-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QiyjlUl5FwuYYtXvQmwztGRZFIa5UsR2sOP8nij0KgOl+88XSmWRsC0szu3Xj41R S7Iq1Ssu18WXox0nRzXWOQ== 0000014272-98-000002.txt : 19980401 0000014272-98-000002.hdr.sgml : 19980401 ACCESSION NUMBER: 0000014272-98-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRISTOL MYERS SQUIBB CO CENTRAL INDEX KEY: 0000014272 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 220790350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-01136 FILM NUMBER: 98582589 BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2125464000 MAIL ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL MYERS CO DATE OF NAME CHANGE: 19891012 10-K 1 FORM 10-K FISCAL YEAR ENDED DECEMBER 31, 1997 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 Commission File Number 1-1136 BRISTOL-MYERS SQUIBB COMPANY (Exact name of registrant as specified in its charter) Delaware 22-079-0350 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 345 Park Avenue, New York, N.Y. 10154 (Address of principal executive offices) Telephone: (212) 546-4000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock, $.10 Par Value New York Stock Exchange Pacific Exchange, Inc. $2 Convertible Preferred Stock, $1 Par Value New York Stock Exchange Pacific Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] 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 [ ] The aggregate market value of voting stock held by non-affiliates of the registrant as of February 28, 1998 was $99,481,748,374. At February 28, 1998, there were 994,247,077 shares of common stock outstanding. Documents incorporated by reference Proxy Statement for Annual Meeting of Stockholders on May 5, 1998. Part III PART I ------ Item 1. BUSINESS. DESCRIPTION OF BRISTOL-MYERS SQUIBB COMPANY - ------------------------------------------- General: - ------- Bristol-Myers Squibb Company ("Bristol-Myers Squibb" or the "Company") was incorporated under the laws of the State of Delaware in August 1933 under the name Bristol-Myers Company as successor to a New York business started in 1887. In 1989, the Bristol-Myers Company changed its name to Bristol-Myers Squibb Company, as a result of a merger. The Company, through its divisions and subsidiaries, is a major producer and distributor of pharmaceuticals, consumer medicines, nutritionals, medical devices and beauty care products. In general, the business of the Company's segments is not seasonal. BUSINESS SEGMENTS - ----------------- Reference is made to Note 2 Acquisitions and Divestitures and Note 13 Segment Information in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report. DESCRIPTION OF SEGMENTS - ----------------------- PHARMACEUTICALS: - --------------- This segment includes sales of prescription medicines, mainly cardiovascular, anti-cancer, anti-infective and central nervous system drugs. 1997 1996 1995 ------ ------ ------ Cardiovascular $2,905 $2,816 $2,911 Anti-cancer 2,420 1,971 1,600 Anti-infective 2,235 1,856 1,701 Central nervous system 955 760 601 Other 1,417 1,263 932 ------ ------ ------ Total Segment $9,932 $8,666 $7,745 ------ ------ ------ The principal products in this segment are: Cardiovascular: - -------------- PRAVACHOL* Pravastatin sodium, an HMG Co-A reductase inhibitor * Indicates brand names of products which are registered trademarks owned by the Company. 1 CAPOTEN*/CAPOZIDE* captopril, an angiotensin converting enzyme (ACE) inhibitor MONOPRIL* fosinopril sodium, a second-generation ACE inhibitor with convenient once-a-day dosing QUESTRAN* cholestyramine, a cholesterol-reducing agent SOTACOR* sotalol, a beta blocker with unique antiarrhythmic qualities AVAPRO irbesartan, an angiotensin II receptor antagonist, co-developed and jointly marketed with Sanofi S.A. CORGARD*/CORZIDE* nadolol, a once-a-day beta blocker used in the treatment of hypertension and angina pectoris Anti-cancer: - ----------- TAXOL*(R) paclitaxel, used in the treatment of refractory ovarian cancer, the second-line treatment of AIDS-related Kaposi's sarcoma, and in treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy (with an exclusivity period, granted pursuant to the Hatch-Waxman Act in the U.S., which expired in December 1997) PARAPLATIN* carboplatin, a chemotherapeutic agent used in the treatment of ovarian cancer VEPESID* etoposide, used in the treatment of small-cell lung cancer and refractory testicular cancer PLATINOL* cisplatin, used in the treatment of ovarian, testicular and advanced bladder cancer Anti-infective: - -------------- ZERIT* stavudine, used in the treatment of persons with advanced HIV disease CEFZIL* cefprozil, an oral cephalosporin used in the treatment of respiratory infections VIDEX* didanosine, an antiretroviral drug used in the treatment of adult and pediatric patients with advanced human immunodeficiency virus (HIV) infection DURICEF* cefadroxil, an oral cephalosporin MAXIPIME* cefepime, a fourth generation injectable cephalosporin 2 VELOSEF* cephradine, an oral cephalosporin AMIKIN* amikacin, an aminoglycoside AZACTAM* aztreonam, a monobactam antibiotic FUNGIZONE* amphotericin B, an anti-fungal Central nervous system: - ---------------------- BUSPAR* buspirone, a novel anti-anxiety agent that effectively relieves persistent anxiety with or without accompanying deprssive symptoms SERZONE* nefazodone, an antidepressant treatment which offers a low incidence of side-effects STADOL NS* butorphanol NS, a prescription nasal spray analgesic Other: - ----- DOVONEX* calcipotriene, a vitamin D3 analog for the treatment of moderate psoriasis LAC-HYDRIN* used in the treatment of moderate to severe dry skin GLUCOPHAGE metformin, an oral anti-diabetes agent for type 2 non- insulin-dependent diabetes OVCON* an oral contraceptive ESTRACE* stradiol, a low-dose estrogen replacement therapy CONSUMER MEDICINES: - ------------------ This segment includes sales of analgesics, skin care, cough/cold remedies, antiperspirants and deodorants, and other consumer medicines. 1997 1996 1995 ------ ------ ------ Analgesics $ 739 $ 718 $ 669 Other 612 561 551 ------ ------ ------ Total Segment $1,351 $1,279 $1,220 ------ ------ ------ 3 The principal products in this segment are: EXCEDRIN* analgesics BUFFERIN* EFFERALGAN* DAFALGAN* ASPIRINE UPSA* KERI* a line of moisturizing body lotions and shower and bath oils SEA BREEZE* skin care products COMTREX* a multi-symptom cold reliever BAN* anti-perspirants and deodorants VAGISTAT-1* for vaginal yeast infections On March 14, 1998, the Company completed the sale of the assets related to the BAN* brand of anti-perspirant and deodorant products. BEAUTY CARE: - ----------- This segment includes sales of haircoloring and hair care preparations and other beauty care products. 1997 1996 1995 ------ ------ ------ Haircoloring $ 841 $ 812 $ 714 Hair care 794 586 487 Other 70 69 103 ------ ------ ------ Total Segment $1,705 $1,467 $1,304 ------ ------ ------ The principal products in this segment are: NICE 'N EASY* haircolorings MISS CLAIROL* HYDRIENCE* NATURAL INSTINCTS* ULTRESS* LOVING CARE* HERBAL ESSENCES* complete lines of shampoos and conditioners INFUSIUM 23* DAILY DEFENSE* SYSTEME BIOLAGE* professional hair care products sold MATRIX ESSENTIALS* exclusively in beauty salons VITAL NUTRIENTS* VAVOOM* MUM* anti-perspirants and deodorants 4 NUTRITIONALS: - ------------ This segment includes sales of infant formulas and other nutritional products. 1997 1996 1995 ------ ------ ------ Infant formulas $1,219 $1,201 $1,086 Other 692 592 506 ------ ------ ------ Total Segment $1,911 $1,793 $1,592 ------ ------ ------ The principal products in this segment are: ENFAMIL* infant formula products PROSOBEE* NUTRAMIGEN* LACTOFREE* ENFAPRO* follow-up formula products for older babies NEXT STEP* ALACTA NF* SUSTAGEN* nutritional supplements and specialties CHOCO MILK* ISOCAL* SUSTACAL* NUTRAMENT* BOOST* THERAGRAN* vitamins PLUSSSZ* POLY-VI-SOL* POLY-VI-FLOR* NATALINS* MEDICAL DEVICES: - --------------- This segment includes sales of orthopaedic implants, ostomy and wound care products and other medical devices. 1997 1996 1995 ------ ------ ------ Orthopaedic implants $ 615 $ 644 $ 657 Ostomy 451 452 472 Other 736 764 777 ------ ------ ------ Total Segment $1,802 $1,860 $1,906 ------ ------ ------ 5 The principal products in this segment are: NEXGEN* Complete Knee Solution VERSYS* Hip System CENTRALIGN* Precoat Hip Prosthesis orthopaedic implants ACTIVE LIFE/ ostomy care products COLODRESS* SUR-FIT/ COMBIHESIVE/SECURE* DUODERM* wound care products SOURCES AND AVAILABILITY OF RAW MATERIALS - ----------------------------------------- Bristol-Myers Squibb, for the most part, purchases the principal raw materials and supplies used in each industry segment in the open market. Substantially all such materials are obtainable from a number of sources so that the loss of any one source of supply would not have a material adverse effect on the Company. PATENTS, TRADEMARKS AND LICENSES - -------------------------------- The Company owns or is licensed under a number of patents in the United States and foreign countries covering products, principally in the pharmaceuticals and medical devices segments, and has also developed many brand names and trademarks for products in each industry segment. The Company considers the overall protection of its patent, trademark and license rights to be of material value and acts to protect these rights from infringement. The Company believes that no single patent or license is of material importance in relation to the business as a whole. COMPETITION, DISTRIBUTION AND CUSTOMERS - --------------------------------------- The markets in which Bristol-Myers Squibb competes are generally broad based, heavily competitive and include many competitors. The principal means of competition utilized to market the products of Bristol-Myers Squibb include quality, service, price and product performance. The products of the pharmaceuticals segment and the medical devices segment are promoted on a national and international basis in medical journals and directly to the medical profession. The Company is also utilizing direct-to-consumer advertising for a number of its pharmaceutical products. Most of the other products of Bristol-Myers Squibb are generally advertised and promoted on a national and international basis through the use of television, radio, print media, consumer offers, and window and in-store displays. Bristol-Myers Squibb's products are principally sold to the wholesale and retail trade both nationally and internationally. Certain products of the pharmaceuticals and medical devices segments are also sold to other drug manufacturers, hospitals and the medical profession. None of the segments is dependent upon a single customer, or a few customers, such that the loss of any one or more would have a material adverse effect on the segment. 6 RESEARCH AND DEVELOPMENT - ------------------------ Research and development is essential to Bristol-Myers Squibb's businesses, particularly to the Pharmaceuticals Segment. Management continues to place great emphasis on these activities. Pharmaceutical research and development is carried out by the Bristol-Myers Squibb Pharmaceutical Research Institute which has major facilities in Princeton, Hopewell and New Brunswick, New Jersey; and Wallingford, Connecticut. Pharmaceutical research and development is also carried out at various other facilities in the United States and in Belgium, France, Germany, Italy, Japan, and the United Kingdom. Bristol-Myers Squibb spent $1,385 million in 1997, $1,276 million in 1996 and $1,199 million in 1995 on company sponsored research and development activities. Pharmaceutical research and development spending, as a percentage of pharmaceutical sales, was 12.0% in 1997 compared to 12.3% in 1996 and 12.9% in 1995. REGULATION - ---------- Most aspects of the Company's business are subject to some degree of government regulation in the countries in which its operations are conducted. The Company's policy is to comply fully with all regulatory requirements applying to its products and operations. For some products, and in some countries, government regulation is significant and, in general, there is a trend to more stringent regulation. The Company devotes significant time, effort and expense addressing the extensive governmental regulatory requirements applicable to its business. Governmental regulatory actions can result in the recall or seizure of products, suspension or revocation of the authority necessary for the production or sale of a product, and other civil and criminal sanctions. In the United States, the drug, medical device, diagnostic, food and cosmetic industries in which the Company operates have long been subject to regulation by various federal, state and local agencies, primarily as to product manufacture, safety, efficacy, advertising and labeling. Assuring compliance with appropriate laws and regulations requires increasing expenditures of time and resources. In addition, governmental bodies in the United States as well as other countries have expressed concern about costs relating to health care and, in some cases, have focused attention on the pricing of drugs and on appropriate drug utilization. Government regulation in these areas already exists in some countries and may be expanded significantly in the United States and other countries in the future. While the Company is unable to predict the extent to which its business may be affected by future regulatory developments, it believes that its substantial experience dealing with governmental regulatory requirements and restrictions on its operations throughout the world and its development of new and improved products should enable it to compete effectively within this environment. 7 EMPLOYEES - --------- Bristol-Myers Squibb employed approximately 53,600 people at December 31, 1997. DOMESTIC AND FOREIGN OPERATIONS - ------------------------------- Reference is made to Note 11 Financial Instruments, and Note 13 Segment Information in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report. International operations are subject to certain risks which are inherent in conducting business abroad, including possible nationalization or expropriation, price and exchange controls, limitations on foreign participation in local enterprises and other restrictive governmental actions. In addition, changes in the relative value of currencies take place from time to time and their effects may be favorable or unfavorable on Bristol-Myers Squibb's operations. There are currency restrictions relating to repatriation of earnings in certain countries. Item 2. PROPERTIES. Bristol-Myers Squibb's world headquarters is located at 345 Park Avenue, New York, New York, where it leases approximately 841,800 square feet of floor space, approximately 301,800 square feet of which is sublet to others. The headquarters for the Company's segments are as follows: Pharmaceutical world headquarters is located in Princeton, New Jersey; Consumer Medicines in Plainsboro, New Jersey; Beauty Care in Stamford, Connecticut; Nutritionals in Evansville, Indiana; and Medical Devices in Warsaw, Indiana. Bristol-Myers Squibb manufactures products at forty-three major worldwide locations with an aggregate floor space of approximately 12,896,000 square feet. Forty-one facilities are owned by Bristol-Myers Squibb and two are leased. The following table illustrates the segment and geographic location of the Company's significant manufacturing facilities. Cons Beauty Med Pharm Med Care Nutri Dev Total ----- ----- ----- ----- ----- ----- United States 7 1 2 2 3 15 Europe, Mid East and Africa 5 5 1 1 1 13 Other Western Hemisphere 6 1 2 9 Pacific 4 1 1 6 ----- ----- ----- ----- ----- ----- Total 22 7 4 6 4 43 ----- ----- ----- ----- ----- ----- Portions of these facilities and other facilities owned or leased by Bristol-Myers Squibb in the United States and elsewhere are used for research, administration, storage and distribution. Bristol-Myers Squibb's facilities are well-maintained, adequately insured and in satisfactory condition. 8 Item 3. LEGAL PROCEEDINGS. Breast Implant Litigation - ------------------------- Reference is made to Note 16 Contingencies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report. As of December 31, 1997, approximately 23,000 domestic and 1,300 foreign breast implant recipients were plaintiffs in lawsuits pending in federal and state courts in the United States and in certain courts in Canada and Australia. Of the 23,000 domestic plaintiffs, about 12,300 have opted out of the class action settlement described below. The remaining 10,700 plaintiffs have chosen to participate in the settlement, and their lawsuits are expected to be dismissed. Some 400 foreign breast implant recipients have opted out of the Revised Settlement but the opt-out period has not yet expired for foreign women. Only those suits filed by plaintiffs who have opted out of the class action settlement may proceed in the United States. Appeals related to the Revised Settlement are pending. Other manufacturers of breast implants, as well as suppliers of component parts and other parties, are also defendants in the majority of these cases. Some of these plaintiffs have sued numerous manufacturers without specifying the manufacturer of the implants involved. In addition to individual suits, the Company has been named as a defendant, together with other defendants, in a purported class action brought on behalf of children allegedly exposed to silicone in utero and through breast milk. (FEUER, ET AL., V. MCGHAN, ET AL., U.S.D.C, E. Dist. NY, 93-0146.) The suit, which has not been certified as a class action, names all breast implant manufacturers as defendants and seeks to establish a medical monitoring fund. On April 11, 1996, a class action on behalf of all women in the Canadian province of British Columbia was certified in the provincial court of British Columbia on the single issue of whether silicone gel breast implants are reasonably fit for their intended purpose (HARRINGTON V. DOW CORNING CORPORATION ET AL., Supreme Court, British Columbia, C954330). A previously certified class action lawsuit entitled IN RE: LOUISIANA BREAST IMPLANT CLASS ACTION (previously SPITZFADEN, ET AL. VS. DOW CORNING CORP., ET AL.), No. 92-2589, was decertified by the trial court in December 1997 and is not expected to proceed as a class action. The Company is a participant in a class action settlement approved by the Honorable Sam C. Pointer, Jr., Chief Judge of the United States District Court for the Northern District of Alabama (LINDSEY, ET AL., V. DOW CORNING, ET AL., CV-94-P-11558-S), before whom all federal breast implant cases were consolidated for pretrial purposes. On December 22, 1995, Judge Pointer approved a revised settlement program (Revised Settlement) for resolution of claims seeking damages for personal injuries from allegedly defective breast implants. The Revised Settlement arises out of a class action settlement approved by the Court on September 1, 1994. On January 16, 1996, the Company, Baxter Healthcare Corporation and Baxter International (collectively, Baxter), and Minnesota, Mining and Manufacturing Company (3M) (hereinafter, the Settling Defendants) each paid $125 million into a court- established fund as an initial reserve to pay claims under the Revised Settlement. In 1997, the Company made additional contributions to the court- established fund totaling approximately $190 million. McGhan Medical Corporation and Union Carbide Corporation are also parties to the Revised Settlement. 9 The fifteen-year Revised Settlement program provides benefits to those breast implant recipients who have had at least one breast implant manufactured by one of the Settling Defendants (or their predecessors or subsidiaries). Several kinds of benefits are available for eligible participants with breast implants made by companies affiliated with Bristol-Myers Squibb, Baxter and 3M: (1) for current claimants, compensation generally ranging from $10,000 to $50,000 based on disease and disability definitions of the original settlement, plus supplemental benefits of an additional $15,000 to $50,000 for claimants with ruptured implants; (2) for current claimants seeking higher benefits and for other registrants, compensation ranging from $75,000 to $250,000 based on more stringent disease and disability definitions (Long- Term Benefits); and (3) although the Settling Defendants are not recommending removal of implants absent some specific medical reason, a $3,000 payment for those class members (other than late registrants) who seek removal of implants. In addition, current claimants are eligible for an advance payment of $5,000, and other registrants are eligible for an advance payment of $1,000. For current claimants, benefits would be payable regardless of the number of claimants seeking compensation, regardless of the total dollar value of approved claims, and regardless of the outcome of appeals from the order approving the settlement. For other registrants, benefits would be subject to an aggregate $755 million limit for all participating companies over the fifteen-year life of the program. The Company's individual aggregate limit for such benefits is $400 million. In the event the dollar value of the future claims subject to the limit exceeds this amount, claimants may be afforded additional opt-out rights but without the right to assert punitive or other statutory multiple damage claims. The Company's obligations to make payments under the Revised Settlement are not affected by the number of class members electing to opt out of the settlement or the number of class members making claims under it. However, the Company's obligations to fund Long-Term Benefits are cancelable if certain provisions of the Revised Settlement are disapproved on appeal. The Revised Settlement was the subject of an appeal filed by certain foreign breast implant recipients. In November 1996, the Settling Defendants settled that appeal, and the benefits of the Revised Settlement were extended, with certain modifications, to foreign breast implant recipients. Pursuant to the settlement, the Settling Defendants paid (on an equal basis) an aggregate of $25 million into a court-approved settlement fund as an initial reserve for payment of foreign claims. Approximately 380,000 domestic class members (with implants of all manufacturers, not just MEC, Baxter and 3M) registered with the original settlement approved in 1994. Around 88,000 of these class members have indicated that they received at least one breast implant manufactured by MEC or a related company. Of these 88,000 registrants, 14,300 have opted out of the Revised Settlement; 6,300 of these have proved to the satisfaction of the claims office that they received a breast implant of MEC or a related company, while the remaining 8,000 opt-outs have indicated their belief (but have not proved) that they received an MEC breast implant. The 14,300 opt- outs who have or claim to have MEC implants are among the 44,800 domestic registrants (with implants of all manufacturers) who opted out of the Revised Settlement. The Company has identified approximately 10,800 persons from among the 44,800 opt-outs (with implants of all defendants, not just MEC) as plaintiffs in lawsuits against it. An as yet undetermined number of these 10,800 plaintiffs do not have MEC implants and their claims against the Company are expected to be dismissed. An additional 1,570 plaintiffs with claims based upon MEC implants remain from among domestic class members who 10 previously opted out of the settlement originally approved in 1994. Because the opt-out period is essentially over for domestic class members, the number of opt-outs is not expected to increase materially. However, because of continuing uncertainties, it is still not possible to predict on any precise basis the total number of women with MEC implants who will pursue lawsuits against the Company. The cost of the settlement is dependent upon complex and varying factors, including the number of class members that participate, the kinds of claims asserted and approved under the settlement, and their dollar value. In light of the continuing uncertainties attendant to these and other factors, it is not possible to achieve any precision at this time in estimating the cost of the settlement to the Company. In May of 1996, the Company, together with other Settling Defendants, entered into a $50 million settlement of claims asserted by certain health insurers based upon payments made or benefits provided by insurers and represented health plans to participating registrants that allegedly involve or relate to silicone gel breast implants. The Company has paid $20.2 million to the settlement, which extinguishes the potential claims of the majority of the U.S. commercial and non-governmental health care insurer market against both the defendants and settlement class members. In July of 1995, the Company entered into a $20.5 million (U.S. funds) class action settlement with plaintiff representatives in the provinces of Ontario and Quebec. The class includes persons who have or had MEC breast implants and who reside in Ontario and Quebec or who received their MEC implants there. The settlement, which had minimal opt-outs, has been approved by the provincial courts of Ontario and Quebec. The Company's insurers were notified of the breast implant claims and the Revised Settlement, and generally reserved their rights or declined to confirm coverage. The Company has reached settlements with many of the insurers (generally in connection with coverage litigation filed by the Company in Texas state court). The settlement agreements provided cash or confirmed coverage. Legal proceedings remain unresolved against some of the insurers. The cost to the Company of resolving opt-out claims is subject to a number of complex uncertainties. Primary among them is the difficulty of estimating with any precision the quantity and quality of such claims. While there have been large judgments, defendants have won more trials than they have lost, and in 1996 and 1997, the Company's trial experience was highly favorable. The Company has maintained throughout this litigation that breast implants do not cause disease and medical and scientific data support the Company's position. The Company's view has found strong support in the December 1996 decision of a federal judge in Oregon, who ruled to exclude the testimony of plaintiffs' experts concerning a causal link between silicone gel breast implants and systemic illness on the ground that it fails to satisfy standards for reliability under current Supreme Court guidelines. In addition, a science panel appointed by Judge Pointer is in the process of reviewing the scientific literature regarding any relation between breast implants and disease, and is expected to report its findings in 1998. The results of continuing medical research and a variety of additional factors, including the success of other legal defenses and the success of the Revised Settlement program, might substantially affect the cost of resolving opt-out cases. 11 In the fourth quarter of 1993, the Company recorded a charge of $500 million before taxes ($310 million after taxes) in respect of breast implant cases. The charge consisted of $1.5 billion for potential liabilities and expenses, offset by $1 billion of expected insurance proceeds. In the fourth quarters of 1994 and 1995, the Company recorded additional special charges of $750 million before taxes ($488 million after taxes) and $950 million before taxes ($590 million after taxes), respectively, related to breast implant product liability claims. Although the cost of the Revised Settlement and the ongoing litigation cannot at present be predicted with any reasonable degree of precision, the Company, based on the information set forth above and on related estimates, continues to believe that previously established reserves should be adequate to address these claims. Infant Formula Matters - ---------------------- The Company, one of its subsidiaries, and others are or have been defendants in a number of antitrust actions in various states filed on behalf of purported statewide classes of indirect purchasers of infant formula products and by the Attorneys General of Louisiana, Minnesota and Mississippi, alleging a price fixing conspiracy and other violations of state antitrust or deceptive trade practice laws and seeking penalties and other relief. The Company has previously reported reaching settlements and receiving final court approval in the majority of these cases. The only open cases are in Louisiana and Missouri. On November 6, 1997, the court in Louisiana dismissed the plaintiffs' case. The plaintiffs are appealing that dismissal. In Missouri, the Company has a motion to dismiss pending. The Company believes that these actions are without merit and that their ultimate disposition will not have a material adverse effect on the Company's results of operations, liquidity or consolidated financial position. Prescription Drug Litigation - ---------------------------- As of December 31, 1997, the Company is a defendant in over 100 actions brought against the Company and more than 30 other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers in various federal district courts by certain chain drugstores, supermarket chains and independent drugstores, suing either individually or as a representative of a nationwide class of retail pharmacies that has been certified. These cases, which have been coordinated for pretrial purposes in the United States District Court for the Northern District of Illinois, seek treble damages and injunctive relief on account of an alleged antitrust conspiracy concerning the pricing and marketing of brand name prescription drugs in violation of the Sherman Act; individual retailer plaintiffs also assert claims of unlawful price discrimination under the Robinson-Patman Act. Discovery has been completed with respect to claims concerning the alleged Sherman Act violations. Completion of additional discovery with respect to Robinson- Patman Act claims against the Company has been stayed. It is estimated that the class members who have not opted out represent approximately two-thirds of retail pharmacy purchases of brand name prescription drugs during the alleged damages period. As of May 1, 1996, the Company, without admitting any wrongdoing, reached an amended agreement to settle the class action. On May 30, 1997, the United States Court of Appeals for the Seventh Circuit dismissed appeals challenging the District Court's approval of the amended class action settlement. On October 29, 1997, the class settlement became final. Trial in the class case against the manufacturer and wholesaler defendants who have not settled is scheduled for September 14, 1998, with trial in the actions brought by the individual retailer plaintiffs to follow. The largest opt-out retailer plaintiffs have purported to quantify their 12 Sherman Act damage claims against the defendants, including the Company, asserting damages aggregating approximately $2.4 billion before trebling. On November 20, 1997, two large retail chains, Eckerd Corporation and American Drug Stores, initiated similar actions in the Northern District of Illinois against several manufacturer and wholesaler defendants, including the Company. On August 15, 1997, the Seventh Circuit ruled on consolidated appeals from several District Court rulings. The Appeals Court reversed the District Court's denial of summary judgment to the manufacturer defendants, including the Company, on the overcharge damages claims based on plaintiffs' indirect purchases from wholesalers of defendant manufacturers' drugs. However, the Court of Appeals also reversed the District Court's grant of summary judgment to the wholesaler defendants in the class action and stated that class and individual plaintiffs might be able to recover overcharge damages on indirect purchases from wholesalers if they demonstrated that wholesalers participated in the alleged Sherman Act violations. After remand, the District Court granted the individual plaintiffs leave to amend their complaints to join the wholesalers as defendants. Class action cases brought by retail pharmacies in state courts against similar defendants including the Company and alleging similar claims under state law have been filed in California, Alabama, Wisconsin, Minnesota and Mississippi. Final settlements have been approved in the Wisconsin and Minnesota class actions. The Mississippi court has ruled that the case may not proceed as a class action, but has refused to dismiss the claims of named plaintiffs. Class action cases brought by consumers in state courts against similar defendants including the Company and alleging similar claims under state law have been brought in Alabama, California, Washington, New York, Arizona, the District of Columbia, Maine, Michigan, Minnesota, Wisconsin, Kansas, Florida, Tennessee and North Carolina. Four of these state consumer cases were removed to federal court and transferred to the consolidated proceedings in the Northern District of Illinois. These four cases have recently been remanded to state court and all the consumer class actions are now in state court. The consumer actions brought in Washington and New York have been dismissed; an appeal is pending in New York. A consumer class has been certified in the District of Columbia case, while class certification has been denied in the Maine, Michigan and Minnesota consumer cases. Plaintiffs in Minnesota responded to the denial of class certification by filing a new consumer class action seeking only injunctive relief on August 14, 1997. In July 1996, the Company received a subpoena from the Federal Trade Commission (FTC) in an investigation it is conducting to determine whether U.S. pharmaceutical manufacturers have engaged in unfair methods of competition by engaging in unlawful concerted activities on prices of pharmaceutical products. On May 27, 1997, the FTC served a second subpoena and a Civil Investigative Demand (CID) on the Company for information and documents. The Company responded to this CID and has completed its document production. On December 31, 1997, the FTC requested additional documents. The Company believes that the above-described actions are without merit and that their ultimate disposition will not have a material adverse effect on the Company's results of operations, liquidity or consolidated financial position. Environmental Matters - --------------------- The Company, together with others, is a party to, or otherwise involved in, a number of proceedings brought by the Environmental Protection Agency or comparable state agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) or comparable state laws directed at the cleanup of hazardous waste sites. While it is not possible to predict with certainty the outcome of these cases, the Company believes that the ultimate disposition of these matters will not have a material 13 adverse effect on the Company's results of operations, liquidity or consolidated financial position. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 14 PART IA ------------ EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------ The following are the executive corporate officers and the other executive officers of the Registrant: Positions and Offices Presently Name Age Held with the Registrant - ---------------- --- --------------------------------- Charles A. Heimbold, Jr. 64 Chairman of the Board, Chief Executive Officer and Director Hamed M. Adbou, Ph.D. 57 President, Technical Operations, Worldwide Medicines Group Harrison M. Bains, Jr. 54 Treasurer and Vice President, Corporate Staff Samuel L. Barker, Ph.D. 55 Executive Vice President, Franchise Management and Strategy, Worldwide Medicines Group Alice C. Brennan 45 Secretary, Head of the Office of Corporate Conduct and Vice President, Corporate Staff Peter R. Dolan 42 President, Pharmaceutical Group - Europe and Worldwide Consumer Medicines Donald J. Hayden, Jr. 42 President, Intercontinental, Worldwide Medicines Group George P. Kooluris 53 Senior Vice President, Corporate Development, Corporate Staff Richard J. Lane 47 President, U.S. Pharmaceutical Group John L. McGoldrick 57 General Counsel and Senior Vice President, Law and Strategic Planning, Corporate Staff Michael F. Mee 55 Chief Financial Officer and Senior Vice President, Corporate Staff Christine A. Poon 45 President, Medical Devices Group Peter S. Ringrose, Ph.D. 52 President, Bristol-Myers Squibb Pharmaceutical Research Institute Stephen I. Sadove 46 President, Worldwide Beauty Care and Nutritionals Frederick S. Schiff 50 Controller and Vice President, Financial Operations, Corporate Staff 15 John L. Skule 54 Vice President, Public Affairs, Corporate Staff Charles G. Tharp, Ph.D. 46 Senior Vice President, Human Resources, Corporate Staff Kenneth E. Weg 59 Executive Vice President, President, Worldwide Medicines Group and Director Persons who hold titles as elected corporate officers of the Registrant were last elected or reelected to the office held at the general election of officers by the Registrant's Board of Directors on May 6, 1997. Officers of the Registrant serve in such capacity at the pleasure of the Board of Directors of the Registrant. CHARLES A. HEIMBOLD, JR. - From 1992 to 1996, President of the Registrant. Mr. Heimbold has been a director of the Registrant since 1989, the Chief Executive Officer of the Registrant since 1994 and Chairman of the Board of Directors of the Registrant since 1995. HAMED M. ABDOU, Ph.D. - From 1993 to 1995, Vice President QA/QC, Technical Operations PG, a division of the Registrant, and from 1995 to 1997, Senior Vice President, North America and Intercontinental Manufacturing, Technical Operations PG, a division of the Registrant. Dr. Abdou has been President, Technical Operations, Worldwide Medicines Group, a division of the Registrant since 1997. HARRISON M. BAINS, JR. - Mr. Bains has been Treasurer and Vice President, Corporate Staff of the Registrant since 1988. SAMUEL L. BARKER, Ph.D. - From 1992 to 1994, President, U.S. Pharmaceutical Group, a division of the Registrant, from 1994 to 1995, Executive Vice President, and President, U.S. Pharmaceutical Group, a division of the Registrant and from 1995 to 1997, President, U.S. Pharmaceutical Group, Worldwide Medicines Group, a division of the Registrant. Dr. Barker has been Executive Vice President, Franchise Management and Strategy, Worldwide Medicines Group, a division of the Registrant since 1997. ALICE C. BRENNAN - From 1992 to 1994, Secretary of American Cyanamid Company, a pharmaceutical and agricultural company. Ms. Brennan has been Secretary and Vice President, Corporate Staff of the Registrant since 1994 and Head of the Office of Corporate Conduct since 1997. PETER R. DOLAN - From 1993 to 1995, President, Bristol-Myers Products, a division of the Registrant, from 1995 to 1996, President, Mead Johnson Nutritional Group, a division of the Registrant, and from 1996 to 1997, President, Nutritionals and Medical Device Group, a division of the Registrant. Mr. Dolan has been President, Pharmaceutical Group - Europe and Worldwide Consumer Medicines, divisions of the Registrant since 1997. 16 DONALD J. HAYDEN, JR. - From 1993 to 1994, Vice President & General Manager, Bristol-Myers Oncology Division, Specialty Pharmaceuticals, a division of the Registrant, in 1994, Vice President & General Manager, Bristol-Myers Oncology Division, a division of the Registrant, from 1994 to 1995, Vice President & General Manager, Bristol-Myers Oncology/Immunology Division, a division of the Registrant, in 1995, President Oncology & Immunology, a division of the Registrant, from 1995 to 1997, Senior Vice President, Worldwide Franchise Management and Business Development, a division of the Registrant, and in 1997, President, Intercontinental Pharmaceutical Group and Senior Vice President, Worldwide Business Development, Worldwide Medicines Group, a division of the Registrant. Mr. Hayden has been President, Intercontinental, Worldwide Medicines Group, a division of the Registrant since 1997. GEORGE P. KOOLURIS - From 1980 to 1993, Vice President, Corporate Development, Corporate Staff of the Registrant. Mr. Kooluris has been Senior Vice President, Corporate Development, Corporate Staff of the Registrant since 1994. RICHARD J. LANE - From 1993 to 1994, President, Human Health - U.S., Merck Co., Inc., in 1994, President, Human Health N.A., Merck & Co., Inc., a pharmaceutical company, from 1994 to 1995, consultant Schering-Plough Corporation, a pharmaceutical company, and in 1995, Senior Vice President Marketing Operations, Sandoz Pharmaceuticals, a pharmaceutical, nutritionals and chemicals company. From 1995 to 1997, Senior Vice President Marketing, U.S. Pharmaceuticals, a division of the Registrant, and in 1997, President, U.S. Primary Care, a division of the Registrant. Mr. Lane has been President, U.S. Pharmaceuticals, a division of the Registrant since 1997. JOHN L. McGOLDRICK - From 1974 to 1994, Partner, McCarter & English and from 1995 to 1997, General Counsel and Senior Vice President, Corporate Staff of the Registrant. Mr. McGoldrick has been General Counsel and Senior Vice President, Law and Strategic Planning, Corporate Staff of the Registrant since 1997. MICHAEL F. MEE - From 1990 to 1993, director and from 1992 to 1993, Chairman of the Board and Chief Financial Officer of Wang Laboratories, Inc., a provider of computer-based information processing products and services. Mr. Mee has been Chief Financial Officer and Senior Vice President, Corporate Staff of the Registrant since 1994. CHRISTINE A. POON - From 1993 to 1994, Vice President, Business Strategy, Specialty Pharmaceuticals, a division of the Registrant, from 1994 to 1995, President & General Manager - Canada, Pharmaceutical Group - Intercontinental, a division of the Registrant, in 1995 Vice President OPS- Planning - Intercontinental & President, Canada, a division of the Registrant, from 1995 to 1996, Vice President, Canada and Northern Latin America, Intercontinental, a division of the Registrant, from 1996 to 1997, Senior Vice President, Intercontinental Northern Latin America and Canada, a division of the Registrant, and in 1997, President, Latin America and Canada, Worldwide Pharmaceutical Group, a division of the Registrant. Ms. Poon has been President, Medical Devices Group, a division of the Registrant since 1997. 17 PETER S. RINGROSE, Ph.D. - From 1992 to 1994, Senior Vice President, Medicinal Research & Development, Europe and from 1994 to 1996, Senior Vice President, Worldwide Discovery and Medicinal Research & Development, Europe of Pfizer Inc., a health care company. Dr. Ringrose has been President, Bristol-Myers Squibb Pharmaceutical Research Institute, a division of the Registrant since 1997. STEPHEN I. SADOVE - From 1991 to 1994, President, Clairol Incorporated, a division of the Registrant, from 1994 to 1996, President, Worldwide Clairol and 1996 to 1997, President, Worldwide Beauty Care, a division of the Registrant. Mr. Sadove has been President, Worldwide Beauty Care and Nutritionals, a division of the Registrant since 1997. FREDERICK S. SCHIFF - From 1990 to 1997, Controller and Vice President, Corporate Staff of the Registrant. Mr. Schiff has been Controller and Vice President, Financial Operations, Corporate Staff of the Registrant since 1997. JOHN L. SKULE - Mr. Skule has been Vice President, Public Affairs, Corporate Staff of the Registrant since 1993. CHARLES G. THARP, Ph.D. - Dr. Tharp has been Senior Vice President, Human Resources, Corporate Staff of the Registrant since 1993. KENNETH E. WEG - From 1993 to 1996, President, Bristol-Myers Squibb Pharmaceutical Group, a division of the Registrant. Mr. Weg has been President, Worldwide Medicines Group, a division of the Registrant, since 1997 and a director of the Registrant since 1995 and Executive Vice President of the Registrant since 1995. In addition to the positions and offices heretofore listed, all of the foregoing executive corporate officers and other executive officers of the Registrant are directors and/or officers of one or more affiliates of the Registrant, with the exception of Mr. Skule and Dr. Tharp. 18 PART II ------------ Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. MARKET PRICES - ------------- Bristol-Myers Squibb common and preferred stocks are traded on the New York Stock Exchange and the Pacific Exchange, Inc. (symbol: BMY). A quarterly summary of the high and low market prices is presented below: 1997 1996 ------------------- --------------------- High Low High Low -------- -------- --------- --------- Common: First Quarter $69 1/4 $53 1/4 $45 1/8 $40 9/16 Second Quarter 85 3/4 57 1/4 45 1/8 39 Third Quarter 88 5/8 71 49 41 1/2 Fourth Quarter 98 3/16 80 58 3/16 48 1/4 Preferred: During all four quarters of 1997 and the first quarter of 1996, there were no trades of the Company's preferred stock. The Company's preferred stock traded at a high of $369 and a low of $350 1/2 during the second quarter of 1996, a high of $370 and low of $364 during the third quarter of 1996 and a high and low of $450 during the fourth quarter of 1996. HOLDERS OF COMMON STOCK - ----------------------- The approximate number of record holders of common stock at December 31, 1997 was 127,036. The number of record holders is based upon the actual number of holders registered on the books of Bristol-Myers Squibb at such date and does not include holders of shares in "street names" or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies. 19 DIVIDENDS - --------- Dividend payments per share in 1997 and 1996 were: Common Preferred ------------------- ---------------- 1997 1996 1997 1996 ------- --------- ----- ----- First Quarter $ .38 $ .37 1/2 $ .50 $ .50 Second Quarter .38 .37 1/2 .50 .50 Third Quarter .38 .37 1/2 .50 .50 Fourth Quarter .38 .37 1/2 .50 .50 ------- --------- ----- ----- Year $ 1.52 $1.50 $2.00 $2.00 ======= ========= ===== ===== In December 1997, the Board of Directors of the Company declared a quarterly dividend of $.39 per share on the common stock of the Company, payable on February 1, 1998 to shareholders of record as of January 2, 1998. The 1998 indicated annual payment of $1.56 per share represents the twenty-sixth consecutive year that the Company has raised the dividend on its common stock. 20 Item 6. SELECTED FINANCIAL DATA. FIVE-YEAR FINANCIAL SUMMARY OPERATING RESULTS - --------------------------- (in millions, except per share amounts) 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- Net Sales $16,701 $15,065 $13,767 $11,984 $11,413 ------- ------- ------- ------- ------- Expenses: Cost of products sold 4,464 3,965 3,637 3,122 3,029 Marketing, selling and administrative 4,173 3,925 3,670 3,166 3,098 Advertising and product promotion 2,241 1,946 1,646 1,367 1,255 Research and development 1,385 1,276 1,199 1,108 1,128 Other(*) (44) (60) 1,213 666 332 ------- ------- ------- ------- ------- 12,219 11,052 11,365 9,429 8,842 ------- ------- ------- ------- ------- Earnings Before Income Taxes(*) 4,482 4,013 2,402 2,555 2,571 Provision for income taxes 1,277 1,163 590 713 612 ------- ------- ------- ------- ------- Net Earnings(*) $ 3,205 $ 2,850 $ 1,812 $ 1,842 $ 1,959 ======= ======= ======= ======= ======= Dividends paid on common and preferred stock $ 1,515 $ 1,507 $ 1,495 $ 1,485 $ 1,485 Earnings per common share - Basic(*) 3.22 2.84 1.79 1.81 1.90 Earnings per common share - Diluted(*) 3.14 2.80 1.78 1.81 1.89 Dividends per common share 1.52 1.50 1.48 1.46 1.44 (*) Includes a gain on the sale of a business of $225 million before taxes, $140 million after taxes, in 1997. Includes a special charge for pending and future product liability claims of $950 million before taxes, $590 million after taxes, or $.58 per common share, basic and diluted in 1995; $750 million before taxes, $488 million after taxes, or $.48 per common share, basic and diluted in 1994; and $500 million before taxes, $310 million after taxes, or $.30 per common share, basic and diluted in 1993. Includes a provision for restructuring of $225 million before taxes, $140 million after taxes, in 1997 and $310 million before taxes, $198 million after taxes, in 1995. 21 Item 6. SELECTED FINANCIAL DATA. (Con't.) FIVE-YEAR FINANCIAL SUMMARY FINANCIAL POSITION AT DECEMBER 31 - --------------------------------- (in millions) except per share amounts) 1997 1996 1995 1994 1993 ------- ------- ------- ------ ------ Current assets $ 7,736 $ 7,528 $ 7,018 $ 6,710 $ 6,570 Property, plant and equipment 4,156 3,964 3,760 3,666 3,374 Total assets 14,977 14,685 13,929 12,910 12,101 Current liabilities 5,032 5,050 4,806 4,274 3,065 Long-term debt 1,279 966 635 644 588 Total liabilities 7,758 8,115 8,107 7,206 6,161 Stockholders' equity $ 7,219 $ 6,570 $ 5,822 $ 5,704 $ 5,940 Average common shares outstanding - Basic 996 1,004 1,012 1,017 1,030 Average common shares outstanding - Diluted 1,021 1,018 1,016 1,020 1,038 Reference is made to Note 2 Acquisitions and Divestitures, Note 8 Property, Plant and Equipment and Note 16 Contingencies, appearing in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report. 22 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Summary In 1997, Bristol-Myers Squibb achieved record levels of sales, earnings and earnings per share. Worldwide sales grew to $16.7 billion, an 11% increase over 1996. Domestic sales, which represent 58% of worldwide sales, increased 14% to $9.6 billion, while international sales increased 7% to $7.1 billion. Exchange rate fluctuations had an unfavorable effect of 3% on worldwide sales and 8% on international sales. Sales growth resulted from a 14% increase due to volume with no changes overall from pricing activity. In 1997, significant contributions to the Company's sales growth were made by the Company's most important products, many of which experienced double- and even triple-digit sales growth on a worldwide basis. Earnings before income taxes increased 12% to $4,482 million in 1997, net earnings increased 12% to $3,205 million, basic earnings per share increased 13% to $3.22 and diluted earnings per share increased 12% to $3.14. Net earnings and basic earnings per share have increased at compound annual growth rates of 12% and 13%, respectively, over the past 10 years. Bristol-Myers Squibb's financial position remains strong. At December 31, 1997, the Company held $1.8 billion in cash, time deposits and marketable securities. Cash provided by operating activities totaled $2.5 billion and continued to be the primary source of funding to finance dividend distributions of $1.5 billion and treasury stock repurchases of $1.2 billion. Dividends per common share were $1.52 in 1997, increasing from $1.50 per share paid in 1996. The Company's payout ratio, calculated as dividends per common share over basic earnings per common share, were 47.2%, 52.8% and 57.6%, in 1997, 1996 and 1995, respectively, excluding the 1995 special charge and provision for restructuring. In December 1997, the Company announced another dividend increase, the twenty-sixth consecutive year that dividends have increased. The 1998 indicated annual payment is $1.56 per share. Bristol-Myers Squibb's strong financial position is evidenced further by its triple-A credit rating from both Moody's and Standard & Poor's, making Bristol-Myers Squibb one of only seven U.S. companies with this distinction. In 1997, Bristol-Myers Squibb established its long-term strategic objective to be the number one company in earnings per share growth within its competitive universe. To achieve this objective, the Company is making strategic investments behind a number of high priority projects. The Company's top priority project is to become the most productive, respected and innovative pharmaceutical research and development organization in the world. Other high priority projects focus on high growth products in fast growing markets, including PRAVACHOL*, TAXOL*(R) (paclitaxel), GLUCOPHAGE and HERBAL ESSENCES*, as well as enhancing the balanced strength of its core businesses. During 1997, increases were made in advertising and promotion expenditures, sales force personnel and research and development facilities and personnel to help ensure the success of these high priority projects. Total equity market capitalization was $94 billion as of December 31, 1997, a 72.3% increase over last year. Total return to stockholders, share price appreciation together with reinvested dividends, was 77.0% for 1997, which compares favorably to the 33.4% return of the Standard & Poor's 500 Index. 23 Employment levels at December 1997 increased to 53,600 from 51,200 at December 1996, with increases in the pharmaceutical sales force and increases due to acquisitions. During the year, the Company made a number of strategic acquisitions. In January 1998, the Company completed the acquisition of Redmond Products, Inc., a leading hair care manufacturer in the United States which markets well-known products including AUSSIE Mega Shampoo, AUSSIE 3 Minute Miracle Conditioner and AUSSIE Sprunch Spray, among others. In Latin America, the Company acquired Abeefe S.A., Peru's largest pharmaceutical manufacturer and marketer of a broad range of prescription and nonprescription anti-infective, respiratory, anti-inflammatory and dermatological products; CHOCO MILK*, Mexico's leading milk-based nutritional supplement; and SAL DE UVAS PICOT*, a leading effervescent antacid product. Net Sales and Earnings Worldwide sales increased 11% in 1997 to $16.7 billion, compared with increases of 9% and 15% in 1996 and 1995, respectively. The consolidated sales growth resulted from a 14% increase due to volume, a 3% decrease due to unfavorable foreign exchange rate fluctuations and no changes overall from pricing activity. In 1996, the 9% increase in sales reflected an 11% increase due to volume, a 2% decrease due to unfavorable foreign exchange rate fluctuations and no changes overall from pricing activity. In 1995, the 15% increase in sales reflected a 13% increase due to volume, while price increases and exchange rate fluctuations each contributed 1% to growth on a worldwide basis. Domestic sales increased 14% in 1997, and 10% in both 1996 and 1995, while international sales increased 7% in 1997, 9% in 1996 and 22% in 1995. In general, the businesses of the Company's industry segments are not seasonal. Net earnings and basic earnings per share in 1997 increased 12% to $3,205 million and 13% to $3.22 per share from $2,850 million and $2.84 per share in 1996. 1995 net earnings and basic earnings per share were $1,812 million and $1.79 per share ($2,600 million and $2.57 per share excluding the 1995 provision for restructuring and special charge). Diluted earnings per share in 1997, 1996 and 1995 were $3.14, $2.80 and $1.78, respectively. Net earnings margins increased to 19.2% in 1997 from 18.9% in both 1996 and 1995, excluding the 1995 charges. The effective income tax rate on earnings before income taxes was 28.5% in 1997 compared to 29.0% and 24.6% in 1996 and 1995, respectively. Excluding the 1995 special charge and provision for restructuring, the effective income tax rate on earnings before income taxes was 29.0% in 1995. The lower 1997 effective income tax rate compared to 1996 and 1995 resulted from increased income in lower tax rate jurisdictions. As described in the notes to the financial statements, in the fourth quarter of 1997, the Company divested Linvatec Corporation, its arthroscopy and surgical powered instrument business, for $370 million, resulting in a gain of $225 million before taxes, $140 million after taxes. At the same time, the Company recorded a provision for restructuring of $225 million before taxes, $140 million after taxes. The provision for restructuring primarily relates to the consolidation of plants and facilities and related employee termination costs. In the fourth quarter of 1995, the Company recorded a special charge to earnings of $950 million before taxes, $590 million after taxes, or $.58 per common share, basic and diluted (see Note 16 - Contingencies), as well as a provision for restructuring of $310 million before taxes, $198 million after taxes. 24 Expenses Total costs and expenses as a percentage of sales were 73.2% in 1997 compared with 73.4% in both 1996 and 1995, excluding the 1995 special charge and provision for restructuring. As a percentage of sales, cost of products sold increased to 26.7% in 1997 from 26.3% in 1996, principally due to incremental low margin Oncology Therapeutic Network sales, partially offset by increased sales of higher margin promoted pharmaceutical products. In 1996, cost of products sold as a percentage of sales remained relatively unchanged at 26.3% compared to 26.4% in 1995. Excluding 1996 acquisitions, cost of products sold as a percentage of sales decreased to 25.5% in 1996 due to a favorable product mix and manufacturing efficiencies. Advertising and promotion expenses in support of new and existing products increased 15% to $2,241 million in 1997 from $1,946 million in 1996, and as a percentage of sales, increased to 13.5% from 12.9%, principally due to increased spending on direct-to-consumer campaigns for several pharmaceutical products as well as incremental advertising support of beauty care products. In 1996, advertising and promotion expenses increased 18% from 1995 levels primarily due to incremental spending in the Pharmaceuticals and Beauty Care Segments, supporting direct-to-consumer campaigns and new product launches, respectively. Marketing, selling and administrative expenses increased 6% to $4,173 million in 1997 from $3,925 million in 1996, and as a percentage of sales, decreased to 25.0% in 1997 from 26.1% in 1996 and 26.7% in 1995 as a direct result of the Company's productivity programs and higher sales volumes. The Company's investment in research and development totaled $1,385 million in 1997, an increase of 9% over 1996, and as a percentage of sales, decreased to 8.3% in 1997 from 8.5% in 1996. This spending level reflects the Company's commitment to research over a broad range of therapeutic areas and clinical development in support of new products. The Company acquired a new research facility in Hopewell, N.J., and announced its intention to hire 2,000 additional scientists over the next several years. Over the past 10 years, research and development expenses have increased at a compound annual growth rate of 10%. In 1997, research and development spending dedicated to the research and development of pharmaceutical products was 12.0% of pharmaceutical sales compared to 12.3% and 12.9% in 1996 and 1995, respectively. During 1997, 1996 and 1995, the Company entered into a number of research alliances, licensing agreements and biotechnology collaborations. These agreements are providing important new products as well as early-stage compounds for further development and new processes that will help the Company screen for new drugs more effectively. Business Segments All five of the Company's business segments - Pharmaceuticals, Consumer Medicines, Nutritionals, Medical Devices and Beauty Care - reported sales increases, excluding foreign exchange, during the year. By the end of 1997, Bristol-Myers Squibb had 63 products with more than $50 million in annual sales, 33 of which had more than $100 million in annual sales. 25 Sales in the Pharmaceuticals Segment, which is the Company's largest segment at 59% of total Company, increased 15% to $9,932 million in 1997. Sales growth resulted from a 17% increase in volume and a 1% increase in selling prices, offset by a 3% decrease due to the unfavorable effect of foreign exchange rate fluctuations. Domestic sales increased 23% and international sales increased 13%, excluding foreign exchange, primarily due to volume growth. Sales of PRAVACHOL*, a cholesterol-lowering agent, and the Company's largest selling product, were $1.4 billion, an increase of 34%. Domestic sales increased 39% to $875 million. Results of the Long-term Intervention with Pravastatin in Ischaemic Disease (LIPID) trial showed PRAVACHOL* treatment reduced consequences of coronary heart disease, including heart attack, stroke and death, by 20% to 30%. Sales of MONOPRIL*, a second generation angiotensin converting enzyme (ACE) inhibitor with once-a-day dosing, increased 28% to $328 million, with strong growth in both domestic and international markets. The Company and Sanofi S.A. received U.S. marketing clearance from the U.S. Food and Drug Administration (FDA) for irbesartan and clopidogrel. Irbesartan, sold as AVAPRO in the United States, is an angiotensin II receptor blocker for the treatment of hypertension, and clopidogrel, to be sold as PLAVIX in the United States, is a platelet inhibitor for the reduction of stroke and heart attack in patients with atherosclerosis. AVAPRO was launched in the United States during the fourth quarter, and PLAVIX is planned to launch in early 1998. Sales of cardiovascular drugs, the largest product group in the segment, increased 3% to $2,905 million. Due to the loss of patent exclusivity in several European countries in the first quarter of 1997, and in the United States in February 1996, sales of captopril, an ACE inhibitor sold primarily under the trademark CAPOTEN*, declined $296 million to $795 million. Excluding CAPOTEN* sales, cardiovascular drugs increased 22%. Sales of anti-cancer drugs increased 23% to $2,420 million. Sales of TAXOL*, the Company's leading anti-cancer agent, increased 16% to $941 million. In June and September 1997, the Company was granted use patents in the United States covering specific dosage regimes for TAXOL*, and in August 1997, the FDA cleared TAXOL* for use in second-line treatment of AIDS-related Kaposi's sarcoma. Sales of PARAPLATIN*, which is used in combination therapy for the treatment of ovarian cancer, increased 17%. Sales in the Oncology Therapeutics Network (OTN), a specialty distributor of anti-cancer medicines and related products, acquired in October 1996, were $480 million. Anti-infective drug sales were $2,235 million, an increase of 20% over the prior year. Strong growth was recorded for ZERIT* and VIDEX*, the Company's two antiretroviral agents. Sales of ZERIT*, the Company's fastest growing product, increased by $258 million, or 185% to $398 million, while sales of VIDEX* grew 35% to $152 million. In December 1997, ZERIT* became the most commonly prescribed thymidine nucleoside reverse transcriptase inhibitor in HIV therapy in the United States, surpassing AZT. In August 1997, ZERIT* received approval from the European Union for use in combination therapy for first-line treatment of HIV, and in January 1997, a new oral solution of ZERIT*, representing a significant addition to the limited therapeutic options available to treat HIV-infected infants and children, was introduced. Sales of CEFZIL*, an oral cephalosporin used in the treatment of respiratory infections, and MAXIPIME*, a fourth generation injectable cephalosporin, also contributed to the growth of anti-infectives. 26 Sales of central nervous system drugs increased 26% to $955 million, due to the strong growth of BUSPAR*, the Company's novel anti-anxiety agent, and SERZONE*, an antidepressant that offers a low incidence of side effects. Sales of BUSPAR* increased 20% to $443 million, while sales of SERZONE* increased 70% to $185 million. In May 1997, studies presented at an American Psychiatric Association meeting demonstrated that SERZONE* increased sleep efficiency in people suffering from depression. GLUCOPHAGE, an oral medication for type 2 (non-insulin-dependent) diabetes continued to experience strong growth, with sales increasing 74% to $579 million. The Company has sponsored a public awareness program that offers information to physicians and their patients on the proper management of type 2 diabetes, a serious undertreated medical condition that afflicts more than 15 million Americans. GLUCOPHAGE is the leading branded product in the United States for this disease. In 1996, Pharmaceuticals Segment sales increased 12% over 1995 levels. Increases in sales of PRAVACHOL*, TAXOL*, PARAPLATIN*, ZERIT*, MONOPRIL*, BUSPAR*, CEFZIL*, GLUCOPHAGE, SERZONE* and VIDEX* were partially offset by decreases in sales of CAPOTEN*, due to the loss of patent exclusivity, DURICEF*, QUESTRAN*, VEPESID* and ISOVUE*. The margin on earnings before taxes decreased to 29.7% in 1997 from 30.4% in 1996 primarily due to increased investment in advertising and promotion expenses in support of high priority products, and lower margin sales for OTN. In 1996, the margin on earnings before taxes increased to 30.4% from 29.6% in 1995 due to a decrease, as a percentage of sales, in research and development spending. Sales in the Consumer Medicines Segment increased 6% to $1,351 million, reflecting a 13% increase due to volume, a 6% decrease due to the unfavorable effect of foreign exchange rate fluctuations and a 1% decrease in selling prices. International sales increased 6% (17% excluding the unfavorable effect of foreign exchange), while domestic sales increased 5%. Sales of analgesic products increased 3% (9% excluding the effect of foreign exchange), due to volume growth from EFFERALGAN* and ASPIRINE UPSA* from the UPSA Group, as well as domestic growth of EXCEDRIN*. In January 1998, the Company received clearance from the FDA to market EXCEDRIN* Migraine, the first and only medication for migraine headache pain available to consumers without a prescription. The SEA BREEZE* and KERI* lines of skin care products also performed well, with strong growth in the Japanese marketplace. VAGISTAT-1*, the first and only one-dose over-the-counter medication for vaginal yeast infections, was introduced in April 1997. In 1996, worldwide sales of Consumer Medicines increased 5% from 1995 levels, (an increase of 11%, excluding foreign exchange), primarily due to increased sales of EXCEDRIN*, BUFFERIN* and analgesics from the UPSA Group including EFFERALGAN*, DAFALGAN* and ASPIRINE UPSA*. The margin on earnings before taxes improved to 9.3% in 1997, from 7.7% in 1996 and 5.8% in 1995, as a result of efficiency gains due to productivity programs. Sales in the Nutritionals Segment increased 7% to $1,911 million, reflecting a 10% increase due to volume, a 2% decrease due to the unfavorable effect of foreign exchange rate fluctuations and a 1% decrease in selling prices. International sales increased 15% (21% excluding the unfavorable effect of foreign exchange), while domestic sales increased 1%. Mead Johnson continues 27 to increase its worldwide and U.S. leadership position in the infant formula market. Total infant formula sales increased due to growth of NUTRAMIGEN*, LACTOFREE* and PROSOBEE* special infant formulas. Sales of ENFAMIL*, the Company's largest selling infant formula, decreased 3% to $674 million worldwide, while increasing 9% internationally to $167 million, excluding foreign exchange. BOOST* and SUSTACAL* adult nutritional beverages, and ALACTA NF*, a nutritious beverage for preschool-age children sold outside the U.S., also contributed to sales growth. In 1996, worldwide sales of Nutritionals increased 13% from 1995 levels, primarily due to increased sales of infant formulas, including ENFAMIL*, and adult consumer nutritionals. The margin on earnings before taxes improved to 21.1% in 1997, from 20.7% in 1996 and 19.9% in 1995, primarily due to higher sales volumes, improved manufacturing efficiencies and gains due to productivity programs. In the Medical Devices Segment, sales of $1,802 million reflected a 3% decrease from prior year levels. Volume gains of 2% were achieved, while sales were impacted by a 1% decrease due to changes in selling prices and a 4% decrease due to the effect of foreign exchange. International sales remained constant (excluding the effect of foreign exchange, sales increased 8%), while domestic sales decreased 6%. The Company's ConvaTec division is the worldwide market share leader in ostomy and advanced wound care products. Sales of ostomy and wound care products increased 6% and 16%, respectively, excluding foreign exchange. The Company's Zimmer division continues to be the world market share leader in knee and hip replacements. Worldwide sales of knee prosthetic joint implants increased 2%, excluding the effect of foreign exchange, led by growth of the NEXGEN* Complete Knee Solution. Hip replacement sales decreased 4%, excluding the effect of foreign exchange. Zimmer is restructuring to focus on its core businesses of orthopaedic implants and fracture fixation devices. As discussed in the notes to the financial statements, the Company completed the sale of Linvatec Corporation, its arthroscopy and surgical powered instruments business, in December 1997. Also, as part of its restructuring, Zimmer announced a 10% reduction in its domestic work force, as well as a restructuring of its European business. In 1996, worldwide sales of Medical Devices declined by $46 million and 2%, although excluding foreign exchange, remained at 1995 levels. In 1995, medical device sales increased 13% as a result of increased sales of knee implants, and ostomy and wound care products. Excluding the acquisition of Calgon Vestal Laboratories, and a divestiture in 1994, sales increased 7% in 1995. The margin on earnings before taxes in the Medical Devices Segment decreased to 20.0% in 1997, from 22.5% in 1996 and 22.8% in 1995, due to price decreases, lower sales volumes and incremental manufacturing costs in connection with recently introduced products. Sales in the Beauty Care Segment increased 16% in 1997 to $1,705 million, reflecting a 16% increase due to volume, a 1% increase due to pricing and a 1% decrease due to foreign exchange rate fluctuations. Excluding the effect of foreign exchange, international sales increased 28% over 1996, while domestic sales increased 12%. The Company's Clairol division is the number one hair products company in the United States and continues to maintain its market share leadership in U.S. haircolorings. Sales of the Company's hair care products were especially strong, increasing 36% in 1997, primarily due 28 to sales of the HERBAL ESSENCES* complete line of shampoos, conditioners, styling aids and body wash, which increased 168% to $351 million, aided by its launch into additional countries in 1997. Sales of INFUSIUM 23* hair care products also contributed to growth of hair care products. In September, Clairol launched DAILY DEFENSE*, a complete line of shampoos and conditioners designed to purify and fortify hair to protect it from environmental and styling stresses. Also in September, the Company's Matrix Essentials division launched VITAL NUTRIENTS*, an innovative hair care line that provides micro-nutrients, daily protection and internal moisture balance. Haircoloring product sales increased 4%, benefiting from the continued success of NICE N EASY*, NATURAL INSTINCTS*, salon haircolorings and HYDRIENCE*, which increased 86% following its launch into international markets. In 1996, sales in the Beauty Care Segment increased 13% from 1995 levels, primarily due to increased sales of haircoloring, hair and skin care products. The margin on earnings before taxes in 1997 was 17.1% compared to 17.0% in 1996, and increased from 15.3% in 1995 primarily due to higher volumes and productivity programs, offset by the cost of new product introductions and other spending programs. Geographic Areas Bristol-Myers Squibb products are available in virtually every country in the world; its largest markets are the United States, France, Japan, Germany and Canada. Sales in the U.S., net of inter-area sales, increased 14% in 1997. Sales in the Pharmaceuticals, Beauty Care and Nutritionals segments, comprised 59%, 12% and 11%, respectively, of the region's sales. Products with strong growth in the region included PRAVACHOL*, GLUCOPHAGE, ZERIT*, HERBAL ESSENCES*, TAXOL*, BUSPAR*, PARAPLATIN*, NUTRAMIGEN*, BOOST* and incremental sales from the OTN acquisition. The margin on earnings before taxes decreased to 24.5% in 1997 from 26.0% in 1996 primarily due to increases, as a percentage of sales, in cost of products sold and advertising and promotion expenses. In 1996, sales in the U.S. increased 10%, net of inter-area sales, primarily due to anti-cancer and anti-infective drugs from the Pharmaceuticals Segment, infant formulas from the Nutritionals Segment and haircoloring and hair care products from the Beauty Care Segment. Strong sales increases were achieved despite a 68% decline in sales of CAPOTEN*. The margin on earnings before taxes increased to 26.0% in 1996 from 25.6% in 1995. Sales in Europe, Mid-East and Africa, net of inter-area sales, increased 2% (12% excluding foreign exchange). Pharmaceuticals and Consumer Medicines, which comprised nearly 73% of sales in the region, increased 10% and 17%, respectively, excluding foreign exchange. Products with strong growth in the region included ZERIT*, PRAVACHOL*, TAXOL*, MAXIPIME*, EFFERALGAN*, PLUSSSZ*, a vitamin-enriched effervescent drink, and the introductions of HERBAL ESSENCES* and HYDRIENCE*. Increases in sales of these products were partially offset by decreases in sales of CAPOTEN* due to the loss of exclusivity in several European countries in early 1997. The margin on earnings before taxes increased to 23.8% in 1997 from 21.9% in 1996 primarily due to manufacturing efficiencies as a result of the Company's productivity programs. In 1996, sales in Europe, Mid-East and Africa, net of inter-area 29 sales, increased 8% (10% excluding foreign exchange), due to strong sales growth of products from the Pharmaceuticals Segment including anti-cancer and antiretroviral drugs, which were partially offset by decreases in sales of CAPOTEN* and penicillins and from the Medical Devices Segment, including ostomy and wound care products. In the Nutritionals Segment, sales of PLUSSSZ* and vitamins from the 1996 acquisition of Pharmavit, as well as analgesic products in the Consumer Medicines Segment, contributed to sales growth in the region. The margin on earnings before taxes decreased to 21.9% in 1996 from 22.7% in 1995. Sales in Other Western Hemisphere countries, net of inter-area sales, increased 25% in 1997 (26% excluding foreign exchange). Pharmaceuticals, which comprised nearly 66% of the region's sales, increased 22%. Products with strong growth included PRAVACHOL*, VIDEX*, ZERIT*, TAXOL*, introductory sales of HYDRIENCE* and HERBAL ESSENCES*, and sales from the acquisitions of CHOCO MILK* and SAL DE UVAS PICOT*. The margin on earnings before taxes increased to 14.2% in 1997 from 11.1% in 1996 reflecting improved gross margins due to manufacturing efficiencies. In 1996, sales in Other Western Hemisphere countries increased 19% (25% excluding foreign exchange), due to increased sales of cardiovascular, anti-cancer and anti-infective drugs from the Pharmaceuticals Segment, infant formulas from the Nutritionals Segment, and haircoloring and hair care products from the Beauty Care Segment. Sales of pharmaceutical products from the 1996 acquisition of Argentia S.A. also contributed to sales growth in the region. The margin on earnings before taxes decreased to 11.1% in 1996 from 12.2% in 1995. Sales in the Pacific region increased 5%, net of inter-area sales, (13% excluding foreign exchange) in 1997. Pharmaceuticals and Nutritionals comprised 38% and 30%, respectively, of the region's sales. Products with strong growth included PRAVACHOL*, SEA BREEZE*, ZERIT*, TAXOL*, KERI* products, ALACTA NF*, ENFAMIL* and the launch of HERBAL ESSENCES*. The margin on earnings before taxes decreased to 3.2% in 1997 from 4.4% in 1996 due to increases, as a percentage of sales, in cost of products sold and sales force expenses. In 1996, sales in the Pacific region, net of inter- area sales, increased 2% (12% excluding foreign exchange), as a result of increased sales from analgesics, infant formulas, school-age nutritional beverages, skin care, anti-infective and cardiovascular drugs. The margin on earnings before taxes decreased to 4.4% in 1996 from 5.8% in 1995, primarily as a result of increases, as a percentage of sales, in advertising and promotion expenditures in support of new and existing products. Financial Position Cash and cash equivalents, time deposits and marketable securities totaled $1.8 billion at December 31, 1997, compared to $2.2 billion at both December 31, 1996 and 1995. Working capital was $2.7 billion at December 31, 1997, compared to $2.5 billion and $2.2 billion at December 31, 1996 and 1995, respectively. Cash and cash equivalents, time deposits and marketable securities, and the conversion of other working capital items are expected to fund near-term operations of the Company. In August 1997, the Company issued $300 million principal amount of 6.875% Debentures due August 1, 2097, and in November 1996, the Company issued $350 million principal amount of 6.80% Debentures due November 15, 2026. Proceeds from the sale of these securities have been used for general corporate purposes, including working capital, capital expenditures, stock repurchase programs, repayment or refinancing of borrowings, and acquisitions. 30 The Company is exposed to market risk, including changes in currency exchange rates and interest rates. To reduce financial risks, the Company enters into certain derivative financial instruments where available on a cost effective basis to hedge its underlying economic exposure. These instruments are also managed on a consolidated basis to efficiently net exposures and thus take advantage of any natural offsets. It is the Company's policy to hedge underlying economic exposures to reduce foreign exchange and interest rate risk. Derivative financial instruments are not used for trading purposes. Gains and losses on hedging transactions are offset by gains and losses on the underlying exposures being hedged. Foreign exchange option contracts and, to a lesser extent, forward contracts, are used to hedge anticipated transactions. The Company's primary foreign currency exposures in relation to the U.S. dollar are the French franc, Deutsche mark, Spanish peseta and Japanese yen. The table below summarizes the Company's outstanding foreign exchange option contracts as of December 31, 1997. The fair value of option contracts, which will change over time, is estimated based on forward currency rates and other relevant market factors. The fair value of option contracts should be viewed in relation to the fair value of the underlying hedged transactions and the overall reduction in exposure to adverse fluctuations in foreign currency exchange rates. Dollars in Millions Weighted Average Notional Carrying Fair Strike Price Amount Value Value Maturity ------------ -------- -------- ----- -------- Option Contracts Purchased Right to Sell: French franc FF 5.89 $461 $6 $19 1998 Deutsche mark DM 1.77 286 6 11 1998 Spanish peseta Pts 147.07 113 2 6 1998 Other Currencies Various 175 3 12 1998 Right to Buy: Japanese yen Y 127.60 103 2 3 1998 Japanese yen for Deutsche marks DM 73.77 113 2 3 1998 Other Currencies Various 28 1 1 1998 ------ --- --- $1,279 $22 $55 ====== === === The Company maintains cash and cash equivalents, time deposits and marketable securities with various financial institutions. These financial institutions are located primarily in the U.S., Puerto Rico and Ireland, and Company policy is designed to limit exposure to any one financial institution. Cash and cash equivalents, time deposits and marketable securities at December 31, 1997 were denominated primarily in U.S. dollar instruments with near-term maturities. The average interest yield on cash and cash equivalents was 5.6% at December 31, 1997 while interest yields on time deposits and marketable securities averaged 5.1% at December 31, 1997. 31 Short-term borrowings and long-term debt at December 31, 1997 are denominated primarily in U.S. dollars but also include French franc short-term borrowings due to banks of $191 million and Japanese yen long-term debt of $171 million. Disclosures related to short-term borrowings and long-term debt are included in the notes to the financial statements. Internally generated cash provided by operations was $2.5 billion in 1997, $2.6 billion in 1996 and $2.5 billion in 1995. Cash provided by operations continued to be the Company's primary source of funds to finance operating needs and expenditures for new plants and equipment. As part of the Company's ongoing commitment to improve plant efficiency and maintain superior research facilities, the Company has invested nearly $1.9 billion in capital expansion over the past three years. Cash provided by operations was also used to pay dividends of over $4.5 billion over the past three years, to fund acquisitions at a cost of $920 million over the last three years, and to finance the share repurchase program. The Company's share repurchase program authorizes the purchase of common stock from time to time in the open market or through private transactions as market conditions permit. During 1997, the Company purchased 16.8 million shares of common stock at a cost of $1,162 million, bringing the total shares acquired since the program's inception to 123 million. During the past three years, the Company has repurchased 43 million shares at a cost of $2.3 billion. Return on Stockholder's Equity was 46.5% in 1997, 46.0% in 1996 and 45.1% in 1995, excluding the 1995 special charge and the provision for restructuring. The Company will adopt recently issued Statement of Financial Accounting Standards No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits, in 1998. This statement does not change the measurement or the recognition of pension and postretirement expenses. It eliminates certain current disclosures, and requires additional disclosures or changes on the benefit obligation and fair value of plan assets. Subsequent to year end, the Company entered into two revolving credit facility agreements totaling $500 million. They are available for use as needed for general corporate purposes. The Company has reviewed its information systems for YEAR 2000 compliance and has initiated plans to remedy any deficiencies in a timely manner. As a result of the review and action plan, the Company believes the cost of such remedial corrective actions are not material to the Company's financial position, results of operations or cash flows. 32 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF EARNINGS, COMPREHENSIVE INCOME and RETAINED EARNINGS (in millions, except per share amounts) Year Ended December 31, EARNINGS --------------------------- 1997 1996 1995 ------- ------- ------- Net Sales $16,701 $15,065 $13,767 ------- ------- ------- Expenses: Cost of products sold 4,464 3,965 3,637 Marketing, selling and administrative 4,173 3,925 3,670 Advertising and product promotion 2,241 1,946 1,646 Research and development 1,385 1,276 1,199 Provision for restructuring 225 - 310 Gain on sale of a business (225) - - Special charge - - 950 Other (44) (60) (47) ------- ------- ------- 12,219 11,052 11,365 ------- ------- ------- Earnings Before Income Taxes 4,482 4,013 2,402 Provision for income taxes 1,277 1,163 590 ------- ------- ------- Net Earnings $ 3,205 $ 2,850 $ 1,812 ======= ======= ======= Earnings Per Common Share: Basic $3.22 $2.84 $1.79 Diluted $3.14 $2.80 $1.78 Average Common Shares Outstanding: Basic 996 1,004 1,012 Diluted 1,021 1,018 1,016 COMPREHENSIVE INCOME - -------------------- Net Earnings $3,205 $2,850 $1,812 Other Comprehensive Income: Foreign currency translation (195) (38) (21) Tax effect 23 4 (5) ------ ------ ------ Total Other Comprehensive Income (172) (34) (26) ------ ------ ------ Comprehensive Income $3,033 $2,816 $1,786 ====== ====== ====== The accompanying notes are an integral part of these financial statements. 33 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF EARNINGS, COMPREHENSIVE INCOME and RETAINED EARNINGS (in millions, except per share amounts) Year Ended December 31, -------------------------- 1997 1996 1995 ------ ------ ------ RETAINED EARNINGS - ----------------- Retained Earnings, January 1 $ 9,260 $ 7,917 $7,600 Net earnings 3,205 2,850 1,812 ------- ------- ------ 12,465 10,767 9,412 Less dividends 1,515 1,507 1,495 ------- ------- ------ Retained Earnings, December 31 $10,950 $ 9,260 $7,917 ======= ======= ====== The accompanying notes are an integral part of these financial statements. 34 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED BALANCE SHEET ASSETS (dollars in millions) December 31, --------------------------- 1997 1996 1995 ------- ------- ------- ASSETS - ------ Current Assets: Cash and cash equivalents $ 1,456 $ 1,681 $ 1,645 Time deposits and marketable securities 338 504 533 Receivables, net of allowances 2,973 2,651 2,356 Inventories 1,799 1,669 1,451 Prepaid expenses 1,170 1,023 1,033 ------- ------- ------- Total Current Assets 7,736 7,528 7,018 Property, Plant and Equipment 4,156 3,964 3,760 Insurance Recoverable 619 853 959 Excess of cost over net tangible assets received in business acquisitions 1,625 1,508 1,219 Other Assets 841 832 973 ------- ------- ------- $14,977 $14,685 $13,929 ======= ======= ======= The accompanying notes are an integral part of these financial statements. 35 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (dollars in millions) December 31, --------------------------- 1997 1996 1995 ------- ------- ------- LIABILITIES - ----------- Current Liabilities: Short-term borrowings $ 543 $ 513 $ 575 Accounts payable 1,017 1,064 848 Accrued expenses 1,939 1,962 1,939 Product liability 865 800 700 U.S. and foreign income taxes payable 668 711 744 ------- ------- ------- Total Current Liabilities 5,032 5,050 4,806 Product Liability 171 1,031 1,645 Other Liabilities 1,276 1,068 1,021 Long-Term Debt 1,279 966 635 ------- ------- ------- Total Liabilities 7,758 8,115 8,107 ------- ------- ------- STOCKHOLDERS' EQUITY - -------------------- Preferred stock, $2 convertible series: Authorized 10 million shares; issued and outstanding 12,936 in 1997, 15,245 in 1996 and 19,023 in 1995, liquidation value of $50 per share - - - Common stock, par value of $.10 per share: Authorized 2.25 billion shares; issued 1,083,253,703 in 1997, 1,082,496,016 in 1996 and 540,185,639 in 1995 108 108 54 Capital in excess of par value of stock 544 382 375 Cumulative translation adjustments (533) (361) (327) Retained earnings 10,950 9,260 7,917 ------- ------- ------- 11,069 9,389 8,019 Less cost of treasury stock - 90,069,383 common shares in 1997, 81,806,550 in 1996 and 34,953,311 in 1995 3,850 2,819 2,197 ------- ------- ------- Total Stockholders' Equity 7,219 6,570 5,822 ------- ------- ------- $14,977 $14,685 $13,929 ======= ======= ======= The accompanying notes are an integral part of these financial statements. 36 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in millions) Year Ended December 31, -------------------------- 1997 1996 1995 ------ ------ ------ Cash Flows From Operating Activities: Net Earnings $3,205 $2,850 $1,812 Depreciation and amortization 591 519 448 Provision for restructuring 225 - 310 Gain on sale of a business (225) - - Special charge - - 950 Other operating items 33 (52) (34) Receivables (479) (262) (319) Inventories (288) (227) (50) Accounts payable 2 177 155 Accrued expenses (181) 42 166 Income taxes 318 250 (252) Product liability (795) (514) (441) Insurance recoverable 234 106 9 Other assets and liabilities (164) (248) (255) ------ ------ ------ Net Cash Provided by Operating Activities 2,476 2,641 2,499 ------ ------ ------ Cash Flows From Investing Activities: Proceeds from sales of time deposits and marketable securities 530 406 349 Purchases of time deposits and marketable securities (363) (379) (80) Additions to fixed assets (767) (601) (513) Proceeds from sales of businesses 370 213 - Business acquisitions (254) (316) (350) Other, net (48) (40) (37) ------ ------ ------ Net Cash Used in Investing Activities (532) (717) (631) ------ ------ ------ Cash Flows From Financing Activities: Short-term borrowings 81 (78) (181) Long-term debt 328 346 (10) Issuances of common stock under stock plans 117 206 71 Purchases of treasury stock (1,162) (852) (244) Dividends paid (1,515) (1,507) (1,495) ------ ------ ------ Net Cash Used in Financing Activities (2,151) (1,885) (1,859) ------ ------ ------ Effect of Exchange Rates on Cash (18) (3) (6) ------ ------ ------ (Decrease) Increase in Cash and Cash Equivalents (225) 36 3 Cash and Cash Equivalents at Beginning of Year 1,681 1,645 1,642 ------ ------ ------ Cash and Cash Equivalents at End of Year $1,456 $1,681 $1,645 ====== ====== ====== The accompanying notes are an integral part of these financial statements. 37 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 1 ACCOUNTING POLICIES - --------------------------- Basis of Consolidation - The consolidated financial statements include the accounts of Bristol-Myers Squibb Company and all of its subsidiaries. Cash and Cash Equivalents - Cash and cash equivalents primarily include securities with a maturity of three months or less at the time of purchase, recorded at cost, which approximates market. Time Deposits and Marketable Securities - Time deposits and marketable securities are available for sale and are recorded at fair value, which approximates cost. Inventory Valuation - Inventories are generally stated at average cost, not in excess of market. Capital Assets and Depreciation - Expenditures for additions, renewals and betterments are capitalized at cost. Depreciation is generally computed by the straight-line method based on the estimated useful lives of the related assets. Excess of Cost over Net Tangible Assets - The excess of cost over net tangible assets received in business acquisitions is being amortized on a straight-line basis over periods not exceeding 40 years. Earnings Per Share - Basic earnings per common share are computed using the weighted average number of shares outstanding during the year. Diluted earnings per common share are computed using the weighted average number of shares outstanding during the year, plus the incremental shares outstanding assuming the exercise of dilutive stock options. Note 2 ACQUISITIONS AND DIVESTITURES - ------------------------------------- In January 1998, the Company acquired Redmond Products, Inc., a leading hair care manufacturer in the United States. On December 31, 1997, the Company completed the sale of Linvatec Corporation, its arthroscopy and surgical powered instrument business, for $370 million in cash. The sale resulted in a gain of $225 million before taxes, $140 million after taxes. In November 1997, the Company acquired Abeefe S.A., Peru's largest pharmaceutical manufacturer and marketer of a broad range of prescription and nonprescription anti-infective, respiratory, anti- inflammatory and dermatological products. 38 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) In July 1997, the Company acquired CHOCO MILK*, Mexico's leading milk-based nutritional supplement. In March 1997, the Company acquired SAL DE UVAS PICOT*, a leading effervescent antacid product in Mexico. In 1996, the Company acquired Pharmavit Gyogyszer-es Elelmiszeripari Reszvenytarsasag, one of Hungary's leading manufacturers of over-the-counter medicines, nutritional products and generic pharmaceuticals. The Company also acquired Argentia S.A., one of Argentina's largest manufacturers and marketers of ethical pharmaceuticals and completed the acquisition of Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines and related products. In 1995, the Company acquired A/S GEA Farmaceutisk Fabrik, a leading manufacturer and marketer of branded generic pharmaceuticals for the Scandinavian market, and completed the acquisition of Calgon Vestal Laboratories, a wound and skin care and infection control products business. Note 3 RESTRUCTURING - --------------------- The Company recorded a $225 million restructuring charge, $140 million after taxes, in the fourth quarter of 1997. The restructuring charge primarily relates to the consolidation of plants and facilities, and related employee terminations. The restructuring charge consists of employee-related costs of $93 million, $74 million of asset write-downs and $58 million of other related expenses. The Company recorded a $310 million restructuring charge, $198 million after taxes, in the fourth quarter of 1995. The restructuring charge related to the consolidation of plants and facilities, and related employee terminations. The restructuring charge consisted of employee- related costs of $190 million, $100 million of asset write-downs and $20 million of other related expenses. Note 4 OTHER INCOME AND EXPENSES - --------------------------------- Year Ended December 31, ----------------------- 1997 1996 1995 ---- ---- ---- Interest income $106 $95 $139 Interest expense (118) (78) (97) Other - net 56 43 5 ---- ---- ---- $ 44 $ 60 $ 47 ==== ==== ==== 39 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Cash payments for interest were $110 million, $76 million and $93 million in 1997, 1996 and 1995, respectively. Note 5 FOREIGN CURRENCY TRANSLATION - ------------------------------------ Cumulative translation adjustments, which represent the effect of translating assets and liabilities of the Company's non-U.S. entities, except those in highly inflationary economies, were: 1997 1996 1995 ---- ---- ---- Balance, January 1 $361 $327 $301 Effect of balance sheet translations: Amount 195 38 21 Tax effect (23) (4) 5 ---- ---- ---- Balance, December 31 $533 $361 $327 ==== ==== ==== Note 6 PROVISION FOR INCOME TAXES - ---------------------------------- The components of earnings before income taxes were: Year Ended December 31, ----------------------- 1997 1996 1995 ------ ------ ------ U.S. $2,858 $2,332 $1,195 Non-U.S. 1,624 1,681 1,207 ------ ------ ------ $4,482 $4,013 $2,402 ====== ====== ====== The provision for income taxes consisted of: Year Ended December 31, ------------------------ 1997 1996 1995 ------ ------ ------ Current: U.S. $633 $462 $466 Non-U.S. 471 442 356 ------ ------ ------ 1,104 904 822 ------ ------ ------ 40 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Year Ended December 31, ----------------------- 1997 1996 1995 ------ ----- ----- Deferred: U.S. 220 232 (200) Non-U.S. (47) 27 (32) ------ ----- ----- 173 259 (232) ------ ----- ----- $1,277 $1,163 $590 ====== ====== ===== Income taxes paid during the year were $898 million, $861 million and $856 million in 1997, 1996 and 1995, respectively. The Company's provision for income taxes in 1997, 1996 and 1995 was different from the amount computed by applying the statutory United States Federal income tax rate to earnings before income taxes, as a result of the following: % of Earnings Before Income Taxes ---------------------- 1997 1996 1995 ------ ----- ----- U.S. statutory rate 35.0% 35.0% 35.0% Effect of operations in Puerto Rico and Ireland (5.5) (5.5) (9.7) State and local taxes .6 .6 .8 Other (1.6) (1.1) (1.5) ----- ----- ----- 28.5% 29.0% 24.6% ===== ===== ===== Prepaid taxes at December 31, 1997, 1996 and 1995 were $818 million, $757 million and $786 million, respectively. The deferred income tax liability, included in Other Liabilities, at December 31, 1997 and 1996 was $352 and $124 million, respectively. The deferred income tax asset, included in Other Assets, at December 31, 1995 was $130 million. The components of prepaid and deferred income taxes consisted of: 41 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) December 31, ---------------------- 1997 1996 1995 ---- ---- ---- Product liability $154 $383 $527 Postretirement and pension benefits 191 129 163 Restructuring 77 88 130 Depreciation (278) (245) (210) Other 322 278 306 ---- ---- ---- $466 $633 $916 ==== ==== ==== The Company has settled its United States Federal income tax returns with the Internal Revenue Service through 1991. United States Federal income taxes have not been provided on substantially all of the unremitted earnings of non-U.S. subsidiaries, since it is management's practice and intent to reinvest such earnings in the operations of these subsidiaries. The total amount of the net unremitted earnings of non-U.S. subsidiaries was approximately $2.6 billion at December 31, 1997. Note 7 INVENTORIES - ------------------- December 31, ------------------------ 1997 1996 1995 ------ ------ ------ Finished goods $1,153 $ 994 $ 892 Work in process 197 223 180 Raw and packaging materials 449 452 379 ------ ------ ------ $1,799 $1,669 $1,451 ====== ====== ====== Note 8 PROPERTY, PLANT AND EQUIPMENT - ------------------------------------- December 31, ------------------------- 1997 1996 1995 ------ ------ ------ Land $ 180 $ 160 $ 160 Buildings 2,631 2,427 2,296 Machinery, equipment and fixtures 3,646 3,626 3,403 Construction in progress 544 433 405 ------ ------ ------ 7,001 6,646 6,264 Less accumulated depreciation 2,845 2,682 2,504 ------ ------ ------ $4,156 $3,964 $3,760 ====== ====== ====== 42 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 9 SHORT-TERM BORROWINGS AND LONG-TERM DEBT - ------------------------------------------------ Short-term borrowings included amounts primarily due to foreign banks of $524 million, $440 million and $558 million at December 31, 1997, 1996 and 1995, respectively, and current installments of long-term debt of $19 million, $73 million and $17 million at December 31, 1997, 1996 and 1995, respectively. The average interest rate on short-term borrowings was 13.9% at December 31, 1997 and 7.6% on current installments of long-term debt. The Company has short-term lines of credit with domestic and foreign banks. At December 31, 1997, the unused portions of these lines of credit were approximately $200 million and $593 million, respectively. The components of long-term debt were: December 31, -------------------------- 1997 1996 1995 ------ ---- ---- 6.80% Debentures, due in 2026 $ 344 $344 - 7.15% Debentures, due in 2023 343 343 $343 6.875% Debentures, due in 2097 296 - - Various Rate Yen Term Loans, due in 2003 70 76 - 3.51% Deutsche Mark Interest on Yen Principal Term Loan, due in 2005 49 53 59 5.75% Industrial Revenue Bonds, due in 2024 34 34 34 5.00% Yen Term Loan, due in 2000 29 31 69 Various Rate Turkish Lira Term Loans, due in 1999 26 - - 2.83% Yen Term Loan, due in 2002 24 27 - Capitalized Leases 26 19 19 6.18% Yen Term Loan, paid in 1997 - - 64 Other, 4.30% to 10.25%,due in varying amounts through 2014 38 39 47 ------ ---- ---- $1,279 $966 $635 ====== ==== ==== Subsequent to year end, the Company entered into two revolving credit facility agreements totaling $500 million. They are available for use as needed for general corporate purposes. 43 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 10 STOCKHOLDERS' EQUITY - ----------------------------- Changes in capital shares and capital in excess of par value of stock were: Capital in Excess of Shares of Common Stock Par Value --------------------------- of Stock Issued Treasury (in millions) ------------- ---------- ---------- Balance, December 31, 1994 540,173,669 32,887,848 $397 Issued pursuant to stock plans, options and rights - (1,602,537) (22) Conversions of preferred stock 11,970 - - Purchases - 3,668,000 - ------------- ---------- ---- Balance, December 31, 1995 540,185,639 34,953,311 375 Effect of two-for-one stock split 540,185,639 34,953,311 (54) Issued pursuant to stock plans, options and rights 221,032 (6,623,272) (25) Conversions of preferred stock 31,960 - - Purchases - 18,523,200 - Other 1,871,746 - 86 ------------- ---------- ---- Balance, December 31, 1996 1,082,496,016 81,806,550 382 Issued pursuant to stock plans and options 738,151 (8,514,867) 162 Conversions of preferred stock 19,536 - - Purchases - 16,777,700 - ------------- ---------- ---- Balance, December 31, 1997 1,083,253,703 90,069,383 $544 ============= ========== ==== Each share of the Company's preferred stock is convertible into 8.48 shares of common stock and is callable at the Company's option. The reductions in the number of issued shares of preferred stock in 1997, 1996 and 1995 were due to conversions into shares of common stock. Dividends per common share were $1.52 in 1997, $1.50 in 1996 and $1.48 in 1995. Stock Compensation Plans - ------------------------ Under the Company's stock option plans, officers, directors and key employees may be granted options to purchase the Company's common stock at no less than 100% of the market price on the date the option is granted. Options generally become exercisable in installments of 25% per year on each of the first through the fourth anniversaries of the grant date and have a maximum term of 10 years. Additionally, the plans provide 44 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) for the granting of stock appreciation rights whereby the grantee may surrender exercisable options and receive common stock and/or cash measured by the excess of the market price of the common stock over the option exercise price. The plans also provide for the granting of performance-based stock options to certain key executives. Under the terms of the 1983 Stock Option Plan, as amended, additional shares are authorized in the amount of 0.9% of the outstanding shares per year through 2003 and incorporates the Company's long-term performance award plan. Under the TeamShare Stock Option Plan, all full-time employees, excluding key executives, meeting certain years of service requirements are granted options to purchase the Company's common stock at the market price on the date the options are granted. The Company has authorized 30,000,000 shares for issuance under the plan. As of December 31, 1997, a total of 21,984,200 options were granted under the plan with generally 400 options granted to each eligible employee. Individual grants generally become exercisable on or after the third anniversary of the grant date. The Company's restricted stock award plan provides for the granting of up to 6,000,000 shares of common stock to key employees, subject to restrictions as to continuous employment except in the case of death or normal retirement. Restrictions generally expire over a five-year period from date of grant. Compensation expense is recognized over the restricted period. At December 31, 1997, a total of 1,253,352 shares were outstanding under the plan. The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock-based compensation plans other than for restricted stock and performance-based awards. Had compensation cost for the Company's other stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, the Company's net income and basic earnings per share would have been reduced by approximately $85 million, or $.09 per common share - basic and $.08 per common share - diluted, in 1997, $55 million, or $.05 per common share, basic and diluted in 1996 and $35 million, or $.03 per common share, basic and diluted in 1995. The fair value of the options granted during 1997, 1996 and 1995 was estimated as $12.82 per common share, $8.51 per share and $6.47 per share, respectively, on the date of grant using the Black-Scholes option- pricing model with the following assumptions: 45 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) 1997 1996 1995 ----- ----- ----- Dividend yield 4.3% 4.3% 4.2% Volatility 19.3% 17.0% 18.2% Risk-free interest rate 6.5% 6.5% 6.9% Assumed forfeiture rate 3.0% 3.0% 3.0% Expected life (years) 7 7 7 Stock option transactions were: Weighted Average of Shares of Common Stock Exercise -------------------------- Price Available Under of Shares for Option Plan Under Plan ----------- ----------- ---------- Balance, December 31, 1994 4,567,924 21,946,987 $56.99 Authorized 19,565,572 - - Granted (13,449,952) 13,449,952 61.79 Exercised - (2,012,827) 40.96 Lapsed 1,129,560 (1,129,574) 61.92 ----------- ----------- Balance, December 31, 1995 11,813,104 32,254,538 59.76 ----------- ----------- Effect of two-for-one stock split 11,813,104 32,254,538 - Authorized 9,094,182 - - Granted (16,179,560) 16,179,560 46.92 Exercised - (8,863,078) 27.62 Lapsed 1,788,528 (1,796,826) 33.00 ----------- ----------- Balance, December 31, 1996 18,329,358 70,028,732 34.27 ----------- ----------- Authorized 9,006,205 - - Granted (11,347,801) 11,347,801 65.77 Exercised - (12,787,811) 30.34 Lapsed 2,284,788 (2,287,820) 45.63 ----------- ----------- Balance, December 31, 1997 18,272,550 66,300,902 $40.08 =========== =========== The following table summarizes information concerning currently outstanding and exercisable options: 46 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Options Outstanding Options Exercisable ----------------------------------- -------------------- Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price - ------------ ----------- ----------- -------- ----------- --------- $ 0 - $ 20 325,808 0.94 $14.07 325,808 $14.07 $20 - $ 40 40,931,295 6.02 30.88 22,779,341 31.10 $40 - $ 60 16,621,274 8.45 48.74 3,007,105 43.68 $60 - $ 80 7,620,950 9.18 67.36 - - $80 - $100 801,575 9.55 82.10 - - ---------- ---------- 66,300,902 26,112,254 ========== ========== At December 31, 1997, 104,710,291 shares of common stock were reserved for issuance pursuant to stock plans, options and conversions of preferred stock. Note 11 FINANCIAL INSTRUMENTS - ------------------------------ Foreign exchange option contracts and, to a lesser extent, forward contracts, are used to hedge anticipated transactions. The Company has exposures to net foreign currency denominated assets and liabilities, which approximated $2,070 million, $1,640 million and $1,385 million at December 31, 1997, 1996 and 1995, respectively, primarily in Deutsche marks, French francs, Italian lire and Japanese yen. The Company mitigates the effect of these exposures through third-party borrowings and foreign exchange forward contracts. The risk of loss associated with the types of foreign exchange option contracts entered into by the Company is limited to premium amounts paid for the option contracts. Premiums are deferred in Prepaid expenses and amortized in the consolidated statement of earnings (in the Other caption) over the time frame of the underlying hedged transaction. Gains and losses related to the option contracts, which qualify as hedges of foreign currency anticipated transactions, are recognized in earnings when the hedged transactions are recognized. Gains and losses on foreign exchange forward contracts are recognized in the basis of the underlying transaction being hedged. The notional amounts of the Company's foreign exchange option contracts at December 31, 1997, 1996 and 1995 were $1,279 million, $1,172 million and $1,126 million, respectively. 47 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The Company does not anticipate any material adverse effect on its financial position resulting from its involvement in these instruments, nor does it anticipate non-performance by any of its counterparties. At December 31, 1997, 1996 and 1995, the carrying value of all financial instruments, both short- and long-term, approximated their fair values. Note 12 LEASES - --------------- Minimum rental commitments under all noncancelable operating leases, primarily real estate, in effect at December 31, 1997 were: Years Ending December 31, - ------------------------- 1998 $116 1999 88 2000 71 2001 59 2002 45 Later years 159 ---- Total minimum payments 538 Less total minimum sublease rentals 152 ---- Net minimum rental commitments $386 ==== Operating lease rental expense (net of sublease rental income of $26 million in 1997, $27 million in 1996 and $25 million in 1995) was $124 million in 1997, $129 million in 1996 and $135 million in 1995. Note 13 SEGMENT INFORMATION - ---------------------------- The major product categories for each business segment are as follows: Year Ended December 31, ------------------------ 1997 1996 1995 ------ ------ ------ Pharmaceuticals Cardiovascular $2,905 $2,816 $2,911 Anti-cancer 2,420 1,971 1,600 Anti-infective 2,235 1,856 1,701 Central nervous system 955 760 601 Consumer Medicines 48 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Analgesics 739 718 669 Nutritionals Infant formulas 1,219 1,201 1,086 Medical Devices Orthopaedic implants 615 644 657 Ostomy 451 452 472 Beauty Care Haircolor 841 812 714 Hair care 794 586 487 Inter-area sales, which are usually billed at or above manufacturing costs, by geographic area, were: Year Ended December 31, ------------------------- 1997 1996 1995 ------ ------ ------ United States $1,370 $1,210 $ 977 Europe, Mid-East and Africa 762 692 542 Other Western Hemisphere 32 59 49 Pacific 24 25 21 ------ ------ ------ Total inter-area eliminations $2,188 $1,986 $1,589 ====== ====== ====== Included in earnings before taxes of each segment is a cost of capital charge. The offset to the cost of capital share is included in Other. In addition, Other principally consists of interest income, interest expense and certain administrative expenses, and in 1996, the cost of certain of the Company's productivity programs. In 1997, Other includes the gain on sale of a business of $225 million and the provision for restructuring of $225 million. In 1995, Other includes the provision for restructuring of $310 million and the special charge of $950 million for pending and future product liability claims. Other assets principally consist of cash and cash equivalents, time deposits and marketable securities and certain other assets. BUSINESS SEGMENTS Net Sales Earnings Before Taxes - ----------------- ----------------------- ---------------------- 1997 1996 1995 1997 1996 1995 ------- ------- ------- ------ ------ ------ Pharmaceuticals $ 9,932 $ 8,666 $ 7,745 $2,945 $2,634 $2,290 Consumer Medicines 1,351 1,279 1,220 125 99 71 Nutritionals 1,911 1,793 1,592 403 371 317 Medical Devices 1,802 1,860 1,906 361 419 435 Beauty Care 1,705 1,467 1,304 292 250 200 ------- ------- ------- ------ ------ ------ Net sales and earnings before taxes $16,701 $15,065 $13,767 $4,126 $3,773 $3,313 ======= ======= ======= ====== ====== ====== 49 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) GEOGRAPHIC AREAS Net Sales Earnings Before Taxes - ---------------- ------------------------ ------------------------ 1997 1996 1995 1997 1996 1995 ------- ------- ------- ------ ------ ------ United States $11,014 $ 9,661 $ 8,662 $2,700 $2,512 $2,220 Europe, Mid-East and Africa 4,653 4,520 4,074 1,109 988 925 Other Western Hemisphere 1,586 1,307 1,097 225 145 134 Pacific 1,636 1,563 1,523 52 69 89 Inter-area eliminations (2,188) (1,986) (1,589) 40 59 (55) ------- ------ ------ ------ ----- ----- Net sales and earnings before taxes $16,701 $15,065 $13,767 4,126 3,773 3,313 ======= ======= ======= Other 356 240 (911) ------ ------ ------ Earnings before taxes $4,482 $4,013 $2,402 ====== ====== ====== BUSINESS SEGMENTS Year-End Assets - ----------------- -------------------------- 1997 1996 1995 ------- ------- ------- Pharmaceuticals $ 6,705 $ 6,098 $5,221 Consumer Medicines 1,573 1,450 1,474 Nutritionals 1,021 910 797 Medical Devices 1,225 1,376 1,407 Beauty Care 743 652 537 ------- ------- ------ Identifiable segment assets $11,267 $10,486 $9,436 ======= ======= ====== GEOGRAPHIC AREAS Year-End Assets - ---------------- ------------------------- 1997 1996 1995 ------- ------- ------- United States $ 6,545 $ 5,925 $ 5,239 Europe, Mid-East and Africa 3,430 3,376 3,230 Other Western Hemisphere 1,063 741 462 Pacific 989 1,023 1,030 Inter-area eliminations (760) (579) (525) ------- ------- ------- Identifiable geographic assets 11,267 10,486 9,436 Other assets 3,710 4,199 4,493 ------- ------- ------- Total assets $14,977 $14,685 $13,929 ======= ======= ======= 50 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Capital BUSINESS SEGMENTS Expenditures Depreciation - ----------------- ------------------ ---------------- 1997 1996 1995 1997 1996 1995 ---- ---- ---- ---- ---- ---- Pharmaceuticals $525 $402 $333 $241 $232 $225 Consumer Medicines 48 32 17 24 20 19 Nutritionals 55 43 60 43 45 30 Medical Devices 24 36 47 46 43 42 Beauty Care 53 67 33 20 26 26 ---- ---- ---- ---- ---- ---- Business segment total 705 580 490 374 366 342 Other 62 21 23 23 21 23 ---- ---- ---- ---- ---- ---- Total $767 $601 $513 $397 $387 $365 ==== ==== ==== ==== ==== ==== Note 14 RETIREMENT BENEFIT PLANS - --------------------------------- The Company and certain of its subsidiaries have defined benefit pension plans for regular full-time employees. The principal pension plan is the Bristol-Myers Squibb Retirement Income Plan. The Company's funding policy is to contribute amounts to provide for current service and to fund past service liability. Plan benefits are primarily based on years of credited service and on participants' compensation. Plan assets principally consist of equity securities and fixed income securities. Cost for the Company's defined benefit plans included the following components: Year Ended December 31, ----------------------- 1997 1996 1995 ----- ----- ----- Service cost - benefits earned during the year $ 135 $ 127 $ 101 Interest cost on projected benefit obligation 203 191 183 Actual earnings on plan assets (504) (359) (406) Net amortization and deferral 283 171 213 ----- ----- ----- Net pension expense $ 117 $ 130 $ 91 ===== ===== ===== The weighted average actuarial assumptions for the Company's pension plans were as follows: December 31, ----------------------- 1997 1996 1995 ----- ----- ----- Discount rate 7.5% 7.8% 7.3% Compensation increase 4.5% 4.8% 4.5% Long-term rate of return 10.0% 10.0% 10.0% 51 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The funded status of the plans was as follows: December 31, --------------------------- 1997 1996 1995 ------- ------- ------- Actuarial present value of accumulated benefit obligation: Vested $(2,174) $(2,044) $(2,059) Non-vested (257) (252) (217) ------- ------- ------- $(2,431) $(2,296) $(2,276) ======= ======= ======= Total projected benefit obligation $(2,928) $(2,734) $(2,689) Plan assets at fair value 2,949 2,596 2,307 ------- ------- ------- Plan assets in excess of (less than) projected benefit obligation 21 (138) (382) Unamortized net assets at adoption (47) (62) (76) Unrecognized prior service cost 56 67 78 Unrecognized net losses 13 235 516 Adjustment required to recognize minimum pension liability recorded in Other Assets (22) (26) (48) ======= ======= ======= Prepaid pension expense $ 21 $ 76 $ 88 ======= ======= ======= Plan assets in excess of (less than) projected benefit obligation included $188 million, $184 million and $150 million in an unfunded benefit equalization plan at December 31, 1997, 1996 and 1995, respectively. Note 15 POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS - --------------------------------------------------------- The Company provides comprehensive medical and group life benefits to substantially all U.S. retirees who elect to participate in the Company's comprehensive medical and group life plans. The medical plan is contributory. Contributions are adjusted periodically and vary by date of retirement and the original retiring company. The life insurance plan is non-contributory. Cost for the Company's postretirement benefit plans included the following components: 52 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Year Ended December 31, -------------------- 1997 1996 1995 ----- ----- ----- Service cost - benefits earned during the year $ 9 $ 9 $ 8 Interest cost on accumulated postretirement benefit obligation 36 34 41 Actual earnings on plan assets (20) (13) (11) Net amortization and deferral 9 6 7 ---- ----- ---- Net postretirement benefit expense $ 34 $ 36 $ 45 ==== ==== ==== The status of the plans was as follows: December 31, ------------------- 1997 1996 1995 ----- ----- ----- Accumulated postretirement benefit obligation: Retirees $(338) $(347) $(403) Fully eligible active plan participants (19) (17) (17) Other active plan participants (171) (147) (159) ----- ----- ----- (528) (511) (579) Plan assets at fair value 113 89 74 ----- ----- ----- Accumulated postretirement benefit obligation in excess of plan assets (415) (422) (505) Unrecognized prior service cost 4 5 3 Unrecognized net (earnings) losses (65) (56) 38 ----- ----- ----- Accrued postretirement benefit expense $(476) $(473) $(464) ===== ===== ===== For measurement purposes, an annual rate of increase in the per capita cost of covered health care benefits of 7.8% for participants under age 65 and 7.0% for participants age 65 and over was assumed for 1998; the rate was assumed to decrease gradually to 5.0% in 2007 and to remain at that level thereafter. Increasing the assumed medical care cost trend rates by 1 percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1997 by $23 million and the aggregate of the service and interest cost components of net postretirement benefit expense for the year then ended by $2 million. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.5% in 1997, 7.8% in 1996 and 7.3% in 1995. Plan assets principally consist of equity securities and fixed income securities. The expected long-term rate of return on plan assets was 10.0% in 1997, 1996 and 1995. 53 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 16 CONTINGENCIES - ---------------------- Various lawsuits, claims and proceedings of a nature considered normal to its businesses are pending against the Company and certain of its subsidiaries. The most significant of these are described below. Reference is made to Item 3 Legal Proceedings in Part 1 of this Form 10-K Annual Report. Breast Implant Litigation - ------------------------- As of December 31, 1997, approximately 24,000 persons were plaintiffs in suits against the Company, its subsidiary, Medical Engineering Corporation (MEC), and certain other subsidiaries, in federal and state courts in the United States and in certain courts in Canada and Australia, alleging damages for personal injuries of various types resulting from polyurethane-covered breast implants and smooth-walled breast implants. The Company, MEC and certain other defendants are participants in a settlement program originally approved on September 1, 1994, and revised on December 22, 1995, by the Federal District Court in Birmingham, Alabama. About 11,000 of these plaintiffs are participating in the revised settlement, and are expected to discontinue their lawsuits. Separate class action settlements have been approved in the provincial courts of Ontario and Quebec, and an agreement has been reached under which other foreign breast implant recipients may settle their claims. Approximately 380,000 domestic class members (with implants of all manufacturers, not just MEC, Baxter and 3M) originally registered with the revised settlement. Around 88,000 of these class members have indicated that they received at least one breast implant manufactured by MEC or a related company. Of these 88,000 registrants, 14,300 have opted out of the revised settlement; 6,300 of these have proved to the satisfaction of the claims office that they received a breast implant of MEC or a related company, while the remaining 8,000 opt-outs have indicated their belief (but have not proved) that they received an MEC breast implant. The 14,300 opt-outs who have or claim to have MEC implants are among the 44,800 domestic registrants (with implants of all manufacturers) who opted out of the revised settlement. The Company has identified approximately 10,800 persons from among the 44,800 opt-outs (with implants of all defendants, not just MEC) as plaintiffs in lawsuits against it. An as yet undetermined number of these 10,800 plaintiffs do not have MEC implants and their claims against the Company are expected to be dismissed. An additional 1,570 claims based upon MEC implants remain from among domestic class members who previously opted out of the settlement originally approved in 1994. Because the opt-out period is essentially over, the number of opt-outs in not expected to increase materially. However, because of continuing uncertainties, it is still not possible to predict on any precise basis the total number of women with MEC implants who will pursue lawsuits against the Company. The cost of the settlement is dependent upon complex and varying factors, including the number of class members that participate, the kinds of claims approved and their dollar value. The cost to the Company of 54 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) resolving opt-out claims is also subject to a number of complex uncertain- ties in addition to the unknown quantity and quality of such claims. As set forth in the Consolidated Statement of Cash Flows, in 1995, 1996 and 1997, the Company paid substantial sums to settle litigation and opt-out claims and for litigation expenses, as well as to the revised settlement. In connection with breast implant product liability claims, the Company recorded special charges in 1993 of $500 million before taxes, $310 million after taxes, or $.30 per common share, basic and diluted; in 1994 of $750 million before taxes, $488 million after taxes, or $.48 per common share, basic and diluted; and in 1995 of $950 million before taxes, $590 million after taxes, or $.58 per common share, basic and diluted. The 1993 special charge consisted of $1.5 billion (recorded as Product Liability), offset by $1.0 billion of expected insurance proceeds (recorded as Insurance Recoverable). In light of the continuing uncertainties (including additional insurance recoveries), the cost of the revised settlement and the ongoing litigation cannot at present be predicted with any reasonable degree of precision. However, the Company, based on the information set forth above and on related estimates, continues to believe that previously established reserves should be adequate to address these claims. Other Actions - ------------- The Company, one of its subsidiaries, and others are or have been defendants in a number of antitrust actions in various states filed on behalf of purported statewide classes of indirect purchasers of infant formula products and by the Attorneys General of Louisiana, Minnesota and Mississippi, alleging a price fixing conspiracy and other violations of state antitrust or deceptive trade practice laws and seeking penalties and other relief. The Company has previously reported reaching settlements and receiving final court approval in the majority of these cases. The only open cases are in Louisiana and Missouri. On November 6, 1997, the court in Louisiana dismissed the plaintiffs' case. The plaintiffs are appealing that dismissal. In Missouri, the Company has a motion to dismiss pending. As of December 31, 1997, the Company is a defendant in over 100 actions brought against the Company and more than 30 other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers in various federal district courts by certain chain drugstores, supermarket chains and independent drugstores, suing either individually or as representatives of a nationwide class of retail pharmacies that has been certified. These cases, which have been coordinated for pretrial purposes, all seek treble damages and injunctive relief on account of alleged antitrust violations in the pricing and marketing of brand name prescription drugs. The Company, without admitting any wrongdoing, reached an amended agreement as of May 1, 1996, to settle the class action, and that settlement has become final. The largest opt-out retailer plaintiffs have purported to quantify their damage claims against the defendants, including the Company, asserting damages aggregating approximately $2.4 billion before trebling. Cases brought by retail 55 pharmacies in state court under state law alleging similar grounds are proceeding in California, Alabama, Mississippi, Wisconsin and Minnesota; the Wisconsin and Minnesota cases are subject to settlements. Purported class actions brought by consumers in state court under state law alleging similar grounds have been brought in California, Washington, New York, Arizona, Maine, Alabama, Michigan, Minnesota, Wisconsin, the District of Columbia, Kansas, Florida, Tennessee and North Carolina. While it is not possible to predict with certainty the outcome of these cases, it is the opinion of management that these lawsuits, claims and proceedings which are pending against the Company are without merit or will not have a material adverse effect on the Company's operating results, liquidity or consolidated financial position. Note 17 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) - ------------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter Year ------- ------- ------- ------- ------ 1997: Net Sales $4,045 $4,064 $4,151 $4,441 $16,701 Gross Profit 2,967 2,967 3,041 3,262 12,237 Net Earnings * 810 738 855 802 3,205 Earnings Per Common Share Basic .81 .74 .86 .81 3.22 Diluted .79 .73 .84 .78 3.14 1996: Net Sales $3,669 $3,696 $3,745 $3,955 $15,065 Gross Profit 2,734 2,734 2,742 2,890 11,100 Net Earnings 726 655 753 716 2,850 Earnings Per Common Share Basic .72 .65 .75 .71 2.84 Diluted .71 .64 .74 .70 2.80 * In 1997, the fourth quarter and annual results included a gain on the sale of a business of $225 million ($140 million after taxes) and a provision for restructuring of $225 million ($140 million after taxes). 56 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Stockholders of Bristol-Myers Squibb Company In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) and (2) on page 59 present fairly, in all material respects, the financial position of Bristol-Myers Squibb Company and its subsidiaries at December 31, 1997, 1996 and 1995, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ Price Waterhouse LLP - ------------------------ 1177 Avenue of the Americas New York, New York 10036 January 22, 1998 57 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III --------- Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (a) Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 5, 1998 with respect to the Directors of the Registrant which is incorporated herein by reference and made a part hereof in response to the information required by Item 10. (b) The information required by Item 10 with respect to the Executive Officers of the Registrant has been included in Part IA of this Form 10-K Annual Report in reliance on General Instruction G of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K. Item 11. EXECUTIVE COMPENSATION. Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 5, 1998 with respect to Executive Compensation which is incorporated herein by reference and made a part hereof in response to the information required by Item 11. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 5, 1998 with respect to the security ownership of certain beneficial owners and management which is incorporated herein by reference and made a part hereof in response to information required by Item 12. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 5, 1998 with respect to certain relationships and related transactions which is incorporated herein by reference and made a part hereof in response to the information required by Item 13. 58 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. Page Number ------ (a) 1. Financial Statements 33-37 Notes to Consolidated Financial Statements 38-56 Report of Independent Accountants 57 2. Financial Statement Schedules Schedule Page Number Number -------- ------ Valuation and qualifying accounts II S-1 All other schedules not included with this additional financial data are omitted because they are not applicable or the required information is included in the financial statements or notes thereto. 3. Exhibit List The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to this Item 14. Unless otherwise indicated, all Exhibits are part of Commission File Number 1-1136. 3a. Restated Certificate of Incorporation of Bristol-Myers Squibb Company (filed as Exhibit 4a to Registrant's Registration Statement on Form S-3, Registration Statement No. 33-33682, dated March 7, 1990, as amended through May 6, 1997). 3b. Bylaws of Bristol-Myers Squibb Company, as amended through January 1, 1998 (incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-8 filed March 5, 1998). 4a. Letter of Agreement dated March 28, 1984 (incorporated herein by reference to Exhibit 4 to Form 10-K for the fiscal year ended December 31, 1983). 4b. Indenture, dated as of June 1, 1993, between Bristol-Myers Squibb Company and The Chase Manhattan Bank (National Association), as trustee (incorporated herein by reference to Exhibit 4.1 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4.2 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4e to the Form 10-K for the fiscal year ended December 31, 1996). 59 4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4f to the Form 10-Q for the quarterly period ended September 30, 1997). 4f. Five Year Competitive Advance and Revolving Credit Facility Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent, filed herewith. 4g. 364-Day Competitive Advance and Revolving Credit Facility Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent, filed herewith. **10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, effective as of May 6, 1997 and as amended effective December 2, 1997 (incorporated herein by reference to Exhibit 99(a) to the Registration Statement on Form S-8 filed March 5, 1998), filed herewith. **10b. Bristol-Myers Squibb Company Executive Performance Incentive Plan (incorporated herein by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1996). **10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as amended and restated as of September 10, 1996, as amended January 1, 1997, filed herewith. **10d. Squibb Corporation 1982 Option, Restricted Stock and Performance Unit Plan, as amended (incorporated herein by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1993). **10e. Squibb Corporation 1986 Option, Restricted Stock and Performance Unit Plan, as amended (as adopted, incorporated herein by reference to Exhibit 10k to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1988, File No. 1-5514; as amended effective July 1, 1993, and incorporated herein by reference to Exhibit 10c to the Form 10-K for the fiscal year ended December 31, 1993). **10f. Bristol-Myers Squibb Company Performance Incentive Plan, as amended (as adopted, incorporated herein by reference to Exhibit 2 to the Form 10-K for the fiscal year ended December 31, 1978; as amended as of January 8, 1990, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1990; as amended on April 2, 1991, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1991; as amended effective January 1, 1994, incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1993; and as amended effective January 1, 1994, incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1994). **10g. Benefit Equalization Plan of Bristol-Myers Squibb Company and its Subsidiary or Affiliated Corporations Participating in the Bristol- Myers Squibb Company Retirement Income Plan or the Bristol-Myers 60 Squibb Puerto Rico, Inc. Retirement Income Plan, as amended (as amended and restated as of January 1, 1993, as amended effective October 1, 1993, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1993; and as amended effective February 1, 1995, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1995). **10h. Benefit Equalization Plan of Bristol-Myers Squibb Company and its Subsidiary or Affiliated Corporations Participating in the Bristol- Myers Squibb Company Savings and Investment Program, as amended (as amended and restated as of May 1, 1990, incorporated herein by reference to Exhibit 19d to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19e to the Form 10-K for the fiscal year ended December 31, 1991, as amended as of October 1, 1994, incorporated herein by reference to Exhibit 10f to the Form 10-K for the fiscal year ended December 31, 1994). **10i. Squibb Corporation Supplementary Pension Plan, as amended (as previously amended and restated, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1991; as amended as of September 14, 1993, and incorporated herein by reference to Exhibit 10g to the Form 10-K for the fiscal year ended December 31, 1993). **10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as amended (as adopted on November 7, 1989, incorporated herein by reference to Exhibit 10t to the Form 10-K for the fiscal year ended December 31, 1989; as amended on December 4, 1990, incorporated herein by reference to Exhibit 19a to the Form 10-K for the fiscal year ended December 31, 1990; as amended effective July 1, 1993, incorporated herein by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1993; as amended effective December 6, 1994, incorporated herein by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1994). **10k. Bristol-Myers Squibb Company Retirement Income Plan for Non-Employee Directors, as amended to March 5, 1996 (incorporated herein by reference to Exhibit 10k to the Form 10-K for the fiscal year ended December 31, 1996). **10l. Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for Non-Employee Directors, as amended to January 13, 1998, filed herewith. **10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock Option Plan, as amended (as approved by the Stockholders on May 1, 1990, incorporated herein by reference to Exhibit 28 to Registration Statement No. 33-38587 on Form S-8; as amended May 7, 1991, incorporated herein by reference to Exhibit 19c to the Form 10-K for the fiscal year ended December 31, 1991), as amended January 13, 1998, filed herewith. **10n. Squibb Corporation Deferral Plan for Fees of Outside Directors, as amended (as adopted, incorporated herein by reference to Exhibit 10e to the Squibb Corporation Form 10-K for the fiscal year ended 61 December 31, 1987, File No. 1-5514; as amended effective December 31, 1991, incorporated herein by reference to Exhibit 10m to the Form 10-K for the fiscal year ended December 31, 1992). **10o. Amendment to all of the Company's plans, agreements, legal documents and other writings, pursuant to action of the Board of Directors on October 3, 1989, to reflect the change of the Company's name to Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10v to the Form 10-K for the fiscal year ended December 31, 1989). **10p. Employment agreement of March 1998 for Charles A. Heimbold, Jr., filed herewith. 21. Subsidiaries of the Registrant (filed herewith). 23. Consent of Price Waterhouse LLP(filed herewith). 27. Bristol-Myers Squibb Company Financial Data Schedule (filed herewith). 99. Additional Exhibit (filed herewith). (b) Reports on Form 8-K None. 62 SIGNATURES ----------- Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. BRISTOL-MYERS SQUIBB COMPANY (Registrant) By /s/ Charles A. Heimbold, Jr. ---------------------------------- Charles A. Heimbold, Jr. Chairman of the Board and Chief Executive Officer March 31, 1998 ---------------------------------- Date Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date ---------- -------- ------- Chairman of the Board, Chief Executive Officer And Director (Principal /s/ Charles A. Heimbold, Jr. Executive Officer) March 31, 1998 - ------------------------------ (Charles A. Heimbold, Jr.) Chief Financial Officer and Senior Vice President Corporate Staff(Principal /s/ Michael F. Mee Financial Officer) March 31, 1998 - ------------------------------ (Michael F. Mee) Controller and Vice President, Financial Operations, Corporate Staff (Principal /s/ Frederick S. Schiff Accounting Officer) March 31, 1998 - ------------------------------ (Frederick S. Schiff) 63 Signature Title Date - -------- ------ ------ /s/ Robert E. Allen Director March 31, 1998 - ----------------------------- (Robert E. Allen) /s/ Vance D. Coffman Director March 31, 1998 - ----------------------------- (Vance D. Coffman) /s/ Ellen V. Futter Director March 31, 1998 - ----------------------------- (Ellen V. Futter) /s/ Louis V. Gerstner, Jr. Director March 31, 1998 - ----------------------------- (Louis V. Gerstner, Jr.) /s/ Laurie H. Glimcher, M.D. Director March 31, 1998 - ----------------------------- (Laurie H. Glimcher, M.D.) /s/ John D. Macomber Director March 31, 1998 - ----------------------------- (John D. Macomber) /s/ James D. Robinson III Director March 31, 1998 - ----------------------------- (James D. Robinson III) /s/ Andrew C. Sigler Director March 31, 1998 - ----------------------------- (Andrew C. Sigler) /s/ Louis W. Sullivan, M.D. Director March 31, 1998 - ----------------------------- (Louis W. Sullivan, M.D.) Executive Vice President, President Worldwide Medicines /s/ Kenneth E. Weg Group and Director March 31, 1998 - ---------------------------- (Kenneth E. Weg) 64 EXHIBIT INDEX ------------- The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designed by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to this Item 14. An asterisk (*) in the Page column indicates that the Exhibit has been previously filed with the Commission and is incorporated herein by reference. Unless otherwise indicated, all Exhibits are part of Commission File Number 1-1136. Exhibit Number and Description Page ------------------------------ ---- 3a. Restated Certificate of Incorporation of Bristol- * Myers Squibb Company (incorporated herein by reference to Exhibit 4a to Registration Statement No. 33-33682 on Form S-3). 3b. Bylaws of Bristol-Myers Squibb Company, as amended * through January 1, 1998 (incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-8 filed March 5, 1998). 4a. Letter of Agreement dated March 28, 1984 * (incorporated herein by reference to Exhibit 4 to Form 10-K for the fiscal year ended December 31,1983). 4b. Indenture, dated as of June 1, 1993, between * Bristol-Myers Squibb Company and The Chase Manhattan Bank (National Association), as trustee (incorporated herein by reference to Exhibit 4.1 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers * Squibb Company (incorporated herein by reference to Exhibit 4.2 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers * Squibb Company (incorporated herein by reference to Exhibit 4e to the Form 10-K for the fiscal year ended December 31, 1996). 4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers * Squibb Company (incorporated herein by reference to Exhibit 4f to the Form 10-Q for the quarterly period ended September 30, 1997). 65 Exhibit Number and Description Page ------------------------------ ---- 4f. Five Year Competitive Advance and Revolving E-1-1 Credit Facility Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent. 4g. 364-Day Competitive Advance and Revolving Credit E-2-1 Facility Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent. ** 10a. Bristol-Myers Squibb Company 1997 Stock Incentive E-3-1 Plan, effective as of May 6, 1997 and as amended effective December 2, 1997 (incorporated herein by reference to Exhibit 99(a) to the Registration Statement on Form S-8 filed March 5, 1998). ** 10b. Bristol-Myers Squibb Company Executive Performance * Incentive Plan (incorporated herein by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1996). ** 10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, E-4-1 as amended and restated as of September 10, 1996, as amended January 1, 1997. ** 10d. Squibb Corporation 1982 Option, Restricted Stock * and Performance Unit Plan, as amended (incorporated by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1993). ** 10e. Squibb Corporation 1986 Option, Restricted Stock * and Performance Unit Plan, as amended (as adopted, incorporated herein by reference to Exhibit 10k to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1988, File No. 1-5514, as amended July 1, 1993, incorporated herein by reference to Exhibit 10c to the Form 10-K for the fiscal year ended December 31, 1993). ** 10f. Bristol-Myers Squibb Company Performance Incentive * Plan, as amended (as adopted, incorporated herein by reference to Exhibit 2 to the Form 10-K for the 66 Exhibit Number and Description Page ------------------------------ ---- fiscal year ended December 31, 1978; as amended as of January 8, 1990, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1990; as amended on April 2, 1991, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1991; as amended effective on January 1, 1994, and incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1994). ** 10g. Benefit Equalization Plan of Bristol-Myers Squibb * Company and its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb Company Retirement Income Plan or the Bristol-Myers Squibb Puerto Rico, Inc. Retirement Income Plan, as amended (as amended and restated as of January 1, 1993, as amended effective October 1, 1993, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1993 and amended effective February 1, 1995, incorporated by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1995). ** 10h. Benefit Equalization Plan of Bristol-Myers Squibb * Company and its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb Company Savings and Investment Program, as amended (as amended and restated as of May 1, 1990, incorporated herein by reference to Exhibit 19d to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19e to the Form 10-K for the fiscal year ended December 31, 1991; as amended as of October 1, 1994, incorporated herein by reference to Exhibit 10f of the Form 10-K for the fiscal year ended December 31, 1994). ** 10i. Squibb Corporation Supplementary Pension Plan, as * amended (as previously amended and restated, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1991; as amended on September 14, 1993, incorporated by reference to Exhibit 10g to the Form 10-K for the fiscal year ended December 31, 1993). ** 10j. Bristol-Myers Squibb Company Restricted Stock Award * Plan, as amended (as adopted on November 7, 1989, 67 Exhibit Number and Description Page ------------------------------ ---- incorporated herein by reference to Exhibit 10t to the Form 10-K for the fiscal year ended December 31, 1989; as amended on December 4, 1990, incorporated herein by reference to Exhibit 19a to the Form 10-K for the fiscal year ended December 31, 1990; as amended July 1, 1993, incorporated by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1993; as amended effective December 6, 1994, incorporated by reference to Exhibit 10h to the Form 10-K for the fiscal year Ended January 31, 1994). ** 10k. Bristol-Myers Squibb Company Retirement Income Plan * for Non-Employee Directors, as amended to March 5,1996 (incorporated herein by reference to Exhibit 10k to the Form 10-K for the fiscal year ended December 31, 1996). ** 10l. Bristol-Myers Squibb Company 1987 Deferred E-5-1 Compensation Plan for Non-Employee Directors, as amended to January 13, 1998. ** 10m. Bristol-Myers Squibb Company Non-Employee Directors' E-6-1 Stock Option Plan, as amended (as approved by the Stockholders on May 1, 1990, incorporated herein by reference to Exhibit 28 to Registration Statement No. 33-38587 on Form S-8; as amended May 7, 1991, incorporated herein by reference to Exhibit 19c to the Form 10-K for the fiscal year ended December 31, 1991), as amended January 13, 1998. ** 10n. Squibb Corporation Deferral Plan for Fees of Outside * Directors, as amended (as adopted, incorporated herein by reference to Exhibit 10e to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1987, File No. 1-5514; as amended effective December 31, 1991, incorporated herein by reference to Exhibit 10m to the Form 10-K for the fiscal year ended December 31, 1992). ** 10o. Amendment to all of the Company's plans, agreements, * legal documents and other writings, pursuant to action of the Board of Directors on October 3, 1989, to reflect the change of the Company's name to Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10v to the Form 10-K for the fiscal year ended December 31, 1989). 68 Exhibit Number and Description Page ------------------------------ ---- ** 10p. Employment agreement of March 1998 for Charles A. E-7-1 Heimbold, Jr. 21. Subsidiaries of the Registrant. E-8-1 23. Consent of Price Waterhouse LLP. E-9-1 27. Bristol-Myers Squibb Company Financial E-10-1 Data Schedule 99. Additional Exhibit E-11-1 69 SCHEDULE II ----------- BRISTOL-MYERS SQUIBB COMPANY VALUATION AND QUALIFYING ACCOUNTS (dollars in millions) Additions Balance at charged to Deductions- Balance at beginning costs and bad debts end Description of period expenses written off of period - --------------- ---------- ---------- ------------ ---------- Allowances for discounts and doubtful accounts: For the year ended December 31, 1997 $107 $19 $17 $109 ========== ========== ============ =========== For the year ended December 31, 1996 $100 $39 $32 $107 ========== ========== ============ =========== For the year ended December 31, 1995 $77 $31 $8 $100 ========== ========== ============ =========== S-1 EX-4.F 2 EXHIBIT 4f ---------- $250,000,000 FIVE YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT Dated as of March 17, 1998 Among BRISTOL-MYERS SQUIBB COMPANY, THE BORROWING SUBSIDIARIES, THE LENDERS NAMED HEREIN, CITIBANK, N.A., as Administrative Agent and THE CHASE MANHATTAN BANK, as Administrative Agent E-1-1 TABLE OF CONTENTS Page ARTICLE I Definitions. . . . . . . . . . . . . 1 SECTION 1.1 Defined Terms. . . . . . . . . . . . . . . . . . 1 SECTION 1.2 Classification of Loans and Borrowings . . . . . 15 SECTION 1.3 Terms Generally. . . . . . . . . . . . . . . . . 16 SECTION 1.4 Accounting Terms; GAAP . . . . . . . . . . . . . 16 ARTICLE II The Credits. . . . . . . . . . . . . 16 SECTION 2.1 Commitments. . . . . . . . . . . . . . . . . . . 16 SECTION 2.2 Loans and Borrowings . . . . . . . . . . . . . . 16 SECTION 2.3 Requests for Revolving Borrowings. . . . . . . . 17 SECTION 2.4 Competitive Bid Procedure. . . . . . . . . . . . 18 SECTION 2.5 Extension of Maturity Date . . . . . . . . . . . 20 SECTION 2.6 Increase of Commitments. . . . . . . . . . . . . 22 SECTION 2.7 Funding of Borrowings. . . . . . . . . . . . . . 23 SECTION 2.8 Interest Elections . . . . . . . . . . . . . . . 24 SECTION 2.9 Termination and Reduction of Commitments . . . . 25 SECTION 2.10 Repayment of Loans; Evidence of Debt. . . . . . 26 SECTION 2.11 Prepayment of Loans . . . . . . . . . . . . . . 27 SECTION 2.12 Fees. . . . . . . . . . . . . . . . . . . . . . 27 SECTION 2.13 Interest. . . . . . . . . . . . . . . . . . . . 28 SECTION 2.14 Alternate Rate of Interest. . . . . . . . . . . 28 SECTION 2.15 Increased Costs . . . . . . . . . . . . . . . . 29 SECTION 2.16 Break Funding Payments. . . . . . . . . . . . . 30 SECTION 2.17 Taxes . . . . . . . . . . . . . . . . . . . . . 31 SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs . . . . . . . . . . . . 34 SECTION 2.19 Mitigation Obligations; Replacement of Lenders. 35 SECTION 2.20 Borrowing Subsidiaries. . . . . . . . . . . . . 36 ARTICLE III Representations and Warranties . . . . . . . . 36 SECTION 3.1 Organization; Powers . . . . . . . . . . . . . . 36 SECTION 3.2 Authorization. . . . . . . . . . . . . . . . . . 37 SECTION 3.3 Enforceability . . . . . . . . . . . . . . . . . 37 E-1-2 SECTION 3.4 Governmental Approvals . . . . . . . . . . . . . 37 SECTION 3.5 Financial Statements; No Material Adverse Change 37 SECTION 3.6 Litigation; Compliance with Laws . . . . . . . . 38 SECTION 3.7 Federal Reserve Regulations. . . . . . . . . . . 38 SECTION 3.8 Use of Proceeds. . . . . . . . . . . . . . . . . 38 SECTION 3.9 Taxes. . . . . . . . . . . . . . . . . . . . . . 38 SECTION 3.10 Employee Benefit Plans. . . . . . . . . . . . . 38 SECTION 3.11 Environmental and Safety Matters. . . . . . . . 39 SECTION 3.12 Properties. . . . . . . . . . . . . . . . . . . 39 SECTION 3.13 Investment and Holding Company Status . . . . . 39 ARTICLE IV Conditions . . . . . . . . . . . . . 39 SECTION 4.1 Effective Date . . . . . . . . . . . . . . . . . 39 SECTION 4.2 Each Credit Event. . . . . . . . . . . . . . . . 40 SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary . 41 ARTICLE V Covenants . . . . . . . . . . . . . 41 SECTION 5.1 Existence. . . . . . . . . . . . . . . . . . . . 41 SECTION 5.2 Business and Properties. . . . . . . . . . . . . 41 SECTION 5.3 Financial Statements, Reports, Etc.. . . . . . . 41 SECTION 5.4 Insurance. . . . . . . . . . . . . . . . . . . . 42 SECTION 5.5 Obligations and Taxes. . . . . . . . . . . . . . 42 SECTION 5.6 Litigation and Other Notices . . . . . . . . . . 42 SECTION 5.7 Books and Records. . . . . . . . . . . . . . . . 43 SECTION 5.8 Consolidations, Mergers, and Sales of Assets . . 43 SECTION 5.9 Liens. . . . . . . . . . . . . . . . . . . . . . 43 SECTION 5.10 Limitation on Sale and Leaseback Transactions . 44 ARTICLE VI Events of Default . . . . . . . . . . . 45 ARTICLE VII E-1-3 The Administrative Agents . . . . . . . . . 47 ARTICLE VIII Miscellaneous . . . . . . . . . . . . 50 SECTION 8.1 Notices. . . . . . . . . . . . . . . . . . . . . 50 SECTION 8.2 Survival of Agreement. . . . . . . . . . . . . . 50 SECTION 8.3 Binding Effect . . . . . . . . . . . . . . . . . 51 SECTION 8.4 Successors and Assigns . . . . . . . . . . . . . 51 SECTION 8.5 Expenses; Indemnity. . . . . . . . . . . . . . . 54 SECTION 8.6 Applicable Law . . . . . . . . . . . . . . . . . 54 SECTION 8.7 Waivers; Amendment . . . . . . . . . . . . . . . 54 SECTION 8.8 Entire Agreement . . . . . . . . . . . . . . . . 55 SECTION 8.9 Severability . . . . . . . . . . . . . . . . . . 55 SECTION 8.10 Counterparts. . . . . . . . . . . . . . . . . . 55 SECTION 8.11 Headings. . . . . . . . . . . . . . . . . . . . 55 SECTION 8.12 Right of Setoff . . . . . . . . . . . . . . . . 56 SECTION 8.13 Jurisdiction; Consent to Service of Process . . 56 SECTION 8.14 Waiver of Jury Trial. . . . . . . . . . . . . . 56 SECTION 8.15 Conversion of Currencies. . . . . . . . . . . . 57 SECTION 8.16 Guaranty. . . . . . . . . . . . . . . . . . . . 57 SECTION 8.17 European Monetary Union . . . . . . . . . . . . 59 SCHEDULES: Schedule 2.1 -- Commitments EXHIBITS: Exhibit A-1 -- Competitive Bid Request Exhibit A-2 -- Notice of Competitive Bid Request Exhibit A-3 -- Competitive Bid Exhibit A-4 -- Competitive Bid Accept/Reject Letter Exhibit A-5 -- Borrowing Request Exhibit B -- Form of Assignment and Acceptance Exhibit C -- Form of Opinion of Company's Counsel Exhibit D -- Form of Administrative Questionnaire Exhibit E -- Form of Borrowing Subsidiary Agreement Exhibit F -- Form of Borrowing Subsidiary Termination E-1-4 FIVE YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT (the "Agreement") dated as of March 17, 1998, among BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation (the "Company"), the BORROWING SUBSIDIARIES (as defined herein), the lenders listed in Schedule 2.1 (the "Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders (in such capacity, "Chase"), and CITIBANK, N.A., as administrative agent for the Lenders (in such capacity, "Citibank"; Chase and Citibank are referred to herein individually as an "Administrative Agent" and collectively as the "Administrative Agents") and as competitive advance facility agent (in such capacity, the "Advance Agent"). The Company has requested that the Lenders, on the terms and subject to the conditions herein set forth (i) extend credit to the Company and the applicable Borrowing Subsidiaries to enable them to borrow on a standby revolving credit basis on and after the date hereof and at any time and from time to time prior to the Maturity Date (such term and each other capitalized term used but not defined herein having the meaning assigned to it in Article I) a principal amount not in excess of $250,000,000 (as such amount may be increased pursuant to Section 2.6) and (ii) provide a procedure pursuant to which the Company and the Borrowing Subsidiaries may invite the Lenders to bid on an uncommitted basis on short-term borrowings by the Company or the applicable Borrowing Subsidiary. The proceeds of such borrowings are to be used for working capital and other general corporate purposes (other than hostile acquisitions), including commercial paper backup and repurchase of shares. The Lenders are willing to extend such credit on the terms and subject to the conditions herein set forth. Accordingly, the parties hereto agree as follows: ARTICLE I Definitions SECTION 1.1 Defined Terms. As used in this Agreement, the following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "Administrative Fees" shall have the meaning assigned to such term in Section 2.12(b). "Administrative Questionnaire" shall mean an administrative questionnaire delivered by a Lender pursuant to Section 8.4(e) in the form of Exhibit D. "Affiliate" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly, Controls or is Controlled by or is under common Control with the Person specified. E-1-5 "Alternate Base Rate" shall mean for any day, a rate per annum equal to the greatest of (a) the rate of interest per annum publicly announced from time to time by Citibank as its base rate in effect at its principal office in New York City, (b) 1/2 of one percent above the Federal Funds Effective Rate and (c) the Base CD Rate in effect for such day plus 1%. If for any reason Citibank shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or Federal Funds Effective Rate, or both, specified in clause (b) or (c), respectively, of the first sentence of this definition, for any reason, including, without limitation, the inability or failure of Citibank to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (b) or (c), or both, of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate shall be effective on the effective date of any change in such rate. "Alternative Currency" shall mean at any time, a common currency of the European monetary union and any currency (other than Dollars) that is readily available, freely traded and convertible into Dollars in the London market and as to which a Dollar Equivalent can be calculated. "Applicable Percentage" shall mean, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, Applicable Percentage shall mean, with respect to any Lender, the percentage of the aggregate outstanding principal amount of the Loans represented by the aggregate outstanding principal amount of each Lender's Loans. "Applicable Rate" shall mean on any date, with respect to any Eurocurrency Revolving Loan, or with respect to the facility fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "Eurocurrency Spread" or "Facility Fee Rate", as the case may be, based upon the Ratings by Moody's and S&P, respectively, in effect on such date: E-1-6 Ratings: Eurocurrency Facility Fee Spread Rate ------------ ------------ Category 1 Aa3 or higher by Moody's; .100% .050% AA- or higher by S&P Category 2 A3 or higher but lower .175% .075% than Aa3 by Moody's; A- or higher but lower than AA- by S&P Category 3 Baa2 or higher but lower .150% .125% than A3 by Moody's; BBB or higher but lower than A- by S&P Category 4 lower than Baa2 by Moody's; .300% .200% lower than BBB by S&P For purposes of the foregoing, (i) if the Ratings shall fall within different Categories, the Applicable Rate shall be based upon the higher of the two Ratings unless the Ratings are more than one level apart, in which case the Applicable Rate shall be based upon the Rating one level below the higher Rating, and (ii) if any Rating shall be changed (other than as a result of a change in the rating system of the applicable Rating Agency), such change shall be effective as of the date on which it is first announced by the Rating Agency making such change. Each such change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of any Rating Agency shall change, the parties hereto shall negotiate in good faith to amend this definition to reflect such changed rating system. If either Rating Agency shall cease to be in the business of rating corporate debt obligations or shall not otherwise have in effect a Rating, the Applicable Rate shall be determined by reference to the Rating from the other Rating Agency. The Company shall always cause a Rating to be maintained by at least one Rating Agency. "Assessment Rate" shall mean, for any day, the net annual assessment rate (rounded upwards, if necessary, to the next higher Basis Point) as most recently estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insurance by such Corporation (or such successor) of time deposits made in dollars at Citibank's domestic offices. "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee in the form of Exhibit B. E-1-7 "Availability Period" shall mean the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments. "Base CD Rate" shall mean the sum of (a) the product of (i) the Average Weekly Three-Month Secondary CD Rate times (ii) a fraction of which the numerator is 100% and the denominator is 100% minus the aggregate rates of (A) basic and supplemental reserve requirements in effect on the date of effectiveness of such Average Weekly Three-Month Secondary CD Rate, as set forth below, under Regulation D of the Board applicable to certificates of deposit in units of $100,000 or more issued by a "member bank" located in a "reserve city" (as such terms are used in Regulation D) and (B) marginal reserve requirements in effect on such date of effectiveness under Regulation D applicable to time deposits of a "member bank" and (b) the Assessment Rate. "Average Weekly Three-Month Secondary CD Rate" shall mean the three-month secondary certificate of deposit ("CD") rate for the most recent weekly period covered therein in the Federal Reserve Statistical release entitled "Weekly Summary of Lending and Credit Measures (Averages of daily figures)" released in the week during which occurs the day for which the CD rate is being determined. The CD rate so reported shall be in effect, for the purposes of this definition, for each day of the week in which the release date of such publication occurs. If such publication or a substitute containing the foregoing rate information is not published by the Federal Reserve for any week, such average rate shall be determined by Citibank on the basis of quotations received by it from three New York City negotiable certificate of deposit dealers of recognized standing on the first Business Day of the week succeeding such week for which such rate information is not published. "Basis Point" shall mean 1/100th of 1%. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States of America. "Board of Directors" shall mean either the board of directors of the Company or any duly authorized committee thereof or any committee of officers of the Company acting pursuant to authority granted by the board of directors of the Company or any committee of such board. "Borrower" shall mean the Company or any Borrowing Subsidiary. "Borrowing" shall mean (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect or (b) a Competitive Loan or group of Competitive Loans of the same Type made on the same date and as to which a single Interest Period is in effect. "Borrowing Request" shall mean a request by the Company for a Revolving Borrowing in accordance with Section 2.3. "Borrowing Subsidiary" shall mean any Subsidiary of the Company designated as a Borrowing Subsidiary by the Company pursuant to Section 2.20. "Borrowing Subsidiary Agreement" shall mean a Borrowing Subsidiary Agreement substantially in the form of Exhibit E. E-1-8 "Borrowing Subsidiary Obligations" shall mean the due and punctual payment of (i) the principal of and interest on any Loans made by the Lenders to the Borrowing Subsidiaries pursuant to this Agreement, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities (including, without limitation, the obligations described in Section 2.20) of the Borrowing Subsidiaries to the Lenders under this Agreement and the other Loan Documents. "Borrowing Subsidiary Termination" shall mean a Borrowing Subsidiary Termination substantially in the form of Exhibit F. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however, that, when used in connection with a Eurocurrency Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market, or in the city which is the principal financial center of the country of issuance of the applicable Alternative Currency. "Capital Lease Obligations" of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Change in Control" shall be deemed to have occurred if (a) any Person or group of Persons (other than (i) the Company, (ii) any Subsidiary or (iii) any employee or director benefit plan or stock plan of the Company or a Subsidiary or any trustee or fiduciary with respect to any such plan when acting in that capacity or any trust related to any such plan) shall have acquired beneficial ownership of shares representing more than 20% of the combined voting power represented by the outstanding Voting Shares of the Company (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder), or (b) during any period of 12 consecutive months, commencing before or after the date of this Agreement, individuals who on the first day of such period were directors of the Company (together with any replacement or additional directors who were nominated or elected by a majority of directors then in office) cease to constitute a majority of the Board of Directors of the Company. "Change in Law" shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Competitive Loans. E-1-9 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.9, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 8.4, and (c) increased pursuant to Section 2.6. The initial amount of each Lender's Commitment is set forth on Schedule 2.1, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders' Commitments is $250,000,000. "Company" shall mean Bristol-Myers Squibb Company, a Delaware corporation. "Competitive Bid" shall mean an offer by a Lender to make a Competitive Loan pursuant to Section 2.4. "Competitive Bid Accept/Reject Letter" shall mean a notification made by the Company pursuant to Section 2.4(d) in the form of Exhibit A-4. "Competitive Bid Rate" shall mean, as to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid. "Competitive Bid Request" shall mean a request made pursuant to Section 2.4 in the form of Exhibit A-1. "Competitive Borrowing" shall mean a Borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Bids for such Borrowing have been accepted under the bidding procedure described in Section 2.4. "Competitive Loan" shall mean a Loan made pursuant to Section 2.4. Each Competitive Loan shall be a Eurocurrency Competitive Loan or a Fixed Rate Loan. "Competitive Loan Exposure" shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the outstanding Competitive Loans of such Lender denominated in Dollars and (b) the sum of the Dollar Equivalents of the aggregate principal amounts of the outstanding Competitive Loans of such Lender denominated in Alternative Currencies. "Consolidated Net Tangible Assets" shall mean, with respect to the Company, the total amount of its assets (less applicable reserves and other properly deductible items) after deducting (i) all current liabilities (excluding the amount of those which are by their terms extendable or renewable at the option of the obligor to a date more than 12 months after the date as of which the amount is being determined) and (ii) all goodwill, tradenames, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as set forth on the most recent balance sheet of the Company and its consolidated subsidiaries and determined on a consolidated basis in accordance with GAAP. E-1-10 "Consolidated Net Worth" shall mean at any time for the determination thereof the sum of all amounts which, in conformity with GAAP, would be included under the caption "total stockholders' equity" (or any like caption) on a consolidated balance sheet of the Company and its Subsidiaries as at such time. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Currency" shall mean Dollars or any Alternative Currency. "Debt" shall mean (i) all obligations represented by notes, bonds, debentures or similar evidences of indebtedness; (ii) all indebtedness for borrowed money or for the deferred purchase price of property or services other than, in the case of any such deferred purchase price, on normal trade terms and (iii) all rental obligations as lessee under leases which shall have been or should be recorded as Capital Lease Obligations. "Default" shall mean any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Dollar Equivalent" shall mean, with respect to any principal amount of any Competitive Loan denominated in an Alternative Currency, the equivalent in Dollars of such amount, determined by Citibank using the Exchange Rate in effect for such Alternative Currency at approximately 11:00 a.m. London time on the date of the Competitive Bid Request that resulted in the making of such Competitive Loan. "Dollars" or "$" shall mean lawful money of the United States of America. "Effective Date" means the date on which the conditions specified in Section 4.1 are satisfied (or waived in accordance with Section 8.7). "Environmental and Safety Laws" shall mean any and all applicable current and future treaties, laws (including without limitation common law), regulations, enforceable requirements, binding determinations, orders, decrees, judgments, injunctions, permits, approvals, authorizations, licenses, permissions, written notices or binding agreements issued, promulgated or entered by any Governmental Authority, relating to the environment, to employee health or safety as it pertains to the use or handling of, or exposure to, any hazardous substance or contaminant, to preservation or reclamation of natural resources or to the management, release or threatened release of any hazardous substance, contaminant, or noxious odor, including without limitation the Hazardous Materials Transportation Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, the Clean Air Act of 1970, as amended, the Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of 1970, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the Safe Drinking Water Act of 1974, as amended, any similar or implementing state law, all amendments of any of them, and any regulations promulgated under any of them. E-1-11 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with the Company, is treated as a single employer under Section 414 of the Code. "ERISA Termination Event" shall mean (i) a "Reportable Event" described in Section 4043 of ERISA and the regulations issued thereunder (other than a "Reportable Event" not subject to the provision for 30-day notice to the PBGC under such regulations), or (ii) the withdrawal of the Company or any of its ERISA Affiliates from a "single employer" Plan during a plan year in which it was a "substantial employer", both of such terms as defined in Section 4001(a) of ERISA, or (iii) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC or (v) any other event or condition which is reasonably likely to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or (vi) the partial or complete withdrawal of the Company or any ERISA Affiliate of the Company from a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA. "Eurocurrency", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the LIBO Rate. "Event of Default" shall have the meaning assigned to such term in Article VI. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exchange Rate" shall mean, with respect to any Alternative Currency on a particular date, the rate at which such Alternative Currency may be exchanged into Dollars, as set forth on such date on the applicable Reuters currency page with respect to such Alternative Currency; provided, that the Company may make a one time election, with the approval of Citibank (such approval not to be unreasonably withheld), to use Bloomberg currency pages to determine Exchange Rate instead of Reuters currency pages. In the event that such rate does not appear on the applicable Reuters currency page, or Bloomberg currency page, as the case may be, the Exchange Rate with respect to such Alternative Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by Citibank and the Company or, in the absence of such agreement, such Exchange Rate shall instead be Citibank's spot rate of exchange in the London interbank market or other market where its foreign currency exchange operations in respect of such Alternative Currency is then being conducted, at or about 10:00 A.M., local time, at such date for the purchase of Dollars with such Alternative Currency for delivery two Business Days later; provided, however, that if at the time of any such determination, for any reason, no such spot rate is being quoted, Citibank may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error. "Extension Letter" shall mean a letter from the Company requesting an extension of the Maturity Date. E-1-12 "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as released on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so released for any day which is a Business Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as determined by Citibank, of the quotations for the day of such transactions received by Citibank from three Federal funds brokers of recognized standing selected by it. "Financial Officer" of any corporation shall mean the chief inancial officer, principal accounting officer or treasurer of such corporation. "Fixed Rate" shall mean, with respect to any Competitive Loan (other than a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid. "Fixed Rate Loan" shall mean a Competitive Loan bearing interest at a Fixed Rate. "Foreign Lender" shall mean, with respect to any Borrower, any Lender that is organized under the laws of a jurisdiction other than that in which such Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Funded Debt" shall mean Debt of the Company or a Subsidiary owning Restricted Property maturing by its terms more than one year after its creation and Debt classified as long-term debt under GAAP and, in the case of Funded Debt of the Company, ranking at least pari passu with the Loans. "GAAP" shall mean generally accepted accounting principles in the United States of America. "Governmental Authority" shall mean the government of any nation, including, but not limited to, the United States of America, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantee" of or by any Person (the "guarantor") shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. E-1-13 "Hazardous Substances" shall mean any toxic, radioactive, mutagenic, carcinogenic, noxious, caustic or otherwise hazardous substance, material or waste, including petroleum, its derivatives, by-products and other hydrocarbons, including, without limitation, polychlorinated biphenyls ("PCBs"), asbestos or asbestos-containing material, and any substance, waste or material regulated or that could reasonably be expected to result in liability under Environmental and Safety Laws. "Indenture" shall mean the Indenture dated as of June 1, 1993 between the Company and Chase, as successor to The Chase Manhattan Bank (National Association), as Trustee, as amended, supplemented or otherwise modified from time to time. "Interest Election Request" shall mean a request by the Company to convert or continue a Revolving Borrowing in accordance with Section 2.8. "Interest Payment Date" shall mean (a) with respect to any ABR Loan, the last day of each March, June, September and December, (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days' duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days' duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing. "Interest Period" shall mean (a) as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is 1, 2, 3, 6 months (or, if available, as determined by Citibank and each of the Lenders, 12 months) thereafter, as the Company may elect, and (b) as to any Fixed Rate Borrowing, the period (which shall not be less than seven days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "Lenders" shall mean (a) the financial institutions listed on Schedule 2.1 (other than any such financial institution that has ceased to be a party hereto, pursuant to an Assignment and Acceptance) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance or pursuant to the provisions of Section 2.6. E-1-14 "LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, the rate appearing on Page 3740 or Page 3750, as the case may be, of Dow Jones Markets (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by Citibank from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars or the applicable Alternative Currency in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for deposits in Dollars or the applicable Alternative Currency with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurocurrency Borrowing for such Interest Period shall be the rate per annum (rounded upwards, if necessary, to the next Basis Point) equal to the arithmetic average of the rates at which deposits in Dollars or the applicable Alternative Currency approximately equal in principal amount to such Borrowing and for a maturity comparable to such Interest Period are offered to the principal London offices of the Reference Lenders (or, if any Reference Lender does not at the time maintain a London office, the principal London office of any Affiliate of such Reference Lender) in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided, however, that, if only two Reference Lenders notify Citibank of the rates offered to such Reference Lenders (or any Affiliates of such Reference Lenders) as aforesaid, the LIBO Rate with respect to such Eurocurrency Borrowing shall be equal to the arithmetic average of the rates so offered to such Reference Lenders (or any such Affiliates). "Lien" shall mean any mortgage, lien, pledge, encumbrance, charge or security interest. "Loan Documents" means this Agreement, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary Termination and each promissory note held by a Lender pursuant to Section 2.10(e). "Loans" shall mean the loans made by the Lenders to the Borrowers pursuant to this Agreement. "Margin" shall mean, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be added to or subtracted from the LIBO Rate in order to determine the interest rate applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid. "Margin Regulations" shall mean Regulations G, T, U and X of the Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof. "Material Adverse Effect" shall mean a material adverse effect on the business, operations, properties or financial condition of the Company and its consolidated Subsidiaries, taken as a whole. "Maturity", when used with respect to any Security, shall mean the date on which the principal of such Security becomes due and payable as provided therein or in the Indenture, whether on a Repayment Date, at the Stated Maturity thereof or by declaration of acceleration, call for redemption or otherwise. E-1-15 "Maturity Date" shall mean March 17, 2003, subject to extension pursuant to Section 2.5. "Moody's" shall mean Moody's Investors Service, Inc. or any successor thereto. "Notice of Competitive Bid Request" shall mean a notification made pursuant to Section 2.4 in the form of Exhibit A-2. "Original Issue Discount Security" shall mean (i) any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof, and (ii) any other Security deemed an Original Issue Discount Security for United States Federal income tax purposes. "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. "Person" shall mean any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA), subject to the provisions of Title IV of ERISA or Section 412 of the Code that is maintained for current or former employees, or any beneficiary thereof, of the Company or any ERISA Affiliate. "Rating Agencies" shall mean Moody's and S&P. "Ratings" shall mean the ratings from time to time established by the Rating Agencies for senior, unsecured, non-credit-enhanced long-term debt of the Company. "Reference Lenders" shall mean Chase, Citibank and Deutsche Bank AG. "Register" shall have the meaning given such term in Section 8.4(d). "Repayment Date", when used with respect to any Security to be repaid, shall mean the date fixed for such repayment pursuant to such Security. "Required Lenders" shall mean, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing at least 51% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; provided that, for purposes of declaring the Loans to be due and payable pursuant to Article VI, and for all purposes after the Loans become due and payable pursuant to Article VI or the Commitments shall have expired or terminated, the Competitive Loan Exposures of the Lenders shall be included in their respective Revolving Credit Exposures in determining the Required Lenders. E-1-16 "Restricted Property" shall mean (i) any manufacturing facility, or portion thereof, owned or leased by the Company or any Subsidiary and located within the continental United States of America which, in the opinion of the Board of Directors of the Company, is of material importance to the business of the Company and its Subsidiaries taken as a whole, but no such manufacturing facility, or portion thereof, shall be deemed of material importance if its gross book value (before deducting accumulated depreciation) is less than 2% of Consolidated Net Tangible Assets, and (ii) any shares of capital stock or indebtedness of any Subsidiary owning any such manufacturing facility. As used in this definition, "manufacturing facility" means property, plant and equipment used for actual manufacturing and for activities directly related to manufacturing, and it excludes sales offices, research facilities and facilities used only for warehousing, distribution or general administration. "Revolving Credit Exposure" shall mean, with respect to any Lender at any time, the aggregate outstanding principal amount of such Lender's Revolving Loans at such time. "Revolving Loan" shall mean a Loan made pursuant to Section 2.3. "Sale and Leaseback Transaction" shall mean any arrangement with any Person pursuant to which the Company or any Subsidiary leases any Restricted Property that has been or is to be sold or transferred by the Company or the Subsidiary to such Person, other than (i) temporary leases for a term, including renewals at the option of the lessee, of not more than three years, (ii) leases between the Company and a Subsidiary or between Subsidiaries, (iii) leases of Restricted Property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation, of such Restricted Property, and (iv) arrangements pursuant to any provision of law with an effect similar to that under former Section 168(f)(8) of the Internal Revenue Code of 1954. "S&P" shall mean Standard & Poor's Ratings Group or any successor thereto. "SEC" shall mean the Securities and Exchange Commission. "Security" or "Securities" shall mean any note or notes, bond or bonds, debenture or debentures, or any other evidences of indebtedness, of any series authenticated and delivered from time to time under the Indenture. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, shall mean the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "subsidiary" shall mean, with respect to any Person (the "parent") at any date, (i) for purposes of Sections 5.9 and 5.10 only, any Person the majority of the outstanding Voting Stock of which is owned, directly or indirectly, by the parent or one or more subsidiaries of the parent of such Person and (ii) for all other purposes under this Agreement, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held. E-1-17 "Subsidiary" shall mean a subsidiary of the Company. "Taxes" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority and all liabilities with respect thereto. "Transactions" means the execution and delivery by the Borrowers of this Agreement (or, in the case of the Borrowing Subsidiaries, the Borrowing Subsidiary Agreements), the performance by the Borrowers of this Agreement, the borrowing of the Loans and the use of the proceeds thereof. "Type", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, "Rate" shall include the LIBO Rate, the Alternate Base Rate and the Fixed Rate. "Value" shall mean, with respect to a Sale and Leaseback Transaction, an amount equal to the present value of the lease payments with respect to the term of the lease remaining on the date as of which the amount is being determined, without regard to any renewal or extension options contained in the lease, discounted at the weighted average interest rate on the Securities of all series (including the effective interest rate on any Original Issue Discount Securities) which are outstanding on the effective date of such Sale and Leaseback Transaction and which have the benefit of Section 1007 of the Indenture under which the Securities are issued. "Voting Stock" shall mean, as applied to the stock of any corporation, stock of any class or classes (however designated) having by the terms thereof ordinary voting power to elect a majority of the members of the board of directors (or other governing body) of such corporation other than stock having such power only by reason of the happening of a contingency. "Wholly Owned Subsidiary" of any Person shall mean a subsidiary of such Person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity are, at the time any determination is being made, owned by such Person or one or more wholly owned subsidiaries of such Person or by such Person and one or more wholly owned subsidiaries of such Person. SECTION 1.2 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type (e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving Borrowing"). SECTION 1.3 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument E-1-18 or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.4 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time. ARTICLE II The Credits SECTION 2.1 Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Company and any Borrowing Subsidiary which is organized and existing under the laws of the United States of America or any State thereof from time to time during the Availability Period in Dollars in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Company and each applicable Borrowing Subsidiary may borrow, prepay and reborrow Revolving Loans. SECTION 2.2 Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.4. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments and Competitive Bids of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.14, (i) each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Company (on its own behalf or on behalf of any other applicable Borrower) may request in accordance herewith, and (ii) each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or Fixed Rate Loans as the Company (on its own behalf or on behalf of any other Borrower) may request in accordance herewith. Each Lender at its option may make any Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of any Borrower to repay such Loan in accordance with the terms of this Agreement. E-1-19 (c) At the commencement of each Interest Period for any Eurocurrency Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Each Competitive Borrowing denominated in Dollars shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000, and each Competitive Borrowing denominated in an Alternative Currency shall be in an aggregate principal amount that is not less than the Dollar Equivalent of $10,000,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 15 Eurocurrency Revolving Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Company (on its own behalf or on behalf of any other Borrower) shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.3 Requests for Revolving Borrowings. To request a Revolving Borrowing, the Company (on its own behalf or on behalf of any other applicable Borrower) shall notify Citibank of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 10:30 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to Citibank of a written Borrowing Request in the form of Exhibit A-5. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.2: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; (iv) in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; (v) the location and number of the account of the Company or the other applicable Borrowers to which funds are to be disbursed, which shall comply with the requirements of Section 2.7; and (vi) the applicable Borrower. If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Revolving E-1-20 Borrowing, then the Company shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, Citibank shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.4 Competitive Bid Procedure. (a) Subject to the terms and conditions set forth herein, from time to time during the Availability Period the Company (on its own behalf or on behalf of any other Borrower) may request Competitive Bids and the Company (on its own behalf and on behalf of any other Borrowers) may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; provided that no Competitive Loan may be requested that would result in the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures exceeding the total Commitments. To request Competitive Bids, the Company (on its own behalf and on behalf of any other Borrowers) shall hand deliver or telecopy to the Advance Agent a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the Advance Agent, in the case of a Eurocurrency Borrowing, not later than 10:00 a.m., New York City time, four Business Days before the date of the proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one Business Day before the date of the proposed Borrowing. A Competitive Bid Request that does not conform substantially to Exhibit A-1 may be rejected in the Advance Agent's sole discretion, and the Advance Agent shall promptly notify the Company of such rejection by telecopy. Each Competitive Bid Request shall specify the following information in compliance with Section 2.2: (i) the aggregate amount of the requested Borrowing; (ii) the Currency of the requested Borrowing; (iii) the date of such Borrowing, which shall be a Business Day; (iv) whether such Borrowing is to be a Eurocurrency Borrowing or a Fixed Rate Borrowing; (v) the Interest Period to be applicable to such Borrowing, which shall be a period (vi) the location and number of the account of the Company or any other Borrower to (vii) the applicable Borrower. If no election as to the Currency of a Borrowing is specified in any Competitive Bid Request, then the applicable Borrower shall be deemed to have requested a Borrowing in Dollars. Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Advance Agent shall notify the Lenders of the details thereof by telecopy, inviting the Lenders to submit Competitive Bids. E-1-21 (b) Each Lender may (but shall not have any obligation to) make one or more Competitive Bids to such Borrower in response to a Competitive Bid Request. Each Competitive Bid by a Lender must be received by the Advance Agent by telecopy, in the form of Exhibit A-3 hereto, in the case of a Eurocurrency Competitive Borrowing, not later than 9:30 a.m., New York City time, three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the proposed date of such Competitive Borrowing. Competitive Bids that do not conform substantially to the format of Exhibit A-3 may be rejected by the Advance Agent, and the Advance Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount of the Competitive Loan or Loans that the Lender is willing to make (which, in the case of a Competitive Borrowing denominated in Dollars, shall be a minimum of $5,000,000 and an integral multiple of $1,000,000 and, in the case of a Competitive Borrowing denominated in an Alternative Currency, shall be a minimum principal amount the Dollar Equivalent of which is equal to $5,000,000, and which may equal the entire principal amount of the Competitive Borrowing request by such Borrower), (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof. (c) The Advance Agent shall promptly notify such Borrower by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Lender that shall have made such Competitive Bid. (d) Subject only to the provisions of this paragraph, such Borrower may accept or reject any Competitive Bid. Such Borrower shall notify the Advance Agent by telephone, confirmed by telecopy in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject each Competitive Bid, in the case of a Eurocurrency Competitive Borrowing, not later than 2:00 p.m., New York City time, three Business Days before the date of the proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 2:00 p.m., New York City time, on the proposed date of the Competitive Borrowing; provided that (i) the failure of such Borrower to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) such Borrower shall not accept a Competitive Bid made at a particular Competitive Bid Rate if the Company rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by such Borrower shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, such Borrower may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is, in the case of a Competitive Borrowing denominated in Dollars, in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000 and, in the case of a Competitive Borrowing denominated in an Alternative Currency, in a minimum principal amount the Dollar Equivalent of which is $5,000,000; provided further that if a Competitive Loan must be in an amount less than $5,000,000 or an amount in an Alternative Currency of which the Dollar Equivalent is less than $5,000,000 because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of $5,000,000 or an amount in an Alternative Currency of which the Dollar Equivalent is $5,000,000 or any integral multiple of $1,000,000 thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of such Borrower. A notice given by such Borrower pursuant to this paragraph (d) shall be irrevocable. E-1-22 (e) The Advance Agent shall promptly notify each bidding Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted. (f) If the Advance Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the Company at least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Advance Agent pursuant to paragraph (b) of this Section. (g) All notices required by this Section 2.4 shall be given in accordance with Section 8.1. SECTION 2.5 Extension of Maturity Date. (i) The Company may, by sending an Extension Letter to Citibank (in which case Citibank shall promptly deliver a copy to each of the Lenders), during the period of not less than 30 days and not more than 60 days prior to any anniversary of the date hereof, request that the Lenders extend the Maturity Date at the time in effect to the first anniversary of such date. Each Lender, acting in its sole discretion, shall, by notice to Citibank given not more than 20 days after the date of the Extension Letter, advise Citibank in writing whether or not such Lender agrees to such extension (each Lender that so advises Citibank that it will not extend the Maturity Date, being referred to herein as a "Non-extending Lender"); provided that any Lender that does not advise Citibank by the 20th day after the date of the Extension Letter shall be deemed to be a Non-extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to agree. (ii) (A) If Lenders holding Commitments that aggregate at least 51% of the total Commitments on the 20th day after the date of the Extension Letter shall not have agreed to extend the Maturity Date, then the Maturity Date shall not be so extended and the outstanding principal balance of all Loans and other amounts payable hereunder shall be payable on such Maturity Date. (B) If (and only if) Lenders holding Commitments that aggregate at least 51% of the total Commitments on the 20th day after the date of the Extension Letter shall have agreed to extend the Maturity Date, then the Maturity Date applicable to the Lenders that shall so have agreed, shall be the first anniversary of the current Maturity Date. In the event of such extension, the Commitment of each Non-extending Lender shall terminate on the Maturity Date in effect prior to such extension, all Loans and other amounts payable hereunder to such Non-extending Lenders shall become due and payable on such Maturity Date and the total Commitment of the Lenders hereunder shall be reduced by the Commitments of Non-extending Lenders so terminated on such Maturity Date. (iii) In the event that the conditions of clause (B) of paragraph (ii) above have been satisfied, the Company shall have the right on or before the Maturity Date in effect prior to the requested extension, at its own expense, to require any Non-extending Lender to transfer and assign without recourse (except as to title and the absence of Liens created by it) (in accordance with and subject to the restrictions contained in Section 8.4) all its interests, rights and obligations under this Agreement to one or more E-1-23 banks or other financial institutions identified to the Non-extending Lender, which may include any Lender (each an "Additional Commitment Lender"), provided that (x) such Additional Commitment Lender, if not already a Lender hereunder, shall be subject to the approval of Citibank and the Company (such approvals not to be unreasonably withheld), (y) such assignment shall become effective as of a date specified by the Company (which shall not be later than the Maturity Date in effect prior to the requested extension) and (z) the Additional Commitment Lender shall pay to such Non-extending Lender in immediately available funds on the effective date of such assignment the principal of and interest accrued to the date of payment on the Loans made by it hereunder and all other amounts accrued for its account or owed to it hereunder. Notwithstanding the foregoing, no extension of the Maturity Date shall become effective unless, on the Maturity Date in effect prior to the requested extension the conditions set forth in paragraphs (a) and (b) of Section 4.2 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to the current Maturity Date) and Citibank shall have received a certificate to that effect dated such Maturity Date and executed by a Financial Officer of the Company. SECTION 2.6 Increase of Commitments. (a) The Company may, by notice to Citibank (in which case Citibank shall promptly deliver a copy to each of the Lenders), request that the total Commitments be increased by an amount that will equal or exceed $20,000,000, but that will not result in the total Commitments exceeding $500,000,000. Each such notice shall set forth the amount of the requested increase in the total Commitments and the date on which such increase is requested to become effective (which shall be not less than 20 days or more than 45 days after the date of such notice (or such shorter time as may be agreed upon by the Company and Citibank)), and shall offer each Lender the opportunity to increase its Commitment by its Applicable Percentage of the proposed increased amount. Each Lender shall, by notice to the Company and Citibank given not more than 20 days after the date of the Company's notice (or such shorter time as may be agreed upon by the Company and Citibank), either agree to increase its Commitment by all or a portion of the offered amount (each Lender so agreeing being an "Increasing Lender") or decline to increase its Commitment (and any Lender that does not deliver such a notice within such period of 20 days (or such shorter time as may be agreed upon by the Company and Citibank) shall be deemed to have declined to increase its Commitment) (each Lender so declining or deemed to have declined being a "Non-increasing Lender"). In the event that, on the 20th day (or such shorter time as may be agreed upon by the Company and Citibank) after the Company shall have delivered a notice pursuant to the first sentence of this paragraph, the Lenders shall have agreed pursuant to the preceding sentence to increase their Commitments by an aggregate amount less than the increase in the total Commitments requested by the Company, Citibank or the Company may arrange for one or more banks or other financial institutions (any such bank or other financial institution as referred to in this clause (a) being called an "Augmenting Lender"), which may include any Lender, to extend Commitments or increase their existing Commitments in an aggregate amount equal to the unsubscribed amount, provided that each Augmenting Lender, if not already a Lender hereunder, shall be subject to the approval of the Company and Citibank (which approvals shall not be unreasonably withheld) and each Augmenting Lender shall execute all such documentation as Citibank shall reasonably specify to evidence its Commitment and its status as a Lender hereunder. Increases and new Commitments created pursuant to this clause (a) shall become effective on the date specified in the notice delivered by the Company pursuant to the first sentence of this paragraph. Notwithstanding the foregoing, no increase in the total Commitments (or in the Commitment of any Lender) shall become effective under this paragraph unless, (i) on the date of such increase, the conditions set forth in paragraphs (a) and (b) of Section 4.2 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to such increase) and Citibank shall have received a certificate to that effect dated such date and executed by a E-1-24 Financial Officer of the Company and (ii) to the extent requested from the Company, Citibank shall have received (with sufficient copies for each of the Lenders) documents consistent with those delivered on the Effective Date under clauses (b) and (c) of Section 4.1 as to the corporate power and authority of the Company to borrow hereunder after giving effect to such increase. (b) On the effective date (the "Increase Effective Date") of any increase in the total Commitments pursuant to Section 2.6(a) (the "Commitment Increase"), (i) the aggregate principal amount of the Loans outstanding (the "Initial Loans") immediately prior to giving effect to the Commitment Increase on the Increase Effective Date shall be deemed to be paid, (ii) each Increasing Lender shall pay to Citibank in same day funds an amount equal to the difference between (A) the product of (1) such Increasing Lender's Applicable Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings (as hereinafter defined) and (B) the product of (1) such Increasing Lender's Applicable Percentage (calculated without giving effect to the Commitment Increase) multiplied by (2) the amount of the Initial Loans, (iii) each Augmenting Lender shall pay to Citibank in same day funds an amount equal to the product of (1) such Augmenting Lender's Applicable Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, and (iv) after Citibank receives the funds specified in clauses (ii) and (iii) above, Citibank shall pay to each Non-increasing Lender the portion of such funds that is equal to the difference between (A) the product of (1) such Non-increasing Lender's Applicable Percentage (calculated without giving effect to the Commitment Increase) multiplied by (2) the amount of the Initial Loans, and (B) the product of (1) such Non-increasing Lender's Applicable Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, (v) after the effectiveness of the Commitment Increase, the Company shall be deemed to have made new Borrowings (the "Subsequent Borrowings") in an aggregate principal amount equal to the aggregate principal amount of the Initial Loans and of the types and for the Interest Periods specified in a Borrowing Request delivered to Citibank in accordance with Section 2.3, (vi) each Non-increasing Lender, each Increasing Lender and each Augmenting Lender shall be deemed to hold its Applicable Percentage of each Subsequent Borrowing (calculated after giving effect to the Commitment Increase) and (vii) the Company shall pay each Increasing Lender and each Non-increasing Lender any and all accrued but unpaid interest on the Initial Loans. The deemed payments made pursuant to clause (i) above in respect of each Eurocurrency Loan shall be subject to indemnification by the Company pursuant to the provisions of Section 2.16 if the Increase Effective Date occurs other than on the last day of the Interest Period relating thereto. If requested by a Lender, the Company, at its own expense, shall execute and deliver to Citibank on behalf of each Increasing Lender and each Augmenting Lender a promissory note complying with the provisions of Section 2.10(e) hereof, in a principal amount equal to the Commitment of such Lender hereunder after giving effect to the Commitment Increase. Each Increasing Lender shall promptly surrender to Citibank any previous promissory note held by it, for return to the Company and shall indemnify the Company for any claims, losses, damages or expenses (including reasonable fees and disbursements of counsel) arising out of its failure to surrender such promissory note, provided the Company does not (unless pursuant to a final judgment of a court of competent jurisdiction) make any payments in respect of such promissory note. SECTION 2.7 Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in Dollars or in the applicable Alternative Currency, as the case may be, to the account of Citibank or an Affiliate thereof most recently designated by it for such purpose by notice E-1-25 to the Lenders, by 2:00 p.m., New York City time (or, in the case of any Competitive Loan with respect to which a Borrower shall have requested funding in another jurisdiction, to such account in such jurisdiction as Citibank shall designate for such purpose by notice to the applicable Lenders, by 2:00 p.m., local time). Citibank will make such Loans available to such Borrower by promptly crediting the amounts so received, in like funds, to an account of such Borrower maintained with Citibank in New York City (or, in the case of any Competitive Loan with respect to which such Borrower shall have requested funding in another jurisdiction, to such account in such jurisdiction as such Borrower shall have designated in the applicable Competitive Bid Request). (b) Unless Citibank shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to Citibank such Lender's share of such Borrowing, Citibank may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to such Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to Citibank, then the applicable Lender and the applicable Borrower severally agree to pay to Citibank forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to Citibank, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by Citibank in accordance with banking industry rules on interbank compensation or (ii) in the case of such Borrower, the interest rate on the applicable Borrowing; provided that no repayment by such Borrower pursuant to this sentence shall be deemed to be a prepayment for purposes of Section 2.16. If such Lender pays such amount to Citibank, then such amount shall constitute such Lender's Loan included in such Borrowing. SECTION 2.8 Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Company (on its own behalf or on behalf of any other Borrower) may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Company (on its own behalf or on behalf of any other Borrower) may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Competitive Borrowings, which may not be converted or continued. (b) To make an election pursuant to this Section, the Company (on its own behalf or on behalf of any other Borrower) shall notify Citibank of such election by telephone by the time that a Borrowing Request would be required under Section 2.3 if the Company (on its own behalf or on behalf of any other Borrower) were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to Citibank of a written Interest Election Request in a form approved by Citibank and signed by the Company. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.2: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); E-1-26 (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and (iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Company (on its own behalf or on behalf of any other Borrower) shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, Citibank shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Company (on its own behalf or on behalf of any other Borrower) fails to deliver a timely Interest Election Request with respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and Citibank, at the request of the Required Lenders, so notifies the Company, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.9 Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date. (b) The Company may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000 and (ii) the Company shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the sum of the Revolving Credit Exposures plus the Competitive Loan Exposures would exceed the total Commitments. (c) The Company shall notify Citibank of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, Citibank shall advise the Lenders of the contents thereof. Each notice delivered by the Company pursuant to this Section shall E-1-27 be irrevocable; provided that a notice of termination of the Commitments delivered by the Company may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Company (by notice to Citibank on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent (subject to the provisions of Section 2.6). Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. SECTION 2.10 Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby unconditionally promises to pay (i) to Citibank for the account of each Lender the then unpaid principal amount of its Revolving Loans on the Maturity Date and (ii) to Citibank for the account of each Lender the then unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable to such Loan. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) Citibank shall maintain a Register pursuant to subsection 8.4(d), and an account for each Lender in which it shall record (i) the amount of each Loan made hereunder and any promissory note evidencing such Loan, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by Citibank hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the Register and the accounts of each Lender maintained pursuant to paragraphs (b) and (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or Citibank to maintain such accounts or any error therein shall not in any manner affect the obligation of any Borrower to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans made by it be evidenced by a promissory note for its Competitive Loans and a promissory note for its Revolving Loans. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by Citibank. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 8.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its assigns). SECTION 2.11 Prepayment of Loans. (a) The applicable Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section; provided that no Borrower shall have the right to prepay any Competitive Loan without the prior consent of the Lender thereof. E-1-28 (b) The Company (on its own behalf or on behalf of any other Borrower) shall notify Citibank by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing, not later than 10:00 a.m., New York City time, three Business Days before the date of prepayment and (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 10:00 a.m., New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.9, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.9. Promptly following receipt of any such notice relating to a Revolving Borrowing, Citibank shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.2. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13. SECTION 2.12 Fees. (a) The Company agrees to pay to Citibank for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the date hereof to but excluding the date on which such Commitment terminates; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such facility fee shall continue to accrue on the daily amount of such Lender's Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the Commitments terminate shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (b) The Company agrees to pay to the Administrative Agents, for their own account, the administrative, auction and other fees separately agreed upon between the Company and the Administrative Agents (collectively, the "Administrative Fees"). (c) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to Citibank for distribution, in the case of facility fees, to the Lenders. Fees paid shall not be refundable under any circumstances. SECTION 2.13 Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate. (b) The Loans comprising each Eurocurrency Borrowing shall bear interest (i) in the case of a Eurocurrency Revolving Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Loan. (c) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan. E-1-29 (d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 1% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 1% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section. (e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (f) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at time when the Alternate Base Rate is based on clause (a) of the first sentence of the definition of Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall be determined by Citibank, and such determination shall be conclusive absent manifest error. SECTION 2.14 Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurocurrency Borrowing: (a) Citibank shall have determined (which determination shall be made in good faith and shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period; or (b) Citibank is advised by the Required Lenders (or, in the case of a Eurocurrency Competitive Loan, the Lender that is required to make such Loan) that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; then Citibank shall give notice thereof to the Company (on its own behalf or on behalf of the applicable Borrower) and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until Citibank notifies the Company and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurocurrency Borrowing shall be ineffective, (ii) if any Borrowing Request requests a Eurocurrency Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) any request by the Company (on its own behalf or on behalf of any Borrower) for a Eurocurrency Competitive Borrowing shall be E-1-30 ineffective; provided that (A) if the circumstances giving rise to such notice do not affect all the Lenders, then requests by the Company for Eurocurrency Competitive Borrowings may be made to Lenders that are not affected thereby and (B) if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted. SECTION 2.15 Increased Costs. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or (ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurocurrency Loans or Fixed Rate Loans made by such Lender; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan or Fixed Rate Loan (or of maintaining its obligation to make any such Loan) by an amount deemed by such Lender to be material or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, then the applicable Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. (b) If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time the Company will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company as specified in paragraph (a) or (b) of this Section, and setting forth in reasonable detail the manner in which such amount or amounts shall have been determined, shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 60 days prior to the date that such Lender notifies such Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 60-day period referred to above shall be extended to include the period of retroactive effect thereof. (e) Notwithstanding the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any Competitive Loan if the Change in Law that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid pursuant to which such Loan was made. E-1-31 SECTION 2.16 Break Funding Payments. In the event of (a) the payment of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan, or (e) the assignment of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by any Borrower pursuant to Section 2.19, then, in any such event, the applicable Borrower shall compensate each Lender for the out-of-pocket loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the present value of the excess, if any, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, refinanced or not borrowed (assumed to be the LIBO Rate applicable thereto) for the period from the date of such payment, prepayment, refinancing or failure to borrow or refinance to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow or refinance the Interest Period for such Loan which would have commenced on the date of such failure) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid or not borrowed or refinanced for such period or Interest Period, as the case may be. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section and setting forth in reasonable detail the manner in which such amount or amounts shall have been determined shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. Such Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.17 Taxes. (a) Any and all payments to the Lenders or the Administrative Agents hereunder by a Borrower or on behalf of any Borrower shall be made free and clear of and without deduction for any and all current or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding (i) taxes imposed on any Administrative Agent or any Lender (or participant) as a result of a present or former connection between such Administrative Agent or such Lender (or participant) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than as a result of entering into this Agreement, performing any obligations hereunder, receiving any payments hereunder or enforcing any rights hereunder) and (ii) any taxes that are attributable solely to the failure of any Non-U.S. Lender (as defined in Section 2.17(g) below) to comply with Section 2.17 (g) or 2.17(h) (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, "Non-Excluded Taxes"). If the relevant Borrower shall be required to deduct any Non-Excluded Taxes from or in respect of any sum payable hereunder to any Lender or any Administrative Agent, (i) the sum payable shall be increased by the amount (an "Additional Amount") necessary so that after making all required deductions (including deductions applicable to Additional Amounts payable under this Section 2.17) such Lender or such Administrative Agent (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the relevant Borrower shall make such deductions and (iii) the relevant Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. E-1-32 (b) In addition, the relevant Borrower (or the Company, as guarantor, as applicable) shall pay to the relevant Governmental Authority in accordance with applicable law any current or future stamp, intangibles or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document that are imposed by a Governmental Authority in a jurisdiction in which the relevant Borrower or the Company is incorporated, organized, managed and controlled or considered to have its seat or otherwise has a connection (other than as a result of entering into this Agreement, performing any obligations hereunder, receiving any payments hereunder or enforcing any rights hereunder) ("Other Taxes"). (c) The relevant Borrower (or the Company, as guarantor, as applicable) shall indemnify each Lender (or participant) and each Administrative Agent for the full amount of Non-Excluded Taxes and Other Taxes paid by such Lender (or participant) or such Administrative Agent, as the case may be, and any liability (including penalties, interest and expenses (including reasonable attorney's fees and expenses)) arising therefrom or with respect thereto, whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared by a Lender, or an Administrative Agent on its behalf and setting forth in reasonable detail the manner in which such amount shall have been determined, absent manifest error, shall be final, conclusive and binding for all purposes. Such indemnification shall be made within 30 days after the date the Lender or the Administrative Agent, as the case may be, makes written demand therefor, which written demand shall be made within 60 days of the date such Lender or Administrative Agent receives written demand for payment of such Taxes or Other Taxes from the relevant Governmental Authority. (d) If a Lender (or participant) or an Administrative Agent receives a refund in respect of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the relevant Borrower or with respect to which the relevant Borrower has paid Additional Amounts pursuant to this Section 2.17, it shall within 30 days from the date of such receipt pay over such refund to the relevant Borrower (but only to the extent of indemnity payments made, or Additional Amounts paid, by the relevant Borrower under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender (or participant) or such Administrative Agent and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the relevant Borrower, upon the request of such Lender (or participant) or such Administrative Agent, agrees to repay the amount paid over to the relevant Borrower (plus penalties, interest or other charges) to such Lender (or participant) or such Administrative Agent in the event such Lender (or participant) or such Administrative Agent is required to repay such refund to such Governmental Authority. (e) As soon as practicable after the date of any payment of Non- Excluded Taxes or Other Taxes by the relevant Borrower to the relevant Governmental Authority, the relevant Borrower will deliver to Citibank, at its addresses referred to in Section 8.1, the original or a certified copy of a receipt issued by such Governmental Authority evidencing payment thereof. (f) Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 2.17 shall survive the payment in full of the principal of and interest on all Loans made hereunder. E-1-33 (g) Each Lender (or participant) that is not a United States Person as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the Borrower and Citibank two copies of either United States Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c)(3)(A) of the Code, is not a 10 percent shareholder (within the meaning of Section 881(c)(3)(B) of the Code) of the Company and is not a controlled foreign corporation related to the Company (within the meaning of Section 881(c)(3)(C) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax on payments by the Company under this Agreement. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of a participant, on or before the date such participant becomes a participant hereunder) and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Notwithstanding any other provision of this Section 2.17(g), a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.17(g) that such Non-U.S. Lender is not legally able to deliver. (h) A Lender (or participant) that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which a Borrowing Subsidiary is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrowing Subsidiary (with a copy to Citibank), at the time or times prescribed by applicable law or reasonably requested by the Borrowing Subsidiary, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender (or participant) is legally entitled to complete, execute and deliver such documentation and in such Lender's reasonable judgment such completion, execution or submission would not materially prejudice the legal position of such Lender (or participant). (i) The relevant Borrower shall not be required to indemnify any Lender, or to pay any Additional Amounts to any Lender, in respect of any withholding tax pursuant to paragraph (a) or (c) above to the extent that (i) the obligation to withhold amounts with respect to such withholding tax was in effect and would apply to amounts payable to such Lender on the date such Lender became a party to this Agreement (or, in the case of a participant, on the date such participant became a participant hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender designated such New Lending Office with respect to a Loan or, with respect to payments by a Borrower pursuant to a Competitive Loan, as of the date the Company accepts a Competitive Bid pursuant to Section 2.4(d); provided, however, that this clause (i) shall not apply to any Lender (or participant) if the assignment, participation, transfer or designation of a New Lending Office was made at the request of the relevant Borrower; and provided further, however, that this clause (i) shall not apply to the extent the indemnity payment or Additional Amounts any Lender (or participant) would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or Additional Amounts that the Lender (or participant) making the assignment, participation, transfer or designation of such New Lending Office would have been entitled to receive in the absence of such assignment, participation, transfer or designation, or (ii) the obligation to pay such Additional Amounts would not have arisen but for a failure by such Lender (or participant) to comply with the provisions of paragraph (g) or (h) above. E-1-34 (j) Any Lender (or participant) claiming any indemnity payment or Additional Amounts payable pursuant to this Section 2.17 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by the relevant Borrower or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such indemnity payment or Additional Amounts that may thereafter accrue and would not, in the sole determination of such Lender (or participant), be otherwise disadvantageous to such Lender (or participant). (k) Nothing contained in this Section 2.17 shall require any Lender (or participant) or any Administrative Agent to make available any of its tax returns (or any other information that it deems to be confidential or proprietary). SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) Each Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 3:00 p.m., local time at the place of payment, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of Citibank, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to Citibank at its offices at 399 Park Avenue, New York, New York, or such other location as Citibank shall designate from time to time, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 8.5 shall be made directly to the Persons entitled thereto. Citibank shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars or, in the case of Competitive Loans, the applicable Currency, as the case may be. (b) If at any time insufficient funds are received by and available to Citibank to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such E-1-35 participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation. (d) Unless Citibank shall have received notice from a Borrower prior to the date on which any payment is due to Citibank for the account of the Lenders hereunder that such Borrower will not make such payment, Citibank may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to Citibank forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Citibank, at the greater of the Federal Funds Effective Rate and a rate determined by Citibank in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.7(b) or 2.18(d), then Citibank may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by Citibank for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.19 Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to file any certificate or document requested by the Company (consistent with legal and regulatory restrictions), to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such filing, designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not otherwise be disadvantageous to such Lender. (b) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then such Borrower may, upon notice to such Lender and Citibank, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 8.4), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it and any and all rights and interests related thereto) to an assignee that shall assume such obligations (which assignee may be another E-1-36 Lender, if a Lender accepts such assignment); provided that (i) such Borrower shall have received the prior written consent of the Administrative Agents which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans (other than Competitive Loans), accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or such Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. SECTION 2.20 Borrowing Subsidiaries. The Company may designate any Wholly Owned Subsidiary of the Company as a Borrowing Subsidiary. Upon the receipt by Citibank of a Borrowing Subsidiary Agreement executed by such a Wholly Owned Subsidiary and the Company, such Wholly Owned Subsidiary shall be a Borrowing Subsidiary and a party to this Agreement. A Subsidiary shall cease to be a Borrowing Subsidiary hereunder at such time as no Loans, fees or any other amounts due in connection therewith pursuant to the terms hereof shall be outstanding to such Subsidiary and such Subsidiary and the Company shall have executed and delivered to Citibank a Borrowing Subsidiary Termination; provided that, notwithstanding anything herein to the contrary, no Borrowing Subsidiary shall cease to be a Borrowing Subsidiary solely because it no longer is a Wholly Owned Subsidiary of the Company so long as such Borrowing Subsidiary and the Company shall not have executed and delivered to Citibank a Borrowing Subsidiary Termination and the Company's guarantee of the Borrowing Subsidiary Obligations of such Borrowing Subsidiary pursuant to Section 8.16 has not been released. ARTICLE III Representations and Warranties The Company represents and warrants to each of the Lenders and each of the Administrative Agents that: SECTION 3.1 Organization; Powers. The Company (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted and (c) is qualified to do business in every jurisdiction where such qualification is required, except where the failure so to qualify would not result in a Material Adverse Effect. Each Borrower has the corporate power and authority to execute and deliver this Agreement (or, in the case of the Borrowing Subsidiaries, the Borrowing Subsidiary Agreements), to perform its obligations under this Agreement and to borrow hereunder. SECTION 3.2 Authorization. The Transactions (a) are within each Borrower's corporate powers and have been duly authorized by all requisite corporate action and (b) will not (i) violate (A) any provision of any law, statute, rule or regulation (including, without limitation, the Margin Regulations), (B) any provision of the certificate of incorporation or other constitutive documents or by-laws of the Company or any Subsidiary, (C) any order of any Governmental Authority or (D) any provision of any indenture, agreement or other instrument to which the Company or any Subsidiary is a party or by which it or any of its property is or may be bound, (ii) be in E-1-37 conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any such indenture, agreement or other instrument or (iii) result in the creation or imposition of any lien upon any property or assets of the Company or any Subsidiary other than, in the case of clauses (i)(A), (i)(C), (i)(D), (ii) and (iii), any such violations, conflicts, breaches, defaults or liens that, individually or in the aggregate, would not have a Material Adverse Effect. SECTION 3.3 Enforceability. Each Loan Document constitutes or, when executed and delivered, will constitute a legal, valid and binding obligation of each Borrower party thereto, enforceable in accordance with its terms (subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity)). SECTION 3.4 Governmental Approvals. No action, consent or approval of, registration or filing with or other action by any Governmental Authority is required in connection with the Transactions. SECTION 3.5 Financial Statements; No Material Adverse Change. (a) The Company has heretofore furnished to the Administrative Agents and the Lenders copies of (i) its audited consolidated financial statements for the years ended December 31, 1995 and December 31, 1996, respectively, which were included in its annual report on Form 10-K dated December 31, 1995 and December 31, 1996, respectively (the "10-Ks"), filed with the SEC under the Exchange Act and (ii) its unaudited consolidated financial statements for the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, which were included in its Quarterly Report on Form 10-Q dated March 31, 1997, June 30, 1997 and September 30, 1997, respectively (the "10-Qs"), filed with the SEC under the Exchange Act. Such financial statements present fairly, in all material respects, the financial condition and the results of operations of the Company and the Subsidiaries, taken as a whole, as of, and for accounting periods ending on, such dates in accordance with GAAP (subject, in the case of unaudited statements, to normal year-end audit adjustments and the absence of footnotes). (b) Since December 31, 1997, there has been no material adverse effect on the business, operations, properties or financial condition of the Company and its Subsidiaries, taken as a whole. SECTION 3.6 Litigation; Compliance with Laws. (a) Except as disclosed in either the most recent 10-K or the most recent 10-Q, as of the date hereof, there are no actions, proceedings or investigations filed or (to the knowledge of the Company) threatened against the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal which question the validity or legality of this Agreement, the Transactions or any action taken or to be taken pursuant to this Agreement and no order or judgment has been issued or entered restraining or enjoining the Company from the execution, delivery or performance of this Agreement nor is there any other action, proceeding or investigation filed or (to the knowledge of the Company) threatened against the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal which would be reasonably likely to result in a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default would be reasonably likely to result in a Material Adverse Effect. E-1-38 SECTION 3.7 Federal Reserve Regulations. No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose which entails a violation of, or which is inconsistent with, the provisions of the Margin Regulations. SECTION 3.8 Use of Proceeds. All proceeds of the Loans shall be used for the purposes referred to in the recitals to this Agreement. SECTION 3.9 Taxes. The Company and the Subsidiaries have filed or caused to be filed all Federal and material state, local and foreign Tax returns which are required to be filed by them, and have paid or caused to be paid all Taxes shown to be due and payable on such returns or on any assessments received by any of them, other than any Taxes or assessments the validity of which is being contested in good faith by appropriate proceedings, and with respect to which appropriate accounting reserves have, to the extent required by GAAP, been set aside. SECTION 3.10 Employee Benefit Plans. The present aggregate value of accumulated benefit obligations of all Plans and all foreign employee pension benefit plans (based on those assumptions used for disclosure of such obligations in corporate financial statements in accordance with GAAP) did not, as of the most recent statements available, exceed the aggregate value of the assets for all such plans. Except as would not individually or in the aggregate have a Material Adverse Effect: (a) no ERISA Termination Event has occurred or (b) each Plan has been established and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations. SECTION 3.11 Environmental and Safety Matters. Other than exceptions to any of the following that would not in the aggregate have a Material Adverse Effect: (i) the Company and the Subsidiaries comply and have complied with all applicable Environmental and Safety Laws; (ii) there are and have been no Hazardous Substances at any property owned, leased or operated by the Company now or in the past, or at any other location, that could reasonably be expected to result in liability of the Company or any Subsidiary under any Environmental and Safety Law or result in costs to any of them arising out of any Environmental and Safety Law; (iii) there are no past, present, or, to the knowledge of the Company and the Subsidiaries, anticipated future events, conditions, circumstances, practices, plans, or legal requirements that could reasonably be expected to prevent the Company or any of the Subsidiaries from, or increase the costs to the Company or any of the Subsidiaries of, complying with applicable Environmental and Safety Laws or obtaining or renewing all material permits, approvals, authorizations, licenses or permissions required of any of them pursuant to any such law; and (iv) neither the Company nor any of the Subsidiaries has retained or assumed, by contract or operation of law, any liability, fixed or contingent, under any Environmental and Safety Law. SECTION 3.12 Properties. (a) Each of the Company and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property that are material to the business of the Company and its Subsidiaries taken as a whole, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property that are material to the business of the Company and its Subsidiaries taken as a whole, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. E-1-39 SECTION 3.13 Investment and Holding Company Status. Neither the Company nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. ARTICLE IV Conditions SECTION 4.1 Effective Date. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 8.7): (a) Citibank (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to Citibank (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) Citibank shall have received a favorable written opinion (addressed to the Administrative Agents and the Lenders and dated the Effective Date) of Cravath, Swaine & Moore, counsel to the Company, and John L. McGoldrick, Esq., Senior Vice President Law and Strategic Planning and General Counsel of the Company, collectively to the effect set forth in Exhibit C. The Company hereby requests such counsel to deliver such opinions. (c) Citibank shall have received such documents and certificates as Citibank or its counsel may reasonably request relating to the organization, existence and good standing of the Company, the authorization of the Transactions and any other legal matters relating to the Company, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agents and their counsel. (d) Citibank shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.2. (e) The Administrative Agents shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder. Citibank shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding. E-1-40 SECTION 4.2 Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (other than a Borrowing made solely to refinance outstanding Borrowings that does not increase the aggregate principal amount of the Loans of any Lender outstanding) is subject to the satisfaction of the following conditions: (a) The representations and warranties of the Company set forth in this Agreement other than those set forth in Sections 3.5(b), 3.6(a), 3.10 and 3.11 shall be true and correct in all material respects (provided that such representations and warranties qualified as to materiality shall be true and correct) on and as of the date of such Borrowing with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. (b) At the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing. Each Borrowing shall be deemed to constitute a representation and warranty by the Company on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary. The obligation of each Lender to make a Loan on the occasion of the first Borrowing by each Borrowing Subsidiary is subject to the satisfaction of the following condition: Citibank (or their counsel) shall have received a Borrowing Subsidiary Agreement properly executed by such Borrowing Subsidiary and the Company. ARTICLE V Covenants A. Affirmative Covenants. The Company covenants and agrees with each Lender and each Administrative Agent that so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any fees or any other amounts payable hereunder shall be unpaid, unless the Required Lenders shall otherwise consent in writing, it will, and will cause each of the Subsidiaries to: SECTION 5.1 Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises that are material to the business of the Company and its Subsidiaries as a whole, except as expressly permitted under Section 5.7 and except, in the case of any Subsidiary, where the failure to do so would not result in a Material Adverse Effect. SECTION 5.2 Business and Properties. Comply in all respects with all applicable laws, rules, regulations and orders of any Governmental Authority (including Environmental and Safety Laws and ERISA), whether now in effect or hereafter enacted except instances that could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect; and at all times maintain and preserve all property material to the conduct of the business of the Company and its Subsidiaries as a whole 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, E-1-41 additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times, except where the failure to do so would not result in a Material Adverse Effect. SECTION 5.3 Financial Statements, Reports, Etc. Furnish to the Administrative Agents and each Lender: (a) within 95 days after the end of each fiscal year, its annual report on Form 10-K as filed with the SEC, incl uding its consolidated balance sheet and the related co nsolidated earnings statement showing its co nsolidated financial condition as of the close of such fiscal year and the consolidated results of its operations during such year, all audited by Price Waterhouse LLP or other independent certified public accountants of recognized national standing selected by the Company and accompanied by an opinion of such accountants to the effect that such consolidated financial statements fairly present the Company's financial condition and results of operations on a consolidated basis in accordance with GAAP; (b) within 50 days after the end of each of the first three fiscal quarters of each fiscal year, its quarterly report on Form 10-Q as filed with the SEC, including its unaudited consolidated balance sheet and related consolidated earnings statement, showing its consolidated financial condition as of the close of such fiscal quarter and the consolidated results of its operations during such fiscal quarter and the then elapsed portion of the fiscal year (and each delivery of such statements shall be deemed a representation that such statements fairly present the Company's financial condition and results of operations on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes); (c) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a certificate of a Financial Officer certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; (d) promptly after the same become publicly available, copies of all reports on Form 8-K filed by it with the SEC, or any Governmental Authority succeeding to any of or all the functions of the SEC, or copies of all reports distributed to its shareholders, as the case may be; and (e) promptly, from time to time, such other information as any Lender shall reasonably request through Citibank. SECTION 5.4 Insurance. Keep its insurable properties adequately insured at all times by financially sound and reputable insurers (which may include captive insurers), and maintain such other insurance or self insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies similarly situated and in the same or similar businesses. SECTION 5.5 Obligations and Taxes. Pay and discharge promptly when due all material taxes, assessments and governmental charges imposed upon it or upon its income or profits or in respect of its property, in each E-1-42 case before the same shall become delinquent or in default and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves with respect thereto shall, to the extent required by GAAP, have been set aside. SECTION 5.6 Litigation and Other Notices. Give Citibank written notice of the following within five Business Days after any executive officer of the Company obtains knowledge thereof: (a) the filing or commencement of any action, suit or proceeding which the Company reasonably expects to result in a Material Adverse Effect; (b) any Event of Default or Default, specifying the nature and extent thereof and the action (if any) which is proposed to be taken with respect thereto; and (c) any change in any of the Ratings. SECTION 5.7 Books and Records. Keep proper books of record and account in which full, true and correct entries are made of all material dealings and transactions in relation to its business and activities. B. Negative Covenants. The Company covenants and agrees with each Lender and each Administrative Agent that so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any fees or any other amounts payable hereunder shall be unpaid, unless the Required Lenders shall otherwise consent in writing, it will not, and will not permit any of the Subsidiaries to: SECTION 5.8 Consolidations, Mergers, and Sales of Assets. In the case of the Company (a) consolidate or merge with or into any other Person or liquidate, wind up or dissolve (or suffer any liquidation or dissolution) or (b) sell, or otherwise transfer (in one transaction or a series of transactions), or permit any Subsidiary to sell, or otherwise transfer (in one transaction or a series of transactions), all or substantially all of the assets of the Company and the Subsidiaries, taken as a whole, to any other Person; provided that the Company may merge or consolidate with another Person if (A) the Company is the corporation surviving such merger and (B) immediately after giving effect to such merger or consolidation, no Default or Event of Default shall have occurred and be continuing. SECTION 5.9 Liens. Create, assume or suffer to exist any Lien upon any Restricted Property to secure any Debt of the Company, any Subsidiary or any other Person, without making effective provision whereby the Loans that may then or thereafter be outstanding shall be secured by such Lien equally and ratably with (or prior to) such Debt for so long as such Debt shall be so secured, except that the foregoing shall not prevent the Company or any Subsidiary from creating, assuming or suffering to exist any of the following Liens: (a) Liens existing on the date hereof; (b) any Lien existing on property owned or leased by any Person at the time it becomes a Subsidiary; (c) any Lien existing on property at the time of the acquisition thereof by the Company or any Subsidiary; E-1-43 (d) any Lien to secure any Debt incurred prior to, at the time of, or within 12 months after the acquisition of any Restricted Property for the purpose of financing all or any part of the purchase price thereof and any Lien to the extent that it secures Debt which is in excess of such purchase price and for the payment of which recourse may be had only against such Restricted Property; (e) any Lien to secure any Debt incurred prior to, at the time of, or within 12 months after the completion of the construction, alteration, repair or improvement of any Restricted Property for the purpose of financing all or any part of the cost thereof and any Lien to the extent that it secures Debt which is in excess of such cost and for the payment of which recourse may be had only against such Restricted Property; (f) any Liens securing Debt of a Subsidiary owing to the Company or to another Subsidiary; (g) any Liens securing industrial development, pollution control or similar revenue bonds; (h) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in clauses (a) through (g) above, so long as the principal amount of the Debt secured thereby does not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement (except that, where an additional principal amount of Debt is incurred to provide funds for the completion of a specific project, the additional principal amount, and any related financing costs, may be secured by the Lien as well) and such Lien is limited to the same property subject to the Lien so extended, renewed or replaced (and improvements on such property); and (i) any Lien not permitted by clauses (a) through (h) above securing Debt which, together with the aggregate outstanding principal amount of all other Debt of the Company and its Subsidiaries owning Restricted Property which would otherwise be subject to the foregoing restrictions and the aggregate Value of existing Sale and Leaseback Transactions which would be subject to the restrictions of Section 5.10 but for this clause (i), does not at any time exceed 10% of Consolidated Net Tangible Assets. SECTION 5.10 Limitation on Sale and Leaseback Transactions. Enter into any Sale and Leaseback Transaction, or permit any Subsidiary owning Restricted Property to do so, unless either: (a) the Company or such Subsidiary would be entitled to incur Debt, in a principal amount at least equal to the Value of such Sale and Leaseback Transaction, which is secured by Liens on the property to be leased (without equally and ratably securing the Loans) without violating Section 5.9, or (b) the Company, during the six months immediately following the effective date of such Sale and Leaseback Transaction, causes to be applied to (A) the acquisition of Restricted Property or (B) the voluntary retirement of Funded Debt (whether by redemption, defeasance, repurchase, or otherwise) an amount equal to the Value of such Sale and Leaseback Transaction. E-1-44 ARTICLE VI Events of Default In case of the happening of any of the following events (each an "Event of Default"): (a) any representation or warranty made or deemed made in or in connection with the execution and delivery of this Agreement or the Borrowings hereunder or under any Borrowing Subsidiary Agreement shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (b) default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; (c) default shall be made in the payment of any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (b) above) due hereunder, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days; (d) default shall be made in the due observance or performance of any covenant, condition or agreement contained in Section 5.6, 5.8, 5.9 or 5.10; (e) default shall be made in the due observance or performance of any covenant, condition or agreement contained herein (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from any Administrative Agent or any Lender to the Company; (f) the Company or any Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of one or more items of Debt in an aggregate principal amount greater than or equal to 3% of Consolidated Net Worth, when and as the same shall become due and payable (giving effect to any applicable grace period), or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Debt if the effect of any failure referred to in this clause (ii) is to cause such Debt to become due prior to its stated maturity; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Company or any Borrowing Subsidiary, or of a substantial part of the property or assets of the Company or any Borrowing Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Borrowing Subsidiary or for a substantial part of the property or assets of the Company or any Borrowing Subsidiary or (iii) the winding up or liquidation of the Company or any Borrowing Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; E-1-45 (h) the Company or any Borrowing Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Borrowing Subsidiary or for a substantial part of the property or assets of the Company or any Borrowing Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing; or (i) one or more judgments for the payment of money in an aggregate amount equal to or greater than 3% of Consolidated Net Worth (exclusive of any amount thereof covered by insurance) shall be rendered against the Company, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Company or any Subsidiary to enforce any such judgment; (j) (i) a Plan of the Company or any Borrowing Subsidiary shall fail to maintain the minimum funding standard required by Section 412 of the Code for any plan year or a waiver of such standard is sought or granted under Section 412(d), or (ii) an ERISA Termination Event shall have occurred with respect to the Company or any Borrowing Subsidiary or an ERISA Affiliate has incurred or is reasonably likely to incur a liability to or on account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, or (iii) the Company or any Borrowing Subsidiary or any ERISA Affiliate shall engage in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the United States Department of Labor, or (iv) the Company or any Borrowing Subsidiary or any ERISA Affiliate shall fail to pay any required installment or any other payment required to be paid by such entity under Section 412 of the Code on or before the due date for such installment or other payment, or (v) the Company or any Borrowing Subsidiary or any ERISA Affiliate shall fail to make any contribution or payment to any Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA) which the Company or any Borrowing Subsidiary or any ERISA Affiliate is required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto, and there shall result from any such event or events either a liability or a material risk of incurring a liability to the PBGC or a Plan which will have a Material Adverse Effect; (k) a Change in Control shall occur; or (l) at any time while a Borrowing Subsidiary Agreement is in effect, the guarantee in Section 8.16 shall cease to be, or shall be asserted E-1-46 by the Company not to be, a valid and binding obligation on the part of the Company; then, and in every such event (other than an event with respect to the Company described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, Citibank, at the request of the Required Lenders, shall, by notice to the Company or any Borrowing Subsidiary (which notice to a Borrowing Subsidiary may be given to the Company), take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Company or any Borrowing Subsidiary accrued hereunder, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived anything contained herein to the contrary notwithstanding; and, in any event with respect to the Company described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Company and the Borrowing Subsidiaries accrued hereunder shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived anything contained herein to the contrary notwithstanding. ARTICLE VII The Administrative Agents In order to expedite the transactions contemplated by this Agreement, each of The Chase Manhattan Bank and Citibank, N.A. is hereby appointed to act as an Administrative Agent on behalf of the Lenders and Citibank is hereby appointed to act as Advance Agent on behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes each Administrative Agent (which term, for purposes of this Article VII, shall be deemed to include the Advance Agent) to take such actions on behalf of such Lender or holder and to exercise such powers as are specifically delegated to the Administrative Agents or an Administrative Agent individually, as the case may be, by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto. Citibank is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Company or any Borrowing Subsidiary of any Event of Default of which Citibank has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Company or any Borrowing Subsidiary pursuant to this Agreement as received by Citibank. Neither Administrative Agent nor any of their respective directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his or her own gross negligence or willful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection E-1-47 herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Company or any Borrowing Subsidiary of any of the terms, conditions, covenants or agreements contained in this Agreement. The Administrative Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or other instruments or agreements. The Administrative Agents may deem and treat the Lender which makes any Loan as the holder of the indebtedness resulting therefrom for all purposes hereof until it shall have received notice from such Lender, given as provided herein, of the transfer thereof. The Administrative Agents shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. The Administrative Agents shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither Administrative Agent nor any of their respective directors, officers, employees or agents shall have any responsibility to the Company or any Borrowing Subsidiary on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Company of any of their respective obligations hereunder or in connection herewith. The Administrative Agents may execute any and all duties hereunder by or through their Affiliates, agents or employees and shall be entitled to rely upon the advice of legal counsel selected by them with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by them in accordance with the advice of such counsel. The Lenders hereby acknowledge that the Administrative Agents shall be under no duty to take any discretionary action permitted to be taken by them pursuant to the provisions of this Agreement unless they shall be requested in writing to do so by the Required Lenders. Subject, in the case of a resignation of both Administrative Agents, to the appointment and acceptance of a successor Administrative Agent as provided below, either Administrative Agent may resign at any time by notifying the Lenders and the Company. Upon any such resignation of both Administrative Agents, the Required Lenders shall have the right to appoint a successor Administrative Agent acceptable to the Company. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agents give notice of their resignation, then the retiring Administrative Agents may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agents and the retiring Administrative Agents shall be discharged from their duties and obligations hereunder. If only one of the Administrative Agents shall resign, the other Administrative Agent shall become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any Administrative Agent's resignation hereunder, the provisions of this Article and Section 8.5 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. With respect to the Loans made by them hereunder, each Administrative Agent in its individual capacity and not as Administrative Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Administrative Agent, and such Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if it were not an Administrative Agent. E-1-48 Each Lender agrees (i) to reimburse the Administrative Agents, on demand, in the amount of its Applicable Percentage of any expenses incurred for the benefit of the Lenders by the Administrative Agents, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, which shall not have been reimbursed by the Company and (ii) to indemnify and hold harmless the Administrative Agents and any of their respective directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against either of them in its capacity as an Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by either of them under this Agreement to the extent the same shall not have been reimbursed by the Company; provided that no Lender shall be liable to any Administrative Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of such Administrative Agent or any of its directors, officers, employees or agents. Each Lender acknowledges that it has, independently and without reliance upon any Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any related agreement or any document furnished hereunder or thereunder. ARTICLE VIII Miscellaneous SECTION 8.1 Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telecopy, as follows: (a) if to the Company, to Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, Attention of the Treasurer (Telecopy No. 212-605-9632) and the General Counsel (Telecopy No. 212-546-9562); (b) if to The Chase Manhattan Bank, to it at One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Vito Cipriano (Telecopy No. 212-552-5662); (c) if to Citibank, (i) for notices concerning operational matters, to Citibank, N.A., c/o Citibank Delaware, Two Penns Way, Suite 200, New Castle, DE 19720, Attention of Janet Wallace (Telecopy No. (302) 894-6120) or (ii) for notices concerning credit matters, to Citibank, N.A., 399 Park Avenue, New York, New York 10043, Attention of William E. Clark (Telecopy No. 212-826-2371); E-1-49 (d) if to a Lender, to it at its address (or telecopy number) set forth in Schedule 2.1 or in the Assignment and Acceptance pursuant to which such Lender became a party hereto; and (e) if to any Borrowing Subsidiary, to it at the address (or telecopy number) set forth above for the Company. Each Borrowing Subsidiary hereby irrevocably appoints the Company as its agent for the purpose of giving on its behalf any notice and taking any other action provided for in this Agreement and hereby agrees that it shall be bound by any such notice or action given or taken by the Company hereunder irrespective of whether or not any such notice shall have in fact been authorized by such Borrowing Subsidiary and irrespective of whether or not the agency provided for herein shall have theretofore been terminated. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy to such party as provided in this Section or in accordance with the latest unrevoked direction from such party given in accordance with this Section. SECTION 8.2 Survival of Agreement. All covenants, agreements, representations and warranties made by the Company herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or the Commitments have not been terminated. SECTION 8.3 Binding Effect. This Agreement shall become effective when it shall have been executed by the Company and the Administrative Agents and when the Administrative Agents shall have received copies hereof (telecopied or otherwise) which, when taken together, bear the signature of each Lender, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither the Company nor any Borrowing Subsidiary shall have the right to assign any rights hereunder or any interest herein without the prior consent of all the Lenders. SECTION 8.4 Successors and Assigns. (a) Whenever in this Agreement any of the parties is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any party that are contained in this Agreement shall bind and inure to the benefit of its successors and assigns. (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that, except in the case of an assignment to another Lender or an Affiliate of a Lender, (i) each of the Company (so long as no Event of Default shall have occurred and be continuing with respect to the Company under clause (g) or (h) of Article VI of this Agreement) and Citibank must give its prior written consent to such assignment (which consent in each case shall not be unreasonably withheld) and (ii) the amount of the E-1-50 Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Citibank) shall not be less than $10,000,000 unless it shall be the entire amount of such Lender's Commitment. The parties to each assignment shall execute and deliver to Citibank an Assignment and Acceptance, and a processing and recordation fee of $3,000. Upon acceptance and recording pursuant to paragraph (e) of this Section, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof, (X) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (Y) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto (but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 8.5, as well as to any fees accrued for its account hereunder and not yet paid)). Notwithstanding the foregoing, any Lender assigning its rights and obligations under this Agreement may retain any Competitive Loans made by it outstanding at such time, and in such case shall retain its rights hereunder in respect of any Loans so retained until such Loans have been repaid in full in accordance with this Agreement. (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the financial condition of the Company or the performance or observance by the Company of any obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.3 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon any Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agents to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agents by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) Citibank shall maintain at one of its offices in the City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and the principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time and any promissory notes evidencing such Loans (the "Register"). The entries in the Register shall be conclusive in the absence of manifest error and the Company, the other Borrowers, the Administrative Agents and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. No assignment or E-1-51 transfer of any Loan (or portion thereof) or any Note evidencing such Loan shall be effected unless and until it has been recorded in the Register as provided in this subsection 8.4(d). Notwithstanding any other provision of this Agreement, any assignment or transfer of all or part of a promissory note shall be registered on the Register only upon surrender for registration of assignment or transfer of the promissory note (and each promissory note shall expressly so provide), accompanied by a duly executed Assignment and Acceptance, and thereupon one or more new promissory notes in the same aggregate principal amount shall be issued to the designated Assignee and the old promissory notes shall be returned by Citibank to the Borrower marked "cancelled". The Register shall be available for inspection by each party hereto, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee together with an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above and, if required, the written consent of the Company to such assignment, Citibank shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. (f) Each Lender may sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto or thereto for the performance of such obligations, (iii) each participating bank or other entity shall be entitled to the benefit of the cost protection provisions contained in Sections 2.15, 2.16 and 2.17 to the same extent as if it was the selling Lender (and limited to the amount that could have been claimed by the selling Lender had it continued to hold the interest of such participating bank or other entity, it being further agreed that the selling Lender will not be permitted to make claims against the Company under Section 2.15(b) for costs or reductions resulting from the sale of a participation), except that all claims made pursuant to such Sections shall be made through such selling Lender, and (iv) the Company, the Administrative Agents and the other Lenders shall continue to deal solely and directly with such selling Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Company relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or thereunder or the amount of principal of or the rate at which interest is payable on the Loans, extending the final scheduled maturity of the Loans or any date scheduled for the payment of interest on the Loans or extending the Commitments). (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant any information relating to the Company furnished to such Lender; provided that, prior to any such disclosure, each such assignee or participant or proposed assignee or participant shall be subject to the same confidentiality agreement as are the Lenders. (h) The Company and any Borrowing Subsidiary shall not assign or delegate any rights and duties hereunder without the prior written consent of all Lenders. (i) Any Lender may at any time pledge or otherwise assign all or E-1-52 any portion of its rights under this Agreement to a Federal Reserve Bank; provided that no such pledge shall release any Lender from its obligations hereunder. In order to facilitate such an assignment to a Federal Reserve Bank, the Company shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made by the assigning Lender hereunder. SECTION 8.5 Expenses; Indemnity. (a) The Company agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agents in connection with entering into this Agreement or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (including the reasonable fees, disbursements and other charges of a single counsel), or incurred by the Administrative Agents or any Lender in connection with the enforcement of their rights in connection with this Agreement or in connection with the Loans made hereunder or thereunder, including the fees and disbursements of counsel for the Administrative Agents and, in the case of enforcement, each Lender. (b) The Company agrees to indemnify each Administrative Agent, each Lender, each of their Affiliates and the directors, officers, employees and agents of the foregoing (each such Person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against any Indemnitee arising out of (i) the consummation of the transactions contemplated by this Agreement, (ii) the use of the proceeds of the Loans or (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto; provided that (A) such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a final judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee and (B) such indemnity shall not apply to losses, claims, damages, liabilities or related expenses that result from disputes solely between Lenders. (c) The provisions of this Section shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any investigation made by or on behalf of any Administrative Agent or any Lender. All amounts due under this Section shall be payable on written demand therefor. SECTION 8.6 Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 8.7 Waivers; Amendment. (a) No failure or delay of any Administrative Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agents and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement or consent to any departure therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Company or any Subsidiary in any case shall entitle such party to any other or further notice or demand in similar or other circumstances. E-1-53 (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan, or amend or modify Section 8.16, without the prior written consent of each Lender directly affected thereby, (ii) increase the Commitment (except pursuant to Section 2.6), or decrease the facility fees of any Lender without the prior written consent of such Lender or (iii) amend or modify the provisions of Section 2.18 or Section 8.4(h), the provisions of this Section or the definition of the "Required Lenders", without the prior written consent of each Lender; provided further, however, that no such agreement shall amend, modify or otherwise affect the rights or duties of any Administrative Agent hereunder without the prior written consent of such Administrative Agent. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section and any consent by any Lender pursuant to this Section shall bind any assignee of its rights and interests hereunder. SECTION 8.8 Entire Agreement. This Agreement constitutes the entire contract among the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 8.9 Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 8.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 8.3. SECTION 8.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 8.12 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or obligations of the Company and the applicable Borrowing Subsidiary now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees promptly to notify the Company after such setoff and application made by such Lender, but the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of setoff) which such Lender may have. E-1-54 SECTION 8.13 Jurisdiction; Consent to Service of Process. (a) The Company and any Borrowing Subsidiary hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Subject to the foregoing and to paragraph (b) below, nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement against any other party hereto in the courts of any jurisdiction. (b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or thereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 8.14 Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each party hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certification in this Section. SECTION 8.15 Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given. (b) The obligations of each Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "Applicable Creditor") shall, notwithstanding any judgment in a currency (the "Judgment Currency") other than the currency in which such sum is stated to be E-1-55 due hereunder (the "Agreement Currency"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrowers contained in this Section 8.15 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder. SECTION 8.16 Guaranty. In order to induce the Lenders to make Loans to the applicable Borrowing Subsidiaries, the Company hereby unconditionally guarantees the Borrowing Subsidiary Obligations of all the Borrowing Subsidiaries. The Company further agrees that the Borrowing Subsidiary Obligations may be extended and renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its agreement hereunder notwithstanding any extension or renewal of any Borrowing Subsidiary Obligation. The Company waives promptness, diligence, presentment to, demand of payment from and protest to the Borrowing Subsidiaries of any Borrowing Subsidiary Obligations, and also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Company hereunder shall be absolute and unconditional and not be affected by (a) the failure of any Lender or the Administrative Agents to assert any claim or demand or to enforce any right or remedy against the Borrowing Subsidiaries under the provisions of this Agreement or any of the other Loan Documents or otherwise; (b) any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement, any other Loan Documents or any other agreement; (c) the failure of any Lender to exercise any right or remedy against any Borrowing Subsidiaries; (d) the invalidity or unenforceability of any Loan Document or (e) any other circumstance which might otherwise constitute a defense available to or discharge of the Borrower or a guarantor (other than payment). The Company further agrees that its agreement hereunder constitutes a promise of payment when due and not of collection, and waives any right to require that any resort be had by any Lender to any balance of any deposit account or credit on the books of any Lender in favor of any Borrowing Subsidiary or any other Person. The obligations of the Company hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever, by reason of the invalidity, illegality or unenforceability of the Borrowing Subsidiary Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of the Company hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agents or any Lender to assert any claim or demand or to enforce any remedy under this Agreement or under any other Loan Document or any other agreement, by any waiver or modification in respect of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Borrowing Subsidiary Obligations, or by any other act or omission which may or might in any manner or to any extent vary the risk of the Company or otherwise operate as a discharge of the Company as a matter of law or equity. E-1-56 The Company further agrees that its obligations hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Borrowing Subsidiary Obligation is rescinded or must otherwise be restored by the Administrative Agents or any Lender upon the bankruptcy or reorganization of any of the Borrowing Subsidiaries or otherwise. In furtherance of the foregoing and not in limitation of any other right which the Administrative Agents or any Lender may have at law or in equity against the Company by virtue hereof, upon the failure of any Borrowing Subsidiary to pay any Borrowing Subsidiary Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Company hereby promises to and will, upon receipt of written demand by Citibank, forthwith pay, or cause to be paid, in cash the amount of such unpaid Borrowing Subsidiary Obligation. In the event that, by reason of the bankruptcy of any Borrowing Subsidiary, (i) acceleration of Loans made to such Borrowing Subsidiary is prevented and (ii) the Company shall not have prepaid the outstanding Loans and other amounts due hereunder owed by such Borrowing Subsidiary, the Company will forthwith purchase such Loans at a price equal to the principal amount thereof plus accrued interest thereon and any other amounts due hereunder with respect thereto. The Company further agrees that if payment in respect of any Borrowing Subsidiary Obligation shall be due in a currency other than Dollars and/or at a place of payment other than New York and if, by reason of any Change in Law, disruption of currency or foreign exchange markets, war or civil disturbance or similar event, payment of such Borrowing Subsidiary Obligation in such currency or such place of payment shall be impossible or, in the judgment of any applicable Lender, not consistent with the protection of its rights or interests, then, at the election of any applicable Lender, the Company shall make payment of such Borrowing Subsidiary Obligation in Dollars (based upon the applicable Exchange Rate in effect on the date of payment) and/or in New York, and shall indemnify such Lender against any losses or expenses that it shall sustain as a result of such alternative payment. Upon payment by the Company of any Borrowing Subsidiary Obligations, each Lender shall, in a reasonable manner, assign the amount of the Borrowing Subsidiary Obligations owed to it and paid by the Company pursuant to this guarantee to the Company, such assignment to be pro tanto to the extent to which the Borrowing Subsidiary Obligations in question were discharged by the Company, or make such disposition thereof as the Company shall direct (all without recourse to any Lender and without any representation or warranty by any Lender except with respect to the amount of the Borrowing Subsidiary Obligations so assigned). Upon payment by the Company of any sums as provided above, all rights of the Company against any Borrowing Subsidiary arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full of all the Borrowing Subsidiary Obligations to the Lenders. SECTION 8.17 European Monetary Union. If, as a result of the implementation of European monetary union, (a) any currency ceases to be lawful currency of the nation issuing the same and is replaced by a European common currency, then any amount payable hereunder by any party hereto in such currency shall instead be payable in the European common currency and the amount so payable shall be determined by translating the amount payable in such currency to such European common currency at the exchange rate recognized by the European Central Bank for the purpose of implementing European monetary union, or (b) any currency and a European common currency are at the same time recognized by the central bank or comparable authority of the nation issuing such currency as lawful currency of such nation, then (i) any Loan made at such time shall be made in such European common currency and (ii) any other amount payable by any party hereto in such currency shall be payable in such currency or in such European common currency (in an amount determined as set forth in E-1-57 clause (a)), at the election of the obligor. Prior to the occurrence of the event or events described in clause (a) or (b) of the preceding sentence, each amount payable hereunder in any currency will continue to be payable only in that currency. The Borrowers agree, at the request of the Required Lenders, at the time of or at any time following the implementation of European monetary union, to enter into an agreement amending this Agreement in such manner as the Required Lenders shall reasonably request in order to avoid any unfair burden or disadvantage resulting from the implementation of such monetary union and to place the parties hereto in the position they would have been in had such monetary union not been implemented, the intent being that neither party will be adversely affected economically as a result of such implementation and that reasonable provisions shall be adopted to govern the borrowing, maintenance and repayment of Loans denominated in currencies other than Dollars after the occurrence of the event or events described in clause (a) or (b) of the preceding sentence. E-1-58 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. BRISTOL-MYERS SQUIBB COMPANY, By Name: Title: By Name: Title: THE CHASE MANHATTAN BANK, individually and as Administrative Agent, By Name: Title: CITIBANK, N.A., individually and as Administrative Agent and Advance Agent, By Name: Title: SWISS BANK CORPORATION, Stamford branch, as a Lender By: Title: By: Title: E-1-59 DRESDNER BANK AG, New York Branch and Grand Cayman Branch, as a Lender By: Title: By: Title: BANCA MONTE DEI PASCHI DI SIENA S.p.A., as a Lender By: Title: BANCO SANTANDER S.A., New York branch, as a Lender By: Title: By: Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Lender By: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Lender By: Title: E-1-60 BANQUE NATIONALE DE PARIS, as a Lender By: Title: By: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Lender By: Title: ROYAL BANK OF CANADA, as a Lender By: Title: THE BANK OF NEW YORK, as a Lender By: Title: THE NORTHERN TRUST COMPANY, as a Lender By: Title: DEUTSCHE BANK AG, New York branch and/or Cayman Islands branch, as a Lender By: Title: By: Title: E-1-61 WACHOVIA BANK, N.A., as a Lender By: Title: BANK OF MONTREAL, as a Lender By: Title: ING BANK N.V., as a Lender By: Title: E-1-62 EX-4.G 3 $250,000,000 364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT Dated as of March 17, 1998 Among BRISTOL-MYERS SQUIBB COMPANY, THE BORROWING SUBSIDIARIES, THE LENDERS NAMED HEREIN, CITIBANK, N.A., as Administrative Agent and THE CHASE MANHATTAN BANK, as Administrative Agent E-2-1 TABLE OF CONTENTS Page ARTICLE I Definitions. . . . . . . . . . . . . 1 SECTION 1.1 Defined Terms. . . . . . . . . . . . . . . . . . 1 SECTION 1.2 Classification of Loans and Borrowings . . . . . 14 SECTION 1.3 Terms Generally. . . . . . . . . . . . . . . . . 14 SECTION 1.4 Accounting Terms; GAAP . . . . . . . . . . . . . 15 ARTICLE II The Credits. . . . . . . . . . . . . 15 SECTION 2.1 Commitments. . . . . . . . . . . . . . . . . . . 15 SECTION 2.2 Loans and Borrowings . . . . . . . . . . . . . . 15 SECTION 2.3 Requests for Revolving Borrowings. . . . . . . . 16 SECTION 2.4 Competitive Bid Procedure. . . . . . . . . . . . 17 SECTION 2.5 Extension of Maturity Date . . . . . . . . . . . 19 SECTION 2.6 Increase of Commitments. . . . . . . . . . . . . 20 SECTION 2.7 Funding of Borrowings. . . . . . . . . . . . . . 22 SECTION 2.8 Interest Elections . . . . . . . . . . . . . . . 23 SECTION 2.9 Termination and Reduction of Commitments . . . . 24 SECTION 2.10 Repayment of Loans; Evidence of Debt. . . . . . 25 SECTION 2.11 Prepayment of Loans . . . . . . . . . . . . . . 25 SECTION 2.12 Fees. . . . . . . . . . . . . . . . . . . . . . 26 SECTION 2.13 Interest. . . . . . . . . . . . . . . . . . . . 27 SECTION 2.14 Alternate Rate of Interest. . . . . . . . . . . 27 SECTION 2.15 Increased Costs . . . . . . . . . . . . . . . . 28 SECTION 2.16 Break Funding Payments. . . . . . . . . . . . . 29 SECTION 2.17 Taxes . . . . . . . . . . . . . . . . . . . . . 30 SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs . . . . . . . . . . . 33 SECTION 2.19 Mitigation Obligations; Replacement of Lenders. 34 SECTION 2.20 Borrowing Subsidiaries. . . . . . . . . . . . . 35 ARTICLE III Representations and Warranties . . . . . . . . 35 SECTION 3.1 Organization; Powers . . . . . . . . . . . . . . 35 SECTION 3.2 Authorization. . . . . . . . . . . . . . . . . . 36 E-2-2 SECTION 3.3 Enforceability . . . . . . . . . . . . . . . . . 36 SECTION 3.4 Governmental Approvals . . . . . . . . . . . . . 36 SECTION 3.5 Financial Statements; No Material Adverse Change 36 SECTION 3.6 Litigation; Compliance with Laws . . . . . . . . 37 SECTION 3.7 Federal Reserve Regulations. . . . . . . . . . . 37 SECTION 3.8 Use of Proceeds. . . . . . . . . . . . . . . . . 37 SECTION 3.9 Taxes. . . . . . . . . . . . . . . . . . . . . . 37 SECTION 3.10 Employee Benefit Plans. . . . . . . . . . . . . 37 SECTION 3.11 Environmental and Safety Matters. . . . . . . . 37 SECTION 3.12 Properties. . . . . . . . . . . . . . . . . . . 38 SECTION 3.13 Investment and Holding Company Status . . . . . 38 ARTICLE IV Conditions . . . . . . . . . . . . . 38 SECTION 4.1 Effective Date . . . . . . . . . . . . . . . . . 38 SECTION 4.2 Each Credit Event. . . . . . . . . . . . . . . . 39 SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary . 39 ARTICLE V Covenants . . . . . . . . . . . . . 40 SECTION 5.1 Existence. . . . . . . . . . . . . . . . . . . . 40 SECTION 5.2 Business and Properties. . . . . . . . . . . . . 40 SECTION 5.3 Financial Statements, Reports, Etc.. . . . . . . 40 SECTION 5.4 Insurance. . . . . . . . . . . . . . . . . . . . 41 SECTION 5.5 Obligations and Taxes. . . . . . . . . . . . . . 41 SECTION 5.6 Litigation and Other Notices . . . . . . . . . . 41 SECTION 5.7 Books and Records. . . . . . . . . . . . . . . . 42 SECTION 5.8 Consolidations, Mergers, and Sales of Assets . . 42 SECTION 5.9 Liens. . . . . . . . . . . . . . . . . . . . . . 42 SECTION 5.10 Limitation on Sale and Leaseback Transactions . 43 ARTICLE VI Events of Default . . . . . . . . . . . 44 ARTICLE VII The Administrative Agents . . . . . . . . . 46 ARTICLE VIII E-2-3 Miscellaneous . . . . . . . . . . . . 49 SECTION 8.1 Notices. . . . . . . . . . . . . . . . . . . . . 49 SECTION 8.2 Survival of Agreement. . . . . . . . . . . . . . 49 SECTION 8.3 Binding Effect . . . . . . . . . . . . . . . . . 50 SECTION 8.4 Successors and Assigns . . . . . . . . . . . . . 50 SECTION 8.5 Expenses; Indemnity. . . . . . . . . . . . . . . 53 SECTION 8.6 Applicable Law . . . . . . . . . . . . . . . . . 53 SECTION 8.7 Waivers; Amendment . . . . . . . . . . . . . . . 53 SECTION 8.8 Entire Agreement . . . . . . . . . . . . . . . . 54 SECTION 8.9 Severability . . . . . . . . . . . . . . . . . . 54 SECTION 8.10 Counterparts. . . . . . . . . . . . . . . . . . 54 SECTION 8.11 Headings. . . . . . . . . . . . . . . . . . . . 54 SECTION 8.12 Right of Setoff . . . . . . . . . . . . . . . . 55 SECTION 8.13 Jurisdiction; Consent to Service of Process . . 55 SECTION 8.14 Waiver of Jury Trial. . . . . . . . . . . . . . 55 SECTION 8.15 Conversion of Currencies. . . . . . . . . . . . 56 SECTION 8.16 Guaranty. . . . . . . . . . . . . . . . . . . . 56 SECTION 8.17 European Monetary Union . . . . . . . . . . . . 58 SCHEDULES: Schedule 2.1 -- Commitments EXHIBITS: Exhibit A-1 -- Competitive Bid Request Exhibit A-2 -- Notice of Competitive Bid Request Exhibit A-3 -- Competitive Bid Exhibit A-4 -- Competitive Bid Accept/Reject Letter Exhibit A-5 -- Borrowing Request Exhibit B -- Form of Assignment and Acceptance Exhibit C -- Form of Opinion of Company's Counsel Exhibit D -- Form of Administrative Questionnaire Exhibit E -- Form of Borrowing Subsidiary Agreement Exhibit F -- Form of Borrowing Subsidiary Termination E-2-4 364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT (the "Agreement") dated as of March 17, 1998, among BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation (the "Company"), the BORROWING SUBSIDIARIES (as defined herein), the lenders listed in Schedule 2.1 (the "Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation,as administrative agent for the Lenders (in such capacity, "Chase"), and CITIBANK, N.A., as administrative agent for the Lenders (in such capacity, "Citibank"; Chase and Citibank are referred to herein individually as an "Administrative Agent" and collectively as the "Administrative Agents") and as competitive advance facility agent (in such capacity, the "Advance Agent"). The Company has requested that the Lenders, on the terms and subject to the conditions herein set forth (i) extend credit to the Company and the applicable Borrowing Subsidiaries to enable them to borrow on a standby revolving credit basis on and after the date hereof and at any time and from time to time prior to the Maturity Date (such term and each other capitalized term used but not defined herein having the meaning assigned to it in Article I) a principal amount not in excess of $250,000,000 (as such amount may be increased pursuant to Section 2.6) and (ii) provide a procedure pursuant to which the Company and the Borrowing Subsidiaries may invite the Lenders to bid on an uncommitted basis on short-term borrowings by the Company or the applicable Borrowing Subsidiary. The proceeds of such borrowings are to be used for working capital and other general corporate purposes (other than hostile acquisitions), including commercial paper backup and repurchase of shares. The Lenders are willing to extend such credit on the terms and subject to the conditions herein set forth. Accordingly, the parties hereto agree as follows: ARTICLE I Definitions SECTION 1.1 Defined Terms. As used in this Agreement, the following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "Administrative Fees" shall have the meaning assigned to such term in Section 2.12(b). "Administrative Questionnaire" shall mean an administrative questionnaire delivered by a Lender pursuant to Section 8.4(e) in the form of Exhibit D. E-2-5 "Affiliate" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly, Controls or is Controlled by or is under common Control with the Person specified. "Alternate Base Rate" shall mean for any day, a rate per annum equal to the greatest of (a) the rate of interest per annum publicly announced from time to time by Citibank as its base rate in effect at its principal office in New York City, (b) 1/2 of one percent above the Federal Funds Effective Rate and (c) the Base CD Rate in effect for such day plus 1%. If for any reason Citibank shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or Federal Funds Effective Rate, or both, specified in clause (b) or (c), respectively, of the first sentence of this definition, for any reason, including, without limitation, the inability or failure of Citibank to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (b) or (c), or both, of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate shall be effective on the effective date of any change in such rate. "Alternative Currency" shall mean at any time, a common currency of the European monetary union and any currency (other than Dollars) that is readily available, freely traded and convertible into Dollars in the London market and as to which a Dollar Equivalent can be calculated. "Applicable Percentage" shall mean, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, Applicable Percentage shall mean, with respect to any Lender, the percentage of the aggregate outstanding principal amount of the Loans represented by the aggregate outstanding principal amount of each Lender's Loans. "Applicable Rate" shall mean on any date, (i) with respect to any Eurocurrency Revolving Loan, 12 Basis Points per annum, and (ii) with respect to facility fees payable hereunder, 3 Basis Points per annum. "Assessment Rate" shall mean, for any day, the net annual assessment rate (rounded upwards, if necessary, to the next higher Basis Point) as most recently estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insurance by such Corporation (or such successor) of time deposits made in dollars at Citibank's domestic offices. "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee in the form of Exhibit B. "Availability Period" shall mean the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments. "Base CD Rate" shall mean the sum of (a) the product of (i) the E-2-6 Average Weekly Three-Month Secondary CD Rate times (ii) a fraction of which the numerator is 100% and the denominator is 100% minus the aggregate rates of (A) basic and supplemental reserve requirements in effect on the date of effectiveness of such Average Weekly Three-Month Secondary CD Rate, as set forth below, under Regulation D of the Board applicable to certificates of deposit in units of $100,000 or more issued by a "member bank" located in a "reserve city" (as such terms are used in Regulation D) and (B) marginal reserve requirements in effect on such date of effectiveness under Regulation D applicable to time deposits of a "member bank" and (b) the Assessment Rate. "Average Weekly Three-Month Secondary CD Rate" shall mean the three-month secondary certificate of deposit ("CD") rate for the most recent weekly period covered therein in the Federal Reserve Statistical release entitled "Weekly Summary of Lending and Credit Measures (Averages of daily figures)" released in the week during which occurs the day for which the CD rate is being determined. The CD rate so reported shall be in effect, for the purposes of this definition, for each day of the week in which the release date of such publication occurs. If such publication or a substitute containing the foregoing rate information is not published by the Federal Reserve for any week, such average rate shall be determined by Citibank on the basis of quotations received by it from three New York City negotiable certificate of deposit dealers of recognized standing on the first Business Day of the week succeeding such week for which such rate information is not published. "Basis Point" shall mean 1/100th of 1%. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States of America. "Board of Directors" shall mean either the board of directors of the Company or any duly authorized committee thereof or any committee of officers of the Company acting pursuant to authority granted by the board of directors of the Company or any committee of such board. "Borrower" shall mean the Company or any Borrowing Subsidiary. "Borrowing" shall mean (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect or (b) a Competitive Loan or group of Competitive Loans of the same Type made on the same date and as to which a single Interest Period is in effect. "Borrowing Request" shall mean a request by the Company for a Revolving Borrowing in accordance with Section 2.3. "Borrowing Subsidiary" shall mean any Subsidiary of the Company designated as a Borrowing Subsidiary by the Company pursuant to Section 2.20. "Borrowing Subsidiary Agreement" shall mean a Borrowing Subsidiary Agreement substantially in the form of Exhibit E. "Borrowing Subsidiary Obligations" shall mean the due and punctual E-2-7 payment of (i) the principal of and interest on any Loans made by the Lenders to the Borrowing Subsidiaries pursuant to this Agreement, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities (including, without limitation, the obligations described in Section 2.20) of the Borrowing Subsidiaries to the Lenders under this Agreement and the other Loan Documents. "Borrowing Subsidiary Termination" shall mean a Borrowing Subsidiary Termination substantially in the form of Exhibit F. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however, that, when used in connection with a Eurocurrency Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market, or in the city which is the principal financial center of the country of issuance of the applicable Alternative Currency. "Capital Lease Obligations" of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Change in Control" shall be deemed to have occurred if (a) any Person or group of Persons (other than (i) the Company, (ii) any Subsidiary or (iii) any employee or director benefit plan or stock plan of the Company or a Subsidiary or any trustee or fiduciary with respect to any such plan when acting in that capacity or any trust related to any such plan) shall have acquired beneficial ownership of shares representing more than 20% of the combined voting power represented by the outstanding Voting Shares of the Company (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder), or (b) during any period of 12 consecutive months, commencing before or after the date of this Agreement, individuals who on the first day of such period were directors of the Company (together with any replacement or additional directors who were nominated or elected by a majority of directors then in office) cease to constitute a majority of the Board of Directors of the Company. "Change in Law" shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. E-2-8 "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Competitive Loans. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.9, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 8.4, and (c) increased pursuant to Section 2.6. The initial amount of each Lender's Commitment is set forth on Schedule 2.1, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders' Commitments is $250,000,000. "Company" shall mean Bristol-Myers Squibb Company, a Delaware corporation. "Competitive Bid" shall mean an offer by a Lender to make a Competitive Loan pursuant to Section 2.4. "Competitive Bid Accept/Reject Letter" shall mean a notification made by the Company pursuant to Section 2.4(d) in the form of Exhibit A-4. "Competitive Bid Rate" shall mean, as to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid. "Competitive Bid Request" shall mean a request made pursuant to Section 2.4 in the form of Exhibit A-1. "Competitive Borrowing" shall mean a Borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Bids for such Borrowing have been accepted under the bidding procedure described in Section 2.4. "Competitive Loan" shall mean a Loan made pursuant to Section 2.4. Each Competitive Loan shall be a Eurocurrency Competitive Loan or a Fixed Rate Loan. "Competitive Loan Exposure" shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the outstanding Competitive Loans of such Lender denominated in Dollars and (b) the sum of the Dollar Equivalents of the aggregate principal amounts of the outstanding Competitive Loans of such Lender denominated in Alternative Currencies. "Consolidated Net Tangible Assets" shall mean, with respect to the Company, the total amount of its assets (less applicable reserves and other properly deductible items) after deducting (i) all current liabilities (excluding the amount of those which are by their terms extendable or renewable at the option of the obligor to a date more than 12 months after the date as of E-2-9 which the amount is being determined) and (ii) all goodwill, tradenames, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as set forth on the most recent balance sheet of the Company and its consolidated subsidiaries and determined on a consolidated basis in accordance with GAAP. "Consolidated Net Worth" shall mean at any time for the determination thereof the sum of all amounts which, in conformity with GAAP, would be included under the caption "total stockholders' equity" (or any like caption) on a consolidated balance sheet of the Company and its Subsidiaries as at such time. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Currency" shall mean Dollars or any Alternative Currency. "Debt" shall mean (i) all obligations represented by notes, bonds, debentures or similar evidences of indebtedness; (ii) all indebtedness for borrowed money or for the deferred purchase price of property or services other than, in the case of any such deferred purchase price, on normal trade terms and (iii) all rental obligations as lessee under leases which shall have been or should be recorded as Capital Lease Obligations. "Default" shall mean any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Dollar Equivalent" shall mean, with respect to any principal amount of any Competitive Loan denominated in an Alternative Currency, the equivalent in Dollars of such amount, determined by Citibank using the Exchange Rate in effect for such Alternative Currency at approximately 11:00 a.m. London time on the date of the Competitive Bid Request that resulted in the making of such Competitive Loan. "Dollars" or "$" shall mean lawful money of the United States of America. "Effective Date" means the date on which the conditions specified in Section 4.1 are satisfied (or waived in accordance with Section 8.7). "Environmental and Safety Laws" shall mean any and all applicable current and future treaties, laws (including without limitation common law), regulations, enforceable requirements, binding determinations, orders, decrees, judgments, injunctions, permits, approvals, authorizations, licenses, permissions, written notices or binding agreements issued, promulgated or entered by any Governmental Authority, relating to the environment, to employee health or safety as it pertains to the use or handling of, or exposure to, any hazardous substance or contaminant, to preservation or reclamation of natural E-2-10 resources or to the management, release or threatened release of any hazardous substance, contaminant, or noxious odor, including without limitation the Hazardous Materials Transportation Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, the Clean Air Act of 1970, as amended, the Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of 1970, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the Safe Drinking Water Act of 1974, as amended, any similar or implementing state law, all amendments of any of them, and any regulations promulgated under any of them. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with the Company, is treated as a single employer under Section 414 of the Code. "ERISA Termination Event" shall mean (i) a "Reportable Event" described in Section 4043 of ERISA and the regulations issued thereunder (other than a "Reportable Event" not subject to the provision for 30-day notice to the PBGC under such regulations), or (ii) the withdrawal of the Company or any of its ERISA Affiliates from a "single employer" Plan during a plan year in which it was a "substantial employer", both of such terms as defined in Section 4001(a) of ERISA, or (iii) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC or (v) any other event or condition which is reasonably likely to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or (vi) the partial or complete withdrawal of the Company or any ERISA Affiliate of the Company from a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA. "Eurocurrency", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the LIBO Rate. "Event of Default" shall have the meaning assigned to such term in Article VI. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exchange Rate" shall mean, with respect to any Alternative Currency on a particular date, the rate at which such Alternative Currency may be exchanged into Dollars, as set forth on such date on the applicable Reuters currency page with respect to such Alternative Currency; provided, that the Company may make a one time election, with the approval of Citibank (such approval not to be unreasonably withheld), to use Bloomberg currency pages to determine Exchange Rate instead of Reuters currency pages. In the event that E-2-11 such rate does not appear on the applicable Reuters currency page, or Bloomberg currency page, as the case may be, the Exchange Rate with respect to such Alternative Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by Citibank and the Company or, in the absence of such agreement, such Exchange Rate shall instead be Citibank's spot rate of exchange in the London interbank market or other market where its foreign currency exchange operations in respect of such Alternative Currency is then being conducted, at or about 10:00 A.M., local time, at such date for the purchase of Dollars with such Alternative Currency for delivery two Business Days later; provided, however, that if at the time of any such determination, for any reason, no such spot rate is being quoted, Citibank may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error. "Extension Letter" shall mean a letter from the Company requesting an extension of the Maturity Date. "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as released on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so released for any day which is a Business Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as determined by Citibank, of the quotations for the day of such transactions received by Citibank from three Federal funds brokers of recognized standing selected by it. "Financial Officer" of any corporation shall mean the chief financial officer, principal accounting officer or treasurer of such corporation. "Fixed Rate" shall mean, with respect to any Competitive Loan (other than a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid. "Fixed Rate Loan" shall mean a Competitive Loan bearing interest at a Fixed Rate. "Foreign Lender" shall mean, with respect to any Borrower, any Lender that is organized under the laws of a jurisdiction other than that in which such Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Funded Debt" shall mean Debt of the Company or a Subsidiary owning Restricted Property maturing by its terms more than one year after its creation and Debt classified as long-term debt under GAAP and, in the case of Funded Debt of the Company, ranking at least pari passu with the Loans. "GAAP" shall mean generally accepted accounting principles in the United States of America. E-2-12 "Governmental Authority" shall mean the government of any nation, including, but not limited to, the United States of America, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantee" of or by any Person (the "guarantor") shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. "Hazardous Substances" shall mean any toxic, radioactive, mutagenic, carcinogenic, noxious, caustic or otherwise hazardous substance, material or waste, including petroleum, its derivatives, by-products and other hydrocarbons, including, without limitation, polychlorinated biphenyls ("PCBs"), asbestos or asbestos-containing material, and any substance, waste or material regulated or that could reasonably be expected to result in liability under Environmental and Safety Laws. "Indenture" shall mean the Indenture dated as of June 1, 1993 between the Company and Chase, as successor to The Chase Manhattan Bank (National Association), as Trustee, as amended, supplemented or otherwise modified from time to time. "Interest Election Request" shall mean a request by the Company to convert or continue a Revolving Borrowing in accordance with Section 2.8. "Interest Payment Date" shall mean (a) with respect to any ABR Loan, the last day of each March, June, September and December, (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days' duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days' duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing. E-2-13 "Interest Period" shall mean (a) as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is 1, 2, 3, 6 months (or, if available, as determined by Citibank and each of the Lenders, 12 months) thereafter, as the Company may elect, and (b) as to any Fixed Rate Borrowing, the period (which shall not be less than seven days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "Lenders" shall mean (a) the financial institutions listed on Schedule 2.1 (other than any such financial institution that has ceased to be a party hereto, pursuant to an Assignment and Acceptance) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance or pursuant to the provisions of Section 2.6. "LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, the rate appearing on Page 3740 or Page 3750, as the case may be, of Dow Jones Markets (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by Citibank from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars or the applicable Alternative Currency in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for deposits in Dollars or the applicable Alternative Currency with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurocurrency Borrowing for such Interest Period shall be the rate per annum (rounded upwards, if necessary, to the next Basis Point) equal to the arithmetic average of the rates at which deposits in Dollars or the applicable Alternative Currency approximately equal in principal amount to such Borrowing and for a maturity comparable to such Interest Period are offered to the principal London offices of the Reference Lenders (or, if any Reference Lender does not at the time maintain a London office, the principal London office of any Affiliate of such Reference Lender) in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided, however, that, if only two Reference Lenders notify Citibank of the rates offered to such Reference Lenders (or any Affiliates of such Reference Lenders) as aforesaid, the LIBO Rate with respect to such Eurocurrency Borrowing shall be equal to the arithmetic average of the rates so offered to such Reference Lenders (or any such Affiliates). E-2-14 "Lien" shall mean any mortgage, lien, pledge, encumbrance, charge or security interest. "Loan Documents" means this Agreement, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary Termination and each promissory note held by a Lender pursuant to Section 2.10(e). "Loans" shall mean the loans made by the Lenders to the Borrowers pursuant to this Agreement. "Margin" shall mean, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be added to or subtracted from the LIBO Rate in order to determine the interest rate applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid. "Margin Regulations" shall mean Regulations G, T, U and X of the Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof. "Material Adverse Effect" shall mean a material adverse effect on the business, operations, properties or financial condition of the Company and its consolidated Subsidiaries, taken as a whole. "Maturity", when used with respect to any Security, shall mean the date on which the principal of such Security becomes due and payable as provided therein or in the Indenture, whether on a Repayment Date, at the Stated Maturity thereof or by declaration of acceleration, call for redemption or otherwise. "Maturity Date" shall mean March 16, 1999, subject to extension pursuant to Section 2.5. "Moody's" shall mean Moody's Investors Service, Inc. or any successor thereto. "Notice of Competitive Bid Request" shall mean a notification made pursuant to Section 2.4 in the form of Exhibit A-2. "Original Issue Discount Security" shall mean (i) any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof, and (ii) any other Security deemed an Original Issue Discount Security for United States Federal income tax purposes. "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. E-2-15 "Person" shall mean any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA), subject to the provisions of Title IV of ERISA or Section 412 of the Code that is maintained for current or former employees, or any beneficiary thereof, of the Company or any ERISA Affiliate. "Rating Agencies" shall mean Moody's and S&P. "Ratings" shall mean the ratings from time to time established by the Rating Agencies for senior, unsecured, non-credit-enhanced long-term debt of the Company. "Reference Lenders" shall mean Chase, Citibank and Deutsche Bank AG. "Register" shall have the meaning given such term in Section 8.4(d). "Repayment Date", when used with respect to any Security to be repaid, shall mean the date fixed for such repayment pursuant to such Security. "Required Lenders" shall mean, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing at least 51% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; provided that, for purposes of declaring the Loans to be due and payable pursuant to Article VI, and for all purposes after the Loans become due and payable pursuant to Article VI or the Commitments shall have expired or terminated, the Competitive Loan Exposures of the Lenders shall be included in their respective Revolving Credit Exposures in determining the Required Lenders. "Restricted Property" shall mean (i) any manufacturing facility, or portion thereof, owned or leased by the Company or any Subsidiary and located within the continental United States of America which, in the opinion of the Board of Directors of the Company, is of material importance to the business of the Company and its Subsidiaries taken as a whole, but no such manufacturing facility, or portion thereof, shall be deemed of material importance if its gross book value (before deducting accumulated depreciation) is less than 2% of Consolidated Net Tangible Assets, and (ii) any shares of capital stock or indebtedness of any Subsidiary owning any such manufacturing facility. As used in this definition, "manufacturing facility" means property, plant and equipment used for actual manufacturing and for activities directly related to manufacturing, and it excludes sales offices, research facilities and facilities used only for warehousing, distribution or general administration. "Revolving Credit Exposure" shall mean, with respect to any Lender at any time, the aggregate outstanding principal amount of such Lender's Revolving Loans at such time. E-2-16 "Revolving Loan" shall mean a Loan made pursuant to Section 2.3. "Sale and Leaseback Transaction" shall mean any arrangement with any Person pursuant to which the Company or any Subsidiary leases any Restricted Property that has been or is to be sold or transferred by the Company or the Subsidiary to such Person, other than (i) temporary leases for a term, including renewals at the option of the lessee, of not more than three years, (ii) leases between the Company and a Subsidiary or between Subsidiaries, (iii) leases of Restricted Property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation, of such Restricted Property, and (iv) arrangements pursuant to any provision of law with an effect similar to that under former Section 168(f)(8) of the Internal Revenue Code of 1954. "S&P" shall mean Standard & Poor's Ratings Group or any successor thereto. "SEC" shall mean the Securities and Exchange Commission. "Security" or "Securities" shall mean any note or notes, bond or bonds, debenture or debentures, or any other evidences of indebtedness, of any series authenticated and delivered from time to time under the Indenture. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, shall mean the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "subsidiary" shall mean, with respect to any Person (the "parent") at any date, (i) for purposes of Sections 5.9 and 5.10 only, any Person the majority of the outstanding Voting Stock of which is owned, directly or indirectly, by the parent or one or more subsidiaries of the parent of such Person and (ii) for all other purposes under this Agreement, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held. "Subsidiary" shall mean a subsidiary of the Company. "Taxes" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority and all liabilities with respect thereto. E-2-17 "Transactions" means the execution and delivery by the Borrowers of this Agreement (or, in the case of the Borrowing Subsidiaries, the Borrowing Subsidiary Agreements), the performance by the Borrowers of this Agreement, the borrowing of the Loans and the use of the proceeds thereof. "Type", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, "Rate" shall include the LIBO Rate, the Alternate Base Rate and the Fixed Rate. "Value" shall mean, with respect to a Sale and Leaseback Transaction, an amount equal to the present value of the lease payments with respect to the term of the lease remaining on the date as of which the amount is being determined, without regard to any renewal or extension options contained in the lease, discounted at the weighted average interest rate on the Securities of all series (including the effective interest rate on any Original Issue Discount Securities) which are outstanding on the effective date of such Sale and Leaseback Transaction and which have the benefit of Section 1007 of the Indenture under which the Securities are issued. "Voting Stock" shall mean, as applied to the stock of any corporation, stock of any class or classes (however designated) having by the terms thereof ordinary voting power to elect a majority of the members of the board of directors (or other governing body) of such corporation other than stock having such power only by reason of the happening of a contingency. "Wholly Owned Subsidiary" of any Person shall mean a subsidiary of such Person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity are, at the time any determination is being made, owned by such Person or one or more wholly owned subsidiaries of such Person or by such Person and one or more wholly owned subsidiaries of such Person. SECTION 1.2 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type (e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving Borrowing"). SECTION 1.3 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), E-2-18 (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.4 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time. ARTICLE II The Credits SECTION 2.1 Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Company and any Borrowing Subsidiary which is organized and existing under the laws of the United States of America or any State thereof from time to time during the Availability Period in Dollars in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Company and each applicable Borrowing Subsidiary may borrow, prepay and reborrow Revolving Loans. SECTION 2.2 Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.4. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments and Competitive Bids of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.14, (i) each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Company (on its own behalf or on behalf of any other applicable Borrower) may request in accordance herewith, and (ii) each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or Fixed Rate Loans as the Company (on its own behalf or on behalf of any other Borrower) may request in accordance herewith. Each Lender at its option may make any Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of any Borrower to repay such Loan in accordance with the terms of this Agreement. E-2-19 (c) At the commencement of each Interest Period for any Eurocurrency Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Each Competitive Borrowing denominated in Dollars shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000, and each Competitive Borrowing denominated in an Alternative Currency shall be in an aggregate principal amount that is not less than the Dollar Equivalent of $10,000,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 15 Eurocurrency Revolving Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Company (on its own behalf or on behalf of any other Borrower) shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.3 Requests for Revolving Borrowings. To request a Revolving Borrowing, the Company (on its own behalf or on behalf of any other applicable Borrower) shall notify Citibank of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 10:30 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to Citibank of a written Borrowing Request in the form of Exhibit A-5. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.2: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; (iv) in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; (v) the location and number of the account of the Company or the other applicable Borrowers to which funds are to be disbursed, which shall comply with the requirements of Section 2.7; and (vi) the applicable Borrower. E-2-20 If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Revolving Borrowing, then the Company shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, Citibank shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.4 Competitive Bid Procedure. (a) Subject to the terms and conditions set forth herein, from time to time during the Availability Period the Company (on its own behalf or on behalf of any other Borrower) may request Competitive Bids and the Company (on its own behalf and on behalf of any other Borrowers) may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; provided that no Competitive Loan may be requested that would result in the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures exceeding the total Commitments. To request Competitive Bids, the Company (on its own behalf and on behalf of any other Borrowers) shall hand deliver or telecopy to the Advance Agent a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the Advance Agent, in the case of a Eurocurrency Borrowing, not later than 10:00 a.m., New York City time, four Business Days before the date of the proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one Business Day before the date of the proposed Borrowing. A Competitive Bid Request that does not conform substantially to Exhibit A-1 may be rejected in the Advance Agent's sole discretion, and the Advance Agent shall promptly notify the Company of such rejection by telecopy. Each Competitive Bid Request shall specify the following information in compliance with Section 2.2: (i) the aggregate amount of the requested Borrowing; (ii) the Currency of the requested Borrowing; (iii) the date of such Borrowing, which shall be a Business Day; (iv) whether such Borrowing is to be a Eurocurrency Borrowing or a Fixed Rate Borrowing; (v) the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term "Interest Period"; (vi) the location and number of the account of the Company or any other Borrower to which funds are to be disbursed, which shall comply with the requirements of Section 2.7; and (vii) the applicable Borrower. If no election as to the Currency of a Borrowing is specified in any Competitive Bid Request, then the applicable Borrower shall be deemed to have requested a Borrowing in Dollars. Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Advance Agent shall notify the Lenders of the details thereof by telecopy, inviting the Lenders to submit Competitive Bids. E-2-21 (b) Each Lender may (but shall not have any obligation to) make one or more Competitive Bids to such Borrower in response to a Competitive Bid Request. Each Competitive Bid by a Lender must be received by the Advance Agent by telecopy, in the form of Exhibit A-3 hereto, in the case of a Eurocurrency Competitive Borrowing, not later than 9:30 a.m., New York City time, three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the proposed date of such Competitive Borrowing. Competitive Bids that do not conform substantially to the format of Exhibit A-3 may be rejected by the Advance Agent, and the Advance Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount of the Competitive Loan or Loans that the Lender is willing to make (which, in the case of a Competitive Borrowing denominated in Dollars, shall be a minimum of $5,000,000 and an integral multiple of $1,000,000 and, in the case of a Competitive Borrowing denominated in an Alternative Currency, shall be a minimum principal amount the Dollar Equivalent of which is equal to $5,000,000, and which may equal the entire principal amount of the Competitive Borrowing request by such Borrower), (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof. (c) The Advance Agent shall promptly notify such Borrower by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Lender that shall have made such Competitive Bid. (d) Subject only to the provisions of this paragraph, such Borrower may accept or reject any Competitive Bid. Such Borrower shall notify the Advance Agent by telephone, confirmed by telecopy in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject each Competitive Bid, in the case of a Eurocurrency Competitive Borrowing, not later than 2:00 p.m., New York City time, three Business Days before the date of the proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 2:00 p.m., New York City time, on the proposed date of the Competitive Borrowing; provided that (i) the failure of such Borrower to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) such Borrower shall not accept a Competitive Bid made at a particular Competitive Bid Rate if the Company rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by such Borrower shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, such Borrower may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is, in the case of a E-2-22 Competitive Borrowing denominated in Dollars, in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000 and, in the case of a Competitive Borrowing denominated in an Alternative Currency, in a minimum principal amount the Dollar Equivalent of which is $5,000,000; provided further that if a Competitive Loan must be in an amount less than $5,000,000 or an amount in an Alternative Currency of which the Dollar Equivalent is less than $5,000,000 because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of $5,000,000 or an amount in an Alternative Currency of which the Dollar Equivalent is $5,000,000 or any integral multiple of $1,000,000 thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of such Borrower. A notice given by such Borrower pursuant to this paragraph (d) shall be irrevocable. (e) The Advance Agent shall promptly notify each bidding Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted. (f) If the Advance Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the Company at least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Advance Agent pursuant to paragraph (b) of this Section. (g) All notices required by this Section 2.4 shall be given in accordance with Section 8.1. SECTION 2.5 Extension of Maturity Date. (i) The Company may, by sending an Extension Letter to Citibank (in which case Citibank shall promptly deliver a copy to each of the Lenders), during the period of not less than 30 days and not more than 60 days prior to the then current Maturity Date, request that the Lenders extend the Maturity Date at the time in effect to 364 days after the Maturity Date then in effect. Each Lender, acting in its sole discretion, shall, by notice to Citibank given not more than 20 days after the date of the Extension Letter, advise Citibank in writing whether or not such Lender agrees to such extension (each Lender that so advises Citibank that it will not extend the Maturity Date, being referred to herein as a "Non-extending Lender"); provided that any Lender that does not advise Citibank by the 20th day after the date of the Extension Letter shall be deemed to be a Non-extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to agree. (ii) (A) If Lenders holding Commitments that aggregate at least 51% of the total Commitments on the 20th day after the date of the Extension Letter shall not have agreed to extend the Maturity Date, then the Maturity Date shall not be so extended and the outstanding principal balance of all Loans and other amounts payable hereunder shall be payable on such Maturity Date. (B) If (and only if) Lenders holding Commitments that aggregate at least 51% of the total Commitments on the 20th day after the date of the Extension Letter shall have agreed to extend the Maturity Date, then the Maturity Date applicable to the Lenders that shall so have agreed, shall be 364 days after the current Maturity Date. In the event of such extension, the Commitment of each Non-extending Lender shall terminate on the Maturity Date in effect prior to such extension, all Loans and other amounts payable hereunder to such Non-extending Lenders shall become due and payable on such Maturity Date and the total Commitment of the Lenders hereunder shall be reduced by the Commitments of Non-extending Lenders so terminated on such Maturity Date. E-2-23 (iii) In the event that the conditions of clause (B) of paragraph (ii) above have been satisfied, the Company shall have the right on or before the Maturity Date in effect prior to the requested extension, at its own expense, to require any Non-extending Lender to transfer and assign without recourse (except as to title and the absence of Liens created by it) (in accordance with and subject to the restrictions contained in Section 8.4) all its interests, rights and obligations under this Agreement to one or more banks or other financial institutions identified to the Non-extending Lender, which may include any Lender (each an "Additional Commitment Lender"), provided that (x) such Additional Commitment Lender, if not already a Lender hereunder, shall be subject to the approval of Citibank and the Company (such approvals not to be unreasonably withheld), (y) such assignment shall become effective as of a date specified by the Company (which shall not be later than the Maturity Date in effect prior to the requested extension) and (z) the Additional Commitment Lender shall pay to such Non-extending Lender in immediately available funds on the effective date of such assignment the principal of and interest accrued to the date of payment on the Loans made by it hereunder and all other amounts accrued for its account or owed to it hereunder. Notwithstanding the foregoing, no extension of the Maturity Date shall become effective unless, on the Maturity Date in effect prior to the requested extension the conditions set forth in paragraphs (a) and (b) of Section 4.2 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to the current Maturity Date) and Citibank shall have received a certificate to that effect dated such Maturity Date and executed by a Financial Officer of the Company. SECTION 2.6 Increase of Commitments. (a) The Company may, by notice to Citibank (in which case Citibank shall promptly deliver a copy to each of the Lenders), request that the total Commitments be increased by an amount that will equal or exceed $20,000,000, but that will not result in the total Commitments exceeding $500,000,000. Each such notice shall set forth the amount of the requested increase in the total Commitments and the date on which such increase is requested to become effective (which shall be not less than 20 days or more than 45 days after the date of such notice (or such shorter time as may be agreed upon by the Company and Citibank)), and shall offer each Lender the opportunity to increase its Commitment by its Applicable Percentage of the proposed increased amount. Each Lender shall, by notice to the Company and Citibank given not more than 20 days after the date of the Company's notice (or such shorter time as may be agreed upon by the Company and Citibank), either agree to increase its Commitment by all or a portion of the offered amount (each Lender so agreeing being an "Increasing Lender") or decline to increase its Commitment (and any Lender that does not deliver such a notice within such period of 20 days (or such shorter time as may be agreed upon by the Company and Citibank) shall be deemed to have declined to increase its Commitment) (each Lender so declining or deemed to have declined being a "Non-increasing Lender"). In the event that, on the 20th day (or such shorter time as may be agreed upon by the Company and Citibank) after the Company shall have delivered a notice E-2-24 pursuant to the first sentence of this paragraph, the Lenders shall have agreed pursuant to the preceding sentence to increase their Commitments by an aggregate amount less than the increase in the total Commitments requested by the Company, Citibank or the Company may arrange for one or more banks or other financial institutions (any such bank or other financial institution as referred to in this clause (a)being called an "Augmenting Lender"), which may include any Lender, to extend Commitments or increase their existing Commitments in an aggregate amount equal to the unsubscribed amount, provided that each Augmenting Lender, if not already a Lender hereunder, shall be subject to the approval of the Company and Citibank (which approvals shall not be unreasonably withheld) and each Augmenting Lender shall execute all such documentation as Citibank shall reasonably specify to evidence its Commitment and its status as a Lender hereunder. Increases and new Commitments created pursuant to this clause (a) shall become effective on the date specified in the notice delivered by the Company pursuant to the first sentence of this paragraph. Notwithstanding the foregoing, no increase in the total Commitments (or in the Commitment of any Lender) shall become effective under this paragraph unless, (i) on the date of such increase, the conditions set forth in paragraphs (a)and (b) of Section 4.2 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to such increase) and Citibank shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Company and (ii) to the extent requested from the Company, Citibank shall have received (with sufficient copies for each of the Lenders) documents consistent with those delivered on the Effective Date under clauses (b) and (c) of Section 4.1 as to the corporate power and authority of the Company to borrow hereunder after giving effect to such increase. (b) On the effective date (the "Increase Effective Date") of any increase in the total Commitments pursuant to Section 2.6(a) (the "Commitment Increase"), (i) the aggregate principal amount of the Loans outstanding (the "Initial Loans") immediately prior to giving effect to the Commitment Increase on the Increase Effective Date shall be deemed to be paid, (ii) each Increasing Lender shall pay to Citibank in same day funds an amount equal to the difference between (A) the product of (1) such Increasing Lender's Applicable Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings (as hereinafter defined) and (B) the product of (1) such Increasing Lender's Applicable Percentage (calculated without giving effect to the Commitment Increase) multiplied by (2) the amount of the Initial Loans, (iii) each Augmenting Lender shall pay to Citibank in same day funds an amount equal to the product of (1) such Augmenting Lender's Applicable Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, and (iv) after Citibank receives the funds specified in clauses (ii) and (iii) above, Citibank shall pay to each Non-increasing Lender the portion of such funds that is equal to the difference between (A) the product of (1) such Non-increasing Lender's Applicable Percentage (calculated without giving effect to the Commitment Increase) multiplied by (2) the amount of the Initial Loans, and (B) the product of (1) such Non-increasing Lender's Applicable Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, (v) after the effectiveness of the Commitment Increase, the Company shall be deemed to have made new Borrowings (the "Subsequent Borrowings") in an aggregate principal amount equal to the aggregate principal amount of the Initial Loans and of the types and for the Interest Periods specified in a Borrowing Request delivered to Citibank in accordance with Section 2.3, (vi) each Non-increasing Lender, each Increasing E-2-25 Lender and each Augmenting Lender shall be deemed to hold its Applicable Percentage of each Subsequent Borrowing (calculated after giving effect to the Commitment Increase) and (vii) the Company shall pay each Increasing Lender and each Non-increasing Lender any and all accrued but unpaid interest on the Initial Loans. The deemed payments made pursuant to clause (i) above in respect of each Eurocurrency Loan shall be subject to indemnification by the Company pursuant to the provisions of Section 2.16 if the Increase Effective Date occurs other than on the last day of the Interest Period relating thereto. If requested by a Lender, the Company, at its own expense, shall execute and deliver to Citibank on behalf of each Increasing Lender and each Augmenting Lender a promissory note complying with the provisions of Section 2.10(e) hereof, in a principal amount equal to the Commitment of such Lender hereunder after giving effect to the Commitment Increase. Each Increasing Lender shall promptly surrender to Citibank any previous promissory note held by it, for return to the Company and shall indemnify the Company for any claims, losses, damages or expenses (including reasonable fees and disbursements of counsel) arising out of its failure to surrender such promissory note, provided the Company does not (unless pursuant to a final judgment of a court of competent jurisdiction) make any payments in respect of such promissory note. SECTION 2.7 Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in Dollars or in the applicable Alternative Currency, as the case may be, to the account of Citibank or an Affiliate thereof most recently designated by it for such purpose by notice to the Lenders, by 2:00 p.m., New York City time (or, in the case of any Competitive Loan with respect to which a Borrower shall have requested funding in another jurisdiction, to such account in such jurisdiction as Citibank shall designate for such purpose by notice to the applicable Lenders, by 2:00 p.m., local time). Citibank will make such Loans available to such Borrower by promptly crediting the amounts so received, in like funds, to an account of such Borrower maintained with Citibank in New York City (or, in the case of any Competitive Loan with respect to which such Borrower shall have requested funding in another jurisdiction, to such account in such jurisdiction as such Borrower shall have designated in the applicable Competitive Bid Request). (b) Unless Citibank shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to Citibank such Lender's share of such Borrowing, Citibank may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to such Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to Citibank, then the applicable Lender and the applicable Borrower severally agree to pay to Citibank forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to Citibank, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by Citibank in accordance with banking industry rules on interbank compensation or (ii) in the case of such Borrower, the interest rate on the applicable Borrowing; provided that no repayment by such Borrower pursuant to this sentence shall be deemed to be a prepayment for purposes of Section 2.16. If such Lender pays such amount to Citibank, then such amount shall constitute such Lender's Loan included in such Borrowing. E-2-26 SECTION 2.8 Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Company (on its own behalf or on behalf of any other Borrower) may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Company (on its own behalf or on behalf of any other Borrower) may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Competitive Borrowings, which may not be converted or continued. (b) To make an election pursuant to this Section, the Company (on its own behalf or on behalf of any other Borrower) shall notify Citibank of such election by telephone by the time that a Borrowing Request would be required under Section 2.3 if the Company (on its own behalf or on behalf of any other Borrower) were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to Citibank of a written Interest Election Request in a form approved by Citibank and signed by the Company. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.2: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and (iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Company (on its own behalf or on behalf of any other Borrower) shall be deemed to have selected an Interest Period of one month's duration. E-2-27 (d) Promptly following receipt of an Interest Election Request, Citibank shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Company (on its own behalf or on behalf of any other Borrower) fails to deliver a timely Interest Election Request with respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and Citibank, at the request of the Required Lenders, so notifies the Company, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.9 Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date. (b) The Company may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000 and (ii) the Company shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the sum of the Revolving Credit Exposures plus the Competitive Loan Exposures would exceed the total Commitments. (c) The Company shall notify Citibank of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, Citibank shall advise the Lenders of the contents thereof. Each notice delivered by the Company pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Company may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Company (by notice to Citibank on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent (subject to the provisions of Section 2.6). Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. SECTION 2.10 Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby unconditionally promises to pay (i) to Citibank for the account of each Lender the then unpaid principal amount of its Revolving Loans on the Maturity Date and (ii) to Citibank for the account of each Lender the then unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable to such Loan. E-2-28 (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) Citibank shall maintain a Register pursuant to subsection 8.4(d), and an account for each Lender in which it shall record (i) the amount of each Loan made hereunder and any promissory note evidencing such Loan, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by Citibank hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the Register and the accounts of each Lender maintained pursuant to paragraphs (b) and (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or Citibank to maintain such accounts or any error therein shall not in any manner affect the obligation of any Borrower to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans made by it be evidenced by a promissory note for its Competitive Loans and a promissory note for its Revolving Loans. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by Citibank. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 8.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its assigns). SECTION 2.11 Prepayment of Loans. (a) The applicable Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section; provided that no Borrower shall have the right to prepay any Competitive Loan without the prior consent of the Lender thereof. (b) The Company (on its own behalf or on behalf of any other Borrower) shall notify Citibank by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing, not later than 10:00 a.m., New York City time, three Business Days before the date of prepayment and (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 10:00 a.m., New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.9, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.9. Promptly following receipt of any such notice relating to a Revolving Borrowing, Citibank shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.2. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13. E-2-29 SECTION 2.12 Fees. (a) The Company agrees to pay to Citibank for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the date hereof to but excluding the date on which such Commitment terminates; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such facility fee shall continue to accrue on the daily amount of such Lender's Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the Commitments terminate shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (b) The Company agrees to pay to the Administrative Agents, for their own account, the administrative, auction and other fees separately agreed upon between the Company and the Administrative Agents (collectively, the "Administrative Fees"). (c) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to Citibank for distribution, in the case of facility fees, to the Lenders. Fees paid shall not be refundable under any circumstances. SECTION 2.13 Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate. (b) The Loans comprising each Eurocurrency Borrowing shall bear interest (i) in the case of a Eurocurrency Revolving Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Loan. (c) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan. (d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 1% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 1% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section. E-2-30 (e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (f) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at time when the Alternate Base Rate is based on clause (a) of the first sentence of the definition of Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall be determined by Citibank, and such determination shall be conclusive absent manifest error. SECTION 2.14 Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurocurrency Borrowing: (a) Citibank shall have determined (which determination shall be made in good faith and shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period; or (b) Citibank is advised by the Required Lenders (or, in the case of a Eurocurrency Competitive Loan, the Lender that is required to make such Loan) that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; then Citibank shall give notice thereof to the Company (on its own behalf or on behalf of the applicable Borrower) and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until Citibank notifies the Company and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurocurrency Borrowing shall be ineffective, (ii) if any Borrowing Request requests a Eurocurrency Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) any request by the Company (on its own behalf or on behalf of any Borrower) for a Eurocurrency Competitive Borrowing shall be ineffective; provided that (A) if the circumstances giving rise to such notice do not affect all the Lenders, then requests by the Company for Eurocurrency Competitive Borrowings may be made to Lenders that are not affected thereby and (B) if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted. E-2-31 SECTION 2.15 Increased Costs. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or (ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurocurrency Loans or Fixed Rate Loans made by such Lender; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan or Fixed Rate Loan (or of maintaining its obligation to make any such Loan) by an amount deemed by such Lender to be material or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, then the applicable Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. (b) If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time the Company will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company as specified in paragraph (a) or (b) of this Section, and setting forth in reasonable detail the manner in which such amount or amounts shall have been determined, shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 60 days prior to the date that such Lender notifies such Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 60-day period referred to above shall be extended to include the period of retroactive effect thereof. E-2-32 (e) Notwithstanding the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any Competitive Loan if the Change in Law that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid pursuant to which such Loan was made. SECTION 2.16 Break Funding Payments. In the event of (a) the payment of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan, or (e) the assignment of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by any Borrower pursuant to Section 2.19, then, in any such event, the applicable Borrower shall compensate each Lender for the out-of-pocket loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the present value of the excess, if any, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, refinanced or not borrowed (assumed to be the LIBO Rate applicable thereto) for the period from the date of such payment, prepayment, refinancing or failure to borrow or refinance to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow or refinance the Interest Period for such Loan which would have commenced on the date of such failure) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid or not borrowed or refinanced for such period or Interest Period, as the case may be. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section and setting forth in reasonable detail the manner in which such amount or amounts shall have been determined shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. Such Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.17 Taxes. (a) Any and all payments to the Lenders or the Administrative Agents hereunder by a Borrower or on behalf of any Borrower shall be made free and clear of and without deduction for any and all current or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding (i) taxes imposed on any Administrative Agent or any Lender (or participant) as a result of a present or former connection between such Administrative Agent or such Lender (or participant) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than as a result of entering into this Agreement, performing any obligations hereunder, receiving any payments hereunder or enforcing any rights hereunder) and (ii) any taxes that are attributable solely to the failure of any Non-U.S. Lender (as defined in Section 2.17(g) below) to comply with Section 2.17 (g) or 2.17(h) (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, "Non-Excluded E-2-33 Taxes"). If the relevant Borrower shall be required to deduct any Non-Excluded Taxes from or in respect of any sum payable hereunder to any Lender or any Administrative Agent, (i) the sum payable shall be increased by the amount (an "Additional Amount") necessary so that after making all required deductions (including deductions applicable to Additional Amounts payable under this Section 2.17) such Lender or such Administrative Agent (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the relevant Borrower shall make such deductions and (iii) the relevant Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the relevant Borrower (or the Company, as guarantor, as applicable) shall pay to the relevant Governmental Authority in accordance with applicable law any current or future stamp, intangibles or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document that are imposed by a Governmental Authority in a jurisdiction in which the relevant Borrower or the Company is incorporated, organized, managed and controlled or considered to have its seat or otherwise has a connection (other than as a result of entering into this Agreement, performing any obligations hereunder, receiving any payments hereunder or enforcing any rights hereunder) ("Other Taxes"). (c) The relevant Borrower (or the Company, as guarantor, as applicable) shall indemnify each Lender (or participant) and each Administrative Agent for the full amount of Non-Excluded Taxes and Other Taxes paid by such Lender (or participant) or such Administrative Agent, as the case may be, and any liability (including penalties, interest and expenses (including reasonable attorney's fees and expenses)) arising therefrom or with respect thereto, whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared by a Lender, or an Administrative Agent on its behalf and setting forth in reasonable detail the manner in which such amount shall have been determined, absent manifest error, shall be final, conclusive and binding for all purposes. Such indemnification shall be made within 30 days after the date the Lender or the Administrative Agent, as the case may be, makes written demand therefor, which written demand shall be made within 60 days of the date such Lender or Administrative Agent receives written demand for payment of such Taxes or Other Taxes from the relevant Governmental Authority. (d) If a Lender (or participant) or an Administrative Agent receives a refund in respect of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the relevant Borrower or with respect to which the relevant Borrower has paid Additional Amounts pursuant to this Section 2.17, it shall within 30 days from the date of such receipt pay over such refund to the relevant Borrower (but only to the extent of indemnity payments made, or Additional Amounts paid, by the relevant Borrower under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender (or participant) or such Administrative Agent and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the relevant Borrower, upon the request of such Lender (or participant) or such Administrative Agent, agrees to repay the amount paid over to the relevant Borrower (plus penalties, interest or other charges) to such Lender (or participant) or such Administrative Agent in the event such Lender (or participant) or such Administrative Agent is required to repay such refund to such Governmental Authority. E-2-34 (e) As soon as practicable after the date of any payment of Non-Excluded Taxes or Other Taxes by the relevant Borrower to the relevant Governmental Authority, the relevant Borrower will deliver to Citibank, at its addresses referred to in Section 8.1, the original or a certified copy of a receipt issued by such Governmental Authority evidencing payment thereof. (f) Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 2.17 shall survive the payment in full of the principal of and interest on all Loans made hereunder. (g) Each Lender (or participant) that is not a United States Person as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the Borrower and Citibank two copies of either United States Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c)(3)(A) of the Code, is not a 10 percent shareholder (within the meaning of Section 881(c)(3)(B) of the Code) of the Company and is not a controlled foreign corporation related to the Company (within the meaning of Section 881(c)(3)(C) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax on payments by the Company under this Agreement. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of a participant, on or before the date such participant becomes a participant hereunder) and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Notwithstanding any other provision of this Section 2.17(g), a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.17(g) that such Non-U.S. Lender is not legally able to deliver. (h) A Lender (or participant) that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which a Borrowing Subsidiary is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrowing Subsidiary (with a copy to Citibank), at the time or times prescribed by applicable law or reasonably requested by the Borrowing Subsidiary, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender (or participant) is legally entitled to complete, execute and deliver such documentation and in such Lender's reasonable judgment such completion, execution or submission would not materially prejudice the legal position of such Lender (or participant). E-2-35 (i) The relevant Borrower shall not be required to indemnify any Lender, or to pay any Additional Amounts to any Lender, in respect of any withholding tax pursuant to paragraph (a) or (c) above to the extent that (i) the obligation to withhold amounts with respect to such withholding tax was in effect and would apply to amounts payable to such Lender on the date such Lender became a party to this Agreement (or, in the case of a participant, on the date such participant became a participant hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender designated such New Lending Office with respect to a Loan or, with respect to payments by a Borrower pursuant to a Competitive Loan, as of the date the Company accepts a Competitive Bid pursuant to Section 2.4(d); provided, however, that this clause (i) shall not apply to any Lender (or participant) if the assignment, participation, transfer or designation of a New Lending Office was made at the request of the relevant Borrower; and provided further, however, that this clause (i) shall not apply to the extent the indemnity payment or Additional Amounts any Lender (or participant) would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or Additional Amounts that the Lender (or participant) making the assignment, participation, transfer or designation of such New Lending Office would have been entitled to receive in the absence of such assignment, participation, transfer or designation, or (ii) the obligation to pay such Additional Amounts would not have arisen but for a failure by such Lender (or participant) to comply with the provisions of paragraph (g) or (h) above. (j) Any Lender (or participant) claiming any indemnity payment or Additional Amounts payable pursuant to this Section 2.17 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by the relevant Borrower or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such indemnity payment or Additional Amounts that may thereafter accrue and would not, in the sole determination of such Lender (or participant), be otherwise disadvantageous to such Lender (or participant). (k) Nothing contained in this Section 2.17 shall require any Lender (or participant) or any Administrative Agent to make available any of its tax returns (or any other information that it deems to be confidential or proprietary). SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) Each Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 3:00 p.m., local time at the place of payment, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of Citibank, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to Citibank at its offices at 399 Park Avenue, New York, New York, or such other location as Citibank shall designate from time to time, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 8.5 shall be made directly to the Persons entitled thereto. Citibank shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars or, in the case of Competitive Loans, the applicable Currency, as the case may be. E-2-36 (b) If at any time insufficient funds are received by and available to Citibank to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation. (d) Unless Citibank shall have received notice from a Borrower prior to the date on which any payment is due to Citibank for the account of the Lenders hereunder that such Borrower will not make such payment, Citibank may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to Citibank forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Citibank, at the greater of the Federal Funds Effective Rate and a rate determined by Citibank in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.7(b) or 2.18(d), then Citibank may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by Citibank for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. E-2-37 SECTION 2.19 Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to file any certificate or document requested by the Company (consistent with legal and regulatory restrictions), to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such filing, designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not otherwise be disadvantageous to such Lender. (b) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then such Borrower may, upon notice to such Lender and Citibank, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 8.4), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it and any and all rights and interests related thereto) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) such Borrower shall have received the prior written consent of the Administrative Agents which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans (other than Competitive Loans), accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or such Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. SECTION 2.20 Borrowing Subsidiaries. The Company may designate any Wholly Owned Subsidiary of the Company as a Borrowing Subsidiary. Upon the receipt by Citibank of a Borrowing Subsidiary Agreement executed by such a Wholly Owned Subsidiary and the Company, such Wholly Owned Subsidiary shall be a Borrowing Subsidiary and a party to this Agreement. A Subsidiary shall cease to be a Borrowing Subsidiary hereunder at such time as no Loans, fees or any other amounts due in connection therewith pursuant to the terms hereof shall be outstanding to such Subsidiary and such Subsidiary and the Company shall have executed and delivered to Citibank a Borrowing Subsidiary Termination; provided that, notwithstanding anything herein to the contrary, no Borrowing Subsidiary shall cease to be a Borrowing Subsidiary solely because it no longer is a Wholly Owned Subsidiary of the Company so long as such Borrowing Subsidiary and the Company shall not have executed and delivered to Citibank a Borrowing Subsidiary Termination and the Company's guarantee of the Borrowing Subsidiary Obligations of such Borrowing Subsidiary pursuant to Section 8.16 has not been released. E-2-38 ARTICLE III Representations and Warranties The Company represents and warrants to each of the Lenders and each of the Administrative Agents that: SECTION 3.1 Organization; Powers. The Company (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted and (c) is qualified to do business in every jurisdiction where such qualification is required, except where the failure so to qualify would not result in a Material Adverse Effect. Each Borrower has the corporate power and authority to execute and deliver this Agreement (or, in the case of the Borrowing Subsidiaries, the Borrowing Subsidiary Agreements), to perform its obligations under this Agreement and to borrow hereunder. SECTION 3.2 Authorization. The Transactions (a) are within each Borrower's corporate powers and have been duly authorized by all requisite corporate action and (b) will not (i) violate (A) any provision of any law, statute, rule or regulation (including, without limitation, the Margin Regulations), (B) any provision of the certificate of incorporation or other constitutive documents or by-laws of the Company or any Subsidiary, (C) any order of any Governmental Authority or (D) any provision of any indenture, agreement or other instrument to which the Company or any Subsidiary is a party or by which it or any of its property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any such indenture, agreement or other instrument or (iii) result in the creation or imposition of any lien upon any property or assets of the Company or any Subsidiary other than, in the case of clauses (i)(A), (i)(C), (i)(D), (ii) and (iii), any such violations, conflicts, breaches, defaults or liens that, individually or in the aggregate, would not have a Material Adverse Effect. SECTION 3.3 Enforceability. Each Loan Document constitutes or, when executed and delivered, will constitute a legal, valid and binding obligation of each Borrower party thereto, enforceable in accordance with its terms (subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity)). SECTION 3.4 Governmental Approvals. No action, consent or approval of, registration or filing with or other action by any Governmental Authority is required in connection with the Transactions. E-2-39 SECTION 3.5 Financial Statements; No Material Adverse Change. (a) The Company has heretofore furnished to the Administrative Agents and the Lenders copies of (i) its audited consolidated financial statements for the years ended December 31, 1995 and December 31, 1996, respectively, which were included in its annual report on Form 10-K dated December 31, 1995 and December 31, 1996, respectively (the "10-Ks"), filed with the SEC under the Exchange Act and (ii) its unaudited consolidated financial statements for the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, which were included in its Quarterly Report on Form 10-Q dated March 31, 1997, June 30, 1997 and September 30, 1997, respectively (the "10-Qs"), filed with the SEC under the Exchange Act. Such financial statements present fairly, in all material respects, the financial condition and the results of operations of the Company and the Subsidiaries, taken as a whole, as of, and for accounting periods ending on, such dates in accordance with GAAP (subject, in the case of unaudited statements, to normal year-end audit adjustments and the absence of footnotes). (b) Since December 31, 1997, there has been no material adverse effect on the business, operations, properties or financial condition of the Company and its Subsidiaries, taken as a whole. SECTION 3.6 Litigation; Compliance with Laws. (a) Except as disclosed in either the most recent 10-K or the most recent 10-Q, as of the date hereof, there are no actions, proceedings or investigations filed or (to the knowledge of the Company) threatened against the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal which question the validity or legality of this Agreement, the Transactions or any action taken or to be taken pursuant to this Agreement and no order or judgment has been issued or entered restraining or enjoining the Company from the execution, delivery or performance of this Agreement nor is there any other action, proceeding or investigation filed or (to the knowledge of the Company) threatened against the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal which would be reasonably likely to result in a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default would be reasonably likely to result in a Material Adverse Effect. SECTION 3.7 Federal Reserve Regulations. No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose which entails a violation of, or which is inconsistent with, the provisions of the Margin Regulations. SECTION 3.8 Use of Proceeds. All proceeds of the Loans shall be used for the purposes referred to in the recitals to this Agreement. E-2-40 SECTION 3.9 Taxes. The Company and the Subsidiaries have filed or caused to be filed all Federal and material state, local and foreign Tax returns which are required to be filed by them, and have paid or caused to be paid all Taxes shown to be due and payable on such returns or on any assessments received by any of them, other than any Taxes or assessments the validity of which is being contested in good faith by appropriate proceedings, and with respect to which appropriate accounting reserves have, to the extent required by GAAP, been set aside. SECTION 3.10 Employee Benefit Plans. The present aggregate value of accumulated benefit obligations of all Plans and all foreign employee pension benefit plans (based on those assumptions used for disclosure of such obligations in corporate financial statements in accordance with GAAP) did not, as of the most recent statements available, exceed the aggregate value of the assets for all such plans. Except as would not individually or in the aggregate have a Material Adverse Effect: (a) no ERISA Termination Event has occurred or (b) each Plan has been established and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations. SECTION 3.11 Environmental and Safety Matters. Other than exceptions to any of the following that would not in the aggregate have a Material Adverse Effect: (i) the Company and the Subsidiaries comply and have complied with all applicable Environmental and Safety Laws; (ii) there are and have been no Hazardous Substances at any property owned, leased or operated by the Company now or in the past, or at any other location, that could reasonably be expected to result in liability of the Company or any Subsidiary under any Environmental and Safety Law or result in costs to any of them arising out of any Environmental and Safety Law; (iii) there are no past, present, or, to the knowledge of the Company and the Subsidiaries, anticipated future events, conditions, circumstances, practices, plans, or legal requirements that could reasonably be expected to prevent the Company or any of the Subsidiaries from, or increase the costs to the Company or any of the Subsidiaries of, complying with applicable Environmental and Safety Laws or obtaining or renewing all material permits, approvals, authorizations, licenses or permissions required of any of them pursuant to any such law; and (iv) neither the Company nor any of the Subsidiaries has retained or assumed, by contract or operation of law, any liability, fixed or contingent, under any Environmental and Safety Law. SECTION 3.12 Properties. (a) Each of the Company and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property that are material to the business of the Company and its Subsidiaries taken as a whole, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property that are material to the business of the Company and its Subsidiaries taken as a whole, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. E-2-41 SECTION 3.13 Investment and Holding Company Status. Neither the Company nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. ARTICLE IV Conditions SECTION 4.1 Effective Date. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 8.7): (a) Citibank (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to Citibank (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) Citibank shall have received a favorable written opinion (addressed to the Administrative Agents and the Lenders and dated the Effective Date) of Cravath, Swaine & Moore, counsel to the Company, and John L. McGoldrick, Esq., Senior Vice President Law and Strategic Planning and General Counsel of the Company, collectively to the effect set forth in Exhibit C. The Company hereby requests such counsel to deliver such opinions. (c) Citibank shall have received such documents and certificates as Citibank or its counsel may reasonably request relating to the organization, existence and good standing of the Company, the authorization of the Transactions and any other legal matters relating to the Company, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agents and their counsel. (d) Citibank shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.2. (e) The Administrative Agents shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder. Citibank shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding. SECTION 4.2 Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (other than a Borrowing made solely to refinance outstanding Borrowings that does not increase the aggregate principal amount of the Loans of any Lender outstanding) is subject to the satisfaction of the following conditions: E-2-42 (a) The representations and warranties of the Company set forth in this Agreement other than those set forth in Sections 3.5(b), 3.6(a), 3.10 and 3.11 shall be true and correct in all material respects (provided that such representations and warranties qualified as to materiality shall be true and correct) on and as of the date of such Borrowing with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. (b) At the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing. Each Borrowing shall be deemed to constitute a representation and warranty by the Company on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary. The obligation of each Lender to make a Loan on the occasion of the first Borrowing by each Borrowing Subsidiary is subject to the satisfaction of the following condition: Citibank (or their counsel) shall have received a Borrowing Subsidiary Agreement properly executed by such Borrowing Subsidiary and the Company. ARTICLE V Covenants A. Affirmative Covenants. The Company covenants and agrees with each Lender and each Administrative Agent that so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any fees or any other amounts payable hereunder shall be unpaid, unless the Required Lenders shall otherwise consent in writing, it will, and will cause each of the Subsidiaries to: SECTION 5.1 Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises that are material to the business of the Company and its Subsidiaries as a whole, except as expressly permitted under Section 5.7 and except, in the case of any Subsidiary, where the failure to do so would not result in a Material Adverse Effect. SECTION 5.2 Business and Properties. Comply in all respects with all applicable laws, rules, regulations and orders of any Governmental Authority (including Environmental and Safety Laws and ERISA), whether now in effect or hereafter enacted except instances that could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect; and at all times maintain and preserve all property material to the conduct of the business of the Company and its Subsidiaries as a whole 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 necessary in order that the business carried on in connection therewith may be properly conducted at all times, except where the failure to do so would not result in a Material Adverse Effect. E-2-43 SECTION 5.3 Financial Statements, Reports, Etc. Furnish to the Administrative Agents and each Lender: (a) within 95 days after the end of each fiscal year, its annual report on Form 10-K as filed with the SEC, including its consolidated balance sheet and the related consolidated earnings statement showing its consolidated financial condition as of the close of such fiscal year and the consolidated results of its operations during such year, all audited by Price Waterhouse LLP or other independent certified public accountants of recognized national standing selected by the Company and accompanied by an opinion of such accountants to the effect that such consolidated financial statements fairly present the Company's financial condition and results of operations on a consolidated basis in accordance with GAAP; (b) within 50 days after the end of each of the first three fiscal quarters of each fiscal year, its quarterly report on Form 10-Q as filed with the SEC, including its unaudited consolidated balance sheet and related consolidated earnings statement, showing its consolidated financial condition as of the close of such fiscal quarter and the consolidated results of its operations during such fiscal quarter and the then elapsed portion of the fiscal year (and each delivery of such statements shall be deemed a representation that such statements fairly present the Company's financial condition and results of operations on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes); (c) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a certificate of a Financial Officer certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; (d) promptly after the same become publicly available, copies of all reports on Form 8-K filed by it with the SEC, or any Governmental Authority succeeding to any of or all the functions of the SEC, or copies of all reports distributed to its shareholders, as the case may be; and (e) promptly, from time to time, such other information as any Lender shall reasonably request through Citibank. SECTION 5.4 Insurance. Keep its insurable properties adequately insured at all times by financially sound and reputable insurers (which may include captive insurers), and maintain such other insurance or self insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies similarly situated and in the same or similar businesses. E-2-44 SECTION 5.5 Obligations and Taxes. Pay and discharge promptly when due all material taxes, assessments and governmental charges imposed upon it or upon its income or profits or in respect of its property, in each case before the same shall become delinquent or in default and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves with respect thereto shall, to the extent required by GAAP, have been set aside. SECTION 5.6 Litigation and Other Notices. Give Citibank written notice of the following within five Business Days after any executive officer of the Company obtains knowledge thereof: (a) the filing or commencement of any action, suit or proceeding which the Company reasonably expects to result in a Material Adverse Effect; (b) any Event of Default or Default, specifying the nature and extent thereof and the action (if any) which is proposed to be taken with respect thereto; and (c) any change in any of the Ratings. SECTION 5.7 Books and Records. Keep proper books of record and account in which full, true and correct entries are made of all material dealings and transactions in relation to its business and activities. B. Negative Covenants. The Company covenants and agrees with each Lender and each Administrative Agent that so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any fees or any other amounts payable hereunder shall be unpaid, unless the Required Lenders shall otherwise consent in writing, it will not, and will not permit any of the Subsidiaries to: SECTION 5.8 Consolidations, Mergers, and Sales of Assets. In the case of the Company (a) consolidate or merge with or into any other Person or liquidate, wind up or dissolve (or suffer any liquidation or dissolution) or (b) sell, or otherwise transfer (in one transaction or a series of transactions), or permit any Subsidiary to sell, or otherwise transfer (in one transaction or a series of transactions), all or substantially all of the assets of the Company and the Subsidiaries, taken as a whole, to any other Person; provided that the Company may merge or consolidate with another Person if (A) the Company is the corporation surviving such merger and (B) immediately after giving effect to such merger or consolidation, no Default or Event of Default shall have occurred and be continuing. E-2-45 SECTION 5.9 Liens. Create, assume or suffer to exist any Lien upon any Restricted Property to secure any Debt of the Company, any Subsidiary or any other Person, without making effective provision whereby the Loans that may then or thereafter be outstanding shall be secured by such Lien equally and ratably with (or prior to) such Debt for so long as such Debt shall be so secured, except that the foregoing shall not prevent the Company or any Subsidiary from creating, assuming or suffering to exist any of the following Liens: (a) Liens existing on the date hereof; (b) any Lien existing on property owned or leased by any Person at the time it becomes a Subsidiary; (c) any Lien existing on property at the time of the acquisition thereof by the Company or any Subsidiary; (d) any Lien to secure any Debt incurred prior to, at the time of, or within 12 months after the acquisition of any Restricted Property for the purpose of financing all or any part of the purchase price thereof and any Lien to the extent that it secures Debt which is in excess of such purchase price and for the payment of which recourse may be had only against such Restricted Property; (e) any Lien to secure any Debt incurred prior to, at the time of, or within 12 months after the completion of the construction, alteration, repair or improvement of any Restricted Property for the purpose of financing all or any part of the cost thereof and any Lien to the extent that it secures Debt which is in excess of such cost and for the payment of which recourse may be had only against such Restricted Property; (f) any Liens securing Debt of a Subsidiary owing to the Company or to another Subsidiary; (g) any Liens securing industrial development, pollution control or similar revenue bonds; (h) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in clauses (a) through (g) above, so long as the principal amount of the Debt secured thereby does not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement (except that, where an additional principal amount of Debt is incurred to provide funds for the completion of a specific project, the additional principal amount, and any related financing costs, may be secured by the Lien as well) and such Lien is limited to the same property subject to the Lien so extended, renewed or replaced (and improvements on such property); and E-2-46 (i) any Lien not permitted by clauses (a) through (h) above securing Debt which, together with the aggregate outstanding principal amount of all other Debt of the Company and its Subsidiaries owning Restricted Property which would otherwise be subject to the foregoing restrictions and the aggregate Value of existing Sale and Leaseback Transactions which would be subject to the restrictions of Section 5.10 but for this clause (i), does not at any time exceed 10% of Consolidated Net Tangible Assets. SECTION 5.10 Limitation on Sale and Leaseback Transactions. Enter into any Sale and Leaseback Transaction, or permit any Subsidiary owning Restricted Property to do so, unless either: (a) the Company or such Subsidiary would be entitled to incur Debt, in a principal amount at least equal to the Value of such Sale and Leaseback Transaction, which is secured by Liens on the property to be leased (without equally and ratably securing the Loans) without violating Section 5.9, or (b) the Company, during the six months immediately following the effective date of such Sale and Leaseback Transaction, causes to be applied to (A) the acquisition of Restricted Property or (B) the voluntary retirement of Funded Debt (whether by redemption, defeasance, repurchase, or otherwise) an amount equal to the Value of such Sale and Leaseback Transaction. ARTICLE VI Events of Default In case of the happening of any of the following events (each an "Event of Default"): (a) any representation or warranty made or deemed made in or in connection with the execution and delivery of this Agreement or the Borrowings hereunder or under any Borrowing Subsidiary Agreement shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (b) default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; (c) default shall be made in the payment of any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (b) above) due hereunder, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days; (d) default shall be made in the due observance or performance of any covenant, condition or agreement contained in Section 5.6, 5.8, 5.9 or 5.10; E-2-47 (e) default shall be made in the due observance or performance of any covenant, condition or agreement contained herein (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from any Administrative Agent or any Lender to the Company; (f) the Company or any Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of one or more items of Debt in an aggregate principal amount greater than or equal to 3% of Consolidated Net Worth, when and as the same shall become due and payable (giving effect to any applicable grace period), or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Debt if the effect of any failure referred to in this clause (ii) is to cause such Debt to become due prior to its stated maturity; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Company or any Borrowing Subsidiary, or of a substantial part of the property or assets of the Company or any Borrowing Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Borrowing Subsidiary or for a substantial part of the property or assets of the Company or any Borrowing Subsidiary or (iii) the winding up or liquidation of the Company or any Borrowing Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (h) the Company or any Borrowing Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Borrowing Subsidiary or for a substantial part of the property or assets of the Company or any Borrowing Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing; or (i) one or more judgments for the payment of money in an aggregate amount equal to or greater than 3% of Consolidated Net Worth (exclusive of any amount thereof covered by insurance) shall be rendered against the Company, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Company or any Subsidiary to enforce any such judgment; E-2-48 (j) (i) a Plan of the Company or any Borrowing Subsidiary shall fail to maintain the minimum funding standard required by Section 412 of the Code for any plan year or a waiver of such standard is sought or granted under Section 412(d), or (ii) an ERISA Termination Event shall have occurred with respect to the Company or any Borrowing Subsidiary or an ERISA Affiliate has incurred or is reasonably likely to incur a liability to or on account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, or (iii) the Company or any Borrowing Subsidiary or any ERISA Affiliate shall engage in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the United States Department of Labor, or (iv) the Company or any Borrowing Subsidiary or any ERISA Affiliate shall fail to pay any required installment or any other payment required to be paid by such entity under Section 412 of the Code on or before the due date for such installment or other payment, or (v) the Company or any Borrowing Subsidiary or any ERISA Affiliate shall fail to make any contribution or payment to any Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA) which the Company or any Borrowing Subsidiary or any ERISA Affiliate is required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto, and there shall result from any such event or events either a liability or a material risk of incurring a liability to the PBGC or a Plan which will have a Material Adverse Effect; (k) a Change in Control shall occur; or (l) at any time while a Borrowing Subsidiary Agreement is in effect, the guarantee in Section 8.16 shall cease to be, or shall be asserted by the Company not to be, a valid and binding obligation on the part of the Company; then, and in every such event (other than an event with respect to the Company described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, Citibank, at the request of the Required Lenders, shall, by notice to the Company or any Borrowing Subsidiary (which notice to a Borrowing Subsidiary may be given to the Company), take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Company or any Borrowing Subsidiary accrued hereunder, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived anything contained herein to the contrary notwithstanding; and, in any event with respect to the Company described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Company and the Borrowing Subsidiaries accrued hereunder shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived anything contained herein to the contrary notwithstanding. E-2-49 ARTICLE VII The Administrative Agents In order to expedite the transactions contemplated by this Agreement, each of The Chase Manhattan Bank and Citibank, N.A. is hereby appointed to act as an Administrative Agent on behalf of the Lenders and Citibank is hereby appointed to act as Advance Agent on behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes each Administrative Agent (which term, for purposes of this Article VII, shall be deemed to include the Advance Agent) to take such actions on behalf of such Lender or holder and to exercise such powers as are specifically delegated to the Administrative Agents or an Administrative Agent individually, as the case may be, by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto. Citibank is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Company or any Borrowing Subsidiary of any Event of Default of which Citibank has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Company or any Borrowing Subsidiary pursuant to this Agreement as received by Citibank. Neither Administrative Agent nor any of their respective directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his or her own gross negligence or willful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Company or any Borrowing Subsidiary of any of the terms, conditions, covenants or agreements contained in this Agreement. The Administrative Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or other instruments or agreements. The Administrative Agents may deem and treat the Lender which makes any Loan as the holder of the indebtedness resulting therefrom for all purposes hereof until it shall have received notice from such Lender, given as provided herein, of the transfer thereof. The Administrative Agents shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. The Administrative Agents shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither Administrative Agent nor any of their respective directors, officers, employees or agents shall have any responsibility to the Company or any Borrowing Subsidiary on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Company of any of their E-2-50 respective obligations hereunder or in connection herewith. The Administrative Agents may execute any and all duties hereunder by or through their Affiliates, agents or employees and shall be entitled to rely upon the advice of legal counsel selected by them with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by them in accordance with the advice of such counsel. The Lenders hereby acknowledge that the Administrative Agents shall be under no duty to take any discretionary action permitted to be taken by them pursuant to the provisions of this Agreement unless they shall be requested in writing to do so by the Required Lenders. Subject, in the case of a resignation of both Administrative Agents, to the appointment and acceptance of a successor Administrative Agent as provided below, either Administrative Agent may resign at any time by notifying the Lenders and the Company. Upon any such resignation of both Administrative Agents, the Required Lenders shall have the right to appoint a successor Administrative Agent acceptable to the Company. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agents give notice of their resignation, then the retiring Administrative Agents may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agents and the retiring Administrative Agents shall be discharged from their duties and obligations hereunder. If only one of the Administrative Agents shall resign, the other Administrative Agent shall become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any Administrative Agent's resignation hereunder, the provisions of this Article and Section 8.5 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. With respect to the Loans made by them hereunder, each Administrative Agent in its individual capacity and not as Administrative Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Administrative Agent, and such Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if it were not an Administrative Agent. Each Lender agrees (i) to reimburse the Administrative Agents, on demand, in the amount of its Applicable Percentage of any expenses incurred for the benefit of the Lenders by the Administrative Agents, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, which shall not have been reimbursed by the Company and (ii) to indemnify and hold harmless the Administrative Agents and any of their E-2-51 respective directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against either of them in its capacity as an Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by either of them under this Agreement to the extent the same shall not have been reimbursed by the Company; provided that no Lender shall be liable to any Administrative Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of such Administrative Agent or any of its directors, officers, employees or agents. Each Lender acknowledges that it has, independently and without reliance upon any Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any related agreement or any document furnished hereunder or thereunder. ARTICLE VII Miscellaneous SECTION 8.1 Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telecopy, as follows: (a) if to the Company, to Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, Attention of the Treasurer (Telecopy No. 212-605-9632) and the General Counsel (Telecopy No. 212-546-9562); (b) if to The Chase Manhattan Bank, to it at One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Vito Cipriano (Telecopy No. 212-552-5662); (c) if to Citibank, (i) for notices concerning operational matters, to Citibank, N.A.,c/o Citibank Delaware, Two Penns Way, Suite 200, New Castle, DE 19720, Attention of Janet Wallace (Telecopy No. (302) 894-6120) or (ii) for notices concerning credit matters, to Citibank, N.A., 399 Park Avenue, New York, New York 10043, Attention of William E. Clark (Telecopy No. 212-826-2371); (d) if to a Lender, to it at its address (or telecopy number) set forth in Schedule 2.1 or in the Assignment and Acceptance pursuant to which such Lender became a party hereto; and E-2-52 (e) if to any Borrowing Subsidiary, to it at the address (or telecopy number) set forth above for the Company. Each Borrowing Subsidiary hereby irrevocably appoints the Company as its agent for the purpose of giving on its behalf any notice and taking any other action provided for in this Agreement and hereby agrees that it shall be bound by any such notice or action given or taken by the Company hereunder irrespective of whether or not any such notice shall have in fact been authorized by such Borrowing Subsidiary and irrespective of whether or not the agency provided for herein shall have theretofore been terminated. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy to such party as provided in this Section or in accordance with the latest unrevoked direction from such party given in accordance with this Section. SECTION 8.2 Survival of Agreement. All covenants, agreements, representations and warranties made by the Company herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or the Commitments have not been terminated. SECTION 8.3 Binding Effect. This Agreement shall become effective when it shall have been executed by the Company and the Administrative Agents and when the Administrative Agents shall have received copies hereof (telecopied or otherwise) which, when taken together, bear the signature of each Lender, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither the Company nor any Borrowing Subsidiary shall have the right to assign any rights hereunder or any interest herein without the prior consent of all the Lenders. SECTION 8.4 Successors and Assigns. (a) Whenever in this Agreement any of the parties is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any party that are contained in this Agreement shall bind and inure to the benefit of its successors and assigns. (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that, except in the case of an assignment to another Lender or an Affiliate of a Lender, (i) each of the Company (so long as no Event of Default shall have occurred and be continuing with respect to the Company under clause (g) or (h) of Article VI of this Agreement) and Citibank must give its prior written consent to such assignment (which consent in each case shall not be unreasonably withheld) and (ii) the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Citibank) shall E-2-53 not be less than $10,000,000 unless it shall be the entire amount of such Lender's Commitment. The parties to each assignment shall execute and deliver to Citibank an Assignment and Acceptance, and a processing and recordation fee of $3,000. Upon acceptance and recording pursuant to paragraph (e) of this Section, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof, (X) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (Y) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto (but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 8.5, as well as to any fees accrued for its account hereunder and not yet paid)). Notwithstanding the foregoing, any Lender assigning its rights and obligations under this Agreement may retain any Competitive Loans made by it outstanding at such time, and in such case shall retain its rights hereunder in respect of any Loans so retained until such Loans have been repaid in full in accordance with this Agreement. (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the financial condition of the Company or the performance or observance by the Company of any obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.3 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon any Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agents to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agents by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. E-2-54 (d) Citibank shall maintain at one of its offices in the City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and the principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time and any promissory notes evidencing such Loans (the "Register"). The entries in the Register shall be conclusive in the absence of manifest error and the Company, the other Borrowers, the Administrative Agents and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. No assignment or transfer of any Loan (or portion thereof) or any Note evidencing such Loan shall be effected unless and until it has been recorded in the Register as provided in this subsection 8.4(d). Notwithstanding any other provision of this Agreement, any assignment or transfer of all or part of a promissory note shall be registered on the Register only upon surrender for registration of assignment or transfer of the promissory note (and each promissory note shall expressly so provide), accompanied by a duly executed Assignment and Acceptance, and thereupon one or more new promissory notes in the same aggregate principal amount shall be issued to the designated Assignee and the old promissory notes shall be returned by Citibank to the Borrower marked "cancelled". The Register shall be available for inspection by each party hereto, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee together with an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above and, if required, the written consent of the Company to such assignment, Citibank shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. (f) Each Lender may sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto or thereto for the performance of such obligations, (iii) each participating bank or other entity shall be entitled to the benefit of the cost protection provisions contained in Sections 2.15, 2.16 and 2.17 to the same extent as if it was the selling Lender (and limited to the amount that could have been claimed by the selling Lender had it continued to hold the interest of such participating bank or other entity, it being further agreed that the selling Lender will not be permitted to make claims against the Company under Section 2.15(b) for costs or reductions resulting from the sale of a participation), except that all claims made pursuant to such Sections shall be made through such selling Lender, and (iv) the Company, the Administrative Agents and the other Lenders shall continue to deal solely and directly with such selling Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Company relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or thereunder or the amount of principal of or the rate at which interest is payable on the Loans, extending the final scheduled maturity of the Loans or any date scheduled for the payment of interest on the Loans or extending the Commitments). E-2-55 (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant any information relating to the Company furnished to such Lender; provided that, prior to any such disclosure, each such assignee or participant or proposed assignee or participant shall be subject to the same confidentiality agreement as are the Lenders. (h) The Company and any Borrowing Subsidiary shall not assign or delegate any rights and duties hereunder without the prior written consent of all Lenders. (i) Any Lender may at any time pledge or otherwise assign all or any portion of its rights under this Agreement to a Federal Reserve Bank; provided that no such pledge shall release any Lender from its obligations hereunder. In order to facilitate such an assignment to a Federal Reserve Bank, the Company shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made by the assigning Lender hereunder. SECTION 8.5 Expenses; Indemnity. (a) The Company agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agents in connection with entering into this Agreement or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (including the reasonable fees, disbursements and other charges of a single counsel), or incurred by the Administrative Agents or any Lender in connection with the enforcement of their rights in connection with this Agreement or in connection with the Loans made hereunder or thereunder, including the fees and disbursements of counsel for the Administrative Agents and, in the case of enforcement, each Lender. (b) The Company agrees to indemnify each Administrative Agent, each Lender, each of their Affiliates and the directors, officers, employees and agents of the foregoing (each such Person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against any Indemnitee arising out of (i) the consummation of the transactions contemplated by this Agreement, (ii) the use of the proceeds of the Loans or (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto; provided that (A) such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a final judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee and (B) such indemnity shall not apply to losses, claims, damages, liabilities or related expenses that result from disputes solely between Lenders. (c) The provisions of this Section shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any investigation made by or on behalf of any Administrative Agent or any Lender. All amounts due under this Section shall be payable on written demand therefor. E-2-56 SECTION 8.6 Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 8.7 Waivers; Amendment. (a) No failure or delay of any Administrative Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agents and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement or consent to any departure therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Company or any Subsidiary in any case shall entitle such party to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan, or amend or modify Section 8.16, without the prior written consent of each Lender directly affected thereby, (ii) increase the Commitment (except pursuant to Section 2.6), or decrease the facility fees of any Lender without the prior written consent of such Lender or (iii) amend or modify the provisions of Section 2.18 or Section 8.4(h), the provisions of this Section or the definition of the "Required Lenders", without the prior written consent of each Lender; provided further, however, that no such agreement shall amend, modify or otherwise affect the rights or duties of any Administrative Agent hereunder without the prior written consent of such Administrative Agent. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section and any consent by any Lender pursuant to this Section shall bind any assignee of its rights and interests hereunder. SECTION 8.8 Entire Agreement. This Agreement constitutes the entire contract among the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 8.9 Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. E-2-57 SECTION 8.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 8.3. SECTION 8.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 8.12 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or obligations of the Company and the applicable Borrowing Subsidiary now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees promptly to notify the Company after such setoff and application made by such Lender, but the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of setoff) which such Lender may have. SECTION 8.13 Jurisdiction; Consent to Service of Process. (a) The Company and any Borrowing Subsidiary hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Subject to the foregoing and to paragraph (b) below, nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement against any other party hereto in the courts of any jurisdiction. (b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or thereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. E-2-58 (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 8.14 Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each party hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certification in this Section. SECTION 8.15 Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given. (b) The obligations of each Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "Applicable Creditor") shall, notwithstanding any judgment in a currency (the "Judgment Currency") other than the currency in which such sum is stated to be due hereunder (the "Agreement Currency"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrowers contained in this Section 8.15 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder. SECTION 8.16 Guaranty. In order to induce the Lenders to make Loans to the applicable Borrowing Subsidiaries, the Company hereby unconditionally guarantees the Borrowing Subsidiary Obligations of all the Borrowing Subsidiaries. The Company further agrees that the Borrowing Subsidiary Obligations may be extended and renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its agreement hereunder notwithstanding any extension or renewal of any Borrowing Subsidiary Obligation. The Company waives promptness, diligence, presentment to, demand of payment from and protest to the Borrowing Subsidiaries of any Borrowing Subsidiary Obligations, and also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Company hereunder shall be absolute and unconditional and not be affected by (a) the failure of any Lender or the Administrative Agents to assert any claim or demand or to enforce any right or remedy against the Borrowing Subsidiaries under the provisions of this Agreement or any of the other Loan Documents or otherwise; E-2-59 (b) any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement, any other Loan Documents or any other agreement; (c) the failure of any Lender to exercise any right or remedy against any Borrowing Subsidiaries; (d) the invalidity or unenforceability of any Loan Document or (e) any other circumstance which might otherwise constitute a defense available to or discharge of the Borrower or a guarantor (other than payment). The Company further agrees that its agreement hereunder constitutes a promise of payment when due and not of collection, and waives any right to require that any resort be had by any Lender to any balance of any deposit account or credit on the books of any Lender in favor of any Borrowing Subsidiary or any other Person. The obligations of the Company hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever, by reason of the invalidity, illegality or unenforceability of the Borrowing Subsidiary Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of the Company hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agents or any Lender to assert any claim or demand or to enforce any remedy under this Agreement or under any other Loan Document or any other agreement, by any waiver or modification in respect of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Borrowing Subsidiary Obligations, or by any other act or omission which may or might in any manner or to any extent vary the risk of the Company or otherwise operate as a discharge of the Company as a matter of law or equity. The Company further agrees that its obligations hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Borrowing Subsidiary Obligation is rescinded or must otherwise be restored by the Administrative Agents or any Lender upon the bankruptcy or reorganization of any of the Borrowing Subsidiaries or otherwise. In furtherance of the foregoing and not in limitation of any other right which the Administrative Agents or any Lender may have at law or in equity against the Company by virtue hereof, upon the failure of any Borrowing Subsidiary to pay any Borrowing Subsidiary Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Company hereby promises to and will, upon receipt of written demand by Citibank, forthwith pay, or cause to be paid, in cash the amount of such unpaid Borrowing Subsidiary Obligation. In the event that, by reason of the bankruptcy of any Borrowing Subsidiary, (i) acceleration of Loans made to such Borrowing Subsidiary is prevented and (ii) the Company shall not have prepaid the outstanding Loans and other amounts due hereunder owed by such Borrowing Subsidiary, the Company will forthwith purchase such Loans at a price equal to the principal amount thereof plus accrued interest thereon and any other amounts due hereunder with respect thereto. The Company further agrees that if payment in respect of any Borrowing Subsidiary Obligation shall be due in a currency other than Dollars and/or at a place of payment other than New York and if, by reason of any Change in Law, disruption of currency or foreign E-2-60 exchange markets, war or civil disturbance or similar event, payment of such Borrowing Subsidiary Obligation in such currency or such place of payment shall be impossible or, in the judgment of any applicable Lender, not consistent with the protection of its rights or interests, then, at the election of any applicable Lender, the Company shall make payment of such Borrowing Subsidiary Obligation in Dollars (based upon the applicable Exchange Rate in effect on the date of payment) and/or in New York, and shall indemnify such Lender against any losses or expenses that it shall sustain as a result of such alternative payment. Upon payment by the Company of any Borrowing Subsidiary Obligations, each Lender shall, in a reasonable manner, assign the amount of the Borrowing Subsidiary Obligations owed to it and paid by the Company pursuant to this guarantee to the Company, such assignment to be pro tanto to the extent to which the Borrowing Subsidiary Obligations in question were discharged by the Company, or make such disposition thereof as the Company shall direct (all without recourse to any Lender and without any representation or warranty by any Lender except with respect to the amount of the Borrowing Subsidiary Obligations so assigned). Upon payment by the Company of any sums as provided above, all rights of the Company against any Borrowing Subsidiary arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full of all the Borrowing Subsidiary Obligations to the Lenders. SECTION 8.17 European Monetary Union. If, as a result of the implementation of European monetary union, (a) any currency ceases to be lawful currency of the nation issuing the same and is replaced by a European common currency, then any amount payable hereunder by any party hereto in such currency shall instead be payable in the European common currency and the amount so payable shall be determined by translating the amount payable in such currency to such European common currency at the exchange rate recognized by the European Central Bank for the purpose of implementing European monetary union, or (b) any currency and a European common currency are at the same time recognized by the central bank or comparable authority of the nation issuing such currency as lawful currency of such nation, then (i) any Loan made at such time shall be made in such European common currency and (ii) any other amount payable by any party hereto in such currency shall be payable in such currency or in such European common currency (in an amount determined as set forth in clause (a)), at the election of the obligor. Prior to the occurrence of the event or events described in clause (a) or (b) of the preceding sentence, each amount payable hereunder in any currency will continue to be payable only in that currency. The Borrowers agree, at the request of the Required Lenders, at the time of or at any time following the implementation of European monetary union, to enter into an agreement amending this Agreement in such manner as the Required Lenders shall reasonably request in order to avoid any unfair burden or disadvantage resulting from the implementation of such monetary union and to place the parties hereto in the position they would have been in had such monetary union not been implemented, the intent being that neither party will be adversely affected economically as a result of such implementation and that reasonable provisions shall be adopted to govern the borrowing, maintenance and repayment of Loans denominated in currencies other than Dollars after the occurrence of the event or events described in clause (a) or (b) of the preceding sentence. E-2-61 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. BRISTOL-MYERS SQUIBB COMPANY, By Name: Title: By Name: Title: THE CHASE MANHATTAN BANK, individually and as Administrative Agent, By Name: Title: CITIBANK, N.A., individually and as Administrative Agent and Advance Agent, By Name: Title: E-2-62 SWISS BANK CORPORATION, Stamford branch, as a Lender By: Title: By: Title: DRESDNER BANK AG, New York Branch and Grand Cayman Branch, as a Lender By: Title: By: Title: BANCA MONTE DEI PASCHI DI SIENA S.p.A., as a Lender By: Title: BANCO SANTANDER S.A., New York branch, as a Lender By: Title: By: Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Lender By: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Lender By: Title: E-2-63 BANQUE NATIONALE DE PARIS, as a Lender By: Title: By: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Lender By: Title: ROYAL BANK OF CANADA, as a Lender By: Title: THE BANK OF NEW YORK, as a Lender By: Title: THE NORTHERN TRUST COMPANY, as a Lender By: Title: DEUTSCHE BANK AG, New York branch and/or Cayman Islands branch, as a Lender By: Title: By: Title: E-2-64 WACHOVIA BANK, N.A., as a Lender By: Title: BANK OF MONTREAL, as a Lender By: Title: ING BANK N.V., as a Lender By: Title: E-2-65 EX-10.A 4 BRISTOL-MYERS SQUIBB COMPANY 1997 STOCK INCENTIVE PLAN (as amended and restated as of December 2, 1997) 1. Purpose: The purpose of the 1997 Stock Incentive Plan is to secure for the Company and its stockholders the benefits of the incentive inherent in common stock ownership by the officers and key employees of the Company and its Subsidiaries and Affiliates who will be largely responsible for the Company's future growth and continued financial success and by providing long-term incentives in addition to current compensation to certain key executives of the Company and its Subsidiaries and Affiliates who contribute significantly to the long-term performance and growth of the Company and such Subsidiaries and Affiliates. It is intended that the former purpose will be effected through the granting of stock options, stock appreciation rights, dividend equivalents and/or restricted stock under the Plan and that the latter purpose will be effected through an award conditionally granting performance units or performance shares under the Plan, either independently or in conjunction with and related to a nonqualified stock option grant under the Plan. 2. Definitions: For purposes of this Plan: (a) "Affiliate" shall mean any entity in which the Company has an ownership interest of at least 20%. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Common Stock" shall mean the Company's common stock (par value $.10 per share). (d) "Company" shall mean the Issuer (the Bristol-Myers Squibb Company), its Subsidiaries and Affiliates. (e) "Disability" or "Disabled" shall mean qualifying for and receiving payments under a disability pay plan of the Company or any Subsidiary or Affiliate. (f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (g) "Fair Market Value" shall mean the average of the high and low sale prices of a share of Common Stock on the New York Stock Exchange, Inc. composite tape on the date of measurement or on any date as determined by the Committee and if there were no trades on such date, on the day on which a trade occurred next preceding such date. (h) "Issuer" shall mean the Bristol-Myers Squibb Company. (i) "Prior Plan" shall mean the Bristol-Myers Squibb Company 1983 Stock Option Plan as amended and restated effective as of September 10, 1996. (j) "Retirement" shall mean termination of the employment of an employee with the Company or a Subsidiary or Affiliate on or after (i) the employee's 65th birthday or (ii) the employee's 55th birthday if the employee has completed 10 years of service with the Company, its Subsidiaries and/or its Affiliates. For purposes of this Section 2(j) and all other purposes of this Plan, Retirement shall also mean termination of employment of an employee with the Company or a Subsidiary or Affiliate for any reason (other than the employee's death, disability, resignation, willful misconduct or activity deemed detrimental to the interests of the Company) where, on termination, the employee's age plus years of service (rounded up to the next higher whole number) equals at least 70 and the employee has completed 10 years of service with the Company, its Subsidiaries and/or its Affiliates. Furthermore, an employee who makes an election to retire under Article 19 of E-3-1 6. Stock Options: Stock options under the Plan shall consist of incentive stock options under Section 422 of the Code or nonqualified stock options (options not intended to qualify as incentive stock options), as the Committee shall determine. In addition, the Committee may grant stock appreciation rights in conjunction with an option, as set forth in Section 6(b)(11), or may grant awards in conjunction with an option, as set forth in Section 6(b)(10) (an "Associated Option"). Each option shall be subject to the following terms and conditions: (a) Grant of Options. The Committee shall (1) select the officers and key employees of the Company and its Subsidiaries and Affiliates to whom options may from time to time be granted, (2) determine whether incentive stock options or nonqualified stock options are to be granted, (3) determine the number of shares to be covered by each option so granted, (4) determine the terms and conditions (not inconsistent with the Plan) of any option granted hereunder (including but not limited to restrictions upon the options, conditions of their exercise, or on the shares of Common Stock issuable upon exercise thereof), (5) determine whether nonqualified stock options or incentive stock options granted under the Plan shall include stock appreciation rights and, if so, shall determine the terms and conditions thereof in accordance with Section 6(b)(11) hereof, (6) determine whether any nonqualified stock options granted under the Plan shall be Associated Options, and (7) prescribe the form of the instruments necessary or advisable in the administration of options. (b) Terms and Conditions of Option. Any option granted under the Plan shall be evidenced by a Stock Option Agreement executed by the Company and the optionee, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan, and in the case of an incentive stock option not inconsistent with the provisions of the Code applicable to incentive stock options, as the Committee shall prescribe: (1) Number of Shares Subject to an Option. The Stock Option Agreement shall specify the number of shares of Common Stock subject to the Agreement. If the option is an Associated Option, the number of shares of Common Stock subject to such Associated Option shall initially be equal to the number of performance units or performance shares subject to the award, but one share of Common Stock shall be canceled for each performance unit or performance share paid out under the award. (2) Option Price. The purchase price per share of Common Stock purchasable under an option will be determined by the Committee but will be not less than the Fair Market Value of a share of Common Stock on the date of the grant of such option. (3) Option Period. The period of each option shall be fixed by the Committee, but no option shall be exercisable after the expiration of ten years from the date the option is granted. (4) Consideration. Each optionee, as consideration for the grant of an option, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year from the date of the granting of such option, and no option shall be exercisable until after the completion of such one year period of employment by the optionee. (5) Exercise of Option. An option may be exercised in whole or in part from time to time during the option period (or, if determined by the Committee, in specified installments during the option period) by giving written notice of exercise to the Company specifying the number of shares to be purchased, such notice to be accompanied by payment in full of the purchase price and Withholding Taxes (as defined in Section 11 hereof), unless an election to defer receipt of shares is made under Section 12, due either by E-3-3 certified or bank check, or in shares of Common Stock of the Company owned by the optionee having a Fair Market Value at the date of exercise equal to such purchase price, or in a combination of the foregoing; provided, however, that payment in shares of Common Stock of the Company will not be permitted unless at least 100 shares of Common Stock are required and delivered for such purpose. No shares shall be issued until full payment therefor has been made. An optionee shall have the rights of a stockholder only with respect to shares of stock for which certificates have been issued to the optionee. (6) Nontransferability of Options. No option or stock appreciation right granted under the Plan shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such option or stock appreciation right shall be exercisable, during the optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may set forth in a Stock Option Agreement at the time of grant or thereafter, that the options (other than Incentive Stock Options) may be transferred to members of the optionee's immediate family, to trusts solely for the benefit of such immediate family members and to partnerships in which such family members and/or trusts are the only partners. For this purpose, immediate family means the optionee's spouse, parents, children, stepchildren, grandchildren and legal dependants. Any transfer of options made under this provision will not be effective until notice of such transfer is delivered to the Company. (7) Retirement and Termination of Employment Other than by Death or Disability. If an optionee shall cease to be employed by the Company or any of its Subsidiaries or Affiliates for any reason (other than termination of employment by reason of death or Disability) after the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable only to the extent that the optionee was otherwise entitled to exercise it at the time of such cessation of employment with the Company, Subsidiary or Affiliate, but in no event after the expiration of the option period set forth therein except that in the case of cessation of employment other than by reason of Retirement or death, the option shall in no event be exercisable after the date three months next succeeding such cessation of employment. The Plan does not confer upon any optionee any right with respect to continuation of employment by the Company or any of its Subsidiaries or Affiliates. (8) Disability of Optionee. An optionee who ceases to be employed by reason of Disability shall be treated as though the optionee remained in the employ of the Company or a Subsidiary or Affiliate until the earlier of (i) cessation of payments under a disability pay plan of the Company, Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the optionee's 65th birthday. (9) Death of Optionee. In the event of the death of the optionee while in the employ of the Company or of any of its Subsidiaries or Affiliates or within whichever period after Retirement or cessation of employment of the optionee specified in subsection (7) or (8) is applicable, and provided the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable by the executors, administrators, legatees or distributees of the optionee's estate, as the case may be, at any time following death but in no event after the expiration of the option period set forth therein and only to the extent that the optionee would otherwise have been entitled to exercise it if the optionee were then living, except that in the case of the death of an optionee after Retirement or other cessation of employment, the option shall in no event be exercisable after the later of (i) the date twelve months next succeeding such death or (ii) the last day of the period after Retirement or other cessation of employment of the optionee specified in Section 6(b)(7). In the event any option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof. (10) Long-Term Performance Awards. The Committee may from time to time grant nonqualified stock options under the Plan in conjunction with and related to an award of performance units or performance shares made under a Long-Term Performance Award as set forth in Section 7(b)(11). In such event, notwithstanding any other provision hereof, (i) the number of shares to which the Associated Option applies shall initially be equal to the number of performance units or performance shares granted by the award, but such number of shares shall be reduced on a one-share-for-one unit or share basis to the extent that the Committee determines pursuant to the terms of the award, to pay to the optionee or the optionee's beneficiary the performance units or performance shares granted pursuant to such award; and (ii) such Associated Option shall be cancelable in the discretion of the Committee, without the consent of the optionee, under the conditions and to the extent specified in the award. E-3-4 (11) Stock Appreciation Rights. In the case of any option granted under the Plan, either at the time of grant or by amendment of such option at any time after such grant there may be included a stock appreciation right which shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall impose, including the following: (A) A stock appreciation right shall be exercisable to the extent, and only to the extent, that the option in which it is included is at the time exercisable, and may be exercised within such period only at such time or times as may be determined by the Committee; (B) A stock appreciation right shall entitle the optionee (or any person entitled to act under the provisions of subsection (9) hereof) to surrender unexercised the option in which the stock appreciation right is included (or any portion of such option) to the Company and to receive from the Company in exchange therefor that number of shares having an aggregate value equal to (or, in the discretion of the Committee, less than) the excess of the value of one share (provided such value does not exceed such multiple of the option price per share as may be specified by the Committee) over the option price per share specified in such option times the number of shares called for by the option, or portion thereof, which is so surrendered. The Committee shall be entitled to cause the Company to settle its obligation, arising out of the exercise of a stock appreciation right, by the payment of cash equal to the aggregate value of the shares the Company would otherwise be obligated to deliver or partly by the payment of cash and partly by the delivery of shares. Any such election shall be made within 30 business days after the receipt by the Committee of written notice of the exercise of the stock appreciation right. The value of a share for this purpose shall be the Fair Market Value thereof on the last business day preceding the date of the election to exercise the stock appreciation right; (C) No fractional shares shall be delivered under this subsection (11) but in lieu thereof a cash adjustment shall be made; (D) If a stock appreciation right included in an option is exercised, such option shall be deemed to have been exercised to the extent of the number of shares called for by the option or portion thereof which is surrendered on exercise of the stock appreciation right and no new option may be granted covering such shares under this Plan; and (E) If an option which includes a stock appreciation right is exercised, such stock appreciation right shall be deemed to have been canceled to the extent of the number of shares called for by the option or portion thereof is exercised and no new stock appreciation rights may be granted covering such shares under this Plan. (12) Incentive Stock Options. In the case of any incentive stock option granted under the Plan, the aggregate Fair Market Value of the shares of Common Stock of the Company (determined at the time of grant of each option) with respect to which incentive stock options granted under the Plan and any other plan of the Company or its parent or a Subsidiary which are exercisable for the first time by an employee during any calendar year shall not exceed $100,000 or such other amount as may be required by the Code. In any year, the maximum number of shares with respect to which incentive stock options may be granted shall not exceed 4,000,000 shares. E-3-5 (13) Rights of Transferee. Notwithstanding anything to the contrary herein, if an option has been transferred in accordance with Section 6(b)(6), the option shall be exercisable solely by the transferee. The option shall remain subject to the provisions of the Plan, including that it will be exercisable only to the extent that the optionee or optionee's estate would have been entitled to exercise it if the optionee had not transferred the option. In the event of the death of the optionee prior to the expiration of the right to exercise the transferred option, the period during which the option shall be exercisable will terminate on the date one year following the date of the optionee's death. In the event of the death of the transferee prior to the expiration of the right to exercise the option, the period during which the option shall be exercisable by the executors, administrators, legatees and distributees of the transferee's estate, as the case may be, will terminate on the date one year following the date of the transferee's death. In no event will be the option be exercisable after the expiration of the option period set forth in the Stock Option Agreement. The option shall be subject to such other rules as the Committee shall determine. 7. Long-term Performance Awards: Awards under the Plan shall consist of the conditional grant to the participants of a specified number of performance units or performance shares. The conditional grant of a performance unit to a participant will entitle the participant to receive a specified dollar value, variable under conditions specified in the award, if the performance objectives specified in the award are achieved and the other terms and conditions thereof are satisfied. The conditional grant of a performance share to a participant will entitle the participant to receive a specified number of shares of Common Stock of the Company, or the equivalent cash value, if the objective(s) specified in the award are achieved and the other terms and conditions thereof are satisfied. Each award will be subject to the following terms and conditions: (a) Grant of Awards. The Committee shall (1) select the officers and key executives of the Company and its Subsidiaries and Affiliates to whom awards may from time to time be granted, (2) determine the number of performance units or performance shares covered by each award, (3) determine the terms and conditions of each performance unit or performance share awarded and the award period and performance objectives with respect to each award, (4) determine the periods during which a participant may request the Committee to approve deferred payment of a percentage (not less than 25%) of an award (the "Deferred Portion") and the interest or rate of return thereon or the basis on which such interest or rate of return thereon is to be determined, (5) determine whether payment with respect to the portion of an award which has not been deferred (the "Current Portion") and the payment with respect to the Deferred Portion of an award shall be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock, (6) determine whether the award is to be made independently of or in conjunction with a nonqualified stock option granted under the Plan, and (7) prescribe the form of the instruments necessary or advisable in the administration of the awards. (b) Terms and Conditions of Award. Any award conditionally granting performance units or performance shares to a participant shall be evidenced by a Performance Unit Agreement or Performance Share Agreement, as applicable, executed by the Company and the participant, in such form as the Committee shall approve, which Agreement shall contain in substance the following terms and conditions applicable to the award and such additional terms and conditions as the Committee shall prescribe: (1) Number and Value of Performance Units. The Performance Unit Agreement shall specify the number of performance units conditionally granted to the participant. If the award has been made in conjunction with the grant of an Associated Option, the number of performance units granted shall initially be equal to the number of shares which the participant is granted the right to purchase pursuant to the Associated Option, but one performance unit shall be canceled for each share of the Company's Common Stock purchased upon exercise of the Associated Option or for each stock appreciation right included in such option that has been exercised. The Performance Unit Agreement shall specify the threshold, target and maximum dollar values of each performance unit and corresponding performance objectives as provided under Section 6(b)(5). No payout under a performance unit award to an individual Participant may exceed 0.15% of the pre-tax earnings of the Company for the fiscal year which coincides with the final year of the performance unit period. E-3-6 (2) Number and Value of Performance Shares. The Performance Share Agreement shall specify the number of performance shares conditionally granted to the participant. If the award has been made in conjunction with the grant of an Associated Option, the number of performance shares granted shall initially be equal to the number of shares which the participant is granted the right to purchase pursuant to the Associated Option, but one performance share shall be canceled for each share of the Company's Common Stock purchased upon exercise of the Associated Option or for each stock appreciation right included in such option that has been exercised. The Performance Share Agreement shall specify that each Performance Share will have a value equal to one (1) share of Common Stock of the Company. (3) Award Periods. For each award, the Committee shall designate an award period with a duration to be determined by the Committee in its discretion but in no event less than three calendar years within which specified performance objectives are to be attained. There may be several award periods in existence at any one time and the duration of performance objectives may differ from each other. (4) Consideration. Each participant, as consideration for the award of performance units or performance shares, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year after the date of the making of such award, and no award shall be payable until after the completion of such one year of employment by the participant. (5) Performance Objectives. The Committee shall establish performance objectives with respect to the Company for each award period on the basis of such criteria and to accomplish such objectives as the Committee may from time to time determine. Performance criteria for awards under the Plan may include one or more of the following measures of the operating performance: a. Earnings d. Financial return ratios b. Revenue e. Total Shareholder Return c. Operating or net cash flows f. Market share The Committee shall establish the specific targets for the selected criteria. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index. These targets may be based upon the total Company or upon a defined business unit which the executive has responsibility for or influence over. (6) Determination and Payment of Performance Units or Performance Shares Earned. As soon as practicable after the end of an award period, the Committee shall determine the extent to which awards have been earned on the basis of the Company's actual performance in relation to the established performance objectives as set forth in the Performance Unit Agreement or Performance Share Agreement and certify these results in writing. The Performance Unit Agreement or Performance Share Agreement shall specify that as soon as practicable after the end of each award period, the Committee shall determine whether the conditions of Sections 7(b)(4) and 7(b)(5) hereof have been met and, if so, shall ascertain the amount payable or shares which should be distributed to the participant in respect of the performance units or performance shares. As promptly as practicable after it has determined that an amount is payable or should be distributed in respect of an award, the Committee shall cause the Current Portion of such award to be paid or distributed to the participant or the participant's beneficiaries, as the case may be, in the Committee's discretion, either entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock. The Deferred Portion of an award shall be contingently credited and payable to the participant over a deferred period and shall be credited with interest, rate of return, or other valuation as determined by the Committee. The Committee, in its discretion, shall determine the conditions upon, and method of, payment of such Deferred Portions and whether such payment will be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock. E-3-7 In making the payment of an award in Common Stock hereunder, the cash equivalent of such Common Stock shall be determined by the Fair Market Value of the Common Stock on the day the Committee designates the performance units shall be payable. (7) Nontransferability of Awards and Designation of Beneficiaries. No award under this Section of the Plan shall be transferable by the participant other than by will or by the laws of descent and distribution, except that a participant may designate a beneficiary pursuant to the provisions hereof. If any participant or the participant's beneficiary shall attempt to assign the participant's rights under the Plan in violation of the provisions thereof, the Company's obligation to make any further payments to such participant or the participant's beneficiaries shall forthwith terminate. A participant may name one or more beneficiaries to receive any payment of an award to which the participant may be entitled under the Plan in the event of the participant's death, on a form to be provided by the Committee. A participant may change the participant's beneficiary designation from time to time in the same manner. If no designated beneficiary is living on the date on which any payment becomes payable to a participant's beneficiary, or if no beneficiary has been specified by the participant, such payment will be payable to the person or persons in the first of the following classes of successive preference: (i) Widow or widower, if then living, (ii) Surviving children, equally, (iii) Surviving parents, equally, (iv) Surviving brothers and sisters, equally, (v) Executors or administrators and the term "beneficiary" as used in the Plan shall include such person or persons. (8) Retirement and Termination of Employment Other Than by Death or Disability. In the event of the Retirement prior to the end of an award period of a participant who has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to Retirement, the participant, or his estate, shall be entitled to a payment of such award at the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement or Performance Share Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit or share) of the value of the performance units or performance shares granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's Retirement occurs, bears to the total number of months in the award period, subject to the attainment of performance objectives associated with the award as certified by the Committee. The participant's right to receive any remaining performance units or performance shares shall be canceled and forfeited. Subject to Section 7(b)(6) hereof, the Performance Unit Agreement or Performance Share Agreement shall specify that the right to receive the performance units or performance shares granted to such participant shall be conditional and shall be canceled, forfeited and surrendered if the participant's continuous employment with the Company and its Subsidiaries and Affiliates shall terminate for any reason, other than the participant's death, Disability or Retirement prior to the end of the award period. E-3-8 (9) Disability of Participant. For the purposes of any award a participant who becomes Disabled shall be deemed to have suspended active employment by reason of Disability commencing on the date the participant becomes entitled to receive payments under a disability pay plan of the Company or any Subsidiary or Affiliate and continuing until the date the participant is no longer entitled to receive such payments. In the event a participant becomes Disabled during an award period but only if the participant has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to becoming Disabled, upon the determination by the Committee of the extent to which an award has been earned pursuant to Section 7(b)(6) the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participants under such award as the number of months of the award period in which the participant was not Disabled bears to the total number of months in the award period subject to the attainment of the performance objectives associated with the award as certified by the Committee. The participant's right to receive any remaining performance units shall be canceled and forfeited. (10) Death of Participant. In the event of the death prior to the end of an award period of a participant who has satisfied the one year employment requirement with respect to an award prior to the date of death, the participant's beneficiaries or estate, as the case may be, shall be entitled to a payment of such award upon the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement or Performance Share Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit or share) of the value of the performance units or performance shares granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's death occurs, bears to the total number of months in the award period. The participant's right to receive any remaining performance units or performance shares shall be canceled and forfeited. The Committee may, in its discretion, waive, in whole or in part, such cancellation and forfeiture of any performance units or performance shares. (11) Grant of Associated Option. If the Committee determines that the conditional grant of performance units or performance shares under the Plan is to be made to a participant in conjunction with the grant of a nonqualified stock option under the Plan, the Committee shall grant the participant an Associated Option under the Plan subject to the terms and conditions of this subsection (11). In such event, such award under the Plan shall be contingent upon the participant's being granted such an Associated Option pursuant to which: (i) the number of shares the optionee may purchase shall initially be equal to the number of performance units or performance shares conditionally granted by the award, (ii) such number of shares shall be reduced on a one-share-for-one-unit or share basis to the extent that the Committee determines, pursuant to Section 7(b)(6) hereof, to pay to the participant or the participant's beneficiaries the performance units or performance shares conditionally granted pursuant to the award, and (iii) the Associated Option shall be cancelable in the discretion of the Committee, without the consent of the participant, under the conditions and to the extent specified herein and in Section 7(b)(6) hereof. If no amount is payable in respect of the conditionally granted performance units or performance shares, the award and such performance units or performance shares shall be deemed to have been canceled, forfeited and surrendered, and the Associated Option, if any, shall continue in effect in accordance with its terms. If any amount is payable in respect of the performance units or performance shares and such units or shares were granted in conjunction with an Associated Option, the Committee shall, within 30 days after the determination of the Committee referred to in the first sentence of Section 7(b)(6), determine, in its sole discretion, either: (A) to cancel in full the Associated Option, in which event the value of the performance units or performance shares payable pursuant to Sections 7(b)(5) and (6) shall be paid or the performance shares shall be distributed; E-3-9 (B) to cancel in full the performance units or performance shares, in which event no amount shall be paid to the participant in respect thereof and no shares shall be distributed but the Associated Option shall continue in effect in accordance with its terms; or (C) to cancel some, but not all, of the performance units or performance shares, in which event the value of the performance units payable pursuant to Sections 7(b)(5) and (6) which have not been canceled shall be paid and/or the performance shares shall be distributed and the Associated Option shall be canceled with respect to that number of shares equal to the number of conditionally granted performance units or performance shares that remain payable. Any action taken by the Committee pursuant to the preceding sentence shall be uniform with respect to all awards having the same award period. If the Committee takes no such action, it shall be deemed to have determined to cancel in full the award in accordance with clause (b) above. 8. Restricted Stock: Restricted stock awards under the Plan shall consist of grants of shares of Common Stock of the Issuer subject to the terms and conditions hereinafter provided. (a) Grant of Awards: The Committee shall (i) select the officers and key employees to whom Restricted Stock may from time to time be granted, (ii) determine the number of shares to be covered by each award granted, (iii) determine the terms and conditions (not inconsistent with the Plan) of any award granted hereunder, and (iv) prescribe the form of the agreement, legend or other instrument necessary or advisable in the administration of awards under the Plan. (b) Terms and Conditions of Awards: Any restricted stock award granted under the Plan shall be evidenced by a Restricted Stock Agreement executed by the Issuer and the recipient, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan as the Committee shall prescribe: (1) Number of Shares Subject to an Award: The Restricted Stock Agreement shall specify the number of shares of Common Stock subject to the Award. (2) Restriction Period: The period of restriction applicable to each Award shall be established by the Committee but may not be less than one year. The Restriction Period applicable to each Award shall commence on the Award Date. (3) Consideration: Each recipient, as consideration for the grant of an award, shall remain in the continuous employ of the Company for at least one year from the date of the granting of such award, and any shares covered by such an award shall lapse if the recipient does not remain in the continuous employ of the Company for at least one year from the date of the granting of the award. (4) Restriction Criteria: The Committee shall establish the criteria upon which the restriction period shall be based. Restrictions may be based upon either the continued employment of the recipient or upon the attainment by the Company of one or more of the following measures of the operating performance: a. Earnings d. Financial return ratios b. Revenue e. Total Shareholder Return c. Operating or net cash flows f. Market share The Committee shall establish the specific targets for the selected criteria. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index. Performance objectives may be established in combination with restrictions based upon the continued employment of the recipient. These targets may be based upon the total Company or upon a defined business unit which the executive has responsibility for or influence over. E-3-10 In cases where objective performance criteria are established, the Committee shall determine the extent to which the criteria have been achieved and the corresponding level to which restrictions will be removed from the Award or the extent to which a participant's right to receive an Award should be lapsed in cases where the performance criteria have not been met and shall certify these determinations in writing. The Committee may provide for the determination of the attainment of such restrictions in installments where deemed appropriate. (c) Terms and Conditions of Restrictions and Forfeitures: The shares of Common Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions: (1) During the Restriction Period, the participant will not be permitted to sell, transfer, pledge or assign Restricted Stock awarded under this Plan. (2) Except as provided in Section 8(c)(i), or as the Committee may otherwise determine, the participant shall have all of the rights of a stockholder of the Issuer, including the right to vote the shares and receive dividends and other distributions provided that distributions in the form of stock shall be subject to the same restrictions as the underlying Restricted Stock. (3) In the event of a participant's retirement, death or disability prior to the end of the Restriction Period for a participant who has satisfied the one year employment requirement of Section 7(c)(iii) with respect to an award prior to Retirement, death or Disability, the participant, or his/her estate, shall be entitled to receive that proportion (to the nearest whole share) of the number of shares subject to the Award granted as the number of months of the Restriction Period which have elapsed since the Award date to the date at which the participant's retirement, death or disability occurs, bears to the total number of months in the Restriction Period. The participant's right to receive any remaining shares shall be canceled and forfeited and the shares will be deemed to be reacquired by the Issuer. (4) In the event of a participant's retirement, death, disability or in cases of special circumstances as determined by the Committee, the Committee may, in its sole discretion when it finds that such an action would be in the best interests of the Company, accelerate or waive in whole or in part any or all remaining time based restrictions with respect to all or part of such participant's Restricted Stock. (5) Upon termination of employment for any reason during the restriction period, subject to the provisions of paragraph (iii) above or in the event that the participant fails promptly to pay or make satisfactory arrangements as to the withholding taxes as provided in the following paragraph, all shares still subject to restriction shall be forfeited by the participant and will be deemed to be reacquired by the Company. (6) A participant may, at any time prior to the expiration of the Restriction Period, waive all right to receive all or some of the shares of a Restricted Stock Award by delivering to the Company a written notice of such waiver. (7) Notwithstanding the other provisions of this Section 7, the Committee may adopt rules which would permit a gift by a participant of restricted shares to members of his/her immediate family (spouse, parents, children, stepchildren, grandchildren or legal dependants) or to a Trust whose beneficiary or beneficiaries shall be either such a person or persons or the participant. (8) Any attempt to dispose of Restricted Stock in a manner contrary to the restrictions shall be ineffective. E-3-11 9. Determination of Breach of Conditions: The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination or reduction of the Company's obligations in accordance with the provisions of the Plan shall be conclusive. 10. Adjustment in the Event of Change in Stock: In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, recapitalization, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, the aggregate number and class of shares available under the Plan, and the number, class and the price of shares subject to outstanding options and/or awards and the number of performance units and/or the dollar value of each unit shall be appropriately adjusted by the Committee, whose determination shall be conclusive. 11. Taxes: Each participant shall, no later than the Tax Date (as defined below), pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Withholding Tax (as defined below) with respect to an Option or Award, and the Company shall, to the extent permitted by law, have the right to deduct such amount from any payment of any kind otherwise due to the participant. The Company shall also have the right to retain or sell without notice, or to demand surrender of, shares of Common Stock in value sufficient to cover the amount of any Withholding Tax (that is that portion of any Applicable Tax, as defined below, required by any governmental entity to be withheld or otherwise deducted and paid with respect to such Award), and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Withholding Tax, remitting any balance to the participant. For purposes of the paragraph, the value of shares of Common Stock so retained or surrendered shall be the average of the high and low sales prices per share on the New York Stock Exchange composite tape on the date that the amount of the Withholding Tax is to be determined (the "Tax Date") and the value of shares of Common Stock so sold shall be the actual net sale price per share (after deduction of commissions) received by the Company. Notwithstanding the foregoing, if the stock options have been transferred, the optionee shall provide the Company with funds sufficient to pay such Withholding Tax or Applicable Tax. Furthermore, if such optionee does not satisfy his tax payment obligation and the stock options have been transferred, the transferee may provide the funds sufficient to enable the Company to pay such taxes. However, if the stock options have been transferred, the Company shall have no right to retain or sell without notice, or to demand surrender from the transferee of, shares of Common Stock in order to pay such Withholding Tax or Applicable Tax. Notwithstanding the foregoing, the participant shall be entitled to satisfy the obligation to pay any Withholding Tax or to satisfy the obligation to pay any tax to any governmental entity in respect of such Award, including any Federal, state or local income tax up to an amount determined on the basis of the highest marginal tax rate applicable to such participant, Federal Insurance Contribution Act taxes or other governmental impost or levy (an "Applicable Tax"), in whole or in part, by providing the Company with funds sufficient to enable the Company to pay such Withholding Tax or Applicable Tax or by requiring the Company to retain or to accept upon delivery thereof by the participant shares of Common Stock having a Fair Market Value sufficient to cover the amount of such Withholding Tax or Applicable Tax or in a greater amount as deemed appropriate by the Company. Each election by a participant to have shares retained or to deliver shares for this purpose shall be subject to the following restrictions: (i) the election must be in writing and be made on or prior to the Tax Date; (ii) the election must be irrevocable; (iii) the election shall be subject to the disapproval of the Committee. 12. Deferral Election: Notwithstanding the provisions of Section 11, any optionee or participant may elect, with the concurrence of the Committee and consistent with any rules and regulations established by the Committee, to defer the delivery of the proceeds of the exercise of any stock option not transferred under the provisions of Section 6(b)(6) or stock appreciation rights. E-3-12 (a) Election Timing: The election to defer the delivery of the proceeds from any eligible award must be made at least six months prior to the date such award is exercised or at such other time as the Committee may specify. Deferrals will only be allowed for exercises which occur while the optionee or participant is an active employee of the Company. Any election to defer the delivery of proceeds from an eligible award shall be irrevocable as long as the optionee or participant remains an employee of the Company. (b) Stock Option Deferral: The deferral of the proceeds of stock options may be elected by an optionee subject to the Regulations established by the Committee. The proceeds from such an exercise shall be credited to the optionee's deferred stock option account as the number of deferred share units equivalent in value to those proceeds. Deferred share units shall be valued at the Fair Market Value on the date of exercise. Subsequent to exercise, the deferred share units shall be valued at the Fair Market Value of Common Stock of the Company. Deferred share units shall accrue dividends at the rate paid upon the Company's Common Stock credited in the form of additional deferred share units. Deferred share units shall be distributed in shares of Company Stock upon the termination of employment of the participant or at such other date as may be approved by the Committee over a period of no more than 10 years. (c) Stock Appreciation Right Deferral: Upon such exercise, the Company will credit the optionee's deferred stock option account with the number of deferred share units equivalent in value to the difference between the Fair Market Value of a share of Common Stock on the exercise date and the exercise price of the Stock Appreciation Right multiplied by the number of shares exercised. Deferred share units shall be valued at the Fair Market Value on the date of exercise. Subsequent to exercise, the deferred share units shall be valued at the Fair Market Value of Common Stock of the Company. Deferred share units shall accrue dividends at the rate paid upon the Company's Common Stock credited in the form of additional deferred share units. Deferred share units shall be distributed in shares of Common Stock upon the termination of employment of the participant or at such other date as may be approved by the Committee over a period of no more than 10 years. (d) Accelerated Distributions: The Committee may, at its sole discretion, allow for the early payment of an optionee's or participant's deferred share units account in the event of an "unforeseeable emergency" or in the event of the death or disability of the optionee or participant. An "unforeseeable emergency" is defined as an unanticipated emergency caused by an event beyond the control of the optionee or participant that would result in severe financial hardship if the distribution were not permitted. Such distributions shall be limited to the amount necessary to sufficiently address the financial hardship. Any distributions under this provision shall be consistent with the Regulations established under the Code. Additionally, the Committee may use its discretion to cause deferred share unit accounts to be distributed when continuing the Program is no longer in the best interest of the Company. (e) Assignability: No rights to deferred share unit accounts may be assigned or subject to any encumbrance, pledge or charge of any nature except that an optionee or participant may designate a beneficiary pursuant to any rules established by the Committee. 13. Amendment of the Plan: The Board of Directors may amend or suspend the Plan at any time and from time to time. No such amendment of the Plan may, however, increase the maximum number of shares to be offered under options or awards, or change the manner of determining the option price, or change the designation of employees or class of employees eligible to receive options or awards, or permit the transfer or issue of stock before payment therefor in full, or, without the written consent of the optionee or participant, alter or impair any option or award previously granted under the Plan or Prior Plan. Notwithstanding the foregoing, if an option has been transferred in accordance with Section 6(b)(6), written consent of the transferee (and not the optionee) shall be necessary to alter or impair any option or award previously granted under the Plan. E-3-13 14. Miscellaneous: (a) By accepting any benefits under the Plan, each optionee or participant and each person claiming under or through such optionee or participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other Committee appointed by the Board. (b) No participant or any person claiming under or through him shall have any right or interest, whether vested or otherwise, in the Plan or in any option, or stock appreciation right or award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Agreement that affect such participant or such other person shall have been complied with. (c) Nothing contained in the Plan or in any Agreement shall require the Company to segregate or earmark any cash or other property. (d) Neither the adoption of the Plan nor its operation shall in any way affect the rights and powers of the Company or any of its Subsidiaries or Affiliates to dismiss and/or discharge any employee at any time. (e) Notwithstanding anything to the contrary in the Plan, neither the Board nor the Committee shall have any authority to take any action under the Plan where such action would affect the Company's ability to account for any business combination as a "pooling of interests." 15. Term of the Plan: The Plan, if approved by stockholders, will be effective May 6, 1997. The Plan shall expire on May 31, 2002 unless suspended or discontinued by action of the Board of Directors. The expiration of the Plan, however, shall not affect the rights of Optionees under options theretofore granted to them or the rights of participants under awards theretofore granted to them, and all unexpired options and awards shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. E-3-14 EX-10.C 5 BRISTOL-MYERS SQUIBB COMPANY 1983 STOCK OPTION PLAN (as amended and restated effective as of January 1, 1997) 1. Purpose: The purpose of the 1983 Stock Option Plan (as amended and restated effective as of January 1, 1997) (the "Plan") is to secure for the Company and its stockholders the benefits of the incentive inherent in common stock ownership by the officers and key employees of the Company and its Subsidiaries and Affiliates who will be largely responsible for the Company's future growth and continued financial success and by providing long-term incentives in addition to current compensation to certain key executives of the Company and its Subsidiaries and Affiliates who contribute significantly to the long-term performance and growth of the Company and such Subsidiaries and Affiliates. It is intended that the former purpose will be effected through the grant of stock options and stock appreciation rights under the Plan and that the latter purpose will be effected through an award conditionally granting performance units under the Plan, either independently or in conjunction with and related to a nonqualified stock option grant under the Plan. The Bristol-Myers Squibb Company Long-Term Performance Award Plan (as amended to January 17, 1983 and in effect as of December 31, 1992) ("LTPAP") has been merged into and consolidated with the Plan as of January 1, 1993. As used herein, the term "Prior Plan" shall mean the Bristol-Myers Squibb Company 1983 Stock Option Plan (as amended through May 1, 1991 and in effect as of December 31, 1992) prior to its amendment and restatement as of January 1, 1993. 2. Definitions: For purposes of this Plan: (a) "Affiliate" shall mean any entity in which the Company has an ownership interest of at least 20%. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Common Stock" shall mean the Company's common stock (par value $.10 per share). (d) "Company" shall mean Bristol-Myers Squibb Company. (e) "Disability" or "Disabled" shall mean qualifying for and receiving payments under a disability pay plan of the Company or any Subsidiary or Affiliate. (f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (g) "Fair Market Value" shall mean the average of the high and low sale prices of a share of Common Stock on the New York Stock Exchange, Inc. composite tape on the date of measurement or on any date as determined by the Committee and if there were no trades on such date, on the day on which a trade occurred next preceding such date. (h) "Retirement" shall mean termination of the employment of an employee with the Company or a Subsidiary or Affiliate on or after (i) the employee's 65 th birthday or (ii) the employee's 55th birthday if the employee has completed 10 years of service with the Company, its Subsidiaries and/or its Affiliates. For purposes of this Section 2(h) and all other purposes of this Plan, Retirement shall also mean termination of employment of an employee E-4-1 with the Company or a Subsidiary or Affiliate for any reason (other than the employee's death, disability, resignation, willful misconduct or activity deemed detrimental to the interests of the Company) where, on termination, the employee's age plus years of service (rounded up to the next higher whole number) equals at least 70 and the employee has completed 10 years of service with the Company, its Subsidiaries and/or its Affiliates. Furthermore, an employee who makes an election to retire under Article 19 of the Bristol-Myers Squibb Company Retirement Income Plan (the "Retirement Income Plan") shall have any additional years of age and service which are credited under Article 19 of the Retirement Income Plan taken into account when determining such employee's age and service under this Section 2(h). Such election shall be deemed a Retirement for purposes of this Section 2(h) and all other purposes of this Plan. (i) "Subsidiary" shall mean any corporation which at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" in Section 424 of the Code. 3. Amount of Stock: The amount of stock which may be made subject to grants of options or awards of performance units under the Plan in calendar year 1993 shall not exceed an amount equal to (i) 0.9% of the outstanding shares of the Company's Common Stock on January 1, 1993, plus (ii) the amount of shares available for, and not made subject to, grants of options under the Prior Plan as of January 1, 1993, less (iii) the number of shares subject to options granted in 1993 under the Prior Plan and (iv) the number of shares corresponding to awards of performance units outstanding under the LTPAP on the date the Plan is approved by the stockholders of the Company. With respect to each succeeding year, the amount of stock which may be made subject to grants of options or awards of performance units under the Plan shall not exceed an amount equal to (i) 0.9% of the outstanding shares of the Company's Common Stock on January 1 of such year plus, subject to this Section 3, (ii) in any year the number of shares equal to the amount of shares that were available for grants and awards in the prior year but were not made subject to a grant or award in such prior year and (iii) the number of shares that were subject to options or awards granted hereunder or under the Prior Plan, which options or awards terminated or expired in the prior year without being exercised. Common Stock issued hereunder may be authorized and reissued shares or issued shares acquired by the Company or its Subsidiaries on the market or otherwise. 4. Administration: The Plan shall be administered under the supervision of the Board of Directors of the Company which shall exercise its powers, to the extent herein provided, through the agency of a Compensation and Management Development Committee (the "Committee") which shall be appointed by the Board of Directors of the Company and shall consist of not less than three directors who shall serve at the pleasure of the Board. No member of the Committee shall have been within one year prior to appointment to, or while serving on, the Committee granted or awarded equity securities of the Company pursuant to this or any other plan of the Company or its Subsidiaries or Affiliates except to the extent that participation in any such plan or receipt of any such grant or award would not adversely affect the Committee member's status as a non-employee director for purposes of Rule 16b-3 under the Exchange Act. The Committee, from time to time, may adopt rules and regulations for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate. The interpretation and construction of any provision of the Plan by the Committee shall, unless otherwise determined by the Board of Directors, be final and conclusive. The Committee shall maintain a written record of its proceedings. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the Committee. 5. Eligibility: Options and awards may be granted only to present or future officers and key employees of the Company and its Subsidiaries and Affiliates, including Subsidiaries and Affiliates which become such after the adoption of the Plan. Any officer or key employee of the Company or of any such Subsidiary or Affiliate shall be eligible to receive one or more options or awards under the Plan. Any director who is not an officer or employee of the Company or one of its Subsidiaries or Affiliates and any member of the Committee, during the time of the member's service as such or E-4-2 thereafter, shall be ineligible to receive an option or award under the Plan. The adoption of this Plan shall not be deemed to give any officer or employee any right to an award or to be granted an option to purchase Common Stock of the Company, except to the extent and upon such terms and conditions as may be determined by the Committee. 6. Stock Options: Stock options under the Plan shall consist of incentive stock options under Section 422 of the Code or nonqualified stock options (options not intended to qualify as incentive stock options), as the Committee shall determine. In addition, the Committee may grant stock appreciation rights in conjunction with an option, as set forth in Section 6(b)(11), or may grant awards in conjunction with an option, as set forth in Section 6(b)(10) (an "Associated Option"). Each option shall be subject to the following terms and conditions: (a) Grant of Options. The Committee shall (1) select the officers and key employees of the Company and its Subsidiaries and Affiliates to whom options may from time to time be granted, (2) determine whether incentive stock options or nonqualified stock options, are to be granted, (3) determine the number of shares to be covered by each option so granted, (4) determine the terms and conditions (not inconsistent with the Plan) of any option granted hereunder (including but not limited to restrictions upon the options, conditions of their exercise, or on the shares of Common Stock issuable upon exercise thereof), (5) determine whether nonqualified stock options or incentive stock options granted under the Plan shall include stock appreciation rights and, if so, shall determine the terms and conditions thereof in accordance with Section 6(b)(11) hereof, (6) determine whether any nonqualified stock options granted under the Plan shall be Associated Options, and (7) prescribe the form of the instruments necessary or advisable in the administration of options. (b) Terms and Conditions of Option. Any option granted under the Plan shall be evidenced by a Stock Option Agreement executed by the Company and the optionee, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan, and in the case of an incentive stock option not inconsistent with the provisions of the Code applicable to incentive stock options, as the Committee shall prescribe: (1) Number of Shares Subject to an Option. The Stock Option Agreement shall specify the number of shares of Common Stock subject to the Agreement. If the option is an Associated Option, the number of shares of Common Stock subject to such Associated Option shall initially be equal to the number of performance units subject to the award, but one share of Common Stock shall be canceled for each performance unit paid out under the award. (2) Option Price. The purchase price per share of Common Stock purchasable under an option will be determined by the Committee but will be not less than the Fair Market Value of a share of Common Stock on the date of the grant of such option. (3) Option Period. The period of each option shall be fixed by the Committee, but no option shall be exercisable after the expiration of ten years from the date the option is granted. (4) Consideration. Each optionee, as consideration for the grant of an option, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year from the date of the granting of such option, and no option shall be exercisable until after the completion of such one year period of employment by the optionee. E-4-3 (5) Exercise of Option. An option may be exercised in whole or in part from time to time during the option period (or, if determined by the Committee, in specified installments during the option period) by giving written notice of exercise to the Company specifying the number of shares to be purchased, such notice to be accompanied by payment in full of the purchase price and Withholding Taxes (as defined in Section 10 hereof) due either by certified or bank check, or in shares of Common Stock of the Company owned by the optionee having a Fair Market Value at the date of exercise equal to such purchase price and Withholding Taxes due, or in a combination of the foregoing; provided, however, that payment in shares of Common Stock of the Company will not be permitted unless at least 100 shares of Common Stock are required and delivered for such purpose. No shares shall be issued until full payment therefor has been made. An optionee shall have the rights of a stockholder only with respect to shares of stock for which certificates have been issued to the optionee. (6) Nontransferability of Options. No option or stock appreciation right granted under the Plan shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such option or stock appreciation right shall be exercisable, during the optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may set forth in a Stock Option Agreement at the time of grant or thereafter, that the options may be transferred to members of the optionee's immediate family, to trusts solely for the benefit of such immediate family members and to partnerships in which such family members and/or trusts are the only partners. For this purpose, immediate family members means the optionee's spouse, parents, children, stepchildren, grandchildren and legal dependents. Any transfer of options made under this provision will not be effective until notice of such transfer is delivered to the Company. (7) Retirement and Termination of Employment Other than by Death or Disability. If an optionee shall cease to be employed by the Company or any of its Subsidiaries or Affiliates for any reason (other than termination of employment by reason of death or Disability) after the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable only to the extent that the optionee was otherwise entitled to exercise it at the time of such cessation of employment with the Company, Subsidiary or Affiliate, but in no event after the expiration of the option period set forth therein except that in the case of cessation of employment other than by reason of Retirement or death, the option shall in no event be exercisable after the date three months next succeeding such cessation of employment. The Plan does not confer upon any optionee any right with respect to continuation of employment by the Company or any of its Subsidiaries or Affiliates. (8) Disability of Optionee. An optionee who ceases to be employed by reason of Disability shall be treated as though the optionee remained in the employ of the Company or a Subsidiary or Affiliate until the earlier of (i) cessation of payments under a disability pay plan of the Company, Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the optionee's 65th birthday. (9) Death of Optionee. In the event of the death of the optionee while in the employ of the Company or of any of its Subsidiaries or Affiliates or within whichever period after Retirement or cessation of employment of the optionee specified in subsection (7) or (8) is applicable, and provided the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable by the executors, administrators, legatees or distributees of the optionee's estate, as the case may be, at any time following death but in no event after the expiration of the option period set forth therein and only to the extent that the optionee would otherwise have been entitled to exercise it if the optionee were then living, except that in the case of the death of an optionee after Retirement or other cessation of employment, the option shall in no event be exercisable after the later of (i) the date twelve months next succeeding such death or (ii) the last day of the period after Retirement or other cessation of employment of the optionee specified in Section 6(b)(7). In the event any option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof. E-4-4 (10) Long Term Performance Awards. The Committee may from time to time grant nonqualified stock options under the Plan in conjunction with and related to an award of performance units made under a Long Term Performance Award as set forth in Section 7(b)(11). In such event, notwithstanding any other provision hereof, (i) the number of shares to which the Associated Option applies shall initially be equal to the number of performance units granted by the award, but such number of shares shall be reduced on a one share-for-one unit basis to the extent that the Committee determines pursuant to the terms of the award, to pay to the optionee or the optionee's beneficiary the performance units granted pursuant to such award; and (ii) such Associated Option shall be cancelable in the discretion of the Committee, without the consent of the optionee, under the conditions and to the extent specified in the award. (11) Stock Appreciation Rights. In the case of any option granted under the Plan, either at the time of grant or by amendment of such option at any time after such grant there may be included a stock appreciation right which shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall impose, including the following: (A) A stock appreciation right shall be exercisable to the extent, and only to the extent, that the option in which it is included is at the time exercisable, and may be exercised within such period only at such time or times as may be determined by the Committee; (B) A stock appreciation right shall entitle the optionee (or any person entitled to act under the provisions of subsection (9) hereof) to surrender unexercised the option in which the stock appreciation right is included (or any portion of such option) to the Company and to receive from the Company in exchange therefor that number of shares having an aggregate value equal to (or, in the discretion of the Committee, less than) the excess of the value of one share (provided such value does not exceed such multiple of the option price per share as may be specified by the Committee) over the option price per share specified in such option times the number of shares called for by the option, or portion thereof, which is so surrendered. The Committee shall be entitled to cause the Company to settle its obligation, arising out of the exercise of a stock appreciation right, by the payment of cash equal to the aggregate value of the shares the Company would otherwise be obligated to deliver or partly by the payment of cash and partly by the delivery of shares. Any such election shall be made within 30 business days after the receipt by the Committee of written notice of the exercise of the stock appreciation right. The value of a share for this purpose shall be the Fair Market Value thereof on the last business day preceding the date of the election to exercise the stock appreciation right; (C) No fractional shares shall be delivered under this subsection (11) but in lieu thereof a cash adjustment shall be made; (D) If a stock appreciation right included in an option is exercised, such option shall be deemed to have been exercised to the extent of the number of shares called for by the option or portion thereof which is surrendered on exercise of the stock appreciation right and no new option may be granted covering such shares under this Plan; and (E) If an option which includes a stock appreciation right is exercised, such stock appreciation right shall be deemed to have been canceled to the extent of the number of shares called for by the option or portion thereof is exercised and no new stock appreciation rights may be granted covering such shares under this Plan. E-4-5 (12) Incentive Stock Options. In the case of any incentive stock option granted under the Plan, the aggregate Fair Market Value of the shares of Common Stock of the Company (determined at the time of grant of each option) with respect to which incentive stock options granted under the Plan and any other plan of the Company or its parent or a Subsidiary which are exercisable for the first time by an employee during any calendar year shall not exceed $100,000 or such other amount as may be required by the Code. In any year, the maximum number of shares with respect to which incentive stock options may be granted shall not exceed 4,000,000 shares. (13) Rights of Transferee. Notwithstanding anything to the contrary herein, if an option has been transferred in accordance with Section 6(b)(6), the option shall be exercisable solely by the transferee. The option shall remain subject to the provisions of the Plan, including that it will be exercisable only to the extent that the optionee or optionee's estate would have been entitled to exercise it if the optionee had not transferred the option. In the event of the death of the optionee prior to the expiration of the right to exercise the transferred option, the period during which the option shall be exercisable will terminate on the date one year following the date of the optionee's death. In the event of the death of the transferee prior to the expiration of the right to exercise the option, the period during which the option shall be exercisable by the executors, administrators, legatees and distributees of the transferee's estate, as the case may be, will terminate on the date one year following the date of the transferee's death. In no event will the option be exercisable after the expiration of the option period set forth in the Stock Option Agreement. The option shall be subject to such other rules as the Committee shall determine. 7. Long-term Performance Awards: Awards under the Plan shall consist of the conditional grant to the participants of a specified number of performance units. The conditional grant of a performance unit to a participant will entitle the participant to receive a specified dollar value, variable under conditions specified in the award, if the performance objectives specified in the award are achieved and the other terms and conditions thereof are satisfied. Each award will be subject to the following terms and conditions: (a) Grant of Awards. The Committee shall (1) select the officers and key executives of the Company and its Subsidiaries and Affiliates to whom awards may from time to time be granted, (2) determine the number of performance units covered by each award, (3) determine the terms and conditions of each performance unit awarded and the award period and performance objectives with respect to each award, (4) determine the periods during which a participant may request the Committee to approve deferred payment of a percentage (50% or 100%) of an award (the "Deferred Portion") and the interest or rate of return thereon or the basis on which such interest or rate of return thereon is to be determined, (5) determine whether payment with respect to the portion of an award which has not been deferred (the "Current Portion") and the payment with respect to the Deferred Portion of an award shall be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock, (6) determine whether the award is to be made independently of or in conjunction with a nonqualified stock option granted under the Plan, and (7) prescribe the form of the instruments necessary or advisable in the administration of the awards. (b) Terms and Conditions of Award. Any award conditionally granting performance units to a participant shall be evidenced by a Performance Unit Agreement executed by the Company and the participant, in such form as the Committee shall approve, which Agreement shall contain in substance the following terms and conditions and such additional terms and conditions as the Committee shall prescribe: (1) Number of Performance Units. The Performance Unit Agreement shall specify the number of performance units conditionally granted to the participant. If the award has been made in conjunction with the grant of an Associated Option, the number of performance units granted shall initially be equal to the number of shares which the participant is granted the right to purchase pursuant to the Associated Option, but one performance unit shall be canceled for each share of the Company's Common Stock purchased upon exercise of the Associated Option or for each stock appreciation right included in such option that has been exercised. E-4-6 (2) Value of Performance Units. The Performance Unit Agreement shall specify the threshold, target and maximum dollar values of each performance unit and corresponding performance objectives as provided under Section 7(b)(5). (3) Award Periods. For each award, the Committee shall designate an award period with a duration to be determined by the Committee in its discretion but in no event less than three calendar years within which specified performance objectives are to be attained. There may be several award periods in existence at any one time and the duration of performance objectives may differ from each other. (4) Consideration. Each participant, as consideration for the award of performance units, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year after the date of the making of such award, and no award shall be payable until after the completion of such one year of employment by the participant. (5) Performance Objectives. The Committee shall establish performance objectives with respect to the Company for each award period on the basis of such criteria and to accomplish such objectives as the Committee may from time to time determine. Performance objectives may include objective and subjective criteria. During any award period, the Committee may adjust the performance objectives for such award period as it deems equitable in recognition of unusual or nonrecurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. (6) Determination and Payment of Performance Units Earned. As soon as practicable after the end of an award period, the Committee shall determine the extent to which awards have been earned on the basis of the Company's actual performance in relation to the established performance objectives as set forth in the Performance Unit Agreement. The Performance Unit Agreement shall specify that as soon as practicable after the end of each award period, the Committee shall determine whether the conditions of Sections 7(b)(4) and 7(b)(5) hereof have been met and, if so, shall ascertain the amount payable to the participant in respect of the performance units. As promptly as practicable after it has determined that an amount is payable in respect of an award, the Committee shall cause the Current Portion of such award to be paid to the participant or the participant's beneficiaries, as the case may be, in the Committee's discretion, either entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock. The Deferred Portion of an award shall be contingently credited and payable to the participant over a deferred period and shall be credited with interest or a rate of return, as determined by the Committee. The Committee, in its discretion, shall determine the conditions upon, and method of, payment of such deferred portions and whether such payment will be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock. In making the payment of an award in Common Stock hereunder, the cash equivalent of such Common Stock shall be determined by the Fair Market Value of the Common Stock on the day the Committee designates the performance units shall be paid. (7) Nontransferability of Awards and Designation of Beneficiaries. No award under the Plan shall be transferable by the participant other than by will or by the laws of descent and distribution, except that a participant may designate a beneficiary pursuant to the provisions hereof. If any participant or the participant's beneficiary shall attempt to assign the participant's rights under the Plan in violation of the provisions thereof, the Company's obligation to make any further payments to such participant or the participant's beneficiaries shall forthwith terminate. E-4-7 A participant may name one or more beneficiaries to receive any payment of an award to which the participant may be entitled under the Plan in the event of the participant's death, on a form to be provided by the Committee. A participant may change the participant's beneficiary designation from time to time in the same manner. If no designated beneficiary is living on the date on which any payment becomes payable to a participant's beneficiary, such payment will be payable to the person or persons in the first of the following classes of successive preference: (I) Widow or widower, if then living, (ii) Surviving children, equally, (iii) Surviving parents, equally, (iv) Surviving brothers and sisters, equally, (v) Executors or administrators and the term "beneficiary" as used in the Plan shall include such person or persons. (8) Retirement and Termination of Employment Other Than by Death or Disability. In the event of the Retirement prior to the end of an award period of a participant who has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to Retirement, the participant, or his estate, shall be entitled to a payment of such award at the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's Retirement occurs, bears to the total number of months in the award period. The participant's rights in any remaining performance units shall be canceled and forfeited. Subject to Section 7(b)(6) hereof, the Performance Unit Agreement shall specify that the rights of the participant in the performance units granted to such participant shall be conditional and shall be canceled, forfeited and surrendered if the participant's continuous employment with the Company and its Subsidiaries and Affiliates shall terminate for any reason, other than the participant's death, Disability or Retirement prior to the end of the award period. The Committee may, in its discretion, waive, in whole or in part, the cancellation, forfeiture and surrender of any performance units. (9) Disability of Participant. For the purposes of any award a participant who becomes Disabled shall be deemed to have suspended active employment by reason of Disability commencing on the date the participant becomes entitled to receive payments under a disability pay plan of the Company or any Subsidiary or Affiliate and continuing until the date the participant is no longer entitled to receive such payments. In the event a participant becomes Disabled during an award period but only if the participant has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to becoming Disabled, upon the determination by the Committee of the extent to which an award has been earned pursuant to Section 7(b)(6) the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participants under such award as the number of months of the award period in which the participant was not Disabled bears to the total number of months of the award period. The participant's rights in any remaining performance units shall be canceled and forfeited. The Committee may, in its discretion, waive, in whole or in part, such cancellation and forfeiture of any performance units. E-4-8 (10) Death of Participant. In the event of the death prior to the end of an award period of a participant who has satisfied the one year employment requirement with respect to an award prior to the date of death, the participant's beneficiaries or estate, as the case may be, shall be entitled to a payment of such award upon the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's death occurs, bears to the total number of months in the award period. The participant's rights in any remaining performance units shall be canceled and forfeited. The Committee may, in its discretion, waive, in whole or in part, such cancellation and forfeiture of any performance units. (11) Grant of Associated Option. If the Committee determines that the conditional grant of performance units under the Plan is to be made to a participant in conjunction with the grant of a nonqualified stock option under the Plan, the Committee shall grant the participant an Associated Option under the Plan subject to the terms and conditions of this subsection (11). In such event, such award under the Plan shall be contingent upon the participant's being granted such an Associated Option pursuant to which: (i) the number of shares the optionee may purchase shall initially be equal to the number of performance units conditionally granted by the award, (ii) such number of shares shall be reduced on a one share-for-one unit basis to the extent that the Committee determines, pursuant to Section 7(b)(6) hereof, to pay to the participant or the participant's beneficiaries the performance units conditionally granted pursuant to the award, and (iii) the Associated Option shall be cancelable in the discretion of the Committee, without the consent of the participant, under the conditions and to the extent specified herein and in Section 7(b)(6) hereof. If no amount is payable in respect of the conditionally granted performance units, the award and such performance units shall be deemed to have been canceled, forfeited and surrendered, and the Associated Option, if any, shall continue in effect in accordance with its terms. If any amount is payable in respect of the performance units and such units were granted in conjunction with an Associated Option, the Committee shall, within 30 days after the determination of the Committee referred to in the first sentence of Section 7(b)(6), determine, in its sole discretion, either: (A) to cancel in full the Associated Option, in which event the value of the performance units payable pursuant to Sections 7(b)(5) and (6) shall be paid; (B) to cancel in full the performance units, in which event no amount shall be paid to the participant in respect thereof but the Associated Option shall continue in effect in accordance with its terms; or (C) to cancel some, but not all, of the performance units, in which event the value of the performance units payable pursuant to Sections 7(b)(5) and (6) which have not been canceled shall be paid and the Associated Option shall be canceled with respect to that number of shares equal to the number of conditionally granted performance units that remain payable. E-4-9 Any action taken by the Committee pursuant to the preceding sentence shall be uniform with respect to all awards having the same award period. If the Committee takes no such action, it shall be deemed to have determined to cancel in full the award in accordance with clause (B) above. 8. Determination of Breach of Conditions: The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination or reduction of the Company's obligations in accordance with the provisions of the Plan shall be conclusive. 9. Adjustment in the Event of Change in Stock: In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, recapitalization, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, the aggregate number and class of shares available under the Plan, and the number, class and the price of shares subject to outstanding options and/or awards and the number of performance units and/or the dollar value of each unit shall be appropriately adjusted by the Committee, whose determination shall be conclusive. 10. Taxes: In connection with the transfer of shares of Common Stock to an optionee, subject to Section 16 of the Exchange Act, as the result of the exercise of a nonqualified stock option or a stock appreciation right, or to a participant subject to Section 16 of the Exchange Act, upon payment of an award, the Company shall have the right to retain or sell without notice, or to demand surrender of, shares of Common Stock having a Fair Market Value (taking into account any commissions or other expenses the Company may incur upon the sale of such shares) on the date that the amount required by any governmental entity to be withheld or otherwise deducted and paid with respect to such transfer ("Withholding Tax") is to be determined (the "Tax Date") sufficient to cover the amount of any Applicable Tax (the amount of Withholding Tax plus the incremental amount determined on the basis of the highest marginal tax rate applicable to such optionee or participant, Federal Insurance Contribution Act taxes or other governmental impost or levy), and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Applicable Tax, remitting any balance to the optionee or participant. Notwithstanding the foregoing, if the stock options have been transferred, the optionee shall provide the Company with funds sufficient to pay such Withholding or Applicable Tax. Furthermore, if such optionee does not satisfy his withholding obligation, the transferee may provide the funds sufficient to enable the Company to pay such Withholding Tax or Applicable Tax. However, if the stock options have been transferred, the Company shall have no right to retain or sell without notice, or to demand surrender from the transferee of, shares of Common Stock in order to pay such Withholding Tax or Applicable Tax. An optionee or participant who is not an executive officer of the Company subject to Section 16 of the Exchange Act shall be entitled to satisfy the obligation to pay any Withholding Tax or Applicable Tax, by providing the Company with funds sufficient to enable the Company to pay such Withholding Tax or Applicable Tax or by requiring the Company to retain or to accept upon delivery thereof by the optionee or participant shares of Common Stock sufficient in value (determined in accordance with the last sentence of the preceding paragraph), to cover the amount of such Withholding Tax or Applicable Tax. Each election by an optionee or participant to have shares retained or to deliver shares for this purpose shall be subject to the following restrictions: (i) the election must be in writing and be made on or prior to the Tax Date; (ii) the election must be irrevocable; (iii) the election shall be subject to the disapproval of the Committee. 11. Amendment of the Plan: The Board of Directors may amend or suspend the Plan at any time and from time to time. No such amendment of the Plan may, however, increase the maximum number of shares to be offered under options or awards, or change the manner of determining the option price, or change the designation of employees or class of employees eligible to receive options or awards, or permit the transfer or issue of stock before payment therefor in full, or, without the written consent of the optionee or participant, alter or impair any option or award previously granted under the Plan, Prior Plan or LTPAP. Notwithstanding the foregoing, if an option has been transferred in accordance with Section 6(b)(6), written consent of the transferee (and not the optionee) shall be necessary to alter or impair any option or award previously granted under the Plan. E-4-10 12. Amendment of Options Outstanding Under the Prior Plan: The Prior Plan and certain nonqualified options granted and outstanding thereunder are hereby amended to provide that any nonqualified option which is outstanding on the date this Plan is adopted by a vote of the holders of a majority of the shares of the Company's Common Stock and $2.00 Convertible Preferred Stock present in person or by proxy at a duly held shareholders meeting at which a quorum representing a majority of all outstanding voting stock is present shall be exercisable in accordance with Sections 6(b)(7) and 6(b)(9), except that for the purpose of such options "Retirement" shall additionally mean termination of the employment of an employee after completing 35 years of service with the Company or its Subsidiaries. Furthermore, an employee who makes an election to retire under Article 19 of the Retirement Income Plan shall have any additional years of age and service which are credited under Article 19 of the Retirement Income Plan taken into account when determining such employee's age and years of service with the Company or its Subsidiaries under this Section 12. Such election shall be deemed a Retirement for purposes of this Section 12 and all other purposes of this Plan. 13. Miscellaneous: By accepting any benefits under the Plan, each optionee or participant and each person claiming under or through such optionee or participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other Committee appointed by the Board. No participant or any person claiming under or through him shall have any right or interest, whether vested or otherwise, in the Plan or in any option, or stock appreciation right or award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Agreement that affect such participant or such other person shall have been complied with. Nothing contained in the Plan or in any Agreement shall require the Company to segregate or earmark any cash or other property. Neither the adoption of the Plan nor its operation shall in any way affect the rights and powers of the Company or any of its Subsidiaries or Affiliates to dismiss and/or discharge any employee at any time. 14. Term of the Plan: The Plan shall become effective as of January 1, 1993 by action of the Board of Directors conditioned on and subject to approval of the Plan, by a vote of the holders of a majority of the shares of Common Stock and $2.00 Convertible Preferred Stock of the Company present in person or by proxy at a duly held shareholders meeting at which a quorum representing a majority of all outstanding voting stock is present. The Plan shall terminate on December 31, 2002, or at such earlier date as may be determined by the Board of Directors. Termination of the Plan, however, shall not affect the rights of optionees under options theretofore granted to them or the rights of participants under awards theretofore granted to them, and all unexpired options and awards shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. E-4-11 EX-10.L 6 BRISTOL-MYERS SQUIBB COMPANY 1987 DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS AMENDED EFFECTIVE JANUARY 13, 1998 Section 1. Effective Date. The effective date of this Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for Non-Employee Directors (the "Plan") is January 20, 1987. Section 2. Eligibility. Any Director of Bristol-Myers Squibb Company (the "Company") who is not an Officer or employee of the Company or a subsidiary thereof is eligible to participate in the Plan. Section 3. Deferred Compensation Account. There shall be established on the books of the Company for each participant a deferred compensation account in the participant's name. Section 4. Amount of Deferral. Five Hundred (500) Share Units payable, as of February 1 of each year, to the participant for membership on the Board of Directors shall be deferred and credited to such participant's deferred compensation account as Share Units equal to the number of shares of the Company's common stock which could have been purchased with the amounts deferred, determined by dividing the dollar value of the amounts deferred by the fair market value of a share of the Company's common share as reported in The Wall Street Journal on the effective date of such deferral until the cessation of the participant's service as a Director. Twenty-five (25) percent of the basic fee payable to the participant for membership on the Board of Directors shall be deferred and credited to such participant's deferred compensation account as Share Units equal to the number of shares of the Company's common stock which could have been purchased with the amounts deferred, determined by dividing the dollar value of the amounts deferred by the fair market value of a share of the Company's common share as reported in The Wall Street Journal on the effective date of such deferral until such time as the participant meets a guideline level of Share Unit or Company common stock ownership established by the Executive Compensation Committee of the Company. A participant may elect, by filing the appropriate form pursuant to Section 9, to defer receipt for any calendar year of either (1) all of the compensation payable to the participant for serving on the Board of Directors and any committee thereof, (2) only the basic fee payable to the participant for membership on the Board of Directors, or (3) any percentage, in excess of twenty-five percent of the basic fee, specified by the participant of the compensation payable to the participant specified in clause (1) hereof. E-5-1 Section 5. Form and Computation of Deferred Amounts. Effective with respect to amounts deferred after the Effective Date of the Plan and subject to Section 4, a participant, at the time he elects to participate in the Plan, shall elect to have the amounts deferred credited to such participant's deferred compensation account as Treasury Units or Dollar Units each equal to the number of shares of the Company's common stock which could have been purchased with the amounts deferred determined by dividing the dollar value of the amounts deferred by the fair market value of a share of the Company's common share as reported in The Wall Street Journal on the effective date of such deferral. Such deferrals shall be allocated to Treasury Units, Dollar Units and/or Share Units in increments of 0%, 33 1/3%, 50%, 66 2/3% or 100%. The amount credited to a participant's deferred compensation account as Treasury Units shall be credited with interest at a rate to be set by the Executive Compensation Committee of the Company in January of each year after a review of the six-month United States Treasury bill discount rates for the preceding year. The amount credited to a participant's deferred compensation account as Dollar Units shall be credited with interest at a rate to be set by the Executive Compensation Committee in January of each year after a review of investment return on the invested cash of the Company. Upon payment by the Company of dividends on its common stock, the amount credited to a participant's deferred compensation account as Share Units shall be credited with an amount equal to the number of Share Units multiplied by a fraction the numerator of which is the amount of such dividend and the denominator of which is the fair market value of a Share of the Company's common stock as reported in The Wall Street Journal on the day such dividend is payable. The amount of Share Units in a participant's deferred compensation account shall be adjusted in the discretion of the Executive Compensation Committee to take into account a merger, consolidation, reorganization, recapitalization, stock split or other change in corporate structure of capitalization affecting the Company's common stock. Section 6. Period of Deferral. Subject to Section 4, a participant may elect to defer receipt of compensation either (1) until a specified year in the future, (2) until the cessation of the participant's service as a Director or (3) until the end of the calendar year in which the cessation of the participant's service as a Director occurs. If alternative (1) is elected, payment will be made or will commence within sixty days after the beginning of the year specified; if alternative (2) is elected, payment will be made or will commence within sixty days after the cessation of the participant's service as a Director; and if alternative (3) is elected, payment will be made or will commence within sixty days after the end of the calendar year in which the cessation of the participant's service as a Director occurs. Section 7. Form of Payment. A participant may elect to receive the compensation deferred under the Plan in either (1) a lump sum in cash or (2) a number of installments in cash, not more than ten, as specified by the participant. If installment payments are elected, the amount of each installment shall be equal to the balance in the participant's deferred compensation account divided by the number of installments remaining to be paid (including the installment in question). E-5-2 Section 8. Death Prior to Receipt. A participant may elect that, in the event he or she dies prior to receipt of any or all of the amounts payable pursuant to this Plan, any amounts remaining in the participant's deferred compensation account shall be paid to the participant's estate in cash in either (1) a lump sum within sixty days following notification to the Company of the participant's death or (2) a number of annual installments, not more than ten, as specified by the participant. If alternative (2) is elected and payment to the participant pursuant to clause (2) of Section 7 has not commenced prior to death, the initial installment payment hereunder shall be made sixty days after notification to the Company of the participant's death, and the amount of each such installment shall be determined as provided in the last sentence of Section 7. If alternative (2) is elected and payment to the participant pursuant to clause (2) of Section 7 had commenced prior to death, the installment payments to the participant's estate shall be made at the same time and in the same amount as such payments would have been made to the participant had he or she survived. For purposes of this Section 8, any amounts deferred as Share Units shall be converted to Dollar Units by multiplying the number of Share Units credited to a participant's deferred compensation account on the date of his death by the fair market value of a share of the Company's common stock on such date as reported in The Wall Street Journal. Section 9. Time of Election of Deferral. An election to defer compensation may be made by (i) a nominee for election as a Director prior to his/her election for the calendar year in which he/she is being elected (except that a person elected a Director by the Board of Directors may make an election to defer compensation within 30 days after his/her election as a Director, in which event such election to defer compensation shall be effective only with respect to compensation paid after the election to defer compensation is made) and (ii) a person then currently serving as a Director for the next succeeding calendar year no later than the preceding December 31. This election will be deemed to be an election to defer compensation under this Plan for each succeeding calendar year, unless (1) the participant elects, in accordance with Section 12, to discontinue the deferral, (2) the Company discontinues the Plan, or (3) the election is stated, in writing, to apply only to the current calendar year. Section 10. Status of Previous Deferrals. Any deferral election made under the Bristol-Myers Squibb Company Amended and Restated Deferred Compensation Plan for Non-Employee Directors (the "Prior Plan") shall be subject to and governed by the terms of the Prior Plan. Section 11. Manner of Electing Deferral. A participant may elect to defer compensation by giving written notice to the Executive Compensation Committee of the Company on a form provided by the Company, which notice shall include the amount to be deferred, the form in which the amount deferred is to be credited, the period of deferral, the form of payment, including the number of installments, if any. E-5-3 Section 12. Effect of Election. An election to defer compensation including the form of deferral shall be irrevocable by the participant once the calendar year to which it applies has commenced. An election may be discontinued or modified by the participant with respect to calendar years not yet begun by notifying the Executive Compensation Committee of the Company in writing no later than November 30th of the preceding year. Section 13. Further Election. Prior to the commencement of the year in which a participant has elected to commence receipt of payment of amounts deferred, the participant shall have the one-time right with regard to funds previously deferred to elect a further deferral of the payment of such funds by delivering to the committee a written statement in a form provided by the Company specifying the further period of deferral and the form of payment, including the number of installments, if any. In the event, however, there is a final determination by a court of appropriate jurisdiction that the further deferral was ineffective for the purpose of deferring tax obligations on the deferred amounts, then all amounts on which the further deferral was determined to be ineffective shall be paid to the participant within 15 days of such final determination being made, such payment to be made pursuant to the previously elected deferral. Section 14. Participant's Rights Unsecured. The right of any participant to receive future payments under the provisions of the Plan shall be an unsecured claim against the general assets of the Company. Section 15. Statement of Account. A statement will be sent to each participant each year as to the value of his/her deferred compensation account as of the end of the preceding year. Section 16. Assignability. No right to receive payments hereunder shall be transferable or assignable by a participant, except by will or under the laws of descent and distribution. Section 17. Administration. This Plan will be administered by the Executive Compensation Committee of the Company, which shall have the authority to adopt rules and regulations to carry out the Plan and to interpret, construe and implement the provisions of the Plan. Section 18. Amendment. This Plan may at any time or from time to time be amended, modified or terminated by the Company. No amendment, modification or termination shall, without the consent of the participant, adversely affect such participant's accruals in his/her deferred compensation account of the date of amendment, modification or termination. E-5-4 EX-10.M 7 BRISTOL-MYERS SQUIBB COMPANY NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN AMENDED EFFECTIVE JANUARY 13, 1998 1. Purpose: The purpose of the Bristol-Myers Squibb Company Non-Employee Directors' Stock Option Plan ("the Plan") is to secure for Bristol-Myers Squibb Company ("the Company") and its stockholders the benefits of the incentive inherent in increased common stock ownership by the members of the Board of Directors ("the Board") of the Company who are Eligible Directors as defined in the Plan. 2. Administration: The Plan shall be administered by the Board. The Board shall have all the powers vested in it by the terms of the Plan, such powers to include authority (within the limitations described herein) to prescribe the form of the agreement embodying awards of stock options made under the Plan ("Options"). The Board shall, subject to the provisions of the Plan, grant Options under the Plan and shall have the power to construe the Plan, to determine all questions arising thereunder and to adopt and amend such rules and regulations for the administration of the Plan as it may deem desirable. Any decision of the Board in the administration of the Plan, as described herein, shall be final and conclusive. The Board may act only by a majority of its members in office, except that the members thereof may authorize any one or more of their number or the Secretary or any other officer of the Company to execute and deliver documents on behalf of the Board. No member of the Board shall be liable for anything done or omitted to be done by such member or by any other member of the Board in connection with the Plan, except for such member's own willful misconduct or as expressly provided by statute. 3. Amount of Stock: The stock which may be issued and sold under the Plan will be the Common Stock (par value $.10 per share) of the Company, of a total number not exceeding 500,000 shares, subject to adjustment as provided in Paragraph 6 below. The stock to be issued may be either authorized and unissued shares or issued shares acquired by the Company or its subsidiaries. In the event that Options granted under the Plan shall terminate or expire without being exercised in whole or in part, new Options may be granted covering the shares not purchased under such lapsed Options. E-6-1 4. Eligible Directors: The members of the Board who are eligible to participate in the Plan are persons who serve as directors of the Company after the effective date of the Plan and: (a) who are not current or former employees of the Company and (b) who are not and, in the past, have not been eligible to receive Options on Company stock by participation as an employee in another plan sponsored by the Company or under a contractual arrangement with the Company. 5. Terms and Conditions of Options: Each Option granted under the Plan shall be evidenced by an agreement in such form as the Board shall prescribe from time to time in accordance with the Plan and shall comply with the following terms and conditions: (a) The Option exercise price shall be the fair market value of the Common Stock shares subject to such Option on the date the Option is granted, which shall be the average of the high and the low sales prices of a Common Stock share on the date of grant as reported on the New York Stock Exchange Composite Transactions Tape or, if the New York Stock Exchange is closed on that date, on the last preceding date on which the New York Stock Exchange was open for trading. (b) Each year, as of the date of the Annual Meeting of Stockholders of the Company, each Eligible Director who has been elected or reelected or who is continuing as a member of the Board as of the adjournment of the Annual Meeting shall automatically receive an Option for 2,000 shares of Common Stock. (c) The Option shall not be transferable by the optionee otherwise than by will or the laws of descent and distribution, and shall be exercisable during his lifetime only by him. (d) No Option or any part of an Option shall be exercisable: (i) before the Eligible Director has served one term-year as a member of the Board since the date the Option was granted (as used herein, the term "term-year" means that period from one Annual Meeting to the subsequent Annual Meeting), (ii) after the expiration of ten years from the date the Option was granted, (iii) unless, written notice of the exercise is delivered to the Company specifying the number of shares to be purchased and payment in full is made for the shares of Common Stock being acquired thereunder at the time of exercise; such payment shall be made (A) in United States dollars by certified check, or bank draft or (B) by tendering to the Company Common Stock shares owned by the person exercising the Option and having a fair market value equal to the cash exercise price applicable to such Option, such fair market value to be the average of the high and low sales prices of a Common Stock share on the date of exercise as reported on the New York Stock Exchange Composite Transactions Tape, or, if the New York Stock Exchange is closed on that date, on the last preceding date on which the New York Stock Exchange was open for trading, or E-6-2 (C) by a combination of United States dollars and Common Stock shares as aforesaid; and (iv) unless the person exercising the Option has been, at all times during the period beginning with the date of grant of the Option and ending on the date of such exercise, an Eligible Director of the Company, except that (A) if such a person shall cease to be such an Eligible Director for reasons other than retirement or death, while holding an Option that has not expired and has not been fully exercised, such person, at any time within one year after the date he ceases to be such an Eligible Director (but in no event after the Option has expired under the provisions of subparagraph 5(d) (ii) above), may exercise the Option with respect to any Common Stock shares as to which such person has not exercised the Option on the date the person ceased to be such an Eligible Director; or (B) if such person shall cease to be such an Eligible Director by reason of retirement or death while holding an Option that has not expired and has not been fully exercised, such person, or in the case of death, the executors, administrators or distributees, as the case may be, may at any time within five years after the date such person ceased to be such an Eligible Director (but in no event after the Option has expired under the provisions of subparagraph 5(d) (ii) above), exercise the Option with respect to any shares of Common Stock as to which such person has not exercised the Option on the date the person ceased to be such an Eligible Director, notwithstanding the provisions of subparagraph 5(e) below. (C) if any person who has ceased to be such an Eligible Director for reasons other than death, shall die holding an Option that has not been fully exercised, such person's executors, administrators, heirs or distributees, as the case may be, may, at any time within the greater of (1) one year after the date of death or (2) the remainder for the period in which such person could have exercised the Option had the person not died, (but in no event (under either (1) or (2) after the Option has expired under the provisions of subparagraph 5(d) (ii) above)), exercise the Option with respect to any shares as to which the decedent could have exercised the Option at the time of death. In the event any Option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the Option are the duly appointed legal representatives of the deceased optionee's estate or the or the proper legatees or distributees thereof. (e) Subject to subparagraph 5(d) (i) above, one-quarter (25%) of the total number of shares of Common Stock covered by the Option shall become exercisable beginning on the earlier of (a) the first anniversary date of the grant of the Option or (b) the completion of one term-year following the grant of the Option; thereafter an additional one-quarter (25%) of the shares shall become exercisable annually on the earlier of (a) the anniversary date of the grant of the Option or (b) the completion of an additional term-year of service as a member of the Board. 6. Adjustment in the Event of Change in Stock: In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, recapitalizations, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, the aggregate number and class of shares available under the Plan, and the number, class and the price of shares of Common Stock subject to outstanding Options shall be appropriately adjusted by the Board, whose determination shall be conclusive. E-6-3 7. Miscellaneous Provisions: (a) Except as expressly provided for in the Plan, no Eligible Director or other person shall have any claim or right to be granted an Option under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any Eligible Director any right to be retained in the service of the Company. (b) An optionee's rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of an optionee's death, by will or the laws of descent and distribution), including, but not by way of limitations, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any participant in the Plan shall be subject to any obligation or liability of such participant. (c) No Common Stock shares shall be issued hereunder unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable federal, state and other securities laws and regulations. (d) It shall be a condition to the obligation of the Company to issue Common Stock shares upon exercise of an Option, that the optionee (or any beneficiary or person entitled to act under subparagraph 5(d) (iv) above) pay to the Company, upon its demand, such amount as may be requested by the Company for the purpose of satisfying any liability to withhold federal, state, local or foreign income or other taxes. If the amount requested is not paid, the Company may refuse to issue Common Stock shares. (e) The expenses of the Plan shall be borne by the Company. (f) The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the issuance of shares upon exercise of any Option under the Plan and issuance of shares upon exercise of Options shall be subordinate to the claims of the Company's general creditors. (g) By accepting any Option or other benefit under the Plan, each optionee and each person claiming under or through such person shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan by the Company or the Board. 8. Amendment or Discontinuance: The Plan may be amended at any time and from time to time by the Board as the Board shall deem advisable, including, but not limited to amendments necessary to qualify for any exemption or to comply with applicable law or regulations provided, however, that except as provided in Paragraph 6 above, the Board may not, without further approval by the shareholders of the Company in accordance with Paragraph 10 below, increase the maximum number of shares of Common Stock as to which Options may be granted under the Plan, increase the number of shares subject to an Option, reduce the minimum Option exercise price described in subparagraph 5(a) above, extend the period during which Options may be granted or exercised under the Plan or change the class of persons eligible to receive Options under the Plan. No amendment of the Plan shall materially and adversely affect any right of any optionee with respect to any Option theretofore granted without such optionee's written consent. E-6-4 9. Termination: This Plan shall terminate upon the earlier of the following dates or events to occur: (a) upon the adoption of a resolution of the Board terminating the Plan; or (b) ten years from the date the Plan is initially approved and adopted by the shareholders of the Company in accordance with Paragraph 10 below. 10. Effective Date of Plan: The Plan shall become effective as of May 1, 1990 or such later date as the Board may determine, provided that the Company's stockholders shall have adopted the Plan at the Company's 1990 Annual Meeting of Stockholders. E-6-5 EX-10.P 8 March 25, 1998 Mr. Charles A. Heimbold, Jr. Chairman and Chief Executive Officer Bristol-Myers Squibb Company 345 Park Avenue New York, NY 10154-0037 Dear Charlie: Over the four years since you assumed the role of Chief Executive Officer, your leadership has significantly contributed to the Company's success, as reflected in the substantial increase in the value of the Company by roughly $70 billion as of year-end 1997. In light of this, the Compensation and Management Development Committee has approved the following in exchange for your agreement to serve as Chairman and Chief Executive Officer until December 31, 2001, or such earlier date as the Board of Directors may appoint your successor: - You will be granted a Restricted Stock Award of 150,000 shares which will vest upon your retirement. - Your annual bonus target will be determined by the Board but will not be less than 170% of your base salary, and your base salary will not be less than in 1998. - After your retirement you will be provided with the benefits, support and agreements similar to those historically provided to other retiring executives who served as Chairman and Chief Executive Officer of the Company. Bristol-Myers Squibb Company By: /s/ Andrew C. Sigler ----------------------------- Andrew C. Sigler Chairman, Compensation and Management Development Committee Agreed to. By: /s/ Charles A. Heimbold, Jr. - -------------------------------- Charles A. Heimbold, Jr. Chairman and Chief Executive Officer Date: March 31, 1998 - ---------------------- E-7-1 EX-21 9 EXHIBIT 21 - ---------- BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST 2309 Realty Corporation 345 Park Corporation 77 Wilson St., Corp. A.G. Medical Services, P.A. A/S GEA Farmaceutisk Fabrik Abeefe S.A. Agit Ges. fuer Informationssysteme und Techniken m.b.H. Alive & Well, Inc. Allard Laboratories, Inc. Apothecon BV Apothecon Farmaceutica Ltda. Apothecon, Inc. Apothecon, S.A. Astel Laboratoires S.A.R.L. B-MS GeneRx B. L. Pharmaceuticals (Proprietary) Limited Blisa, Inc. BMS Holdings BMS Music Company Boclaro Inc. Bristol (Iran) S.A. Bristol Arzneimittel G.m.b.H. Bristol Caribbean, Inc. Bristol Foundation Bristol Iran Private Company Limited Bristol Laboratories Corporation Bristol Laboratories Inc. Bristol Laboratories International, S.A. Bristol Laboratories Medical Information Systems Inc. Bristol Pharmaceutical Information Center, S.A. Bristol-Myers (Bangladesh) Inc. Bristol-Myers (Japan) Limited Bristol-Myers (Private) Limited Bristol-Myers (Zaire) Ltd. Bristol-Myers Award Superannuation Pty. Ltd. Bristol-Myers Barceloneta, Inc. Bristol-Myers Company Limited Bristol-Myers de Mexico, S.A. de C.V. Bristol-Myers Ecuatoriana S.A. Bristol-Myers Foreign Sales Corporation Bristol-Myers Ges.m.b.H. Bristol-Myers Industrial (Dominicana), Inc. Bristol-Myers International s.r.l. Bristol-Myers Lion Ltd. Bristol-Myers Middle East S.A.L. Bristol-Myers Nederland Inc. Bristol-Myers Oncology Therapeutic Network, Inc. Bristol-Myers Overseas Corporation Bristol-Myers Overseas Corporation (Guam Branch) Bristol-Myers Overseas Corporation (Korea - Branch) E-8-1 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Bristol-Myers Pakistan (Pvt.) Limited Bristol-Myers S.A. Bristol-Myers Squibb (Guangzhou) Ltd. Bristol-Myers Squibb (Hong Kong) Limited Bristol-Myers Squibb (Malaysia) Sendirian Berhad Bristol-Myers Squibb (N.Z.) Limited Bristol-Myers Squibb (Phil.) Inc. Bristol-Myers Squibb (Proprietary) Limited Bristol-Myers Squibb (Russia) Bristol-Myers Squibb (Singapore) Pte. Limited Bristol-Myers Squibb (Taiwan) Ltd. Bristol-Myers Squibb (Thailand) Ltd. Bristol-Myers Squibb (West Indies) Ltd. Bristol-Myers Squibb A.E.B.E. Bristol-Myers Squibb A.G. Bristol-Myers Squibb Aktiebolag Bristol-Myers Squibb Argentina, S.A.* Bristol-Myers Squibb Asia/Pacific, Inc. Bristol-Myers Squibb Asia/Pacific, Inc. (Singapore - Branch) Bristol-Myers Squibb Auslandsbeteiligungs Holding, GmbH Bristol-Myers Squibb Australia Pty. Ltd. Bristol-Myers Squibb B.V. Bristol-Myers Squibb Belgium, S.A. Bristol-Myers Squibb Brasil, S.A. Bristol-Myers Squibb Business Services Limited Bristol-Myers Squibb Canada Inc. Bristol-Myers Squibb Company Bristol-Myers Squibb de Colombia S.A. Bristol-Myers Squibb de Costa Rica, S.A. Bristol-Myers Squibb de Guatemala, S. A. Bristol-Myers Squibb de Mexico, S.A. de C.V. Bristol-Myers Squibb de Venezuela, S.A. Bristol-Myers Squibb del Ecuador, C.A. Bristol-Myers Squibb Dominicana, S.A. Bristol-Myers Squibb Export SA Bristol-Myers Squibb Farmaceutica Portuguesa Limitada Bristol-Myers Squibb G.m.b.H. Bristol-Myers Squibb Ges. m.b.H. Bristol-Myers Squibb Global Properties Ltd. Bristol-Myers Squibb Holding Germany GMBH Bristol-Myers Squibb Holdings B.V. Bristol-Myers Squibb Holdings Limited Bristol-Myers Squibb Holdings Limited (Ireland - Branch) Bristol-Myers Squibb Holdings Limited (Kenya - Branch) Bristol-Myers Squibb Ilaclari Limited Sirketi Bristol-Myers Squibb Ilaclari, Inc. Bristol-Myers Squibb Ilaclari, Inc. (Turkey - Branch) Bristol-Myers Squibb International Company Bristol-Myers Squibb International Corporation Bristol-Myers Squibb International Corporation (Belgium - Branch) Bristol-Myers Squibb International Corporation (Egypt - Branch) E-8-2 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Bristol-Myers Squibb International Corporation (Spain - Branch) Bristol-Myers Squibb International Insurance Company Bristol-Myers Squibb International Limited Bristol-Myers Squibb Investco, Inc. Bristol-Myers Squibb K.K. Bristol-Myers Squibb Korea Ltd. Bristol-Myers Squibb Manufacturing Bristol-Myers Squibb MEA S.A. (Saudi Arabia - Branch) Bristol-Myers Squibb MEA S.A. (Switzerland) Bristol-Myers Squibb MEA S.A.(Egypt - Branch) Bristol-Myers Squibb Norway Ltd. Bristol-Myers Squibb Pakistan (Pvt.) Ltd. Bristol-Myers Squibb Peru, S.A. Bristol-Myers Squibb Pharmaceuticals Limited (England) Bristol-Myers Squibb Pharmaceuticals Limited (Ireland) Bristol-Myers Squibb Products S.A. Bristol-Myers Squibb Puerto Rico, Inc. Bristol-Myers Squibb S.p.A. Bristol-Myers Squibb Service Ltd. Bristol-Myers Squibb Sp. z o.o. Bristol-Myers Squibb Spol. s r.o. Bristol-Myers Squibb Superannuation Plan Pty. Ltd. Bristol-Myers Squibb Zentrum Fuer Forschung Und Fortbildung Im Gesundheitswesen G.m.b.H. Bristol-Myers Squibb, S.A. Bristol-Myers Zimmer Award Superannuation Plan Bristol-Salor Pharma G.m.b.H. Cancer Research, Inc. Carboplant Spezialimplante GmbH CJG Partners, L.P. Clairol de Mexico, S.A. de C.V. Clairol Incorporated Clairol International S.r.l. Clairol Limited Cliva S.A. Compania Bristol-Myers Squibb de Centro America (El Salvador Branch) Compania Bristol-Myers Squibb de Centro America (Honduras Branch) Compania Bristol-Myers Squibb de Centro America (Nicaragua Branch) Compania Bristol-Myers Squibb de Centro America (Panama Branch) Convatec Limited Convatec Sp. z o.o. Convatec Spot s r.o. Convatec Vertriebs G.m.b.H. Convatec, S.A. Delmed S.A. Dermogroup S.R.L. Duart Industries, Ltd. E. R. Squibb & Sons de Venezuela, C.A. E. R. Squibb & Sons Inter-American (Chile - Branch) E. R. Squibb & Sons Inter-American Corporation E. R. Squibb & Sons Inter-American Corporation (Colombia - Branch) E. R. Squibb & Sons Inter-American Corporation (PRico - Branch) E-8-3 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST E. R. Squibb & Sons Limited E. R. Squibb & Sons, Inc. E. R. Squibb & Sons, Inc. (England - Branch)* Elektrochemische Ges.Hirschfelde M.b.H. ESS Partners, L.P. EWI Corporation F.A.I.R. Laboratories Limited G.I.E. Centre de Recherche de Biologie Moleculaire G.I.E. Institut de Recherche Squibb Grove Insurance Company Ltd. Grove Limited Grove Products (Far East) Limited Grove Products (Far East) Limited (India - Branch) Hexachimie Heyden Farmaceutica Portugesa Limitada Iris Acquisition Corp. JG Partners, L.P. Kingsdown Medical Consultants Limited Laboratoire Oberlin Laboratoires Convatec S.A. Laboratoires Guieu France S.a.r.l. Laboratoires UPSA Laboratori Guieu S.p.A. Laboratorios Industriales Grove S.A. Lawrence Laboratories Limited Linson Investments Limited Linson Pharma Inc. Listo B.V. Logics International, Inc. Matrix Essentials, Inc. Mead Johnson & Company Mead Johnson (Guangzhou) Ltd. Mead Johnson (Manufacturing) Jamaica Limited Mead Johnson A.E.B.E. Mead Johnson B.V. Mead Johnson de Mexico, S.A. de C.V. Mead Johnson Ecuador S.A. Mead Johnson Farmaceutica Limitada Mead Johnson International Limited (Argentine - Branch) Mead Johnson International Limited (Canada) Mead Johnson International Limited (Colombia - Branch) Mead Johnson Jamaica Ltd. Mead Johnson Limited Mead Johnson Pharmaceutical, Inc. Mead Johnson S.p.A. MEC Subsidiary Corporation Medical Engineering Corporation Monarch Crown Corporation Oncogen Limited Partnership Oncology Therapeutics Network Automated Technologies, Inc. Oncology Therapeutics Network Corporation Oncology Therapeutics Network Joint Venture, L.P. E-8-4 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Orthoplant Endoprothetik GmbH Osmat S.A. OTN Online, Inc. OTN Parent Corp. Oy Bristol-Myers Squibb (Finland) AB P. T. Squibb Indonesia Pharmagen Pharmavit Rt. PRB Partners, L.P. Recherche et Propriete Industrielle Redmond Products Distributing, Inc. Redmond Products International, Inc. Redmond Products, Inc. Route 22 Real Estate Holding Corporation RPI Management, Inc. S+G Implants G.m.b.H. Salorpharma G.m.b.H. Schuppert Meubelen Holten B.V. Seabrook Medical Systems, Inc. Selecciones Mercantiles, S.A. de C.V. Sino-American Shanghai Squibb Pharmaceuticals Limited Societe Francaise de Complements Alimentaires Squibb (Far East) Limited Squibb (Far East) Limited (Taiwan - Branch) Squibb (Nigeria) Limited Squibb (Thailand) Limited Squibb ApS Squibb Convatec Medical Products Co. Ltd. Squibb Corporation Squibb Development Limited Squibb Farmaceutica Portuguesa, Limitada Squibb Industria Farmaceutica, S.A. Squibb Manufacturing, Inc. Squibb Middle East S.A. (Egypt - Branch) Squibb Middle East S.A. (Jordan - Branch) Squibb Middle East S.A. (Panama) Squibb Overseas Investments, Inc. Squibb Pacific Limited Squibb Pharma G.m.b.H. Squibb Properties, Inc. Squibb Surgicare Limited Squibb-von Heyden G.m.b.H. Stamford Holdings B.V. Swords Holdings I, L.L.C. Swords Holdings II, L.L.C. Swords Laboratories Limited T S V Corporation Tallosa, S.A. Unterstuetzungskasse Bristol-Myers Squibb G.m.b.H. Upsamedica LDA Upsamedica SA NV Upsamedica SpA E-8-5 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Von Heyden Pharma G.m.b.H. Wallingford Research, Inc. Westwood-Intrafin, S.A. Westwood-Squibb Holdings, Inc. Westwood-Squibb Pharmaceuticals, Inc. Zimmer B.V. Zimmer Caribe, Inc. Zimmer Chirurgie G.m.b.H. Zimmer Europe Co-Ordination Centre N.V. Zimmer Europe Limited Zimmer Limited Zimmer New Zealand Limited Zimmer of Canada Limited Zimmer Pte. Ltd. Zimmer S. A. (France) Zimmer S.A. (Spain) Zimmer S.R.L. Zimmer, Inc. E-8-6 EX-23 10 Exhibit 23 ---------- CONSENT OF INDEPENDENT ACCOUNTANTS - ----------------------------------- We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-8 (Nos. 33-30856, 33-31055, 33-35586, 33-38411, 33-38587, 33-44788, 333-47403, 33-52691, 33-58187 and 333-02873), Post-Effective Amendment No. 2 on Form S-8 (No. 33-30756-02) to Form S-4 (No. 333-09519), Form S-3 (No. 33-33682) and Pre-Effective Amendment No. 1 on Form S-3 (No. 33-62496) of Bristol-Myers Squibb Company of our report dated January 22, 1998 appearing on page 57 of this Form 10-K. /s/ Price Waterhouse LLP - ------------------------------- PRICE WATERHOUSE LLP New York, New York March 31, 1998 E-9-1 EX-27 11
5 Exhibit 27 for Bristol-Myers Squibb for year ended 12/31/97 1000000 YEAR Dec-31-1997 Dec-31-1997 1456 338 3082 109 1799 7736 7001 2845 14977 5032 1279 0 0 108 7111 14977 16701 16701 4464 4464 3626 0 118 4482 1277 3205 0 0 0 3205 3.22 3.14 Items reported as "zero" are not applicable or are immaterial to the consolidated financial position of the Company.
EX-99 12 EXHIBIT 99.1 - ------------ Cautionary statement regarding forward looking statements made by the Company, intended to have the benefit of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company is hereby filing a cautionary statement identifying important factors that could cause the Company's actual results to differ materially from those projected in forward looking statements made by or on behalf of the Company. There are several communications made by or on behalf of the Company (including the Company's Annual Report to Stockholders and Form 10-K) which contain statements relating to goals, plans and projections regarding its financial position, results of operations, market position and product development, among other things, which are based on current expectations that involve inherit risks and uncertainties including factors that would delay, divert or change one of them in the next several years. These important factors include -- New government laws and regulations, such as (i) health care initiatives, (ii) changes in the FDA and foreign regulatory approval processes which may cause delays in approving new products, (iii) tax changes such as the phasing out of tax benefits heretofore available in the United States and certain foreign countries. Difficulties in developing new products; new products developed by competitors which have lower prices or superior performance features or which are otherwise competitive with the Company's current products; and generic competition as the Company's products go off patent, as well as possible problems with licensors. Legal difficulties including negative results relating to patents; adverse decisions in litigation including the breast implant cases and other product liability cases; the inability to obtain adequate insurance with respect to this type of liability; recalls of pharmaceutical products or forced closings of manufacturing plants. Increasing pricing pressures worldwide from managed care buyers and institutional and governmental purchasers; changes of business conditions including renewed inflation, higher interest rates and fluctuation of foreign currency exchange rates. No assurance can be given that any goal or plan set forth in forward looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The Company undertakes no obligation to release publicly any revisions to forward looking statements as a result of future events or developments. E-11-1 -----END PRIVACY-ENHANCED MESSAGE-----