Loans, as determined by the Company and notified to the Administrative Agent in accordance with subsections 2.2 and 2.9, provided that no Loan shall be made as a Eurodollar Revolving Credit Loan after the day that is one month prior to the Termination Date. (c) (i) Notwithstanding anything to the contrary contained in this Agreement, the Company may request from time to time that the Aggregate Commitment be increased by an amount not less than $25,000,000 or a whole multiple of $10,000,000 in excess thereof, provided that the Company may only request such an increase once in any six-month period and in no event shall the Aggregate Commitment exceed $3,000,000,000. Such increase in the Aggregate Commitment shall be effected as follows: the Company may (I) request one or more of the Banks to increase the amount of its Commitment (which request shall be in writing and sent to the Administrative Agent to forward to such Bank or Banks) and/or (II) arrange for one or more banks or financial institutions not a party hereto (an quot;Other Bankquot;) to become parties to and lenders under this Agreement, provided that (w) the Administrative Agent shall have approved such Other Bank, which approval shall not be unreasonably withheld, (x) the minimum Commitment of such Other Bank equals or exceeds $15,000,000 and (y) after giving effect to such increase, no Bank shall have a Commitment hereunder which exceeds an amount equal to 20% of the Aggregate Commitment. In no event may any Bank's Commitment be increased without the prior written consent of such Bank, and the failure of any Bank to respond to the Company's request for an increase shall be deemed a rejection by such Bank of the Company's request. The Aggregate Commitment may not be increased if, at the time of any proposed increase hereunder, a Default or Event of Default has occurred and is continuing, or either of the Company's LT Ratings from Moody's or S&P is less than A3 or A-, respectively. Upon any request by the Company to increase the Aggregate Commitment hereunder, the Company shall be deemed to have represented and warranted on and as of the date of such request that no Default or Event of Default has occurred and is continuing. Notwithstanding anything contained in this Agreement to the contrary, no Bank shall have any obligation whatsoever to increase the amount of its Commitment, and each Bank may, at its option, unconditionally and without cause, decline to increase its Commitment. © 2004. EDGAR Online, Inc.
  • 170. 14 (ii) If any Bank is willing, in its sole and absolute discretion, to increase the amount of its Commitment hereunder (such a Bank hereinafter referred to as an quot;Increasing Bankquot;), it shall enter into a written agreement to that effect with the Company and the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (a quot;Commitment Increase Supplementquot;), which agreement shall specify, among other things, the amount of the increased Commitment of such Increasing Bank. Upon the effectiveness of such Increasing Bank's increase in Commitment, Schedule I hereto shall, without further action, be deemed to have been amended as appropriate to reflect the increased Commitment of such Increasing Bank. Any Other Bank which is willing to become a party hereto and a lender hereunder and that has been approved by the Agent (which approval shall not be unreasonably withheld) shall enter into a written agreement with the Company and the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (an quot;Additional Bank Agreementquot;), which agreement shall specify, among other things, its Commitment hereunder. When such Other Bank becomes a Bank hereunder as set forth in the Additional Bank Agreement, Schedule I shall, without further action, be deemed to have been amended as appropriate to reflect the Commitment of such Other Bank. Upon the execution by the Administrative Agent, the Company and such Other Bank of such Additional Bank Agreement, such Other Bank shall become and be deemed a party hereto and a quot;Bankquot; hereunder for all purposes hereof and shall enjoy all rights and assume all obligations on the part of the Banks set forth in this Agreement, and its Commitment shall be the amount specified in its Additional Bank Agreement. Each Other Bank which executes and delivers an Additional Bank Agreement and becomes a party hereto and a quot;Bankquot; hereunder pursuant to such Additional Bank Agreement is hereinafter referred to as an quot;Additional Bank.quot; (iii) In no event shall an increase in a Bank's Commitment or the Commitment of an Other Bank pursuant to this subsection 2.1(c) become effective until the Administrative Agent shall have received a favorable written opinion of counsel for the Company, addressed to the Banks, with respect to the matters set forth in paragraphs 2 and 3 of Exhibit B-1 as they relate to this Agreement and the borrowings hereunder after giving effect to the increase in the Aggregate Commitment resulting from the increase in such Bank's Commitment or the extension of a Commitment by such Other Bank. In no event shall an increase in a Bank's Commitment or the Commitment of an Other Bank which results in the Aggregate Commitment exceeding the amount which is authorized at such time in resolutions previously delivered to the Administrative Agent become effective until the Administrative Agent shall have received a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Company authorizing the borrowings contemplated pursuant to such increase, certified by the Secretary or an Assistant Secretary of the Company. Concurrently with the execution by an Increasing Bank of a Commitment Increase Supplement or by an Additional Bank of an Additional Bank Agreement, the Company shall make such borrowing from such Increasing Bank or Additional Bank, and/or shall make such prepayment of outstanding Revolving Credit Loans, as shall be required to cause the aggregate outstanding principal amount of Revolving Credit Loans owing to each Bank (including each such Increasing Bank and Additional Bank) to be proportional to such Bank's share of the Aggregate Commitment after giving effect to any increase thereof. The Company agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense incurred as a result of any such prepayment in accordance with subsection 2.19, as applicable. © 2004. EDGAR Online, Inc.
  • 171. 15 (iv) No Other Bank may become an Additional Bank unless the Administrative Agent and the Company consent (which consent of the Administrative Agent shall not be unreasonably withheld) thereto by executing the Additional Bank Agreement signed by such bank or financial institution (or counterparts thereof), but no consent of any of the other Banks hereunder shall be required therefor. In no event shall the Commitment of any Bank be increased by reason of any bank or financial institution becoming an Additional Bank, or otherwise, but the Aggregate Commitment shall be increased by the amount of each Additional Bank's Commitment. Upon any Bank entering into a Commitment Increase Supplement or any Additional Bank becoming a party hereto, the Administrative Agent shall notify each other Bank thereof and shall deliver to each Bank a copy of the Additional Bank Agreement executed by such Additional Bank and the Commitment Increase Supplement executed by such Increasing Bank. 2.2. Revolving Credit Borrowing Procedure. Subject to the terms and conditions hereof, the Company may request Revolving Credit Loans during the Commitment Period on any Working Day, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Loans, or on any Business Day, otherwise, provided that the Company shall give the Administrative Agent irrevocable notice, substantially in the form of Exhibit F, (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, (a) three Working Days prior to the requested Borrowing Date, if all or any part of the requested Loans are to be initially Eurodollar Revolving Credit Loans or (b) on the Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the Borrowing is to be of Eurodollar Revolving Credit Loans, Base Rate Loans or a combination thereof and (iv) if the Borrowing is to be entirely or partly of Eurodollar Revolving Credit Loans, the amount of such Type of Loan and the length of the initial Interest Period therefor. Each Borrowing of Revolving Credit Loans shall be in an amount equal to (x) in the case of Base Rate Loans, $25,000,000 or a whole multiple of $5,000,000 in excess thereof (or, if the then Aggregate Available Commitment is less than $25,000,000, such lesser amount) and (y) in the case of Eurodollar Revolving Credit Loans, $25,000,000 or a whole multiple of $5,000,000 in excess thereof. Upon receipt of any such notice from the Company, the Administrative Agent shall promptly notify the Lending Installation of each Bank thereof. Each Bank will make the amount of its pro rata share of each Borrowing of Revolving Credit Loans available to the Administrative Agent at the office of the Administrative Agent specified in subsection 10.2 prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the Company in funds immediately available to the Administrative Agent. The Administrative Agent shall make the funds so received from the Banks immediately available to the Company at the Administrative Agent's aforesaid address or to an account designated by the Company. 2.3. Competitive Bid Borrowing Procedure. (a) To request Competitive Bids, the Company shall deliver to the Administrative Agent a Competitive Bid Request, substantially in the form of Exhibit G, to be received by the Administrative Agent (i) in the case of a Eurodollar Competitive Bid Borrowing, not later than 10:00 a.m, New York City time, four Working Days before a proposed Competitive Bid Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m, New York City time, one Business Day before a proposed Competitive Bid Borrowing. No Base Rate Loan shall be requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that does not conform substantially to the format of Exhibit G may be rejected in the Administrative Agent's sole discretion, and the © 2004. EDGAR Online, Inc.
  • 172. 16 Administrative Agent shall promptly notify the Company of such rejection by telecopier. Such request shall in each case refer to this Agreement and specify (x) whether the Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing (which shall be a Business Day and, in the case of a Eurodollar Competitive Bid Loan, a Working Day) and the aggregate principal amount thereof, which shall be a minimum principal amount of $25,000,000 and in an integral multiple of $5,000,000 (or an aggregate principal amount equal to the remaining balance of the available Commitments) and which will not cause the aggregate principal of all outstanding Loans to exceed the Aggregate Commitment, and (z) the Interest Period with respect thereto (which may not end after the Termination Date). The Competitive Bid Maturity Date for each Competitive Bid Loan shall be the date set forth therefor in the relevant Competitive Bid Request, which date shall be not less than fifteen days after the date of the Competitive Bid Borrowing and, in any event, shall not be later than the Termination Date. Promptly after its receipt of a Competitive Bid Request that is not rejected as aforesaid, the Administrative Agent shall invite by telecopier (in the form set forth in Exhibit H) the Banks to bid, on the terms and conditions of this Agreement, to make Competitive Bid Loans pursuant to the Competitive Bid Request. (b) Each Bank may, in its sole and absolute discretion, make one or more Competitive Bids to the Company responsive to a Competitive Bid Request. Each Competitive Bid by a Bank must be received by the Administrative Agent via telecopier, in the form of Exhibit I, (i) in the case of a Eurodollar Competitive Bid Borrowing, not later than 9:30 a.m., New York City time, three Working Days before a proposed Competitive Bid Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the Business Day of a proposed Competitive Bid Borrowing. Multiple bids will be accepted by the Administrative Agent. Competitive Bids that do not conform substantially to the format of Exhibit I may be rejected by the Administrative Agent after conferring with, and upon the instruction of, the Company, and the Administrative Agent shall notify the Bank making such nonconforming bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount (which shall be in a minimum principal amount of $5,000,000 and in integral multiples of $1,000,000, which may exceed such Bank's Commitment and which may equal the entire principal amount of the Competitive Bid Borrowing requested by the Company) of the Competitive Bid Loan or Loans that the applicable Bank is willing to make to the Company, (y) the Competitive Bid Rate or Rates at which such Bank is prepared to make the Competitive Bid Loan or Loans and (z) the Interest Period and the last day thereof. A Competitive Bid submitted by a Bank pursuant to this paragraph (b) shall be irrevocable. (c) The Administrative Agent shall promptly notify the Company by telecopier of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each Competitive Bid Loan in respect of which a Competitive Bid was made and the identity of the Bank that made each bid. The Administrative Agent shall send a copy of all Competitive Bids (or a summary of such bids) to the Company for its records as soon as practicable after completion of the bidding process set forth in this subsection 2.3. (d) The Company may in its sole and absolute discretion, subject only to the provisions of this paragraph (d), accept or reject any Competitive Bid referred to in paragraph (c) above. The Company shall notify the Administrative Agent by telephone, confirmed by © 2004. EDGAR Online, Inc.
  • 173. 17 telecopier in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject any or all of the bids referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive Bid Borrowing, not later than 10:30 a.m., New York City time, three Business Days before a proposed Competitive Bid Borrowing and (y) in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the day of a proposed Competitive Bid Borrowing; provided, however, that (i) the failure by the Company to give such notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii) the Company shall not accept a bid made at a particular Competitive Bid Rate if the Company has decided to reject a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Company shall not exceed the principal amount specified in the Competitive Bid Request, (iv) if the Company shall accept a bid or bids made at a particular Competitive Bid Rate and such bid or bids would cause the total amount of accepted bids to exceed the amount specified in the Competitive Bid Request, then the aggregate amount of the bids made at such Competitive Bid Rates shall be reduced ratably as necessary to eliminate such excess, and (v) except pursuant to clause (iv) above, no bid shall be accepted for a Competitive Bid Loan unless such Competitive Bid Loan is in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000; provided further, however, that if a Competitive Bid Loan must be in an amount less than $5,000,000 because of the provisions of clause (iv) above, such Competitive Bid Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv) the amount shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of the Company. A notice given by the Company pursuant to this paragraph (d) shall be irrevocable. (e) The Administrative Agent shall promptly notify each bidding Bank whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate) by telecopy sent by the Administrative Agent, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Bid Loan in respect of which its bid has been accepted. (f) A Competitive Bid Request shall not be made within two Business Days after the date of any previous Competitive Bid Request. (g) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Bank, it shall submit such bid directly to the Company one quarter of an hour earlier than the latest time at which the other Banks are required to submit their bids to the Administrative Agent pursuant to paragraph (b) above. (h) All notices required by this subsection 2.3 shall be given in accordance with subsection 10.2. 2.4. Repayment of Loans; Evidence of Debt. (a) The Company unconditionally promises to pay to the Administrative Agent for the account of the relevant Bank (i) on the Termination Date (or such earlier date on which the Loans become due and payable pursuant to subsection 2.8 or Section 8), the unpaid principal amount of each Revolving Credit Loan made to it by such Bank and (ii) on the last day of the Interest Period thereof, the unpaid principal amount of each Competitive Bid Loan made to it by such Bank. The Company shall © 2004. EDGAR Online, Inc.
  • 174. 18 have no right to prepay any principal of any Competitive Bid Loan. The Company further agrees to pay interest in immediately available funds at the office of the Administrative Agent on the unpaid principal amount of the Loans from time to time from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.12. (b) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Company to such Bank resulting from the Loans made by such Bank to the Company, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder. (c) The Administrative Agent shall maintain the Register pursuant to subsection 10.6(d), and a subaccount for each Bank, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, whether such Loan is a Revolving Credit Loan or a Competitive Bid Loan, the Type of each Loan made and the Interest Period or maturity date (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Company and each Bank's share thereof. (d) The entries made in the Register and the accounts maintained pursuant to paragraphs (b) and (c) of this subsection shall be prima facie evidence of the items contained therein; provided, however, that the failure of any Bank or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the Loan made to the Company by such Bank in accordance with the terms of this Agreement. (e) If requested by any Bank for purposes of subsection 10.6(g), the Company shall execute and deliver, at the Company's expense, to such Bank (and deliver a copy thereof to the Administrative Agent) one or more promissory notes evidencing the Loans owing to such Bank pursuant to this Agreement. Any such note shall be substantially in the form of Exhibit A-1, or A-2, as applicable, and shall be entitled to all of the rights and benefits of this Agreement. 2.5. Facility Fee; Administrative Agent's Fee. (a) The Company agrees to pay to the Administrative Agent for the account of each Bank a non-refundable facility fee at the Applicable Facility Fee Rate per annum on the daily average amount of such Bank's Commitment (whether borrowed or unborrowed) from and including the date hereof to and excluding the Termination Date, payable quarterly in arrears and on each Fee Payment Date. (b) The Company will pay to the Administrative Agent, for its own account, an agent's fee equal to the amount agreed upon in writing between the Company and the Administrative Agent, payable to the Administrative Agent in such manner as the Company and the Administrative Agent may agree. Each Bank acknowledges that the Administrative Agent is being paid certain other fees for its own account in connection with the financing pursuant to this Agreement in addition to the fees described in this Agreement. 2.6. Utilization Fee. If the average daily aggregate principal amount of the Loans and L/C Obligations outstanding for the calendar quarter preceding a Fee Payment Date © 2004. EDGAR Online, Inc.
  • 175. 19 (or such shorter period beginning with the date hereof or ending with the Termination Date) is (i) in excess of 33.3% but less than 66.7% or (ii) equal to or greater than 66.7%, as the case may be, of the average daily Aggregate Commitment for such calendar quarter or period, the Company agrees to pay to the Administrative Agent for the account of the Banks a non-refundable utilization fee (the quot;Utilization Feequot;) at the Applicable Utilization Fee Rate on such average daily aggregate principal amount of the Loans and L/C Obligations outstanding during such calendar quarter (or shorter period), payable in arrears on each Fee Payment Date. 2.7. Termination or Reduction of Commitments. The Company shall have the right, upon not less than three Business Days' notice to the Administrative Agent, to terminate the Aggregate Commitment or, from time to time, to reduce the amount of the Aggregate Commitment, provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments made in respect of the Loans on the effective date of such termination or reduction, the aggregate principal amount of the Loans and L/C Obligations then outstanding that are not cash-collateralized pursuant to subsection 3.9 would exceed the Aggregate Commitment then in effect. Any such reduction shall be in an amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Commitments then in effect. 2.8. Optional Prepayments of Revolving Credit Loans. The Company may at any time and from time to time prepay the Revolving Credit Loans, in whole or in part, without premium or penalty, upon irrevocable notice to the Administrative Agent given not less that three Business Days prior to the prepayment date, in the case of prepayments of Eurodollar Revolving Credit Loans, or on the prepayment date, in the case of prepayments of Base Rate Loans, specifying the date and amount of prepayment and whether the prepayment is of Base Rate Loans, Eurodollar Revolving Credit Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Prepayments made in respect of any Eurodollar Loans on any day other than the last day of the applicable Interest Period shall be accompanied by amounts, if any, payable pursuant to subsection 2.19(d). The Company shall not have the right to prepay any Competitive Bid Loan without the consent of the Bank that made such Competitive Bid Loan. 2.9. Conversion and Continuation Options. (a) The Company may elect from time to time to convert Eurodollar Revolving Credit Loans to Base Rate Loans by giving the Administrative Agent at least one Business Day's prior irrevocable notice of such election, provided that any such conversion of Eurodollar Revolving Credit Loans may only be made on the last day of an Interest Period with respect thereto. The Company may elect from time to time to convert Base Rate Loans to Eurodollar Revolving Credit Loans by giving the Administrative Agent at least three Working Days' prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Revolving Credit Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of such notice the Administrative Agent shall promptly notify each Bank thereof. All or any part of outstanding Eurodollar Revolving Credit Loans and Base Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a Eurodollar Revolving Credit Loan when any Event of Default has occurred © 2004. EDGAR Online, Inc.
  • 176. 20 and is continuing unless the Administrative Agent or the Required Banks have determined that such a conversion is appropriate, (ii) any such conversion may only be made if, after giving effect thereto, subsection 2.11 shall not have been contravened and (iii) no Revolving Credit Loan may be converted into a Eurodollar Revolving Credit Loan after the date that is one month prior to the Termination Date. (b) Any Eurodollar Revolving Credit Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Company giving notice to the Administrative Agent, in accordance with the applicable provisions of the term quot;Interest Periodquot; set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Revolving Credit Loan may be continued as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent or the Required Banks have determined that such a continuation is not appropriate, (ii) if, after giving effect thereto, subsection 2.11 would be contravened or (iii) after the date that is one month prior to the Termination Date. If the Company shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. 2.10. Applicable Interest Rate Margins, Facility Fee Rate and Utilization Fee. The Applicable Eurodollar Margin, the Applicable Facility Fee Rate and the Applicable Utilization Fee Rate (the Applicable Eurodollar Margin, the Applicable Facility Fee Rate and the Applicable Utilization Fee Rate, individually or collectively, the quot;Applicable Marginquot; or quot;Applicable Ratequot;) shall be equal to the percentage per annum set forth below (in basis points). ---------------------------------------------------------------------------------------------------------------- Utilization Utilization Pricing LT Ratings ST Ratings Facility Eurodollar Fee (> Fee (> Level S&P/Moody's S&P/Moody's Fee Rate Loan Margin 33.3%) 66.7%) ---------------------------------------------------------------------------------------------------------------- 1 AA-/Aa3 and A-1/P-1 7.0 18.0 7.5 15.0 2 A+/A1 and A-1/P-1 9.0 21.0 7.5 15.0 3 A/A2 and A-1/P-1 10.0 25.0 7.5 15.0 4 A-/A3 N/A 11.0 29.0 12.5 25.0 5 BBB+/Baa1 N/A 12.5 37.5 12.5 25.0 6 BBB/Baa2 N/A 20.0 55.0 12.5 25.0 7 BBB-/Baa3 N/A 25.0 75.0 12.5 25.0 ---------------------------------------------------------------------------------------------------------------- For purposes of the foregoing, if the Debt Ratings fall within different pricing levels, then the highest of such pricing levels (i.e., the pricing level having the lowest numerical designation above) shall apply. 2.11. Minimum Amounts of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Tranche shall be equal to $25,000,000 or a whole multiple of $5,000,000 in excess thereof. © 2004. EDGAR Online, Inc.
  • 177. 21 2.12. Interest Rates and Payment Dates. (a) The Loans comprising each Eurodollar Borrowing shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to (i) in the case of each Eurodollar Revolving Credit Loan, the Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin and (ii) in the case of each Eurodollar Competitive Bid Loan, the Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Margin offered by the Bank making such Loan and accepted by the Company pursuant to subsection 2.3. (b) Each Base Rate Loan shall bear interest for each day during which such Base Rate Loan is outstanding at a rate per annum equal to the Base Rate. (c) Each Fixed Rate Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the fixed rate of interest offered by the Bank making such Loan and accepted by the Company pursuant to subsection 2.3. (d) If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon, any fee or any other amount payable pursuant to the terms of this Agreement (other than attorneys' fees incurred in connection with the enforcement of the terms hereof) shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of any overdue interest, fee or other amount, the rate described in paragraph (b) of this subsection plus 2%, in each case from the date of such non-payment until such amount is paid in full (after as well as before judgment). (e) Interest on each Loan shall be payable in arrears on each Interest Payment Date applicable to such Loan, the Termination Date and upon any prepayment of such Loan, provided that interest accruing pursuant to paragraph (d) of this subsection shall be payable on demand. 2.13. Computation of Interest and Fees. (a) Interest on Base Rate Loans shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. Interest on Eurodollar Loans, Fixed Rate Loans and all fees shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Company and the Banks of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change in the Base Rate is announced. The Administrative Agent shall as soon as practicable notify the Company and the Banks of the effective date and the amount of each such change in interest rate. Notwithstanding anything to the contrary in this Agreement, interest paid or becoming due hereunder shall in no event exceed the maximum rate permitted by applicable law. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Company and the Banks in the absence of manifest error. The Administrative Agent shall, at the request of the Company, deliver to the Company a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.12. © 2004. EDGAR Online, Inc.
  • 178. 22 (c) If any Reference Bank's Commitment shall terminate or all its Loans shall be assigned for any reason whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank, and if, as a result of the foregoing, there shall only be one Reference Bank remaining, the Administrative Agent (after consultation with the Company and the Banks) shall, by notice to the Company and the Banks, designate another Bank acceptable to the Company, as a Reference Bank so that there shall at all times be at least two Reference Banks. (d) Each Reference Bank shall use its best efforts to furnish quotations of rates to the Administrative Agent as contemplated hereby. If any of the Reference Banks shall be unable or shall otherwise fail to supply such rates to the Administrative Agent upon its request, the rate of interest shall, subject to the provisions of subsection 2.14, be determined on the basis of the quotations of the remaining Reference Banks or Reference Bank. 2.14. Inability to Determine Interest Rate. In the event that prior to the first day of any Interest Period the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Company) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, the Administrative Agent shall give telex, telecopy or telephonic notice thereof to the Company and the Banks as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans (including any Eurodollar Competitive Bid Loan) requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted on the first day of such Interest Period to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Company have the right to convert Loans to Eurodollar Loans. 2.15. Pro Rata Treatment and Payments. (a) Each Revolving Credit Borrowing by the Company from the Banks hereunder, each payment by the Company on account of any fee hereunder and, except as contemplated by subsections 2.1(c)(iii), 2.20, 2.22 and 2.23 any reduction of the Commitments of the Banks shall be made pro rata according to the respective Commitment Percentages of the Banks. Except as contemplated by subsections 2.1(c)(iii), 2.20, 2.22 and 2.23, each payment (including each prepayment) by the Company on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Credit Loans then held by the Banks. Each payment of principal of any Competitive Bid Borrowing shall be allocated pro rata among the Banks participating in such Borrowing in accordance with the respective principal amounts of their outstanding Competitive Bid Loans comprising such Borrowing. Each payment of interest on any Competitive Bid Borrowing shall be allocated pro rata among the Banks participating in such Borrowing in accordance with the respective amounts of accrued and unpaid interest on their outstanding Competitive Bid Loans comprising such Borrowing. Each Bank agrees that in computing such Bank's portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Bank's percentage of such Borrowing to the next higher or lower whole dollar amount. All payments (including prepayments) to be made by the Company hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Banks, at the © 2004. EDGAR Online, Inc.
  • 179. 23 Administrative Agent's office specified in subsection 10.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lending Installation of the Banks promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Working Day, the maturity thereof shall be extended to the next succeeding Working Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Working Day. (b) Unless the Administrative Agent shall have been notified in writing by any Bank prior to a Borrowing Date that such Bank will not make the amount that would constitute its Commitment Percentage of the Borrowing on such date available to the Administrative Agent, the Administrative Agent may assume that such Bank has made such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Company a corresponding amount. If such amount is made available to the Administrative Agent on a date after such Borrowing Date, such Bank shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average Federal funds rate during such period as quoted by the Administrative Agent, times (ii) the amount of such Bank's Commitment Percentage of such Borrowing, times (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to the date on which such Bank's Commitment Percentage of such Borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Bank with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Bank's Commitment Percentage of such Borrowing is not in fact made available to the Administrative Agent by such Bank within three Business Days of such Borrowing Date, the Administrative Agent shall notify the Company of such Bank's failure to fund, and shall be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Company. 2.16. Illegality. Notwithstanding any other provision herein, if any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled, (b) the Loans of such Bank then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law and (c) such Bank shall promptly notify the Administrative Agent of any such cancellation and conversion pursuant to this subsection 2.16. 2.17. Requirements of Law. (a) In the event that after the date hereof any change in any Requirement of Law or in the interpretation or application thereof by any Governmental Authority charged with the administration or interpretation thereof or compliance © 2004. EDGAR Online, Inc.
  • 180. 24 by any Bank or the Lending Installation of any Bank with any request or directive (whether or not having the force of law) from any such Governmental Authority made subsequent to the date hereof: (i) shall subject any Bank or the Lending Installation of any Bank to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan or Fixed Rate Loan made by it, or change the basis of taxation of payments to such Bank or the Lending Installation of such Bank in respect thereof (except for taxes covered by subsection 2.18 and changes in the rate of tax on the net income of such Bank or the Lending Installation of such Bank); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Bank or the Lending Installation of such Bank which is not otherwise included in the determination of interest on the Eurodollar Rate Loans or Fixed Rate Loans hereunder; or (iii) shall impose on such Bank or the Lending Installation of such Bank any other condition; and the result of any of the foregoing is to increase the cost to such Bank or the Lending Installation of such Bank, by an amount which such Bank deems to be material, of making, converting into, continuing or maintaining any Eurodollar Loan or Fixed Rate Loan or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof then, in any such case, the Company shall pay such Bank, within 30 days after its demand, any additional amounts necessary to compensate such Bank for such increased cost or reduced amount receivable. If any Bank becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Company, through the Administrative Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by such Bank, through the Administrative Agent, to the Company shall set forth, in reasonable detail, the basis for such claim and the method of computation thereof and be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. Notwithstanding the foregoing, no Bank shall be entitled to request compensation under this Section with respect to any Competitive Bid Loan if it shall have been aware of the change giving rise to such request at the time of submission of such Bank's Competitive Bid pursuant to which such Competitive Loan shall have been made. (b) In the event that any Bank shall have determined that any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Bank or the Lending Installation of such Bank or any corporation controlling such Bank with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority, in each case, made subsequent to the date hereof, does or shall have the effect of reducing the rate of return on such Bank's, such Lending Installation's or such corporation's capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Bank, such Lending © 2004. EDGAR Online, Inc.
  • 181. 25 Installation or such corporation could have achieved but for such change or compliance (taking into consideration such Bank's, such Lending Installation's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, after submission by such Bank to the Company of a written request therefor, the Company shall pay to such Bank within 90 days after demand such additional amount or amounts as will compensate such Bank for such reduction. Each such request shall be accompanied by such information in respect of the basis for the claim made thereby and the method of computation thereof as such Bank shall at the time customarily provide to other borrowers deemed by it to be similarly situated. This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. (c) Each Bank, through the Administrative Agent, will promptly notify the Company of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this subsection. Notwithstanding the foregoing, no Bank shall be entitled to any compensation described in this Section unless, at the time it requests such compensation, it is the policy or general practice of such Bank to request compensation for comparable costs in similar circumstances under comparable provisions of other credit agreements for comparable customers (as determined by such Bank) unless specific facts or circumstances applicable to the Company or the transactions contemplated by this Agreement would alter such policy or general practice. If any Bank fails to give the notice described in subsection 2.17(c) within 90 days after it obtains such actual knowledge of the event required to be described in such notice, such Bank shall, with respect to any compensation that would otherwise be owing to such Bank under this subsection 2.17, only be entitled to payment for increased costs incurred from and after the date that such Bank does give such notice. If the Company shall reimburse any Bank pursuant to this Section for any cost and such Bank shall subsequently receive a refund in respect thereof, such Bank shall so notify the Company and, upon its request, will pay to the Company the portion of such refund that such Bank shall determine in good faith to be allocable to the costs so reimbursed. 2.18. Taxes. (a) All payments made by the Company under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding, in the case of the Administrative Agent and each Bank, taxes based on or measured by net income imposed on the Administrative Agent or such Bank, as the case may be, as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Administrative Agent or such Bank (excluding a connection arising solely from the Administrative Agent or such Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called quot;Taxesquot;). If any Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Bank hereunder, the amounts so payable to the Administrative Agent or such Bank shall be increased to the extent necessary to yield to the Administrative Agent or such Bank (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement; provided, however, that the Company shall not be required to increase any amounts payable to any Non- © 2004. EDGAR Online, Inc.
  • 182. 26 U.S. Lender (as defined in subsection 2.18(b)) with respect to any Taxes that would not have been imposed but for such Non-U.S. Lender's failure to provide to the Company the Internal Revenue Service Forms required to be provided to the Company pursuant to subsection 2.18(b). Whenever any Taxes are payable by the Company, promptly thereafter the Company shall send to the Administrative Agent for its own account or for the account of such Bank, as the case may be, a certified copy of an original official receipt received by the Company showing payment thereof. If such evidence of payment is unavailable, other evidence of such payment, satisfactory to the Administrative Agent, shall be provided by the Company. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Company shall indemnify the Administrative Agent and the Banks for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Bank as a result of any such failure. (b) Each Bank represents and warrants to the Company that under currently applicable law and treaties no Taxes will be required to be withheld by the Company with respect to any payments to be made to such Bank hereunder. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes (each, a quot;Non-U.S. Lenderquot;) agrees to deliver to the Company and the Administrative Agent on or prior to the Closing Date or, in the case of a Non-U.S. Lender that is an assignee or transferee of, or purchaser of a participation in, an interest under this Agreement pursuant to subsection 10.6 (unless such Non-U.S. Lender was already a Bank hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Non-U.S. Lender, (i) two (2) accurate and complete original signed copies of Internal Revenue Service Form W-8ECI or Form W-8BEN (or successor forms) certifying that such Non-U.S. Lender is entitled as of such date to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement, or (ii) if such Non-U.S. Lender is not a quot;bankquot; within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption under an income tax treaty) (or any successor forms) pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit K (any such certificate, an quot;Exemption Certificatequot;), and (y) two (2) accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (with respect to the portfolio interest exemption) (or successor form) certifying that such Non-U.S. Lender is entitled as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement. In addition, each Non-U.S. Lender agrees that from time to time after the Closing Date, when the passage of time or a change in facts or circumstances renders the previous certification obsolete or inaccurate in any material respect, such Non-U.S. Lender will deliver to the Company and the Administrative Agent two (2) new accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to a complete exemption under an income tax treaty), or Form W-8BEN (with respect to the portfolio interest exemption) and an Exemption Certificate, as the case may be, and such other forms as may be required in order to confirm or establish that such Non-U.S. Lender is entitled to a continued exemption from United States withholding tax with respect to payments under this Agreement, or such Non-U.S. Lender shall immediately notify the Company and the Administrative Agent of its inability to deliver any such form or Exemption Certificate, in which case such Non-U.S. Lender shall not be required to deliver any such form or Exemption © 2004. EDGAR Online, Inc.
  • 183. 27 Certificate. Notwithstanding anything to the contrary contained in this subsection 2.18, the Company agrees to pay any additional amounts and to indemnify each Non-U.S. Lender in the manner set forth in subsection 2.18(a) in respect of any United States Taxes deducted or withheld by them if such Taxes would not have been deducted or withheld but for any change after the Closing Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof. (c) If any Bank (or Transferee) or the Administrative Agent shall become aware that it is entitled to receive a refund or credit (such credit to include any increase in any foreign tax credit) as a result of Taxes (including any penalties or interest with respect thereto) as to which it has been indemnified by the Company pursuant to this subsection 2.18, it shall promptly notify the Company of the availability of such refund or credit and shall, within 30 days after receipt of a request by the Company, apply for such refund or credit at the Company's expense, and in the case of any application for such refund or credit by the Company, shall, if legally able to do so, deliver to the Company such certificates, forms or other documentation as may be reasonably necessary to assist the Company in such application. If any Bank (or Transferee) or the Administrative Agent receives a refund or credit (such credit to include any increase in any foreign tax credit) in respect to any Taxes as to which it has been indemnified by the Company pursuant to this subsection 2.18, it shall promptly notify the Company of such refund or credit and shall, within 60 days after receipt of such refund or the benefit of such credit (such benefit to include any reduction of the taxes for which any Bank (or Transferee) or the Administrative Agent would otherwise be liable due to any increase in any foreign tax credit available to such Bank (or Transferee) or the Administrative Agent), repay the amount of such refund or benefit of such credit (with respect to the credit, as determined by the Bank, Transferee or Administrative Agent in its sole, reasonable judgment) to the Company (to the extent of amounts that have been paid by the Company under this subsection 2.18 with respect to Taxes giving rise to such refund or credit), plus any interest received with respect thereto, net of all reasonable out-of-pocket expenses of such Bank (or Transferee) or the Administrative Agent and without interest (other than interest actually received from the relevant taxing authority or other Governmental Authority with respect to such refund or credit); provided, however, that the Company, upon the request of such Bank (or Transferee) or the Administrative Agent, agrees to return the amount of such refund or benefit of such credit (plus interest) to such Bank (or Transferee) or the Administrative Agent in the event such Bank (or Transferee) or the Administrative Agent is required to repay the amount of such refund or benefit of such credit to the relevant taxing authority or other Governmental Authority. (d) The agreements in this subsection shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. 2.19. Indemnity. The Company agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of (a) default by the Company in payment when due of the principal amount of or interest on any Eurodollar Loan or Fixed Rate Loan, (b) default by the Company in making a borrowing of, conversion into or continuation of any Eurodollar Loan, or any borrowing of a Fixed Rate Loan, after the Company has given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by the Company in making any prepayment after the Company has given a notice thereof in accordance with the provisions of this Agreement or © 2004. EDGAR Online, Inc.
  • 184. 28 (d) the making of a prepayment of a Eurodollar Loan or Fixed Rate Loan on a day which is not the last day of an Interest Period with respect thereto, including, in each case, any such loss or expense arising from the reemployment of funds obtained by it (or which it has arranged to obtain) or from fees payable to terminate the deposits from which such funds were obtained (or which it has arranged to obtain). Such indemnification shall exclude any loss of margin hereunder, but shall include an amount equal to the excess, if any, as reasonably determined by such Bank, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed, converted or continued or transferred or assigned (assumed to be the Eurodollar Rate or, in the case of a Fixed Rate Loan, the fixed rate of interest applicable thereto) for the period from the date of such payment, prepayment or conversion or failure to borrow, convert, or continue or transfer or assignment to the last day of the current or anticipated Interest Period for such Loan) over (ii) the amount of interest (as reasonably determined by such Bank) that would be realized by such Bank in reemploying the funds so paid, prepaid, converted or not borrowed, converted or continued or transferred or assigned for such period or Interest Period, as the case may be. Nothing in this Section shall be deemed to give the Company any right to prepay any Competitive Bid Loan or other Loan the prepayment of which is otherwise prohibited pursuant to the terms of this Credit Agreement. This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. 2.20. Actions of Banks. Each Bank agrees to use reasonable efforts (including reasonable efforts to change the Lending Installation for its Loans) to avoid or minimize any illegality pursuant to subsection 2.16 or any amounts which might otherwise be payable pursuant to subsection 2.17 or 2.18; provided, however, that such efforts shall not cause the imposition on such Bank of any additional costs or legal or regulatory burdens deemed by such Bank to be material. In the event that such reasonable efforts are insufficient to avoid all such illegality, all such events or circumstances or all amounts that might be payable pursuant to subsection 2.17 or 2.18, then the Company may remove any such Bank pursuant to subsection 2.22 or replace any such Bank pursuant to subsection 2.23. 2.21. Lending Installations. Each Bank may hold its Loans at any Lending Installation selected by it and may change its Lending Installation from time to time, provided that no such Bank shall be entitled to receive any greater amount under subsections 2.17, 2.18, 2.19 or 10.5 as a result of a transfer of any such Loans to a different office of such Bank than it would be entitled to immediately prior thereto unless such claim would have arisen even if such transfer had not occurred. All provisions of this Agreement shall apply to any such Lending Installation. Each Bank may, by written or telex notice to the Company and the Administrative Agent, designate a Lending Installation through which the Loans will be made by it and for whose account payments are to be made. 2.22. Removal of Banks. The Company shall be permitted, from time to time in its discretion, to remove Banks from this Agreement and to reduce the Aggregate Commitment; provided, that (a) the Aggregate Commitment may not be reduced below $1,000,000,000 as a result of removal of one or more Banks from this Agreement pursuant to this Section, (b) after giving effect to such removal, no Bank shall have a Commitment hereunder which exceeds an amount equal to 20% of the Aggregate Commitment and (c) a Bank may not be removed from this Agreement at any time a Default or an Event of Default exists and remains uncured or unwaived under this Agreement. If the Company elects to terminate the Commitment of a Bank, © 2004. EDGAR Online, Inc.
  • 185. 29 it shall give not less than 30 days written notice to the Administrative Agent and such Bank. On the effective date of such termination, the Company shall pay to the Administrative Agent, for the account of such Bank, in immediately available funds, an amount equal to all Loans and other amounts (including accrued interest and fees) owing to such Bank plus the amounts, if any, owing to such Bank under subsections 2.17, 2.18, 2.19 and 10.5. Notwithstanding the removal of any Bank pursuant to this subsection, such Bank shall continue to have all such rights as would survive the termination of this Agreement under subsections 2.17, 2.18, 2.19 and 10.5. 2.23. Replacement of Banks. In the event that any Bank (a quot;Notifying Bankquot;) (a) shall demand payment by the Company of any amount pursuant to subsection 2.17 or 2.18, (b) shall cause the suspension of the availability of any Type pursuant to subsection 2.16, (c) shall have excused itself from funding a Loan pursuant to subsection 2.16, (d) shall have failed to make available a Loan on the date on which it was obligated to do so or (e) shall have failed to consent to any waiver, amendment or modification of this Agreement that has been consented to by the Required Banks, the Company may, upon notice to such Notifying Bank and the Administrative Agent, nominate a new financial institution or group of financial institutions willing to participate in the facility in the place of such Notifying Bank (quot;Replacement Bankquot;). Upon receipt of such notice from the Company and upon the consent of the Administrative Agent as to the Replacement Bank, which consent shall not be unreasonably withheld, such Notifying Bank shall be obligated to transfer without recourse, representation, warranty (other than that it has not in any way transferred, assigned, encumbered, sold or conveyed its rights under its Loans) or expense to such Notifying Bank, all of its rights (other than rights that would survive the termination of this Agreement pursuant to subsections 2.17, 2.18, 2.19 and 10.5) and obligations hereunder to the Replacement Bank; provided that the Replacement Bank satisfies all of the requirements of this Agreement and pays such Notifying Bank all amounts owing to such Notifying Bank under this Agreement and the Company pays such Notifying Bank any funding losses incurred pursuant to subsection 2.19, if any, as a result of such replacement. This subsection 2.23 shall in no way affect the right of the Company to replace, remove or add a Bank pursuant to any other provision of this Agreement. SECTION 3. LETTERS OF CREDIT 3.1. L/C Commitment. (a) Prior to the date hereof, the Issuing Bank has issued the Existing Letters of Credit; and subject to the terms and conditions hereof, the Issuing Bank, in reliance on the agreements of the other Banks set forth in subsection 3.4(a), agrees to issue letters of credit after the date hereof (the Existing Letters of Credit, together with any letters of credit issued hereunder after the date hereof, quot;Letters of Creditquot;) for the account of the Company on any Business Day during the Commitment Period in such form as may be approved from time to time by the Issuing Bank; provided that the Issuing Bank shall not issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the sum of (A) the outstanding aggregate principal amount of all Revolving Credit Loans made by all Banks, plus (B) the aggregate outstanding amount of L/C Obligations plus (C) the outstanding aggregate principal amount of all Competitive Bid Loans made by all Banks, would exceed the Aggregate Commitment. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is five Business Days prior to the Termination Date, © 2004. EDGAR Online, Inc.
  • 186. 30 provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above). From and after the date hereof, all Existing Letters of Credit shall constitute Letters of Credit for all purposes of the Agreement. (b) The Issuing Bank shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause the Issuing Bank or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law. 3.2. Procedure for Issuance of Letter of Credit. The Company may from time to time request that the Issuing Bank issue a Letter of Credit by delivering to the Issuing Bank at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of the Issuing Bank, and such other certificates, documents and other papers and information as the Issuing Bank may reasonably request. Upon receipt of any Application, the Issuing Bank will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Bank be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by the Issuing Bank and the Company. The Issuing Bank shall furnish a copy of such Letter of Credit to the Company promptly following the issuance thereof. The Issuing Bank shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Banks, notice of the issuance of each Letter of Credit (including the amount thereof). 3.3. Fees and Other Charges. (a) The Company will pay a fee on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans plus 0.20%, shared ratably among the Banks and payable quarterly in arrears on each Fee Payment Date after the issuance date. (b) In addition to the foregoing fees, the Company shall pay or reimburse the Issuing Bank for such normal and customary costs and expenses as are incurred or charged by the Issuing Bank in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit. 3.4. L/C Participations. (a) The Issuing Bank irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Bank to issue Letters of Credit, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Bank, on the terms and conditions set forth below, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage in the Issuing Bank's obligations and rights under and in respect of each Letter of Credit and the amount of each draft paid by the Issuing Bank thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Bank that, if a draft is paid under any Letter of Credit for which the Issuing Bank is not reimbursed in full by the Company in accordance with the terms of this Agreement, such © 2004. EDGAR Online, Inc.
  • 187. 31 L/C Participant shall pay to the Issuing Bank upon demand at the Issuing Bank's address for notices specified herein an amount equal to such L/C Participant's Commitment Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. (b) If any amount required to be paid by any L/C Participant to the Issuing Bank pursuant to subsection 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Bank under any Letter of Credit is paid to the Issuing Bank within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Bank on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Bank, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to subsection 3.4(a) is not made available to the Issuing Bank by such L/C Participant within three Business Days after the date such payment is due, the Issuing Bank shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans hereunder. A certificate of the Issuing Bank submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Bank has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with subsection 3.4(a), the Issuing Bank receives any payment related to such Letter of Credit (whether directly from the Company or otherwise), or any payment of interest on account thereof, the Issuing Bank will receive such payment as agent for and for the account of such L/C Participant and will distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment received by the Issuing Bank shall be required to be returned by the Issuing Bank, such L/C Participant shall return to the Issuing Bank the portion thereof previously distributed by the Issuing Bank to it. 3.5. Reimbursement Obligation of the Company. If any draft is paid under any Letter of Credit, the Company shall reimburse the Issuing Bank for the amount of (a) the draft so paid and (b) any taxes, fees, charges or other reasonable costs or expenses incurred by the Issuing Bank in connection with such payment, not later than 12:00 Noon, New York City time, on the third Business Day immediately following the day that the Company receives notice of the date and amount of such draft. Each such payment shall be made to the Issuing Bank at its address for notices referred to herein in Dollars and in immediately available funds. Interest shall be payable on any such amounts from the date on which the relevant draft is paid until payment in full (x) until the third Business Day succeeding the date of the relevant notice, at the Base Rate and (y) thereafter, at the rate set forth in subsection 2.12(d). 3.6. Obligations Absolute. The Company's obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Company may have or have had against the Issuing Bank (except to the extent resulting from the gross negligence or willful misconduct of such Issuing Bank), any beneficiary of a Letter of Credit or any other Person. The Company also agrees with the Issuing Bank that the Issuing Bank shall not be responsible for, and the Company's Reimbursement Obligations under subsection 3.5 shall not be affected by, among © 2004. EDGAR Online, Inc.
  • 188. 32 other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Company and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Company against any beneficiary of such Letter of Credit or any such transferee. The Issuing Bank shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Issuing Bank. The Company agrees that any action taken or omitted by the Issuing Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Customs and, to the extent not inconsistent therewith, the Uniform Commercial Code of the State of New York, shall be binding on the Company and shall not result in any liability of the Issuing Bank to the Company. 3.7. Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Bank shall promptly notify the Company of the date and amount thereof. The responsibility of the Issuing Bank to the Company in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit. 3.8. Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply. 3.9. Cash-Collateralization. (a) If at any time the Commitments terminate while any Letters of Credit are outstanding, or if at any time the Company is required by this Agreement to cash-collateralize any Letters of Credit, the Company shall deposit in an interest-bearing cash collateral account opened by the Administrative Agent (the quot;Cash Collateral Accountquot;) an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in the Cash Collateral Account pursuant to this Agreement shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit and other related obligations arising under this Agreement with respect to L/C Obligations. Upon the expiration, cancellation or other termination of any Letter of Credit, the Administrative Agent shall remit to the Company an amount equal to the difference between (i) the amount on deposit in the Cash Collateral Account at such time, and (ii) an amount equal to the L/C Obligations then outstanding. Following the expiration, cancellation or other termination of the final outstanding Letter of Credit, the funds remaining in the Cash Collateral Account, if any, shall be returned to the Company (or such other Person as may be lawfully entitled thereto). © 2004. EDGAR Online, Inc.
  • 189. 33 SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Banks to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit hereunder, the Company hereby represents and warrants to the Administrative Agent and each Bank that: 4.1. Financial Condition. The consolidated balance sheet of the Company and its consolidated Subsidiaries as of December 31, 2003, and the related consolidated statements of income and of cash flows for the period ended on such date, reported on by PricewaterhouseCoopers LLP, copies of which have heretofore been furnished to each Bank, present fairly the consolidated financial condition of the Company and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). 4.2. No Change. Since December 31, 2003 and until the date of this Agreement, except to the extent publicly disclosed on or prior to December 31, 2003 through filings made by the Company with the SEC or press releases issued by the Company there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect. 4.3. Corporate Existence; Compliance with Law; Significant Subsidiaries. Each of the Company and its Significant Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and (b) has the power and authority to conduct the business in which it is currently engaged. Each Significant Subsidiary as of December 31, 2003 is listed on Schedule II hereto. 4.4. Corporate Power; Authorization; Enforceable Obligations. The Company has the corporate power and authority to make, deliver and perform this Agreement and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement. No consent or authorization of, filing with or other act by or in respect of, any Governmental Authority or any other Person is required on the part of the Company in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement. This Agreement has been duly executed and delivered on behalf of the Company. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 4.5. No Legal Bar. The execution, delivery and performance of this Agreement, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or material Contractual Obligation of the Company or of any of its Significant Subsidiaries and will not result in, or require, the creation © 2004. EDGAR Online, Inc.
  • 190. 34 or imposition of any Lien on any of its or their material respective properties or revenues pursuant to any such Requirement of Law or material Contractual Obligation. 4.6. No Material Litigation. (a) No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company or any of its Significant Subsidiaries or against any of its or their respective properties or revenues, in any case that involves this Agreement, the execution, delivery and performance of this Agreement or the Borrowings hereunder. (b) No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company or any of its Significant Subsidiaries or against any of its or their respective properties or revenues which could reasonably be expected to result in a violation of subsection 7.3, except to the extent publicly disclosed prior to the date of this Agreement through filings made by the Company with the SEC or press releases issued by the Company. 4.7. No Default. (a) Neither the Company nor any of its Significant Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to result in a violation of subsection 7.3. (b) No Default or Event of Default has occurred and is continuing. 4.8. Aggregation of the Representations and Warranties Relating to Net Worth. The total effect of each event or circumstance referred to in subsections 4.6(b) and 4.7(a) is not, when taken together in the aggregate, reasonably expected to result in a violation of subsection 7.3. 4.9. Federal Regulations. No part of the proceeds of any Loans will be used for quot;purchasingquot; or quot;carryingquot; any quot;margin stockquot; within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect in violation of the provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System. 4.10. ERISA. Each Plan complies in all material respects with all applicable provisions of ERISA and the Code, no Reportable Event has occurred with respect to any Plan, neither the Company nor any other members of any Commonly Controlled Entity has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to terminate any Plan, except in any case to the extent that such failures could not, in the aggregate, reasonably be expected to result in a violation of subsection 7.3. 4.11. Investment Company Act. The Company is not an quot;investment companyquot; within the meaning of the Investment Company Act of 1940, as amended. 4.12. Purpose of Loans. The proceeds of the Loans shall be used by the Company for general corporate purposes and to repay outstanding Indebtedness. © 2004. EDGAR Online, Inc.
  • 191. 35 SECTION 5. CONDITIONS PRECEDENT 5.1. Conditions to Initial Loans. The agreement of each Bank to make the initial Loan requested to be made by it (and of the Issuing Bank to issue the initial Letter of Credit, if earlier) is subject to the satisfaction of the following conditions precedent: (a) Credit Agreement. The Administrative Agent shall have received this Agreement, executed and delivered by a duly authorized officer of the Company, with a counterpart for each Bank. (b) Corporate Proceedings of the Company. The Administrative Agent shall have received, with a counterpart for each Bank, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Company authorizing (i) the execution, delivery and performance of this Agreement, and (ii) the borrowings contemplated hereunder, certified by the Secretary or an Assistant Secretary of the Company as of the Closing Date pursuant to a certificate substantially in the form of Exhibit D-2, which certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (c) Corporate Documents. The Administrative Agent shall have received, with a counterpart for each Bank, true and complete copies of the certificate of incorporation and by-laws of the Company, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of the Company. (d) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Bank, (i) the executed legal opinion of the general counsel of the Company, substantially in the form of Exhibit B-1, and (ii) the executed legal opinion of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent, substantially in the form of Exhibit B-2. (e) Certificates. The Administrative Agent shall have received, with a counterpart for each Bank, an officer's certificate of the chief financial officer, treasurer or controller of the Company, substantially in the form of Exhibit D-1, and a certificate of incumbency of the Company, substantially in the form of Exhibit E. (f) Existing 364-Day Credit Agreement. The Existing 364-Day Credit Agreement shall have been terminated and all amounts, if any, owing by the Company thereunder shall have been paid in full. (g) Existing 5-Year Credit Agreement. The Existing 5-Year Credit Agreement shall have been terminated and all amounts, if any, owing by the Company thereunder shall have been paid in full. (h) Transfer Instructions. The Administrative Agent shall have received written money transfer instructions addressed to the Administrative Agent and signed by a duly authorized officer, together with such other related money transfer authorizations as the Administrative Agent may have reasonably requested. © 2004. EDGAR Online, Inc.
  • 192. 36 (i) New 364-Day Credit Agreement. The New 364-Day Credit Agreement shall have been duly executed and delivered to JPMorgan Chase Bank, as administrative agent under the New 364-Day Credit Agreement. 5.2. Conditions to Each Loan. The agreement of each Bank to make any Loan, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, requested to it on any date (including, without limitation, its initial Loan and the initial Letter of Credit) is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by the Company in Section 4 of this Agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date except (i) to the extent such representations and warranties expressly relate to an earlier date, (ii) for changes in the Schedules hereto reflecting transactions permitted by this Agreement and (iii) subsequent to the Closing Date, for the representations and warranties contained in subsection 4.2. (b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans and Letters of Credit requested to be made on such date. (c) Borrowing Notice. The Administrative Agent shall have received a notice of borrowing from the Company, substantially in the form of Exhibit F. Each Borrowing by, and issuance of a Letter of Credit on behalf of, the Company hereunder shall constitute a representation and warranty by the Company as of the date of such Loan, or Letter of Credit, that the conditions contained in this subsection 5.2 have been satisfied. It is understood and agreed that conversions and continuations of Revolving Credit Loans pursuant to subsection 2.9 shall not be subject to the conditions set forth in this subsection 5.2. SECTION 6. AFFIRMATIVE COVENANTS The Company hereby agrees that, so long as any Commitment shall remain in effect, any Letter of Credit remains outstanding (other than any Letter of Credit that has been cash-collateralized pursuant to subsection 3.9), any principal of or interest on any Loan or any other amount shall be unpaid hereunder, the Company shall: 6.1. Financial Statements. Furnish to: (a) each Bank, promptly after becoming available, each annual and quarterly report which the Company files with the SEC; (b) each Bank, promptly after becoming available and in any event within 120 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the SEC by PricewaterhouseCoopers LLP or other independent public accountants © 2004. EDGAR Online, Inc.
  • 193. 37 of nationally recognized standing (provided that no such financial statements of the Company need be so delivered if the Company shall have delivered to such Bank its annual report for the relevant year containing such financial statements pursuant to subsection 6.1(a)); (c) each Bank, promptly after becoming available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Company, (i) a consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of such quarter and (ii) the related consolidated statements of income and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in comparative form (i) in the case of clause (i) above, the figures for the previous fiscal year end, and (ii) in the case of clause (ii) above, the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to the absence of footnotes and normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Company (the quot;Certificatequot;) (provided that no such financial statements of the Company or the Certificate need be so delivered if the Company shall have delivered to such Bank its quarterly report for the relevant quarter containing such financial statements pursuant to subsection 6.1(a); all such financial statements to fairly present in all material respects the financial condition and results of operations of the Company and to be prepared in reasonable detail and in accordance with Agreement Accounting Principles (except as approved by such accountants or officer, as the case may be, and disclosed therein); (d) the Administrative Agent (for distribution to each Bank), each Report on Form 8-K (if any) which the Company files with the SEC; (e) the Administrative Agent (for distribution to each Bank), upon specific request, copies of all financial statements and reports which the Company has sent to holders of its publicly issued debt securities, and after the same are filed, copies of all financial statements and reports which the Company may make to, or file with, the SEC; and (f) the Administrative Agent (for distribution to each Bank requesting such information), promptly, such other information regarding the operations, business affairs and financial condition of the Company as any Bank may from time to time reasonably request through the Administrative Agent. Any financial statement required to be furnished pursuant to this Section 6.1 shall be deemed to have been furnished on the date on which the Company gives notice to the Administrative Agent (who shall then give notice to the Banks) that the Company has posted such financial statement, or provided a link thereto, on the Company's website or on the Company's behalf on the Intralinks website on the Internet at www.intralinks.com or another relevant website, if any, to which each Bank and the Administrative Agent have access. Notwithstanding the foregoing, the Company shall deliver paper copies of any financial statement referred to in this Section 6.1 to any Bank if the Administrative Agent, on behalf of such Bank, requests the Company to furnish such paper copies. Except as provided in the preceding sentence, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to in © 2004. EDGAR Online, Inc.
  • 194. 38 Section 6.1, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Bank shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. 6.2. Payment of Obligations. Pay, discharge or otherwise satisfy, and cause each of its Significant Subsidiaries to pay, discharge or otherwise satisfy, at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Company or its Significant Subsidiaries, as the case may be, or except to the extent that the failure to pay, discharge or otherwise satisfy the same could not, in the aggregate, reasonably be expected to result in a violation of subsection 7.3. 6.3. Conduct of Business and Maintenance of Existence. Preserve, renew and keep in full force and effect, and cause each of its Significant Subsidiaries to preserve, renew and keep in full force and effect, its corporate existence and take, and cause each of its Significant Subsidiaries to take, all reasonable action to maintain all rights, privileges and franchises material to the normal conduct of its significant businesses, provided, however, that notwithstanding this subsection 6.3, the Company or any Significant Subsidiary may (a) discontinue any of its businesses that are no longer deemed advantageous to it (such determination to be in the sole and absolute discretion of the Company or such Significant Subsidiary) and (b) sell or dispose of any assets, subsidiaries or the capital stock thereof, or consolidate with, accept a merger of, or permit the merger of such Person into any other Person in a transaction permitted pursuant to subsection 7.2; and comply, and cause each of its Significant Subsidiaries to comply, in all material respects with all Requirements of Law (including, but not limited to, ERISA), except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to result in a violation of subsection 7.3. 6.4. Notices. Promptly give notice (or in the case of subsection 6.4(d), a copy) to the Administrative Agent of: (a) the occurrence of any Default or Event of Default; (b) any litigation, investigation or proceeding affecting the Company or any of its Significant Subsidiaries which could reasonably be expected to result in a violation of subsection 7.3; (c) the following events, as soon as possible and in any event within 30 days after the Company knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan, in any event which could reasonably be expected to result in a Material Adverse Effect; and © 2004. EDGAR Online, Inc.
  • 195. 39 (d) as soon as possible and in any event within 30 days after receipt by the Company, a copy of (i) any notice or claim to the effect that the Company or any Subsidiary is or may be liable to any Person as a result of the release by the Company, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (ii) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Company or any Subsidiary, which could reasonably be expected to result in a claim, liability or loss that will, in the case of clauses (i) or (ii), when aggregated with the effect of any failure by the Company to (x) maintain and preserve all property material to the conduct of its business, (y) keep such property in good repair, working order and condition and (z) from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto, result in a violation of subsection 7.3. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto. 6.5. Status of Obligations. Ensure that its obligations under this Agreement shall at all times be direct and general obligations of the Company and shall at all times rank at least pari passu in all respects with all other outstanding unsecured and unsubordinated indebtedness of the Company. 6.6. Maintenance of Property. At all times maintain and preserve, and cause each of its Significant Subsidiaries to maintain and preserve, all property material to the conduct of its business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto except where the failure to do so would not result in a violation of subsection 7.3; provided, however, that nothing in this subsection 6.6 shall prevent the Company or any Subsidiary from (a) discontinuing the operation and maintenance of any of its properties no longer deemed useful in the conduct of its business or (b) selling or disposing of any assets, subsidiaries or the capital stock thereof in a transaction permitted pursuant to subsection 7.2. 6.7. Payment of Taxes. Pay and discharge promptly when due, and cause each of its Significant Subsidiaries to pay and discharge promptly when due, all taxes, assessments and governmental charges or levies the amounts of which are material to the business, assets, operations, prospects or condition, financial or otherwise, of the Company and the Subsidiaries taken as a whole, imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default; provided, however, that such payment and discharge shall not be required with respect to any such tax, assessment, charge, or levy so long as the validity or amount thereof shall be contested in good faith by appropriate actions or proceedings and the Company shall have set aside on its books appropriate reserves with respect thereto. 6.8. Use of Proceeds. Use the proceeds of the Loans for general corporate purposes and to repay outstanding Indebtedness. The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Loans to purchase or carry any quot;margin stockquot; (as defined in Regulation U) in violation of the provisions of Regulations T, U and X of the Board of Governors © 2004. EDGAR Online, Inc.
  • 196. 40 of the Federal Reserve System. SECTION 7. NEGATIVE COVENANTS The Company hereby agrees that, so long as any Commitment remains in effect, any Letter of Credit remains outstanding (other than any Letter of Credit that has been cash-collateralized pursuant to subsection 3.9), or any principal of or interest on any Loan or any other amount shall be unpaid hereunder, the Company shall not: 7.1. Negative Pledge. (a) (1) Create, incur or suffer to exist any Lien upon any of its property or assets to secure indebtedness for money borrowed, incurred, issued, assumed or guaranteed by the Company or (2) create any Lien upon any of its property or assets to secure any indebtedness or other obligations of any Person if such Lien is a Lien created by any action of the Company (including any grant by the Company of any Lien pursuant to a written instrument or by the pledge by the Company of property, but excluding Liens arising by operation of law), without, in the case of any Lien described in the foregoing clauses (1) and (2), thereby expressly securing the due and punctual payment of the principal of and interest on the Loans and all other amounts payable by the Company hereunder equally and ratably with any and all other obligations and indebtedness secured by such Lien, so long as any such other obligations and indebtedness shall be so secured; provided, however, that this restriction shall not prohibit or otherwise restrict: (i) the Company from creating, incurring or suffering to exist upon any of its property or assets any Lien in favor of any subsidiary of the Company; (ii) the Company (A) from creating, incurring or suffering to exist a purchase money Lien upon any such property, assets, capital stock or indebtedness acquired by the Company prior to, at the time of, or within one year after (1) in the case of physical property or assets, the later of the acquisition, completion of construction (including any improvements on existing property) or commencement of commercial operation of such property or (2) in the case of shares of capital stock, indebtedness or other property or assets, the acquisition of such shares of capital stock, indebtedness, property or assets, (B) from acquiring property or assets subject to Liens existing thereon at the date of acquisition thereof, whether or not the indebtedness secured by any such Lien is assumed or guaranteed by the Company, or (C) from creating, incurring or suffering to exist Liens upon any property of any Person, which Liens exist at the time any such Person is merged with or into or consolidated with the Company (or becomes a subsidiary of the Company) or which Liens exist at the time of a sale or transfer of the properties of any such Person as an entirety or substantially as an entirety to the Company; (iii) the Company from creating, incurring or suffering to exist upon any of its property or assets Liens in favor of the United States of America or any State thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute (including maintaining self-insurance or participating in any fund © 2004. EDGAR Online, Inc.
  • 197. 41 in connection with worker's compensation, disability benefits, unemployment insurance, old age pensions or other types of social benefits, or joining in any other provisions or benefits available to companies participating in any such arrangements); (iv) the Company from creating, incurring or suffering to exist upon any of its property or assets Liens securing the performance of letters of credit, bids, tenders, sales contracts, purchase agreements, repurchase agreements, reverse repurchase agreements, bankers' acceptances, leases, surety and performance bonds, and other similar obligations incurred in the ordinary course of business; (v) the Company from creating, incurring or suffering to exist Liens upon any real property acquired or constructed by the Company primarily for use in the conduct of its business; (vi) the Company from entering into any arrangement with any Person providing for the leasing by the Company of any property or assets, which property or assets have been or will be sold or transferred by the Company to such Person with the intention that such property or assets will be leased back to the Company, if the obligations in respect of such lease would not be included as liabilities on a consolidated balance sheet of the Company; (vii) the Company from creating, incurring or suffering to exist upon any of its property or assets Liens to secure non-recourse debt in connection with the Company engaging in any leveraged or single-investor or other lease transactions, whether (in the case of Liens on or relating to leases or groups of leases or the particular properties subject thereto) such Liens are on the particular properties subject to any leases involved in any of such transactions and/or the rental or other payments or rights under such leases or, in the case of any group of related or unrelated leases, on the properties subject to the leases comprising such group and/or on the rental or other payments or rights under such leases, or on any direct or indirect interest therein, and whether (in any case) (A) such Liens are created prior to, at the time of, or at any time after the entering into of such lease transactions and/or (B) such leases are in existence prior to, or are entered into by the Company at the time of or at any time after, the purchase or other acquisition by the Company of the properties subject to such leases; (viii) the Company from creating, incurring or suffering to exist (A) other consensual Liens in the ordinary course of business of the Company that secure indebtedness that, in accordance with generally accepted accounting principles, would not be included in total liabilities as shown on the Company's consolidated balance sheet, or (B) Liens created by the Company in connection with any transaction intended by the Company to be a sale of property or assets of the Company, provided that such Liens are upon any or all of the property or assets intended to be sold, the income from such property or assets and/or the proceeds of such property or assets; (ix) the Company from creating, incurring or suffering to exist Liens on property or assets financed through tax-exempt municipal obligations, provided that such Liens are only on the property or assets so financed; © 2004. EDGAR Online, Inc.
  • 198. 42 (x) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any of the foregoing; provided, however, that any such extension, renewal or replacement shall be limited to all or a part of the property or assets (or substitutions therefor) which secured the Lien so extended, renewed or replaced (plus improvements on such property); and (xi) the Company from creating, incurring or suffering to exist any other Lien not otherwise permitted by any of the foregoing clauses (i) through (ix) above if the aggregate amount of all secured debt of the Company secured by such Liens would not exceed 10% of the excess of the Company's consolidated assets over the consolidated liabilities as shown on the Company's most recent audited consolidated financial statements in accordance with generally accepted accounting principles. (b) For the purposes of this subsection 7.1, any contract by which title is retained as security (whether by lease, purchase, title retention agreement or otherwise) for the payment of a purchase price shall be deemed to be a purchase money Lien. Nothing in this subsection 7.1 shall apply to any Lien of any kind upon any of the properties of any character of the Company existing on the date of execution and delivery of this Agreement. (c) Subject to subsection 7.3, nothing contained in this subsection 7.1 or elsewhere in this Agreement shall prevent or be deemed to prohibit the creation, assumption or guaranty by the Company of any indebtedness not secured by a Lien or the issuance by the Company of any debentures, notes or other evidences of indebtedness not secured by a Lien, whether in the ordinary course of business or otherwise. 7.2. Consolidations, Mergers and Sales of Assets. Consolidate with any other corporation or limited liability company or accept a merger of any other corporation or limited liability company into the Company or permit the Company to be merged into any other corporation or limited liability company, or sell its properties and assets as, or substantially as, an entirety; provided, however, that subject to the provisions of subsection 7.1, nothing contained in this Agreement shall be deemed to prevent (i) the merger into the Company of another corporation or limited liability company, (ii) the consolidation of the Company and another corporation or limited liability company, (iii) the merger of the Company into another corporation or limited liability company or (iv) the sale of the property or assets of the Company to another corporation or limited liability company, so long as (a) no Default or Event or Default shall have occurred and be continuing and (b) with respect to clauses (ii), (iii) and (iv) above, the surviving corporation or limited liability company of the merger or the purchaser of the Company's assets, as the case may be, shall expressly assume the obligations of the Company under this Agreement and expressly agree to be bound by all other provisions applicable to the Company under this Agreement. 7.3. Net Worth. Permit Net Worth at any time to be less than $4,000,000,000. © 2004. EDGAR Online, Inc.
  • 199. 43 SECTION 8. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Company shall (i) fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; (ii) fail to pay any interest on any Loan or Reimbursement Obligation, any Utilization Fee or any Facility Fee within five Business Days after any such interest or fee becomes due in accordance with the terms hereof; or (iii) fail to pay any expenses or other amounts payable under this Agreement to the Administrative Agent or any Bank within fifteen days after such expenses or other amounts become due in accordance with the terms hereof; or (b) Any representation or warranty made or deemed made by the Company herein or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Company shall default in the observance or performance of any agreement contained in Section 7; or (d) The Company shall default in the observance or performance of any other agreement contained in this Agreement (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice shall have been given to the Company by the Administrative Agent; or (e) Any event or condition shall occur which results in the acceleration of the maturity of any Indebtedness of the Company or any of its Significant Subsidiaries in an aggregate principal amount equal to or greater than $100,000,000; or the Company or any of its Significant Subsidiaries shall not make any liquidation or termination payment or payments in an aggregate amount equal to or greater than $100,000,000 when it becomes due (any applicable grace period having expired) under one or more Hedging Agreements; or the Company or any of its Significant Subsidiaries shall not pay the principal of or interest on any Indebtedness with respect to Indebtedness in an aggregate principal amount in excess of $100,000,000 when it becomes due and beyond any period of grace with respect thereto; or (f) (i) The Company or any of its Significant Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Company or any of its Significant Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company or any of its Significant Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period © 2004. EDGAR Online, Inc.
  • 200. 44 of 60 days; or (iii) there shall be commenced against the Company or any of its Significant Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company or any of its Significant Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company or any of its Significant Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any quot;prohibited transactionquot; (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any quot;accumulated funding deficiencyquot; (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist, with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to result in a violation of subsection 7.3; or (h) One or more judgments or decrees shall be entered against the Company or any of its Significant Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $100,000,000 or more and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 90 days from the entry thereof; or (i) If at any time the Company and its Significant Subsidiaries shall become liable for remediation and/or environmental compliance expenses and/or fines, penalties or other charges which, in the aggregate, could reasonably be expected to result in a violation of subsection 7.3; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Company, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Banks, the Administrative Agent may, or upon the request of the Required Banks the Administrative Agent shall, by notice to the Company declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Banks, the Administrative Agent may, or upon the request of the Required Banks the Administrative Agent shall, by notice of default to the Company, declare the © 2004. EDGAR Online, Inc.
  • 201. 45 Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. The Company shall deposit in the Cash Collateral Account an amount equal to the aggregate then undrawn and unexpired amount of Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph (to the extent such Letters of Credit have not been cash-collateralized pursuant to subsection 3.9). Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 9. THE AGENTS 9.1. Appointment. Each Bank hereby designates and appoints JPMorgan Chase Bank as the Administrative Agent of such Bank under this Agreement, and each such Bank authorizes JPMorgan Chase Bank as the Administrative Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. The Joint Lead Arrangers, the Syndication Agents and the Documentation Agent, in their respective capacities as such, shall not have any duties or responsibilities hereunder nor any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Joint Lead Arrangers, the Syndication Agents or the Documentation Agent in their respective capacities as such. 9.2. Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 9.3. Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Company or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or for any failure of the Company to perform its obligations hereunder or thereunder. The Administrative Agent shall © 2004. EDGAR Online, Inc.
  • 202. 46 not be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Company. 9.4. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of the Bank specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Required Banks as it deems appropriate and it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks and all future holders of the obligations owing by the Company hereunder. 9.5. Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a quot;notice of defaultquot;. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Banks. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Banks; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Banks. 9.6. Non-Reliance on Administrative Agent and Other Banks. Each Bank expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Company, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Bank. Each Bank represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Company and made its own decision to make its Loans hereunder and enter into this Agreement. Each Bank also represents that it will, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and © 2004. EDGAR Online, Inc.
  • 203. 47 information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly required to be furnished to the Banks by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Company which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 9.7. Indemnification. The Banks agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitment shall have terminated and the Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans and all other amounts owing hereunder) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. 9.8. Administrative Agent in Its Individual Capacity. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Company as though the Administrative Agent were not the Administrative Agent hereunder. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, the Administrative Agent shall have the same rights and powers under this Agreement as any Bank and may exercise the same as though it were not the Administrative Agent, and the terms quot;Bankquot; and quot;Banksquot; shall include the Administrative Agent in its individual capacity. 9.9. Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon thirty days' notice to the Banks, and may be removed at any time with or without cause by the Required Banks. Upon any resignation or removal of the Administrative Agent, the Required Banks shall appoint from among the Banks a successor Administrative Agent for the Banks, which successor Administrative Agent shall be approved by the Company. If no successor Administrative Agent shall have been so approved by the Company and shall have accepted such appointment within thirty days after the resignation of the Administrative Agent, then in place or the Required Banks' removal of the retiring © 2004. EDGAR Online, Inc.
  • 204. 48 Administrative Agent, such retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent (which shall be a commercial bank or trust company organized or licensed under the laws of the United States or any state thereof) which appointment shall be subject to the approval of the Company such approval not to be unreasonably withheld. Upon the acceptance of any appointment as Administrative Agent hereunder, such successor Administrative Agent shall succeed to the rights, powers and duties of the Administrative Agent and the term quot;Administrative Agentquot; shall mean such successor agent effective upon its appointment, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the obligations owing hereunder. After any retiring Administrative Agent's resignation or removal as Administrative Agent, the provisions of this subsection shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. SECTION 10. MISCELLANEOUS 10.1. Amendments and Waivers. Neither this Agreement, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. With the written consent of the Required Banks, the Administrative Agent and the Company may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or adding any financial institution (other than as provided for herein) as a Bank hereunder (thereby increasing the Aggregate Commitment) or changing in any manner the rights of the Banks or of the Company hereunder or thereunder or waiving, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (a) reduce the amount or extend the maturity of any Loan or any installment thereof, or reduce the rate of interest (other than default interest rates) thereon or extend the time of payment of interest or fees thereon, or reduce any fee payable to any Bank hereunder, or change the amount of any Bank's Commitment, in each case without the written consent of the Bank affected thereby, or (b) amend, modify or waive any provision of subsection 2.1(c) or this subsection 10.1, amend the definition of Required Banks or consent to the assignment or transfer by the Company of any of its rights and obligations under this Agreement (other than as set forth in subsection 7.2), in each case without the written consent of all the Banks, (c) amend, modify or waive any provision of Section 9 or any reference to the Administrative Agent, the Syndication Agents or the Documentation Agent in any other provision of this Agreement which alters the duties or obligations of the Administrative Agent, the Syndication Agents or the Documentation Agent without the written consent of the then Administrative Agent, the Syndication Agents or the Documentation Agent, as the case may be or (d) amend, modify or waive any provision of Section 3 without the written consent of the Issuing Bank. Nothing in this subsection 10.1 shall prevent or prohibit the Administrative Agent, the Company or any Bank from taking any action in accordance with subsection 2.1(c), 2.20, 2.22 or 2.23 notwithstanding anything contained in this subsection 10.1 to the contrary, including, without limitation (i) allowing the Administrative Agent to increase the Aggregate Commitment, (ii) allowing any Bank to increase its Commitment and allowing the execution and delivery of any Commitment Increase Supplement, (iii) allowing an Other Bank to become an © 2004. EDGAR Online, Inc.
  • 205. 49 Additional Bank and allowing the execution and delivery of an Additional Bank Agreement, (iv) allowing a Notifying Bank to transfer its rights and obligations to a Replacement Bank, or (v) the modification, amendment or supplement of this Agreement (including, without limitation, Schedule I), in each case solely in accordance with, or upon a transfer by a Bank of its rights and obligations hereunder pursuant to, the applicable provisions of subsection 2.1(c), 2.20, 2.22 or 2.23. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Banks and shall be binding upon the Company, the Banks, the Agents and all future holders of the obligations owing hereunder. In the case of any waiver, the Company, the Banks and the Agents shall be restored to their former position and rights hereunder, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 10.2. Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy, telegraph or telex), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, or, in the case of telegraphic notice, when delivered to the telegraph company, or, in the case of telex notice, when sent, answerback received, addressed, in the case of the Company and the Administrative Agent, as follows, and as set forth on Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the obligations owing hereunder: The Administrative Agent: JPMorgan Chase Bank Agency Services Group 1111 Fannin - 10th Floor Houston, Texas 77002 Attention: Eleanor Fiore Telecopy: (713) 750-2223 The Company: CIT Group Inc. 1 CIT Drive Livingston, New Jersey 07039 Attention: Executive Vice President and Treasurer Telecopy: (973) 535-3761 with a copy to: CIT Group Inc. 1 CIT Drive Livingston, New Jersey 07039 Attention: General Counsel Telecopy: (973) 740-5148 Notices and other communications to the Banks hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 or subsection © 2004. EDGAR Online, Inc.
  • 206. 50 9.5 unless otherwise agreed by the Administrative Agent and the applicable Bank. The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. 10.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Bank, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4. Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 10.5. Payment of Expenses and Taxes. The Company agrees (a) to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith (including, without limitation, any Commitment Increase Supplement or Additional Bank Agreement pursuant to subsection 2.1), including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse each Bank and the Agents for all its reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents prepared in connection herewith, including, without limitation, reasonable fees and disbursements (including the allocated costs and expenses of in-house counsel) of counsel to the Administrative Agent and to the several Banks, (c) to pay, indemnify, and hold each Bank and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement and any such other documents prepared in connection herewith, and (d) to pay, indemnify, and hold each Bank and the Administrative Agent, and each of their respective Affiliates, officers, directors and employees, harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable legal fees and expenses), with respect to the execution, delivery, enforcement, performance and administration of this Agreement, any Loan (including the use of proceeds thereof) and any such other documents prepared in connection herewith (all the foregoing, collectively, the quot;indemnified liabilitiesquot;), provided, that the Company shall have no obligation hereunder to any Administrative Agent or any Bank with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of such Administrative Agent or such Bank, (ii) legal proceedings commenced against any Administrative Agent or any © 2004. EDGAR Online, Inc.
  • 207. 51 Bank by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such, or (iii) legal proceedings commenced against any Agent or any Bank by any other Bank or by any Transferee. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 10.6. Successors and Assigns; Participations; Purchasing Banks. (a) This Agreement shall be binding upon and inure to the benefit of the Company, the Administrative Agent, the Banks, all future holders of the obligations owing hereunder and their respective successors and assigns (including any affiliate of the Issuing Bank that issues any Letter of Credit), except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Bank (except as provided in subsection 7.2). (b) Any Bank may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities (quot;Participantsquot;) participating interests in any Loan owing to such Bank, any Commitment of such Bank or any other interest of such Bank hereunder. In the event of any such sale by a Bank of participating interests to the Participant, such Bank's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any obligation owing to it hereunder for all purposes under this Agreement, and the Company and the Administrative Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement; provided, that such Bank shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Credit Agreement other than, as may be agreed to by such Bank and Participant, any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment or postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment. The Company agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. The Company also agrees that each Participant shall be entitled to the benefits of subsections 2.17, 2.18, 2.19 and 10.5 with respect to its participation in the Commitment and the Loans outstanding from time to time; provided, that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Bank would have been entitled to receive in respect of the amount of the participation transferred by the transferor Bank to such Participant had no such transfer occurred. (c) Any Bank may, in the ordinary course of its business and in accordance with applicable law, at any time sell, to any Bank or any Affiliate thereof and, unless an Event of Default has occurred and is continuing, with the consent of the Company, the Administrative Agent and the Issuing Bank (which consents shall not be unreasonably withheld or delayed), to one or more additional banks or financial institutions (quot;Purchasing Banksquot;) all or any part of its © 2004. EDGAR Online, Inc.
  • 208. 52 rights and obligations under this Agreement pursuant to a Commitment Transfer Supplement, substantially in the form of Exhibit C (a quot;Commitment Transfer Supplementquot;), executed by such Purchasing Bank and such transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank or an Affiliate thereof, by the Company and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register. Each such assignment shall be in a minimum amount of $5,000,000 (other than in the case of an assignment of all of a Bank's interests under this Agreement) and the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance, a Commitment Transfer Supplement, and the transferor Bank or the Purchasing Bank, as agreed between them, shall deliver to the Administrative Agent a processing and recordation fee of $3,500. After giving effect to any such assignment (other than an assignment of all of a Bank's interests under this Agreement), the assigning Bank (together with any Bank which is an Affiliate of such assigning Bank) shall retain Revolving Credit Loans and/or Commitments aggregating not less than $15,000,000. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date determined pursuant to such Commitment Transfer Supplement (the quot;Transfer Effective Datequot;), (x) the Purchasing Bank thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Bank hereunder with a Commitment as set forth therein, and (y) the transferor Bank thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Bank's rights and obligations under this Agreement, such transferor Bank shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of Commitment Percentages arising from the purchase by such Purchasing Bank of all or a portion of the rights and obligations of such transferor Bank under this Agreement. Notwithstanding any provision of this subsection 10.6, the consent of the Company shall not be required for any assignment which occurs at any time when any of the events described in Section 8(f) shall have occurred and be continuing. (d) The Administrative Agent shall maintain at its address referred to in subsection 10.2 a copy of each Commitment Transfer Supplement delivered to it and a register (the quot;Registerquot;) for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the Loans and L/C Obligations owing to, each Bank from time to time. The entries in the Register shall constitute prima facie evidence of the items contained therein, and the Company, the Administrative Agent, the Issuing Bank and the Banks shall treat each Person whose name is recorded in the Register as the owner of the Loan and participations in Letters of Credit recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Company, the Issuing Bank or any Bank at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a Commitment Transfer Supplement executed by a transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank or an Affiliate thereof, by the Company and the Administrative Agent), the Administrative Agent shall (i) promptly accept such Commitment Transfer Supplement and (ii) on the Transfer Effective Date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Banks and the Company. © 2004. EDGAR Online, Inc.
  • 209. 53 (f) If, pursuant to this subsection, any interest in this Agreement is transferred to any Participant or Assignee (each, a quot;Transfereequot;) which is organized under the laws of any jurisdiction other than the United States or any state thereof, the transferor Bank shall cause such Transferee, concurrently with the effectiveness of such transfer, (i) to represent to the transferor Bank (for the benefit of the transferor Bank and the Company) that under applicable law and treaties no taxes will be required to be withheld by the Company or the transferor Bank with respect to any payments to be made to such Transferee in respect of the Loans (except to the extent that such Transferee's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Company with respect to Taxes pursuant to subsection 2.18(a)) and (ii) to furnish to the transferor Bank (and, in the case of any Assignee, to the Company) the forms and certificates required to be delivered pursuant to subsection 2.18(b). (g) Nothing herein shall prohibit any Bank from pledging or assigning all or any portion of its Loans to any Federal Reserve Bank in accordance with applicable law. 10.7. Dissemination of Information; Confidentiality. (a) The Company authorizes each Bank to disclose to any Participant or Purchasing Bank or any other Person acquiring an interest in this Agreement by operation of law, or (with the consent of the Company; provided that such consent shall not be unreasonably withheld and shall not be required for any disclosure which occurs at any time when any of the events described in Section 8(f) shall have occurred and be continuing) any contractual counterparty to any swap, hedge, securitization or other derivative transaction entered into by such Bank in connection with this Agreement (each a quot;Transfereequot;) and any prospective Transferee any and all information in such Bank's possession concerning the creditworthiness of the Company and its Subsidiaries, provided that such Transferee or prospective Transferee agrees to be bound by this subsection 10.7 with respect to such information as though such Transferee or prospective Transferee were a Bank hereunder. (b) Each Bank and each Transferee that receives information which is not publicly available and which has been identified by the Company as confidential (quot;Proprietary Informationquot;) will be bound to treat such Proprietary Information in a confidential manner and to use such Proprietary Information only for the purpose of evaluating and monitoring the creditworthiness of the Company and its Subsidiaries in connection with such Bank's or such Transferee's extensions of credit pursuant to this Agreement or such Bank's or Transferee's other agreements with the Company, or as otherwise may be required by law, regulation or court order; provided, that if any Bank or Transferee shall be required to disclose any Proprietary Information by a court order (i) such Bank or Transferee shall, unless prohibited by applicable law, applicable regulation or the terms of the applicable court order, communicate such fact to the Administrative Agent and the Administrative Agent shall communicate such fact to the Company and (ii) such Bank or Transferee shall disclose only such Proprietary Information which it is requested to disclose or advised by counsel to disclose; provided, further, that any Bank or Transferee may disclose such information which it is requested to disclose or is advised by counsel to disclose to an auditor, examiner or regulator if it has advised such auditor, examiner or regulator that such information is confidential; provided, further, that any Bank or Transferee may disclose Proprietary Information (A) to Affiliates of such Bank or Transferee provided that such Affiliates agree to keep the Proprietary Information confidential as set forth herein, (B) with the written consent of the Company, (C) in connection with any litigation © 2004. EDGAR Online, Inc.
  • 210. 54 involving the Company and such Bank or Transferee, (D) to legal counsel to such Bank or Transferee if it advises such legal counsel that such information is confidential, (E) if such Proprietary Information was in the possession of such Bank or Transferee on a non-confidential basis prior to the Company furnishing it to such Bank or Transferee as shown by clear and convincing evidence, or (F) if such Proprietary Information is received by such Bank or Transferee, without restriction as to its disclosure or use, from a Person who, to such Bank's or Transferee's knowledge or reasonable belief, was not prohibited from disclosing it by any duty of confidentiality. 10.8. Adjustments. (a) If any Bank (a quot;benefitted Bankquot;) shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Bank, if any, in respect of such other Bank's Loans, or interest thereon, such benefitted Bank shall purchase for cash from the other Banks such portion of each such other Bank's Loan, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Bank to share the excess payment or benefits of such collateral or proceeds ratably with each of the Banks; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Bank, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Notwithstanding anything contained in this Agreement to the contrary, this subsection 10.8 shall only be applicable to (i) payments received by a Bank in respect of the obligations of the Company under this Agreement and (ii) collateral received from the Company, if any, to secure obligations of the Company under this Agreement. (b) In addition to any rights and remedies of the Banks provided by law, upon (i) the occurrence and during the continuance of an Event of Default, and (ii) the declaration by the Administrative Agent that the Loans are immediately due and payable pursuant to the last paragraph of Section 8, or the occurrence and continuance of an Event of Default specified in clause (i) or (ii) of paragraph (f) of Section 8, each Bank shall have the right, without prior notice to the Company, any such notice being expressly waived by the Company to the extent permitted by applicable law (but without waiving any notices specified in Section 8), upon any amount becoming due and payable by the Company hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether matured or unmatured, at any time held or owing by such Bank or any branch or agency thereof to or for the credit or the account of the Company. Each Bank agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Bank, provided that the failure to give such notice shall not affect the validity of such set-off and application. 10.9. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent. © 2004. EDGAR Online, Inc.
  • 211. 55 10.10. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10.11. Integration. This Agreement represents the agreement of the Company, the Agents and the Banks with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Company, the Agents or any Bank relative to subject matter hereof not expressly set forth or referred to herein other than any agreements referred to in subsection 2.5(b). 10.12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 10.13. Submission To Jurisdiction; Waivers. The Company hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address set forth in subsection 10.2 or at such other address of which the Bank shall have been notified pursuant thereto; and (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. 10.14. WAIVERS OF JURY TRIAL. THE COMPANY, THE AGENTS AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 10.15. USA PATRIOT Act. Each Bank hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the quot;Actquot;), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Bank to identify the Company in accordance with the Act. © 2004. EDGAR Online, Inc.
  • 212. Signature page to the 5-Year Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A., and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. CIT GROUP INC. By: ________________________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 213. Signature page to the 5-Year Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A., and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. JPMORGAN CHASE BANK, as Administrative Agent and as a Bank By: ________________________________ Name: Title: J.P. MORGAN SECURITIES INC., as Joint Lead Arranger By: ________________________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 214. Signature page to the 5-Year Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A., and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. CITIBANK, N.A., as Syndication Agent By: ________________________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 215. Signature page to the 5-Year Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A. and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. BARCLAYS BANK PLC, as Documentation Agent and as a Bank By: ________________________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 216. Signature page to the 5-Year Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A., and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. BANK OF AMERICA, N.A., as Syndication Agent and as a Bank By: ________________________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 217. Signature page to the 5-Year Credit Agreement, dated as of April 14, 2004 among CIT Group Inc., the banks parties thereto, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers, Citibank, N.A., and Bank of America, N.A., as Syndication Agents, Barclays Bank PLC, as Documentation Agent and JPMorgan Chase Bank, as Administrative Agent. Name of Bank: By: ________________________________ Name: Title: © 2004. EDGAR Online, Inc.
  • 218. EXHIBIT 12.1 CIT GROUP INC. AND SUBSIDIARIES COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES ($ IN MILLIONS) Quarters Ended March 31, ------------------------ 2004 2003 ------- ------ Net income........................................... $189.3 $127.0 Provision for income taxes........................... 121.1 81.2 ------ ------ Earnings before provision for income taxes........... 310.4 208.2 ------ ------ Fixed charges: Interest and debt expense on indebtedness.......... 293.6 354.7 Dividends on preferred capital securities.......... 4.4 4.4 Interest factor-one third of rentals on real and personal properties............................. 3.5 3.9 ------ ------ Total fixed charges.................................. 301.5 363.0 ------ ------ Total earnings before provision for income taxes and fixed charges..................................... $611.9 $571.2 ====== ====== Ratios of earnings to fixed charges(1)............... 2.03x 1.57x ====== ====== ---------- (1) Excluding the gain from redemption of debt in the quarter ended March 31, 2004, the ratio of earnings to fixed charges was 1.89x. This gain from debt redemption is significant, does not occur on a regular basis, and is not indicative of our ongoing operations. © 2004. EDGAR Online, Inc.
  • 219. EXHIBIT 31.1 CERTIFICATIONS I, Albert R. Gamper, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of CIT Group Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 7, 2004 /s/ Albert R. Gamper, Jr. .................................... Albert R. Gamper, Jr. Chairman and Chief Executive Officer © 2004. EDGAR Online, Inc.
  • 220. EXHIBIT 31.2 CERTIFICATIONS I, Joseph M. Leone, certify that: 1. I have reviewed this quarterly report on Form 10-Q of CIT Group Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 7, 2004 /s/ Joseph M. Leone ......................................... Joseph M. Leone Vice Chairman and Chief Financial Officer © 2004. EDGAR Online, Inc.
  • 221. Exhibit 32.1 Certification Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of CIT Group Inc. (quot;CITquot;) on Form 10-Q for the three months ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the quot;Reportquot;), I, Albert R. Gamper, Jr., the Chief Executive Officer of CIT, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and (ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CIT. /s/ Albert R. Gamper, Jr. ------------------------- Albert R. Gamper, Jr. Chairman and Chief Executive Officer CIT Group Inc. Dated: May 7, 2004 © 2004. EDGAR Online, Inc.
  • 222. Exhibit 32.2 Certification Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of CIT Group Inc. (quot;CITquot;) on Form 10-Q for the three months ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the quot;Reportquot;), I, Joseph M. Leone, the Chief Financial Officer of CIT, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and (ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CIT. /s/ Joseph M. Leone ----------------------- Joseph M. Leone Vice Chairman and Chief Financial Officer CIT Group Inc. Dated: May 7, 2004 © 2004. EDGAR Online, Inc.
  • 223. End of Filing © 2004. EDGAR Online, Inc.