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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FORM TO
COMMISSION FILE NUMBER 1-5482
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TYCO INTERNATIONAL (US) INC.
(FORMERLY TYCO INTERNATIONAL LTD.)
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2297459
(State or Incorporation) (I.R.S. Employer
Identification Number)
ONE TYCO PARK, EXETER, NEW HAMPSHIRE 03833
(Address of registrant's principal executive offices)
(603) 778-9700
(Registrant's telephone number)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange
None on which registered
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III or this Form 10-K or any amendment to this
Form 10-K. [X]
The number of shares of common stock outstanding as of September 19, 1997
was 1,000 shares, all of which are indirectly owned by Tyco International Ltd.
(formerly ADT Limited.)
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
I(1)(A) AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
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PART I
ITEM 1. BUSINESS
Tyco International (US) Inc., formerly known as Tyco International Ltd.,
(the "Company" or "Tyco"), through its divisions and operating subsidiaries,
engages in the manufacture and distribution of disposable medical supplies and
other specialty products, the design, manufacture, installation and service of
fire detection and suppression systems, and the manufacture and distribution of
flow control products and electrical and electronic components. The Company
maintains a strong leadership position in each of its segments of these markets.
See Notes 12 and 13 to the Consolidated Financial Statements for certain
consolidated segment and geographic financial data relating to the Company's
businesses.
As more fully described in Notes 1 and 17 to the Consolidated Financial
Statements, subsequent to June 30, 1997 the Company merged with and became a
wholly owned subsidiary of ADT Limited (subsequently renamed Tyco International
Ltd.). Additionally, on July 1, 1997 the Company completed the acquisition of
AT&T's submarine systems business. The merger with ADT Limited was accounted for
as a pooling of interests. The information presented in this Form 10-K reflects
only the historical information related to Tyco as of and for the period ended
June 30, 1997. No adjustment or restatement has been reflected for the
transactions described in Note 17.
I. DISPOSABLE AND SPECIALTY PRODUCTS
Tyco's Disposable and Specialty Products Group consists of Kendall
International ("Kendall"), Ludlow Laminating and Coating, Armin Plastics
("Armin"), Carlisle Plastics, Inc. ("Carlisle"), Twitchell, and Accurate
Forming. Kendall manufactures and distributes medical supplies, disposable
medical products and adhesive products and tapes. Ludlow Laminating and Coating
manufactures laminated and coated products. Armin manufactures polyethylene film
and packaging products. Carlisle manufactures specialty packaging materials and
garment hangers. Twitchell manufactures extrusion coated polyester yarns and
woven fabrics and Accurate Forming manufactures deep-drawn metal parts.
Kendall
Kendall conducts its operations through four business units: Kendall
Healthcare, Kendall International, Kendall-Polyken and Ludlow Technical
Products. In each of its business units, Kendall competes with numerous
companies, including a number of larger, well-established companies. Kendall
relies on its reputation for quality and dependable service, together with its
low cost manufacturing and innovative products, to compete in its markets.
The Kendall Healthcare business unit markets a broad range of wound care,
vascular therapy, urological care, incontinence care, anesthetic care and other
products to U.S. and Canadian hospitals and alternate site health care
customers. Kendall Healthcare is the industry leader in gauze production with
its Kerlix(R) and Curity(R) brands. Kendall Healthcare's other core domestic
product category consists of its vascular therapy products, principally
anti-embolism stockings, marketed under the T.E.D.(R) brand name, sequential
pneumatic compression devices sold under the SCD(TM) brand name and a venous
plexus foot pump. Kendall Healthcare pioneered the pneumatic compression form of
treatment and continues to be the dominant participant in the pneumatic
compression and elastic stocking segments of the vascular therapy market.
Kendall Healthcare also offers a range of other patient care products,
including incontinent care products marketed primarily to nursing homes and
other institutional providers of long term care, urological, wound care,
surgical care and respiratory care products, a broad line of disposable medical
supplies including respiratory, urology, nursing care products, airway
management, temperature monitoring and specialty products serving patients in
anesthesia, critical care and emergency medicine.
Kendall Healthcare distributes its products both directly through its sales
force and through a network of over 250 independent distributors. Kendall
Healthcare's sales force is divided into three groups: one promoting its
vascular therapy products, one promoting its wound care and other health care
products and one selling all
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of its products into the alternate site markets. Most of the U.S. distributors
also sell similar products made by Kendall's competitors, a practice common in
the industry.
Kendall International is responsible for the manufacturing, marketing,
distribution and export of Kendall products in numerous countries worldwide.
Kendall International's operations are organized primarily into three geographic
regions -- Europe, Latin America and the Far East. Kendall International
generally markets a range of products similar to those of Kendall Healthcare,
although the mix of product lines varies from country to country. Kendall
International markets directly to hospital and medical professionals and through
independent distributors.
The Kendall-Polyken division manufactures and markets specialty adhesive
products and tapes for industrial applications, including external corrosion
protection tape products for oil, gas and water pipelines. Other industrial
applications include tapes used in the automotive industry for wire harness
wraps, sealing and other purposes, and tapes used in the aerospace and heating
and air conditioning (HVAC) industries. Kendall-Polyken also produces duct,
foil, strapping, packaging and electrical tapes and spray adhesives for
industrial and consumer markets worldwide and manufactures bandages and medical
tapes for Kendall Healthcare and for others. Kendall's Betham division develops
and markets pressure sensitive adhesives and coatings, principally for the
automotive, medical and specialty markets.
Kendall-Polyken generally markets its pipeline products directly, working
with local manufacturers' representatives, international engineering and
construction companies, and the owners and operators of pipeline transportation
facilities. Kendall-Polyken sells its other industrial products either directly
to major end users or through diverse distribution channels, depending on the
industry being served.
The Ludlow Technical Products division manufactures and sells a variety of
disposable medical products, specialized paper and film products. These products
include transcutaneous electrical nerve stimulation electrodes and related
products which are used primarily in physical therapy and other forms of
rehabilitative medicine, medical electrodes for EKGs and similar diagnostic
tests, gels which are used with medical electrodes for testing and other
monitoring purposes, hydrogel wound care products, neonatal electrodes,
diagnostic and monitoring electrodes, electrotherapy electrodes and cable and
lead wire. Ludlow Technical Products also produces adhesive tapes, pressure
sensitive coated papers and films used for business forms and in printing
applications, high quality facsimile paper and recording chart papers for
medical and industrial instrumentation.
These products are marketed primarily by the division's internal sales
force. Competitors vary from small regional firms to larger firms that compete
with Ludlow Technical Products on a national basis. Competition is on the basis
of price and quality.
Ludlow Laminating and Coating
Ludlow Laminating and Coating produces protective packaging and other
materials made of coated or laminated combinations of paper, polyethylene and
foil. Coated packaging materials provide barriers against grease, oil, light,
heat, moisture, oxygen and other contaminants that could damage the contained
products. The division produces structural coated and laminated products such as
plastic coated kraft, linerboard and bleached boards for rigid urethane
insulation panels, automotive components and wallboard panels. Other
applications include packaging for photographic film, frozen foods, health care
products, electrical and metallic components, agricultural chemicals, cement and
specialty resins.
Ludlow markets its laminated and coated products through its internal sales
force and through independent manufacturers' representatives. The Company
competes with many large manufacturers of laminated and coated products on the
basis of price, service, marketing coverage and custom application engineering.
There are numerous specialized competitors which tend to differ from market to
market.
Armin
Armin manufactures polyethylene film and packaging products in a wide range
of size, gauge, construction strength, stretch capacity, clarity and color.
Armin extrudes low density, high density and linear
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low density polyethylene film from resin purchased in pellet form, using such
additives as coloring, slip and anti-block chemicals. Armin's products include
plastic supermarket packaging, greenhouse sheeting, shipping covers and liners
and a variety of other packaging configurations for the aerospace, agricultural,
automotive, construction, cosmetics, electronics, food processing, healthcare,
pharmaceutical and shipping industries. Armin also manufactures a number of
other polyethylene products, such as reusable plastic pallets, transformer pads
for electric utilities, and a large variety of disposable gloves for the
cosmetic, medical, foodhandling and pharmaceutical industries. A majority of
sales are generated through Armin's internal sales force. Armin serves over
6,000 customers in the United States.
Armin competes with a wide range of manufacturers, including some
vertically integrated companies and companies that manufacture polyethylene
resins for their own use. Armin competes in many market segments by emphasizing
product innovation, specialization and customer service.
Carlisle
Carlisle is a leading producer of industrial and consumer plastic products.
Carlisle's products include trash bags, flexible packaging, sheeting and garment
hangers. Carlisle's trash bag products include institutional lines, as well as
Carlisle's own national consumer brands. Sales are primarily in North America.
Carlisle supplies plastic trash bags to mass merchants, grocery chains, and
institutional customers. Carlisle manufactures Ruffies(R), a national brand
consumer trash bag, for mass merchants and other retail stores. Carlisle also
provides heavy duty trash can liners for institutional customers, such as food
service distributors, janitorial supply houses, restaurants, hotels and
hospitals.
In the consumer trash bag market, Carlisle competes primarily with two
nationally advertised brands. Carlisle has historically concentrated on mass
merchants as the primary market for its branded Ruffies trash bags, while the
other major national brands are marketed primarily through food retailers.
Film-Gard(R), Carlisle's leading plastic sheeting product, is sold to
consumers and professional contractors through do-it-yourself outlets, home
improvement centers and hardware stores. A wide range of Film-Gard products are
sold for various uses, including painting, renovation, construction, landscaping
and agriculture. Carlisle's industrial packaging film is sold through
distributors and manufacturers for use as shrink wrap and for other packaging
requirements.
Carlisle sells molded plastic garment hangers to garment manufacturers,
national retailers, regional or local retailers, and mass merchants. Garment
manufacturers place their clothes on Carlisle's hangers before shipping to
retail outlets. Carlisle creates, manufactures and sells customized hanger
designs to national retailers. Regional or local retailers buy standard Carlisle
hanger lines for retail clothing displays. Carlisle also supplies mass merchants
with consumer plastic hangers for sale to the general public.
Carlisle operates in a competitive marketplace where success is dependent
upon price, service and quality.
Twitchell
Twitchell manufactures extrusion coated polyester yarns and woven
PVC-coated yarn fabrics and woven and knit paper fabrics. These fabrics are sold
by Twitchell's internal sales force and through distributors to manufacturers
for use principally in outdoor furniture, wall coverings, window screening,
awnings, housewares and other specialty products. Non-woven fabric is coated and
sold for use as disposable medical clothing. Competition is on the basis of
price, quality and service. Twitchell competes with a number of U.S. and foreign
manufacturers in the sale of woven fabrics and coated products.
Accurate Forming
Accurate Forming manufactures deep-drawn metal parts, primarily barrels,
caps and clips for pens and pencils and containers, caps and closures for
cosmetics, pharmaceutical packaging and automotive applications. Accurate
Forming sells its products on a direct basis through its internal sales force
and also utilizes manufacturers' representatives. The Company competes with many
small, independent deep-drawn metal
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manufacturers and plastic extruders, several of which have manufacturing
locations in the Far East. Competition is on the basis of price.
II. FIRE AND SAFETY SERVICES
The Company is the largest contractor in the world for the design and
installation of fire detection, suppression and sprinkler systems, and for the
servicing of such systems. The Company is also a leading manufacturer and
distributor of fire detection and suppression products.
The Company's Grinnell subsidiary ("Grinnell"), which was founded in 1850,
is the largest installer, manufacturer and supplier of automatic fire sprinkler
and fire alarm and detection systems in North America. Wormald International
Limited ("Wormald"), which was founded in 1889, operates as a major fire
protection company with contracting, manufacturing and distribution operations
throughout Western Europe and the Asia-Pacific region. Grinnell and Wormald, in
combination, is the largest fire protection company in the world, forming a
network of over 300 offices on five continents. The acquisition of Thorn
Security Group ("Thorn") in July 1996 further expands the Company's worldwide
position in the fire detection and security systems market.
Contracting and Service
The Company designs, fabricates, installs and services automatic fire
sprinkler systems, fire alarm and detection systems, special hazard suppression
systems and security systems in buildings and other installations. Grinnell's
fire protection contracting and service business in North America operates
through a network of offices located in the United States, Canada, Mexico, Latin
America and Puerto Rico. Internationally, the Company engages in fire protection
contracting and service through a network of offices in the United Kingdom,
Continental Europe, Saudi Arabia, United Arab Emirates, Australia, New Zealand
and Asia.
The Company installs fire protection systems in both new and existing
structures. Typically, the contracting businesses bid on contracts for fire
protection installation which are let by owners, architects, construction
engineers and mechanical or general contractors. In recent years, the business
of retrofitting existing buildings in the United States and Canada has grown as
a result of local and state legislation requiring installation of fire
protection systems and reduced insurance premiums available on structures with
automatic sprinkler systems. Revenue from the servicing, maintenance, repair and
inspection of fire protection, detection and suppression systems installed by
the Company and other contractors has increased in recent years.
A majority of the fire suppression systems installed by the Company are
water-based, but the Company is also the world's leader in providing custom
designed special hazard fire protection systems which incorporate various
specialized non-water agents such as foams, dry chemicals and gases. Systems
using agents other than water are suited for fire protection in certain
manufacturing, power generation, petrochemical, offshore oil exploration,
transportation, telecommunications, mining and marine applications. The Company
holds exclusive manufacturing and distribution rights in several regions of the
world for INERGEN(R) fire suppression products. INERGEN(R), an alternative to
the ozone depleting agent known as halon, consists of a mixture of three inert
gases designed to effectively extinguish fires without polluting the environment
or damaging costly equipment.
In Australia, New Zealand and Asia, the Company, through its O'Donnell
Griffin division, also engages in the installation of electrical wire and
related electrical equipment in new and existing structures and offers
specialized electrical contracting services in these markets for different types
of construction, including applications for railroad and bridge construction.
Substantially all of the mechanical components (and, in North America, most
of the pipe) used in the fire protection systems installed by the Company are
manufactured by the Company. The Company also has fabrication plants worldwide
that cut, thread and weld pipe, which is then shipped with other prefabricated
components to job sites for installation. The Company has developed its own
computer-aided-design technology that reduces the time required to design
systems for specific applications and coordinates fabrication and delivery of
system components. The Company also installs alarms, detection and activation
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devices and centralized monitors. With Thorn, the Company is now a major
manufacturer of alarms, detection and activation devices and also operates
central monitoring stations.
In its fire protection contracting business, the Company employs both
non-union and union employees in North America, Europe and Asia-Pacific. Many of
the union employees are employed on an hourly basis for particular jobs. In
North America, the largest number of union employees is represented by a number
of local unions affiliated with the United Association of Plumbers and
Pipefitters ("UA"). In April 1994, following lengthy negotiations, Grinnell's
contracts with a number of locals of the UA were not renewed. Employees in those
locations, representing 64% of those employees represented by the UA unions,
went on strike. Grinnell has continued to operate with former union members who
have crossed over and with replacement workers. The labor action has not had,
and is not expected to have, any material adverse effect on Grinnell's business
or results of operations.
Generally, competition in the fire protection business varies by geographic
location. In North America, Grinnell competes with hundreds of smaller
contractors on a regional or local basis for the installation of fire
suppression and alarm and detection systems. Many of the regional and local
competitors employ non-union labor. In Europe, the Company competes with many
regional or local contractors on a country by country basis. In Australia, New
Zealand and Asia, the Company competes with a few large fire protection
contractors as well as with many smaller regional or local companies. The
Company competes for fire protection contracts primarily on the basis of price,
service and quality.
Manufacturing and Distribution
The Company manufactures most of the components used in its own fire
protection contracting business, as well as a variety of products for sale to
other fire protection contractors. In North America, the Company manufactures
pipe and pipe fittings, fire hydrants, sprinkler heads and substantially all of
the mechanical sprinkler components used in an automatic fire suppression
system. In the United Kingdom, France, Germany and Asia-Pacific, the Company
manufactures and sells sprinkler heads, specialty valves, fire doors and
electronic panels for use in fire detection systems. In Mexico, the Company
manufactures fire extinguishers, fire hose and related equipment. With the
acquisition of Thorn, the Company now manufactures a complete line of alarm and
detection equipment that is installed by the Company's units. Thorn's products
are also sold to other alarm and detection installers.
The Company's Ansul subsidiary manufactures and sells various lines of dry
chemical, liquid and gaseous portable fire extinguishers and related agents for
industrial, government, commercial and consumer applications. Ansul also
manufactures and sells special hazard fire suppression systems designed for use
in restaurants, marine applications, mining applications, the petrochemical
industry, confined industrial spaces and commercial spaces housing delicate and
electronic equipment. Ansul also manufactures spill control products designed to
absorb, neutralize and solidify spills of various hazardous materials.
Fire protection products are sold through the Company's flow control
products distribution network discussed in "Flow Control Products," below, and
through independent distributors.
Environmental Services
The Earth Technology Corporation ("Earth Tech"), is a provider of a broad
range of environmental, consulting and engineering services. The principal
services of Earth Tech consist of full-spectrum environmental and hazardous
waste management services, infrastructure design and construction services,
facilities engineering and construction management services for institutional,
civic, commercial and industrial clients, and contract operations and management
services for water, waste water and remediation treatment facilities for
municipal and industrial clients.
Services are provided through a network of 40 offices located throughout
North America. Earth Tech competes with a number of national, regional and local
companies on the basis of price and breadth and quality of services.
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III. FLOW CONTROL PRODUCTS
The Company's Flow Control Group manufactures and distributes flow control
products in North America, Europe and Asia-Pacific. Flow control products
include pipe, fittings, valves, meters and related products which are used to
transport, control and measure the flow of liquids and gases. The Flow Control
Group includes Grinnell, Allied Tube & Conduit ("Allied"), Mueller Co.
("Mueller") and a number of specialized manufacturers of valves, fittings and
couplings.
Manufacturing
The Company manufactures and distributes a wide range of flow control
products, including pipe and pipe fittings, tubing, valves, meters, couplings,
pipe hangers, strut and related components. These products are used in plumbing,
heating, ventilation and air conditioning (HVAC) systems, mechanical
contracting, power generation, water and gas utilities, oil and gas exploration,
petrochemical and numerous other industrial applications. The Company also
manufactures certain related products such as steel tubing, custom iron
castings, malleable iron pipe fittings and fencing materials.
Allied is the leading North American manufacturer of pipe and other tubular
products. Allied manufactures a full line of steel pipe for the fire protection
and construction industries and for commercial, residential and institutional
markets. Its mechanical tube division offers steel tubing in a wide assortment
of shapes and sizes for a variety of industrial and commercial applications.
Allied's fence division is a leader in the manufacture of products for the
residential and industrial/commercial fence markets. Allied also manufactures
metal framing systems used in the construction, industrial and OEM markets.
Mueller, a manufacturer of water and gas distribution products,
manufactures fire hydrants, iron butterfly and gate valves, service-line brass
valves and fittings, gas valves and meter bars, water meters, backflow
preventers and related products for sale to independent distributors and, to a
lesser extent, directly to waterworks contractors, municipalities and gas
companies throughout the United States and Canada.
Over the past several years, the Company has expanded its worldwide
manufacturing and distribution presence through a series of acquisitions and
internal growth. In North America, Grinnell manufactures forged steel fittings
and valves. In Switzerland, Neotecha manufactures Teflon lined specialty valves
for use in highly corrosive environments. In the United Kingdom, Charles Winn
(Valves) Ltd. and Hindle Cockburns manufacture specialty high performance
butterfly valves and ball valves that are used principally in the oil and gas,
chemical and processing industries. In Spain, Belgicast manufactures valves used
for waterworks and other industrial applications. In Germany, the Sempell Valve
Group manufactures and services specialty valves used in industrial and power
generation applications. In Malaysia the Company manufactures couplings,
fittings, steel tubing and metal framing products.
In September 1996, the Company acquired Henry Pratt Co., James Jones
Company and Edward Barber & Co. from Watts Industries, Inc. The three
operations, located in the United States and the United Kingdom, are engaged in
the manufacture and sale of valves, hydrants and fittings used primarily in
water utility, wastewater treatment and power generation markets.
Distribution
The Company operates through a 45 branch distribution network for the sale
of flow control and fire protection products in North America. Five Regional
Distribution Centers ("RDC's") are strategically located in Georgia, Illinois,
Pennsylvania, Texas and California to support the branches' product needs and to
ship directly to customers. Each RDC stocks over 8,500 products. The Company's
Worldwide Flow Control operations also stock and sell products through various
distribution centers in Europe, Australia, New Zealand, the Middle East and
Asia. In Europe, the Company distributes fire protection products, industrial
valves and products for mechanical markets through warehouses located in the
Netherlands, the United Kingdom, Germany and France. Products are sold
principally to distributors and to fire protection contractors and in some
instances to mechanical and industrial contractors and original equipment
manufacturers. In the Asia-Pacific region, the Company distributes fire
protection and flow control products through warehouses located in Australia,
New Zealand and Singapore. Products are sold directly to fire protection and
other
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contractors as well as to mechanical and industrial contractors and independent
distributors. While distribution patterns vary, most centers stock an extensive
line of valves, fittings, pipe and other products for fire protection systems,
components for HVAC installations and water and gas distribution, and
specialized valves and piping for the chemical, food, power and beverage
processing industries.
Grinnell's North American distribution network competes with independent
manufacturers' representatives and other manufacturers and to a lesser extent
with local and regional supply houses, all of which carry lines of other
domestic or foreign manufacturers. Grinnell competes on the basis of price, the
breadth of its product line, service and quality. Grinnell competes for the sale
of gray iron pipe fittings, malleable and ductile iron fittings and other flow
control products and fire protection sprinklers and devices principally with
other domestic producers, as well as with foreign manufacturers of fittings.
Grinnell uses an internal sales force for the sale of certain other iron
castings sold direct to original equipment manufacturers and other end users.
Allied competes for the sale of steel pipe, which is sold through
Grinnell's distribution network discussed above, with pipe from other domestic
and foreign producers. Competition for the sale of pipe is based on price,
service and breadth of product line. Fence and other specialized industrial
tubing is sold to wholesalers, original equipment manufacturers and other
distributors. Competition for the sale of fence products is principally from
national and regional domestic producers and to a lesser extent from foreign
companies, on the basis of price, service and distribution. The Company competes
with many small regional manufacturers for sales of specialized industrial
tubing on the basis of price and breadth of product line.
Mueller's water and natural gas distribution flow control products are sold
through independent distributors, and, to a lesser extent, directly to
utilities, municipalities and gas distribution companies. Certain of its gas
distribution products are also sold through the Grinnell distribution network.
The Company competes for the sale of these products on the basis of product
quality, service, price, breadth of product line and conformity with municipal
codes and other engineering standards. The Company competes with several other
manufacturers in the United States and Canada for the sale of iron and brass
flow control devices for water and natural gas distribution systems.
IV. ELECTRICAL AND ELECTRONIC COMPONENTS
The Company's Electrical and Electronic Components group consists of
Simplex Technologies, Inc. ("Simplex"), Allied's Electrical Conduit division and
the Company's Printed Circuit Group. Simplex manufacturers underwater
communications cable and cable assemblies. Allied manufactures and distributes
electrical conduit and related components used in commercial electrical
installations. The Printed Circuit Group manufactures printed circuit boards and
assembles backplanes for the electronics industry.
Simplex
Simplex is the largest U.S. manufacturer of undersea fiber optic
telecommunications cable. Simplex also manufacturers cable and cable assemblies
for the U.S. Navy, underwater electric power cable and optical ground wire for
use by power authorities and utilities, and electro-mechanical cable for unique
field applications. Simplex's principal customer was AT&T-SSI, which accounted
for approximately 79% of its revenues in fiscal 1997.
On July 1, 1997 the Company acquired AT&T-SSI. The combination of Simplex
and AT&T-SSI, to be known as Tyco Submarine Systems Ltd. ("TSSL"), will create a
world leader in the design, development, manufacture, supply, installation and
maintenance of underseas fiber optic telecommunications cable systems.
Simplex, and now TSSL, competes on a worldwide basis primarily against two
other entities: Alcatel-Alsthom, headquartered in France and KDD, located in
Japan. Alcatel is vertically integrated and produces its own cable and KDD
utilizes a Japanese cable manufacturer.
Allied Electrical Conduit
Allied's electrical conduit division is one of the leading producers of
steel electrical conduit in the United States. Electrical conduit is galvanized
steel tubing designed to contain current-carrying electrical wires both
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inside and outside building structures. The conduit also serves as an electrical
ground that ensures proper operation of circuit interruptors and provides a
channel into which additional wires can be inserted or removed as electrical
needs change. The division manufactures a full line of electrical conduit as
well as metal framing and other products.
The division's electrical conduit and related products are sold to
wholesale electrical distributors through Allied's distribution facilities by an
internal sales force and a network of commissioned sales agents. The division
competes for the sale of electrical products primarily with several other large
domestic manufacturers. Competition in the electrical conduit industry is
primarily based upon price, quality, delivery and breadth of product line.
Printed Circuit Group
Tyco's Printed Circuit Group of companies is one of the largest independent
manufacturers of complex multi-layered printed circuit boards and assemblers of
backplanes in the United States. Printed circuit boards are used in the
electronics industry to mount and interconnect components to create electronic
systems. They are categorized by the number of sides or layers that contain
circuitry, which could be single-sided, double-sided or multi-layer. In general,
single and double-sided boards are less advanced. Multi-layer boards provide
greater interconnection density while decreasing the number of separate printed
circuit boards which are required to accommodate powerful and sophisticated
components. Backplanes include printed circuit boards and are assemblies of
connectors and other electronic components which distribute power and
interconnect printed circuit boards, power supplies and other system elements.
The Group manufactures highly sophisticated double-sided, mass molded
boards of up to eight layers, precision tooled, custom laminated multi-layer
boards of up to 68 layers and sophisticated flex-rigid circuit boards for use in
environmentally demanding conditions. The majority of the Group's sales are
derived from its high-density multi-layer boards. The Company's backplanes
facility produces fully assembled units utilizing press-fit or soldered
connection technology, custom pin grid array sockets and surface mounted
assembly. The printed circuit boards and backplanes manufactured by the Company
are designed by customers and are manufactured on a job order basis to the
customers' specifications.
The Group markets its products mainly through independent manufacturers'
representatives and, to a lesser extent, through its own internal sales
organization. The Group's customers are generally original equipment
manufacturers in the telecommunications, aircraft, computer, military and other
industrial and consumer electronics industries. The Company competes with
several large companies which manufacture less complex single-sided and
double-sided printed circuit boards in the United States, as well as with many
companies that have their own in-house manufacturing capabilities. The Company
believes that far fewer competitors manufacture the more complex, high-density
double-sided and multi-layer boards. The Group competes on the basis of quality,
price, reliability and timeliness of delivery.
BACKLOG
At June 30, 1997, the Company had a backlog of unfilled orders of
approximately $1.49 billion, compared to a backlog of approximately $1.15
billion as of June 30, 1996. The Company expects that approximately 95% of its
backlog at June 30, 1997 will be filled during the next year.
Backlog by industry segment is as follows (in millions of dollars):
<TABLE>
<CAPTION>
JUNE 30, 1997 JUNE 30, 1996
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<S> <C> <C>
Disposable and Specialty Products............................ $ 71.4 $ 59.5
Fire and Safety Services..................................... 1,086.3 724.2
Flow Control Products........................................ 170.6 97.2
Electrical and Electronic Components......................... 162.0 267.5
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$1,490.3 $1,148.4
======== ========
</TABLE>
The increase in backlog in the Fire and Safety Services segment is
primarily due to increased orders in each geographic region as well as from the
inclusion of Thorn in fiscal 1997. Within the Flow Control segment,
8
<PAGE> 10
the increase was primarily due to increases in the European Flow Control
operations. Within the Electrical Components segment, increases at the Printed
Circuit Group were offset by a decrease at Simplex. Simplex normally sells cable
under long-term multi-million dollar contracts, and the amount of its backlog as
of any date is affected by contract issuance for major systems and by timing of
completion of such underwater communications cable systems.
Sales to agencies of the United States government or for governmental use
have been significant for Earth Tech, but are not significant for the Company as
a whole.
PROPERTIES
The Company's operations are conducted in facilities throughout the world
aggregating some 30 million square feet of floor space, of which approximately
19 million square feet is owned and approximately 11 million square feet is
leased. These facilities house manufacturing and warehousing operations as well
as sales, engineering and administrative offices.
The Company's Disposable and Specialty Products group has manufacturing
facilities at locations in North America, the United Kingdom, Germany, Mexico,
China, Thailand and Malaysia. 7 million square feet is owned and 3 million
square feet is leased.
Within Fire and Safety Services, the fire protection contracting and
service business operates through a network of offices located in North America,
the United Kingdom, Ireland, France, Spain, Belgium, the Netherlands, Germany,
Italy, Austria, Hungary, Switzerland, Denmark, Norway, Sweden, United Arab
Emirates, Saudi Arabia, Australia, New Zealand, Hong Kong, Singapore, Taiwan,
Malaysia, Thailand, Vietnam and Indonesia. Manufacturing of fire protection
components occurs in North America, the United Kingdom, Germany, Australia, New
Zealand and Malaysia. The environmental services business operates through a
network of offices throughout North America. The Company owns 2 million square
feet and leases 5 million square feet.
Flow Control products are manufactured at locations in North America, the
United Kingdom, Germany, Switzerland, Spain and Malaysia. The Company
distributes products in North America through a branch distribution network and
5 regional distribution centers. The Company also stocks and sells products
through warehouse and distribution centers in the Netherlands, the United
Kingdom, Germany, France, Australia, New Zealand and Singapore. The Company owns
8 million square feet and leases 4 million square feet.
Electrical and Electronic Components has manufacturing locations in the
United States. The Company owns 1 million square feet and leases 0.1 million
square feet.
In the opinion of management, the Company's properties and equipment
generally are in good operating condition and are adequate for its present
needs. The Company does not anticipate difficulty in renewing existing leases as
they expire or in finding alternative facilities. See Notes to Consolidated
Financial Statements for a description of the Company's rental obligations.
RESEARCH AND DEVELOPMENT
The amounts expended for company sponsored research and development were
$32.9 million, $32.9 million and $32.0 million during fiscal 1997, 1996 and
1995, respectively. Customer funded research and development expenditures were
$0.5 million, $0.6 million and $1.4 million in fiscal 1997, 1996 and 1995,
respectively.
Approximately 340 full-time scientists, engineers and other technical
personnel are engaged in product research and development activities.
Research activity in fire and safety services and flow control products is
related to improvements in hydraulic design which controls the motion of fluids
resulting in new sprinkler devices and flow control products. Activity at
Simplex involves the continuing design and development of the processes for the
next generation of underwater fiber optic cable with AT&T, Inc. Research and
development activity at the
9
<PAGE> 11
specialty packaging companies involves new product applications while Allied and
the Printed Circuit Group are principally involved with process development.
Kendall focuses on acquiring rights to new products and technologies to
complement existing product lines and applying expertise to refine and
successfully commercialize such products and technologies.
RAW MATERIALS
The Company is one of the largest buyers of steel and of plastic resin in
the United States. Other principal materials include scrap iron of various types
and grades, copper, brass, plastic, polyethylene resin and film, polypropylene,
electronic components, chemicals and additives, thin and flexible copper clad
materials, paper, ink, foil, adhesives, cloth, wax, pulp, cotton and latex. A
portion of Fire and Safety Services and Flow Control Products' materials,
principally certain valves and fittings, are purchased for distribution or for
installation in fire protection systems. Materials are purchased both in the
United States and abroad from a large number of independent sources. There have
been no shortages in materials which have had a material adverse effect on the
Company's business.
PATENTS AND TRADEMARKS
The Company owns a number of patents (principally relating to healthcare
and specialty products, fire protection devices, flow control products, pipe and
tubing manufacture, cable manufacture) and trademarks, and is a licensee under a
number of patents. Although these have been of value and are expected to
continue to be of value in the future, in the opinion of management, the loss of
any single patent or group of patents would not materially affect the conduct of
the business in any of the Company's segments. The patents and licenses have
remaining lives of from one to seventeen years. Kendall sells certain products
under tradenames owned by its suppliers and packages certain products under
customer trademarks and labels.
EMPLOYEES
The Company employed approximately 51,400 persons at June 30, 1997, of whom
approximately 49% were employed outside of North America. The Company has
collective bargaining agreements with labor unions covering approximately 7,100
employees at certain of its domestic operations and 6,200 employees in its
European and Asia-Pacific businesses. While the Company believes that its
relations with the labor unions and with its employees are generally
satisfactory, a number of local unions affiliated with the United Association of
Plumbers and Pipefitters, representing 64% of Grinnell Fire Protection North
American union employees, are on strike. See discussion under "Fire and Safety
Services" above.
ENVIRONMENTAL MATTERS
Tyco makes a substantial effort to operate its facilities in compliance
with federal, state and local laws relating to the protection of the
environment. Compliance has not had and is not expected to have a material
adverse effect upon the capital expenditures, earnings or competitive position
of the Company.
The Company believes that, consistent with applicable laws and regulations,
it exercises due care and takes appropriate precautions in the management of
wastes. The Company has received notification from the U.S. Environmental
Protection Agency and certain state environmental agencies that conditions at a
number of sites where hazardous wastes were disposed of by the Company and other
persons require cleanup and other possible remedial action.
The Company also has a number of projects underway at several of its
manufacturing facilities in order to comply with environmental laws. In
addition, the Company remains responsible for certain environmental issues at
manufacturing locations sold by the Company. These projects relate to a variety
of activities, including solvent and metal contamination clean up, oil spill
containage and clean up, containment area upgrades, feasibility studies and
equipment upgrades and replacement. These projects, some of which are voluntary
and some are required under applicable law, involve both remediation expenses
and capital improvements.
10
<PAGE> 12
The ultimate cost of site cleanup is difficult to predict given the
uncertainties regarding the extent of the required cleanup, the interpretation
of applicable laws and regulations and alternative cleanup methods. Based upon
the Company's experience with the foregoing environmental matters, the Company
has concluded that there is at least a reasonable possibility that remedial
costs will be incurred with respect to these issues in an aggregate amount in
the range of $9.8 million to $38.0 million. At June 30, 1997 the Company has
concluded that the most probable amount which will be incurred within this range
is $17.8 million and such amount is included in the caption "accrued expenses"
in the accompanying consolidated balance sheet. Based upon information available
to the Company, at those sites where there has been an allocation of the
liability for cleanup costs among a number of parties, including the Company,
and such liability could be joint and several, management believes it is
probable that other responsible parties will fully pay the cost allocated to
them, except with respect to one site for which the Company has assumed that one
of the identified responsible parties will be unable to pay the cost apportioned
to it and that such party's cost will be reapportioned among the remaining
responsible parties. In view of the Company's financial position and reserves
for environmental matters of $17.8 million, the Company has concluded that its
payment of such estimated amounts will not have a material adverse effect on its
consolidated financial position or results of operations or liquidity.
ITEM 2. PROPERTIES
See "Business -- Properties" for information relating to Tyco's owned and
leased property.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings. See also the discussions
under Item 1 -- Environmental Matters, and Footnote 7 to the Consolidated
Financial Statements -- Income Taxes.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information required by this item is omitted pursuant to General
Instruction I (2)(c) of Form 10-K.
11
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's Common Stock was listed on the New York Stock Exchange prior
to the merger with ADT Limited. The quarterly high and low sales prices of the
Common Stock and the quarterly dividends per share declared on the Common Stock
were as follows: (The prices and dividends below have been restated to reflect a
two-for-one stock split effected in the form of a stock dividend which was
distributed on November 14, 1995.)
<TABLE>
<CAPTION>
FISCAL 1997 FISCAL 1996
------------------------------------ ------------------------------------
MARKET PRICE RANGE MARKET PRICE RANGE
--------------------- DIVIDEND --------------------- DIVIDEND
QUARTER HIGH LOW PER SHARE HIGH LOW PER SHARE
- --------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
First $44.8750 $35.5000 $.05 $31.6250 $26.6875 $.05
Second 56.0000 42.8750 .05 35.6250 29.5000 .05
Third 62.0000 51.7500 .05 39.2500 32.3750 .05
Fourth 71.8750 54.0000 .05 41.3750 35.1250 .05
---- ----
$.20 $.20
==== ====
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is omitted pursuant to General
Instruction I(2)(a) of Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS
Management's Discussion and Analysis of Financial Condition and Operating
Results appears on pages 39 to 41 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and schedules are filed as part of this
Annual Report:
Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheets - June 30, 1997 and 1996
Consolidated Statements of Income for each of the three years in the period
ended June 30, 1997
Consolidated Statements of Shareholders' Equity for each of the three years
in the period ended June 30, 1997
Consolidated Statements of Cash Flows for each of the three years in the
period ended June 30, 1997
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Report of Independent Accountants on Financial Statement Schedule
Schedule II -- Valuation and Qualifying Accounts
All other financial statements and schedules have been omitted since the
information required to be submitted has been included in the financial
statements and related notes or because they are either not applicable or not
required under the rules of Regulation S-X.
See Notes to Consolidated Financial Statements for Summarized Quarterly
Financial Data (unaudited).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
12
<PAGE> 14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is omitted pursuant to General
Instruction I (2)(c) of Form 10-K.
ITEM 11. MANAGEMENT REMUNERATION
The information required by this item is omitted pursuant to General
Instruction I (2)(c) of Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is omitted pursuant to General
Instruction I (2)(c) of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is omitted pursuant to General
Instruction I (2)(c) of Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K
(a) (1) and (2) Financial Statements and Schedules -- see Item 8.
(a) (3) Listing of Exhibits.
(3) Articles of Organization and Bylaws.
i) Articles of Organization. (Incorporated by reference to
Form 10-K for the year ended May 31, 1987.)
ii) Bylaws. (Incorporated by reference to Form 10-K for the
year ended June 30, 1996.)
(4) Instruments defining the rights of security holders, including
indentures.
a) Rights of common shareholders and preferred shareholders
are defined in the Articles of Organization.
b) Action to Elect to Opt-Out of Requirement for Staggered
Board of Directors Terms. (Incorporated by reference to
Form 10-K for the year ended June 30, 1991.)
c) Indenture dated April 30, 1992 between Tyco Laboratories,
Inc. and Security Pacific National Trust Company (New
York). (Incorporated by reference to Form 10-Q for the
period ended March 31, 1992.)
d) First Supplemental Indenture dated April 30, 1992 between
Tyco Laboratories, Inc. and Security Pacific National Trust
Company (New York). (Incorporated by reference to Form 10-Q
for the period ended March 31, 1992.)
e) Second Supplemental Indenture, dated as of March 8, 1993,
between Tyco Laboratories, Inc. and BankAmerica National
Trust Company, as Trustee. (Incorporated by reference to
Form 8-K filed on March 8, 1993.)
(10) Material Contracts.
Purchase Agreement dated May 28, 1990, as amended, for the purchase of
substantially all the fire protection systems and related businesses conducted
by Wormald International Limited. (Incorporated by reference to Form 8-K dated
August 17, 1990.)
1978 Restricted Stock Ownership Plan for Key Employees. (Incorporated by
reference to Shareholders' Proxy Statement for Annual Meeting of Shareholders on
November 21, 1978.)
13
<PAGE> 15
1981 Key Employee Loan Program. (Incorporated by reference to Form 10-K
for the year ended May 31, 1982.)
1983 Key Employee Loan Program. (Incorporated by reference to Form 10-K
for the year ended May 31, 1983.)
1983 Restricted Stock Ownership Plan for Key Employees. (Incorporated by
reference to Shareholders' Proxy Statement for Annual Meeting of Shareholders on
October 18, 1983.)
1983 Key Employee Loan Program, as amended December 9, 1993 (Incorporated
by reference to Form 10-K for the year ended June 30, 1994.)
Tyco Incentive Compensation Plan. (Incorporated by reference to Form 10-K
for the year ended June 30, 1994.)
Agreement and Plan of Merger, dated as of July 13, 1994, by and among the
Company, T Acquisition Corp. and Kendall International, Inc. (Incorporated by
reference to Form 8-K filed July 26, 1994).
1994 Restricted Stock Ownership Plan for Key Employees. (Incorporated by
reference to Shareholders' Proxy Statement for Annual Meeting of Shareholders on
October 19, 1994.)
Tyco International Ltd. Supplemental Executive Retirement Plan
(Incorporated by reference to Form 10-K for the year ended June 30, 1995).
364-Day Credit Agreement, Five-Year Credit Agreement, and Bridge Credit
Agreement, each dated as of June 27, 1997. (Filed herewith.)
Parent Guarantee Agreement dated as of July 2, 1997. (Filed herewith.)
(11) Earnings Per Share Computation. (Filed herewith.)
(21) Subsidiaries of the registrant. (Omitted pursuant to General
Instruction I(2)(b) of Form 10-K.)
(27) Financial Data Schedule (Filed herewith.)
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K on June 25, 1997 to put on file a
revised opinion of counsel to replace Exhibit 8.1 in the ADT Limited ("ADT")
Registration Statement on Form S-4 relating to the issuance of common shares of
ADT in the merger of Limited Apache, Inc., a subsidiary of ADT, and Tyco.
14
<PAGE> 16
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.
TYCO INTERNATIONAL(US)INC.
By /s/ MARK H. SWARTZ
--------------------------------------------
MARK H. SWARTZ
VICE PRESIDENT-CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
Date: September 29, 1997
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ L. DENNIS KOZLOWSKI Chairman of the Board, Chief
- ----------------------------------- Executive Officer, President
L. DENNIS KOZLOWSKI and Director (Principal
Executive Officer)
/s/ JOSHUA M. BERMAN Director
- -----------------------------------
JOSHUA M. BERMAN
/s/ RICHARD S. BODMAN Director
- -----------------------------------
RICHARD S. BODMAN
/s/ JOHN F. FORT Director September 29, 1997
- -----------------------------------
JOHN F. FORT
/s/ STEPHEN W. FOSS Director
- -----------------------------------
STEPHEN W. FOSS
/s/ RICHARD A. GILLELAND Director
- -----------------------------------
RICHARD A. GILLELAND
/s/ PHILIP M. HAMPTON Director
- -----------------------------------
PHILIP M. HAMPTON
/s/ MARK H. SWARTZ Vice President -- Chief
- ----------------------------------- Financial Officer
MARK H. SWARTZ
/s/ FRANK E. WALSH, JR. Director
- -----------------------------------
FRANK E. WALSH, JR.
</TABLE>
15
<PAGE> 17
[THIS PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Tyco International Ltd.:
We have audited the consolidated balance sheets of Tyco International (US)
Inc. (the "Company", formerly known as Tyco International Ltd.) as of June 30,
1997 and 1996 and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended June 30,
1997. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Notes 1 and 17, on July 2, 1997 subsequent to
the balance sheet date, the Company merged with and became a wholly owned
subsidiary of ADT Limited (subsequently renamed Tyco International Ltd.).
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tyco
International (US) Inc. as of June 30, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 25, 1997
17
<PAGE> 19
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
AT JUNE 30 (IN THOUSANDS EXCEPT SHARE DATA) 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................. $ 170,616 $ 69,404
Receivables, less allowance for doubtful accounts of $62,400 in 1997
and $36,672 in 1996................................................. 1,045,915 688,741
Contracts in process.................................................. 131,895 130,473
Inventories........................................................... 849,626 608,526
Deferred income taxes................................................. 139,152 126,282
Prepaid expenses...................................................... 109,320 72,098
---------- ----------
2,446,524 1,695,524
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET.................................... 1,020,457 725,742
GOODWILL AND OTHER INTANGIBLE ASSETS.................................. 2,106,900 1,232,617
REORGANIZATION VALUE IN EXCESS OF IDENTIFIABLE ASSETS................. 96,179 102,591
DEFERRED INCOME TAXES................................................. 58,183 69,823
OTHER ASSETS.......................................................... 160,086 127,639
---------- ----------
TOTAL ASSETS.......................................................... $5,888,329 $3,953,936
========== ==========
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt................ $ 26,037 $ 127,822
Accounts payable...................................................... 680,805 470,819
Accrued expenses...................................................... 764,426 506,270
Contracts in process -- billings in excess of costs................... 139,019 89,640
Income taxes.......................................................... 113,319 84,196
Deferred income taxes................................................. 11,659 13,063
---------- ----------
1,735,265 1,291,810
---------- ----------
LONG-TERM DEBT........................................................ 919,308 511,622
OTHER LIABILITIES..................................................... 157,451 192,839
DEFERRED INCOME TAXES................................................. 24,728 19,226
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 2,000,000 shares authorized; none
outstanding -- --
Common stock, $.50 par value, 500,000,000 shares authorized;
168,407,245 shares outstanding in 1997 and 152,977,282 shares
outstanding in 1996, net of reacquired shares of 12,967,121 in 1997
and 16,024,221 in 1996 (at cost).................................... 84,203 76,488
Capital in excess of par value, net of deferred compensation of
$26,891 in 1997 and $11,500 in 1996................................. 1,412,041 627,985
Currency translation adjustment....................................... (100,395) (34,571)
Retained earnings..................................................... 1,655,728 1,268,537
---------- ----------
3,051,577 1,938,439
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................ $5,888,329 $3,953,936
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
18
<PAGE> 20
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AT JUNE 30 (IN THOUSANDS EXCEPT PER SHARE DATA) 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES...................................................... $6,597,629 $5,089,828 $4,534,651
---------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales.............................................. 4,751,987 3,692,885 3,313,301
Selling, general and administrative........................ 1,066,991 814,179 735,917
Merger and transaction related costs....................... -- -- 37,170
Interest................................................... 90,762 58,867 63,385
---------- ---------- ----------
5,909,740 4,565,931 4,149,773
---------- ---------- ----------
Income before income taxes and extraordinary item.......... 687,889 523,897 384,878
Income taxes............................................... 268,887 213,750 168,285
---------- ---------- ----------
Income before extraordinary item........................... 419,002 310,147 216,593
Extraordinary item, net of taxes........................... -- -- (2,600)
---------- ---------- ----------
NET INCOME................................................. $ 419,002 $ 310,147 $ 213,993
========== ========== ==========
INCOME PER SHARE:
Income before extraordinary item........................... $ 2.61 $ 2.03 $ 1.43
Extraordinary item, net of taxes........................... $ -- $ -- $ (.02)
Net income................................................. $ 2.61 $ 2.03 $ 1.42
COMMON EQUIVALENT SHARES................................... 160,268 152,862 151,018
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
19
<PAGE> 21
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON CAPITAL IN CURRENCY
FOR THE THREE YEARS ENDED JUNE 30, 1997 STOCK, $.50 EXCESS OF TRANSLATION RETAINED
(IN THOUSANDS) PAR VALUE PAR VALUE ADJUSTMENT EARNINGS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at June 30, 1994...................... $71,084 $ 531,934 $ (40,874) $ 804,882
Net income.................................. 213,993
Dividends................................... (27,462)
Restricted stock grants, cancellations, tax
benefits and other....................... 1,688 15,922
Warrants and options exercised.............. 3,950 45,297
Purchase of treasury stock.................. (356) (18,961)
Currency translation adjustment............. 31,423
Minimum pension liability adjustment........ (6,097)
Amortization of deferred compensation....... 8,258
------- ---------- --------- ----------
Balance at June 30, 1995...................... 76,366 582,450 (9,451) 985,316
Net income.................................. 310,147
Dividends................................... (30,551)
Restricted stock grants, cancellations, tax
benefits and other....................... 6 24,321
Warrants and options exercised.............. 24 513
Purchase of treasury stock.................. (101) (6,769)
Currency translation adjustment............. (25,120)
Minimum pension liability adjustment........ 3,625
Amortization of deferred compensation....... 13,332
Issuance of treasury stock for
acquisition.............................. 193 14,138
------- ---------- --------- ----------
Balance at June 30, 1996...................... 76,488 627,985 (34,571) 1,268,537
Net Income.................................. 419,002
Dividends................................... (32,429)
Restricted stock grants, cancellations, tax
benefits and other....................... 286 2,095
Warrants and options exercised.............. 156 6,960
Currency translation adjustment............. (65,824)
Minimum pension liability adjustment........ 618
Amortization of deferred compensation....... 21,873
Sale of common stock........................ 5,750 639,233
Issuance of treasury stock for
acquisition.............................. 1,537 114,515
Other treasury stock transactions, net...... (14) (620)
------- ---------- --------- ----------
Balance at June 30, 1997...................... $84,203 $1,412,041 $(100,395) $1,655,728
======= ========== ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements.
20
<PAGE> 22
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AT JUNE 30 (IN THOUSANDS) 1997 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................... $ 419,002 $ 310,147 $ 213,993
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary item......................................... -- -- 2,600
Depreciation............................................... 120,261 94,430 88,106
Amortization of intangibles and deferred compensation...... 83,782 53,452 45,056
Deferred income taxes...................................... 62,344 58,487 21,019
Provisions for losses on accounts receivable and inventory
writedowns.............................................. 39,353 31,314 14,819
Changes in assets and liabilities net of effects from
acquisitions and divestitures:
Increase in accounts receivable......................... (107,204) (83,625) (47,181)
(Increase)decrease from accounts receivable sale
program............................................... (60,000) -- 75,000
Decrease(increase)in contracts in process............... 26,414 (24,534) (9,368)
Increase in inventory................................... (117,833) (20,764) (51,396)
(Decrease) increase in accounts payable and accrued
expenses.............................................. (92,331) (26,556) 36,987
Increase (decrease) in income taxes payable............. 20,024 14,215 (43)
Other, net.............................................. (8,431) (13,209) 7,029
----------- --------- ---------
Net cash provided by operating activities.................. 385,381 393,357 396,621
----------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures......................................... (199,286) (123,227) (119,048)
Purchases of businesses, net of cash acquired................ (849,253) (301,410) (130,256)
Net proceeds from sales of acquired assets................... -- 49,768 --
----------- --------- ---------
Net cash used in investing activities...................... (1,048,539) (374,869) (249,304)
----------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt................................. 298,490 -- 144,889
Payments on long-term debt................................... (1,718) (55,716) (181,219)
(Payments) borrowings on lines of credit, net................ (147,524) 77,425 (126,404)
Purchase of treasury stock and warrant....................... (5,309) (6,870) (19,317)
Dividends paid............................................... (31,668) (30,481) (24,335)
Proceeds from exercise of options and warrants............... 7,116 537 49,247
Proceeds from sale of common stock........................... 644,983 -- --
----------- --------- ---------
Net cash provided by (used in) financing activities........ 764,370 (15,105) (157,139)
----------- --------- ---------
Net change in cash and cash equivalents 101,212 3,383 (9,822)
Cash and cash equivalents at beginning of year 69,404 66,021 75,843
----------- --------- ---------
Cash and cash equivalents at end of year $ 170,616 $ 69,404 $ 66,021
=========== ========= =========
SUPPLEMENTARY CASH FLOW DISCLOSURE:
Interest paid................................................ $ 87,824 $ 61,161 $ 64,638
=========== ========= =========
Income taxes paid (net of refunds)........................... $ 164,734 $ 99,874 $ 97,025
=========== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
21
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -- The consolidated financial statements include the
accounts of Tyco International (US)Inc.("Tyco" or the "Company", formerly known
as Tyco International Ltd.) and its subsidiaries. As described more fully in
Note 2, on October 19, 1994 a wholly-owned subsidiary of Tyco merged with
Kendall International, Inc. ("Kendall"). The merger was accounted for under the
pooling of interests method of accounting and these consolidated financial
statements reflect the combined financial position, operating results and cash
flows of Tyco and Kendall as if they had been combined for all periods
presented.
As more fully described in Note 17, subsequent to June 30, 1997 the Company
completed several mergers and an acquisition, including a merger with ADT
Limited which was consummated on July 2, 1997. These financial statements
reflect only the historical accounts of Tyco as of and for the period ended June
30, 1997. No adjustment or restatement has been reflected for the transactions
described in Note 17.
Cash equivalents -- All highly liquid investments purchased with a maturity
of three months or less are considered to be cash equivalents.
Inventories and Contracts -- Inventories are recorded at the lower of cost
(first-in, first-out) or market.
Contract sales for installation of fire protection systems and other
construction related projects are recorded on the percentage-of-completion
method. Profits recognized on contracts in process are based upon estimated
contract revenue and related cost at completion. Revisions in cost estimates as
contracts progress have the effect of increasing or decreasing profits in the
current period. Provisions for anticipated losses are made in the period in
which they first become determinable. Sales of underwater cable systems are also
recorded on the percentage-of-completion method.
Accounts receivable include amounts billed under retainage provisions for
fire protection contracts. Retention balances of $29.3 million at June 30, 1997
which become due upon contract completion and acceptance are expected to be
substantially collected during fiscal 1998.
Property, Plant and Equipment -- Property, plant and equipment are
principally recorded at cost. Maintenance and repair expenditures are charged to
expense when incurred. The straight-line method of depreciation is used over the
estimated useful lives of the related assets, which range from 1 to 50 years for
buildings, 2 to 25 years for machinery and equipment and 1 to 50 years for
leasehold improvements.
Goodwill and Other Intangible Assets -- Goodwill is being amortized on a
straight-line basis over periods up to 40 years. Accumulated amortization
amounted to $219.6 million at June 30, 1997 and $169.1 million at June 30, 1996.
Impairment of goodwill, if any, is measured on the basis of whether anticipated
undiscounted operating cash flows generated by the acquired businesses will
recover the recorded goodwill balances over the remaining amortization period.
At June 30, 1997 and 1996, no impairment of goodwill was indicated.
Other intangible assets include patents, trademarks and other items, which
are being amortized on a straight line basis over lives ranging from 2 to 30
years. At June 30, 1997 and 1996, accumulated amortization amounted to $25.4
million and $20.4 million, respectively.
Reorganization Value in Excess of Identifiable Assets -- Reorganization
value is being amortized using the straight line method over 20 years.
Accumulated amortization amounted to $36.0 million and $29.6 million at June 30,
1997 and 1996, respectively.
Research and Development -- Research and development expenditures are
expensed when incurred.
Translation of Foreign Currency -- Assets and liabilities of the Company's
foreign subsidiaries, other than those operating in highly inflationary
environments, are translated into U.S. dollars using year-end exchange rates.
Revenues and expenses of foreign subsidiaries are translated at the average
exchange rates effective during the year. Foreign currency translation gains and
losses are included as a separate component of shareholders' equity. For
subsidiaries operating in highly inflationary environments, inventories and
property, plant and equipment, including related expenses, are translated at the
rate of exchange in effect on
22
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the date the assets were acquired, while other assets and liabilities are
translated at year-end exchange rates. Translation adjustments for these
operations are included in net income.
Gains and losses resulting from foreign currency transactions, the amounts
of which are not significant, are included in net income.
Interest Rate Swaps, Currency Options and Other Contracts -- The Company
enters into a variety of interest rate swaps, currency options, and
crosscurrency swaps in its management of interest costs and foreign currency
exposures.
Interest rate swaps, which hedge interest rates on certain indebtedness,
involve the exchange of fixed and floating rate interest payment obligations
over the life of the related agreement without the exchange of the notional
payment obligation. The differential to be paid or received is accrued as
interest rates change and is recognized over the life of the agreement as an
adjustment to interest expense.
Currency options, acquired for the purpose of hedging foreign operating
income generally for periods not exceeding twelve months, are marked to market
with any realized and unrealized gains or losses reflected in selling, general
and administrative expense. Under the Company's cross-currency swap, which
hedges certain net foreign investments, changes in valuation are recorded in the
currency translation adjustment account. The interest differentials from this
swap are recorded in interest expense.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported periods. Significant estimates in these financial statements
include allowances for doubtful accounts receivable, net realizable value of
inventories, estimated contract revenues and related costs, environmental
liabilities and tax valuation reserves. Actual results could differ from those
estimates.
Income Per Share -- Net income per share is calculated on the basis of the
weighted average number of shares outstanding plus common equivalent shares to
reflect stock options and warrants using the treasury stock method, based on the
number of shares outstanding prior to the merger with ADT Limited.
Accounting Pronouncements -- In February 1997, the Financial Accounting
Standards Board (the "FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share" which is effective for fiscal years
ending after December 31, 1997, including interim periods. Earlier adoption is
not permitted. However, the statement permits disclosure of pro forma earnings
per share amounts computed under SFAS 128 in the notes to the financial
statements in periods prior to adoption. The statement requires restatement of
all prior period earnings per share data presented after the effective date.
SFAS 128 specifies the computation, presentation and disclosure requirements for
earnings per share and is substantially similar to the standards recently issued
by the International Accounting Standards Committee entitled International
Accounting Standards, Earnings Per Share. The Company will adopt SFAS 128 in
fiscal 1998 and has not yet determined its impact.
In June 1997, the FASB issued two additional statements. SFAS 130,
"Reporting Comprehensive Income" and SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information" are both effective for years beginning after
December 15, 1997. Adoption of these standards are not expected to impact the
financial results of the Company.
2. THE KENDALL MERGER
On October 19, 1994, a wholly-owned subsidiary of Tyco merged with Kendall.
Shareholders of Kendall received 1.29485 shares of Tyco common stock for each
share of Kendall common stock. The transaction qualified for pooling of
interests accounting treatment, which is intended to present as a single
interest common shareholder interests which were previously independent.
Accordingly, the historical financial
23
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
statements for periods prior to the consummation of the combination are restated
as though the companies had been combined during such periods. Revenues and net
income for the quarter ended September 30, 1994 (the most recent interim period
prior to the pooling) were $827.6 million and $32.6 million, respectively, for
Tyco and $226.6 million and $20.7 million, respectively, for Kendall.
All fees and expenses related to the merger and to the integration of the
combined companies have been expensed as required under the pooling of interests
accounting method. Such fees and expenses amounted to $37.2 million ($31.2
million after-tax) in fiscal 1995. The charge includes $18.6 million for
financial advisory, legal, accounting and other direct transaction fees, $14.9
million for payments under severance and employment agreements and other costs
associated with certain compensation plans, and $3.7 million for other
acquisition related and integration costs.
3. ACQUISITIONS AND DIVESTITURES
During fiscal 1997 the Company acquired companies in each of its business
segments for an aggregate of $1.12 billion, including $849.3 million in cash,
approximately 3.1 million shares of the Company's stock valued at $116.1
million, and the assumption of approximately $155.0 million in debt. The cash
portion of the acquisitions was provided by cash on hand and borrowings under
the Company's credit agreement and uncommitted lines of credit. Each of the
acquisitions was accounted for as a purchase and the results of operations of
the acquired companies were included in the consolidated results of the Company
from their respective acquisition dates. As a result of the acquisitions,
approximately $923.6 million in goodwill was recorded by the Company, which
reflects, for each acquisition, the excess of the purchase price, liabilities
assumed and additional purchase liabilities recorded over the fair value of
assets acquired. Additional purchase liabilities included approximately $30.3
million for transaction and other direct costs, $52.8 million for severance
costs, and $28.2 million for costs associated with the shutdown and
consolidation of certain acquired facilities. At June 30, 1997, liabilities for
approximately $4.4 million in transaction and other costs, $26.7 million in
severance costs and $20.3 million for facility related costs remained on the
balance sheet.
The following unaudited pro forma data summarize the results of operations
for the periods indicated as if these acquisitions had been completed on July 1,
1995, the beginning of the 1996 fiscal year. The pro forma data give effect to
actual operating results prior to the acquisitions and adjustments to interest
expense, goodwill amortization and income taxes. These pro forma amounts do not
purport to be indicative of the results that would have actually been obtained
if the acquisitions had occurred on July 1, 1995 or that may be obtained in the
future. The pro forma data do not give effect to acquisitions completed
subsequent to June 30, 1997. See Note 17 to the Consolidated Financial
Statements.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-----------------------------
1997 1996
---------- ----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Sales................................................... $6,837,638 $6,445,177
========== ==========
Net income.............................................. $ 395,446 $ 147,757
========== ==========
Net income per share............................... $ 2.46 $ 0.95
========== ==========
</TABLE>
During fiscal 1996, the Company acquired companies in its Disposable and
Specialty Products, Fire and Safety Services, and Flow Control Products segment
for an aggregate of $315.7 million, including $301.4 million in cash and 386,000
shares of the Company's common stock valued at $14.3 million. The cash
acquisitions were made utilizing cash on hand as well as borrowings under the
Company's uncommitted lines of credit. Each of the acquisitions was accounted
for as a purchase and the results of operations of the acquired companies were
included in the consolidated results of Tyco from their respective acquisition
dates. As a result of the acquisitions, approximately $255 million in goodwill
was recorded by the Company, which reflects the adjustments necessary to
allocate the individual purchase prices to the fair value of assets acquired,
liabilities assumed and additional purchase liabilities recorded. Additional
purchase liabilities recorded included approximately $19 million for severance
and related costs and $6 million for costs associated with the shut
24
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
down and consolidation of certain acquired facilities. At June 30, 1997
liabilities for approximately $6.8 million in severance costs and $2.9 million
for facility related costs remained on the balance sheet. The Company expects to
complete its termination of employees and consolidation of facilities in fiscal
1998.
On December 29, 1995, the Company sold certain assets, including trademarks
and patents, of the Curad(R) and Futuro(R) consumer healthcare products business
owned by its Kendall subsidiary. Under the agreements, Kendall will continue to
manufacture certain Curad(R) and Futuro(R) products for the buyer under
long-term supply agreements. The Company received net cash proceeds of $49.8
million on the sale of the brand names and certain domestic assets. The Company
will continue to receive other payments, including payments under royalty and
non-compete agreements, through fiscal 2001. The Company has also granted to the
buyer options to acquire certain additional trademarks, patents and other
international assets. The gain on the sale was not material to the Company's
results of operations.
During fiscal 1995, the Company acquired five flow control products
companies, three disposable and specialty products companies and two European
fire and safety services companies for an aggregate of $130.3 million in cash.
4. INDEBTEDNESS
Long-term debt is as follows:
<TABLE>
<CAPTION>
AT JUNE 30
--------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Credit agreement................................................ $ -- $ --
Uncommitted lines of credit..................................... -- 91,000
8.125% public notes due 1999.................................... 144,947 144,924
6.5% public notes due 2001...................................... 298,645 --
6.375% public notes due 2004.................................... 104,465 104,386
9.5% public debentures due 2022................................. 199,608 199,592
8.0% public debentures due 2023................................. 49,961 49,960
Other........................................................... 147,719 49,582
-------- --------
Total debt...................................................... 945,345 639,444
Less current portion............................................ 26,037 127,822
-------- --------
Long-term debt.................................................. $919,308 $511,622
======== ========
</TABLE>
Under the Company's credit agreement with a group of commercial banks, the
Company had the right to borrow $300 million or a portion thereof until December
2001 for its general corporate purposes. The weighted average interest rate for
the year ended June 30, 1997 was 5.74%.
In June 1997, the Company renegotiated its credit agreement and increased
it to $1.75 billion giving it the right to borrow up to $500 million until
December 1997, up to $750 million until June 1998 and up to $500 million until
June 2002. The principal amounts then outstanding will be due and payable at
those times. Interest payable on borrowings is variable based upon the Company's
option of selecting a Eurodollar rate plus margins ranging from 0.175% to
0.245%, a certificate of deposit rate plus margins ranging from 0.30% to 0.37%
or a base rate, as defined. In July 1997, the Company borrowed $600 million
under the new credit agreement to partially fund the acquisition of AT&T's
submarine systems business. See Note 17 to the Consolidated Financial
Statements. Also in July 1997, the Company borrowed under the new credit
agreement to fund the debt tenders discussed below. The weighted average
interest rate for these borrowings was 5.93%.
The Company's uncommitted lines of credit are borrowings from commercial
banks on an "as offered" basis. The borrowings and repayments occur daily and
contain no specific terms other than due dates and interest rates. The due dates
generally range from overnight to 90 days, and interest rates approximate those
25
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
available under the Company's credit agreement. The weighted average interest
rate was 5.66% for the year ended June 30, 1997.
In October 1996, the Company issued $300 million principal amount of 6.5%
notes due 2001. The net proceeds were used to redeem debt assumed with the
acquisition of Carlisle Plastics as well as to reduce certain amounts
outstanding under the Company's credit agreement and uncommitted lines of
credit.
In July 1997, the Company tendered for its $145 million 8.125% public notes
due 1999 and its $200 million 9.5% public debentures due 2022. 92.8% of the
8.125% notes and 75.5% of the 9.5% debentures were tendered. The Company paid an
aggregate amount, including accrued interest, of approximately $329.0 million to
the noteholders, which was financed from the new credit agreement discussed
above. In connection with the tender, the Company recorded an after-tax charge
of approximately $26.5 million, net of related income tax benefit of $14.3
million, representing unamortized debt issuance fees and the premium paid, to be
reported as an extraordinary loss during the period ended September 30, 1997.
In connection with the refinancing of Kendall's subordinated notes, the
Company recorded a charge of $4.3 million ($2.6 million after-tax), representing
unamortized debt issuance fees and a call premium, as an extraordinary loss
during fiscal 1995.
At June 30, 1997, the Company had an interest rate swap agreement with a
financial institution having a total notional amount of $50 million, which
effectively converts fixed rate debt to variable rate debt. Under this
agreement, the Company will receive payments at an average fixed rate of 5.555%
and will make payments based on six month LIBOR, which, at June 30, 1997, was
5.91%. This agreement expires in March 1998. The impact of the Company's
interest rate swap activities on its weighted average borrowing rate was a
decrease of 0.1%, a decrease of 0.1% and an increase of 0.1% for fiscal 1997,
1996 and 1995, respectively. The impact on reported interest was a reduction of
$1.5 million, a reduction of $0.5 million and an increase of $1.0 million for
fiscal 1997, 1996 and 1995, respectively.
Under its various loan and credit agreements the Company is required to
meet certain covenants, none of which is considered restrictive to the
operations of the Company.
The aggregate amounts of total debt maturing during the next five fiscal
years are as follows: $26.0 million in fiscal 1998, $9.5 million in fiscal 1999,
$250.7 million in fiscal 2000, $1.0 million in fiscal 2001 and $300.1 million in
fiscal 2002.
5. SALE OF ACCOUNTS RECEIVABLE
The Company has an agreement under which it sells a defined pool of trade
accounts receivable to a limited purpose subsidiary of the Company. The
subsidiary, a separate corporate entity, owns all of its assets and sells
participating interests in such accounts receivable to creditors who, in turn,
purchase and receive ownership and security interests in those assets. As
collections reduce accounts receivable included in the pool, the Company sells
new receivables. The maximum permitted by the agreement was $225 million at June
30, 1997 and at June 30, 1996 and was increased to $300 million in July 1997.
The limited purpose subsidiary has the risk of credit loss on the receivables
and, accordingly, the full amount of the allowance for doubtful accounts has
been retained on the Company's consolidated balance sheet. At June 30, 1997,
$165.0 million was utilized under the program. At June 30, 1996 the $225 million
available under the program was fully utilized. The proceeds from the sales were
used to reduce borrowings under uncommitted lines of credit and are reported as
operating cash flows in the Company's consolidated statement of cash flows. The
proceeds of sale are less than the face amount of accounts receivable sold by an
amount that approximates the purchaser's financing costs of issuing its own
commercial paper backed by these accounts receivable. The discount from the face
amount represented a loss on the sale of receivables of $12.3 million, $12.6
million, and $8.2 million during the years ended June 30, 1997, 1996 and 1995,
respectively, and has been included in selling, general and administrative
expense in the Company's consolidated statement of income. The Company, as
servicing
26
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
agent for the purchaser, retains collection and administrative responsibilities
for the participating interests in the defined pool.
6. FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash in banks,
temporary investments, accounts receivable and debt. The Company also has
currency options (notional amount of $101.5 million), as well as interest rate
swaps. At June 30, 1997 the fair value of interest rate swaps was a $0.2 million
liability, ($0.6 million asset at June 30, 1996) and the fair value of long-term
debt was approximately $962.1 million (book value of $919.3 million), based on
current interest rates. The fair value of financial instruments included in
working capital approximated book value.
None of the Company's financial instruments represent a concentration of
credit risk as the Company deals with a variety of major banks worldwide and its
accounts receivable are spread among a number of major industries, customers and
geographic areas. None of the Company's off-balance sheet financial instruments
would result in a significant loss to the Company if the counterparty failed to
perform according to the terms of its agreement.
7. INCOME TAXES
Provisions for income taxes and the differences between the provisions at
the United States federal statutory rate and the amounts provided are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision at statutory rate.................................... $240,761 $183,364 $134,707
State income taxes............................................. 16,345 20,584 15,972
Non-deductible merger and transaction related costs............ -- -- 7,009
Depreciation and amortization under purchase accounting........ 20,108 12,635 11,430
Foreign earnings taxed at different rates...................... 6,335 4,723 6,873
Effect of rate changes......................................... -- -- (3,900)
Research and development and foreign sales corporation
benefits..................................................... (8,150) (5,150) (4,200)
Other.......................................................... (6,512) (2,406) 394
-------- -------- --------
Provision for income taxes..................................... 268,887 213,750 168,285
Deferred provision............................................. (56,789) (52,199) (28,409)
-------- -------- --------
Current provision.............................................. $212,098 $161,551 $139,876
======== ======== ========
</TABLE>
In the normal course, the Company's United States federal income tax
returns are examined by the Internal Revenue Service ("IRS") and, in connection
with such examinations, significant assessments could arise. During fiscal 1995,
the IRS examined the Company's 1991 and 1992 income tax returns. In connection
with such examination, one item is currently under review by the IRS National
Office, which could result in a significant assessment of additional taxes.
Ultimate resolution of this matter is not expected to have a material adverse
effect on the Company's financial position, results of operations or liquidity.
The provisions for fiscal 1997, 1996 and 1995 included $49.7 million, $29.3
million and $21.7 million, respectively, for foreign income taxes. The foreign
component of income before income taxes was $98.4 million, $55.1 million and
$38.7 million, for fiscal 1997, 1996 and 1995, respectively. Generally, no
provision has been made for U.S. or additional foreign income taxes on the
undistributed earnings of foreign subsidiaries as such earnings are expected to
be permanently reinvested. A liability has been recorded for U.S. taxes
attributable to certain undistributed earnings in selected jurisdictions where
repatriation to the U.S. may be desirable. It is not practicable to estimate the
additional taxes related to the permanently reinvested earnings.
27
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The deferred income tax balance sheet accounts result from temporary
differences between the amount of assets and liabilities recognized for
financial reporting and tax purposes. The components of the net deferred income
tax asset are as follows:
<TABLE>
<CAPTION>
AT JUNE 30
----------------------
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accrued liabilities and reserves......................... $ 158,569 $ 123,077
Accrued post-retirement benefit obligation............... 31,312 31,890
Tax loss carryforwards................................... 123,915 164,229
Other.................................................... 4,516 4,237
--------- ---------
318,312 323,433
--------- ---------
Deferred tax liabilities:
Property, plant and equipment............................ (77,309) (77,096)
Contracts................................................ (5,998) (6,861)
Accrued liabilities and reserves......................... (16,506) (17,398)
Other.................................................... (11,002) (11,133)
--------- ---------
(110,815) (112,488)
--------- ---------
Net deferred income tax asset before valuation allowance...... 207,497 210,945
Valuation allowance........................................... (46,549) (47,129)
--------- ---------
Net deferred income tax asset................................. $ 160,948 $ 163,816
========= =========
</TABLE>
As of June 30, 1997 the Company had approximately $170.2 million of net
operating loss carryforwards in certain foreign jurisdictions. Of these, $152.2
million have no expiration, and the remaining $18.0 million will expire in the
years 1998 to 2004. Domestic operating loss carryforwards at June 30, 1997 were
approximately $134.2 million and will expire in the years 2004 to 2010. A
valuation allowance has been provided for operating loss carryforwards that are
not expected to be utilized.
8. KEY EMPLOYEE LOAN PROGRAM
Loans are made to employees under the 1983 Key Employee Loan Program for
the payment of taxes upon the vesting of shares granted under the Company's
Restricted Stock Ownership Plans. The loans are unsecured and bear interest,
payable annually, at a rate which approximates the Company's incremental short-
term borrowing rate. Loans are generally repayable in ten years, except that
earlier payments are required under certain circumstances. Loans under this
program were $18.8 million and $12.3 million at June 30, 1997 and 1996,
respectively.
9. CAPITAL STOCK
During the second quarter of fiscal 1996, the Board of Directors declared a
two-for-one stock split effected in the form of a 100% stock dividend on the
Company's common stock. Per share amounts and share data have been retroactively
adjusted to reflect the stock split.
Treasury Stock
In December 1996 the Company repurchased 100,000 shares for $5.3 million.
In January 1996 the Company repurchased 201,000 shares for $6.9 million. In
April and May 1995 the Company repurchased 435,070 and 297,556 shares
respectively, of its common stock from the President of Kendall at $26.47 and
$26.22 per share, respectively, the shares then fair market value, for an
aggregate purchase price of $19.3 million to provide for required income tax
withholdings as permitted in the underlying Kendall restricted stock grant
agreement. The total cost of reacquired shares at June 30, 1997 and 1996 was
$68.7 million and $92.9 million, respectively.
28
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Restricted Stock
The Company's 1978 Restricted Stock Ownership Plan (the "1978 Plan")
provided for the award of 4,800,000 shares of common stock to key employees
through November 30, 1988. Under the 1978 Plan, 4,773,700 shares were granted,
net of surrenders. The 1983 Restricted Stock Ownership Plan (the "1983 Plan")
provided for the award of 6,800,000 shares of common stock to key employees
through October 18, 1993. Under the 1983 Plan, 5,797,516 shares were awarded,
net of surrenders. The Company's 1994 Restricted Stock Ownership Plan (the "1994
Plan") provides for the award of an initial amount of shares of common stock
plus an amount equal to one-half of one percent of the total shares outstanding
at the beginning of each fiscal year. At June 30, 1997, there were 2,929,134
shares available, of which 1,339,069 shares had been granted. Common shares are
awarded subject to certain restrictions with vesting varying over periods of up
to ten years.
For grants that vest through passage of time, the fair market value of the
shares at the time of the grant is amortized (net of tax benefit) to expense
over the period of vesting. The unamortized portion of deferred compensation
expense is recorded as a reduction of shareholders' equity. For grants which
vest based on certain specified performance criteria, the fair market value of
the shares at the date of vesting is expensed over the period the performance
criteria are measured. Recipients of all restricted shares have the right to
vote such shares and receive dividends. Income tax benefits resulting from the
vesting of restricted shares, including a deduction for the excess, if any, of
the fair market value of restricted shares at the time of vesting over their
fair market value at the time of the grants and from the payment of dividends on
unvested shares are credited to capital in excess of par value. Compensation
expense of $21.9 million, $13.3 million and $8.3 million was recorded for
restricted stock grant vestings during fiscal 1997, 1996 and 1995, respectively.
Kendall had a restricted stock grant agreement that provided for the
issuance of up to 2,000,000 shares of its common stock to its President. As a
result of the Merger, up to 2,589,700 shares of the Company's common stock
became issuable under the agreement. As of June 30, 1995 all shares under the
grant agreement had vested. As discussed above, the Company repurchased 732,626
of such shares. Compensation expense of $0.6 million was recorded for the grant
during fiscal 1995.
Tyco and Subsidiary Stock Option Plans
Kendall maintained a number of stock incentive plans under which its
officers, directors and key employees were granted options and other awards to
purchase common stock, generally at prices equal to at least 100% of the market
price on the date of grant. As a result of the Kendall merger, these options
became exercisable for Tyco common stock. Transactions under these plans during
fiscal 1997, 1996 and 1995 are included in the table below after giving
retroactive effect to the conversion of Kendall shares to Tyco shares at the
Tyco/Kendall merger exchange ratio.
During fiscal 1995 Tyco established a stock option plan under which certain
employees, excluding officers and directors, have been granted options to
purchase common stock at a price equal to fair market value on the date of
grant. The options vest on a pro-rata basis over five years, with 50% becoming
exercisable at the end of the third year and the remaining exercisable at the
end of the fifth year. The Company has reserved 8,000,000 shares of common stock
for issuance under the plan. Grants are for periods generally not in excess of
ten years.
During fiscal 1996 and 1997 Tyco assumed stock options in connection with
certain acquisitions, all of which immediately became exercisable.
29
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Transactions related to the options described above during fiscal 1997,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
AT JUNE 30,
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Shares exercisable............................................ 239,388 238,985 29,264
Weighted average price of exercisable shares.................. $ 36.89 $ 31.82 $ 8.89
Shares available for future grant............................. 3,885,021 4,818,679 4,965,500
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
---------- -----------------
<S> <C> <C>
Outstanding June 30, 1994......................................... 3,112,820 $ 6.94
Granted...................................................... 3,034,500 26.69
Exercised.................................................... (2,963,912) 6.47
Canceled..................................................... (119,644) 18.23
----------
Outstanding June 30, 1995......................................... 3,063,764 26.52
Assumed from acquisitions.................................... 262,070 38.95
Granted...................................................... 433,071 36.59
Exercised.................................................... (22,644) 37.12
Canceled..................................................... (315,955) 30.89
----------
Outstanding June 30, 1996......................................... 3,420,306 28.27
Assumed from acquisitions.................................... 283,036 26.61
Granted...................................................... 1,043,500 55.50
Exercised.................................................... (273,537) 25.06
Canceled..................................................... (118,798) 45.94
----------
Outstanding June 30, 1997......................................... 4,354,507 $ 34.41
==========
</TABLE>
The following table summarizes information about outstanding and
exercisable options at June 30, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------------- -------------------------------
WEIGHTED AVERAGE
RANGE OF NUMBER WEIGHTED AVERAGE REMAINING CONTRACTUAL NUMBER WEIGHTED AVERAGE
EXERCISE PRICE($) OUTSTANDING EXERCISE PRICE($) LIFE-YEARS EXERCISABLE EXERCISE PRICE($)
- ------------------ ----------- ----------------- --------------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
0.00 to 0.22 1,449 0.21 3.06 1,449 0.21
3.13 to 4.60 7,821 4.28 1.45 7,821 4.28
5.04 to 7.21 3,315 5.44 8.01 3,315 5.44
7.60 to 9.90 1,409 9.87 5.35 1,409 9.87
13.85 to 15.20 15,695 15.18 4.91 15,695 15.18
22.53 to 33.13 2,903,144 26.76 7.82 107,439 24.66
34.85 to 52.12 797,960 43.61 8.89 59,481 44.55
54.84 to 63.25 606,396 58.19 9.59 25,461 57.80
93.91 to 105.64 17,318 101.41 3.87 17,318 101.41
--------- ------ ------- ------
4,354,507 34.41 239,388 36.89
========= ====== ======= ======
</TABLE>
30
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Based Compensation
During fiscal 1997 the Company was required to adopt SFAS 123 "Accounting
for Stock Based Compensation" ("SFAS 123"). SFAS 123 allows companies to measure
compensation cost in connection with stock option plans using a fair value based
method, or to continue to use an intrinsic value based method which generally
does not result in a compensation cost. The Company has decided to continue to
use the intrinsic value based method and no compensation cost has been recorded.
Had the fair value based method been adopted consistent with the provisions of
SFAS 123, the Company's pro forma net income and pro forma net income per share
for the years ended June 30, 1997 and 1996 would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------
1997 1996
-------- --------
<S> <C> <C>
Net income-pro forma............................................. $413,089 $309,655
Net income per share - pro forma................................. $ 2.58 $ 2.03
</TABLE>
The estimated weighted average fair value of options granted at fair value
during fiscal 1997 was $17.55 on the date of grant using the option-pricing
model and assumptions referred to below. The estimated weighted average fair
value of options assumed during fiscal 1997 was $18.56.
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions:
<TABLE>
<S> <C>
Expected stock price volatility...................................... 22%
Risk free interest rate.............................................. 5.97%
Expected annual dividends............................................ $0.20 per share
Expected life of options............................................. 4.2 years
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995
and additional awards in the future are anticipated.
Stock Warrants
The Company has outstanding warrants to purchase common stock at per share
exercise prices of $5.97 (the "A Warrants") and $7.97 (the "B Warrants"),
respectively (together, the "Warrants"). The Warrants expire on July 7, 1999.
During Fiscal 1997, 15,229 A Warrants and 8,745 B Warrants were exercised.
During Fiscal 1996, 14,047 A Warrants and 13,312 B Warrants were exercised.
During Fiscal 1995, 2,599,228 A Warrants and 2,719,434 B Warrants were
exercised. At June 30, 1997, 128,550 A Warrants and 87,151 B Warrants were
issued and outstanding.
Dividends
Tyco paid cash dividends of $0.20 per share in fiscal 1997, 1996, and 1995.
10. COMMITMENTS AND CONTINGENCIES
The Company occupies certain facilities under leases that expire at various
dates through the year 2021. Rental expense under these leases and leases for
equipment was $105.1 million, $85.7 million and $71.3 million for fiscal 1997,
1996 and 1995, respectively. At June 30, 1997 the minimum lease payment
obligations under noncancellable leases were as follows: $91.4 million in fiscal
1998, $60.0 million in fiscal 1999, $45.1 million in fiscal 2000, $32.2 million
in fiscal 2001, $22.7 million in fiscal 2002 and an aggregate of $98.6 million
in fiscal years 2003 through 2021.
In the normal course of business, the Company is liable for contract
completion and product performance. In the opinion of management, such
obligations will not significantly affect the Company's financial position or
results of operations.
31
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company is involved in various stages of investigation and cleanup
related to environmental remediation matters at a number of sites. The ultimate
cost of site cleanup is difficult to predict given the uncertainties regarding
the extent of the required cleanup, the interpretation of applicable laws and
regulations and alternative cleanup methods. Based upon the Company's experience
with the foregoing environmental matters, the Company has concluded that there
is at least a reasonable possibility that remedial costs will be incurred with
respect to these sites in an aggregate amount in the range of $9.8 million to
$38.0 million. At June 30, 1997, the Company has concluded that the most
probable amount that will be incurred within this range is $17.8 million, and
such amount is included in the caption "accrued expenses" in the accompanying
consolidated balance sheet. Based upon information available to the Company, at
those sites where there has been an allocation of the liability for cleanup
costs among a number of parties, including the Company, and such liability could
be joint and several, management believes it is probable that other responsible
parties will fully pay the cost allocated to them, except with respect to one
site for which the Company has assumed that one of the identified responsible
parties will be unable to pay the cost apportioned to it and that such party's
cost will be reapportioned among the remaining responsible parties. In view of
the Company's financial position and reserves for environmental matters of $17.8
million, the Company has concluded that its payment of such estimated amounts
will not have a material adverse effect on its financial position, results of
operations or liquidity.
11. RETIREMENT PLANS
The Company has a number of noncontributory defined benefit retirement
plans covering certain of its domestic and foreign employees. The Company's
funding policy is to make annual contributions to the extent such contributions
are tax deductible as actuarially determined. The benefits under the defined
benefit plans are based on years of service and compensation.
The net periodic pension cost for all defined benefit pension plans
includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost......................................... $ 15,960 $ 11,245 $ 12,708
Interest cost........................................ 36,659 29,339 28,675
Actual return on assets.............................. (76,758) (42,709) (40,349)
Net amortization and deferral........................ 34,537 10,255 11,486
-------- -------- --------
Net periodic pension cost............................ $ 10,398 $ 8,130 $ 12,520
======== ======== ========
</TABLE>
32
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Accrued (prepaid) pension cost at June 30, 1997 for defined benefit plans
is as follows:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS TOTAL
------------- ------------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefit obligations:
Vested................................................ $379,351 $112,336 $491,687
Non-vested............................................ 10,578 9,885 20,463
-------- -------- --------
Total............................................ 389,929 122,221 512,150
Effect of future salary increases.......................... 10,922 3,563 14,485
-------- -------- --------
Projected benefit obligations.............................. 400,851 125,784 526,635
Plan assets at fair value.................................. 450,208 58,222 508,430
Plan assets (in excess of) less than projected benefit
obligations.............................................. (49,357) 67,562 18,205
Unrecognized transition asset (liability).................. 319 (810) (491)
Unrecognized prior service cost............................ (2,074) (7,700) (9,774)
Additional minimum liability............................... -- 7,036 7,036
Unrecognized net (loss) gain............................... (16,494) 3,238 (13,256)
-------- -------- --------
Accrued (prepaid) pension cost............................. $(67,606) $ 69,326 $ 1,720
======== ======== ========
</TABLE>
Accrued (prepaid) pension cost at June 30, 1996 for defined benefit plans
is as follows:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS TOTAL
------------- ------------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefit obligations:
Vested................................................ $281,448 $ 93,267 $374,715
Non-vested............................................ 10,112 8,682 18,794
-------- -------- --------
Total............................................ 291,560 101,949 393,509
Effect of future salary increases.......................... 4,243 3,770 8,013
-------- -------- --------
Projected benefit obligations.............................. 295,803 105,719 401,522
Plan assets at fair value.................................. 331,782 53,185 384,967
-------- -------- --------
Plan assets (in excess of) less than projected benefit
obligations.............................................. (35,979) 52,534 16,555
Unrecognized transition asset (liability).................. 9 (856) (847)
Unrecognized prior service cost............................ (1,876) (6,931) (8,807)
Additional minimum liability............................... -- 9,439 9,439
Unrecognized net (loss) gain............................... (16,309) 499 (15,810)
-------- -------- --------
Accrued (prepaid) pension cost............................. $(54,155) $ 54,685 $ 530
======== ======== ========
</TABLE>
Pursuant to the provisions of SFAS 87, "Employers" Accounting for
Pensions," the Company recorded, in other liabilities, an additional minimum
pension liability adjustment of $7.0 million and $9.4 million as of June 30,
1997 and 1996, respectively, representing the amount by which the accumulated
benefit obligation exceeded the fair value of plan assets plus accrued amounts
previously recorded. The additional liability has been offset by an intangible
asset, included in goodwill and other intangible assets, to the extent of
previously unrecognized prior service cost. The amount in excess of previously
unrecognized prior service cost is recorded, net of the related deferred tax
benefit, as a reduction of shareholders' equity in the amount of $1.9 million
and $2.5 million at June 30, 1997 and 1996, respectively.
In fiscal 1997, 1996 and 1995, the Company terminated certain defined
benefit pension plans and distributed the plans' assets to the participants.
Gains and losses resulting from the above were not material.
33
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Of the total plan obligations, 48% relate to domestic plans and 52% relate
to foreign plans. The average discount rate used in determining the actuarial
present value of the projected benefit obligation, weighted in relation to plan
obligations, was 8.0% and 8.0%, respectively, at June 30, 1997 and 1996. The
average rate of increase in future compensation levels was 5.0% at June 30, 1997
and 5.1% at June 30, 1996. The weighted average long-term rate of return on
assets was 9.7% and 10.0%, respectively, at June 30, 1997 and 1996. Plan assets
are invested principally in equity and fixed income instruments.
The Company also has several defined contribution plans. Pension expense
for the defined contribution plans is computed as a percentage of participants'
compensation and was $30.0 million, $23.0 million and $18.0 million for fiscal
1997, 1996 and 1995, respectively. During fiscal 1995, the Company established
an unfunded Supplemental Executive Retirement Plan ("SERP"). This plan is
nonqualified and restores the employer match that certain employees lose due to
Internal Revenue Service limits on eligible compensation under the defined
contribution plans. Expense related to the SERP was $1.6 million, $1.7 million
and $0.4 million in fiscal 1997, 1996 and 1995, respectively. The Company also
participates in a number of multi-employer defined benefit plans on behalf of
certain employees. Pension expense related to multi-employer plans was $1.8
million, $2.0 million and $2.5 million for fiscal 1997, 1996 and 1995,
respectively.
The Company generally does not provide post- retirement benefits other than
pensions for its employees. Certain of the Company's acquired operations provide
these benefits to employees who were eligible at the date of acquisition.
Net periodic post-retirement benefit cost reflects the following
components:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost......................................................... $ 63 $ 359 $ 361
Interest cost........................................................ 4,260 4,358 4,739
Net amortization and deferral........................................ (3,247) (2,844) (2,857)
------- ------- -------
Net periodic post-retirement benefit cost............................ $ 1,076 $ 1,873 $ 2,243
======= ======= =======
</TABLE>
The components of the accrued post-retirement benefit obligation, all of
which are unfunded are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees................................................................. $38,231 $39,578
Fully eligible active plan participants.................................. 13,127 11,134
Other active plan participants........................................... 797 7,706
------- -------
52,155 58,418
Unrecognized prior service benefit......................................... 15,950 17,377
Unrecognized net gain...................................................... 18,121 13,622
------- -------
Accrued post-retirement benefit cost....................................... $86,226 $89,417
======= =======
</TABLE>
For measurement purposes, in fiscal 1997 a 9.6% composite annual rate of
increase in the per capita cost of covered health care benefits was assumed. The
rate was assumed to decrease gradually to 5.0% by the year 2008 and remain at
that level thereafter. The health care cost trend rate assumption may have a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point would increase the
accumulated post-retirement benefit obligation as of June 30, 1997 by $2.5
million and the aggregate of the service and interest cost component of net
periodic post-retirement benefit cost for the year then ended by $0.2 million.
The weighted average discount rate used in determining the accumulated
post-retirement benefit obligation was 7.75%, 8.25% and 7.5% at June 30, 1997,
1996 and 1995, respectively.
34
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In fiscal 1994 the Company amended certain of its post-retirement health
care programs, principally to adjust the cost-sharing provisions. The amendment
resulted in a reduction of the Company's accumulated post-retirement benefit
obligation of $27.8 million, which created an unrecognized prior service
benefit. The unrecognized prior service benefit is being amortized over
approximately 16 years.
12. CONSOLIDATED SEGMENT DATA
Selected information by industry segment is presented below.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED JUNE 30
------------------------------------
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
Disposable and Specialty Products $1,991,829 $1,459,398 $1,386,781
Fire and Safety Services 2,584,552 1,990,865 1,703,412
Flow Control Products 1,454,592 1,158,944 1,014,357
Electrical and Electronic Components 566,656 480,621 430,101
---------- ---------- ----------
$6,597,629 $5,089,828 $4,534,651
========== ========== ==========
Income Before Income Taxes and Extraordinary Item:
Disposable and Specialty Products $ 364,413 $ 291,744 $ 261,154
Fire and Safety Services 198,914 128,136 86,512
Flow Control Products 156,257 114,145 90,368
Electrical and Electronic Components 109,326 88,525 76,397
---------- ---------- ----------
Income from operations 828,910 622,550 514,431
Interest expense (90,762) (58,867) (63,385)
Corporate and other expenses (50,259) (39,786) (66,168)(1)
---------- ---------- ----------
$ 687,889 $ 523,897 $ 384,878
========== ========== ==========
Total Assets:
Disposable and Specialty Products $1,616,307 $1,086,133 $ 843,557
Fire and Safety Services 2,089,446 1,474,476 1,256,526
Flow Control Products 1,482,458 1,045,124 1,030,364
Electrical and Electronic Components 468,183 232,406 165,615
Corporate assets 231,935 115,797 85,399
---------- ---------- ----------
$5,888,329 $3,953,936 $3,381,461
========== ========== ==========
Depreciation and Amortization:
Disposable and Specialty Products $ 63,281 $ 42,511 $ 39,877
Fire and Safety Services 43,091 34,056 31,795
Flow Control Products 56,333 46,194 41,866
Electrical and Electronic Components 16,920 10,985 10,997
Corporate 24,418 14,136 8,627
---------- ---------- ----------
$ 204,043 $ 147,882 $ 133,162
========== ========== ==========
Capital Expenditures:
Disposable and Specialty Products $ 111,017 $ 41,125 $ 46,402
Fire and Safety Services 17,353 29,098 24,429
Flow Control Products 47,969 39,328 36,618
Electrical and Electronic Components 20,669 12,469 10,941
Corporate 2,278 1,207 658
---------- ---------- ----------
$ 199,286 $ 123,227 $ 119,048
========== ========== ==========
</TABLE>
- ---------------
(1) Includes a charge of $37.2 million for merger and transaction related costs
associated with the Kendall merger. See Notes 1 and 2 to the Consolidated
Financial Statements.
35
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. CONSOLIDATED GEOGRAPHIC DATA
Selected information by geographic area is presented below.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED JUNE 30
------------------------------------
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
Americas (primarily U.S.)..................... $4,628,472 $3,664,645 $3,284,982
Europe........................................ 1,222,951 831,813 756,988
Asia-Pacific.................................. 746,206 593,370 492,681
---------- ---------- ----------
$6,597,629 $5,089,828 $4,534,651
========== ========== ==========
Income From Operations:
Americas (primarily U.S.)..................... $ 715,631 $ 554,170 $ 468,466
Europe........................................ 70,027 42,980 28,564
Asia-Pacific.................................. 43,252 25,400 17,401
---------- ---------- ----------
$ 828,910 $ 622,550 $ 514,431
========== ========== ==========
Total Assets:
Americas (primarily U.S.)..................... $3,792,393 $2,728,772 $2,172,851
Europe........................................ 1,458,210 775,745 802,231
Asia-Pacific.................................. 405,791 333,622 320,980
Corporate assets.............................. 231,935 115,797 85,399
---------- ---------- ----------
$5,888,329 $3,953,936 $3,381,461
========== ========== ==========
</TABLE>
14. SUPPLEMENTARY BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
AT JUNE 30
----------------------
1997 1996
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Inventories:
Purchased materials and manufactured parts.................... $ 269,358 $ 162,600
Work in process............................................... 139,445 108,733
Finished goods................................................ 440,823 337,193
---------- ---------
$ 849,626 $ 608,526
========== =========
Property, Plant and Equipment:
Land.......................................................... $ 47,253 $ 37,560
Buildings..................................................... 408,743 320,034
Machinery and equipment....................................... 1,160,766 934,918
Leasehold improvements........................................ 33,607 22,658
Construction in progress...................................... 136,924 52,289
Accumulated depreciation...................................... (766,836) (641,717)
---------- ---------
$1,020,457 $ 725,742
========== =========
Accrued Payroll and Payroll Related Costs..................... $ 93,819 $ 74,686
========== =========
</TABLE>
15. SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Research and development.......................................... $33,364 $33,480 $33,375
======= ======= =======
</TABLE>
36
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1997
-------------------------------------------------
1ST 2ND 3RD 4TH
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales........................................... $1,479,152 $1,612,904 $1,654,241 $1,851,332
========== ========== ========== ==========
Gross profit.................................... $ 406,300 $ 440,647 $ 459,705 $ 538,990
========== ========== ========== ==========
Net income...................................... $ 83,050 $ 91,320 $ 106,704 $ 137,928
========== ========== ========== ==========
Net income per share............................ $ .54 $ .58 $ .67 $ .82
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996(1)
-------------------------------------------------
1ST 2ND 3RD 4TH
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales........................................... $1,216,202 $1,243,885 $1,257,619 $1,372,122
========== ========== ========== ==========
Gross profit.................................... $ 320,274 $ 334,167 $ 347,541 $ 394,961
========== ========== ========== ==========
Net income...................................... $ 65,664 $ 70,771 $ 79,474 $ 94,238
========== ========== ========== ==========
Net income per share............................ $ .43 $ .46 $ .52 $ .62
========== ========== ========== ==========
</TABLE>
(1) Income per share has been restated for all periods presented to give effect
to a two-for-one stock split. See Note 9 to the Consolidated Financial
Statements.
17. SUBSEQUENT EVENTS (UNAUDITED)
On July 2, 1997, a wholly owned subsidiary of ADT Limited ("ADT") merged
with Tyco, in a stock-for-stock transaction valued at approximately $5.6
billion. ADT is a leading installer and servicer of electronic security systems
with annual revenues of approximately $2.0 billion. Upon consummation of the
merger, ADT (the surviving corporation) changed its name to Tyco International
Ltd. Shareholders of ADT, through a reverse stock split, received 0.48133 shares
of the new Company's common stock for each share of ADT common stock
outstanding, and Tyco shareholders received one share of the new Company's
common stock for each share of Tyco common stock outstanding. At the closing,
Tyco shareholders owned approximately 64% and ADT shareholders owned
approximately 36% of the outstanding shares of the combined company. The
transaction qualifies for pooling of interests accounting treatment, which is
intended to present, as a single interest, common shareholder interests which
were previously independent. All fees and expenses related to the merger and to
the integration of the combined companies will be expensed as required under the
pooling of interests accounting method. These expenses have not been reflected
in the Consolidated Statement of Operations, but will be reflected in the
Consolidated Statement of Operations of the combined company for the period
ended September 30, 1997.
In July 1997, ADT tendered for its 8.25% senior notes due 2000 and its
9.25% senior subordinated notes due 2003. 96.2% of the 8.25% notes and 95.2% of
the 9.25% notes were tendered. The Company paid an aggregate amount, including
accrued interest, of approximately $571.8 million to the noteholders, which was
financed, in part, from the new credit agreement discussed in Note 4. In
connection with the tender, the combined company recorded an after-tax charge of
approximately $26.6 million, net of related income tax benefit of $14.3 million,
representing unamortized debt issuance fees and the premium paid, to be reported
as an extraordinary loss during the period ended September 30, 1997.
In April 1997 the Company entered into an agreement with AT&T to acquire
its submarine systems business ("SSI") for approximately $850 million in cash.
SSI is a world leader in the design, development, manufacture, supply,
installation and maintenance of underseas fiber optic telecommunications cable
systems,
37
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with expected calendar 1997 revenues of approximately $1 billion. The
acquisition, which was completed in July 1997, will be accounted for as a
purchase. The Company increased its bank credit facilities which were used to
partially fund the acquisition of SSI. See Note 4 to the Consolidated Financial
Statements.
In May 1997, the Company entered into a definitive merger agreement for the
acquisition of INBRAND Corporation ("INBRAND"), a producer of adult incontinence
products, feminine hygiene products and baby diapers. The merger agreement
provided for the issuance to INBRAND shareholders of shares of Tyco
International Ltd. in exchange for their INBRAND shares. The INBRAND transaction
was approved by the INBRAND shareholders at a meeting held on August 27, 1997,
and was consummated on that date.
In May 1997, the Company entered into a definitive merger agreement for the
acquisition of Keystone International, Inc. ("Keystone") which designs,
manufactures and markets, on a world-wide basis, industrial values, actuators
and accessories used to control the flow of liquids, gases and solid materials.
The merger agreement provided for the issuance to Keystone shareholders of
shares of Tyco International Ltd. in exchange for their Keystone shares. The
Keystone transaction was approved by the Keystone shareholders at a meeting held
on August 28, 1997, and was consummated on August 29, 1997.
A charge to operations is expected to occur subsequent to the transactions
described above to reflect transaction costs and the combination of the
companies. Such charges, which have not yet been estimated, may include amounts
with respect to the elimination of excess facilities, the write-off of certain
goodwill, other intangibles and fixed assets, severance costs and the
satisfaction of certain liabilities. The effects of these costs have not been
reflected in these financial statements.
38
<PAGE> 40
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATING RESULTS
RESULTS OF OPERATIONS
Information for all periods presented below reflects the grouping of the
Company's businesses into four business segments consisting of Disposable and
Specialty Products, Fire and Safety Services, Flow Control Products, and
Electrical and Electronic Components.
OVERVIEW
Net income was $419.0 million, or $2.61 per share, for fiscal 1997 compared
with $310.1 million, or $2.03 per share, for fiscal 1996. The increase was
attributable to margin improvements and strong earnings in each of the Company's
business segments.
SALES
Sales increased 30% during fiscal 1997 to $6.60 billion from $5.09 billion
in fiscal 1996. Sales of the Disposable and Specialty Products group increased
$532.4 million to $1.99 billion, or 36%, due to increased sales at Kendall,
Ludlow and Armin, as well as the inclusion of Carlisle Plastics ("Carlisle")
from September 1996. The increase in sales resulted principally from the
Carlisle acquisition. Sales at Kendall increased primarily due to increased
volume in both the Healthcare and Polyken businesses. Armin's sales increases
were principally due to higher selling prices. Sales of the Fire and Safety
Services group increased $593.7 million to $2.58 billion, or 30%, due to
increased sales in the contracting business in each geographic region, primarily
due to an increase in the volume of service business, as well as the inclusion
of Thorn Security Group ("Thorn"), acquired in July 1996 and Earth Technology
("Earth Tech"), acquired in January 1996. Sales of the Flow Control Products
group increased $295.6 million to $1.45 billion, or 26%, reflecting higher
volume at European Flow Control, primarily from businesses acquired in the
second and third quarters of fiscal 1997, from Mueller, including businesses
acquired in the first quarter of fiscal 1997, as well as increased volume in
existing businesses, and Grinnell's distribution operations, where sales
increased due to price increases. Sales of the Electrical and Electronic
Components group increased $86.0 million to $566.7 million, or 18%, resulting
principally from increased sales at the Printed Circuit Group operations,
largely due to the acquisition of ElectroStar in January 1997. Sales were also
up at Allied's electrical conduit operations and at Simplex, where the
acquisition of Rochester Wire & Cable offset a decrease at Simplex due to a
decrease in kilometers of cable shipped.
Sales increased 12% during fiscal 1996 to $5.09 billion from $4.53 billion
in fiscal 1995. Sales of the Disposable and Specialty Products group increased
$72.6 million to $1.46 billion, or 5%. Increased sales at Kendall and, to a
lesser extent, at Ludlow were partially offset by decreased sales at Armin, due
to reduced raw material pricing, and by Kendall's sale of Futuro in the second
quarter of fiscal 1996. Kendall's sales include the sales of Professional
Medical Products, Inc. which was acquired during the third quarter of fiscal
1996. Sales of the Fire and Safety Services group increased $287.5 million to
$1.99 billion, or 17%, due to increased sales in the North American, European
and Asia-Pacific regions contracting businesses, as well as sales resulting from
the acquisition of Earth Tech in the third quarter of fiscal 1996. Sales of the
Flow Control group increased $144.6 million, or 14%, to $1.16 billion,
reflecting higher volume at Allied, including businesses acquired by Allied in
the second half of fiscal 1995 as well as from Grinnell's distribution
operations, Mueller and European Flow Control. Sales of the Electrical and
Electronic Components group increased $50.5 million to $480.6 million, or 12%,
resulting principally from higher sales of underwater communications cable
systems at Simplex as well as at the printed circuit businesses and at Allied's
electrical conduit operations.
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM
Pre-tax income was $687.9 million in fiscal 1997 and $523.9 million in
fiscal 1996.
Operating profits of the Disposable and Specialty Products group increased
$72.7 million to $364.4 million, or 25%, reflecting higher earnings at Kendall,
resulting from the volume increases noted above, and
39
<PAGE> 41
Ludlow, as well as the inclusion of Carlisle from September 1996. Operating
profits of the Fire and Safety Services group increased $70.8 million to $198.9
million, or 55%, due to higher margins at fire protection operations in each
geographic region, as well as the inclusion of Thorn and Earth Tech. The higher
margins in fire protection were the result of a higher mix of service work
within the contracting businesses. The operating profits of the Flow Control
Products group increased $42.1 million to $156.3 million, or 37%, resulting
principally from increased earnings at Allied, Mueller and European Flow
Control, including businesses acquired in fiscal 1997. Increases in European
Flow Control were primarily the result of acquisitions. Increases at Allied and
Mueller were a combination of the operating profits resulting from acquisitions
and the result of margin increases and the impact of cost reductions. Operating
profits of the Electrical and Electronic Components group increased $20.8
million to $109.3 million, or 23%, due to increased earnings at Simplex, the
Printed Circuit Group and Allied's electrical conduit operations. The increases
at Simplex and the Printed Circuit group were principally due to acquisitions.
The impact on the consolidated sales and results of operations from changes
in foreign exchange rates relative to the value of the U.S. dollar for fiscal
1997 as compared to fiscal 1996 was not material.
Corporate and other expenses rose to $50.3 million in fiscal 1997 from
$39.8 million in fiscal 1996 due principally to higher compensation expense
under the Company's incentive compensation plans.
Pre-tax income before extraordinary item was $523.9 million in fiscal 1996
and $384.9 million in fiscal 1995. Pre-tax income increased 24% excluding the
$37.2 million charge for merger and transaction related costs in fiscal 1995.
Operating profits of the Disposable and Specialty Products group increased
$30.5 million to $291.7 million, or 12%, reflecting higher earnings at Kendall
and Ludlow partially offset by decreased earnings at Armin, where profits were
adversely affected by changes in raw material costs. Operating profits of the
Fire and Safety Services group rose $41.6 million to $128.1 million, or 48%, due
to higher margins at fire protection operations in each geographic region, as
well as the inclusion of earnings from Earth Tech, which was acquired during the
third quarter of fiscal 1996. Operating profits of the Flow Control group
increased $23.7 million to $114.1 million, or 26%, resulting from increased
earnings principally at Allied and Mueller and, to a lesser extent, at the
group's other operating units. Operating profits of the Electrical and
Electronic Components group increased $12.1 million to $88.5 million, or 16%,
due to increased earnings at Simplex, the printed circuit businesses and at
Allied's electrical conduit operations.
The impact on the consolidated sales and results of operations from changes
in foreign exchange rates relative to the U.S. dollar for fiscal 1996 as
compared to fiscal 1995 was not material.
Corporate and other expenses rose to $39.8 million from $29.0 million in
fiscal 1995 (excluding merger and transaction related costs) due principally to
an increase in expense associated with the Company's accounts receivable
financing program. Under the program, the discount on accounts receivable is
included in selling, general and administrative expense and is excluded from
interest expense. See Note 5 to the Consolidated Financial Statements.
INTEREST EXPENSE
Interest expense increased $31.9 million to $90.8 million during fiscal
1997 due to higher average debt balances as a result of monies borrowed to make
acquisitions. Interest expense decreased $4.5 million to $58.9 million during
fiscal 1996 due to lower average interest rates partially offset by higher
average debt levels.
INCOME TAX EXPENSE
Income tax expense was $268.9 million in fiscal 1997 and $213.8 million in
fiscal 1996. An analysis of income taxes and the effective income tax rate is
presented in Note 7 to the Consolidated Financial Statements.
40
<PAGE> 42
ACCOUNTING AND TECHNICAL PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share" which is effective for fiscal years ending after December 31, 1997,
including interim periods. Earlier adoption is not permitted. However, the
statement permits disclosure of pro forma earnings per share amounts computed
under SFAS 128 in the notes to the financial statements in periods prior to
adoption. The statement requires restatement of all prior period earnings per
share data presented after the effective date. SFAS 128 specifies the
computation, presentation and disclosure requirements for earnings per share and
is substantially similar to the standards recently issued by the International
Accounting Standards Committee entitled International Accounting Standards,
Earnings Per Share. Company will adopt SFAS 128 in fiscal 1998 and has not yet
determined its impact.
In June 1997, the FASB issued two additional statements. SFAS 130,
"Reporting Comprehensive Income" and SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information" are both effective for years beginning after
December 15, 1997. Adoption of these standards are not expected to impact the
financial results of the Company.
Financial Reporting Release No. 48, issued by the Securities and Exchange
Commission requires certain quantitative and qualitative disclosures about
market risks in derivative financial instruments. Potential near term losses in
cash flows and earnings from derivative financial instruments held by the
Company at June 30, 1997 would not have a material impact on the Company's
financial position, results of operations or liquidity.
41
<PAGE> 43
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
and Shareholders of
TYCO INTERNATIONAL LTD.
Our report on the consolidated financial statements of Tyco International
(US) Inc. (formerly Tyco International Ltd.) for the three years ended June 30,
1997 is included in this Form 10-K. In connection with our audits of such
financial statements, we have also audited the related consolidated financial
statement schedule for the three years ended June 30, 1997.
In our opinion, the financial statement schedule for the three years ended
June 30, 1997 referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Boston Massachusetts
July 25, 1997
42
<PAGE> 44
TYCO INTERNATIONAL (US) INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED
BEGINNING TO ACQUISITIONS BALANCE AT
DESCRIPTION OF YEAR INCOME AND OTHER DEDUCTIONS END OF YEAR
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended June 30, 1995:
Allowances for doubtful accounts(1)...... 29,311 7,407 (785) 6,379(2) 29,554
Product warranty......................... 9,712 1,695 2,115 1,694 11,828
Year Ended June 30, 1996:
Allowances for doubtful accounts(1)...... 29,554 10,498 3,080 6,460(2) 36,672
Product warranty......................... 11,828 2,743 (2,784) 2,829 8,958
Year Ended June 30, 1997:
Allowances for doubtful accounts(1)...... 36,672 16,765 28,449 19,486(2) 62,400
Product warranty......................... 8,958 5,911 3,444 3,589 14,724
</TABLE>
- ---------------
(1) Deducted from assets.
(2) Write-off of accounts receivable considered uncollectible.
43
<PAGE> 1
EXHIBIT 10.1
CONFORMED COPY
$750,000,000
364-DAY CREDIT AGREEMENT
dated as of
June 27, 1997
among
Tyco International Ltd.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
------------
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions........................................................................................1
SECTION 1.02. Accounting Terms and Determinations...............................................................17
SECTION 1.03. Types of Borrowings...............................................................................17
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend...............................................................................18
SECTION 2.02. Notice of Committed Borrowing.....................................................................18
SECTION 2.03. The Money Market Borrowings.......................................................................18
SECTION 2.04. Notice to Banks; Funding of Loans.................................................................22
SECTION 2.05. Promissory Notes..................................................................................23
SECTION 2.06. Maturity of Loans.................................................................................23
SECTION 2.07. Interest Rates....................................................................................24
SECTION 2.08. Facility Fee......................................................................................27
SECTION 2.09. Optional Termination or Reduction of Commitments..................................................27
SECTION 2.10. Mandatory Termination of Commitments..............................................................28
SECTION 2.11. Optional Prepayments..............................................................................28
SECTION 2.12. General Provisions as to Payments.................................................................28
SECTION 2.13. Funding Losses....................................................................................29
SECTION 2.14. Computation of Interest and Fees..................................................................29
SECTION 2.15. Regulation D Compensation.........................................................................29
SECTION 2.16. Method of Electing Interest Rates.................................................................30
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness.....................................................................................32
SECTION 3.02. Consequences of Effectiveness; Transitional Provisions............................................32
SECTION 3.03. Borrowings........................................................................................33
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.....................................................................34
SECTION 4.02. Corporate and Governmental Authorization; No Contravention........................................34
SECTION 4.03. Binding Effect....................................................................................34
SECTION 4.04. Financial Information.............................................................................34
SECTION 4.05. Litigation........................................................................................35
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 4.06. Compliance with ERISA.............................................................................35
SECTION 4.07. Environmental Matters.............................................................................35
SECTION 4.08. Taxes.............................................................................................36
SECTION 4.09. Subsidiaries......................................................................................36
SECTION 4.10. Not an Investment Company.........................................................................36
SECTION 4.11. Full Disclosure...................................................................................36
ARTICLE 5
COVENANTS
SECTION 5.01. Information.......................................................................................36
SECTION 5.02. Payment of Obligations............................................................................38
SECTION 5.03. Maintenance of Property; Insurance................................................................39
SECTION 5.04. Conduct of Business and Maintenance of Existence..................................................39
SECTION 5.05. Compliance with Laws..............................................................................40
SECTION 5.06. Inspection of Property, Books and Records; Confidentiality........................................40
SECTION 5.07. Limitation on Restrictions on Subsidiary Dividends and Other Distributions........................41
SECTION 5.08. Debt..............................................................................................43
SECTION 5.09. Fixed Charge Coverage.............................................................................43
SECTION 5.10. Restricted Payments...............................................................................44
SECTION 5.11. Negative Pledge...................................................................................44
SECTION 5.12. Consolidations, Mergers and Sales of Assets.......................................................46
SECTION 5.13. Use of Proceeds...................................................................................47
SECTION 5.14. Transactions with Affiliates......................................................................47
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults................................................................................48
SECTION 6.02. Notice of Default.................................................................................50
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization.....................................................................51
SECTION 7.02. Agent and Affiliates..............................................................................51
SECTION 7.03. Action by Agent...................................................................................51
SECTION 7.04. Consultation with Experts.........................................................................51
SECTION 7.05. Liability of Agent................................................................................51
SECTION 7.06. Indemnification...................................................................................52
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 7.07. Credit Decision...................................................................................52
SECTION 7.08. Successor Agent...................................................................................52
SECTION 7.09. Agent's Fee.......................................................................................52
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair..........................................53
SECTION 8.02. Illegality........................................................................................53
SECTION 8.03. Increased Cost and Reduced Return.................................................................54
SECTION 8.04. Taxes.............................................................................................55
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.........................................57
SECTION 8.06. Substitution of Bank..............................................................................57
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices...........................................................................................58
SECTION 9.02. No Waivers........................................................................................58
SECTION 9.03. Expenses; Indemnification.........................................................................59
SECTION 9.04. Sharing of Set-Offs...............................................................................59
SECTION 9.05. Amendments and Waivers............................................................................60
SECTION 9.06. Successors and Assigns............................................................................60
SECTION 9.07. Collateral........................................................................................62
SECTION 9.08. Governing Law; Submission to Jurisdiction.........................................................62
SECTION 9.09. Counterparts; Integration.........................................................................62
SECTION 9.10. Waiver of Jury Trial..............................................................................63
</TABLE>
Commitment Schedule
Commitment Schedule
Exhibit A - Promissory Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of General Counsel of the Borrower
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Form of Subsidiary Guarantee
Exhibit I - Form of Subsidiary Counsel Opinion
Exhibit J - Form of Parent Guarantee
Exhibit K - Form of Parent Counsel Opinion
iii
<PAGE> 5
364-DAY CREDIT AGREEMENT
AGREEMENT dated as of June 27, 1997 among TYCO INTERNATIONAL LTD., the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, certain of the Banks and the Agent are parties
to an Amended and Restated Credit Agreement dated as of December 23, 1996 (the
"Existing Agreement"); and
WHEREAS, the parties hereto wish to replace the credit facility under
the Existing Agreement with a new credit facility hereunder.
WHEREAS, when all the conditions specified in Section 3.01 have been
satisfied, the Existing Agreement will be automatically terminated and the loans
outstanding thereunder (if any) will be repaid;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03
"ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b).
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"ADT" means ADT Limited, a company organized under the laws of Bermuda.
"ADT'S FORM S-4" means ADT's Form S-4 as filed with the Securities and
Exchange Commission on June 3, 1997, pursuant to the Securities Exchange Act of
1934.
"AFFILIATE" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling
<PAGE> 6
Person. As used herein, the term "control" means 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. The fact that an Affiliate of a Person is a member of a
law firm that renders services to such Person or its Affiliates does not mean
that the law firm is an Affiliate of such Person.
"AGENT" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks under the Financing Documents, any successor agent that
becomes the Agent pursuant to Section 7.08, and the respective corporate
successors of the foregoing acting in such capacity.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"APPLICABLE MARGIN" has the meaning set forth in Section 2.07(h).
"ASSESSMENT RATE" has the meaning set forth in Section 2.07(b).
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and the respective
corporate successors of the foregoing.
"BANK AFFILIATE" means, with respect to the Agent or any Bank, any
Person controlling, controlled by or under common control with the Agent or such
Bank, as the case may be.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BASE RATE LOAN" means a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.07(a) or Article 8.
"BORROWER" means Tyco International Ltd., a Massachusetts corporation,
and its successors.
"BORROWER'S 1996 FORM 10-K" means the Borrower's annual report on Form
10-K for fiscal year 1996, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"BORROWING" has the meaning set forth in Section 1.03.
2
<PAGE> 7
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election.
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means The Hongkong and Shanghai Banking
Corporation Limited, The Dai-Ichi Kangyo Bank, Ltd. and Morgan Guaranty Trust
Company of New York.
"COMMITMENT" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank on the
Commitment Schedule and (ii) with respect to any Assignee, the amount of the
transferor Bank's Commitment assigned to it pursuant to Section 9.06(c), in each
case as such amount may be changed from time to time pursuant to Section 2.09 or
9.06(c).
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.
"COMMITTED BORROWING" has the meaning set forth in Section 1.03.
"COMMITTED LOAN" means a loan made by a Bank pursuant to Section 2.01;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term Committed
Loan shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"CONDUIT" means a special purpose corporation which is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business.
"CONDUIT DESIGNATION" has the meaning set forth in Section 9.06(f).
"CONSENTS" has the meaning set forth in Section 4.01.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such time.
"CONSOLIDATED DEBT" means, at any date, the aggregate amount of Debt of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis as of such date; provided that (i) if a Permitted Receivables Transaction
is outstanding at such date and is accounted for as a sale of accounts
receivable under generally accepted accounting principles, Consolidated Debt
determined as aforesaid shall be adjusted to include the additional Debt,
determined on a consolidated basis as of such date, which would have been
outstanding at such date had such Permitted Receivables Transaction been
accounted for as a borrowing at such date and (ii)
3
<PAGE> 8
Consolidated Debt shall in any event include all Debt of any Person other than
the Borrower or a Consolidated Subsidiary which is Guaranteed by the Borrower or
a Consolidated Subsidiary, except that Consolidated Debt shall not include Debt
of a joint venture, partnership or similar entity which is Guaranteed by the
Borrower or a Consolidated Subsidiary by virtue of the joint venture,
partnership or similar arrangement with respect to such entity or by operation
of applicable law (and not otherwise) so long as the aggregate outstanding
principal amount of all such excluded Debt at any date does not exceed
$50,000,000.
"CONSOLIDATED EBIT" means, for any fiscal period, Consolidated Net
Income for such period plus, to the extent deducted in determining Consolidated
Net Income for such period, the aggregate amount of (i) Consolidated Interest
Expense and (ii) federal, state and local income tax expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any fiscal period, (without
duplication) (i) the consolidated interest expense of the Borrower and its
Consolidated Subsidiaries for such period minus (ii) the consolidated interest
income of the Borrower and its Consolidated Subsidiaries for such period, if,
and only if, such consolidated interest income is equal to or less than
$5,000,000, plus (iii) if a Permitted Receivables Transaction outstanding during
such period is accounted for as a sale of accounts receivable under generally
accepted accounting principles, the additional consolidated interest expense
that would have accrued during such period had such Permitted Receivables
Transaction been accounted for as a borrowing during such period, in each case
determined on a consolidated basis.
"CONSOLIDATED NET INCOME" means, for any fiscal period, the
consolidated net income of the Borrower and its Consolidated Subsidiaries for
such period, determined on a consolidated basis after eliminating therefrom all
Extraordinary Gains and Losses. "EXTRAORDINARY GAINS AND LOSSES" means and
includes, for any fiscal period, all extraordinary gains and losses of the
Borrower and its Consolidated Subsidiaries for such period, determined on a
consolidated basis and, in addition, includes, without limitation, gains or
losses from the discontinuance of operations and gains or losses of the Borrower
and its Consolidated Subsidiaries for such period resulting from the sale,
conversion or other disposition of material assets of the Borrower or any
Consolidated Subsidiary other than in the ordinary course of business.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date and adjusted so as to exclude
the effect of the currency translation adjustment as of such date.
"CONSOLIDATED SUBSIDIARY" means, at any date, with respect to any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in such Person's consolidated financial
statements if such statements were prepared as of such date; unless otherwise
specified, Consolidated Subsidiary means a Consolidated Subsidiary of the
Borrower.
4
<PAGE> 9
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, (i) Consolidated
Net Worth as of such date minus (ii) Intangible Assets as of such date.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any date, the sum of
Consolidated Debt and Consolidated Net Worth, each determined as of such date.
"DEBT" of any Person means, at any date, without duplication, (i) the
principal amount of all obligations of such Person for borrowed money, (ii) the
principal amount of all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (it being understood that,
subject to the proviso to this definition of "Debt," performance bonds,
performance guaranties, letters of credit, bank guaranties and similar
instruments shall not constitute Debt of such Person to the extent that the
outstanding reimbursement obligations of such Person in respect thereof are
collateralized by cash or cash equivalents, which cash or cash equivalents would
not be reflected as assets on a balance sheet of such Person prepared in
accordance with generally accepted accounting principles), (iii) all obligations
of such Person to pay the deferred purchase price of property or services
recorded on the books of such Person, except for (a) trade and similar accounts
payable and accrued expenses arising in the ordinary course of business, and (b)
employee compensation and pension obligations, and other obligations arising
from employee benefit programs and agreements or other similar employment
arrangements, (iv) all obligations of such Person as lessee which are
capitalized on the books of such Person in accordance with generally accepted
accounting principles, (v) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person, and
(vi) all Debt of others Guaranteed by such Person; provided, however, that Debt
shall not include:
(A) contingent reimbursement obligations in
respect of performance bonds, performance
guaranties, bank guaranties or letters of
credit issued in lieu of performance bonds
or performance guaranties or similar
instruments, in each case, incurred by such
Person in the ordinary course of business;
(B) contingent reimbursement obligations in
respect of trade letters of credit, or
similar instruments, in each case, incurred
by such Person in the ordinary course of
business; or
(C) contingent reimbursement obligations in
respect of standby letters of credit or
similar instruments securing self-insurance
obligations of such Person;
in each case, so long as the underlying obligation supported thereby does not
itself constitute Debt.
"DEBT RATING" means a rating of the Borrower's long-term debt which is
not secured or supported by a guarantee, letter of credit or other form of
credit enhancement. If a Debt Rating
5
<PAGE> 10
by a Rating Agency is required to be at or above a specified level and such
Rating Agency shall have changed its system of classifications after the date
hereof, the requirement will be met if the Debt Rating by such Rating Agency is
at or above the new rating which most closely corresponds to the specified level
under the old rating system.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC PARENT" means any Affiliate incorporated under the laws of
the United States, any State thereof or the District of Columbia of which the
Borrower is a Subsidiary.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in
Section 2.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
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<PAGE> 11
"ERISA GROUP" means the Borrower, any Subsidiary Guarantor and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary Guarantor, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of The
Hongkong and Shanghai Banking Corporation Limited, The Dai-Ichi Kangyo Bank,
Ltd. and Morgan Guaranty Trust Company of New York.
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in
Section 2.15.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXISTING AGREEMENT" has the meaning set forth in the recitals hereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Agent.
"FINANCING DOCUMENTS" means this Agreement, the Subsidiary Guarantees,
the Promissory Notes and, on any date on or after the Parent Guarantee Date, the
Parent Guarantee.
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<PAGE> 12
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"GROUP OF LOANS" means, at any time, a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time, (ii) all Euro-Dollar
Loans having the same Interest Period at such time or (iii) all CD Loans having
the same Interest Period at such time, provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Article
8, such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the holder of such Debt of the
payment thereof or to protect such holder against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTOR" means any Subsidiary Guarantor and, on and after the Parent
Guarantee Date, the Parent Guarantor.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTANGIBLE ASSETS" means, at any date, the amount (if any) which would
be stated under the heading "Costs in Excess of Net Assets of Acquired
Companies" or under any other heading relating to intangible assets separately
listed, in each case, on the face of a balance sheet of the Borrower and its
Consolidated Subsidiaries prepared on a consolidated basis as of such date.
"INTEREST PERIOD" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter (or such other
period of time as may at the time be mutually agreed by the Borrower and the
Banks), as the Borrower may elect in such notice; provided that:
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<PAGE> 13
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter (or such other period of time as may at the time be
mutually agreed by the Borrower and the Banks), as the Borrower may elect in
such notice; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such whole number of months thereafter as the Borrower may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; and
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<PAGE> 14
(4) with respect to each Money Market Absolute Rate Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 30 days)
as the Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LEVEL I STATUS" exists at any date if, at such date, the Borrower has
Debt Ratings at or above the level of A by S&P or A2 by Moody's.
"LEVEL II STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at or above the level of A- by S&P or A3 by Moody's and (ii)
Level I Status does not exist at such date.
"LEVEL III STATUS" exists at any date if, at such date, (i) the
Borrower has Debt Ratings at the level of BBB+ by S&P or Baa1 by Moody's and
(ii) Level I Status and Level II Status do not exist at such date.
"LEVEL IV STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at the level of BBB by S&P or Baa2 by Moody's and (ii) Level I
Status, Level II Status and Level III Status do not exist at such date.
"LEVEL V STATUS" exists at any date if, at such date, (i) the Borrower
has a Debt Rating from neither Rating Agency or (ii) Level I Status, Level II
Status, Level III Status and Level IV do not exist at such date.
"LIBOR AUCTION" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating lease)
relating to such asset.
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<PAGE> 15
"LOAN" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "LOANS" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in
Section 2.07(c).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole, or
(ii) the ability of the Borrower and the Subsidiary Guarantors to perform their
obligations under the Financing Documents.
"MATERIAL DEBT" means Debt (other than (i) the Promissory Notes, (ii)
the Subsidiary Guarantees, (iii) any Guarantee by the Borrower of Debt of a
Subsidiary, (iv) any Guarantee by a Subsidiary of Debt of the Borrower or
another Subsidiary, (v) any Debt of the Borrower owed to a Wholly-Owned
Consolidated Subsidiary or (vi) any Debt of a Subsidiary owed to the Borrower or
a Wholly-Owned Consolidated Subsidiary) of the Borrower and/or one or more of
its Subsidiaries, arising in one or more related or unrelated transactions, in
an aggregate outstanding principal amount exceeding $50,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"MERGER" means the merger of a Subsidiary of ADT with and into the
Borrower pursuant to the Plan of Merger dated March 17, 1997.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in
Section 2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"MONEY MARKET BORROWING" has the meaning set forth in Section 1.03.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
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<PAGE> 16
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc., or any successor to
such corporation's business of rating debt securities.
"MULTIEMPLOYER PLAN" means at any time a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA either (i) to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
(ii) has at any time within the preceding five plan years been maintained, or
contributed to, by any Person who was at such time a member of the ERISA Group
for employees of any Person who was at such time a member of the ERISA Group.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined
in Section 2.02 or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in
Section 2.16.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARENT GUARANTOR" means ADT (to be renamed Tyco International Ltd.
upon consummation of the Merger), and its successors.
"PARENT GUARANTEE" means a Parent Guarantee Agreement between the
Parent Guarantor and the Agent for the benefit of the Banks, substantially in
the form of Exhibit J, as amended from time to time.
"PARENT GUARANTEE DATE" means the date the Agent receives (i) duly
executed counterparts of the Parent Guarantee, (ii) an opinion of counsel for
the Parent Guarantor reasonably satisfactory to the Agent to substantially the
effect of Exhibit K hereto and covering such additional matters relating to the
Parent Guarantee as the Required Banks may reasonably request and (iii) all
documents the Agent may reasonably request relating to the existence of the
Parent Guarantor, the corporate authority for and the validity of the Parent
Guarantee, and any other matters reasonably determined by the Agent to be
relevant thereto, all in form and substance reasonably satisfactory to the
Agent.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
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<PAGE> 17
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED RECEIVABLES TRANSACTION" means any sale or sales of,
refinancing of and/or financing secured by, any accounts receivable of the
Borrower and/or any of its Subsidiaries (the "RECEIVABLES") pursuant to which
the Borrower and its Subsidiaries realize aggregate net proceeds of not more
than $500,000,000 at any one time outstanding, including, without limitation,
any revolving purchase(s) of Receivables where the maximum aggregate uncollected
purchase price (exclusive of any deferred purchase price) for such Receivables
at any time outstanding does not exceed $500,000,000.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PROMISSORY NOTES" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, and "PROMISSORY NOTE" means any one of such
promissory notes issued hereunder.
"PROPERTY" means any interest of any kind in any property or assets,
whether real, mixed or personal and whether tangible or intangible.
"PROSPECTS" means, at any time, results of future operations which are
reasonably foreseeable based upon the facts and circumstances in existence at
such time.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30
and December 31.
"RATING AGENCY" means S&P or Moody's.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any one
of such Reference Banks.
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<PAGE> 18
"REFINANCING" has the meaning set forth in Section 5.07 (and the term
"REFINANCED" has a correlative meaning).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having more than 60% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Promissory Notes evidencing more than 60% of the aggregate
unpaid principal amount of the Loans.
"RESPONSIBLE OFFICER" means any of the following: the Chairman,
President, Vice President and Chief Financial Officer, Treasurer and Secretary
of the Borrower.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except to the extent such dividends
and distributions are payable in shares of its capital stock or Stock
Equivalents) or (ii) any payment (except to the extent payable in shares of the
Borrower's capital stock or Stock Equivalents) on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock or (b) any option, warrant or other right to acquire shares of the
Borrower's capital stock; provided that prior to the consummation of the Merger,
repurchases by the Borrower of up to 5,000,000 shares of its common stock shall
not constitute Restricted Payments.
"SIGNIFICANT SUBSIDIARY" means, at any date, (A) each Subsidiary
Guarantor and (B) any other Consolidated Subsidiary which, including its
consolidated subsidiaries, meets any of the following conditions:
(i) the investments in and advances to such Consolidated
Subsidiary by the Borrower and its other Consolidated
Subsidiaries exceed 15% of the total assets of the Borrower
and its Consolidated Subsidiaries, determined on a
consolidated basis as of the end of the most recently
completed fiscal year; or
(ii) the proportionate share attributable to such
Consolidated Subsidiary of the total assets of the Borrower
and its Consolidated Subsidiaries (after intercompany
eliminations) exceeds 15% of the total assets of the Borrower
and the Consolidated Subsidiaries, determined on a
consolidated basis as of the end of the most recently
completed fiscal year; or
(iii) the Borrower's and its Consolidated Subsidiaries'
equity in the income of such Consolidated Subsidiary from
continuing operations before income taxes, extraordinary items
and cumulative effect of a change in accounting principle
exceeds 15% of such income of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis
for the most recently completed fiscal year.
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"STATUS" means, at any date, whichever of Level I Status, Level II
Status, Level III Status, Level IV Status or Level V Status exists at such date.
"STOCK EQUIVALENTS" means, with respect to any Person, options,
warrants, calls or other rights entered into or issued by such Person to acquire
any capital stock or equity securities of, or other ownership interests in, or
securities convertible into or exchangeable for, capital stock or equity
securities of, or other ownership interests in, such Person.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor to its business of rating debt
securities.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person; unless otherwise specified, Subsidiary means a Subsidiary of the
Borrower.
"SUBSIDIARY GUARANTEE" means a Guarantee entered into by a Subsidiary
substantially in the form of Exhibit H hereto.
"SUBSIDIARY GUARANTOR" means, at any time, a Subsidiary which at or
prior to such time shall have delivered to the Agent (i) a Subsidiary Guarantee
in substantially the form of Exhibit H, duly executed by such Subsidiary, which
Subsidiary Guarantee has not terminated in accordance with its terms, (ii) an
opinion of counsel for such Subsidiary (which counsel may be an employee of the
Borrower or such Subsidiary) reasonably satisfactory to the Agent with respect
to such Subsidiary Guarantee, substantially in the form of Exhibit I hereto and
covering such additional matters relating to such Subsidiary Guarantee as the
Required Banks may reasonably request and (iii) all documents the Agent may
reasonably request relating to the existence of such Subsidiary, the corporate
authority for and the validity of such Subsidiary Guarantee, and any other
matters reasonably determined by the Agent to be relevant thereto, all in form
and substance reasonably satisfactory to the Agent.
"TERMINATION DATE" means June 26, 1998, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or to any other Person under Title IV of ERISA.
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<PAGE> 20
"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means, with respect to any
Person, any Consolidated Subsidiary all of the shares of capital stock or other
ownership interests of which (except directors' qualifying shares and
investments by foreign nationals mandated by applicable law) are at the time
beneficially owned, directly or indirectly, by such Person; unless otherwise
specified, Wholly-Owned Consolidated Subsidiary means a Wholly-Owned
Consolidated Subsidiary of the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the then most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if either (i) the Borrower notifies the Agent that
the Borrower wishes to eliminate the effect of any change in generally accepted
accounting principles on the operation of any covenant contained in Article 5 or
(ii) the Agent notifies the Borrower that the Required Banks wish to effect such
an elimination, then the Borrower's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either (A) such notice is withdrawn by the
party giving such notice or (B) such covenant is amended in a manner
satisfactory to the Borrower and the Required Banks to reflect such change in
generally accepted accounting principles.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to the pricing of
Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
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ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section 2.01 from time to time prior to the Termination Date in
amounts such that the aggregate principal amount of Committed Loans by such Bank
at any one time outstanding shall not exceed the amount of its Commitment. Each
Borrowing under this Section shall be in an aggregate principal amount of
$5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.03(b)) and
shall be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time prior to the Termination Date under this Section 2.01.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M.
(New York City time) on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
SECTION 2.03. The Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks, at any time prior to the Termination Date, to make offers to
make Money Market Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar
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<PAGE> 22
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may,
in its sole discretion, submit a Money Market Quote containing an offer or
offers to make Money Market Loans in response to any Invitation for Money Market
Quotes. Each Money Market Quote must comply with the requirements of this
subsection 2.03(d) and must be submitted to the Agent by telex or facsimile
transmission at its offices specified in or pursuant to Section 9.01 not later
than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y)
9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the
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<PAGE> 23
capacity of a Bank may be submitted, and may only be submitted, if the Agent or
such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing and the Interest
Period therefor,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate (the
"Money Market Margin") offered for each such Money Market
Loan, expressed as a percentage (specified to the nearest
1/10,000th of 1%) to be added to or subtracted from the
applicable London Interbank Offered Rate,
(D) in the case of an Absolute Rate Auction, the rate
of interest per annum (specified to the nearest 1/10,000th of
1%) (the "Money Market Absolute Rate") offered for each such
Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market
Quotes; or
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<PAGE> 24
(D) arrives after the time set forth in
subsection 2.03(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection 2.03(d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection 2.03(e) (and the failure of the Borrower to give such notice by such
time shall constitute non-acceptance) and the Agent shall promptly notify each
affected Bank. In the case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may, but shall not be obligated
to, accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending order of Money Market Margins or Money Market Absolute Rates,
as the case may be, in each case beginning with the lowest rate so
offered, and
(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer is described in subsection
2.03(d)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
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<PAGE> 25
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied or waived in accordance with Section 9.05, the Agent will make the
funds so received from the Banks available to the Borrower no later than 3:00
P.M. (New York City time) on such date, in Federal or other funds immediately
available in New York City, as directed by the Borrower.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and, if such Bank shall not have
paid such amount to the Agent within two Domestic Business Days of the Agent's
demand therefor, the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
(d) The failure of any Bank to make any Loan to be made by it on the
date specified therefor shall not relieve any other Bank of any obligation to
make a Loan on such date.
SECTION 2.05. Promissory Notes. (a) The Loans of each Bank shall be
evidenced by a single Promissory Note payable to the order of such Bank for the
account of its Applicable
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<PAGE> 26
Lending Office in an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Promissory Note
in an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Promissory Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Promissory Note" of
such Bank shall be deemed to refer to and include any or all of such Promissory
Notes, as the context may require.
(c) Upon receipt of each Bank's Promissory Note pursuant to Section
3.01(b), the Agent shall forward such Promissory Note to such Bank. Each Bank
shall record the date, amount, type and maturity of each Loan made by it and the
date and amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Promissory Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Promissory Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Promissory Note and to
attach to and make a part of its Promissory Note a continuation of any such
schedule as and when required.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the last day of the Interest Period applicable to
such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for each such day. Such interest shall be payable at maturity, quarterly in
arrears on each Quarterly Payment Date prior to maturity and, with respect to
the principal amount of any Base Rate Loan converted to a CD Loan or a
Euro-Dollar Loan, on the date such amount is so converted. Any overdue principal
of or interest on any Base Rate Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due to but excluding
the date of actual payment, at a rate per annum equal to the sum of 2% plus the
rate otherwise applicable to Base Rate Loans for each such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Applicable Margin for each such day
plus the applicable Adjusted CD Rate for such Interest
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<PAGE> 27
Period; provided that if any CD Loan shall, as a result of subsection (2)(b) of
the definition of Interest Period, have an Interest Period of less than 30 days,
such CD Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 90 days, at intervals of 90 days after the first day thereof. Any
overdue principal of or interest on any CD Loan shall bear interest, payable on
demand, for each day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to the sum of 2%
plus the higher of (i) the sum of the Applicable Margin for each such day plus
the Adjusted CD Rate applicable to such Loan on the day before such payment was
due and (ii) the rate applicable to Base Rate Loans for each such day.
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------
* The amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
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<PAGE> 28
"ASSESSMENT RATE" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. sec. 327.4(a) or any successor provision (a "BIF Member") to the Federal
Deposit Insurance Corporation (or any successor) for the Federal Deposit
Insurance Corporation's (or such successor's) insuring time deposits at offices
of such BIF Member in the United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Assessment
Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for each
such day plus the applicable London Interbank Offered Rate for such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Applicable Margin for such day plus the London Interbank Offered Rate applicable
to such Loan on the day before such payment was due and (ii) the Applicable
Margin for such day plus the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than six months as
the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the circumstances described in subsection (a) or (b)
of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for each day during
the Interest Period applicable thereto, at a rate per annum equal to the sum of
the London Interbank Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if the related Money Market
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<PAGE> 29
LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the
Money Market Margin quoted by the Bank making such Loan in accordance with
Section 2.03. Each Money Market Absolute Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the Money Market Absolute Rate
quoted by the Bank making such Loan in accordance with Section 2.03. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof. Any overdue principal of or interest on any
Money Market Loan shall bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of actual
payment, at a rate per annum equal to the sum of 2% plus the Base Rate for each
such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
(h) The "APPLICABLE MARGIN" with respect to any Euro-Dollar Loan or CD
Loan at any date is the applicable percentage amount set forth in the table
below based on the Status on such date:
<TABLE>
<CAPTION>
LEVEL
LEVEL I LEVEL II III LEVEL IV LEVEL V
STATUS STATUS STATUS STATUS STATUS
------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C>
Euro-Dollar Loans 0.150% 0.195% 0.240% 0.260% 0.325%
CD Loans 0.275% 0.320% 0.365% 0.385% 0.450%
</TABLE>
(i) For each day on which the aggregate outstanding principal amount of
the Loans equals or exceeds 50% of the aggregate amount of the Commitments, the
Borrower shall pay additional interest at the rate of 0.05% per annum on the
aggregate principal amount of Euro-Dollar Loans and CD Loans outstanding to it
on such day. Accrued interest under this subsection (i) shall be payable
quarterly in arrears on each Quarterly Payment Date and upon the date of
termination of the Commitments in their entirety (and, if later, the date the
Loans shall be repaid in their entirety).
SECTION 2.08. Facility Fee. (a) The Borrower shall pay to the Agent for
the account of the Banks ratably a facility fee at the Facility Fee Rate. Such
facility fee shall accrue (i) from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination
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<PAGE> 30
of the Commitments in their entirety), on the daily aggregate amount of the
Commitments (whether used or unused) and (ii) from and including the Termination
Date (or earlier date of termination of the Commitments in their entirety) to
but excluding the date the Loans shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Loans.
The "FACILITY FEE RATE" at any date is: (i) 0.050% if Level I Status
exists at such date, (ii) 0.055% if Level II Status exists at such date, (iii)
0.060% if Level III Status exists at such date, (iv) 0.090% if Level IV Status
exists at such date or (v) 0.125% if Level V Status exists at such date.
(b) Accrued fees under this Section shall be payable quarterly in
arrears on each Quarterly Payment Date and upon the date of termination of the
Commitments in their entirety (and, if later, the date the Loans shall be repaid
in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. Promptly after receiving a notice pursuant to this Section, the Agent
shall notify each Bank of the contents thereof.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may (i) upon at
least one Domestic Business Day's notice to the Agent, prepay any Group of Base
Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)), (ii) upon at least three Domestic Business Days'
notice to the Agent, subject to Section 2.13, prepay any Group of CD Loans and
(iii) upon at least three Euro-Dollar Business Days' notice to the Agent,
subject to Section 2.13, prepay any Group of Euro-Dollar Loans, in whole at any
time, or from time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to but not including the date of
prepayment. Each such optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group of Loans (or such Money Market
Borrowing).
(b) Except as provided in Section 2.11(a)(i), the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of
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<PAGE> 31
such prepayment and once notice is so given to the Banks, the Borrower's notice
of prepayment shall not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 2:00 P.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the respective accounts of the Banks. Whenever any payment of principal of, or
interest on, the Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a different type of Loan (pursuant to Article 2, 6 or 8 (other than
Section 8.02) on any day other than the last day of an Interest Period
applicable thereto, or the last day of an applicable period fixed pursuant to
Section 2.07(d), or if the Borrower fails to borrow, prepay, convert or continue
any Fixed Rate Loans after notice has been given to any Bank in accordance with
Section 2.04(a), 2.11(c) or 2.16 (other than as a result of default by such
Bank), the Borrower shall reimburse each Bank within 15 days after written
demand for any resulting loss or expense reasonably incurred by it (or by an
existing or prospective Participant in the related Loan) in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow,
prepay, convert or continue; provided that such Bank shall have delivered to the
Borrower a certificate specifying in reasonable detail the calculation
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<PAGE> 32
of, and the reasons for, the amount of such loss or expense, which certificate
shall be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days after the giving of
such notice, and (y) shall notify the Borrower at least five Euro-Dollar
Business Days prior to each date on which interest is payable on the Euro-Dollar
Loans of the amount then due it under this Section.
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
SECTION 2.16. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject to subsection
2.16(d) of this Section and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.13 if any such conversion is
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effective on any day other than the last day of an Interest Period
applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional Interest
Period, subject to Section 2.13 if any such conversion is effective on
any day other than the last day of an Interest Period applicable to
such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 10:30 A.M. (New York City time) on
the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective (unless the relevant Loans are to be
converted from Domestic Loans of one type to Domestic Loans of the other type or
are CD Loans to be continued as CD Loans for an additional Interest Period, in
which case such notice shall be delivered to the Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such conversion
or continuation is to be effective). A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not apply, are each at least
$5,000,000 (unless such portion is comprised of Base Rate Loans). If no such
notice is timely received before the end of an Interest Period for any Group of
CD Loans or Euro-Dollar Loans, the Borrower shall be deemed to have elected that
such Group of Loans be converted to Base Rate Loans at the end of such Interest
Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection 2.16(a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans resulting from such conversion
are to be CD Loans or Euro-Dollar Loans, the duration of the next
succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of
such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
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(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to subsection (a) above, the Agent shall notify each Bank
of the contents thereof and such notice shall not thereafter be revocable by the
Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional Interest
Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate principal amounts
of any Group of CD Loans or Euro-Dollar Loans created or continued as a result
of such election would be less than $5,000,000 or (ii) a Default shall have
occurred and be continuing when the Borrower delivers notice of such election to
the Agent.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party);
(b) receipt by the Agent of a duly executed Promissory Note for the
account of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of an opinion of the General Counsel of the
Borrower, substantially in the form of Exhibit E hereto;
(d) receipt by the Agent from each Subsidiary Guarantor under the
Existing Agreement of (i) a Subsidiary Guarantee in substantially the form of
Exhibit H hereto, duly executed by such Subsidiary Guarantor, (ii) an opinion of
counsel for such Subsidiary Guarantor, reasonably satisfactory to the Agent,
with respect to such Subsidiary Guarantee, substantially in the form of Exhibit
I hereto and covering such additional matters relating to such Subsidiary
Guarantee as the Required Banks may reasonably request and (iii) all documents
the Agent may reasonably request relating to the existence of such Subsidiary
Guarantee, the corporate authority for and the validity of such Subsidiary
Guarantee, and any other matters reasonably determined by the Agent to be
relevant thereto, all in form and substance reasonably satisfactory to the
Agent;
(e) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit F hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
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(f) receipt by the Agent of all documents the Agent may reasonably
request relating to the existence of the Borrower, the corporate authority for
and the validity of this Agreement and the Promissory Notes, and any other
matters reasonably determined by the Agent to be relevant hereto, all in form
and substance reasonably satisfactory to the Agent; and
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
July 30, 1997.
SECTION 3.02. Consequences of Effectiveness; Transitional Provisions.
(a) On the Effective Date, the commitments under the Existing Agreement shall
terminate without further action by any party thereto. The Agent will promptly
notify each of the other parties hereto and to the Existing Agreement of the
effectiveness of this Agreement.
(b) Concurrently with the effectiveness of this Agreement, the Borrower
shall repay or prepay in full (including accrued and unpaid interest thereon to,
but excluding, the Effective Date) all "Loans" outstanding under the Existing
Agreement. Concurrently with the effectiveness of this Agreement, the Borrower
shall pay all accrued and unpaid facility fees under the Existing Agreement to,
but excluding, the Effective Date.
(c) The Banks which are parties to the Existing Agreement, comprising
the "Required Banks" as defined therein, hereby waive any requirement of notice
of termination of the Commitments pursuant to Section 2.09 of the Existing
Agreement and any restriction on prepayment of Loans to the extent necessary to
give effect to the subsections (a) and (b) above, provided that any such
prepayment of Loans shall be subject to Section 2.13 of the Existing Agreement.
SECTION 3.03. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction (or waiver in
accordance with Section 9.05) of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate amount
of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
and each Guarantor contained in the Financing Documents (except the
representations and warranties set forth in Sections 4.04(a) and 4.11, which are
made only as of the date of this Agreement) shall be true in all material
respects on and as of the date of such Borrowing.
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Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in
subsections (b), (c) and (d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Banks that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. The Borrower has all corporate powers
and all governmental licenses, authorizations, consents and approvals
(collectively, the "Consents") required to carry on its business as now
conducted, other than those powers and Consents, the failure of which to be
possessed or obtained could not, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Promissory Notes: (a) are within the Borrower's corporate
powers; (b) have been duly authorized by all necessary corporate action on the
part of the Borrower; (c) require no action by or in respect of, or filing with,
any governmental body, agency or official, in each case, on the part of the
Borrower; and (d) do not contravene, or constitute a default by the Borrower
under, any provision of (i) applicable law or regulation, (ii) the certificate
of incorporation or by-laws of the Borrower, or (iii) any agreement or
instrument evidencing or governing Debt of the Borrower or any other material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Promissory Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of June 30, 1996 and the related consolidated statements of
income, of shareholders' equity and of cash flows for the fiscal year then
ended, reported on by Coopers & Lybrand L.L.P. and set forth in the Borrower's
1996 Form 10-K, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles, the
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consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal year.
(b) Since June 30, 1996 there has been no material adverse change in
the business, financial position, results of operations or Prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could, based upon the facts
and circumstances in existence at the time this representation and warranty is
made or deemed made, reasonably be expected to have a Material Adverse Effect or
which in any manner draws into question the validity of the Financing Documents.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance, except
where the failure to so comply could not, based upon the facts and circumstances
in existence at the time this representation and warranty is made or deemed
made, reasonably be expected to have a Material Adverse Effect, with the
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any required contribution or payment to
any Plan or Multiemployer Plan, or made any amendment to any Plan, which has
resulted in or could, based upon the facts and circumstances in existence at the
time this representation and warranty is made or deemed made, reasonably be
expected to result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA (other than a liability to the PBGC for
premiums under Section 4007 of ERISA), which could, based upon the facts and
circumstances existing at the time this representation and warranty is made or
deemed made, reasonably be expected to have a Material Adverse Effect.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has
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reasonably concluded that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, could not, based upon the facts and
circumstances existing at the time this representation and warranty is made or
deemed made, reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. Taxes. The United States Federal income tax liability of
the Borrower and its Subsidiaries has been finally determined for all fiscal
years through the fiscal year ended June 30, 1990. The Borrower and its
Subsidiaries have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes shown on such returns or pursuant to any assessment received by the
Borrower or any Subsidiary, except those assessments which are being contested
in good faith by appropriate proceedings. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate
Consolidated Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, except
where the failure to be so incorporated, existing or in good standing could not,
based upon the facts and circumstances existing at the time this representation
and warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has all corporate powers and all Consents
required to carry on its business as now conducted, other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. The factual information, reports,
financial statements, exhibits and schedules concerning the Borrower and its
Subsidiaries furnished by or on behalf of the Borrower and contained in the
information furnished under cover of a memorandum dated June 2, 1997 by J.P.
Morgan Securities Inc. to a limited number of banks which were being invited to
participate in this Agreement, do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
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ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Promissory Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower, consolidated balance sheets of the Borrower
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, of shareholders' equity and of cash
flows for such fiscal year, setting forth, in each case in comparative form, the
figures for the previous fiscal year, all reported on by Coopers & Lybrand
L.L.P. or other independent public accountants of nationally recognized standing
in a manner complying with the applicable rules and regulations promulgated by
the Securities and Exchange Commission;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
consolidated statements of cash flows for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such quarter, setting forth in
the case of such statements of income and of cash flows in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency on behalf of the Borrower by the chief financial
officer, the chief accounting officer or the treasurer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in subsections (a) and (b) above, a certificate on behalf
of the Borrower signed by the chief financial officer, the chief accounting
officer or the treasurer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 5.08 to 5.11, inclusive, on the date of such
financial statements and (ii) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting forth, in reasonable
detail, the nature thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in subsection (a) above, a statement of the firm of
independent public accountants which reported on such financial statements
stating that, in making the audit necessary for the certification of such
financial statements, such firm of accountants has obtained no knowledge of any
Default, or if it has obtained knowledge of such Default, specifying the nature
and period of existence thereof; provided such firm of accountants shall not be
liable to any Person by reason of such
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firm's failure to obtain knowledge of any Default which would not be disclosed
in the course of an audit conducted in accordance with generally accepted
accounting principles;
(e) within five Domestic Business Days after any Responsible Officer
obtains knowledge of any Default, if such Default is then continuing, a
certificate on behalf of the Borrower signed by the chief financial officer, the
chief accounting officer or the treasurer of the Borrower setting forth, in
reasonable detail, the nature thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(f) promptly following the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all final registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and final reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
(h) within 30 days after any Responsible Officer of the Borrower
obtains knowledge that any member of the ERISA Group (i) gave or was required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knew that the plan administrator of any
Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) received notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) received notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than under Sections 4007, 4071 and 4302 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy of such notice; (iv)
applied for a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (v) gave notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gave notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) failed
to make any required payment or contribution to any Plan or Multiemployer Plan
or made any amendment to any Plan which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a certificate
on behalf of the Borrower, signed by the chief financial officer, the chief
accounting officer or the treasurer of the Borrower setting forth, to the best
of its knowledge, in reasonable detail, the nature of such occurrence and
action, if any, which the Borrower or applicable member of the ERISA Group is
required or proposes to take;
(i) promptly following, and in any event within 10 days of, any change
in a Debt Rating by any Rating Agency, notice thereof; and
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(j) from time to time, upon reasonable notice, such additional
information regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where (i) any such failure to so pay
or discharge could not, based upon the facts and circumstances in existence at
the time, reasonably be expected to have a Material Adverse Effect or (ii) such
liabilities or obligations may be contested in good faith by appropriate
proceedings. The Borrower will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of such liabilities or obligations.
SECTION 5.03. Maintenance of Property; Insurance. (a) Except as
permitted by Section 5.04 or 5.12, the Borrower will keep, and will cause each
Subsidiary to keep, all property necessary in its business in good working order
and condition, ordinary wear and tear excepted, unless the failure to so keep
could not, based upon the facts and circumstances existing at the time,
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its assets and business against such casualties and contingencies, of such
types (including, without limitation, loss or damage, product liability,
business interruption, larceny, embezzlement or other criminal misappropriation)
and in such amounts as is customary in the case of similarly situated
corporations of established reputations engaged in the same or a similar
business, unless the failure to maintain such insurance could not, based upon
the facts and circumstances existing at the time, reasonably be expected to have
a Material Adverse Effect.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower (a) will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries and reasonably related extensions thereof, and (b) will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect (x) their
respective corporate existence and (y) their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business, unless in
the case of either the failure of the Borrower to comply with subclause (b) (y)
of this Section 5.04 or the failure of a Subsidiary to comply with clauses (a)
or (b) of this Section 5.04, such failure could not, based upon the facts and
circumstances existing at the time, reasonably be expected to have a Material
Adverse Effect; provided that nothing in this Section 5.04 shall prohibit (i)
the merger or consolidation of a Subsidiary with or into the Borrower or a
Wholly-Owned Consolidated Subsidiary, (ii) the sale, lease, transfer, assignment
or other disposition by a Subsidiary of all or any part of its assets to the
Borrower or to a Wholly-Owned Consolidated Subsidiary, (iii) the merger or
consolidation of a Subsidiary with or into a Person other than the Borrower or a
Wholly-Owned Consolidated Subsidiary, if
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the Person surviving such consolidation or merger is a Subsidiary and
immediately after giving effect thereto, no Default shall have occurred and be
continuing, (iv) the sale, lease, transfer, assignment or other disposition by a
Subsidiary of all or any part of its assets to a Person other than the Borrower
or a Wholly-Owned Consolidated Subsidiary if the Person to which such sale,
lease, transfer, assignment or other disposition is made is a Subsidiary and
immediately after giving effect thereto, no Default shall have occurred and be
continuing, (v) any transaction permitted pursuant to Section 5.12, (vi) the
termination of the corporate existence of any Subsidiary if the Borrower in good
faith determines that such termination is in the best interest of the Borrower
and is not materially disadvantageous to the Banks and (vii) the sale, lease,
transfer, assignment or other disposition (including any such transaction by way
of merger or consolidation) by the Borrower of all or any part of its assets to
a Person other than the Borrower or a Subsidiary if (A) immediately after giving
effect thereto, no Default shall have occurred and be continuing and (B) the
Borrower is a Subsidiary of such Person or the Borrower and such Person are
Subsidiaries of the same Person.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where (a) noncompliance therewith could not,
based upon the facts and circumstances in existence at the time, reasonably be
expected to have a Material Adverse Effect or (b) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records;
Confidentiality. (a) The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which true and correct entries shall
be made of its business transactions and activities so that financial statements
that fairly present its business transactions and activities can be properly
prepared in accordance with generally accepted accounting principles.
(b) The Borrower will permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all upon reasonable notice to the Borrower, at such reasonable
times and as often as may reasonably be requested by any Bank.
(c) Each Bank and the Agent shall, by its receipt of Confidential
Information (as defined below) pursuant to or in connection with this Agreement
or its exercise of any of its rights hereunder, be deemed to have agreed (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to (i) keep such information confidential, (ii) (except as
permitted by clause (iii) of this Section 5.06(c)) not disclose such information
to any Person other than an officer, director, employee, legal counsel,
independent auditor or authorized agent or advisor of the Agent or such Bank
needing to know such information (it being understood that any such officer,
director, employee, legal counsel, independent auditor or
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authorized agent or advisor shall be informed by the Agent or such Bank of the
confidential nature of such information), (iii) not disclose such information to
any Assignee or Participant (or prospective Assignee or Participant), unless
such Assignee or Participant (or prospective Assignee or Participant) shall
agree in writing to be bound by the provisions of this Section 5.06(c) and (iv)
not use any such information except for purposes relating to this Agreement or
the Notes. The term "Confidential Information" shall mean non-public information
furnished by or on behalf of the Borrower or any of its Subsidiaries to the
Agent, any Bank or other Person exercising rights hereunder or required to be
bound hereby (collectively "Recipients"), but shall not include any such
information which (1) has become or hereafter becomes available to the public
other than as a result of a disclosure by a Recipient, or (2) has become or
hereafter becomes available to a Recipient, on a non-confidential basis, from a
source other than the Borrower or any of its Subsidiaries (or any of their
respective representatives or agents) or any Recipient, which source, to the
knowledge of the Recipient, is not prohibited from disclosing such information
by a confidentiality agreement with, or other legal or fiduciary obligation to,
the Borrower or its Subsidiaries.
The restrictions set forth in the immediately preceding paragraph shall
not prevent the disclosure by a Recipient of any such information:
(A) with the prior written consent of the Borrower,
(B) at the request of a bank regulatory agency or in
connection with an examination by bank examiners, or
(C) upon order of any court or administrative agency of
competent jurisdiction, to the extent required by such order
and not effectively stayed on appeal or otherwise, or as
otherwise required by law; provided that in the case of any
intended disclosure under this clause (C), the Recipient shall
(unless otherwise required by applicable law) give the
Borrower not less than five Domestic Business Days prior
notice (or such shorter period as may, in the good faith
discretion of the Recipient, be reasonable under the
circumstances or may be required by any court or agency under
the circumstances), specifying the Confidential Information
involved and stating such Recipient's intention to disclose
such Confidential Information (including the manner and extent
of such disclosure) in order to allow the Borrower an
opportunity to seek an appropriate protective order.
Each Recipient shall agree that, in addition to all other remedies
available, the Borrower shall be entitled to specific performance and injunctive
and other equitable relief as a remedy for any breach of this Section 5.06(c) by
such Recipient.
SECTION 5.07. Limitation on Restrictions on Subsidiary Dividends and
Other Distributions. The Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or
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restriction on the ability of any Subsidiary to (a) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits, owned by the Borrower or any Subsidiary, or pay any Debt owed to
the Borrower or any Subsidiary, (b) make loans or advances to the Borrower or
any Subsidiary or (c) transfer any of its properties or assets to the Borrower
or any Subsidiary, except for such encumbrances or restrictions existing under
or by reason of
(i) applicable law, agreements with foreign governments with
respect to assets located in their jurisdiction, or condemnation or
eminent domain proceedings,
(ii) any of the Financing Documents,
(iii) (A) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Borrower
or a Subsidiary, or (B) customary restrictions imposed on the transfer
of copyrighted or patented materials or provisions in agreements that
restrict the assignment of such agreements or any rights thereunder,
(iv) provisions contained in the instruments evidencing or
governing Debt or other obligations or agreements, in each case
existing on the Effective Date,
(v) provisions contained in documents evidencing or governing
any Permitted Receivables Transaction,
(vi) provisions contained in instruments evidencing or
governing Debt or other obligations or agreements of any Person, in
each case, at the time such Person (A) shall be merged or consolidated
with or into the Borrower or any Subsidiary, (B) shall sell, transfer,
assign, lease or otherwise dispose of all or substantially all of such
Person's assets to the Borrower or a Subsidiary, or (C) otherwise
becomes a Subsidiary, provided that in the case of clause (A), (B) or
(C), such Debt, obligation or agreement was not incurred or entered
into, or any such provisions adopted, in contemplation of such
transaction,
(vii) provisions contained in instruments amending, restating,
supplementing, extending, renewing, refunding, refinancing, replacing
or otherwise modifying, in whole or in part (collectively,
"Refinancing"), instruments referred to in clauses (ii), (iv) and (vi)
of this Section 5.07, so long as such provisions are, in the good faith
determination of the Borrower's board of directors, not materially more
restrictive than those contained in the respective instruments so
Refinanced,
(viii) provisions contained in any instrument evidencing or
governing Debt or other obligations of a Subsidiary Guarantor,
(ix) any encumbrances and restrictions with respect to a
Subsidiary imposed in connection with an agreement which has been
entered into for the sale or disposition of
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such Subsidiary or its assets, provided such sale or disposition
otherwise complies with this Agreement,
(x) the subordination (pursuant to its terms) in right and
priority of payment of any Debt owed by any Subsidiary (the "Indebted
Subsidiary") to the Borrower or any other Subsidiary, to any other Debt
of such Indebted Subsidiary, provided (A) such Debt is permitted under
this Agreement and (B) the Borrower's board of directors has
determined, in good faith, at the time of the creation of such
encumbrance or restriction, that such encumbrance or restriction could
not, based upon the facts and circumstances in existence at the time,
reasonably be expected to have a Material Adverse Effect,
(xi) provisions governing preferred stock issued by a
Subsidiary, provided that such preferred stock is permitted under
Section 5.08, and
(xii) provisions contained in debt instruments obligations or
other agreements of any Subsidiary which are not otherwise permitted
pursuant to clauses (i) through (xi) of this Section 5.07, provided
that the aggregate investment of the Borrower in all such Subsidiaries
(determined in accordance with generally accepted accounting
principles) shall at no time exceed the greater of (a) $50,000,000 or
(b) 10% of Consolidated Tangible Net Worth.
The provisions of this Section 5.07 shall not prohibit (x) Liens not prohibited
by Section 5.11 or (y) restrictions on the sale or other disposition of any
property securing Debt of any Subsidiary, provided such Debt is otherwise
permitted by this Agreement.
SECTION 5.08. Debt. Consolidated Debt will at no time exceed 52.5% of
Consolidated Total Capitalization. The total Debt of all Consolidated
Subsidiaries (excluding (i) Debt of a Consolidated Subsidiary to the Borrower or
to a Wholly-Owned Consolidated Subsidiary, (ii) Debt of a Subsidiary Guarantor
and (iii) Debt of any Person (a) existing at the time such Person becomes a
Subsidiary or merges into a Subsidiary and (b) not created in contemplation of
such event, but only for a period ending 180 days after the date of such event)
will at no time exceed $300,000,000 in aggregate outstanding principal amount.
For purposes of this Section any preferred stock of a Consolidated Subsidiary
held by a Person other than the Borrower or a Wholly-Owned Consolidated
Subsidiary shall be included, at the higher of its voluntary or involuntary
liquidation value, in "Consolidated Debt" and in the "Debt" of such Consolidated
Subsidiary.
SECTION 5.09. Fixed Charge Coverage. The ratio of Consolidated EBIT to
Consolidated Interest Expense will not, for any period of four consecutive
fiscal quarters, be less than 2.5 to 1.
SECTION 5.10. Restricted Payments. Neither the Borrower nor any
Subsidiary will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to the date hereof does not exceed an amount equal to the sum of (a)
$332,000,000 plus (b) 50% of Consolidated Net Income (or minus 100%
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<PAGE> 46
of Consolidated Net Income, in the event of a net loss for such period) for the
period from July 1, 1996 through the end of the then most recently ended fiscal
quarter of the Borrower (treated for this purpose as a single accounting
period), plus (c) the aggregate cash proceeds (net of underwriting commissions)
received by the Borrower (other than from a Subsidiary) from the issuance or
sale after June 30, 1996 of capital stock or Stock Equivalents of the Borrower
(other than the proceeds of any capital stock or Stock Equivalent which by its
terms is subject to redemption otherwise than at the sole option of the
Borrower) plus (d) the aggregate amount of capital contributions received by the
Borrower subsequent to the Parent Guarantee Date. Nothing in this Section 5.10
shall prohibit the payment of any dividend or distribution within 60 days after
the declaration thereof if such declaration was not prohibited by this Section
5.10.
SECTION 5.11. Negative Pledge. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) any Lien existing on any asset on the Effective Date securing Debt
outstanding on the Effective Date;
(b) any Lien existing on any asset of, or capital stock of, or other
ownership interest in, any Person (such capital stock and other ownership
interests are collectively referred to herein as "Stock") at the time such
Person becomes a Subsidiary, which Lien was not created in contemplation of such
event;
(c) any Lien on any asset securing the payment of all or part of the
purchase price of such asset upon the acquisition thereof by the Borrower or a
Subsidiary or securing Debt (including any obligation as lessee incurred under a
capital lease) incurred or assumed by the Borrower or a Subsidiary prior to, at
the time of or within one year after such acquisition (or in the case of real
property, the completion of construction (including any improvements on an
existing property) or the commencement of full operation of such asset or
property, whichever is later), which Debt is incurred or assumed for the purpose
of financing all or part of the cost of acquiring such asset or, in the case of
real property, construction or improvements thereon; provided, that in the case
of any such acquisition, construction or improvement, the Lien shall not apply
to any asset theretofore owned by the Borrower or a Subsidiary, other than
assets so acquired, constructed or improved;
(d) any Lien existing on any asset or Stock of any Person at the time
such Person is merged or consolidated with or into the Borrower or a Subsidiary
which Lien was not created in contemplation of such event;
(e) any Lien existing on any asset or Stock of any Person at the time
of acquisition thereof by the Borrower or a Subsidiary, which Lien was not
created in contemplation of such acquisition;
(f) any Lien arising out of the Refinancing of any Debt secured by any
Lien permitted by any of the subsections (a) through (e) of this Section 5.11,
provided the principal amount of
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Debt is not increased and is not secured by any additional assets, except as
provided in the last sentence of this Section 5.11;
(g) any Lien to secure Debt of a Subsidiary to the Borrower or to a
Wholly-Owned Consolidated Subsidiary;
(h) any Lien created pursuant to a Permitted Receivables Transaction;
(i) any Lien in favor of the United States or any other country (or any
department, agency, instrumentality or political subdivision of the United
States or any other country) securing obligations arising in connection with
partial, progress, advance or other payments pursuant to any contract, statute,
rule or regulation or securing obligations incurred for the purpose of financing
all or any part of the purchase price (including the cost of installation
thereof or, in the case of real property, the cost of construction or
improvement or installation of personal property thereon) of the asset subject
to such Lien (including, but not limited to, any Lien incurred in connection
with pollution control, industrial revenue or similar financings);
(j) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any single obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business; and
(k) Liens not otherwise permitted by the foregoing clauses (a) through
(j) of this Section 5.11 securing Debt (without duplication) in an aggregate
principal amount at any time outstanding not to exceed an amount equal to the
greater of (i) $50,000,000 or (ii) 10% of Consolidated Tangible Net Worth.
It is understood that any Lien permitted to exist on any asset pursuant to the
foregoing provisions of this Section 5.11 may attach to the proceeds of such
asset and, with respect to Liens permitted pursuant to subsections (a), (b),
(d), (e), (f) (but only with respect to the Refinancing of a Debt secured by a
Lien permitted pursuant to subsections (a), (b), (d) or (e)) or (g) of this
Section 5.11, may attach to an asset acquired in the ordinary course of business
as a replacement of such former asset.
SECTION 5.12. Consolidations, Mergers and Sales of Assets. (a) The
Borrower will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer all or substantially all of its assets to any
other Person, unless
(A) the Borrower or a Subsidiary or a Domestic Parent is
the surviving corporation;
(B) the Person (if other than the Borrower) formed by
such consolidation or into which the Borrower is merged, or
the Person which acquires by sale or other transfer, or which
leases, all or substantially all of the assets of the Borrower
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(any such Person, the "Successor"), shall be organized and
existing under the laws of the United States, any state
thereof or the District of Columbia and shall expressly
assume, in a writing executed and delivered to the Agent for
delivery to each of the Banks, in form reasonably satisfactory
to the Agent, the due and punctual payment of the principal of
and interest on the Promissory Notes and the performance of
the other obligations under this Agreement and the Promissory
Notes on the part of the Borrower to be performed or observed,
as fully as if such Successor were originally named as the
Borrower in this Agreement;
(C) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing; and
(D) the Borrower has delivered to the Agent a certificate
on behalf of the Borrower signed by a Responsible Officer and
an opinion of counsel (which counsel may be an employee of the
Borrower), each stating that all conditions provided in this
Section 5.12 relating to such transaction have been satisfied.
The foregoing provisions of this Section 5.12 shall not restrict the
merger or consolidation of any Subsidiary with and into the Borrower.
Upon the satisfaction (or waiver in accordance with Section 9.05) of
the conditions set forth in this Section 5.12, the Successor shall succeed, and
may exercise every right and power of, the Borrower under this Agreement and the
Promissory Notes with the same effect as if the Successor had been originally
named as the Borrower herein and in the Promissory Notes, and the Borrower shall
be relieved of its obligations under this Agreement and the Promissory Notes.
(b) The Borrower will not, and will not permit any Subsidiary to, sell,
lease or otherwise transfer, in any transaction or series of related
transactions, to any Person (other than the Borrower, a Subsidiary, a Person of
which the Borrower is a Subsidiary or a Subsidiary of such a Person) any
Property (including, without limitation, the stock of any Subsidiary) having a
net book value in excess of 15% of Consolidated Assets determined as of the end
of the fiscal quarter of the Borrower most recently ended at the time of such
sale or other transaction, or Property (including without limitation, stock of a
Subsidiary) which contributed in excess of 15% of Consolidated EBIT for the
fiscal year of the Borrower most recently ended at the time of such sale or
other transaction.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrower for its general corporate purposes,
including, without limitation, capital expenditures and (subject to the
following sentence) acquisitions. None of such proceeds will be used, directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.14. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, on any date before the Parent Guarantee Date,
directly or indirectly, pay any
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funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate (collectively, "AFFILIATE TRANSACTIONS"); provided, however, that the
foregoing provisions of this Section 5.14 shall not prohibit the Borrower or any
of its Subsidiaries from: (a) making Restricted Payments (including, for this
purpose, transactions expressly excluded from the definition of a Restricted
Payment) permitted by Section 5.10, (b) making sales to or purchases from any
Affiliate and, in connection therewith, extending credit or making payments, or
from making payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the ordinary course of
business and on terms and conditions at least as favorable to the Borrower or
such Subsidiary as the terms and conditions which the Borrower would reasonably
expect to be obtained in a similar transaction with a Person which is not an
Affiliate at such time, (c) making payments of principal, interest and premium
on any Debt of the Borrower or such Subsidiary held by an Affiliate if the terms
of such Debt are at least as favorable to the Borrower or such Subsidiary as the
terms which the Borrower would reasonably expect to have been obtained at the
time of the creation of such Debt from a lender which was not an Affiliate, (d)
participating in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the Borrower or such
Subsidiary participates in the ordinary course of its business and on a basis no
less advantageous than the basis on which such Affiliate participates, (e)
paying or granting reasonable compensation and benefits to any director,
officer, employee or agent of the Borrower or any Subsidiary, (f) paying
reasonable legal fees and expenses to a law firm of which an Affiliate is a
member or (g) engaging in any Affiliate Transaction not otherwise addressed in
subsections (a) - (f) of this Section 5.14, the terms of which are not less
favorable to the Borrower or such Subsidiary than those that the Borrower would
reasonably expect to be obtained in a comparable transaction at such time with a
Person which is not an Affiliate.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults. If one or more of the following
events ("EVENTS OF DEFAULT") shall have occurred and be continuing and shall not
have been waived in accordance with Section 9.05:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or shall fail to pay within three Domestic Business Days of the due date thereof
any interest on any Loan or any fees payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.08 or 5.09;
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(c) the Borrower shall fail to observe or perform any covenant
contained in Section 5.07 or Sections 5.10 to 5.14, inclusive, and such failure
shall not be remedied within five days after any Responsible Officer obtains
actual knowledge thereof;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a),
(b) or (c) of this Section 6.01) for 10 days after notice thereof has been given
to the Borrower by the Agent at the request of any Bank;
(e) any representation, warranty, certification or statement made in
writing by the Borrower or any Guarantor in the Financing Documents or in any
certificate, financial statement or other document required to be delivered to
the Agent or any of the Banks pursuant to the Financing Documents shall prove to
have been incorrect in any material respect when made (or deemed made);
(f) on any date on or after the Parent Guarantee Date, there shall
occur any Guarantor Event of Default (as defined in the Parent Guarantee);
(g) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt when due (after giving effect to any applicable
grace period);
(h) any event or condition shall occur that results in the
acceleration of the maturity of any Material Debt or that entitles the holder or
holders of any Material Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof;
(i) the Borrower or any Significant Subsidiary shall (i) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
substantially all of its property, or (ii) consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other similar proceeding commenced against it, or (iii) make a general
assignment for the benefit of creditors, or (iv) fail generally to pay its debts
as they become due, or (v) take corporate action authorizing any of the
foregoing;
(j) (i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or substantially all of its property, and such
involuntary case or other proceeding shall remain in effect and undismissed and
unstayed for a period of 60 consecutive days or (ii) an order for relief shall
be entered against the Borrower or any Significant Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
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(k) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $25,000,000;
(l) a judgment or order for the payment of money in excess of
$30,000,000 (after deducting amounts covered by insurance, except to the extent
that the insurer providing such insurance has declined such coverage) shall be
rendered against the Borrower or any Subsidiary and, within 60 days after entry
thereof, such judgment or order is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay, such
judgment or order is not discharged;
(m) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 40% or more of the
outstanding shares of common stock of the Borrower; or, on the last day of any
period of twelve consecutive calendar months, a majority of members of the board
of directors of the Borrower shall no longer be composed of individuals (i) who
were members of said board of directors on the first day of such twelve
consecutive calendar month period or (ii) whose election or nomination to said
board of directors was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
said board of directors; provided that, the events described in this subsection
(m) shall not constitute an Event of Default on any date on or after the Parent
Guarantee Date;
(n) the Borrower or any Subsidiary shall fail to make any payment
owing by it in respect of any performance bond, performance guaranty or bank
guaranty issued in lieu of a performance bond or performance guaranty (other
than a payment which is disputed by the Borrower or such Subsidiary in good
faith), and the aggregate of all such defaulted payments shall exceed
$50,000,000 at any one time for the Borrower and its Subsidiaries;
(o) on any date on or after the Parent Guarantee Date, the Parent
Guarantee shall cease to be valid and enforceable; or
(p) on any date on or after the Parent Guarantee Date, the Borrower
shall cease to be a Wholly-Owned Consolidated Subsidiary of the Parent
Guarantor;
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then, and in every such event, the Agent shall (i) if requested by Banks having
more than 60% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Promissory Notes evidencing more than 60% in
aggregate principal amount of the Loans, by notice to the Borrower declare the
Promissory Notes (together with accrued interest thereon) to be, and the
Promissory Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in subsection (i) or (j) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Promissory Notes (together
with accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Financing Documents as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York (and any successor acting as Agent) in its capacity as a Bank hereunder
shall have the same rights and powers under the Financing Documents as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York (and any successor
acting as Agent) and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
affiliate of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under the
Financing Documents are only those expressly set forth therein. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
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SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or any Guarantor; (iii) the
satisfaction of any condition specified in Article 3, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Subsidiary Guarantees, the Parent Guarantee,
the Promissory Notes or any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it in good faith to be genuine or to
be signed by or on behalf of the proper party or parties. Without limiting the
generality of the foregoing, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by such indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrower and its Subsidiaries and its own decision to
enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, subject to
the consent of the Borrower. If no successor Agent shall have been so appointed
by the Required Banks and consented to by the Borrower and shall have accepted
such appointment within 45 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least
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$50,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
the Financing Documents. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as the Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon in
writing between the Borrower and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Banks
in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks holding 50% or
more of the aggregate amount of the affected Loans advise the Agent that the
Adjusted CD Rate or the London Interbank Offered Rate, as the case may be, as
determined by the Agent will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon, until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist (which the Agent agrees to do promptly
upon such circumstances ceasing to exist), (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the case
may be, shall be suspended and (ii) each outstanding CD Loan or Euro-Dollar
Loan, as the case may be, shall be converted into a Base Rate Loan on the last
day of the then current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least one Domestic Business Day before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the
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first day to but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
any Bank has determined in its reasonable judgment that the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency,
shall make it unlawful or impossible for such Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice specifying the
circumstances giving rise to such suspension to the other Banks and the
Borrower, whereupon, until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension no longer exist (which such
Bank agrees to do promptly upon such circumstances ceasing to exist), the
obligation of such Bank to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank in
the good faith exercise of its discretion, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan to such
day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
the date of this Agreement, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, any Bank has determined in its reasonable
judgment that the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement with respect to which such Bank is entitled to compensation
during the relevant Interest Period under Section 2.15), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
such Bank (or its Applicable Lending Office) or shall impose
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on any Bank (or its Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Promissory Note or its obligation to make
Fixed Rate Loans and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under its
Promissory Note with respect thereto, by an amount deemed by such Bank to be
material to such Bank, then, within 15 days after written demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the date of this
Agreement, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency (including any determination by any such authority, central
bank or comparable agency that, for purposes of capital adequacy requirements,
the Commitments hereunder do not constitute commitments with an original
maturity of one year or less), has or would have the effect of reducing the rate
of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after written demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date of this Agreement,
which will entitle such Bank to compensation pursuant to this Section; provided
that (i) if any Bank fails to give such notice within 90 days after it obtains
actual knowledge of such an event, such Bank shall only be entitled to payment
under this Section 8.03 for costs incurred from and after the date 90 days prior
to the date that such Bank does give such notice and (ii) each such Bank will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank in the good faith exercise of its discretion, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section and setting forth in reasonable detail the additional amount
or amounts to be paid to it hereunder and the basis used to determine such
amounts shall be conclusive in the absence of manifest error. In determining
such amount, such Bank will use reasonable averaging and attribution methods and
will have a reasonable basis for any assumptions it makes in connection
therewith.
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SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Agent hereunder or under any Promissory Note
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, taxes imposed on or measured by its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on or measured by its income, and
franchise or similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Promissory Note to any Bank or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04 such Bank or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.01, the original or a certified copy of
a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any
Promissory Note or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Financing Document (hereinafter referred to as
"OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04 paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 15 days from the date
such Bank or the Agent (as the case may be) makes demand therefor.
(d) At the times indicated herein, each Bank organized under the laws
of a jurisdiction outside the United States shall provide the Borrower with
Internal Revenue Service form 1001 or 4224 (in each case accompanied by any
statements which may be required under applicable Treasury regulations), as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to receive payments under this Agreement
(i) without deduction or withholding of any United States federal income taxes
or (ii) subject to a reduced rate of United States federal withholding tax,
unless, in each case of clause (i) and (ii) of this Section 8.04(d), an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or which would prevent the Bank
from duly
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completing and delivering any such form with respect to it and the Bank advises
the Borrower and the Agent that it is not capable of receiving payments without
any deduction or withholding of such taxes. Such forms shall be provided (x) on
or prior to the date of the Bank's execution and delivery of this Agreement in
the case of each Bank listed on the signature pages hereof, and on or prior to
the date on which it becomes a Bank in the case of each other Bank, and (y) on
or before the date that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by the Bank. If the form provided by a Bank at the time such Bank first becomes
a party to this Agreement indicates a United States interest withholding tax
rate in excess of zero, withholding tax at such rate shall be considered
excluded from "TAXES" as defined in Section 8.04(a). In addition, to the extent
that for reasons other than a change of treaty, law or regulation any Bank
becomes subject to an increased rate of United States interest withholding tax
while it is a party to this Agreement, withholding tax at such increased rate
shall be considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form in accordance with Section 8.04(d)
(unless such failure is excused by the terms of Section 8.04(d)), such Bank
shall not be entitled to indemnification under Section 8.04(a) or 8.04(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Bank, which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank in the good faith exercise of its discretion, is not
otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make, or to continue or convert
outstanding Loans as or to Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its CD Loans or Euro-Dollar Loans and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such Bank through
the Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist), all Loans which would otherwise be made by such Bank as (or
continued as or converted to) CD Loans or Euro-Dollar Loans, as the case may be,
shall instead be Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the other Banks).
If such Bank notifies such Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a CD Loan or Euro-Dollar
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Loan, as the case may be, on the first day of the next succeeding Interest
Period applicable to the related CD Loans or Euro-Dollar Loans of the other
Banks.
SECTION 8.06. Substitution of Bank. If any Bank (i) has demanded
compensation for increased costs pursuant to Section 8.03 or 8.04 or is entitled
to payments under Section 8.04(a) or (ii) has determined that the making or
maintaining of any Euro-Dollar Loan has become unlawful or impossible pursuant
to Section 8.02 and similar additional interest or compensation has not been
demanded by, or a similar determination has not been made by, all of the Banks,
the Borrower shall have the right (with the assistance of the Agent) to
designate an Assignee which is not an Affiliate of the Borrower to purchase for
cash, pursuant to an Assignment and Assumption Agreement in substantially the
form of Exhibit G hereto, the outstanding Loans and Commitment of such Bank and
to assume all of such Bank's other rights and obligations hereunder without
recourse to or warranty by, or expense to, such Bank, for a purchase price equal
to the principal amount of all of such Bank's outstanding Loans plus any accrued
but unpaid interest thereon and the accrued but unpaid fees in respect of that
Bank's Commitment hereunder plus such amount, if any, as would be payable
pursuant to Section 2.13 if the outstanding Loans of such Bank were prepaid in
their entirety on the date of consummation of such assignment.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party provided for hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (x) in the case of the Borrower or the Agent, at
its address or facsimile or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or facsimile or telex number
set forth in its Administrative Questionnaire or (z) in the case of any party,
such other address or facsimile or telex number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 9.01
and electronic, telephonic or other appropriate confirmation of receipt is
received by the sender, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article 2 or Article 8 shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any other
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further
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exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein and therein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of the Financing Documents, any waiver or consent
hereunder or any amendment thereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including reasonable fees and disbursements
of counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective Bank Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by such Indemnitee (whether or not such
Indemnitee shall be designated a party thereto) arising out of any
investigative, administrative or judicial proceeding (brought or threatened)
relating to or arising out of the Financing Documents, the arrangement,
administration, performance or enforcement thereof or any actual or proposed use
of proceeds of Loans hereunder; provided that no Indemnitee shall have the right
to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction; provided
further that no Indemnitee shall have the right to be indemnified hereunder in
connection with any proceedings between it and another Indemnitee which does not
relate to the Borrower.
(c) If any proceeding or claim shall be brought or asserted against any
Indemnitee in respect of which indemnity may be sought pursuant to the preceding
subsection, such Indemnitee shall promptly notify the Borrower. The Borrower
shall not be liable for any costs or expenses in connection with any settlement
entered into without its consent.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Promissory Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Promissory Note held by such other Bank, the
Bank receiving such proportionately greater payment shall purchase such
participations in the Promissory Notes held by the other Banks, and such other
adjustments shall be made, as may be required, so that all such payments of
principal and interest with respect to the Promissory Notes held by the Banks
shall be shared by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Promissory Notes.
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SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
or the Promissory Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for termination of any Commitment,
(iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Promissory Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement or (v) release the Parent Guarantor from
its obligations under the Parent Guarantee.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement and subject to subsection (e), (f) and (g) below, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
9.06(c) or 9.06(d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (in an amount
equivalent to an original Commitment of not less than $10,000,000) of all, of
its rights and obligations under this Agreement and the Promissory Notes, and
such Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit G
hereto executed by such Assignee and such transferor Bank, with (and subject to)
the subscribed consent of the
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Borrower and the Agent; provided that if an Assignee is an affiliate of such
transferor Bank, no such consent shall be required; and provided further that
such assignment may, but need not, include rights of the transferor Bank in
respect of outstanding Money Market Loans. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Promissory Note
is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing such
assignment in the amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall deliver to
the Borrower and the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Promissory Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(f) Notwithstanding anything to the contrary contained in this Section
9.06 but subject to the terms and conditions set forth in this subsection (f),
any Bank may from time to time, elect to designate a Conduit to provide all or
any part of Loans required to be made by such Bank to the Borrower pursuant to
this Agreement (a "Conduit Designation"), provided the designation of a Conduit
by any Bank for purposes of this Section 9.06(f) shall be subject to the
approval of the Borrower. No additional Note shall be required with regard to a
Conduit Designation; provided, however, to the extent any Conduit shall advance
funds under a Conduit Designation, the designating Bank shall be deemed to hold
the Note in its possession as an agent for such Conduit to the extent of the
Loan funded by such Conduit. Notwithstanding any such Conduit Designation, (x)
the designating Bank shall remain solely responsible to the other parties hereto
for its obligations under this Agreement and (y) the Borrower and the Agent may
continue to deal solely and directly with the designating Bank as administrative
agent for such designating Bank's Conduit, in connection with all of such
Conduit's rights and obligations under this Agreement, unless and until the
Borrower and the Agent are notified that the designating Bank has been replaced
as administrative agent for its Conduit; any payments for the benefit of any
designating Bank and its Conduit shall be paid to such designating Bank for
itself as
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administrative agent for its Conduit, as applicable; provided neither the
Borrower nor the Agent shall be responsible for any designating Bank's
application of any such payments. In addition, any Conduit may (i) with notice
to, but without the prior written consent of the Borrower and the Agent, and
without paying any processing fee therefor, assign all or portions of its
interest in any Loans to the Bank that designated such Conduit or to any
financial institutions consented to by the Borrower and the Agent providing
liquidity and/or credit facilities to or for the account of such Conduit to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any guarantee, surety, credit or
liquidity enhancement to such Conduit.
(g) Each party to this Agreement hereby agrees that, at any time a
Conduit Designation is in effect, it shall not institute against, or join any
other person in instituting against, any Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law, for one year and a day after the
latest maturing commercial paper note issued by such Conduit is paid. This
Section 9.06(g) shall survive the termination of this Agreement.
SECTION 9.07. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. THIS AGREEMENT
AND EACH PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 9.09. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.10. Waiver of Jury Trial. EACH OF THE BORROWER, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
59
<PAGE> 64
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
60
<PAGE> 65
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.
TYCO INTERNATIONAL LTD.
By: /s/ Mark Swartz
----------------------------------------
Title: Vice President - Chief Financial
Officer
By: /s/ Barbara S. Miller
----------------------------------------
Title: Vice President - Treasurer
1 Tyco Park
Exeter, New Hampshire 03833
Facsimile number: 603-778-0108
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Robert L. Barrett
----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Terry Pitcher
----------------------------------------
Title: Vice President
<PAGE> 66
BANKERS TRUST COMPANY
By: /s/ Patricia Hogan
----------------------------------------
Title: Vice President
COMMERZBANK AG, NEW YORK BRANCH
By: /s/ Robert J. Donohue
----------------------------------------
Title: Vice President
By: /s/ Peter T. Doyle
----------------------------------------
Title: Assistant Treasurer
CREDIT SUISSE FIRST BOSTON
By: /s/ Chris T. Horgan
----------------------------------------
Title: Vice President
By: /s/ Edward E. Barr
----------------------------------------
Title: Associate
MELLON BANK, N.A.
By: /s/ Rita C. Long
----------------------------------------
Title: Vice President
<PAGE> 67
BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By: /s/ Luc Verbeken
----------------------------------------
Title: Senior Vice President
By: /s/ Mallika Kambhampati
----------------------------------------
Title: Vice President and Manager
Credit Analysis
THE BANK OF NEW YORK
By: /s/ Ernest Fung
----------------------------------------
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Robert J. Dilloff
----------------------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.
(NEW YORK BRANCH)
By: /s/ Masayoshi Komaki
----------------------------------------
Title: Assistant Vice President
<PAGE> 68
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By: /s/ Mark J. Rakov
----------------------------------------
Title: Vice President
THE SANWA BANK, LIMITED
By: /s/ Yutaka Higashino
----------------------------------------
Title: Senior Vice President
TORONTO DOMINION (NEW YORK), INC.
By: /s/ Jorge A. Garcia
----------------------------------------
Title: Vice President
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
By: /s/ Alexander Beal
----------------------------------------
Title: Assistant Treasurer
By: /s/ Dieter Hoeppli
----------------------------------------
Title: Vice President
<PAGE> 69
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
By: /s/ Robert L. Barrett
----------------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Robert L. Barrett
Telex number: 177615
Facsimile number: 212-648-5018
<PAGE> 70
Commitment Schedule
Morgan Guaranty Trust Company of New York $69,000,000
The Bank of Nova Scotia $64,200,000
Bankers Trust Company $64,200,000
Commerzbank AG, New York Branch $64,200,000
Credit Suisse First Boston $64,200,000
Mellon Bank, N.A. $64,200,000
Bank Brussels Lambert, New York Branch $45,000,000
The Bank of New York $45,000,000
Bank of Tokyo-Mitsubishi Trust Company $45,000,000
The Dai-ichi Kangyo Bank, Ltd. (New York Branch) $45,000,000
The Hongkong and Shanghai Banking Corporation Limited $45,000,000
The Sanwa Bank, Limited $45,000,000
Toronto Dominion (New York), Inc. $45,000,000
Union Bank of Switzerland, New York Branch $45,000,000
Total Commitments:
$750,000,000
<PAGE> 71
EXHIBIT A
PROMISSORY NOTE
New York, New York
, 19
For value received, TYCO INTERNATIONAL LTD., a Massachusetts
corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for
the account of its Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date provided for in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount of each such
Loan on the dates and at the rate or rates provided for in the Credit Agreement.
All such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office of
Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This promissory note is one of the Promissory Notes referred to in the
364-Day Credit Agreement dated as of June 27, 1997 among the Borrower, the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
Except as permitted by Section 9.06 of the Credit Agreement, this
Promissory Note may not be assigned by the Bank to any other Person.
<PAGE> 72
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TYCO INTERNATIONAL LTD.
By
----------------------------
Title:
By
----------------------------
Title:
<PAGE> 73
Promissory Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- ----------------------------------------------------------------------------
Amount Type Amount of Unpaid
of of Principal Principal Maturity Notation
Date Loan Loan Repaid Amount Date Made By
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<PAGE> 74
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Tyco International Ltd.
Re: 364-Day Credit Agreement (the "Credit Agreement")
dated as of June 27, 1997 among the Borrower, the
Banks listed on the signature pages thereof and the
Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount(1) Interest Period(2)
---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
TYCO INTERNATIONAL LTD.
By
------------------------------------------
Title:
By
------------------------------------------
Title:
- ---------------------------
(1)Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2)Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE> 75
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Tyco
International Ltd. (the "Borrower")
Pursuant to Section 2.03 of the 364-Day Credit Agreement dated as of
June 27, 1997 among the Borrower, the Banks parties thereto and the undersigned,
as Agent (the "Credit Agreement"), we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30
A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
---------------------------------
Authorized Officer
<PAGE> 76
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: Morgan Guaranty Trust Company of New York,
as Agent
Re: Money Market Quote to Tyco International Ltd. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at
the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
-------- --------- ------------ --------------------
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed $____________.]**
----------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
<PAGE> 77
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the 364-Day Credit
Agreement dated as of June 27, 1997 (the "Credit Agreement") among the Borrower,
the Banks listed on the signature pages thereof and yourselves, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for which any offer(s)
are accepted, in whole or in part, in accordance with Section 2.03(f) of the
Credit Agreement.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
- ----------
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
<PAGE> 78
EXHIBIT E
Form of Opinion of General Counsel
of the Borrower
June 27, 1997
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, As Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the General Counsel of Tyco International Ltd., a Massachusetts
corporation (the "Borrower"), and am rendering this opinion in connection with
that certain 364-Day Credit Agreement (the "Credit Agreement"), dated as of June
27, 1997, among the Borrower, the banks listed on the signature pages thereof
(the "Banks") and Morgan Guaranty Trust Company of New York, as Agent. This
opinion is being delivered to you pursuant to Section 3.01(c) of the Credit
Agreement. Each term defined in the Credit Agreement and used herein, but not
otherwise defined herein, has the meaning ascribed thereto in the Credit
Agreement.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreement and Promissory Notes and have examined originals or copies,
certified or otherwise identified to my satisfaction, of (i) the Restated
Articles of Organization and By-laws of the Borrower, each as in effect on the
date hereof and (ii) such other documents, records, certificates and instruments
as I have deemed relevant and necessary as a basis for the opinion hereinafter
expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to me as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements, representations and certificates of officers and other
representatives of the Borrower and certificates of public officials. In
addition, I have assumed that (i) the Credit Agreement has been validly
authorized, executed and delivered by all parties thereto (other than the
Borrower), (ii) each party to the Credit Agreement (other than the Borrower) has
been duly organized and is a corporation or other entity validly existing and in
good standing (to the extent applicable) under the laws of its respective
jurisdiction of organization, with the full corporate or other organizational
power to execute and deliver the Credit Agreement and to perform its respective
obligations thereunder, (iii) the Credit Agreement constitutes the legal, valid
and binding obligations of the respective parties thereto (other than the
Borrower) enforceable against such parties in accordance with their respective
terms, (iv) the execution and delivery of the Credit Agreement by each party
thereto (other than the Borrower) and the performance by such parties of their
respective obligations thereunder do not violate such parties' respective
articles or
<PAGE> 79
certificate of incorporation or by-laws, or other organizational documents, and
(v) the execution, delivery and performance by each party to the Credit
Agreement (other than the Borrower) and the performance by such parties of their
respective obligations thereunder do not violate any agreement, judgment,
injunction, decree, order of any governmental authority, other instrument, law
or regulation applicable to such party.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts, and
has all corporate powers and all material governmental licenses, authorizations,
consents and approvals (collectively, the "Consents") required to carry on its
business as now conducted, other than those powers and Consents, the failure of
which to be possessed or obtained could not, based upon the facts and
circumstances in existence on the date hereof, reasonably be expected to have a
Material Adverse Effect.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Promissory Notes (a) are within the Borrower's
corporate powers; (b) have been duly authorized by all necessary corporate
action on the part of the Borrower; (c) require no action by or in respect of,
or filing with, any governmental body, agency or official, in each case, on the
part of the Borrower; and (d) do not contravene, or constitute a default by the
Borrower under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Borrower or, (iii) any agreement
or instrument evidencing or governing Debt of the Borrower, or any other
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Promissory Notes constitute valid and binding obligations
of the Borrower.
4. There is no action, suit or proceeding pending against, or, to the
best of my knowledge, threatened against or affecting, the Borrower or any of
its Subsidiaries before any court or arbitrator or any governmental body, agency
or official, in which there is a reasonable possibility of an adverse decision
which could, based upon the facts and circumstances in existence on the date
hereof, reasonably be expected to have a Material Adverse Effect or which in any
manner draws into question the validity of the Credit Agreement or the
Promissory Notes.
5. Each of the Borrower's corporate Subsidiaries is a corporation
validly existing and in good standing under the laws of its jurisdiction of
incorporation, except where the failure to be so incorporated, existing or in
good standing could not, based upon the facts and circumstances existing on the
date hereof, reasonably be expected to have a Material Adverse Effect, and has
all corporate powers and all Consents required to carry on its business as now
conducted other than those powers and Consents, the failure of which to be
possessed or obtained could not, based upon the facts and circumstances in
existence on the date hereof, reasonably be expected to have a Material Adverse
Effect.
2
<PAGE> 80
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Credit Agreement and the Promissory Notes
may be subject to or limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or transfer or other similar laws
and court decisions, now or hereafter in effect, relating to or affecting the
rights of creditors generally.
(b) The enforceability of the Credit Agreement and the Promissory Notes
is or will be subject to the application of and may be limited by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law). Such principles of equity are of general
application, and in applying such principles a court, among other things, might
not allow a creditor to accelerate maturity of a debt under certain
circumstances including, without limitation, upon the occurrence of a default
deemed immaterial, or might decline to order the Borrower or any of the other
parties to the Credit Agreement to perform covenants. Such principles as applied
by a court might include a requirement that a creditor act with reasonableness
and in good faith. Thus, I express no opinion as to the validity or
enforceability of (i) provisions restricting access to legal or equitable
remedies, such as the specific performance of executory covenants, (ii)
provisions that purport to establish evidentiary standards, (iii) provisions
relating to waivers, severability, set-off, or delay or omission of enforcement
of rights or remedies, and (iv) provisions purporting to convey rights to
persons other than parties to the Credit Agreement.
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) I have not been requested to render, and with your permission I do
not express, any opinion as to the applicability to any provision of the Credit
Agreement or the Promissory Notes, of Section 548 of the Federal Bankruptcy
Code, Article 10 of the New York Debtor & Creditor Law, or any other fraudulent
conveyance, insolvency or transfer laws or any court decisions with respect to
any of the foregoing.
I call your attention to the fact that I am admitted to practice law
only in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of the State of New York, the Commonwealth of Massachusetts
and the Federal laws of the United States of America.
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
3
<PAGE> 81
This opinion is being delivered to you solely for your benefit in
connection with the Credit Agreement, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent.
Very truly yours,
4
<PAGE> 82
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the 364-Day Credit Agreement
(the "Credit Agreement") dated as of June 27, 1997, among Tyco International
Ltd., a Massachusetts corporation (the "Borrower"), the banks listed on the
signature pages thereof (the "Banks") and Morgan Guaranty Trust Company of New
York, as Agent (the "Agent"), and have acted as special counsel for the Agent
for the purpose of rendering this opinion pursuant to Section 3.01(d) of the
Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Credit
Agreement constitutes a valid and binding agreement of the Borrower and each
Promissory Note constitutes a valid and binding obligation of the Borrower, in
each case enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In giving the foregoing opinion, (i) we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect and (ii) insofar as the foregoing
opinion involves matters governed by the laws of Massachusetts, we have relied,
without independent investigation, upon the opinion of the General Counsel of
the Borrower, a copy of which has been delivered to you.
<PAGE> 83
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 84
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), TYCO INTERNATIONAL LTD. (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the 364-Day Credit Agreement dated as of June 27, 1997 among the
Borrower, the Assignor and the other Banks party thereto, as Banks, and the
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and
<PAGE> 85
delivery hereof by the Assignor, the Assignee, [the Borrower and the Agent] and
the payment of the amounts specified in Section 3 required to be paid on the
date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights
and be obligated to perform the obligations of a Bank under the Credit Agreement
with a Commitment in an amount equal to the Assigned Amount, and (ii) the
Commitment of the Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor released from its obligations under the Credit Agreement
to the extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.(3) It is
understood that commitment and/or facility fees in respect of the Assigned
Amount accrued to the date hereof are for the account of the Assignor and such
fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agent is evidence of this consent. Pursuant to Section 9.06(c) the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
- ------------------------------
(3)Amount should combine principal together with accrued interest
and breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
<PAGE> 86
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By
--------------------------------------
Title:
[ASSIGNEE]
By
--------------------------------------
Title:
TYCO INTERNATIONAL LTD.
By
--------------------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
--------------------------------------
Title:
3
<PAGE> 87
EXHIBIT H
SUBSIDIARY GUARANTEE
Dated as of June 27, 1997
WHEREAS, Tyco International Ltd., a Massachusetts corporation (together
with its successors, the "Borrower") has entered into a 364-Day Credit Agreement
(as the same may be amended from time to time, the "Credit Agreement") dated as
of June 27, 1997 among the Borrower, the banks listed on the signature pages
thereof, and Morgan Guaranty Trust Company of New York, as Agent, pursuant to
which the Borrower is entitled, subject to certain conditions, to borrow up to
$750,000,000;
WHEREAS, in conjunction with the transactions contemplated by the
Credit Agreement and in consideration of the financial and other support that
the Borrower has provided, and such financial and other support as the Borrower
may in the future provide, to the undersigned (together with its successors, the
"Guarantor") and in order to induce the Banks and the Agent to enter into the
Credit Agreement and to make Loans thereunder, the Guarantor is willing to
guarantee the obligations of the Borrower under the Credit Agreement and the
Promissory Notes;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:
ARTICLE
DEFINITIONS
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined. In addition the
following terms, as used herein, have the following meanings:
"Guaranteed Obligations" means (i) all obligations of the Borrower in
respect of principal of and interest on the Loans and the Promissory Notes, (ii)
all other amounts payable by the Borrower under the Credit Agreement or the
Promissory Notes and (iii) all renewals or extensions of the foregoing, in each
case whether now outstanding or hereafter arising. The Guaranteed Obligations
shall include, without limitation, any interest, costs, fees and expenses which
accrue on or with respect to any of the foregoing and are payable by the
Borrower pursuant to the Credit Agreement or the Promissory Notes, whether
before or after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of any one or more than
one of the Obligors, and any such interest, costs, fees and expenses that would
have accrued thereon or with respect thereto and would have been payable by the
Borrower pursuant to the Credit Agreement or the Promissory Notes but for the
commencement of such case, proceeding or other action.
"Obligors" means the Borrower and each of the Guarantors (as defined in
the Credit Agreement), including the Guarantor, and "Obligor" means any one of
the foregoing.
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ARTICLE
GUARANTEE
SECTION 1. The Guarantees. Subject to Section 3, the Guarantor hereby
unconditionally and irrevocably guarantees to the Banks and the Agent and to
each of them, the due and punctual payment of all Guaranteed Obligations as and
when the same shall become due and payable, whether at maturity, by declaration
or otherwise, according to the terms thereof. In case of failure by the Borrower
punctually to pay the indebtedness guaranteed hereby, the Guarantor, subject to
Section 3, hereby unconditionally agrees to cause such payment to be made
punctually as and when the same shall become due and payable, whether at
maturity or by declaration or otherwise, and as if such payment were made by the
Borrower.
SECTION 2. Guarantee unconditional. The obligations of the Guarantor
under this Article 2 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of any other Obligor under any Financing Document,
by operation of law or otherwise;
(b) any modification or amendment of or supplement to any Financing
Document (other than as specified in an amendment or waiver of this Subsidiary
Guarantee effected in accordance with Section 3);
(c) any modification, amendment, waiver, release, non-perfection or
invalidity of any direct or indirect security, or of any guaranty or other
liability of any third party, for any obligation of any other Obligor under any
Financing Document;
(d) any change in the corporate existence, structure or ownership of
any other Obligor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any other Obligor or its assets or any resulting
release or discharge of any obligation of any other Obligor contained in any
Financing Document;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against any other Obligor, the Agent, any Bank or
any other Person, whether or not arising in connection with the Financing
Documents; provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any other
Obligor for any reason of any Financing Document, or any provision of applicable
law or regulation purporting to prohibit the payment by any other Obligor of the
principal of or interest on any Promissory Note or any other amount payable by
any other Obligor under any Financing Document; or
(g) any other act or omission to act or delay of any kind by any other
Obligor, the Agent, any Bank or any other Person or any other circumstance
whatsoever that might, but for
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the provisions of this paragraph, constitute a legal or equitable discharge of
the obligations of the Guarantor under this Article 2.
SECTION 3. Limit of Liability. The Guarantor shall be liable under this
Subsidiary Guarantee only for amounts aggregating up to the largest amount that
would not render its obligations hereunder subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provisions of any
applicable state law.
SECTION 4. Discharge; Reinstatement in Certain Circumstances. Subject
to Section 6, the Guarantor's obligations under this Article 2 shall remain in
full force and effect until the Commitments are terminated and the principal of
and interest on the Promissory Notes and all other amounts payable by the
Borrower under the Financing Documents shall have been paid in full. If at any
time any payment of the principal of or interest on any Promissory Note or any
other amount payable by the Borrower under any Financing Document is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any other Obligor or otherwise, the Guarantor's obligations
under this Article 2 with respect to such payment shall be reinstated at such
time as though such payment had become due but had not been made at such time.
SECTION 5. Waiver. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
other Obligor or any other Person.
SECTION 6. Subrogation and Contribution. (a) The Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder (i) to be subrogated to the rights
of the payee against the Borrower with respect to such payment or otherwise to
be reimbursed, indemnified or exonerated by any other Obligor in respect thereof
or (ii) to receive any payment, in the nature of contribution or for any other
reason, from any other Obligor with respect to such payment
(b) Notwithstanding the provision of subsection (a) of this Section 6,
the Guarantor shall have and be entitled to (i) all rights of subrogation or
contribution otherwise provided by law in respect of any payment it may make or
be obligated to make under this Subsidiary Guarantee and (ii) all claims (as
defined under Chapter 11 of Title 11 of the United States Code, as amended, or
any successor statute (the "Bankruptcy Code")) it would have against the
Borrower or any other Guarantor (each an "Other Party") in the absence of
subsection (a) of this Section 6 and to assert and enforce the same, in each
case on and after, but at no time prior to, the date (the "Subrogation Trigger
Date") which is one year and five days after the Termination Date if, but only
if, (x) no Default or Event of Default of the type described in Section 6.01(i)
or 6.01(j) of the Credit Agreement with respect to the relevant Other Party has
existed at any time on and after the date of this Subsidiary Guarantee to and
including the Subrogation Trigger Date and (y) the existence of such Guarantor's
rights under this clause (b) would not make such Guarantor a creditor (as
defined in the Bankruptcy Code) of such Other Party in any insolvency,
bankruptcy, reorganization or similar proceeding commenced on or prior to the
Subrogation Trigger Date.
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SECTION 7. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under the Financing Documents is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of the Financing
Documents shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Agent made at the request of the Required Banks.
ARTICLE
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Agent and the Banks that:
SECTION 1. Corporate Existence and Power. The Guarantor is a
corporation duly incorporated, validly existing and in good standing under the
laws of ___________.
SECTION 2. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Guarantor of this Subsidiary
Guarantee:
(a) are within the Guarantor's corporate powers;
(b) have been duly authorized by all necessary corporate action on the
part of the Guarantor;
(c) require no action by or in respect of, or filing with, any
governmental body, agency or official, in each case, on the part of the
Guarantor; and
(d) do not contravene, or constitute a default by the Guarantor under,
any provision of (i) applicable law or regulation, (ii) the certificate of
incorporation or by-laws of the Guarantor, or (iii) any agreement or instrument
evidencing or governing Debt of the Guarantor or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Guarantor.
SECTION 3. Binding Effect. This Subsidiary Guarantee constitutes a
valid and binding obligation of the Guarantor.
SECTION 4. Not an Investment Company. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
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ARTICLE
MISCELLANEOUS
SECTION 1. Notices. All notices, requests and other communications to
be made to or by the Guarantor hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given: (a) if to the Guarantor, to it at its address or facsimile
number set forth on the signature pages hereof or such other address or
facsimile number as the Guarantor may hereafter specify for the purpose by
notice to the Agent and (b) if to any party to the Credit Agreement, to it at
its address or telex or facsimile number for notices specified in or pursuant to
the Credit Agreement. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section 1 and the appropriate answerback is received,
(ii) if given by facsimile, when such facsimile is transmitted to the facsimile
transmission number specified in this Section 1 and electronic, telephonic or
other appropriate confirmation of receipt thereof is received by the sender,
(iii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iv) if given
by any other means, when delivered at the address specified in this Section 1.
SECTION 2. No Waiver. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under this Subsidiary Guarantee or any
other Financing Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein and therein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 3. Amendments and Waivers. Any provision of this Subsidiary
Guarantee may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Guarantor and the Agent with the prior written
consent of the Required Banks under the Credit Agreement.
SECTION 4. Successors and Assigns. This Subsidiary Guarantee is for the
benefit of the Banks and the Agent and their respective successors and assigns
and in the event of an assignment of the Loans, the Promissory Notes or other
amounts payable under the Financing Documents, the rights hereunder, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness. All the provisions of this Subsidiary Guarantee shall be
binding upon the Guarantor and its successors and assigns.
SECTION 5. Taxes. All payments by the Guarantor hereunder shall be made
free and clear of Taxes in accordance with Section 8.04 of the Credit Agreement.
If the Guarantor is organized under the laws of, or has its principal place of
business in, a jurisdiction outside the United States, this Section 5 shall be
modified in a manner satisfactory to the Agent and the Guarantor to indemnify
for any foreign taxes which may be applicable.
SECTION 6. Effectiveness; Termination. (a) This Agreement shall become
effective when the Agent shall have received a counterpart hereof signed by the
Guarantor.
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(b) The Guarantor may at any time elect to terminate this Subsidiary
Guarantee and its obligations hereunder, provided that, after giving effect
thereto, no Default shall have occurred and be continuing. If the Guarantor so
elects to terminate this Subsidiary Guarantee, it shall give the Agent notice to
such effect, which notice shall be accompanied by a certificate of a Responsible
Officer to the effect that, after giving effect to such termination, no Default
shall have occurred and be continuing. The Agent may if it so elects
conclusively rely on such certificate. Upon receipt of such notice and such
certificate, unless the Agent determines that a Default shall have occurred and
be continuing, the Agent shall promptly deliver to the Guarantor the counterpart
of this Subsidiary Guarantee delivered to the Agent pursuant to Section 6(a),
and upon such delivery this Subsidiary Guarantee shall terminate and the
Guarantor shall have no further obligations hereunder.
SECTION 7. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS SUBSIDIARY
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 8. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed by its authorized officer as of the date first above written.
[GUARANTOR]
By ____________________________
Title:
[Address]
Facsimile Number:
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EXHIBIT I
[Form of Opinion of Counsel for the Subsidiary Guarantor]
June 27, 1997
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the [Associate] General Counsel of Tyco International Ltd., a
Massachusetts corporation (the "Borrower"), and have acted as counsel for [name
of Subsidiary Guarantor] (the "Guarantor"), and am rendering this opinion in
connection with that certain Subsidiary Guarantee (the "Subsidiary Guarantee"),
dated as of June 27, 1997, entered into by the Guarantor, pursuant to that
certain 364-Day Credit Agreement (the "Credit Agreement"), dated as of June 27,
1997, among the Borrower, the banks listed on the signature pages thereof (the
"Banks") and Morgan Guaranty Trust Company of New York, as Agent. Each term
defined in the Subsidiary Guarantee and used herein, but not otherwise defined
herein, has the meaning ascribed thereto in the Subsidiary Guarantee. This
opinion is being delivered to you pursuant to Section 1.01 of the Credit
Agreement.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreement, the Promissory Notes and the Subsidiary Guarantee and have
examined originals or copies, certified or otherwise identified to my
satisfaction, of (i) the [Certificate of Incorporation] and By-laws of the
Guarantor, each as in effect on the date hereof and (ii) such other documents,
records, certificates and instruments as I have deemed relevant and necessary as
a basis for the opinion hereinafter expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to be as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements, representations and certificates of officers and other
representatives of the Guarantor and certificates of public officials.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
<PAGE> 95
(1) The Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of _________________.
(2) The execution, delivery and performance by the Guarantor of the
Subsidiary Guarantee (a) are within the Guarantor's corporate powers; (b) have
been duly authorized by all necessary corporate action on the part of the
Guarantor; (c) require no action by or in respect of, or filing on the part of
the Guarantor with, any governmental body, agency or official, in each case, on
the part of the Guarantor; and (d) do not contravene, or constitute a default by
the Guarantor under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Guarantor or, (iii) any agreement
or instrument evidencing or governing Debt of the Guarantor, or any other
material agreement, judgment, injunction, order, decree or other instrument
binding upon the Guarantor.
(3) The Subsidiary Guarantee constitutes a valid and binding obligation
of the Guarantor.
(4) The Guarantor is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Subsidiary Guarantee may be subject to or
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer or other similar laws and court decisions, now
or hereafter in effect, relating to or affecting the rights of creditors
generally.
(b) The enforceability of the Subsidiary Guarantee is or will be
subject to the application of and may be limited by general principles of equity
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law). Such principles of equity are of general application, and in
applying such principles a court, among other things, might not allow a creditor
to accelerate maturity of a debt under certain circumstances including, without
limitation, upon the occurrence of a default deemed immaterial, or might decline
to order the Guarantor to perform covenants. Such principles as applied by a
court might include a requirement that a creditor act with reasonableness and in
good faith. Thus, I express no opinion as to the validity or enforceability of
(i) provisions restricting access to legal or equitable remedies, such as the
specific performance of executory covenants, (ii) provisions that purport to
establish evidentiary standards, (iii) provisions relating to waivers,
severability, set-off, or delay or omission of enforcement of rights or
remedies, and (iv) provisions purporting to convey rights to persons other than
parties to the Subsidiary Guarantee.
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
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(d) I have not been requested to render, and with your permission I do
not express, any opinion as to the applicability to any provisions of the
Subsidiary Guarantee, of Section 548 of the Federal Bankruptcy Code, Article 10
of the New York Debtor & Creditor Law, or any other fraudulent conveyance,
insolvency or transfer laws or any court decisions with respect to any of the
foregoing.
I call your attention to the fact that I am admitted to practice law
only in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of [the jurisdiction of incorporation of the Guarantor], the
State of New York, the Commonwealth of Massachusetts and the Federal laws of the
United States of America.
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
This opinion is being delivered to you solely for your benefit in
connection with the Subsidiary Guarantee, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent.
Very truly yours,
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EXHIBIT K
Form of Opinion of Counsel
for the Parent Guarantor
June 27, 1997
To the Banks and the Agents
named on Schedule 1 to this Opinion
c/o Morgan Guaranty Trust Company of New York (as Agent)
60 Wall Street
New York, NY 10260
Dear Sirs,
Re: TYCO INTERNATIONAL LTD. (THE "COMPANY")
We have been instructed by the Company to address this opinion to you
in connection with the Parent Guarantee, dated as of [ ], 1997 (the
"Guarantee"), entered into by the Company in connection with all principal of
and interest on amounts loaned to the Borrower under the Financing Documents.
Unless otherwise defined therein, terms defined in the Guarantee have
the same meanings when used in this opinion.
For the purpose of this opinion, we have been supplied with and have
reviewed, and relied upon the following documents:
(A) a copy of the executed US $500,000,000 Credit Agreement
dated as of June 27, 1997 among the Borrower, the Banks listed on the
signature pages thereof and the Agent;
(B) a copy of the executed US $750,000,000 Credit Agreement
dated as of June 27, 1997 among the Borrower, the Banks listed on the
signature pages thereof and the Agent;
(C) a copy of the executed US $500,000,000 Five Year Credit
Agreement dated as of June 27, 1997 among the Borrower, the Banks on
the signature pages thereof and the Agent;
(D) a copy of the executed Subsidiary Guarantees;
(E) a copy of the executed Promissory Notes;
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The Documents referred to in (a) and (e) inclusive are together referred to as
the "Financing Documents".
(F) a copy of the executed Guarantee;
(G) certified copies of the Certificate of Incorporation, the
Certificate evidencing the change of name of the Company from ADT
Limited to TYCO International Ltd. and the Memorandum of Association
and the Bye-laws of the Company;
(H) a certified copy of the minutes of a meeting of the Board
of Directors of the Company held on [ ], 1997 (the "Resolutions");
(I) a certified copy of the Share Certificate evidencing
ownership by the company of TYCO International Ltd, (Mass); and
We also relied upon our searches of documents of public record
maintained by the Registrar of Companies in Bermuda and of the Causes Book of
the Supreme Court of Bermuda which were made in 1997 (the "Searches").
In giving this opinion, we have assumed:
(1) the capacity, power and authority of each of the
parties other than the company to execute, deliver and perform
its obligations under and the due execution and delivery by
all parties other than the Company of the Facility Documents
and the Guarantee;
(2) that each party, other than the Company, has duly
authorised, executed, delivered and taken such other action as
may be required by such party to enter into and perform the
Financing Documents and the Guarantee and that all such
actions were duly authorised when taken;
(3) that no authorisation or approval by, or filing
with, any governmental or regulatory authority, other than
such authorisations, approvals and filings as each party other
than the Company has obtained or made, is necessary for such
party to duly executed and deliver, or to duly perform all of
its obligations under the Financing Documents and the
Guarantee, or for the validity and enforceability of the
Financing Documents and the Guarantee;
(4) that each of the Financing Documents and the
Guarantee constitutes the legal, valid and binding of each
party to it, other than the Company, and is enforceable
against each such party in accordance with its terms;
(5) that the Financing Documents are legal, valid and
binding under the laws by which they are expressed to be
governed and that the Guarantee is legal, valid and binding
under the laws of the State of New York by which it is
expressed to be governed;
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(6) that the information disclosed by the Searches
has not been materially altered and the Searches did not fail
to disclose any material information which has been delivered
for filing or registration, but was not disclosed or did not
appear on the public file at the time of the Searches;
(7) that there is no provision of the law of any
jurisdiction, other than Bermuda, which would have any
implication in relation to the opinions herein expressed;
(8) the genuineness of all signatures on the
documents which we have examined;
(9) the conformity to original documents of all
documents produced to us as copies and the authenticity of all
original documents which, or copies of which, have been
submitted to us;
(10) the accuracy and completeness of all factual
representations made in the Financing Documents, the
Guarantee, the Resolutions and any certificates examined by
us; and
(11) that the Resolutions are in full force and
effect and have not been rescinded.
This opinion is limited to Bermuda Law as applied by the Bermuda
courts. We have made no investigation of the laws of any jurisdiction other than
Bermuda and neither express nor imply any opinion as to any other law, in
particular the laws of the State of New York.
Based upon the foregoing, subject to qualifications set out below, to
matters not disclosed to us and matters of fact which would affect the
conclusion set out below and having regard to such legal considerations as we
deem relevant, we are of the opinion that insofar as the present laws of Bermuda
are concerned:
(i). The Company is a company duly incorporated, duly organised and
validly existing under the laws of Bermuda. The Memorandum of Association of the
Company has been duly filed in the office of the Registrar of Companies of
Bermuda and no other filing, recording, publishing or other act is necessary or
appropriate in Bermuda in connection with the transaction as described in the
Guarantee except those which have been duly made or performed.
(ii). The company has the corporate power and authority to enter into
and perform the Guarantee and has taken all corporate action required on its
part to authorise the execution, delivery and performance of the guarantee.
(iii). The execution, delivery and performance of the Guarantee by the
Company (i) does not and will not violate the Certificate of Incorporation,
Bye-laws or Memorandum of Association of the Company; (ii) conflict with any law
or governmental rule or regulation of
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Bermuda (including the Companies Act of 1981 of Bermuda); and (iii) as far as
can be ascertained from the Searches (which are not conclusive) does not and
will not violate or conflict with any judgement, order, decree, injunction or
award of any authority, agency or court in Bermuda to which the Company is
subject.
(iv). The obligations of the company as set out in the guarantee
constitute, legal, valid and binding obligations of the Company.
(v). The Company having been designated as non-resident for the
purposes of the Exchange Control Act 1972, it is not necessary for the consent
of any authority or agency in Bermuda to be obtained to enable the Company to
enter into and perform its obligations set out in the Guarantee.
(vi). The obligations of the Company under the Guarantee will rank at
least par passu in priority of payment with all other unsecured unsubordinated
indebtedness of the Company other than indebtedness which is preferred by virtue
of any provision of Bermuda law of general application.
(vii). As far as can be ascertained from the Searches, no litigation,
arbitration on administrative proceedings of or before any court, arbitrator or
governmental instrumental instrumentality of or in Bermuda is, to the best of
our knowledge, pending with respect to the Company in connection with the
Guarantee or the transactions contemplated thereby.
(viii). The Company will be permitted to make all payments under the
Guarantee free of any deduction or withholding therefrom in Bermuda and such
payments will not be subject to any tax imposed by the government of Bermuda or
any taxing authority thereof or therein.
(ix). The entry into, performance and enforcement of the Guarantee will
not give rise to any registration fee or to any stamp, excise or other similar
tax imposed by the government of Bermuda or any taxing authority thereof or
therein.
(x). Subject to paragraph (12) and reservation D below, it is not
necessary or advisable under the laws of Bermuda in order to ensure the
validity, effectiveness or enforceability of the Guarantee that the Guarantee be
filed, registered or recorded in any public office or elsewhere in Bermuda.
(xi). The choice of the laws of the State of New York to govern the
Guarantee is a proper, valid and binding choice of law and will be recognised
and applied by the courts of Bermuda assuming that such choice of law is a valid
and binding choice of law under the laws of the State of New York.
(xii). A final and conclusive judgement obtained in the Courts of the
State of New York or Federal Courts of the United States of America against the
Company based upon the Guarantee under which a sum of money is payable (other
than a sum of money payable in respect of taxes or other charges of a like
nature or in respect of a fine or other penalty or multiple damages) could be
enforced by an action in the Supreme Court of Bermuda, without re-
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<PAGE> 101
examination of the merits, under the Common Law Doctrine of Obligation. A final
opinion as to the availability of this remedy should be sought when the facts
surrounding the foreign judgement are known but, on general principles, we would
expect such an application to be successful provided that such judgment:
(A) is final and conclusive;
(B) was not obtained by fraud;
(C) was not and its enforcement would not be contrary to
public policy of Bermuda;
(D) was obtained in circumstances where the proceedings were
not contrary to the rules of natural justice; and
(E) the correct procedures under the laws of Bermuda are duly
complied with.
Neither the Company nor any of its property or assets (or any portion
thereof) enjoys, under the laws of Bermuda, immunity from suit, execution,
attachment or other legal process in any proceedings in Bermuda in connection
with the Guarantee.
Our reservations are as follows:
(a) We express no opinion as to whether specific performance or
injunctive relief, being equitable remedies, would necessarily be available in
respect of any obligations of the Company as set out in the Guarantee.
(b) We express no opinion as to the validity or the binding effect
of any obligations of the Borrower in the Financing Documents which provide for
the payment by the Borrower of a higher rate of interest on overdue amounts than
on amounts which are current. A Bermuda court, even if it were applying the laws
of the State of New York might not give effect to such provision if it could be
established that the amount expressed as being payable was such that the
provision was in the nature of a penalty; that is to say a requirement for a
stipulated sum to be paid irrespective of, or necessarily greater than, the loss
likely to be sustained.
(c) The obligations of the Company under the Guarantee will be
subject to any laws from time to time in effect relating to bankruptcy or
liquidation or any other laws or other legal procedures affecting generally the
enforcement of creditors' rights and may also be the subject of the statutory
limitation of the time within which such proceedings may be brought.
(d) To the extent that the Financing Documents, the Guarantee or
the transactions contemplated thereunder, create or give rise to the creation of
any charge over any assets of the Company, such charge will be registerable
under Part V of The Companies Act 1981 of Bermuda. The fee payable for
registration of a charge is $425.00. Registration is not compulsory and there is
no time limit within which it must be effected. However, as a matter of Bermuda
law, any charge registered shall have priority in Bermuda based on the date that
it is
5
<PAGE> 102
registered and not on the date of its creation and shall have such priority over
any unregistered charge. Accordingly, it is advisable to register any such
charge.
(e) Any provision in the Financing Documents or the Guarantee that
certain calculations and/or certificates will be conclusive and binding will not
be effective if such calculations are fraudulent or erroneous on their face and
will not necessarily prevent juridical enquiries into the merits of any claim by
an aggrieved party.
(f) A Bermuda court may refuse to give effect to any provisions of
the Financing Documents or Guarantee in respect of costs of unsuccessful
litigation brought before the court or where that court has itself made an order
for costs.
(g) We express no opinion as to any law other than Bermuda law and
none of the opinions expressed herein relates to compliance with or matters
governed by the laws of any jurisdiction except Bermuda. Where an obligation is
to be performed in a jurisdiction other than Bermuda, the Courts of Bermuda may
refuse to enforce it to the extent that such performance would be illegal or
contrary to public policy under the laws of such other jurisdiction.
[(h) The Searches showed a cause of action in which the Company is
named as defendant. The action was commenced in 1991 under action number 01299.
The plaintiff is Laidlaw Investments (Barbados) Ltd. We are unable to verify
whether this litigation is proceeding, or has been discontinued, and whether if
it proceeded and judgement was rendered against the Company, whether this
judgement would have any material effect on the Company.]
This opinion is issued on the basis that it will be governed by and
construed in accordance with the laws of Bermuda and that any legal proceedings
with respect thereto will be brought in the courts of Bermuda. It is issued
solely for your benefit for the purpose of the transactions described in the
Guarantee and it is not to be relied upon by any other person (other than
permitted assigns and transferees under the Financing Documents), or for any
other purpose, without our prior written consent.
Yours faithfully,
6
<PAGE> 1
EXHIBIT 10.2
CONFORMED COPY
$500,000,000
FIVE-YEAR CREDIT AGREEMENT
dated as of
June 27, 1997
among
Tyco International Ltd.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
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<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions........................................................................................1
SECTION 1.02. Accounting Terms and Determinations...............................................................17
SECTION 1.03. Types of Borrowings...............................................................................17
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend...............................................................................18
SECTION 2.02. Notice of Committed Borrowing.....................................................................18
SECTION 2.03. The Money Market Borrowings.......................................................................18
SECTION 2.04. Notice to Banks; Funding of Loans.................................................................22
SECTION 2.05. Promissory Notes..................................................................................23
SECTION 2.06. Maturity of Loans.................................................................................23
SECTION 2.07. Interest Rates....................................................................................24
SECTION 2.08. Facility Fee......................................................................................27
SECTION 2.09. Optional Termination or Reduction of Commitments..................................................27
SECTION 2.10. Mandatory Termination of Commitments..............................................................28
SECTION 2.11. Optional Prepayments..............................................................................28
SECTION 2.12. General Provisions as to Payments.................................................................28
SECTION 2.13. Funding Losses....................................................................................29
SECTION 2.14. Computation of Interest and Fees..................................................................29
SECTION 2.15. Regulation D Compensation.........................................................................29
SECTION 2.16. Method of Electing Interest Rates.................................................................30
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness.....................................................................................32
SECTION 3.02. Consequences of Effectiveness; Transitional Provisions............................................32
SECTION 3.03. Borrowings........................................................................................33
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.....................................................................34
SECTION 4.02. Corporate and Governmental Authorization; No Contravention........................................34
SECTION 4.03. Binding Effect....................................................................................34
SECTION 4.04. Financial Information.............................................................................34
SECTION 4.05. Litigation........................................................................................35
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 4.06. Compliance with ERISA.............................................................................35
SECTION 4.07. Environmental Matters.............................................................................35
SECTION 4.08. Taxes.............................................................................................36
SECTION 4.09. Subsidiaries......................................................................................36
SECTION 4.10. Not an Investment Company.........................................................................36
SECTION 4.11. Full Disclosure...................................................................................36
ARTICLE 5
COVENANTS
SECTION 5.01. Information.......................................................................................36
SECTION 5.02. Payment of Obligations............................................................................38
SECTION 5.03. Maintenance of Property; Insurance................................................................39
SECTION 5.04. Conduct of Business and Maintenance of Existence..................................................39
SECTION 5.05. Compliance with Laws..............................................................................40
SECTION 5.06. Inspection of Property, Books and Records; Confidentiality........................................40
SECTION 5.07. Limitation on Restrictions on Subsidiary Dividends and Other Distributions........................41
SECTION 5.08. Debt..............................................................................................43
SECTION 5.09. Fixed Charge Coverage.............................................................................43
SECTION 5.10. Restricted Payments...............................................................................44
SECTION 5.11. Negative Pledge...................................................................................44
SECTION 5.12. Consolidations, Mergers and Sales of Assets.......................................................46
SECTION 5.13. Use of Proceeds...................................................................................47
SECTION 5.14. Transactions with Affiliates......................................................................47
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults................................................................................48
SECTION 6.02. Notice of Default.................................................................................50
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization.....................................................................51
SECTION 7.02. Agent and Affiliates..............................................................................51
SECTION 7.03. Action by Agent...................................................................................51
SECTION 7.04. Consultation with Experts.........................................................................51
SECTION 7.05. Liability of Agent................................................................................51
SECTION 7.06. Indemnification...................................................................................52
SECTION 7.07. Credit Decision...................................................................................52
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 7.08. Successor Agent...................................................................................52
SECTION 7.09. Agent's Fee.......................................................................................52
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair..........................................53
SECTION 8.02. Illegality
.......................................................................................................53
SECTION 8.03. Increased Cost and Reduced Return.................................................................54
SECTION 8.04. Taxes.............................................................................................55
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.........................................57
SECTION 8.06. Substitution of Bank..............................................................................57
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices...........................................................................................58
SECTION 9.02. No Waivers........................................................................................58
SECTION 9.03. Expenses; Indemnification.........................................................................58
SECTION 9.04. Sharing of Set-Offs...............................................................................59
SECTION 9.05. Amendments and Waivers............................................................................59
SECTION 9.06. Successors and Assigns............................................................................60
SECTION 9.07. Collateral........................................................................................62
SECTION 9.08. Governing Law; Submission to Jurisdiction.........................................................62
SECTION 9.09. Counterparts; Integration.........................................................................62
SECTION 9.10. Waiver of Jury Trial..............................................................................63
</TABLE>
Commitment Schedule
Commitment Schedule
Exhibit A - Promissory Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of General Counsel of the Borrower
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Form of Subsidiary Guarantee
Exhibit I - Form of Subsidiary Counsel Opinion
Exhibit J - Form of Parent Guarantee
Exhibit K - Form of Parent Counsel Opinion
iii
<PAGE> 5
FIVE-YEAR CREDIT AGREEMENT
AGREEMENT dated as of June 27, 1997 among TYCO INTERNATIONAL LTD., the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, certain of the Banks and the Agent are parties
to an Amended and Restated Credit Agreement dated as of December 23, 1996 (the
"Existing Agreement"); and
WHEREAS, the parties hereto wish to replace the credit facility under
the Existing Agreement with a new credit facility hereunder.
WHEREAS, when all the conditions specified in Section 3.01 have been
satisfied, the Existing Agreement will be automatically terminated and the loans
outstanding thereunder (if any) will be repaid;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03
"ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b).
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"ADT" means ADT Limited, a company organized under the laws of Bermuda.
"ADT'S FORM S-4" means ADT's Form S-4 as filed with the Securities and
Exchange Commission on June 3, 1997, pursuant to the Securities Exchange Act of
1934.
"AFFILIATE" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling
<PAGE> 6
Person. As used herein, the term "control" means 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. The fact that an Affiliate of a Person is a member of a
law firm that renders services to such Person or its Affiliates does not mean
that the law firm is an Affiliate of such Person.
"AGENT" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks under the Financing Documents, any successor agent that
becomes the Agent pursuant to Section 7.08, and the respective corporate
successors of the foregoing acting in such capacity.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"APPLICABLE MARGIN" has the meaning set forth in Section 2.07(h).
"ASSESSMENT RATE" has the meaning set forth in Section 2.07(b).
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and the respective
corporate successors of the foregoing.
"BANK AFFILIATE" means, with respect to the Agent or any Bank, any
Person controlling, controlled by or under common control with the Agent or such
Bank, as the case may be.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BASE RATE LOAN" means a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.07(a) or Article 8.
"BORROWER" means Tyco International Ltd., a Massachusetts corporation,
and its successors.
"BORROWER'S 1996 FORM 10-K" means the Borrower's annual report on Form
10-K for fiscal year 1996, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"BORROWING" has the meaning set forth in Section 1.03.
2
<PAGE> 7
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election.
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means The Hongkong and Shanghai Banking
Corporation Limited, The Dai-Ichi Kangyo Bank, Ltd. and Morgan Guaranty Trust
Company of New York.
"COMMITMENT" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank on the
Commitment Schedule and (ii) with respect to any Assignee, the amount of the
transferor Bank's Commitment assigned to it pursuant to Section 9.06(c), in each
case as such amount may be changed from time to time pursuant to Section 2.09 or
9.06(c).
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.
"COMMITTED BORROWING" has the meaning set forth in Section 1.03.
"COMMITTED LOAN" means a loan made by a Bank pursuant to Section 2.01;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term Committed
Loan shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"CONDUIT" means a special purpose corporation which is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business.
"CONDUIT DESIGNATION" has the meaning set forth in Section 9.06(f).
"CONSENTS" has the meaning set forth in Section 4.01.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such time.
"CONSOLIDATED DEBT" means, at any date, the aggregate amount of Debt of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis as of such date; provided that (i) if a Permitted Receivables Transaction
is outstanding at such date and is accounted for as a sale of accounts
receivable under generally accepted accounting principles, Consolidated Debt
determined as aforesaid shall be adjusted to include the additional Debt,
determined on a consolidated basis as of such date, which would have been
outstanding at such date had such Permitted Receivables Transaction been
accounted for as a borrowing at such date and (ii)
3
<PAGE> 8
Consolidated Debt shall in any event include all Debt of any Person other than
the Borrower or a Consolidated Subsidiary which is Guaranteed by the Borrower or
a Consolidated Subsidiary, except that Consolidated Debt shall not include Debt
of a joint venture, partnership or similar entity which is Guaranteed by the
Borrower or a Consolidated Subsidiary by virtue of the joint venture,
partnership or similar arrangement with respect to such entity or by operation
of applicable law (and not otherwise) so long as the aggregate outstanding
principal amount of all such excluded Debt at any date does not exceed
$50,000,000.
"CONSOLIDATED EBIT" means, for any fiscal period, Consolidated Net
Income for such period plus, to the extent deducted in determining Consolidated
Net Income for such period, the aggregate amount of (i) Consolidated Interest
Expense and (ii) federal, state and local income tax expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any fiscal period, (without
duplication) (i) the consolidated interest expense of the Borrower and its
Consolidated Subsidiaries for such period minus (ii) the consolidated interest
income of the Borrower and its Consolidated Subsidiaries for such period, if,
and only if, such consolidated interest income is equal to or less than
$5,000,000, plus (iii) if a Permitted Receivables Transaction outstanding during
such period is accounted for as a sale of accounts receivable under generally
accepted accounting principles, the additional consolidated interest expense
that would have accrued during such period had such Permitted Receivables
Transaction been accounted for as a borrowing during such period, in each case
determined on a consolidated basis.
"CONSOLIDATED NET INCOME" means, for any fiscal period, the
consolidated net income of the Borrower and its Consolidated Subsidiaries for
such period, determined on a consolidated basis after eliminating therefrom all
Extraordinary Gains and Losses. "EXTRAORDINARY GAINS AND LOSSES" means and
includes, for any fiscal period, all extraordinary gains and losses of the
Borrower and its Consolidated Subsidiaries for such period, determined on a
consolidated basis and, in addition, includes, without limitation, gains or
losses from the discontinuance of operations and gains or losses of the Borrower
and its Consolidated Subsidiaries for such period resulting from the sale,
conversion or other disposition of material assets of the Borrower or any
Consolidated Subsidiary other than in the ordinary course of business.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date and adjusted so as to exclude
the effect of the currency translation adjustment as of such date.
"CONSOLIDATED SUBSIDIARY" means, at any date, with respect to any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in such Person's consolidated financial
statements if such statements were prepared as of such date; unless otherwise
specified, Consolidated Subsidiary means a Consolidated Subsidiary of the
Borrower.
4
<PAGE> 9
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, (i) Consolidated
Net Worth as of such date minus (ii) Intangible Assets as of such date.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any date, the sum of
Consolidated Debt and Consolidated Net Worth, each determined as of such date.
"DEBT" of any Person means, at any date, without duplication, (i) the
principal amount of all obligations of such Person for borrowed money, (ii) the
principal amount of all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (it being understood that,
subject to the proviso to this definition of "Debt," performance bonds,
performance guaranties, letters of credit, bank guaranties and similar
instruments shall not constitute Debt of such Person to the extent that the
outstanding reimbursement obligations of such Person in respect thereof are
collateralized by cash or cash equivalents, which cash or cash equivalents would
not be reflected as assets on a balance sheet of such Person prepared in
accordance with generally accepted accounting principles), (iii) all obligations
of such Person to pay the deferred purchase price of property or services
recorded on the books of such Person, except for (a) trade and similar accounts
payable and accrued expenses arising in the ordinary course of business, and (b)
employee compensation and pension obligations, and other obligations arising
from employee benefit programs and agreements or other similar employment
arrangements, (iv) all obligations of such Person as lessee which are
capitalized on the books of such Person in accordance with generally accepted
accounting principles, (v) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person, and
(vi) all Debt of others Guaranteed by such Person; provided, however, that Debt
shall not include:
(A) contingent reimbursement obligations in
respect of performance bonds, performance
guaranties, bank guaranties or letters of
credit issued in lieu of performance bonds
or performance guaranties or similar
instruments, in each case, incurred by such
Person in the ordinary course of business;
(B) contingent reimbursement obligations in
respect of trade letters of credit, or
similar instruments, in each case, incurred
by such Person in the ordinary course of
business; or
(C) contingent reimbursement obligations in
respect of standby letters of credit or
similar instruments securing self-insurance
obligations of such Person;
in each case, so long as the underlying obligation supported thereby does not
itself constitute Debt.
"DEBT RATING" means a rating of the Borrower's long-term debt which is
not secured or supported by a guarantee, letter of credit or other form of
credit enhancement. If a Debt Rating
5
<PAGE> 10
by a Rating Agency is required to be at or above a specified level and such
Rating Agency shall have changed its system of classifications after the date
hereof, the requirement will be met if the Debt Rating by such Rating Agency is
at or above the new rating which most closely corresponds to the specified level
under the old rating system.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC PARENT" means any Affiliate incorporated under the laws of
the United States, any State thereof or the District of Columbia of which the
Borrower is a Subsidiary.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in
Section 2.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
6
<PAGE> 11
"ERISA GROUP" means the Borrower, any Subsidiary Guarantor and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary Guarantor, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of The
Hongkong and Shanghai Banking Corporation Limited, The Dai-Ichi Kangyo Bank,
Ltd. and Morgan Guaranty Trust Company of New York.
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in
Section 2.15.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXISTING AGREEMENT" has the meaning set forth in the recitals hereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Agent.
"FINANCING DOCUMENTS" means this Agreement, the Subsidiary Guarantees,
the Promissory Notes and, on any date on or after the Parent Guarantee Date, the
Parent Guarantee.
7
<PAGE> 12
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"GROUP OF LOANS" means, at any time, a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time, (ii) all Euro-Dollar
Loans having the same Interest Period at such time or (iii) all CD Loans having
the same Interest Period at such time, provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Article
8, such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the holder of such Debt of the
payment thereof or to protect such holder against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTOR" means any Subsidiary Guarantor and, on and after the Parent
Guarantee Date, the Parent Guarantor.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTANGIBLE ASSETS" means, at any date, the amount (if any) which would
be stated under the heading "Costs in Excess of Net Assets of Acquired
Companies" or under any other heading relating to intangible assets separately
listed, in each case, on the face of a balance sheet of the Borrower and its
Consolidated Subsidiaries prepared on a consolidated basis as of such date.
"INTEREST PERIOD" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter (or such other
period of time as may at the time be mutually agreed by the Borrower and the
Banks), as the Borrower may elect in such notice; provided that:
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(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter (or such other period of time as may at the time be
mutually agreed by the Borrower and the Banks), as the Borrower may elect in
such notice; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such whole number of months thereafter as the Borrower may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; and
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<PAGE> 14
(4) with respect to each Money Market Absolute Rate Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 30 days)
as the Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LEVEL I STATUS" exists at any date if, at such date, the Borrower has
Debt Ratings at or above the level of A by S&P or A2 by Moody's.
"LEVEL II STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at or above the level of A- by S&P or A3 by Moody's and (ii)
Level I Status does not exist at such date.
"LEVEL III STATUS" exists at any date if, at such date, (i) the
Borrower has Debt Ratings at the level of BBB+ by S&P or Baa1 by Moody's and
(ii) Level I Status and Level II Status do not exist at such date.
"LEVEL IV STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at the level of BBB by S&P or Baa2 by Moody's and (ii) Level I
Status, Level II Status and Level III Status do not exist at such date.
"LEVEL V STATUS" exists at any date if, at such date, (i) the Borrower
has a Debt Rating from neither Rating Agency or (ii) Level I Status, Level II
Status, Level III Status and Level IV do not exist at such date.
"LIBOR AUCTION" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating lease)
relating to such asset.
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"LOAN" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "LOANS" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in
Section 2.07(c).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole, or
(ii) the ability of the Borrower and the Subsidiary Guarantors to perform their
obligations under the Financing Documents.
"MATERIAL DEBT" means Debt (other than (i) the Promissory Notes, (ii)
the Subsidiary Guarantees, (iii) any Guarantee by the Borrower of Debt of a
Subsidiary, (iv) any Guarantee by a Subsidiary of Debt of the Borrower or
another Subsidiary, (v) any Debt of the Borrower owed to a Wholly-Owned
Consolidated Subsidiary or (vi) any Debt of a Subsidiary owed to the Borrower or
a Wholly-Owned Consolidated Subsidiary) of the Borrower and/or one or more of
its Subsidiaries, arising in one or more related or unrelated transactions, in
an aggregate outstanding principal amount exceeding $50,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"MERGER" means the merger of a Subsidiary of ADT with and into the
Borrower pursuant to the Plan of Merger dated March 17, 1997.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in
Section 2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"MONEY MARKET BORROWING" has the meaning set forth in Section 1.03.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
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"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc., or any successor to
such corporation's business of rating debt securities.
"MULTIEMPLOYER PLAN" means at any time a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA either (i) to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
(ii) has at any time within the preceding five plan years been maintained, or
contributed to, by any Person who was at such time a member of the ERISA Group
for employees of any Person who was at such time a member of the ERISA Group.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined
in Section 2.02 or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in
Section 2.16.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARENT GUARANTOR" means ADT (to be renamed Tyco International Ltd.
upon consummation of the Merger), and its successors.
"PARENT GUARANTEE" means a Parent Guarantee Agreement between the
Parent Guarantor and the Agent for the benefit of the Banks, substantially in
the form of Exhibit J, as amended from time to time.
"PARENT GUARANTEE DATE" means the date the Agent receives (i) duly
executed counterparts of the Parent Guarantee, (ii) an opinion of counsel for
the Parent Guarantor reasonably satisfactory to the Agent to substantially the
effect of Exhibit K hereto and covering such additional matters relating to the
Parent Guarantee as the Required Banks may reasonably request and (iii) all
documents the Agent may reasonably request relating to the existence of the
Parent Guarantor, the corporate authority for and the validity of the Parent
Guarantee, and any other matters reasonably determined by the Agent to be
relevant thereto, all in form and substance reasonably satisfactory to the
Agent.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
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"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED RECEIVABLES TRANSACTION" means any sale or sales of,
refinancing of and/or financing secured by, any accounts receivable of the
Borrower and/or any of its Subsidiaries (the "RECEIVABLES") pursuant to which
the Borrower and its Subsidiaries realize aggregate net proceeds of not more
than $500,000,000 at any one time outstanding, including, without limitation,
any revolving purchase(s) of Receivables where the maximum aggregate uncollected
purchase price (exclusive of any deferred purchase price) for such Receivables
at any time outstanding does not exceed $500,000,000.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PROMISSORY NOTES" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, and "PROMISSORY NOTE" means any one of such
promissory notes issued hereunder.
"PROPERTY" means any interest of any kind in any property or assets,
whether real, mixed or personal and whether tangible or intangible.
"PROSPECTS" means, at any time, results of future operations which are
reasonably foreseeable based upon the facts and circumstances in existence at
such time.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30
and December 31.
"RATING AGENCY" means S&P or Moody's.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any one
of such Reference Banks.
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"REFINANCING" has the meaning set forth in Section 5.07 (and the term
"REFINANCED" has a correlative meaning).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having more than 60% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Promissory Notes evidencing more than 60% of the aggregate
unpaid principal amount of the Loans.
"RESPONSIBLE OFFICER" means any of the following: the Chairman,
President, Vice President and Chief Financial Officer, Treasurer and Secretary
of the Borrower.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except to the extent such dividends
and distributions are payable in shares of its capital stock or Stock
Equivalents) or (ii) any payment (except to the extent payable in shares of the
Borrower's capital stock or Stock Equivalents) on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock or (b) any option, warrant or other right to acquire shares of the
Borrower's capital stock; provided that prior to the consummation of the Merger,
repurchases by the Borrower of up to 5,000,000 shares of its common stock shall
not constitute Restricted Payments.
"SIGNIFICANT SUBSIDIARY" means, at any date, (A) each Subsidiary
Guarantor and (B) any other Consolidated Subsidiary which, including its
consolidated subsidiaries, meets any of the following conditions:
(i) the investments in and advances to such Consolidated
Subsidiary by the Borrower and its other Consolidated
Subsidiaries exceed 15% of the total assets of the Borrower
and its Consolidated Subsidiaries, determined on a
consolidated basis as of the end of the most recently
completed fiscal year; or
(ii) the proportionate share attributable to such
Consolidated Subsidiary of the total assets of the Borrower
and its Consolidated Subsidiaries (after intercompany
eliminations) exceeds 15% of the total assets of the Borrower
and the Consolidated Subsidiaries, determined on a
consolidated basis as of the end of the most recently
completed fiscal year; or
(iii) the Borrower's and its Consolidated Subsidiaries'
equity in the income of such Consolidated Subsidiary from
continuing operations before income taxes, extraordinary items
and cumulative effect of a change in accounting principle
exceeds 15% of such income of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis
for the most recently completed fiscal year.
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"STATUS" means, at any date, whichever of Level I Status, Level II
Status, Level III Status, Level IV Status or Level V Status exists at such date.
"STOCK EQUIVALENTS" means, with respect to any Person, options,
warrants, calls or other rights entered into or issued by such Person to acquire
any capital stock or equity securities of, or other ownership interests in, or
securities convertible into or exchangeable for, capital stock or equity
securities of, or other ownership interests in, such Person.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor to its business of rating debt
securities.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person; unless otherwise specified, Subsidiary means a Subsidiary of the
Borrower.
"SUBSIDIARY GUARANTEE" means a Guarantee entered into by a Subsidiary
substantially in the form of Exhibit H hereto.
"SUBSIDIARY GUARANTOR" means, at any time, a Subsidiary which at or
prior to such time shall have delivered to the Agent (i) a Subsidiary Guarantee
in substantially the form of Exhibit H, duly executed by such Subsidiary, which
Subsidiary Guarantee has not terminated in accordance with its terms, (ii) an
opinion of counsel for such Subsidiary (which counsel may be an employee of the
Borrower or such Subsidiary) reasonably satisfactory to the Agent with respect
to such Subsidiary Guarantee, substantially in the form of Exhibit I hereto and
covering such additional matters relating to such Subsidiary Guarantee as the
Required Banks may reasonably request and (iii) all documents the Agent may
reasonably request relating to the existence of such Subsidiary, the corporate
authority for and the validity of such Subsidiary Guarantee, and any other
matters reasonably determined by the Agent to be relevant thereto, all in form
and substance reasonably satisfactory to the Agent.
"TERMINATION DATE" means June 27, 2002, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or to any other Person under Title IV of ERISA.
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"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means, with respect to any
Person, any Consolidated Subsidiary all of the shares of capital stock or other
ownership interests of which (except directors' qualifying shares and
investments by foreign nationals mandated by applicable law) are at the time
beneficially owned, directly or indirectly, by such Person; unless otherwise
specified, Wholly-Owned Consolidated Subsidiary means a Wholly-Owned
Consolidated Subsidiary of the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the then most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if either (i) the Borrower notifies the Agent that
the Borrower wishes to eliminate the effect of any change in generally accepted
accounting principles on the operation of any covenant contained in Article 5 or
(ii) the Agent notifies the Borrower that the Required Banks wish to effect such
an elimination, then the Borrower's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either (A) such notice is withdrawn by the
party giving such notice or (B) such covenant is amended in a manner
satisfactory to the Borrower and the Required Banks to reflect such change in
generally accepted accounting principles.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to the pricing of
Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
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ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section 2.01 from time to time prior to the Termination Date in
amounts such that the aggregate principal amount of Committed Loans by such Bank
at any one time outstanding shall not exceed the amount of its Commitment. Each
Borrowing under this Section shall be in an aggregate principal amount of
$5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.03(b)) and
shall be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time prior to the Termination Date under this Section 2.01.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M.
(New York City time) on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
SECTION 2.03. The Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks, at any time prior to the Termination Date, to make offers to
make Money Market Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar
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Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may,
in its sole discretion, submit a Money Market Quote containing an offer or
offers to make Money Market Loans in response to any Invitation for Money Market
Quotes. Each Money Market Quote must comply with the requirements of this
subsection 2.03(d) and must be submitted to the Agent by telex or facsimile
transmission at its offices specified in or pursuant to Section 9.01 not later
than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y)
9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the
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capacity of a Bank may be submitted, and may only be submitted, if the Agent or
such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing and the Interest
Period therefor,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th
of 1%) to be added to or subtracted from the applicable
London Interbank Offered Rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
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(D) arrives after the time set forth in
subsection 2.03(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection 2.03(d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection 2.03(e) (and the failure of the Borrower to give such notice by such
time shall constitute non-acceptance) and the Agent shall promptly notify each
affected Bank. In the case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may, but shall not be obligated
to, accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending order of Money Market Margins or Money Market Absolute Rates,
as the case may be, in each case beginning with the lowest rate so
offered, and
(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer is described in subsection
2.03(d)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
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<PAGE> 25
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied or waived in accordance with Section 9.05, the Agent will make the
funds so received from the Banks available to the Borrower no later than 3:00
P.M. (New York City time) on such date, in Federal or other funds immediately
available in New York City, as directed by the Borrower.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and, if such Bank shall not have
paid such amount to the Agent within two Domestic Business Days of the Agent's
demand therefor, the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
(d) The failure of any Bank to make any Loan to be made by it on the
date specified therefor shall not relieve any other Bank of any obligation to
make a Loan on such date.
SECTION 2.05. Promissory Notes. (a) The Loans of each Bank shall be
evidenced by a single Promissory Note payable to the order of such Bank for the
account of its Applicable
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<PAGE> 26
Lending Office in an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Promissory Note
in an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Promissory Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Promissory Note" of
such Bank shall be deemed to refer to and include any or all of such Promissory
Notes, as the context may require.
(c) Upon receipt of each Bank's Promissory Note pursuant to Section
3.01(b), the Agent shall forward such Promissory Note to such Bank. Each Bank
shall record the date, amount, type and maturity of each Loan made by it and the
date and amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Promissory Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Promissory Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Promissory Note and to
attach to and make a part of its Promissory Note a continuation of any such
schedule as and when required.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the last day of the Interest Period applicable to
such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for each such day. Such interest shall be payable at maturity, quarterly in
arrears on each Quarterly Payment Date prior to maturity and, with respect to
the principal amount of any Base Rate Loan converted to a CD Loan or a
Euro-Dollar Loan, on the date such amount is so converted. Any overdue principal
of or interest on any Base Rate Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due to but excluding
the date of actual payment, at a rate per annum equal to the sum of 2% plus the
rate otherwise applicable to Base Rate Loans for each such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Applicable Margin for each such day
plus the applicable Adjusted CD Rate for such Interest
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<PAGE> 27
Period; provided that if any CD Loan shall, as a result of subsection (2)(b) of
the definition of Interest Period, have an Interest Period of less than 30 days,
such CD Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 90 days, at intervals of 90 days after the first day thereof. Any
overdue principal of or interest on any CD Loan shall bear interest, payable on
demand, for each day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to the sum of 2%
plus the higher of (i) the sum of the Applicable Margin for each such day plus
the Adjusted CD Rate applicable to such Loan on the day before such payment was
due and (ii) the rate applicable to Base Rate Loans for each such day.
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------
* The amount in brackets being rounded upward, if necessary, to the next higher
1/100 of 1%
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
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<PAGE> 28
"ASSESSMENT RATE" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. sec. 327.4(a) or any successor provision (a "BIF Member") to the Federal
Deposit Insurance Corporation (or any successor) for the Federal Deposit
Insurance Corporation's (or such successor's) insuring time deposits at offices
of such BIF Member in the United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Assessment
Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for each
such day plus the applicable London Interbank Offered Rate for such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Applicable Margin for such day plus the London Interbank Offered Rate applicable
to such Loan on the day before such payment was due and (ii) the Applicable
Margin for such day plus the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than six months as
the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the circumstances described in subsection (a) or (b)
of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for each day during the
Interest Period applicable thereto, at a rate per annum equal to the sum of the
London Interbank Offered Rate for such Interest Period (determined in accordance
with Section 2.07(c) as if the related Money Market
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<PAGE> 29
LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the
Money Market Margin quoted by the Bank making such Loan in accordance with
Section 2.03. Each Money Market Absolute Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the Money Market Absolute Rate
quoted by the Bank making such Loan in accordance with Section 2.03. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof. Any overdue principal of or interest on any
Money Market Loan shall bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of actual
payment, at a rate per annum equal to the sum of 2% plus the Base Rate for each
such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
(h) The "APPLICABLE MARGIN" with respect to any Euro-Dollar Loan or CD
Loan at any date is the applicable percentage amount set forth in the table
below based on the Status on such date:
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
STATUS STATUS STATUS STATUS STATUS
------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Euro-Dollar Loans 0.130% 0.175% 0.210% 0.240% 0.300%
CD Loans 0.255% 0.300% 0.335% 0.365% 0.425%
</TABLE>
(i) For each day on which the aggregate outstanding principal amount of
the Loans equals or exceeds 50% of the aggregate amount of the Commitments, the
Borrower shall pay additional interest at the rate of 0.05% per annum on the
aggregate principal amount of Euro-Dollar Loans and CD Loans outstanding to it
on such day. Accrued interest under this subsection (i) shall be payable
quarterly in arrears on each Quarterly Payment Date and upon the date of
termination of the Commitments in their entirety (and, if later, the date the
Loans shall be repaid in their entirety).
SECTION 2.08. Facility Fee. (a) The Borrower shall pay to the Agent for
the account of the Banks ratably a facility fee at the Facility Fee Rate. Such
facility fee shall accrue (i) from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination
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<PAGE> 30
of the Commitments in their entirety), on the daily aggregate amount of the
Commitments (whether used or unused) and (ii) from and including the Termination
Date (or earlier date of termination of the Commitments in their entirety) to
but excluding the date the Loans shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Loans.
The "FACILITY FEE RATE" at any date is: (i) 0.070% if Level I Status
exists at such date, (ii) 0.075% if Level II Status exists at such date, (iii)
0.090% if Level III Status exists at such date, (iv) 0.110% if Level IV Status
exists at such date or (v) 0.150% if Level V Status exists at such date.
(b) Accrued fees under this Section shall be payable quarterly in
arrears on each Quarterly Payment Date and upon the date of termination of the
Commitments in their entirety (and, if later, the date the Loans shall be repaid
in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. Promptly after receiving a notice pursuant to this Section, the Agent
shall notify each Bank of the contents thereof.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may (i) upon at
least one Domestic Business Day's notice to the Agent, prepay any Group of Base
Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)), (ii) upon at least three Domestic Business Days'
notice to the Agent, subject to Section 2.13, prepay any Group of CD Loans and
(iii) upon at least three Euro-Dollar Business Days' notice to the Agent,
subject to Section 2.13, prepay any Group of Euro-Dollar Loans, in whole at any
time, or from time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to but not including the date of
prepayment. Each such optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group of Loans (or such Money Market
Borrowing).
(b) Except as provided in Section 2.11(a)(i), the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of
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<PAGE> 31
such prepayment and once notice is so given to the Banks, the Borrower's notice
of prepayment shall not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 2:00 P.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the respective accounts of the Banks. Whenever any payment of principal of, or
interest on, the Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a different type of Loan (pursuant to Article 2, 6 or 8 (other than
Section 8.02) on any day other than the last day of an Interest Period
applicable thereto, or the last day of an applicable period fixed pursuant to
Section 2.07(d), or if the Borrower fails to borrow, prepay, convert or continue
any Fixed Rate Loans after notice has been given to any Bank in accordance with
Section 2.04(a), 2.11(c) or 2.16 (other than as a result of default by such
Bank), the Borrower shall reimburse each Bank within 15 days after written
demand for any resulting loss or expense reasonably incurred by it (or by an
existing or prospective Participant in the related Loan) in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow,
prepay, convert or continue; provided that such Bank shall have delivered to the
Borrower a certificate specifying in reasonable detail the calculation
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<PAGE> 32
of, and the reasons for, the amount of such loss or expense, which certificate
shall be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days after the giving of
such notice, and (y) shall notify the Borrower at least five Euro-Dollar
Business Days prior to each date on which interest is payable on the Euro-Dollar
Loans of the amount then due it under this Section.
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
SECTION 2.16. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject to subsection
2.16(d) of this Section and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.13 if any such conversion is
28
<PAGE> 33
effective on any day other than the last day of an Interest Period
applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional Interest
Period, subject to Section 2.13 if any such conversion is effective on
any day other than the last day of an Interest Period applicable to
such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 10:30 A.M. (New York City time) on
the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective (unless the relevant Loans are to be
converted from Domestic Loans of one type to Domestic Loans of the other type or
are CD Loans to be continued as CD Loans for an additional Interest Period, in
which case such notice shall be delivered to the Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such conversion
or continuation is to be effective). A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not apply, are each at least
$5,000,000 (unless such portion is comprised of Base Rate Loans). If no such
notice is timely received before the end of an Interest Period for any Group of
CD Loans or Euro-Dollar Loans, the Borrower shall be deemed to have elected that
such Group of Loans be converted to Base Rate Loans at the end of such Interest
Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection 2.16(a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans resulting from such conversion
are to be CD Loans or Euro-Dollar Loans, the duration of the next
succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of
such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
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<PAGE> 34
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to subsection (a) above, the Agent shall notify each Bank
of the contents thereof and such notice shall not thereafter be revocable by the
Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional Interest
Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate principal amounts
of any Group of CD Loans or Euro-Dollar Loans created or continued as a result
of such election would be less than $5,000,000 or (ii) a Default shall have
occurred and be continuing when the Borrower delivers notice of such election to
the Agent.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party);
(b) receipt by the Agent of a duly executed Promissory Note for the
account of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of an opinion of the General Counsel of the
Borrower, substantially in the form of Exhibit E hereto;
(d) receipt by the Agent from each Subsidiary Guarantor under the
Existing Agreement of (i) a Subsidiary Guarantee in substantially the form of
Exhibit H hereto, duly executed by such Subsidiary Guarantor, (ii) an opinion of
counsel for such Subsidiary Guarantor, reasonably satisfactory to the Agent,
with respect to such Subsidiary Guarantee, substantially in the form of Exhibit
I hereto and covering such additional matters relating to such Subsidiary
Guarantee as the Required Banks may reasonably request and (iii) all documents
the Agent may reasonably request relating to the existence of such Subsidiary
Guarantee, the corporate authority for and the validity of such Subsidiary
Guarantee, and any other matters reasonably determined by the Agent to be
relevant thereto, all in form and substance reasonably satisfactory to the
Agent;
(e) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit F hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
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(f) receipt by the Agent of all documents the Agent may reasonably
request relating to the existence of the Borrower, the corporate authority for
and the validity of this Agreement and the Promissory Notes, and any other
matters reasonably determined by the Agent to be relevant hereto, all in form
and substance reasonably satisfactory to the Agent; and
provided that this Agreement shall not become effective or be binding
on any party hereto unless all of the foregoing conditions are satisfied not
later than July 30, 1997.
SECTION 3.02. Consequences of Effectiveness; Transitional Provisions.
(a) On the Effective Date, the commitments under the Existing Agreement shall
terminate without further action by any party thereto. The Agent will promptly
notify each of the other parties hereto and to the Existing Agreement of the
effectiveness of this Agreement.
(b) Concurrently with the effectiveness of this Agreement, the Borrower
shall prepay in full (including accrued and unpaid interest thereon to, but
excluding, the Effective Date) all "Loans" outstanding under the Existing
Agreement. Concurrently with the effectiveness of this Agreement, the Borrower
shall pay all accrued and unpaid facility fees under the Existing Agreement to,
but excluding, the Effective Date.
(c) The Banks which are parties to the Existing Agreement, comprising
the "Required Banks" as defined therein, hereby waive any requirement of notice
of termination of the Commitments pursuant to Section 2.09 of the Existing
Agreement and any restriction on prepayment of Loans to the extent necessary to
give effect to the subsections (a) and (b) above, provided that any such
prepayment of Loans shall be subject to Section 2.13 of the Existing Agreement.
SECTION 3.03. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction (or waiver in
accordance with Section 9.05) of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate amount
of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
and each Guarantor contained in the Financing Documents (except the
representations and warranties set forth in Sections 4.04(a) and 4.11, which are
made only as of the date of this Agreement) shall be true in all material
respects on and as of the date of such Borrowing.
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Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in
subsections (b), (c) and (d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Banks that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. The Borrower has all corporate powers
and all governmental licenses, authorizations, consents and approvals
(collectively, the "Consents") required to carry on its business as now
conducted, other than those powers and Consents, the failure of which to be
possessed or obtained could not, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Promissory Notes: (a) are within the Borrower's corporate
powers; (b) have been duly authorized by all necessary corporate action on the
part of the Borrower; (c) require no action by or in respect of, or filing with,
any governmental body, agency or official, in each case, on the part of the
Borrower; and (d) do not contravene, or constitute a default by the Borrower
under, any provision of (i) applicable law or regulation, (ii) the certificate
of incorporation or by-laws of the Borrower, or (iii) any agreement or
instrument evidencing or governing Debt of the Borrower or any other material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Promissory Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of June 30, 1996 and the related consolidated statements of
income, of shareholders' equity and of cash flows for the fiscal year then
ended, reported on by Coopers & Lybrand L.L.P. and set forth in the Borrower's
1996 Form 10-K, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles, the
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consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal year.
(b) Since June 30, 1996 there has been no material adverse change in
the business, financial position, results of operations or Prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could, based upon the facts
and circumstances in existence at the time this representation and warranty is
made or deemed made, reasonably be expected to have a Material Adverse Effect or
which in any manner draws into question the validity of the Financing Documents.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance, except
where the failure to so comply could not, based upon the facts and circumstances
in existence at the time this representation and warranty is made or deemed
made, reasonably be expected to have a Material Adverse Effect, with the
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any required contribution or payment to
any Plan or Multiemployer Plan, or made any amendment to any Plan, which has
resulted in or could, based upon the facts and circumstances in existence at the
time this representation and warranty is made or deemed made, reasonably be
expected to result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA (other than a liability to the PBGC for
premiums under Section 4007 of ERISA), which could, based upon the facts and
circumstances existing at the time this representation and warranty is made or
deemed made, reasonably be expected to have a Material Adverse Effect.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has
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reasonably concluded that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, could not, based upon the facts and
circumstances existing at the time this representation and warranty is made or
deemed made, reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. Taxes. The United States Federal income tax liability of
the Borrower and its Subsidiaries has been finally determined for all fiscal
years through the fiscal year ended June 30, 1990. The Borrower and its
Subsidiaries have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes shown on such returns or pursuant to any assessment received by the
Borrower or any Subsidiary, except those assessments which are being contested
in good faith by appropriate proceedings. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate
Consolidated Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, except
where the failure to be so incorporated, existing or in good standing could not,
based upon the facts and circumstances existing at the time this representation
and warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has all corporate powers and all Consents
required to carry on its business as now conducted, other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. The factual information, reports,
financial statements, exhibits and schedules concerning the Borrower and its
Subsidiaries furnished by or on behalf of the Borrower and contained in the
information furnished under cover of a memorandum dated June 2, 1997 by J.P.
Morgan Securities Inc. to a limited number of banks which were being invited to
participate in this Agreement, do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
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ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Promissory Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower, consolidated balance sheets of the Borrower
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, of shareholders' equity and of cash
flows for such fiscal year, setting forth, in each case in comparative form, the
figures for the previous fiscal year, all reported on by Coopers & Lybrand
L.L.P. or other independent public accountants of nationally recognized standing
in a manner complying with the applicable rules and regulations promulgated by
the Securities and Exchange Commission;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
consolidated statements of cash flows for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such quarter, setting forth in
the case of such statements of income and of cash flows in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency on behalf of the Borrower by the chief financial
officer, the chief accounting officer or the treasurer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in subsections (a) and (b) above, a certificate on behalf
of the Borrower signed by the chief financial officer, the chief accounting
officer or the treasurer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 5.08 to 5.11, inclusive, on the date of such
financial statements and (ii) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting forth, in reasonable
detail, the nature thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in subsection (a) above, a statement of the firm of
independent public accountants which reported on such financial statements
stating that, in making the audit necessary for the certification of such
financial statements, such firm of accountants has obtained no knowledge of any
Default, or if it has obtained knowledge of such Default, specifying the nature
and period of existence thereof; provided such firm of accountants shall not be
liable to any Person by reason of such
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firm's failure to obtain knowledge of any Default which would not be disclosed
in the course of an audit conducted in accordance with generally accepted
accounting principles;
(e) within five Domestic Business Days after any Responsible Officer
obtains knowledge of any Default, if such Default is then continuing, a
certificate on behalf of the Borrower signed by the chief financial officer, the
chief accounting officer or the treasurer of the Borrower setting forth, in
reasonable detail, the nature thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(f) promptly following the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all final registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and final reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
(h) within 30 days after any Responsible Officer of the Borrower
obtains knowledge that any member of the ERISA Group (i) gave or was required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knew that the plan administrator of any
Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) received notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) received notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than under Sections 4007, 4071 and 4302 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy of such notice; (iv)
applied for a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (v) gave notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gave notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) failed
to make any required payment or contribution to any Plan or Multiemployer Plan
or made any amendment to any Plan which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a certificate
on behalf of the Borrower, signed by the chief financial officer, the chief
accounting officer or the treasurer of the Borrower setting forth, to the best
of its knowledge, in reasonable detail, the nature of such occurrence and
action, if any, which the Borrower or applicable member of the ERISA Group is
required or proposes to take;
(i) promptly following, and in any event within 10 days of, any change
in a Debt Rating by any Rating Agency, notice thereof; and
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(j) from time to time, upon reasonable notice, such additional
information regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where (i) any such failure to so pay
or discharge could not, based upon the facts and circumstances in existence at
the time, reasonably be expected to have a Material Adverse Effect or (ii) such
liabilities or obligations may be contested in good faith by appropriate
proceedings. The Borrower will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of such liabilities or obligations.
SECTION 5.03. Maintenance of Property; Insurance. (a) Except as
permitted by Section 5.04 or 5.12, the Borrower will keep, and will cause each
Subsidiary to keep, all property necessary in its business in good working order
and condition, ordinary wear and tear excepted, unless the failure to so keep
could not, based upon the facts and circumstances existing at the time,
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its assets and business against such casualties and contingencies, of such
types (including, without limitation, loss or damage, product liability,
business interruption, larceny, embezzlement or other criminal misappropriation)
and in such amounts as is customary in the case of similarly situated
corporations of established reputations engaged in the same or a similar
business, unless the failure to maintain such insurance could not, based upon
the facts and circumstances existing at the time, reasonably be expected to have
a Material Adverse Effect.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower (a) will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries and reasonably related extensions thereof, and (b) will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect (x) their
respective corporate existence and (y) their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business, unless in
the case of either the failure of the Borrower to comply with subclause (b) (y)
of this Section 5.04 or the failure of a Subsidiary to comply with clauses (a)
or (b) of this Section 5.04, such failure could not, based upon the facts and
circumstances existing at the time, reasonably be expected to have a Material
Adverse Effect; provided that nothing in this Section 5.04 shall prohibit (i)
the merger or consolidation of a Subsidiary with or into the Borrower or a
Wholly-Owned Consolidated Subsidiary, (ii) the sale, lease, transfer, assignment
or other disposition by a Subsidiary of all or any part of its assets to the
Borrower or to a Wholly-Owned Consolidated Subsidiary, (iii) the merger or
consolidation of a Subsidiary with or into a Person other than the Borrower or a
Wholly-Owned Consolidated Subsidiary, if
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the Person surviving such consolidation or merger is a Subsidiary and
immediately after giving effect thereto, no Default shall have occurred and be
continuing, (iv) the sale, lease, transfer, assignment or other disposition by a
Subsidiary of all or any part of its assets to a Person other than the Borrower
or a Wholly-Owned Consolidated Subsidiary if the Person to which such sale,
lease, transfer, assignment or other disposition is made is a Subsidiary and
immediately after giving effect thereto, no Default shall have occurred and be
continuing, (v) any transaction permitted pursuant to Section 5.12, (vi) the
termination of the corporate existence of any Subsidiary if the Borrower in good
faith determines that such termination is in the best interest of the Borrower
and is not materially disadvantageous to the Banks and (vii) the sale, lease,
transfer, assignment or other disposition (including any such transaction by way
of merger or consolidation) by the Borrower of all or any part of its assets to
a Person other than the Borrower or a Subsidiary if (A) immediately after giving
effect thereto, no Default shall have occurred and be continuing and (B) the
Borrower is a Subsidiary of such Person or the Borrower and such Person are
Subsidiaries of the same Person.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where (a) noncompliance therewith could not,
based upon the facts and circumstances in existence at the time, reasonably be
expected to have a Material Adverse Effect or (b) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records;
Confidentiality. (a) The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which true and correct entries shall
be made of its business transactions and activities so that financial statements
that fairly present its business transactions and activities can be properly
prepared in accordance with generally accepted accounting principles.
(b) The Borrower will permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all upon reasonable notice to the Borrower, at such reasonable
times and as often as may reasonably be requested by any Bank.
(c) Each Bank and the Agent shall, by its receipt of Confidential
Information (as defined below) pursuant to or in connection with this Agreement
or its exercise of any of its rights hereunder, be deemed to have agreed (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to (i) keep such information confidential, (ii) (except as
permitted by clause (iii) of this Section 5.06(c)) not disclose such information
to any Person other than an officer, director, employee, legal counsel,
independent auditor or authorized agent or advisor of the Agent or such Bank
needing to know such information (it being understood that any such officer,
director, employee, legal counsel, independent auditor or
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authorized agent or advisor shall be informed by the Agent or such Bank of the
confidential nature of such information), (iii) not disclose such information to
any Assignee or Participant (or prospective Assignee or Participant), unless
such Assignee or Participant (or prospective Assignee or Participant) shall
agree in writing to be bound by the provisions of this Section 5.06(c) and (iv)
not use any such information except for purposes relating to this Agreement or
the Notes. The term "Confidential Information" shall mean non-public information
furnished by or on behalf of the Borrower or any of its Subsidiaries to the
Agent, any Bank or other Person exercising rights hereunder or required to be
bound hereby (collectively "Recipients"), but shall not include any such
information which (1) has become or hereafter becomes available to the public
other than as a result of a disclosure by a Recipient, or (2) has become or
hereafter becomes available to a Recipient, on a non-confidential basis, from a
source other than the Borrower or any of its Subsidiaries (or any of their
respective representatives or agents) or any Recipient, which source, to the
knowledge of the Recipient, is not prohibited from disclosing such information
by a confidentiality agreement with, or other legal or fiduciary obligation to,
the Borrower or its Subsidiaries.
The restrictions set forth in the immediately preceding paragraph shall
not prevent the disclosure by a Recipient of any such information:
(A) with the prior written consent of the Borrower,
(B) at the request of a bank regulatory agency or in
connection with an examination by bank examiners, or
(C) upon order of any court or administrative agency of
competent jurisdiction, to the extent required by such order
and not effectively stayed on appeal or otherwise, or as
otherwise required by law; provided that in the case of any
intended disclosure under this clause (C), the Recipient shall
(unless otherwise required by applicable law) give the
Borrower not less than five Domestic Business Days prior
notice (or such shorter period as may, in the good faith
discretion of the Recipient, be reasonable under the
circumstances or may be required by any court or agency under
the circumstances), specifying the Confidential Information
involved and stating such Recipient's intention to disclose
such Confidential Information (including the manner and extent
of such disclosure) in order to allow the Borrower an
opportunity to seek an appropriate protective order.
Each Recipient shall agree that, in addition to all other remedies
available, the Borrower shall be entitled to specific performance and injunctive
and other equitable relief as a remedy for any breach of this Section 5.06(c) by
such Recipient.
SECTION 5.07. Limitation on Restrictions on Subsidiary Dividends and
Other Distributions. The Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or
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restriction on the ability of any Subsidiary to (a) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits, owned by the Borrower or any Subsidiary, or pay any Debt owed to
the Borrower or any Subsidiary, (b) make loans or advances to the Borrower or
any Subsidiary or (c) transfer any of its properties or assets to the Borrower
or any Subsidiary, except for such encumbrances or restrictions existing under
or by reason of
(i) applicable law, agreements with foreign governments with
respect to assets located in their jurisdiction, or condemnation or
eminent domain proceedings,
(ii) any of the Financing Documents,
(iii) (A) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Borrower
or a Subsidiary, or (B) customary restrictions imposed on the transfer
of copyrighted or patented materials or provisions in agreements that
restrict the assignment of such agreements or any rights thereunder,
(iv) provisions contained in the instruments evidencing or
governing Debt or other obligations or agreements, in each case
existing on the Effective Date,
(v) provisions contained in documents evidencing or governing
any Permitted Receivables Transaction,
(vi) provisions contained in instruments evidencing or
governing Debt or other obligations or agreements of any Person, in
each case, at the time such Person (A) shall be merged or consolidated
with or into the Borrower or any Subsidiary, (B) shall sell, transfer,
assign, lease or otherwise dispose of all or substantially all of such
Person's assets to the Borrower or a Subsidiary, or (C) otherwise
becomes a Subsidiary, provided that in the case of clause (A), (B) or
(C), such Debt, obligation or agreement was not incurred or entered
into, or any such provisions adopted, in contemplation of such
transaction,
(vii) provisions contained in instruments amending, restating,
supplementing, extending, renewing, refunding, refinancing, replacing
or otherwise modifying, in whole or in part (collectively,
"Refinancing"), instruments referred to in clauses (ii), (iv) and (vi)
of this Section 5.07, so long as such provisions are, in the good faith
determination of the Borrower's board of directors, not materially more
restrictive than those contained in the respective instruments so
Refinanced,
(viii) provisions contained in any instrument evidencing or
governing Debt or other obligations of a Subsidiary Guarantor,
(ix) any encumbrances and restrictions with respect to a
Subsidiary imposed in connection with an agreement which has been
entered into for the sale or disposition of
40
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such Subsidiary or its assets, provided such sale or disposition
otherwise complies with this Agreement,
(x) the subordination (pursuant to its terms) in right and
priority of payment of any Debt owed by any Subsidiary (the "Indebted
Subsidiary") to the Borrower or any other Subsidiary, to any other Debt
of such Indebted Subsidiary, provided (A) such Debt is permitted under
this Agreement and (B) the Borrower's board of directors has
determined, in good faith, at the time of the creation of such
encumbrance or restriction, that such encumbrance or restriction could
not, based upon the facts and circumstances in existence at the time,
reasonably be expected to have a Material Adverse Effect,
(xi) provisions governing preferred stock issued by a
Subsidiary, provided that such preferred stock is permitted under
Section 5.08, and
(xii) provisions contained in debt instruments obligations or
other agreements of any Subsidiary which are not otherwise permitted
pursuant to clauses (i) through (xi) of this Section 5.07, provided
that the aggregate investment of the Borrower in all such Subsidiaries
(determined in accordance with generally accepted accounting
principles) shall at no time exceed the greater of (a) $50,000,000 or
(b) 10% of Consolidated Tangible Net Worth.
The provisions of this Section 5.07 shall not prohibit (x) Liens not prohibited
by Section 5.11 or (y) restrictions on the sale or other disposition of any
property securing Debt of any Subsidiary, provided such Debt is otherwise
permitted by this Agreement.
SECTION 5.08. Debt. Consolidated Debt will at no time exceed 52.5% of
Consolidated Total Capitalization. The total Debt of all Consolidated
Subsidiaries (excluding (i) Debt of a Consolidated Subsidiary to the Borrower or
to a Wholly-Owned Consolidated Subsidiary, (ii) Debt of a Subsidiary Guarantor
and (iii) Debt of any Person (a) existing at the time such Person becomes a
Subsidiary or merges into a Subsidiary and (b) not created in contemplation of
such event, but only for a period ending 180 days after the date of such event)
will at no time exceed $300,000,000 in aggregate outstanding principal amount.
For purposes of this Section any preferred stock of a Consolidated Subsidiary
held by a Person other than the Borrower or a Wholly-Owned Consolidated
Subsidiary shall be included, at the higher of its voluntary or involuntary
liquidation value, in "Consolidated Debt" and in the "Debt" of such Consolidated
Subsidiary.
SECTION 5.09. Fixed Charge Coverage. The ratio of Consolidated EBIT to
Consolidated Interest Expense will not, for any period of four consecutive
fiscal quarters, be less than 2.5 to 1.
SECTION 5.10. Restricted Payments. Neither the Borrower nor any
Subsidiary will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to the date hereof does not exceed an amount equal to the sum of (a)
$332,000,000 plus (b) 50% of Consolidated Net Income (or minus 100%
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of Consolidated Net Income, in the event of a net loss for such period) for the
period from July 1, 1996 through the end of the then most recently ended fiscal
quarter of the Borrower (treated for this purpose as a single accounting
period), plus (c) the aggregate cash proceeds (net of underwriting commissions)
received by the Borrower (other than from a Subsidiary) from the issuance or
sale after June 30, 1996 of capital stock or Stock Equivalents of the Borrower
(other than the proceeds of any capital stock or Stock Equivalent which by its
terms is subject to redemption otherwise than at the sole option of the
Borrower) plus (d) the aggregate amount of capital contributions received by the
Borrower subsequent to the Parent Guarantee Date. Nothing in this Section 5.10
shall prohibit the payment of any dividend or distribution within 60 days after
the declaration thereof if such declaration was not prohibited by this Section
5.10.
SECTION 5.11. Negative Pledge. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) any Lien existing on any asset on the Effective Date securing Debt
outstanding on the Effective Date;
(b) any Lien existing on any asset of, or capital stock of, or other
ownership interest in, any Person (such capital stock and other ownership
interests are collectively referred to herein as "Stock") at the time such
Person becomes a Subsidiary, which Lien was not created in contemplation of such
event;
(c) any Lien on any asset securing the payment of all or part of the
purchase price of such asset upon the acquisition thereof by the Borrower or a
Subsidiary or securing Debt (including any obligation as lessee incurred under a
capital lease) incurred or assumed by the Borrower or a Subsidiary prior to, at
the time of or within one year after such acquisition (or in the case of real
property, the completion of construction (including any improvements on an
existing property) or the commencement of full operation of such asset or
property, whichever is later), which Debt is incurred or assumed for the purpose
of financing all or part of the cost of acquiring such asset or, in the case of
real property, construction or improvements thereon; provided, that in the case
of any such acquisition, construction or improvement, the Lien shall not apply
to any asset theretofore owned by the Borrower or a Subsidiary, other than
assets so acquired, constructed or improved;
(d) any Lien existing on any asset or Stock of any Person at the time
such Person is merged or consolidated with or into the Borrower or a Subsidiary
which Lien was not created in contemplation of such event;
(e) any Lien existing on any asset or Stock of any Person at the time
of acquisition thereof by the Borrower or a Subsidiary, which Lien was not
created in contemplation of such acquisition;
(f) any Lien arising out of the Refinancing of any Debt secured by any
Lien permitted by any of the subsections (a) through (e) of this Section 5.11,
provided the principal amount of
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Debt is not increased and is not secured by any additional assets, except as
provided in the last sentence of this Section 5.11;
(g) any Lien to secure Debt of a Subsidiary to the Borrower or to a
Wholly-Owned Consolidated Subsidiary;
(h) any Lien created pursuant to a Permitted Receivables Transaction;
(i) any Lien in favor of the United States or any other country (or any
department, agency, instrumentality or political subdivision of the United
States or any other country) securing obligations arising in connection with
partial, progress, advance or other payments pursuant to any contract, statute,
rule or regulation or securing obligations incurred for the purpose of financing
all or any part of the purchase price (including the cost of installation
thereof or, in the case of real property, the cost of construction or
improvement or installation of personal property thereon) of the asset subject
to such Lien (including, but not limited to, any Lien incurred in connection
with pollution control, industrial revenue or similar financings);
(j) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any single obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business; and
(k) Liens not otherwise permitted by the foregoing clauses (a) through
(j) of this Section 5.11 securing Debt (without duplication) in an aggregate
principal amount at any time outstanding not to exceed an amount equal to the
greater of (i) $50,000,000 or (ii) 10% of Consolidated Tangible Net Worth.
It is understood that any Lien permitted to exist on any asset pursuant to the
foregoing provisions of this Section 5.11 may attach to the proceeds of such
asset and, with respect to Liens permitted pursuant to subsections (a), (b),
(d), (e), (f) (but only with respect to the Refinancing of a Debt secured by a
Lien permitted pursuant to subsections (a), (b), (d) or (e)) or (g) of this
Section 5.11, may attach to an asset acquired in the ordinary course of business
as a replacement of such former asset.
SECTION 5.12. Consolidations, Mergers and Sales of Assets. (a) The
Borrower will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer all or substantially all of its assets to any
other Person, unless
(A) the Borrower or a Subsidiary or a Domestic Parent is
the surviving corporation;
(B) the Person (if other than the Borrower) formed by
such consolidation or into which the Borrower is merged, or
the Person which acquires by sale or other transfer, or which
leases, all or substantially all of the assets of the Borrower
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(any such Person, the "Successor"), shall be organized and
existing under the laws of the United States, any state
thereof or the District of Columbia and shall expressly
assume, in a writing executed and delivered to the Agent for
delivery to each of the Banks, in form reasonably satisfactory
to the Agent, the due and punctual payment of the principal of
and interest on the Promissory Notes and the performance of
the other obligations under this Agreement and the Promissory
Notes on the part of the Borrower to be performed or observed,
as fully as if such Successor were originally named as the
Borrower in this Agreement;
(C) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing; and
(D) the Borrower has delivered to the Agent a certificate
on behalf of the Borrower signed by a Responsible Officer and
an opinion of counsel (which counsel may be an employee of the
Borrower), each stating that all conditions provided in this
Section 5.12 relating to such transaction have been satisfied.
The foregoing provisions of this Section 5.12 shall not restrict the
merger or consolidation of any Subsidiary with and into the Borrower.
Upon the satisfaction (or waiver in accordance with Section 9.05) of
the conditions set forth in this Section 5.12, the Successor shall succeed, and
may exercise every right and power of, the Borrower under this Agreement and the
Promissory Notes with the same effect as if the Successor had been originally
named as the Borrower herein and in the Promissory Notes, and the Borrower shall
be relieved of its obligations under this Agreement and the Promissory Notes.
(b) The Borrower will not, and will not permit any Subsidiary to, sell,
lease or otherwise transfer, in any transaction or series of related
transactions, to any Person (other than the Borrower, a Subsidiary, a Person of
which the Borrower is a Subsidiary or a Subsidiary of such a Person) any
Property (including, without limitation, the stock of any Subsidiary) having a
net book value in excess of 15% of Consolidated Assets determined as of the end
of the fiscal quarter of the Borrower most recently ended at the time of such
sale or other transaction, or Property (including without limitation, stock of a
Subsidiary) which contributed in excess of 15% of Consolidated EBIT for the
fiscal year of the Borrower most recently ended at the time of such sale or
other transaction.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrower for its general corporate purposes,
including, without limitation, capital expenditures and (subject to the
following sentence) acquisitions. None of such proceeds will be used, directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.14. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, on any date before the Parent Guarantee Date,
directly or indirectly, pay any
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funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate (collectively, "AFFILIATE TRANSACTIONS"); provided, however, that the
foregoing provisions of this Section 5.14 shall not prohibit the Borrower or any
of its Subsidiaries from: (a) making Restricted Payments (including, for this
purpose, transactions expressly excluded from the definition of a Restricted
Payment) permitted by Section 5.10, (b) making sales to or purchases from any
Affiliate and, in connection therewith, extending credit or making payments, or
from making payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the ordinary course of
business and on terms and conditions at least as favorable to the Borrower or
such Subsidiary as the terms and conditions which the Borrower would reasonably
expect to be obtained in a similar transaction with a Person which is not an
Affiliate at such time, (c) making payments of principal, interest and premium
on any Debt of the Borrower or such Subsidiary held by an Affiliate if the terms
of such Debt are at least as favorable to the Borrower or such Subsidiary as the
terms which the Borrower would reasonably expect to have been obtained at the
time of the creation of such Debt from a lender which was not an Affiliate, (d)
participating in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the Borrower or such
Subsidiary participates in the ordinary course of its business and on a basis no
less advantageous than the basis on which such Affiliate participates, (e)
paying or granting reasonable compensation and benefits to any director,
officer, employee or agent of the Borrower or any Subsidiary, (f) paying
reasonable legal fees and expenses to a law firm of which an Affiliate is a
member or (g) engaging in any Affiliate Transaction not otherwise addressed in
subsections (a) - (f) of this Section 5.14, the terms of which are not less
favorable to the Borrower or such Subsidiary than those that the Borrower would
reasonably expect to be obtained in a comparable transaction at such time with a
Person which is not an Affiliate.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults. If one or more of the following
events ("EVENTS OF DEFAULT") shall have occurred and be continuing and shall not
have been waived in accordance with Section 9.05:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or shall fail to pay within three Domestic Business Days of the due date thereof
any interest on any Loan or any fees payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.08 or 5.09;
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(c) the Borrower shall fail to observe or perform any covenant
contained in Section 5.07 or Sections 5.10 to 5.14, inclusive, and such failure
shall not be remedied within five days after any Responsible Officer obtains
actual knowledge thereof;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a),
(b) or (c) of this Section 6.01) for 10 days after notice thereof has been given
to the Borrower by the Agent at the request of any Bank;
(e) any representation, warranty, certification or statement made in
writing by the Borrower or any Guarantor in the Financing Documents or in any
certificate, financial statement or other document required to be delivered to
the Agent or any of the Banks pursuant to the Financing Documents shall prove to
have been incorrect in any material respect when made (or deemed made);
(f) on any date on or after the Parent Guarantee Date, any Guarantor
Event of Default (as defined in the Parent Guarantee);
(g) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt when due (after giving effect to any applicable
grace period);
(h) any event or condition shall occur that results in the
acceleration of the maturity of any Material Debt or that entitles the holder or
holders of any Material Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof;
(i) the Borrower or any Significant Subsidiary shall (i) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
substantially all of its property, or (ii) consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other similar proceeding commenced against it, or (iii) make a general
assignment for the benefit of creditors, or (iv) fail generally to pay its debts
as they become due, or (v) take corporate action authorizing any of the
foregoing;
(j) (i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or substantially all of its property, and such
involuntary case or other proceeding shall remain in effect and undismissed and
unstayed for a period of 60 consecutive days or (ii) an order for relief shall
be entered against the Borrower or any Significant Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
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(k) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $25,000,000;
(l) a judgment or order for the payment of money in excess of
$30,000,000 (after deducting amounts covered by insurance, except to the extent
that the insurer providing such insurance has declined such coverage) shall be
rendered against the Borrower or any Subsidiary and, within 60 days after entry
thereof, such judgment or order is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay, such
judgment or order is not discharged;
(m) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 40% or more of the
outstanding shares of common stock of the Borrower; or, on the last day of any
period of twelve consecutive calendar months, a majority of members of the board
of directors of the Borrower shall no longer be composed of individuals (i) who
were members of said board of directors on the first day of such twelve
consecutive calendar month period or (ii) whose election or nomination to said
board of directors was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
said board of directors; provided that, the events described in this subsection
(m) shall not constitute an Event of Default on any date on or after the Parent
Guarantee Date;
(n) the Borrower or any Subsidiary shall fail to make any payment
owing by it in respect of any performance bond, performance guaranty or bank
guaranty issued in lieu of a performance bond or performance guaranty (other
than a payment which is disputed by the Borrower or such Subsidiary in good
faith), and the aggregate of all such defaulted payments shall exceed
$50,000,000 at any one time for the Borrower and its Subsidiaries;
(o) on any date on or after the Parent Guarantee Date, the Parent
Guarantee shall cease to be valid and enforceable; or
(p) on any date on or after the Parent Guarantee Date, the Borrower
shall cease to be a Wholly-Owned Consolidated Subsidiary of the Parent
Guarantor;
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then, and in every such event, the Agent shall (i) if requested by Banks having
more than 60% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Promissory Notes evidencing more than 60% in
aggregate principal amount of the Loans, by notice to the Borrower declare the
Promissory Notes (together with accrued interest thereon) to be, and the
Promissory Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in subsection (i) or (j) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Promissory Notes (together
with accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Financing Documents as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York (and any successor acting as Agent) in its capacity as a Bank hereunder
shall have the same rights and powers under the Financing Documents as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York (and any successor
acting as Agent) and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
affiliate of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under the
Financing Documents are only those expressly set forth therein. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
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SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or any Guarantor; (iii) the
satisfaction of any condition specified in Article 3, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Subsidiary Guarantees, the Parent Guarantee,
the Promissory Notes or any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it in good faith to be genuine or to
be signed by or on behalf of the proper party or parties. Without limiting the
generality of the foregoing, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by such indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrower and its Subsidiaries and its own decision to
enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, subject to
the consent of the Borrower. If no successor Agent shall have been so appointed
by the Required Banks and consented to by the Borrower and shall have accepted
such appointment within 45 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least
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$50,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
the Financing Documents. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as the Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon in
writing between the Borrower and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Banks
in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks holding 50% or
more of the aggregate amount of the affected Loans advise the Agent that the
Adjusted CD Rate or the London Interbank Offered Rate, as the case may be, as
determined by the Agent will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon, until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist (which the Agent agrees to do promptly
upon such circumstances ceasing to exist), (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the case
may be, shall be suspended and (ii) each outstanding CD Loan or Euro-Dollar
Loan, as the case may be, shall be converted into a Base Rate Loan on the last
day of the then current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least one Domestic Business Day before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the
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first day to but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
any Bank has determined in its reasonable judgment that the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency,
shall make it unlawful or impossible for such Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice specifying the
circumstances giving rise to such suspension to the other Banks and the
Borrower, whereupon, until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension no longer exist (which such
Bank agrees to do promptly upon such circumstances ceasing to exist), the
obligation of such Bank to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank in
the good faith exercise of its discretion, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan to such
day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
the date of this Agreement, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, any Bank has determined in its reasonable
judgment that the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement with respect to which such Bank is entitled to compensation
during the relevant Interest Period under Section 2.15), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
such Bank (or its Applicable Lending Office) or shall impose
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on any Bank (or its Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Promissory Note or its obligation to make
Fixed Rate Loans and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under its
Promissory Note with respect thereto, by an amount deemed by such Bank to be
material to such Bank, then, within 15 days after written demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the date of this
Agreement, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days after
written demand by such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date of this Agreement,
which will entitle such Bank to compensation pursuant to this Section; provided
that (i) if any Bank fails to give such notice within 90 days after it obtains
actual knowledge of such an event, such Bank shall only be entitled to payment
under this Section 8.03 for costs incurred from and after the date 90 days prior
to the date that such Bank does give such notice and (ii) each such Bank will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank in the good faith exercise of its discretion, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section and setting forth in reasonable detail the additional amount
or amounts to be paid to it hereunder and the basis used to determine such
amounts shall be conclusive in the absence of manifest error. In determining
such amount, such Bank will use reasonable averaging and attribution methods and
will have a reasonable basis for any assumptions it makes in connection
therewith.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Agent hereunder or under any Promissory Note
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each
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<PAGE> 57
Bank and the Agent, taxes imposed on or measured by its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Bank or
the Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on or measured by its income, and
franchise or similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Promissory Note to any Bank or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04 such Bank or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.01, the original or a certified copy of
a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any
Promissory Note or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Financing Document (hereinafter referred to as
"OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04 paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 15 days from the date
such Bank or the Agent (as the case may be) makes demand therefor.
(d) At the times indicated herein, each Bank organized under the laws
of a jurisdiction outside the United States shall provide the Borrower with
Internal Revenue Service form 1001 or 4224 (in each case accompanied by any
statements which may be required under applicable Treasury regulations), as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to receive payments under this Agreement
(i) without deduction or withholding of any United States federal income taxes
or (ii) subject to a reduced rate of United States federal withholding tax,
unless, in each case of clause (i) and (ii) of this Section 8.04(d), an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or which would prevent the Bank
from duly completing and delivering any such form with respect to it and the
Bank advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of such taxes. Such forms shall be
provided (x) on or prior to the date of the Bank's execution and delivery of
this Agreement in the case of each Bank listed on the signature pages hereof,
and
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on or prior to the date on which it becomes a Bank in the case of each other
Bank, and (y) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
so delivered by the Bank. If the form provided by a Bank at the time such Bank
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "TAXES" as defined in Section 8.04(a). In addition, to
the extent that for reasons other than a change of treaty, law or regulation any
Bank becomes subject to an increased rate of United States interest withholding
tax while it is a party to this Agreement, withholding tax at such increased
rate shall be considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form in accordance with Section 8.04(d)
(unless such failure is excused by the terms of Section 8.04(d)), such Bank
shall not be entitled to indemnification under Section 8.04(a) or 8.04(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Bank, which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank in the good faith exercise of its discretion, is not
otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make, or to continue or convert
outstanding Loans as or to Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its CD Loans or Euro-Dollar Loans and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such Bank through
the Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist), all Loans which would otherwise be made by such Bank as (or
continued as or converted to) CD Loans or Euro-Dollar Loans, as the case may be,
shall instead be Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the other Banks).
If such Bank notifies such Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a CD Loan or Euro-Dollar Loan,
as the case may be, on the first day of the next succeeding Interest Period
applicable to the related CD Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If any Bank (i) has demanded
compensation for increased costs pursuant to Section 8.03 or 8.04 or is entitled
to payments under Section 8.04(a)
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or (ii) has determined that the making or maintaining of any Euro-Dollar Loan
has become unlawful or impossible pursuant to Section 8.02 and similar
additional interest or compensation has not been demanded by, or a similar
determination has not been made by, all of the Banks, the Borrower shall have
the right (with the assistance of the Agent) to designate an Assignee which is
not an Affiliate of the Borrower to purchase for cash, pursuant to an Assignment
and Assumption Agreement in substantially the form of Exhibit G hereto, the
outstanding Loans and Commitment of such Bank and to assume all of such Bank's
other rights and obligations hereunder without recourse to or warranty by, or
expense to, such Bank, for a purchase price equal to the principal amount of all
of such Bank's outstanding Loans plus any accrued but unpaid interest thereon
and the accrued but unpaid fees in respect of that Bank's Commitment hereunder
plus such amount, if any, as would be payable pursuant to Section 2.13 if the
outstanding Loans of such Bank were prepaid in their entirety on the date of
consummation of such assignment.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party provided for hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (x) in the case of the Borrower or the Agent, at
its address or facsimile or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or facsimile or telex number
set forth in its Administrative Questionnaire or (z) in the case of any party,
such other address or facsimile or telex number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 9.01
and electronic, telephonic or other appropriate confirmation of receipt is
received by the sender, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article 2 or Article 8 shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any other
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
and therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
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SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of the Financing Documents, any waiver or consent
hereunder or any amendment thereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including reasonable fees and disbursements
of counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective Bank Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by such Indemnitee (whether or not such
Indemnitee shall be designated a party thereto) arising out of any
investigative, administrative or judicial proceeding (brought or threatened)
relating to or arising out of the Financing Documents, the arrangement,
administration, performance or enforcement thereof or any actual or proposed use
of proceeds of Loans hereunder; provided that no Indemnitee shall have the right
to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction; provided
further that no Indemnitee shall have the right to be indemnified hereunder in
connection with any proceedings between it and another Indemnitee which does not
relate to the Borrower.
(c) If any proceeding or claim shall be brought or asserted against any
Indemnitee in respect of which indemnity may be sought pursuant to the preceding
subsection, such Indemnitee shall promptly notify the Borrower. The Borrower
shall not be liable for any costs or expenses in connection with any settlement
entered into without its consent.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Promissory Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Promissory Note held by such other Bank, the
Bank receiving such proportionately greater payment shall purchase such
participations in the Promissory Notes held by the other Banks, and such other
adjustments shall be made, as may be required, so that all such payments of
principal and interest with respect to the Promissory Notes held by the Banks
shall be shared by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Promissory Notes.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
or the Promissory Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the
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Agent are affected thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank (except for a ratable decrease in the Commitments of all
Banks) or subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or any fees hereunder, (iii)
postpone the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder or for termination of any Commitment, (iv) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Promissory Notes, or the number of Banks, which shall be required for the Banks
or any of them to take any action under this Section or any other provision of
this Agreement or (v) release the Parent Guarantor from its obligations under
the Parent Guarantee.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement and subject to subsection (e), (f) and (g) below, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
9.06(c) or 9.06(d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (in an amount
equivalent to an original Commitment of not less than $10,000,000) of all, of
its rights and obligations under this Agreement and the Promissory Notes, and
such Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit G
hereto executed by such Assignee and such transferor Bank, with (and subject to)
the subscribed consent of the Borrower and the Agent; provided that if an
Assignee is an affiliate of such transferor Bank, no such consent shall be
required; and provided further that such assignment may, but need not, include
rights of the transferor Bank in respect of outstanding Money Market Loans. Upon
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execution and delivery of such instrument and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrower shall make appropriate arrangements so that, if
required, a new Promissory Note is issued to the Assignee. In connection with
any such assignment, the transferor Bank shall pay to the Agent an
administrative fee for processing such assignment in the amount of $2,500. If
the Assignee is not incorporated under the laws of the United States of America
or a state thereof, it shall deliver to the Borrower and the Agent certification
as to exemption from deduction or withholding of any United States federal
income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Promissory Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(f) Notwithstanding anything to the contrary contained in this Section
9.06 but subject to the terms and conditions set forth in this subsection (f),
any Bank may from time to time, elect to designate a Conduit to provide all or
any part of Loans required to be made by such Bank to the Borrower pursuant to
this Agreement (a "Conduit Designation"), provided the designation of a Conduit
by any Bank for purposes of this Section 9.06(f) shall be subject to the
approval of the Borrower. No additional Note shall be required with regard to a
Conduit Designation; provided, however, to the extent any Conduit shall advance
funds under a Conduit Designation, the designating Bank shall be deemed to hold
the Note in its possession as an agent for such Conduit to the extent of the
Loan funded by such Conduit. Notwithstanding any such Conduit Designation, (x)
the designating Bank shall remain solely responsible to the other parties hereto
for its obligations under this Agreement and (y) the Borrower and the Agent may
continue to deal solely and directly with the designating Bank as administrative
agent for such designating Bank's Conduit, in connection with all of such
Conduit's rights and obligations under this Agreement, unless and until the
Borrower and the Agent are notified that the designating Bank has been replaced
as administrative agent for its Conduit; any payments for the benefit of any
designating Bank and its Conduit shall be paid to such designating Bank for
itself and as administrative agent for its Conduit, as applicable; provided
neither the Borrower nor the Agent shall be responsible for any designating
Bank's application of any such payments. In addition, any Conduit may (i) with
notice to, but without the prior written consent of the Borrower and the
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Agent, and without paying any processing fee therefor, assign all or portions of
its interest in any Loans to the Bank that designated such Conduit or to any
financial institutions consented to by the Borrower and the Agent providing
liquidity and/or credit facilities to or for the account of such Conduit to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any guarantee, surety, credit or
liquidity enhancement to such Conduit.
(g) Each party to this Agreement hereby agrees that, at any time a
Conduit Designation is in effect, it shall not institute against, or join any
other person in instituting against, any Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law, for one year and a day after the
latest maturing commercial paper note issued by such Conduit is paid. This
Section 9.06(g) shall survive the termination of this Agreement.
SECTION 9.07. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. THIS AGREEMENT
AND EACH PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 9.09. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.10. Waiver of Jury Trial. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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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.
TYCO INTERNATIONAL LTD.
By: /s/ Mark Swartz
----------------------------------------
Title: Vice President - Chief Financial
Officer
By: /s/ Barbara S. Miller
----------------------------------------
Title: Vice President - Treasurer
1 Tyco Park
Exeter, New Hampshire 03833
Facsimile number: 603-778-0108
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Robert L. Barrett
----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Terry Pitcher
----------------------------------------
Title: Vice President
<PAGE> 65
BANKERS TRUST COMPANY
By: /s/ Patricia Hogan
----------------------------------------
Title: Vice President
COMMERZBANK AG, NEW YORK BRANCH
By: /s/ Robert J. Donohue
----------------------------------------
Title: Vice President
By: /s/ Peter T. Doyle
----------------------------------------
Title: Assistant Treasurer
CREDIT SUISSE FIRST BOSTON
By: /s/ Chris T. Horgan
----------------------------------------
Title: Vice President
By: /s/ Edward E. Barr
----------------------------------------
Title: Associate
MELLON BANK, N.A.
By: /s/ Rita C. Long
----------------------------------------
Title: Vice President
<PAGE> 66
BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By: /s/ Luc Verbeken
----------------------------------------
Title: Senior Vice President
By: /s/ Mallika Kambhampati
----------------------------------------
Title: Vice President and Manager
Credit Analysis
THE BANK OF NEW YORK
By: /s/ Ernest Fung
----------------------------------------
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Robert J. Dilloff
----------------------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.
(NEW YORK BRANCH)
By: /s/ Masayoshi Komaki
----------------------------------------
Title: Assistant Vice President
<PAGE> 67
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By: /s/ Mark J. Rakov
----------------------------------------
Title: Vice President
THE SANWA BANK, LIMITED
By: /s/ Yutaka Higashino
----------------------------------------
Title: Senior Vice President
TORONTO DOMINION (NEW YORK), INC.
By: /s/ Jorge A. Garcia
----------------------------------------
Title: Vice President
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
By: /s/ Alexander Beal
----------------------------------------
Title: Assistant Treasurer
By: /s/ Dieter Hoeppli
----------------------------------------
Title: Vice President
<PAGE> 68
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
By: /s/ Robert L. Barrett
----------------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Robert L. Barrett
Telex number: 177615
Facsimile number: 212-648-5018
<PAGE> 69
Commitment Schedule
Morgan Guaranty Trust Company of New York $46,000,000
The Bank of Nova Scotia $42,800,000
Bankers Trust Company $42,800,000
Commerzbank AG, New York Branch $42,800,000
Credit Suisse First Boston $42,800,000
Mellon Bank, N.A. $42,800,000
Bank Brussels Lambert, New York Branch $30,000,000
The Bank of New York $30,000,000
Bank of Tokyo-Mitsubishi Trust Company $30,000,000
The Dai-ichi Kangyo Bank, Ltd. (New York Branch) $30,000,000
The Hongkong and Shanghai Banking Corporation Limited $30,000,000
The Sanwa Bank, Limited $30,000,000
Toronto Dominion (New York), Inc. $30,000,000
Union Bank of Switzerland, New York Branch $30,000,000
Total Commitments:
$500,000,000
<PAGE> 70
EXHIBIT A
PROMISSORY NOTE
New York, New York
, 19
For value received, TYCO INTERNATIONAL LTD., a Massachusetts corporation
(the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This promissory note is one of the Promissory Notes referred to in the
Five-Year Credit Agreement dated as of June 27, 1997 among the Borrower, the
banks listed on the signature pages thereof and Morgan Guaranty Trust Company of
New York, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
Except as permitted by Section 9.06 of the Credit Agreement, this
Promissory Note may not be assigned by the Bank to any other Person.
<PAGE> 71
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TYCO INTERNATIONAL LTD.
By________________________
Title:
By________________________
Title:
<PAGE> 72
Promissory Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- ----------------------------------------------------------------------------
Amount Type Amount of Unpaid
of of Principal Principal Maturity Notation
Date Loan Loan Repaid Amount Date Made By
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<PAGE> 73
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Tyco International Ltd.
Re: Five-Year Credit Agreement (the "Credit Agreement")
dated as of June 27, 1997 among the Borrower, the
Banks listed on the signature pages thereof and the
Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount(1) Interest Period(2)
---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
TYCO INTERNATIONAL LTD.
By
------------------------------------------
Title:
By
------------------------------------------
Title:
- --------------------------
(1) Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2) Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE> 74
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Tyco
International Ltd. (the "Borrower")
Pursuant to Section 2.03 of the Five-Year Credit Agreement dated as of
June 27, 1997 among the Borrower, the Banks parties thereto and the undersigned,
as Agent (the "Credit Agreement"), we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30
A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
----------------------------------
Authorized Officer
<PAGE> 75
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: Morgan Guaranty Trust Company of New York,
as Agent
Re: Money Market Quote to Tyco International Ltd. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at
the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
-------- --------- ------------ --------------------
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed $____________.]**
----------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
<PAGE> 76
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Five-Year Credit
Agreement dated as of June 27, 1997 (the "Credit Agreement") among the Borrower,
the Banks listed on the signature pages thereof and yourselves, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for which any offer(s)
are accepted, in whole or in part, in accordance with Section 2.03(f) of the
Credit Agreement.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
- ----------
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
<PAGE> 77
EXHIBIT E
Form of Opinion of General Counsel
of the Borrower
June 27, 1997
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, As Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the General Counsel of Tyco International Ltd., a Massachusetts
corporation (the "Borrower"), and am rendering this opinion in connection with
that certain Five-Year Credit Agreement (the "Credit Agreement"), dated as of
June 27, 1997, among the Borrower, the banks listed on the signature pages
thereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Agent.
This opinion is being delivered to you pursuant to Section 3.01(c) of the Credit
Agreement. Each term defined in the Credit Agreement and used herein, but not
otherwise defined herein, has the meaning ascribed thereto in the Credit
Agreement.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreement and Promissory Notes and have examined originals or copies,
certified or otherwise identified to my satisfaction, of (i) the Restated
Articles of Organization and By-laws of the Borrower, each as in effect on the
date hereof and (ii) such other documents, records, certificates and instruments
as I have deemed relevant and necessary as a basis for the opinion hereinafter
expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to me as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements, representations and certificates of officers and other
representatives of the Borrower and certificates of public officials. In
addition, I have assumed that (i) the Credit Agreement has been validly
authorized, executed and delivered by all parties thereto (other than the
Borrower), (ii) each party to the Credit Agreement (other than the Borrower) has
been duly organized and is a corporation or other entity validly existing and in
good standing (to the extent applicable) under the laws of its respective
jurisdiction of organization, with the full corporate or other organizational
power to execute and deliver the Credit Agreement and to perform its respective
obligations thereunder, (iii) the Credit Agreement constitutes the legal, valid
and binding obligations of the respective parties thereto (other than the
Borrower) enforceable against such
<PAGE> 78
parties in accordance with their respective terms, (iv) the execution and
delivery of the Credit Agreement by each party thereto (other than the Borrower)
and the performance by such parties of their respective obligations thereunder
do not violate such parties' respective articles or certificate of incorporation
or by-laws, or other organizational documents, and (v) the execution, delivery
and performance by each party to the Credit Agreement (other than the Borrower)
and the performance by such parties of their respective obligations thereunder
do not violate any agreement, judgment, injunction, decree, order of any
governmental authority, other instrument, law or regulation applicable to such
party.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts, and
has all corporate powers and all material governmental licenses, authorizations,
consents and approvals (collectively, the "Consents") required to carry on its
business as now conducted, other than those powers and Consents, the failure of
which to be possessed or obtained could not, based upon the facts and
circumstances in existence on the date hereof, reasonably be expected to have a
Material Adverse Effect.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Promissory Notes (a) are within the Borrower's
corporate powers; (b) have been duly authorized by all necessary corporate
action on the part of the Borrower; (c) require no action by or in respect of,
or filing with, any governmental body, agency or official, in each case, on the
part of the Borrower; and (d) do not contravene, or constitute a default by the
Borrower under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Borrower or, (iii) any agreement
or instrument evidencing or governing Debt of the Borrower, or any other
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Promissory Notes constitute valid and binding obligations
of the Borrower.
4. There is no action, suit or proceeding pending against, or, to the
best of my knowledge, threatened against or affecting, the Borrower or any of
its Subsidiaries before any court or arbitrator or any governmental body, agency
or official, in which there is a reasonable possibility of an adverse decision
which could, based upon the facts and circumstances in existence on the date
hereof, reasonably be expected to have a Material Adverse Effect or which in any
manner draws into question the validity of the Credit Agreement or the
Promissory Notes.
5. Each of the Borrower's corporate Subsidiaries is a corporation
validly existing and in good standing under the laws of its jurisdiction of
incorporation, except where the failure to be so incorporated, existing or in
good standing could not, based upon the facts and
2
<PAGE> 79
circumstances existing on the date hereof, reasonably be expected to have a
Material Adverse Effect, and has all corporate powers and all Consents required
to carry on its business as now conducted other than those powers and Consents,
the failure of which to be possessed or obtained could not, based upon the facts
and circumstances in existence on the date hereof, reasonably be expected to
have a Material Adverse Effect.
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Credit Agreement and the Promissory Notes
may be subject to or limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or transfer or other similar laws
and court decisions, now or hereafter in effect, relating to or affecting the
rights of creditors generally.
(b) The enforceability of the Credit Agreement and the Promissory Notes
is or will be subject to the application of and may be limited by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law). Such principles of equity are of general
application, and in applying such principles a court, among other things, might
not allow a creditor to accelerate maturity of a debt under certain
circumstances including, without limitation, upon the occurrence of a default
deemed immaterial, or might decline to order the Borrower or any of the other
parties to the Credit Agreement to perform covenants. Such principles as applied
by a court might include a requirement that a creditor act with reasonableness
and in good faith. Thus, I express no opinion as to the validity or
enforceability of (i) provisions restricting access to legal or equitable
remedies, such as the specific performance of executory covenants, (ii)
provisions that purport to establish evidentiary standards, (iii) provisions
relating to waivers, severability, set-off, or delay or omission of enforcement
of rights or remedies, and (iv) provisions purporting to convey rights to
persons other than parties to the Credit Agreement.
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) I have not been requested to render, and with your permission I do
not express, any opinion as to the applicability to any provision of the Credit
Agreement or the Promissory Notes, of Section 548 of the Federal Bankruptcy
Code, Article 10 of the New York Debtor & Creditor Law, or any other fraudulent
conveyance, insolvency or transfer laws or any court decisions with respect to
any of the foregoing.
I call your attention to the fact that I am admitted to practice law
only in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of the State of New York, the Commonwealth of Massachusetts
and the Federal laws of the United States of America.
3
<PAGE> 80
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
This opinion is being delivered to you solely for your benefit in
connection with the Credit Agreement, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent.
Very truly yours,
4
<PAGE> 81
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Five-Year Credit
Agreement (the "Credit Agreement") dated as of June 27, 1997, among Tyco
International Ltd., a Massachusetts corporation (the "Borrower"), the banks
listed on the signature pages thereof (the "Banks") and Morgan Guaranty Trust
Company of New York, as Agent (the "Agent"), and have acted as special counsel
for the Agent for the purpose of rendering this opinion pursuant to Section
3.01(d) of the Credit Agreement. Terms defined in the Credit Agreement are used
herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Credit
Agreement constitutes a valid and binding agreement of the Borrower and each
Promissory Note constitutes a valid and binding obligation of the Borrower, in
each case enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In giving the foregoing opinion, (i) we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect and (ii) insofar as the foregoing
opinion involves matters governed by the laws of Massachusetts, we have relied,
without independent
<PAGE> 82
investigation, upon the opinion of the General Counsel of the Borrower, a copy
of which has been delivered to you.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 83
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), TYCO INTERNATIONAL LTD. (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Five-Year Credit Agreement dated as of June 27, 1997 among the
Borrower, the Assignor and the other Banks party thereto, as Banks, and the
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of
<PAGE> 84
the Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor outstanding at the
date hereof. Upon the execution and delivery hereof by the Assignor, the
Assignee, [the Borrower and the Agent] and the payment of the amounts specified
in Section 3 required to be paid on the date hereof (i) the Assignee shall, as
of the date hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a Commitment in an amount
equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by a like amount and the Assignor released from
its obligations under the Credit Agreement to the extent such obligations have
been assumed by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.3 It is
understood that commitment and/or facility fees in respect of the Assigned
Amount accrued to the date hereof are for the account of the Assignor and such
fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agent is evidence of this consent. Pursuant to Section 9.06(c) the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
- -------------------------
(3)Amount should combine principal together with accrued interest
and breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
<PAGE> 85
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By
----------------------------------
Title:
[ASSIGNEE]
By
----------------------------------
Title:
TYCO INTERNATIONAL LTD.
By
----------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By
----------------------------------
Title:
3
<PAGE> 86
EXHIBIT H
SUBSIDIARY GUARANTEE
Dated as of June 27, 1997
WHEREAS, Tyco International Ltd., a Massachusetts corporation (together
with its successors, the "Borrower") has entered into a Five-Year Credit
Agreement (as the same may be amended from time to time, the "Credit Agreement")
dated as of June 27, 1997 among the Borrower, the banks listed on the signature
pages thereof, and Morgan Guaranty Trust Company of New York, as Agent, pursuant
to which the Borrower is entitled, subject to certain conditions, to borrow up
to $500,000,000;
WHEREAS, in conjunction with the transactions contemplated by the
Credit Agreement and in consideration of the financial and other support that
the Borrower has provided, and such financial and other support as the Borrower
may in the future provide, to the undersigned (together with its successors, the
"Guarantor") and in order to induce the Banks and the Agent to enter into the
Credit Agreement and to make Loans thereunder, the Guarantor is willing to
guarantee the obligations of the Borrower under the Credit Agreement and the
Promissory Notes;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:
ARTICLE
DEFINITIONS
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined. In addition the
following terms, as used herein, have the following meanings:
"Guaranteed Obligations" means (i) all obligations of the Borrower in
respect of principal of and interest on the Loans and the Promissory Notes, (ii)
all other amounts payable by the Borrower under the Credit Agreement or the
Promissory Notes and (iii) all renewals or extensions of the foregoing, in each
case whether now outstanding or hereafter arising. The Guaranteed Obligations
shall include, without limitation, any interest, costs, fees and expenses which
accrue on or with respect to any of the foregoing and are payable by the
Borrower pursuant to the Credit Agreement or the Promissory Notes, whether
before or after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of any one or more than
one of the Obligors, and any such interest, costs, fees and expenses that would
have accrued thereon or with respect thereto and would have been payable by the
Borrower pursuant to the Credit Agreement or the Promissory Notes but for the
commencement of such case, proceeding or other action.
"Obligors" means the Borrower and each of the Guarantors (as defined in
the Credit Agreement), including the Guarantor, and "Obligor" means any one of
the foregoing.
<PAGE> 87
ARTICLE
GUARANTEE
SECTION 1. The Guarantees. Subject to Section 3, the Guarantor hereby
unconditionally and irrevocably guarantees to the Banks and the Agent and to
each of them, the due and punctual payment of all Guaranteed Obligations as and
when the same shall become due and payable, whether at maturity, by declaration
or otherwise, according to the terms thereof. In case of failure by the Borrower
punctually to pay the indebtedness guaranteed hereby, the Guarantor, subject to
Section 3, hereby unconditionally agrees to cause such payment to be made
punctually as and when the same shall become due and payable, whether at
maturity or by declaration or otherwise, and as if such payment were made by the
Borrower.
SECTION 2. Guarantee unconditional. The obligations of the Guarantor
under this Article 2 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of any other Obligor under any Financing Document,
by operation of law or otherwise;
(b) any modification or amendment of or supplement to any Financing
Document (other than as specified in an amendment or waiver of this Subsidiary
Guarantee effected in accordance with Section 3);
(c) any modification, amendment, waiver, release, non-perfection or
invalidity of any direct or indirect security, or of any guaranty or other
liability of any third party, for any obligation of any other Obligor under any
Financing Document;
(d) any change in the corporate existence, structure or ownership of
any other Obligor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any other Obligor or its assets or any resulting
release or discharge of any obligation of any other Obligor contained in any
Financing Document;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against any other Obligor, the Agent, any Bank or
any other Person, whether or not arising in connection with the Financing
Documents; provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any other
Obligor for any reason of any Financing Document, or any provision of applicable
law or regulation purporting to prohibit the payment by any other Obligor of the
principal of or interest on any Promissory Note or any other amount payable by
any other Obligor under any Financing Document; or
2
<PAGE> 88
(g) any other act or omission to act or delay of any kind by any other
Obligor, the Agent, any Bank or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the obligations of the Guarantor under this
Article 2.
SECTION 3. Limit of Liability. The Guarantor shall be liable under this
Subsidiary Guarantee only for amounts aggregating up to the largest amount that
would not render its obligations hereunder subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provisions of any
applicable state law.
SECTION 4. Discharge; Reinstatement in Certain Circumstances. Subject
to Section 6, the Guarantor's obligations under this Article 2 shall remain in
full force and effect until the Commitments are terminated and the principal of
and interest on the Promissory Notes and all other amounts payable by the
Borrower under the Financing Documents shall have been paid in full. If at any
time any payment of the principal of or interest on any Promissory Note or any
other amount payable by the Borrower under any Financing Document is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any other Obligor or otherwise, the Guarantor's obligations
under this Article 2 with respect to such payment shall be reinstated at such
time as though such payment had become due but had not been made at such time.
SECTION 5. Waiver. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
other Obligor or any other Person.
SECTION 6. Subrogation and Contribution. (a) The Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder (i) to be subrogated to the rights
of the payee against the Borrower with respect to such payment or otherwise to
be reimbursed, indemnified or exonerated by any other Obligor in respect thereof
or (ii) to receive any payment, in the nature of contribution or for any other
reason, from any other Obligor with respect to such payment
(b) Notwithstanding the provision of subsection (a) of this Section 6,
the Guarantor shall have and be entitled to (i) all rights of subrogation or
contribution otherwise provided by law in respect of any payment it may make or
be obligated to make under this Subsidiary Guarantee and (ii) all claims (as
defined under Chapter 11 of Title 11 of the United States Code, as amended, or
any successor statute (the "Bankruptcy Code")) it would have against the
Borrower or any other Guarantor (each an "Other Party") in the absence of
subsection (a) of this Section 6 and to assert and enforce the same, in each
case on and after, but at no time prior to, the date (the "Subrogation Trigger
Date") which is one year and five days after the Termination Date if, but only
if, (x) no Default or Event of Default of the type described in Section 6.01(i)
or 6.01(j) of the Credit Agreement with respect to the relevant Other Party has
existed at any time on and after the date of this Subsidiary Guarantee to and
including the Subrogation Trigger Date and (y) the
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<PAGE> 89
existence of such Guarantor's rights under this clause (b) would not make such
Guarantor a creditor (as defined in the Bankruptcy Code) of such Other Party in
any insolvency, bankruptcy, reorganization or similar proceeding commenced on or
prior to the Subrogation Trigger Date.
SECTION 7. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under the Financing Documents is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of the Financing
Documents shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Agent made at the request of the Required Banks.
ARTICLE
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Agent and the Banks that:
SECTION 1. Corporate Existence and Power. The Guarantor is a
corporation duly incorporated, validly existing and in good standing under the
laws of ___________.
SECTION 2. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Guarantor of this Subsidiary
Guarantee:
(a) are within the Guarantor's corporate powers;
(b) have been duly authorized by all necessary corporate action on the
part of the Guarantor;
(c) require no action by or in respect of, or filing with, any
governmental body, agency or official, in each case, on the part of the
Guarantor; and
(d) do not contravene, or constitute a default by the Guarantor under,
any provision of (i) applicable law or regulation, (ii) the certificate of
incorporation or by-laws of the Guarantor, or (iii) any agreement or instrument
evidencing or governing Debt of the Guarantor or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Guarantor.
SECTION 3. Binding Effect. This Subsidiary Guarantee constitutes a
valid and binding obligation of the Guarantor.
SECTION 4. Not an Investment Company. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4
<PAGE> 90
ARTICLE
MISCELLANEOUS
SECTION 1. Notices. All notices, requests and other communications to
be made to or by the Guarantor hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given: (a) if to the Guarantor, to it at its address or facsimile
number set forth on the signature pages hereof or such other address or
facsimile number as the Guarantor may hereafter specify for the purpose by
notice to the Agent and (b) if to any party to the Credit Agreement, to it at
its address or telex or facsimile number for notices specified in or pursuant to
the Credit Agreement. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section 1 and the appropriate answerback is received,
(ii) if given by facsimile, when such facsimile is transmitted to the facsimile
transmission number specified in this Section 1 and electronic, telephonic or
other appropriate confirmation of receipt thereof is received by the sender,
(iii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iv) if given
by any other means, when delivered at the address specified in this Section 1.
SECTION 2. No Waiver. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under this Subsidiary Guarantee or any
other Financing Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein and therein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 3. Amendments and Waivers. Any provision of this Subsidiary
Guarantee may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Guarantor and the Agent with the prior written
consent of the Required Banks under the Credit Agreement.
SECTION 4. Successors and Assigns. This Subsidiary Guarantee is for the
benefit of the Banks and the Agent and their respective successors and assigns
and in the event of an assignment of the Loans, the Promissory Notes or other
amounts payable under the Financing Documents, the rights hereunder, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness. All the provisions of this Subsidiary Guarantee shall be
binding upon the Guarantor and its successors and assigns.
SECTION 5. Taxes. All payments by the Guarantor hereunder shall be made
free and clear of Taxes in accordance with Section 8.04 of the Credit Agreement.
If the Guarantor is organized under the laws of, or has its principal place of
business in, a jurisdiction outside the United States, this Section 5 shall be
modified in a manner satisfactory to the Agent and the Guarantor to indemnify
for any foreign taxes which may be applicable.
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SECTION 6. Effectiveness; Termination. (a) This Agreement shall become
effective when the Agent shall have received a counterpart hereof signed by the
Guarantor.
(b) The Guarantor may at any time elect to terminate this Subsidiary
Guarantee and its obligations hereunder, provided that, after giving effect
thereto, no Default shall have occurred and be continuing. If the Guarantor so
elects to terminate this Subsidiary Guarantee, it shall give the Agent notice to
such effect, which notice shall be accompanied by a certificate of a Responsible
Officer to the effect that, after giving effect to such termination, no Default
shall have occurred and be continuing. The Agent may if it so elects
conclusively rely on such certificate. Upon receipt of such notice and such
certificate, unless the Agent determines that a Default shall have occurred and
be continuing, the Agent shall promptly deliver to the Guarantor the counterpart
of this Subsidiary Guarantee delivered to the Agent pursuant to Section 6(a),
and upon such delivery this Subsidiary Guarantee shall terminate and the
Guarantor shall have no further obligations hereunder.
SECTION 7. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS SUBSIDIARY
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 8. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE> 92
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed by its authorized officer as of the date first above written.
[GUARANTOR]
By ____________________________
Title:
[Address]
Facsimile Number:
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<PAGE> 93
EXHIBIT I
[Form of Opinion of Counsel for the Subsidiary Guarantor]
June 27, 1997
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the [Associate] General Counsel of Tyco International Ltd., a
Massachusetts corporation (the "Borrower"), and have acted as counsel for [name
of Subsidiary Guarantor] (the "Guarantor"), and am rendering this opinion in
connection with that certain Subsidiary Guarantee (the "Subsidiary Guarantee"),
dated as of June 27, 1997, entered into by the Guarantor, pursuant to that
certain Five-Year Credit Agreement (the "Credit Agreement"), dated as of June
27, 1997, among the Borrower, the banks listed on the signature pages thereof
(the "Banks") and Morgan Guaranty Trust Company of New York, as Agent. Each term
defined in the Subsidiary Guarantee and used herein, but not otherwise defined
herein, has the meaning ascribed thereto in the Subsidiary Guarantee. This
opinion is being delivered to you pursuant to Section 1.01 of the Credit
Agreement.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreement, the Promissory Notes and the Subsidiary Guarantee and have
examined originals or copies, certified or otherwise identified to my
satisfaction, of (i) the [Certificate of Incorporation] and By-laws of the
Guarantor, each as in effect on the date hereof and (ii) such other documents,
records, certificates and instruments as I have deemed relevant and necessary as
a basis for the opinion hereinafter expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to be as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements, representations and certificates of officers and other
representatives of the Guarantor and certificates of public officials.
<PAGE> 94
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
(1) The Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of _________________.
(2) The execution, delivery and performance by the Guarantor of the
Subsidiary Guarantee (a) are within the Guarantor's corporate powers; (b) have
been duly authorized by all necessary corporate action on the part of the
Guarantor; (c) require no action by or in respect of, or filing on the part of
the Guarantor with, any governmental body, agency or official, in each case, on
the part of the Guarantor; and (d) do not contravene, or constitute a default by
the Guarantor under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Guarantor or, (iii) any agreement
or instrument evidencing or governing Debt of the Guarantor, or any other
material agreement, judgment, injunction, order, decree or other instrument
binding upon the Guarantor.
(3) The Subsidiary Guarantee constitutes a valid and binding obligation
of the Guarantor.
(4) The Guarantor is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Subsidiary Guarantee may be subject to or
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer or other similar laws and court decisions, now
or hereafter in effect, relating to or affecting the rights of creditors
generally.
(b) The enforceability of the Subsidiary Guarantee is or will be
subject to the application of and may be limited by general principles of equity
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law). Such principles of equity are of general application, and in
applying such principles a court, among other things, might not allow a creditor
to accelerate maturity of a debt under certain circumstances including, without
limitation, upon the occurrence of a default deemed immaterial, or might decline
to order the Guarantor to perform covenants. Such principles as applied by a
court might include a requirement that a creditor act with reasonableness and in
good faith. Thus, I express no opinion as to the validity or enforceability of
(i) provisions restricting access to legal or equitable remedies, such as the
specific performance of executory covenants, (ii) provisions that purport to
establish evidentiary standards, (iii) provisions relating to waivers,
severability, set-off, or delay or omission of enforcement of rights or
remedies, and (iv) provisions purporting to convey rights to persons other than
parties to the Subsidiary Guarantee.
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<PAGE> 95
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) I have not been requested to render, and with your permission I do
not express, any opinion as to the applicability to any provisions of the
Subsidiary Guarantee, of Section 548 of the Federal Bankruptcy Code, Article 10
of the New York Debtor & Creditor Law, or any other fraudulent conveyance,
insolvency or transfer laws or any court decisions with respect to any of the
foregoing.
I call your attention to the fact that I am admitted to practice law
only in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of [the jurisdiction of incorporation of the Guarantor], the
State of New York, the Commonwealth of Massachusetts and the Federal laws of the
United States of America.
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
This opinion is being delivered to you solely for your benefit in
connection with the Subsidiary Guarantee, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent.
Very truly yours,
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<PAGE> 96
EXHIBIT K
Form of Opinion of Counsel
for the Parent Guarantor
June 27, 1997
To the Banks and the Agents
named on Schedule 1 to this Opinion
c/o Morgan Guaranty Trust Company of New York (as Agent)
60 Wall Street
New York, NY 10260
Dear Sirs,
Re: TYCO INTERNATIONAL LTD. (THE "COMPANY")
---------------------------------------
We have been instructed by the Company to address this opinion to you
in connection with the Parent Guarantee, dated as of [ ], 1997 (the
"Guarantee"), entered into by the Company in connection with all principal of
and interest on amounts loaned to the Borrower under the Financing Documents.
Unless otherwise defined therein, terms defined in the Guarantee have
the same meanings when used in this opinion.
For the purpose of this opinion, we have been supplied with and have
reviewed, and relied upon the following documents:
(A) a copy of the executed US $500,000,000 Credit Agreement
dated as of June 27, 1997 among the Borrower, the Banks listed on the
signature pages thereof and the Agent;
(B) a copy of the executed US $750,000,000 Credit Agreement
dated as of June 27, 1997 among the Borrower, the Banks listed on the
signature pages thereof and the Agent;
(C) a copy of the executed US $500,000,000 Five Year Credit
Agreement dated as of June 27, 1997 among the Borrower, the Banks on
the signature pages thereof and the Agent;
(D) a copy of the executed Subsidiary Guarantees;
<PAGE> 97
(E) a copy of the executed Promissory Notes;
The Documents referred to in (a) and (e) inclusive are together referred to as
the "Financing Documents".
(F) a copy of the executed Guarantee;
(G) certified copies of the Certificate of Incorporation, the
Certificate evidencing the change of name of the Company from ADT
Limited to TYCO International Ltd. and the Memorandum of Association
and the Bye-laws of the Company;
(H) a certified copy of the minutes of a meeting of the Board
of Directors of the Company held on [ ], 1997 (the "Resolutions");
(I) a certified copy of the Share Certificate evidencing
ownership by the company of TYCO International Ltd, (Mass); and
We also relied upon our searches of documents of public record
maintained by the Registrar of Companies in Bermuda and of the Causes Book of
the Supreme Court of Bermuda which were made in 1997 (the "Searches").
In giving this opinion, we have assumed:
(1) the capacity, power and authority of each of the
parties other than the company to execute, deliver and perform
its obligations under and the due execution and delivery by
all parties other than the Company of the Facility Documents
and the Guarantee;
(2) that each party, other than the Company, has duly
authorised, executed, delivered and taken such other action as
may be required by such party to enter into and perform the
Financing Documents and the Guarantee and that all such
actions were duly authorised when taken;
(3) that no authorisation or approval by, or filing
with, any governmental or regulatory authority, other than
such authorisations, approvals and filings as each party other
than the Company has obtained or made, is necessary for such
party to duly executed and deliver, or to duly perform all of
its obligations under the Financing Documents and the
Guarantee, or for the validity and enforceability of the
Financing Documents and the Guarantee;
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<PAGE> 98
(4) that each of the Financing Documents and the
Guarantee constitutes the legal, valid and binding of each
party to it, other than the Company, and is enforceable
against each such party in accordance with its terms;
(5) that the Financing Documents are legal, valid and
binding under the laws by which they are expressed to be
governed and that the Guarantee is legal, valid and binding
under the laws of the State of New York by which it is
expressed to be governed;
(6) that the information disclosed by the Searches
has not been materially altered and the Searches did not fail
to disclose any material information which has been delivered
for filing or registration, but was not disclosed or did not
appear on the public file at the time of the Searches;
(7) that there is no provision of the law of any
jurisdiction, other than Bermuda, which would have any
implication in relation to the opinions herein expressed;
(8) the genuineness of all signatures on the
documents which we have examined;
(9) the conformity to original documents of all
documents produced to us as copies and the authenticity of all
original documents which, or copies of which, have been
submitted to us;
(10) the accuracy and completeness of all factual
representations made in the Financing Documents, the
Guarantee, the Resolutions and any certificates examined by
us; and
(11) that the Resolutions are in full force and
effect and have not been rescinded.
This opinion is limited to Bermuda Law as applied by the Bermuda
courts. We have made no investigation of the laws of any jurisdiction other than
Bermuda and neither express nor imply any opinion as to any other law, in
particular the laws of the State of New York.
Based upon the foregoing, subject to qualifications set out below, to
matters not disclosed to us and matters of fact which would affect the
conclusion set out below and having regard to such legal considerations as we
deem relevant, we are of the opinion that insofar as the present laws of Bermuda
are concerned:
(i). The Company is a company duly incorporated, duly organised and
validly existing under the laws of Bermuda. The Memorandum of Association of the
Company has been duly
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<PAGE> 99
filed in the office of the Registrar of Companies of Bermuda and no other
filing, recording, publishing or other act is necessary or appropriate in
Bermuda in connection with the transaction as described in the Guarantee except
those which have been duly made or performed.
(ii). The company has the corporate power and authority to enter into
and perform the Guarantee and has taken all corporate action required on its
part to authorise the execution, delivery and performance of the guarantee.
(iii). The execution, delivery and performance of the Guarantee by the
Company (i) does not and will not violate the Certificate of Incorporation,
Bye-laws or Memorandum of Association of the Company; (ii) conflict with any law
or governmental rule or regulation of Bermuda (including the Companies Act of
1981 of Bermuda); and (iii) as far as can be ascertained from the Searches
(which are not conclusive) does not and will not violate or conflict with any
judgement, order, decree, injunction or award of any authority, agency or court
in Bermuda to which the Company is subject.
(iv). The obligations of the company as set out in the guarantee
constitute, legal, valid and binding obligations of the Company.
(v). The Company having been designated as non-resident for the
purposes of the Exchange Control Act 1972, it is not necessary for the consent
of any authority or agency in Bermuda to be obtained to enable the Company to
enter into and perform its obligations set out in the Guarantee.
(vi). The obligations of the Company under the Guarantee will rank at
least par passu in priority of payment with all other unsecured unsubordinated
indebtedness of the Company other than indebtedness which is preferred by virtue
of any provision of Bermuda law of general application.
(vii). As far as can be ascertained from the Searches, no litigation,
arbitration on administrative proceedings of or before any court, arbitrator or
governmental instrumental instrumentality of or in Bermuda is, to the best of
our knowledge, pending with respect to the Company in connection with the
Guarantee or the transactions contemplated thereby.
(viii). The Company will be permitted to make all payments under the
Guarantee free of any deduction or withholding therefrom in Bermuda and such
payments will not be subject to any tax imposed by the government of Bermuda or
any taxing authority thereof or therein.
(ix). The entry into, performance and enforcement of the Guarantee will
not give rise to any registration fee or to any stamp, excise or other similar
tax imposed by the government of Bermuda or any taxing authority thereof or
therein.
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<PAGE> 100
(x). Subject to paragraph (12) and reservation D below, it is not
necessary or advisable under the laws of Bermuda in order to ensure the
validity, effectiveness or enforceability of the Guarantee that the Guarantee be
filed, registered or recorded in any public office or elsewhere in Bermuda.
(xi). The choice of the laws of the State of New York to govern the
Guarantee is a proper, valid and binding choice of law and will be recognised
and applied by the courts of Bermuda assuming that such choice of law is a valid
and binding choice of law under the laws of the State of New York.
(xii). A final and conclusive judgement obtained in the Courts of the
State of New York or Federal Courts of the United States of America against the
Company based upon the Guarantee under which a sum of money is payable (other
than a sum of money payable in respect of taxes or other charges of a like
nature or in respect of a fine or other penalty or multiple damages) could be
enforced by an action in the Supreme Court of Bermuda, without reexamination of
the merits, under the Common Law Doctrine of Obligation. A final opinion as to
the availability of this remedy should be sought when the facts surrounding the
foreign judgement are known but, on general principles, we would expect such an
application to be successful provided that such judgment:
(A) is final and conclusive;
(B) was not obtained by fraud;
(C) was not and its enforcement would not be contrary to
public policy of Bermuda;
(D) was obtained in circumstances where the proceedings were
not contrary to the rules of natural justice; and
(E) the correct procedures under the laws of Bermuda are duly
complied with.
Neither the Company nor any of its property or assets (or any portion
thereof) enjoys, under the laws of Bermuda, immunity from suit, execution,
attachment or other legal process in any proceedings in Bermuda in connection
with the Guarantee.
Our reservations are as follows:
(a) We express no opinion as to whether specific performance or
injunctive relief, being equitable remedies, would necessarily be available in
respect of any obligations of the Company as set out in the Guarantee.
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<PAGE> 101
(b) We express no opinion as to the validity or the binding effect of
any obligations of the Borrower in the Financing Documents which provide for the
payment by the Borrower of a higher rate of interest on overdue amounts than on
amounts which are current. A Bermuda court, even if it were applying the laws of
the State of New York might not give effect to such provision if it could be
established that the amount expressed as being payable was such that the
provision was in the nature of a penalty; that is to say a requirement for a
stipulated sum to be paid irrespective of, or necessarily greater than, the loss
likely to be sustained.
(c) The obligations of the Company under the Guarantee will be subject
to any laws from time to time in effect relating to bankruptcy or liquidation or
any other laws or other legal procedures affecting generally the enforcement of
creditors' rights and may also be the subject of the statutory limitation of the
time within which such proceedings may be brought.
(d) To the extent that the Financing Documents, the Guarantee or the
transactions contemplated thereunder, create or give rise to the creation of any
charge over any assets of the Company, such charge will be registerable under
Part V of The Companies Act 1981 of Bermuda. The fee payable for registration of
a charge is $425.00. Registration is not compulsory and there is no time limit
within which it must be effected. However, as a matter of Bermuda law, any
charge registered shall have priority in Bermuda based on the date that it is
registered and not on the date of its creation and shall have such priority over
any unregistered charge. Accordingly, it is advisable to register any such
charge.
(e) Any provision in the Financing Documents or the Guarantee that
certain calculations and/or certificates will be conclusive and binding will not
be effective if such calculations are fraudulent or erroneous on their face and
will not necessarily prevent juridical enquiries into the merits of any claim by
an aggrieved party.
(f) A Bermuda court may refuse to give effect to any provisions of the
Financing Documents or Guarantee in respect of costs of unsuccessful litigation
brought before the court or where that court has itself made an order for costs.
(g) We express no opinion as to any law other than Bermuda law and none
of the opinions expressed herein relates to compliance with or matters governed
by the laws of any jurisdiction except Bermuda. Where an obligation is to be
performed in a jurisdiction other than Bermuda, the Courts of Bermuda may refuse
to enforce it to the extent that such performance would be illegal or contrary
to public policy under the laws of such other jurisdiction.
[(h) The Searches showed a cause of action in which the Company is
named as defendant. The action was commenced in 1991 under action number 01299.
The plaintiff is Laidlaw Investments (Barbados) Ltd. We are unable to verify
whether this litigation is proceeding, or has been discontinued, and whether if
it proceeded and judgement was rendered against the Company, whether this
judgement would have any material effect on the Company.]
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<PAGE> 102
This opinion is issued on the basis that it will be governed by and
construed in accordance with the laws of Bermuda and that any legal proceedings
with respect thereto will be brought in the courts of Bermuda. It is issued
solely for your benefit for the purpose of the transactions described in the
Guarantee and it is not to be relied upon by any other person (other than
permitted assigns and transferees under the Financing Documents), or for any
other purpose, without our prior written consent.
Yours faithfully,
7
<PAGE> 1
EXHIBIT 10.3
CONFORMED COPY
$500,000,000
BRIDGE CREDIT AGREEMENT
dated as of
June 27, 1997
among
Tyco International Ltd.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Accounting Terms and Determinations...........................17
SECTION 1.03. Types of Borrowings...........................................17
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend...........................................18
SECTION 2.02. Notice of Committed Borrowing.................................18
SECTION 2.03. The Money Market Borrowings...................................18
SECTION 2.04. Notice to Banks; Funding of Loans.............................22
SECTION 2.05. Promissory Notes..............................................23
SECTION 2.06. Maturity of Loans.............................................23
SECTION 2.07. Interest Rates................................................24
SECTION 2.08. Facility Fee..................................................27
SECTION 2.09. Optional Termination or Reduction of Commitments..............27
SECTION 2.10. Mandatory Termination and Reduction of Commitments............28
SECTION 2.11. Prepayments...................................................28
SECTION 2.12. General Provisions as to Payments.............................29
SECTION 2.13. Funding Losses................................................29
SECTION 2.14. Computation of Interest and Fees..............................30
SECTION 2.15. Regulation D Compensation.....................................30
SECTION 2.16. Method of Electing Interest Rates.............................30
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness.................................................32
SECTION 3.02. Consequences of Effectiveness; Transitional Provisions........33
SECTION 3.03. Borrowings....................................................33
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.................................34
SECTION 4.02. Corporate and Governmental Authorization; No Contravention....34
SECTION 4.03. Binding Effect................................................34
SECTION 4.04. Financial Information.........................................34
<PAGE> 3
PAGE
----
SECTION 4.05. Litigation....................................................35
SECTION 4.06. Compliance with ERISA.........................................35
SECTION 4.07. Environmental Matters.........................................35
SECTION 4.08. Taxes.........................................................36
SECTION 4.09. Subsidiaries..................................................36
SECTION 4.10. Not an Investment Company.....................................36
SECTION 4.11. Full Disclosure...............................................36
ARTICLE 5
COVENANTS
SECTION 5.01. Information...................................................37
SECTION 5.02. Payment of Obligations........................................39
SECTION 5.03. Maintenance of Property; Insurance............................39
SECTION 5.04. Conduct of Business and Maintenance of Existence..............39
SECTION 5.05. Compliance with Laws..........................................40
SECTION 5.06. Inspection of Property, Books and Records; Confidentiality....40
SECTION 5.07. Limitation on Restrictions on Subsidiary Dividends and Other
Distributions.................................................42
SECTION 5.08. Debt..........................................................43
SECTION 5.09. Fixed Charge Coverage.........................................44
SECTION 5.10. Restricted Payments...........................................44
SECTION 5.11. Negative Pledge...............................................44
SECTION 5.12. Consolidations, Mergers and Sales of Assets...................46
SECTION 5.13. Use of Proceeds...............................................47
SECTION 5.14. Transactions with Affiliates..................................47
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults............................................48
SECTION 6.02. Notice of Default.............................................51
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization.................................51
SECTION 7.02. Agent and Affiliates..........................................51
SECTION 7.03. Action by Agent...............................................51
SECTION 7.04. Consultation with Experts.....................................51
SECTION 7.05. Liability of Agent............................................51
ii
<PAGE> 4
SECTION 7.06. Indemnification...............................................52
SECTION 7.07. Credit Decision...............................................52
SECTION 7.08. Successor Agent...............................................52
SECTION 7.09. Agent's Fee...................................................53
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair......53
SECTION 8.02. Illegality....................................................54
SECTION 8.03. Increased Cost and Reduced Return.............................54
SECTION 8.04. Taxes.........................................................55
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.....57
SECTION 8.06. Substitution of Bank..........................................58
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices.......................................................58
SECTION 9.02. No Waivers....................................................59
SECTION 9.03. Expenses; Indemnification.....................................59
SECTION 9.04. Sharing of Set-Offs...........................................59
SECTION 9.05. Amendments and Waivers........................................60
SECTION 9.06. Successors and Assigns........................................60
SECTION 9.07. Collateral....................................................62
SECTION 9.08. Governing Law; Submission to Jurisdiction.....................62
SECTION 9.09. Counterparts; Integration.....................................63
SECTION 9.10. Waiver of Jury Trial..........................................63
Commitment Schedule
Commitment Schedule
Exhibit A - Promissory Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of General Counsel of the Borrower
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Form of Subsidiary Guarantee
Exhibit I - Form of Subsidiary Counsel Opinion
Exhibit J - Form of Parent Guarantee
Exhibit K - Form of Parent Counsel Opinion
iii
<PAGE> 5
BRIDGE CREDIT AGREEMENT
AGREEMENT dated as of June 27, 1997 among TYCO INTERNATIONAL LTD., the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, certain of the Banks and the Agent are parties to
an Amended and Restated Credit Agreement dated as of December 23, 1996 (the
"Existing Agreement"); and
WHEREAS, the parties hereto wish to replace the credit facility under the
Existing Agreement with a new credit facility hereunder.
WHEREAS, when all the conditions specified in Section 3.01 have been
satisfied, the Existing Agreement will be automatically terminated and the loans
outstanding thereunder (if any) will be repaid;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03
"ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b).
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"ADT" means ADT Limited, a company organized under the laws of Bermuda.
"ADT'S FORM S-4" means ADT's Form S-4 as filed with the Securities and
Exchange Commission on June 3, 1997, pursuant to the Securities Exchange Act of
1934.
"AFFILIATE" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "Controlling Person") or (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling
<PAGE> 6
Person. As used herein, the term "control" means 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. The fact that an Affiliate of a Person is a member of a
law firm that renders services to such Person or its Affiliates does not mean
that the law firm is an Affiliate of such Person.
"AGENT" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks under the Financing Documents, any successor agent that
becomes the Agent pursuant to Section 7.08, and the respective corporate
successors of the foregoing acting in such capacity.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"APPLICABLE MARGIN" has the meaning set forth in Section 2.07(h).
"ASSESSMENT RATE" has the meaning set forth in Section 2.07(b).
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and the respective
corporate successors of the foregoing.
"BANK AFFILIATE" means, with respect to the Agent or any Bank, any Person
controlling, controlled by or under common control with the Agent or such Bank,
as the case may be.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BASE RATE LOAN" means a Committed Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.07(a) or Article 8.
"BORROWER" means Tyco International Ltd., a Massachusetts corporation,
and its successors.
"BORROWER'S 1996 FORM 10-K" means the Borrower's annual report on Form
10-K for fiscal year 1996, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"BORROWING" has the meaning set forth in Section 1.03.
2
<PAGE> 7
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election.
"CD RATE" means a rate of interest determined pursuant to Section 2.07(b)
on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means The Hongkong and Shanghai Banking Corporation
Limited, The Dai-Ichi Kangyo Bank, Ltd. and Morgan Guaranty Trust Company of New
York.
"COMMITMENT" means (i) with respect to each Bank listed on the Commitment
Schedule, the amount set forth opposite the name of such Bank on the Commitment
Schedule and (ii) with respect to any Assignee, the amount of the transferor
Bank's Commitment assigned to it pursuant to Section 9.06(c), in each case as
such amount may be changed from time to time pursuant to Section 2.09 or
9.06(c).
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.
"COMMITTED BORROWING" has the meaning set forth in Section 1.03.
"COMMITTED LOAN" means a loan made by a Bank pursuant to Section 2.01;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term Committed
Loan shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"CONDUIT" means a special purpose corporation which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business.
"CONDUIT DESIGNATION" has the meaning set forth in Section 9.06(f).
"CONSENTS" has the meaning set forth in Section 4.01.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such time.
"CONSOLIDATED DEBT" means, at any date, the aggregate amount of Debt of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis as of such date; provided that (i) if a Permitted Receivables Transaction
is outstanding at such date and is accounted for as a sale of accounts
receivable under generally accepted accounting principles, Consolidated Debt
determined as aforesaid shall be adjusted to include the additional Debt,
determined on a consolidated basis as of such date, which would have been
outstanding at such date had such Permitted Receivables Transaction been
accounted for as a borrowing at such date and (ii)
3
<PAGE> 8
Consolidated Debt shall in any event include all Debt of any Person other than
the Borrower or a Consolidated Subsidiary which is Guaranteed by the Borrower or
a Consolidated Subsidiary, except that Consolidated Debt shall not include Debt
of a joint venture, partnership or similar entity which is Guaranteed by the
Borrower or a Consolidated Subsidiary by virtue of the joint venture,
partnership or similar arrangement with respect to such entity or by operation
of applicable law (and not otherwise) so long as the aggregate outstanding
principal amount of all such excluded Debt at any date does not exceed
$50,000,000.
"CONSOLIDATED EBIT" means, for any fiscal period, Consolidated Net Income
for such period plus, to the extent deducted in determining Consolidated Net
Income for such period, the aggregate amount of (i) Consolidated Interest
Expense and (ii) federal, state and local income tax expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any fiscal period, (without
duplication) (i) the consolidated interest expense of the Borrower and its
Consolidated Subsidiaries for such period minus (ii) the consolidated interest
income of the Borrower and its Consolidated Subsidiaries for such period, if,
and only if, such consolidated interest income is equal to or less than
$5,000,000, plus (iii) if a Permitted Receivables Transaction outstanding during
such period is accounted for as a sale of accounts receivable under generally
accepted accounting principles, the additional consolidated interest expense
that would have accrued during such period had such Permitted Receivables
Transaction been accounted for as a borrowing during such period, in each case
determined on a consolidated basis.
"CONSOLIDATED NET INCOME" means, for any fiscal period, the consolidated
net income of the Borrower and its Consolidated Subsidiaries for such period,
determined on a consolidated basis after eliminating therefrom all Extraordinary
Gains and Losses. "EXTRAORDINARY GAINS AND LOSSES" means and includes, for any
fiscal period, all extraordinary gains and losses of the Borrower and its
Consolidated Subsidiaries for such period, determined on a consolidated basis
and, in addition, includes, without limitation, gains or losses from the
discontinuance of operations and gains or losses of the Borrower and its
Consolidated Subsidiaries for such period resulting from the sale, conversion or
other disposition of material assets of the Borrower or any Consolidated
Subsidiary other than in the ordinary course of business.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date and adjusted so as to exclude
the effect of the currency translation adjustment as of such date.
"CONSOLIDATED SUBSIDIARY" means, at any date, with respect to any Person,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in such Person's consolidated financial statements if such
statements were prepared as of such date; unless otherwise specified,
Consolidated Subsidiary means a Consolidated Subsidiary of the Borrower.
4
<PAGE> 9
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, (i) Consolidated
Net Worth as of such date minus (ii) Intangible Assets as of such date.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any date, the sum of
Consolidated Debt and Consolidated Net Worth, each determined as of such date.
"DEBT" of any Person means, at any date, without duplication, (i) the
principal amount of all obligations of such Person for borrowed money, (ii) the
principal amount of all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (it being understood that,
subject to the proviso to this definition of "Debt," performance bonds,
performance guaranties, letters of credit, bank guaranties and similar
instruments shall not constitute Debt of such Person to the extent that the
outstanding reimbursement obligations of such Person in respect thereof are
collateralized by cash or cash equivalents, which cash or cash equivalents would
not be reflected as assets on a balance sheet of such Person prepared in
accordance with generally accepted accounting principles), (iii) all obligations
of such Person to pay the deferred purchase price of property or services
recorded on the books of such Person, except for (a) trade and similar accounts
payable and accrued expenses arising in the ordinary course of business, and (b)
employee compensation and pension obligations, and other obligations arising
from employee benefit programs and agreements or other similar employment
arrangements, (iv) all obligations of such Person as lessee which are
capitalized on the books of such Person in accordance with generally accepted
accounting principles, (v) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person, and
(vi) all Debt of others Guaranteed by such Person; provided, however, that Debt
shall not include:
(A) contingent reimbursement obligations in respect of
performance bonds, performance guaranties, bank
guaranties or letters of credit issued in lieu of
performance bonds or performance guaranties or
similar instruments, in each case, incurred by such
Person in the ordinary course of business;
(B) contingent reimbursement obligations in respect of
trade letters of credit, or similar instruments, in
each case, incurred by such Person in the ordinary
course of business; or
(C) contingent reimbursement obligations in respect of
standby letters of credit or similar instruments
securing self-insurance obligations of such Person;
in each case, so long as the underlying obligation supported thereby does not
itself constitute Debt.
"DEBT RATING" means a rating of the Borrower's long-term debt which is
not secured or supported by a guarantee, letter of credit or other form of
credit enhancement. If a Debt Rating
5
<PAGE> 10
by a Rating Agency is required to be at or above a specified level and such
Rating Agency shall have changed its system of classifications after the date
hereof, the requirement will be met if the Debt Rating by such Rating Agency is
at or above the new rating which most closely corresponds to the specified level
under the old rating system.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC PARENT" means any Affiliate incorporated under the laws of the
United States, any State thereof or the District of Columbia of which the
Borrower is a Subsidiary.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section
2.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
6
<PAGE> 11
"ERISA GROUP" means the Borrower, any Subsidiary Guarantor and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary Guarantor, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of The
Hongkong and Shanghai Banking Corporation Limited, The Dai-Ichi Kangyo Bank,
Ltd. and Morgan Guaranty Trust Company of New York.
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in Section
2.15.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXISTING AGREEMENT" has the meaning set forth in the recitals hereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Agent.
"FINANCING DOCUMENTS" means this Agreement, the Subsidiary Guarantees,
the Promissory Notes and, on any date on or after the Parent Guarantee Date, the
Parent Guarantee.
7
<PAGE> 12
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"GROUP OF LOANS" means, at any time, a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time, (ii) all Euro-Dollar
Loans having the same Interest Period at such time or (iii) all CD Loans having
the same Interest Period at such time, provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Article
8, such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.
"GUARANTEE" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the holder of such Debt of the payment
thereof or to protect such holder against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"GUARANTOR" means any Subsidiary Guarantor and, on and after the Parent
Guarantee Date, the Parent Guarantor.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTANGIBLE ASSETS" means, at any date, the amount (if any) which would
be stated under the heading "Costs in Excess of Net Assets of Acquired
Companies" or under any other heading relating to intangible assets separately
listed, in each case, on the face of a balance sheet of the Borrower and its
Consolidated Subsidiaries prepared on a consolidated basis as of such date.
"INTEREST PERIOD" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter (or such other
period of time as may at the time be mutually agreed by the Borrower and the
Banks), as the Borrower may elect in such notice; provided that:
8
<PAGE> 13
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter (or such other period of time as may at the time be
mutually agreed by the Borrower and the Banks), as the Borrower may elect in
such notice; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such whole number of months thereafter as the Borrower may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; and
9
<PAGE> 14
(4) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 30 days)
as the Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which would otherwise end after the Termination
Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LEVEL I STATUS" exists at any date if, at such date, the Borrower has
Debt Ratings at or above the level of A by S&P or A2 by Moody's.
"LEVEL II STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at or above the level of A- by S&P or A3 by Moody's and (ii)
Level I Status does not exist at such date.
"LEVEL III STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at the level of BBB+ by S&P or Baa1 by Moody's and (ii) Level I
Status and Level II Status do not exist at such date.
"LEVEL IV STATUS" exists at any date if, at such date, (i) the Borrower
has Debt Ratings at the level of BBB by S&P or Baa2 by Moody's and (ii) Level I
Status, Level II Status and Level III Status do not exist at such date.
"LEVEL V STATUS" exists at any date if, at such date, (i) the Borrower
has a Debt Rating from neither Rating Agency or (ii) Level I Status, Level II
Status, Level III Status and Level IV do not exist at such date.
"LIBOR AUCTION" means a solicitation of Money Market Quotes setting forth
Money Market Margins based on the London Interbank Offered Rate pursuant to
Section 2.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating lease)
relating to such asset.
10
<PAGE> 15
"LOAN" means a Domestic Loan or a Euro-Dollar Loan or a Money Market Loan
and "LOANS" means Domestic Loans or Euro-Dollar Loans or Money Market Loans or
any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.07(c).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole, or
(ii) the ability of the Borrower and the Subsidiary Guarantors to perform their
obligations under the Financing Documents.
"MATERIAL DEBT" means Debt (other than (i) the Promissory Notes, (ii) the
Subsidiary Guarantees, (iii) any Guarantee by the Borrower of Debt of a
Subsidiary, (iv) any Guarantee by a Subsidiary of Debt of the Borrower or
another Subsidiary, (v) any Debt of the Borrower owed to a Wholly-Owned
Consolidated Subsidiary or (vi) any Debt of a Subsidiary owed to the Borrower or
a Wholly-Owned Consolidated Subsidiary) of the Borrower and/or one or more of
its Subsidiaries, arising in one or more related or unrelated transactions, in
an aggregate outstanding principal amount exceeding $50,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"MERGER" means the merger of a Subsidiary of ADT with and into the
Borrower pursuant to the Plan of Merger dated March 17, 1997.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"MONEY MARKET BORROWING" has the meaning set forth in Section 1.03.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan to be made by a Bank pursuant to a
LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant
to Section 8.01(a)).
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"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market Loan
in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc., or any successor to such
corporation's business of rating debt securities.
"MULTIEMPLOYER PLAN" means at any time a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA either (i) to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
(ii) has at any time within the preceding five plan years been maintained, or
contributed to, by any Person who was at such time a member of the ERISA Group
for employees of any Person who was at such time a member of the ERISA Group.
"NET CASH PROCEEDS" means, with respect to any Reduction Event, an amount
equal to the cash proceeds received by the Borrower or any of its Subsidiaries
from or in respect of such Reduction Event, less the sum of any underwriting
discounts and commissions, fees and other expenses reasonably incurred by such
Person in respect of such Reduction Event.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined
in Section 2.02 or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.16.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARENT GUARANTOR" means ADT (to be renamed Tyco International Ltd. upon
consummation of the Merger), and its successors.
"PARENT GUARANTEE" means a Parent Guarantee Agreement between the Parent
Guarantor and the Agent for the benefit of the Banks, substantially in the form
of Exhibit J, as amended from time to time.
"PARENT GUARANTEE DATE" means the date the Agent receives (i) duly
executed counterparts of the Parent Guarantee, (ii) an opinion of counsel for
the Parent Guarantor reasonably satisfactory to the Agent to substantially the
effect of Exhibit K hereto and covering such additional matters relating to the
Parent Guarantee as the Required Banks may reasonably request and (iii) all
documents the Agent may reasonably request relating to the existence of the
Parent Guarantor, the corporate authority for and the validity of the Parent
Guarantee, and any
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other matters reasonably determined by the Agent to be relevant thereto, all in
form and substance reasonably satisfactory to the Agent.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED RECEIVABLES TRANSACTION" means any sale or sales of,
refinancing of and/or financing secured by, any accounts receivable of the
Borrower and/or any of its Subsidiaries (the "RECEIVABLES") pursuant to which
the Borrower and its Subsidiaries realize aggregate net proceeds of not more
than $500,000,000 at any one time outstanding, including, without limitation,
any revolving purchase(s) of Receivables where the maximum aggregate uncollected
purchase price (exclusive of any deferred purchase price) for such Receivables
at any time outstanding does not exceed $500,000,000.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PROMISSORY NOTES" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "PROMISSORY NOTE" means any one of such promissory notes
issued hereunder.
"PROPERTY" means any interest of any kind in any property or assets,
whether real, mixed or personal and whether tangible or intangible.
"PROSPECTS" means, at any time, results of future operations which are
reasonably foreseeable based upon the facts and circumstances in existence at
such time.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30 and
December 31.
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"RATING AGENCY" means S&P or Moody's.
"REDUCTION EVENT" means the issuance to third parties of any long-term
debt securities of the Borrower or any of its Subsidiaries or any Domestic
Parent (excluding any such debt securities issued for the purpose of financing
the acquisition of specific assets).
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any one
of such Reference Banks.
"REFINANCING" has the meaning set forth in Section 5.07 (and the term
"REFINANCED" has a correlative meaning).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having more than 60% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Promissory Notes evidencing more than 60% of the aggregate
unpaid principal amount of the Loans.
"RESPONSIBLE OFFICER" means any of the following: the Chairman,
President, Vice President and Chief Financial Officer, Treasurer and Secretary
of the Borrower.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on any
shares of the Borrower's capital stock (except to the extent such dividends and
distributions are payable in shares of its capital stock or Stock Equivalents)
or (ii) any payment (except to the extent payable in shares of the Borrower's
capital stock or Stock Equivalents) on account of the purchase, redemption,
retirement or acquisition of (a) any shares of the Borrower's capital stock or
(b) any option, warrant or other right to acquire shares of the Borrower's
capital stock; provided that prior to the consummation of the Merger,
repurchases by the Borrower of up to 5,000,000 shares of its common stock shall
not constitute Restricted Payments.
"SIGNIFICANT SUBSIDIARY" means, at any date, (A) each Subsidiary
Guarantor and (B) any other Consolidated Subsidiary which, including its
consolidated subsidiaries, meets any of the following conditions:
(i) the investments in and advances to such Consolidated
Subsidiary by the Borrower and its other Consolidated Subsidiaries
exceed 15% of the total assets of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as
of the end of the most recently completed fiscal year; or
(ii) the proportionate share attributable to such
Consolidated Subsidiary of the total assets of the Borrower and
its Consolidated Subsidiaries (after intercompany eliminations)
exceeds 15% of the total assets of the Borrower and
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the Consolidated Subsidiaries, determined on a consolidated basis
as of the end of the most recently completed fiscal year; or
(iii) the Borrower's and its Consolidated Subsidiaries'
equity in the income of such Consolidated Subsidiary from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle exceeds 15%
of such income of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis for the most recently completed
fiscal year.
"STATUS" means, at any date, whichever of Level I Status, Level II
Status, Level III Status, Level IV Status or Level V Status exists at such date.
"STOCK EQUIVALENTS" means, with respect to any Person, options, warrants,
calls or other rights entered into or issued by such Person to acquire any
capital stock or equity securities of, or other ownership interests in, or
securities convertible into or exchangeable for, capital stock or equity
securities of, or other ownership interests in, such Person.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor to its business of rating debt
securities.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, Subsidiary means a Subsidiary of the Borrower.
"SUBSIDIARY GUARANTEE" means a Guarantee entered into by a Subsidiary
substantially in the form of Exhibit H hereto.
"SUBSIDIARY GUARANTOR" means, at any time, a Subsidiary which at or prior
to such time shall have delivered to the Agent (i) a Subsidiary Guarantee in
substantially the form of Exhibit H, duly executed by such Subsidiary, which
Subsidiary Guarantee has not terminated in accordance with its terms, (ii) an
opinion of counsel for such Subsidiary (which counsel may be an employee of the
Borrower or such Subsidiary) reasonably satisfactory to the Agent with respect
to such Subsidiary Guarantee, substantially in the form of Exhibit I hereto and
covering such additional matters relating to such Subsidiary Guarantee as the
Required Banks may reasonably request and (iii) all documents the Agent may
reasonably request relating to the existence of such Subsidiary, the corporate
authority for and the validity of such Subsidiary Guarantee, and any other
matters reasonably determined by the Agent to be relevant thereto, all in form
and substance reasonably satisfactory to the Agent.
"TERMINATION DATE" means December 31, 1997, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
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"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or to any other Person under Title IV of ERISA.
"UNITED STATES" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means, with respect to any Person,
any Consolidated Subsidiary all of the shares of capital stock or other
ownership interests of which (except directors' qualifying shares and
investments by foreign nationals mandated by applicable law) are at the time
beneficially owned, directly or indirectly, by such Person; unless otherwise
specified, Wholly-Owned Consolidated Subsidiary means a Wholly-Owned
Consolidated Subsidiary of the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the then most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if either (i) the Borrower notifies the Agent that
the Borrower wishes to eliminate the effect of any change in generally accepted
accounting principles on the operation of any covenant contained in Article 5 or
(ii) the Agent notifies the Borrower that the Required Banks wish to effect such
an elimination, then the Borrower's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either (A) such notice is withdrawn by the
party giving such notice or (B) such covenant is amended in a manner
satisfactory to the Borrower and the Required Banks to reflect such change in
generally accepted accounting principles.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to the pricing of
Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their
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Commitments, while a "Money Market Borrowing" is a Borrowing under Section 2.03
in which the Bank participants are determined on the basis of their bids in
accordance therewith).
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section 2.01 from time to time prior to the Termination Date in
amounts such that the aggregate principal amount of Committed Loans by such Bank
at any one time outstanding shall not exceed the amount of its Commitment. Each
Borrowing under this Section shall be in an aggregate principal amount of
$5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.03(b)) and
shall be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time prior to the Termination Date under this Section 2.01.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give the
Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M. (New
York City time) on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
SECTION 2.03. The Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks, at any time prior to the Termination Date, to make offers to
make Money Market Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section.
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(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth
a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may,
in its sole discretion, submit a Money Market Quote containing an offer or
offers to make Money Market Loans in response to any Invitation for Money Market
Quotes. Each Money Market Quote must comply with the requirements of this
subsection 2.03(d) and must be submitted to the Agent by telex or facsimile
transmission at its offices specified in or pursuant to Section 9.01 not later
than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y)
9:30 A.M. (New York City
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time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction
(or, in either case, such other time or date as the Borrower and the Agent shall
have mutually agreed and shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective); provided that Money
Market Quotes submitted by the Agent (or any affiliate of the Agent) in the
capacity of a Bank may be submitted, and may only be submitted, if the Agent or
such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing and the Interest
Period therefor,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w)
may be greater than or less than the Commitment of the quoting
Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000,
(y) may not exceed the principal amount of Money Market Loans for
which offers were requested and (z) may be subject to an aggregate
limitation as to the principal amount of Money Market Loans for
which offers being made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan, expressed
as a percentage (specified to the nearest 1/10,000th of 1%) to be
added to or subtracted from the applicable London Interbank
Offered Rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii);
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(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
2.03(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the Borrower
of the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection 2.03(d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection 2.03(e) (and the failure of the Borrower to give such notice by such
time shall constitute non-acceptance) and the Agent shall promptly notify each
affected Bank. In the case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may, but shall not be obligated
to, accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending order of Money Market Margins or Money Market Absolute Rates,
as the case may be, in each case beginning with the lowest rate so
offered, and
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(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer is described in subsection
2.03(d)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied or waived in accordance with Section 9.05, the Agent will make the
funds so received from the Banks available to the Borrower no later than 3:00
P.M. (New York City time) on such date, in Federal or other funds immediately
available in New York City, as directed by the Borrower.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and, if such Bank shall not have
paid such amount to the Agent within two Domestic Business Days of the Agent's
demand therefor, the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
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(d) The failure of any Bank to make any Loan to be made by it on the
date specified therefor shall not relieve any other Bank of any obligation to
make a Loan on such date.
SECTION 2.05. Promissory Notes. (a) The Loans of each Bank shall be
evidenced by a single Promissory Note payable to the order of such Bank for the
account of its Applicable Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Promissory Note
in an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Promissory Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Promissory Note" of
such Bank shall be deemed to refer to and include any or all of such Promissory
Notes, as the context may require.
(c) Upon receipt of each Bank's Promissory Note pursuant to Section
3.01(b), the Agent shall forward such Promissory Note to such Bank. Each Bank
shall record the date, amount, type and maturity of each Loan made by it and the
date and amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Promissory Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Promissory Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Promissory Note and to
attach to and make a part of its Promissory Note a continuation of any such
schedule as and when required.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing
shall mature, and the principal amount thereof shall be due and payable
(together with interest accrued thereon), on the last day of the Interest Period
applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the Base Rate
for each such day. Such interest shall be payable at maturity, quarterly in
arrears on each Quarterly Payment Date prior to maturity and, with respect to
the principal amount of any Base Rate Loan converted to a CD Loan or a Euro-
Dollar Loan, on the date such amount is so converted. Any overdue principal of
or interest on any Base Rate Loan shall bear interest, payable on demand, for
each day from and including the
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<PAGE> 27
date payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base
Rate Loans for each such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Applicable Margin for each such day
plus the applicable Adjusted CD Rate for such Interest Period; provided that if
any CD Loan shall, as a result of subsection (2)(b) of the definition of
Interest Period, have an Interest Period of less than 30 days, such CD Loan
shall bear interest during such Interest Period at the rate applicable to Base
Rate Loans during such period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than 90
days, at intervals of 90 days after the first day thereof. Any overdue principal
of or interest on any CD Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but excluding the
date of actual payment, at a rate per annum equal to the sum of 2% plus the
higher of (i) the sum of the Applicable Margin for each such day plus the
Adjusted CD Rate applicable to such Loan on the day before such payment was due
and (ii) the rate applicable to Base Rate Loans for each such day.
The "Adjusted CD Rate" applicable to any Interest Period means a rate per
annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------
* The amount in brackets being rounded upward, if necessary, to the next higher
1/100 of 1%
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including
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<PAGE> 28
without limitation any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of new non-personal time deposits in dollars in New
York City having a maturity comparable to the related Interest Period and in an
amount of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically
on and as of the effective date of any change in the Domestic Reserve
Percentage.
"ASSESSMENT RATE" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund classified
as adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R. sec.
327.4(a) or any successor provision (a "BIF Member") to the Federal Deposit
Insurance Corporation (or any successor) for the Federal Deposit Insurance
Corporation's (or such successor's) insuring time deposits at offices of such
BIF Member in the United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Assessment
Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for each
such day plus the applicable London Interbank Offered Rate for such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Applicable Margin for such day plus the London Interbank Offered Rate applicable
to such Loan on the day before such payment was due and (ii) the Applicable
Margin for such day plus the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than six months as
the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the
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<PAGE> 29
circumstances described in subsection (a) or (b) of Section 8.01 shall exist, at
a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for each day during
the Interest Period applicable thereto, at a rate per annum equal to the sum of
the London Interbank Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if the related Money Market LIBOR Borrowing
were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin
quoted by the Bank making such Loan in accordance with Section 2.03. Each Money
Market Absolute Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day during the Interest Period applicable thereto, at a
rate per annum equal to the Money Market Absolute Rate quoted by the Bank making
such Loan in accordance with Section 2.03. Such interest shall be payable for
each Interest Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the first day
thereof. Any overdue principal of or interest on any Money Market Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the Base Rate for each such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
(h) The "APPLICABLE MARGIN" with respect to any Euro-Dollar Loan or CD
Loan at any date is the applicable percentage amount set forth in the table
below based on the Status on such date:
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
STATUS STATUS STATUS STATUS STATUS
------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Euro-Dollar Loans 0.150% 0.195% 0.240% 0.260% 0.325%
CD Loans 0.275% 0.320% 0.365% 0.385% 0.450%
</TABLE>
(i) For each day on which the aggregate outstanding principal amount
of the Loans equals or exceeds 50% of the aggregate amount of the Commitments,
the Borrower shall pay additional interest at the rate of 0.05% per annum on the
aggregate principal amount of Euro-Dollar Loans and CD Loans outstanding to it
on such day. Accrued interest under this subsection (i) shall be
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<PAGE> 30
payable quarterly in arrears on each Quarterly Payment Date and upon the date of
termination of the Commitments in their entirety (and, if later, the date the
Loans shall be repaid in their entirety).
SECTION 2.08. Facility Fee. (a) The Borrower shall pay to the Agent for
the account of the Banks ratably a facility fee at the Facility Fee Rate. Such
facility fee shall accrue (i) from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily aggregate amount of the Commitments
(whether used or unused) and (ii) from and including the Termination Date (or
earlier date of termination of the Commitments in their entirety) to but
excluding the date the Loans shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Loans.
The "FACILITY FEE RATE" at any date is: (i) 0.050% if Level I Status
exists at such date, (ii) 0.055% if Level II Status exists at such date, (iii)
0.060% if Level III Status exists at such date, (iv) 0.090% if Level IV Status
exists at such date or (v) 0.125% if Level V Status exists at such date.
(b) Accrued fees under this Section shall be payable quarterly in
arrears on each Quarterly Payment Date and upon the date of termination of the
Commitments in their entirety (and, if later, the date the Loans shall be repaid
in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. Promptly after receiving a notice pursuant to this Section, the Agent
shall notify each Bank of the contents thereof.
SECTION 2.10. Mandatory Termination and Reduction of Commitments. (a) The
Commitments shall terminate on the Termination Date, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable on
such date.
(b) In addition, in the event that the Borrower or any of its
Subsidiaries or any Domestic Parent shall receive any Net Cash Proceeds as a
result of any Reduction Event, the Commitments shall be ratably reduced (i) on
the date of each repayment or prepayment pursuant to Section 2.11(b), by an
aggregate amount equal to the amount of such repayment or prepayment and (ii) on
the date of receipt of any such Net Cash Proceeds in an amount exceeding the
then aggregate outstanding principal amount of the Loans, by an amount equal to
the excess, if any, of (x) the largest multiple of $1,000,000 which does not
exceed the amount of such Net Cash Proceeds over (y) the then aggregate
outstanding principal amount of the Loans. The Borrower shall give the Agent at
least five Euro-Dollar Business Days' notice of each reduction required to be
made pursuant to this subsection (b).
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<PAGE> 31
SECTION 2.11. Prepayments. (a) Optional Prepayments. The Borrower may (i)
upon at least one Domestic Business Day's notice to the Agent, prepay any Group
of Base Rate Loans (or any Money Market Borrowing bearing interest at the Base
Rate pursuant to Section 8.01(a)), (ii) upon at least three Domestic Business
Days' notice to the Agent, subject to Section 2.13, prepay any Group of CD Loans
and (iii) upon at least three Euro-Dollar Business Days' notice to the Agent,
subject to Section 2.13, prepay any Group of Euro-Dollar Loans, in whole at any
time, or from time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to but not including the date of
prepayment. Each such optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group of Loans (or such Money Market
Borrowing).
(b) Mandatory Prepayments. In addition, in the event that the Borrower
or any of its Subsidiaries or any Domestic Parent shall receive any Net Cash
Proceeds as a result of any Reduction Event, the Borrower shall repay or prepay
Loans in an aggregate principal amount equal to the largest multiple of
$1,000,000 which does not exceed the amount of such Net Cash Proceeds; provided
that if any prepayment would otherwise require prepayment of Fixed Rate Loans or
portions thereof prior to the last day of the then current Interest Period, then
such prepayment shall, unless the Agent otherwise notifies the Borrower upon the
instructions of the Required Banks, be deferred to the last day of such Interest
Period. The Borrower shall give the Agent at least five Euro-Dollar Business
Days' notice of each prepayment required to be made pursuant to this subsection
(b).
(c) Except as provided in Section 2.11(a)(i), the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(d) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and once notice is so given to
the Banks, the Borrower's notice of prepayment shall not thereafter be revocable
by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 2:00 P.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the respective accounts of the Banks. Whenever any payment of principal of, or
interest on, the Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the
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<PAGE> 32
Money Market Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon shall be payable for such
extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment, each Bank shall
repay to the Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a different type of Loan (pursuant to Article 2, 6 or 8 (other than
Section 8.02) on any day other than the last day of an Interest Period
applicable thereto, or the last day of an applicable period fixed pursuant to
Section 2.07(d), or if the Borrower fails to borrow, prepay, convert or continue
any Fixed Rate Loans after notice has been given to any Bank in accordance with
Section 2.04(a), 2.11(d) or 2.16 (other than as a result of default by such
Bank), the Borrower shall reimburse each Bank within 15 days after written
demand for any resulting loss or expense reasonably incurred by it (or by an
existing or prospective Participant in the related Loan) in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow,
prepay, convert or continue; provided that such Bank shall have delivered to the
Borrower a certificate specifying in reasonable detail the calculation of, and
the reasons for, the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Agent, in which case such
additional interest on the Euro- Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice
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<PAGE> 33
with respect to each Interest Period commencing at least three Euro-Dollar
Business Days after the giving of such notice, and (y) shall notify the Borrower
at least five Euro-Dollar Business Days prior to each date on which interest is
payable on the Euro-Dollar Loans of the amount then due it under this Section.
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
SECTION 2.16. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject to subsection
2.16(d) of this Section and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.13 if any such conversion is effective on any day
other than the last day of an Interest Period applicable to such Loans;
and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Base Rate Loans or CD Loans or elect to continue
such Loans as Euro-Dollar Loans for an additional Interest Period,
subject to Section 2.13 if any such conversion is effective on any day
other than the last day of an Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 10:30 A.M. (New York City time) on
the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective (unless the relevant Loans are to be
converted from Domestic Loans of one type to Domestic Loans of the other type or
are CD Loans to be continued as CD Loans for an additional Interest Period, in
which case such notice shall be delivered to the Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such conversion
or continuation is to be effective). A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the
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<PAGE> 34
aggregate principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion to which it
does not apply, are each at least $5,000,000 (unless such portion is comprised
of Base Rate Loans). If no such notice is timely received before the end of an
Interest Period for any Group of CD Loans or Euro-Dollar Loans, the Borrower
shall be deemed to have elected that such Group of Loans be converted to Base
Rate Loans at the end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the applicable
clause of subsection 2.16(a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans resulting from such conversion are to
be CD Loans or Euro- Dollar Loans, the duration of the next succeeding
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to subsection (a) above, the Agent shall notify each Bank
of the contents thereof and such notice shall not thereafter be revocable by the
Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional Interest
Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate principal amounts
of any Group of CD Loans or Euro-Dollar Loans created or continued as a result
of such election would be less than $5,000,000 or (ii) a Default shall have
occurred and be continuing when the Borrower delivers notice of such election to
the Agent.
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<PAGE> 35
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on the
date that each of the following conditions shall have been satisfied (or waived
in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party);
(b) receipt by the Agent of a duly executed Promissory Note for the
account of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of an opinion of the General Counsel of the
Borrower, substantially in the form of Exhibit E hereto;
(d) receipt by the Agent from each Subsidiary Guarantor under the
Existing Agreement of (i) a Subsidiary Guarantee in substantially the form of
Exhibit H hereto, duly executed by such Subsidiary Guarantor, (ii) an opinion of
counsel for such Subsidiary Guarantor, reasonably satisfactory to the Agent,
with respect to such Subsidiary Guarantee, substantially in the form of Exhibit
I hereto and covering such additional matters relating to such Subsidiary
Guarantee as the Required Banks may reasonably request and (iii) all documents
the Agent may reasonably request relating to the existence of such Subsidiary
Guarantee, the corporate authority for and the validity of such Subsidiary
Guarantee, and any other matters reasonably determined by the Agent to be
relevant thereto, all in form and substance reasonably satisfactory to the
Agent;
(e) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit F hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(f) receipt by the Agent of all documents the Agent may reasonably
request relating to the existence of the Borrower, the corporate authority for
and the validity of this Agreement and the Promissory Notes, and any other
matters reasonably determined by the Agent to be relevant hereto, all in form
and substance reasonably satisfactory to the Agent; and
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
July 30, 1997.
SECTION 3.02. Consequences of Effectiveness; Transitional Provisions. (a)
On the Effective Date, the commitments under the Existing Agreement shall
terminate without further action by any party thereto. The Agent will promptly
notify each of the other parties hereto and to the Existing Agreement of the
effectiveness of this Agreement.
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<PAGE> 36
(b) Concurrently with the effectiveness of this Agreement, the
Borrower shall repay or prepay in full (including accrued and unpaid interest
thereon to, but excluding, the Effective Date) all "Loans" outstanding under the
Existing Agreement. Concurrently with the effectiveness of this Agreement, the
Borrower shall pay all accrued and unpaid facility fees under the Existing
Agreement to, but excluding, the Effective Date.
SECTION 3.03. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction (or waiver in
accordance with Section 9.05) of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate amount
of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
and each Guarantor contained in the Financing Documents (except the
representations and warranties set forth in Sections 4.04(a) and 4.11, which are
made only as of the date of this Agreement) shall be true in all material
respects on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in
subsections (b), (c) and (d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Banks that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. The Borrower has all corporate powers
and all governmental licenses, authorizations, consents and approvals
(collectively, the "Consents") required to carry on its business as now
conducted, other than those powers and Consents, the failure of which to be
possessed or obtained could not, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect.
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SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Borrower of this Agreement and
the Promissory Notes: (a) are within the Borrower's corporate powers; (b) have
been duly authorized by all necessary corporate action on the part of the
Borrower; (c) require no action by or in respect of, or filing with, any
governmental body, agency or official, in each case, on the part of the
Borrower; and (d) do not contravene, or constitute a default by the Borrower
under, any provision of (i) applicable law or regulation, (ii) the certificate
of incorporation or by-laws of the Borrower, or (iii) any agreement or
instrument evidencing or governing Debt of the Borrower or any other material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Promissory Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of June 30, 1996 and the related consolidated
statements of income, of shareholders' equity and of cash flows for the fiscal
year then ended, reported on by Coopers & Lybrand L.L.P. and set forth in the
Borrower's 1996 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) Since June 30, 1996 there has been no material adverse change in
the business, financial position, results of operations or Prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect or which in any manner
draws into question the validity of the Financing Documents.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance, except
where the failure to so comply could not, based upon the facts and circumstances
in existence at the time this representation and warranty is made or deemed
made, reasonably be expected to have a Material Adverse Effect, with the
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard
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under Section 412 of the Internal Revenue Code in respect of any Plan, (ii)
failed to make any required contribution or payment to any Plan or Multiemployer
Plan, or made any amendment to any Plan, which has resulted in or could, based
upon the facts and circumstances in existence at the time this representation
and warranty is made or deemed made, reasonably be expected to result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Internal Revenue Code or (iii) incurred any liability under Title IV of
ERISA (other than a liability to the PBGC for premiums under Section 4007 of
ERISA), which could, based upon the facts and circumstances existing at the time
this representation and warranty is made or deemed made, reasonably be expected
to have a Material Adverse Effect.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, could not, based upon the facts and circumstances existing at the time
this representation and warranty is made or deemed made, reasonably be expected
to have a Material Adverse Effect.
SECTION 4.08. Taxes. The United States Federal income tax liability of
the Borrower and its Subsidiaries has been finally determined for all fiscal
years through the fiscal year ended June 30, 1990. The Borrower and its
Subsidiaries have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes shown on such returns or pursuant to any assessment received by the
Borrower or any Subsidiary, except those assessments which are being contested
in good faith by appropriate proceedings. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate Consolidated
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, except where the
failure to be so incorporated, existing or in good standing could not, based
upon the facts and circumstances existing at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has all corporate powers and all Consents
required to carry on its business as now conducted, other than those powers and
Consents, the failure of which to
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be possessed or obtained could not, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. The factual information, reports,
financial statements, exhibits and schedules concerning the Borrower and its
Subsidiaries furnished by or on behalf of the Borrower and contained in the
information furnished under cover of a memorandum dated June 2, 1997 by J.P.
Morgan Securities Inc. to a limited number of banks which were being invited to
participate in this Agreement, do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Promissory Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, consolidated balance sheets of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, of shareholders' equity and of
cash flows for such fiscal year, setting forth, in each case in comparative
form, the figures for the previous fiscal year, all reported on by Coopers &
Lybrand L.L.P. or other independent public accountants of nationally recognized
standing in a manner complying with the applicable rules and regulations
promulgated by the Securities and Exchange Commission;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
consolidated statements of cash flows for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such quarter, setting forth in
the case of such statements of income and of cash flows in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency on behalf of the Borrower by the chief financial
officer, the chief accounting officer or the treasurer of the Borrower;
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(c) simultaneously with the delivery of each set of financial
statements referred to in subsections (a) and (b) above, a certificate on behalf
of the Borrower signed by the chief financial officer, the chief accounting
officer or the treasurer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 5.08 to 5.11, inclusive, on the date of such
financial statements and (ii) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting forth, in reasonable
detail, the nature thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in subsection (a) above, a statement of the firm of
independent public accountants which reported on such financial statements
stating that, in making the audit necessary for the certification of such
financial statements, such firm of accountants has obtained no knowledge of any
Default, or if it has obtained knowledge of such Default, specifying the nature
and period of existence thereof; provided such firm of accountants shall not be
liable to any Person by reason of such firm's failure to obtain knowledge of any
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted accounting principles;
(e) within five Domestic Business Days after any Responsible Officer
obtains knowledge of any Default, if such Default is then continuing, a
certificate on behalf of the Borrower signed by the chief financial officer, the
chief accounting officer or the treasurer of the Borrower setting forth, in
reasonable detail, the nature thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(f) promptly following the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all final registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and final reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
(h) within 30 days after any Responsible Officer of the Borrower
obtains knowledge that any member of the ERISA Group (i) gave or was required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knew that the plan administrator of any
Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) received notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) received notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than under Sections 4007, 4071 and 4302 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy of such notice; (iv)
applied for a waiver of the
36
<PAGE> 41
minimum funding standard under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gave notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gave notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (vii) failed to make any required payment or
contribution to any Plan or Multiemployer Plan or made any amendment to any Plan
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate on behalf of the Borrower, signed by the
chief financial officer, the chief accounting officer or the treasurer of the
Borrower setting forth, to the best of its knowledge, in reasonable detail, the
nature of such occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take;
(i) promptly following, and in any event within 10 days of, any change
in a Debt Rating by any Rating Agency, notice thereof; and
(j) from time to time, upon reasonable notice, such additional
information regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where (i) any such failure to so pay
or discharge could not, based upon the facts and circumstances in existence at
the time, reasonably be expected to have a Material Adverse Effect or (ii) such
liabilities or obligations may be contested in good faith by appropriate
proceedings. The Borrower will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of such liabilities or obligations.
SECTION 5.03. Maintenance of Property; Insurance. (a) Except as permitted
by Section 5.04 or 5.12, the Borrower will keep, and will cause each Subsidiary
to keep, all property necessary in its business in good working order and
condition, ordinary wear and tear excepted, unless the failure to so keep could
not, based upon the facts and circumstances existing at the time, reasonably be
expected to have a Material Adverse Effect.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its assets and business against such casualties and contingencies, of such
types (including, without limitation, loss or damage, product liability,
business interruption, larceny, embezzlement or other criminal misappropriation)
and in such amounts as is customary in the case of similarly situated
corporations of established reputations engaged in the same or a similar
business, unless the failure to maintain such insurance could not, based upon
the facts and circumstances existing at the time, reasonably be expected to have
a Material Adverse Effect.
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SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower (a) will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries and reasonably related extensions thereof, and (b) will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect (x) their
respective corporate existence and (y) their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business, unless in
the case of either the failure of the Borrower to comply with subclause (b) (y)
of this Section 5.04 or the failure of a Subsidiary to comply with clauses (a)
or (b) of this Section 5.04, such failure could not, based upon the facts and
circumstances existing at the time, reasonably be expected to have a Material
Adverse Effect; provided that nothing in this Section 5.04 shall prohibit (i)
the merger or consolidation of a Subsidiary with or into the Borrower or a
Wholly-Owned Consolidated Subsidiary, (ii) the sale, lease, transfer, assignment
or other disposition by a Subsidiary of all or any part of its assets to the
Borrower or to a Wholly-Owned Consolidated Subsidiary, (iii) the merger or
consolidation of a Subsidiary with or into a Person other than the Borrower or a
Wholly-Owned Consolidated Subsidiary, if the Person surviving such consolidation
or merger is a Subsidiary and immediately after giving effect thereto, no
Default shall have occurred and be continuing, (iv) the sale, lease, transfer,
assignment or other disposition by a Subsidiary of all or any part of its assets
to a Person other than the Borrower or a Wholly-Owned Consolidated Subsidiary if
the Person to which such sale, lease, transfer, assignment or other disposition
is made is a Subsidiary and immediately after giving effect thereto, no Default
shall have occurred and be continuing, (v) any transaction permitted pursuant to
Section 5.12, (vi) the termination of the corporate existence of any Subsidiary
if the Borrower in good faith determines that such termination is in the best
interest of the Borrower and is not materially disadvantageous to the Banks and
(vii) the sale, lease, transfer, assignment or other disposition (including any
such transaction by way of merger or consolidation) by the Borrower of all or
any part of its assets to a Person other than the Borrower or a Subsidiary if
(A) immediately after giving effect thereto, no Default shall have occurred and
be continuing and (B) the Borrower is a Subsidiary of such Person or the
Borrower and such Person are Subsidiaries of the same Person.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where (a) noncompliance therewith could not,
based upon the facts and circumstances in existence at the time, reasonably be
expected to have a Material Adverse Effect or (b) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records; Confidentiality.
(a) The Borrower will keep, and will cause each Subsidiary to keep, proper books
of record and account in which true and correct entries shall be made of its
business transactions and activities so that financial statements that fairly
present its business transactions and activities can be properly prepared in
accordance with generally accepted accounting principles.
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(b) The Borrower will permit, and will cause each Subsidiary to
permit, representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants, all upon reasonable notice to the Borrower, at such
reasonable times and as often as may reasonably be requested by any Bank.
(c) Each Bank and the Agent shall, by its receipt of Confidential
Information (as defined below) pursuant to or in connection with this Agreement
or its exercise of any of its rights hereunder, be deemed to have agreed (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to (i) keep such information confidential, (ii) (except as
permitted by clause (iii) of this Section 5.06(c)) not disclose such information
to any Person other than an officer, director, employee, legal counsel,
independent auditor or authorized agent or advisor of the Agent or such Bank
needing to know such information (it being understood that any such officer,
director, employee, legal counsel, independent auditor or authorized agent or
advisor shall be informed by the Agent or such Bank of the confidential nature
of such information), (iii) not disclose such information to any Assignee or
Participant (or prospective Assignee or Participant), unless such Assignee or
Participant (or prospective Assignee or Participant) shall agree in writing to
be bound by the provisions of this Section 5.06(c) and (iv) not use any such
information except for purposes relating to this Agreement or the Notes. The
term "Confidential Information" shall mean non-public information furnished by
or on behalf of the Borrower or any of its Subsidiaries to the Agent, any Bank
or other Person exercising rights hereunder or required to be bound hereby
(collectively "Recipients"), but shall not include any such information which
(1) has become or hereafter becomes available to the public other than as a
result of a disclosure by a Recipient, or (2) has become or hereafter becomes
available to a Recipient, on a non-confidential basis, from a source other than
the Borrower or any of its Subsidiaries (or any of their respective
representatives or agents) or any Recipient, which source, to the knowledge of
the Recipient, is not prohibited from disclosing such information by a
confidentiality agreement with, or other legal or fiduciary obligation to, the
Borrower or its Subsidiaries.
The restrictions set forth in the immediately preceding paragraph shall
not prevent the disclosure by a Recipient of any such information:
(A) with the prior written consent of the Borrower,
(B) at the request of a bank regulatory agency or in
connection with an examination by bank examiners, or
(C) upon order of any court or administrative agency of
competent jurisdiction, to the extent required by such order and
not effectively stayed on appeal or otherwise, or as otherwise
required by law; provided that in the case of any intended
disclosure under this clause (C), the Recipient shall (unless
otherwise required by applicable law) give the Borrower not less
than five
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Domestic Business Days prior notice (or such shorter period as
may, in the good faith discretion of the Recipient, be reasonable
under the circumstances or may be required by any court or agency
under the circumstances), specifying the Confidential Information
involved and stating such Recipient's intention to disclose such
Confidential Information (including the manner and extent of such
disclosure) in order to allow the Borrower an opportunity to seek
an appropriate protective order.
Each Recipient shall agree that, in addition to all other remedies
available, the Borrower shall be entitled to specific performance and injunctive
and other equitable relief as a remedy for any breach of this Section 5.06(c) by
such Recipient.
SECTION 5.07. Limitation on Restrictions on Subsidiary Dividends and
Other Distributions. The Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits, owned by the Borrower or any
Subsidiary, or pay any Debt owed to the Borrower or any Subsidiary, (b) make
loans or advances to the Borrower or any Subsidiary or (c) transfer any of its
properties or assets to the Borrower or any Subsidiary, except for such
encumbrances or restrictions existing under or by reason of
(i) applicable law, agreements with foreign governments with
respect to assets located in their jurisdiction, or condemnation or
eminent domain proceedings,
(ii) any of the Financing Documents,
(iii) (A) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Borrower or
a Subsidiary, or (B) customary restrictions imposed on the transfer of
copyrighted or patented materials or provisions in agreements that
restrict the assignment of such agreements or any rights thereunder,
(iv) provisions contained in the instruments evidencing or
governing Debt or other obligations or agreements, in each case existing
on the Effective Date,
(v) provisions contained in documents evidencing or governing
any Permitted Receivables Transaction,
(vi) provisions contained in instruments evidencing or governing
Debt or other obligations or agreements of any Person, in each case, at
the time such Person (A) shall be merged or consolidated with or into the
Borrower or any Subsidiary, (B) shall sell, transfer, assign, lease or
otherwise dispose of all or substantially all of such Person's assets to
the Borrower or a Subsidiary, or (C) otherwise becomes a Subsidiary,
provided that in the case of clause (A), (B) or (C), such Debt,
obligation or agreement was not
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incurred or entered into, or any such provisions adopted, in
contemplation of such transaction,
(vii) provisions contained in instruments amending, restating,
supplementing, extending, renewing, refunding, refinancing, replacing or
otherwise modifying, in whole or in part (collectively, "Refinancing"),
instruments referred to in clauses (ii), (iv) and (vi) of this Section
5.07, so long as such provisions are, in the good faith determination of
the Borrower's board of directors, not materially more restrictive than
those contained in the respective instruments so Refinanced,
(viii) provisions contained in any instrument evidencing or
governing Debt or other obligations of a Subsidiary Guarantor,
(ix) any encumbrances and restrictions with respect to a
Subsidiary imposed in connection with an agreement which has been entered
into for the sale or disposition of such Subsidiary or its assets,
provided such sale or disposition otherwise complies with this Agreement,
(x) the subordination (pursuant to its terms) in right and
priority of payment of any Debt owed by any Subsidiary (the "Indebted
Subsidiary") to the Borrower or any other Subsidiary, to any other Debt
of such Indebted Subsidiary, provided (A) such Debt is permitted under
this Agreement and (B) the Borrower's board of directors has determined,
in good faith, at the time of the creation of such encumbrance or
restriction, that such encumbrance or restriction could not, based upon
the facts and circumstances in existence at the time, reasonably be
expected to have a Material Adverse Effect,
(xi) provisions governing preferred stock issued by a
Subsidiary, provided that such preferred stock is permitted under Section
5.08, and
(xii) provisions contained in debt instruments obligations or
other agreements of any Subsidiary which are not otherwise permitted
pursuant to clauses (i) through (xi) of this Section 5.07, provided that
the aggregate investment of the Borrower in all such Subsidiaries
(determined in accordance with generally accepted accounting principles)
shall at no time exceed the greater of (a) $50,000,000 or (b) 10% of
Consolidated Tangible Net Worth.
The provisions of this Section 5.07 shall not prohibit (x) Liens not prohibited
by Section 5.11 or (y) restrictions on the sale or other disposition of any
property securing Debt of any Subsidiary, provided such Debt is otherwise
permitted by this Agreement.
SECTION 5.08. Debt. Consolidated Debt will at no time exceed 52.5% of
Consolidated Total Capitalization. The total Debt of all Consolidated
Subsidiaries (excluding (i) Debt of a Consolidated Subsidiary to the Borrower or
to a Wholly-Owned Consolidated Subsidiary, (ii) Debt of a Subsidiary Guarantor
and (iii) Debt of any Person (a) existing at the time such Person
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becomes a Subsidiary or merges into a Subsidiary and (b) not created in
contemplation of such event, but only for a period ending 180 days after the
date of such event) will at no time exceed $300,000,000 in aggregate outstanding
principal amount. For purposes of this Section any preferred stock of a
Consolidated Subsidiary held by a Person other than the Borrower or a
Wholly-Owned Consolidated Subsidiary shall be included, at the higher of its
voluntary or involuntary liquidation value, in "Consolidated Debt" and in the
"Debt" of such Consolidated Subsidiary.
SECTION 5.09. Fixed Charge Coverage. The ratio of Consolidated EBIT to
Consolidated Interest Expense will not, for any period of four consecutive
fiscal quarters, be less than 2.5 to 1.
SECTION 5.10. Restricted Payments. Neither the Borrower nor any
Subsidiary will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to the date hereof does not exceed an amount equal to the sum of (a)
$332,000,000 plus (b) 50% of Consolidated Net Income (or minus 100% of
Consolidated Net Income, in the event of a net loss for such period) for the
period from July 1, 1996 through the end of the then most recently ended fiscal
quarter of the Borrower (treated for this purpose as a single accounting
period), plus (c) the aggregate cash proceeds (net of underwriting commissions)
received by the Borrower (other than from a Subsidiary) from the issuance or
sale after June 30, 1996 of capital stock or Stock Equivalents of the Borrower
(other than the proceeds of any capital stock or Stock Equivalent which by its
terms is subject to redemption otherwise than at the sole option of the
Borrower) plus (d) the aggregate amount of capital contributions received by the
Borrower subsequent to the Parent Guarantee Date. Nothing in this Section 5.10
shall prohibit the payment of any dividend or distribution within 60 days after
the declaration thereof if such declaration was not prohibited by this Section
5.10.
SECTION 5.11. Negative Pledge. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) any Lien existing on any asset on the Effective Date securing Debt
outstanding on the Effective Date;
(b) any Lien existing on any asset of, or capital stock of, or other
ownership interest in, any Person (such capital stock and other ownership
interests are collectively referred to herein as "Stock") at the time such
Person becomes a Subsidiary, which Lien was not created in contemplation of such
event;
(c) any Lien on any asset securing the payment of all or part of the
purchase price of such asset upon the acquisition thereof by the Borrower or a
Subsidiary or securing Debt (including any obligation as lessee incurred under a
capital lease) incurred or assumed by the Borrower or a Subsidiary prior to, at
the time of or within one year after such acquisition (or in the case of real
property, the completion of construction (including any improvements on an
existing property) or the commencement of full operation of such asset or
property, whichever is later), which Debt is incurred or assumed for the purpose
of financing all or part of the cost of
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acquiring such asset or, in the case of real property, construction or
improvements thereon; provided, that in the case of any such acquisition,
construction or improvement, the Lien shall not apply to any asset theretofore
owned by the Borrower or a Subsidiary, other than assets so acquired,
constructed or improved;
(d) any Lien existing on any asset or Stock of any Person at the time
such Person is merged or consolidated with or into the Borrower or a Subsidiary
which Lien was not created in contemplation of such event;
(e) any Lien existing on any asset or Stock of any Person at the time
of acquisition thereof by the Borrower or a Subsidiary, which Lien was not
created in contemplation of such acquisition;
(f) any Lien arising out of the Refinancing of any Debt secured by any
Lien permitted by any of the subsections (a) through (e) of this Section 5.11,
provided the principal amount of Debt is not increased and is not secured by any
additional assets, except as provided in the last sentence of this Section 5.11;
(g) any Lien to secure Debt of a Subsidiary to the Borrower or to a
Wholly-Owned Consolidated Subsidiary;
(h) any Lien created pursuant to a Permitted Receivables Transaction;
(i) any Lien in favor of the United States or any other country (or
any department, agency, instrumentality or political subdivision of the United
States or any other country) securing obligations arising in connection with
partial, progress, advance or other payments pursuant to any contract, statute,
rule or regulation or securing obligations incurred for the purpose of financing
all or any part of the purchase price (including the cost of installation
thereof or, in the case of real property, the cost of construction or
improvement or installation of personal property thereon) of the asset subject
to such Lien (including, but not limited to, any Lien incurred in connection
with pollution control, industrial revenue or similar financings);
(j) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any single obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business; and
(k) Liens not otherwise permitted by the foregoing clauses (a) through
(j) of this Section 5.11 securing Debt (without duplication) in an aggregate
principal amount at any time outstanding not to exceed an amount equal to the
greater of (i) $50,000,000 or (ii) 10% of Consolidated Tangible Net Worth.
It is understood that any Lien permitted to exist on any asset pursuant to the
foregoing provisions of this Section 5.11 may attach to the proceeds of such
asset and, with respect to Liens permitted
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pursuant to subsections (a), (b), (d), (e), (f) (but only with respect to the
Refinancing of a Debt secured by a Lien permitted pursuant to subsections (a),
(b), (d) or (e)) or (g) of this Section 5.11, may attach to an asset acquired in
the ordinary course of business as a replacement of such former asset.
SECTION 5.12. Consolidations, Mergers and Sales of Assets. (a) The
Borrower will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer all or substantially all of its assets to any
other Person, unless
(A) the Borrower or a Subsidiary or a Domestic Parent is
the surviving corporation;
(B) the Person (if other than the Borrower) formed by
such consolidation or into which the Borrower is merged, or the
Person which acquires by sale or other transfer, or which leases,
all or substantially all of the assets of the Borrower (any such
Person, the "Successor"), shall be organized and existing under
the laws of the United States, any state thereof or the District
of Columbia and shall expressly assume, in a writing executed and
delivered to the Agent for delivery to each of the Banks, in form
reasonably satisfactory to the Agent, the due and punctual payment
of the principal of and interest on the Promissory Notes and the
performance of the other obligations under this Agreement and the
Promissory Notes on the part of the Borrower to be performed or
observed, as fully as if such Successor were originally named as
the Borrower in this Agreement;
(C) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing; and
(D) the Borrower has delivered to the Agent a
certificate on behalf of the Borrower signed by a Responsible
Officer and an opinion of counsel (which counsel may be an
employee of the Borrower), each stating that all conditions
provided in this Section 5.12 relating to such transaction have
been satisfied.
The foregoing provisions of this Section 5.12 shall not restrict the
merger or consolidation of any Subsidiary with and into the Borrower.
Upon the satisfaction (or waiver in accordance with Section 9.05) of the
conditions set forth in this Section 5.12, the Successor shall succeed, and may
exercise every right and power of, the Borrower under this Agreement and the
Promissory Notes with the same effect as if the Successor had been originally
named as the Borrower herein and in the Promissory Notes, and the Borrower shall
be relieved of its obligations under this Agreement and the Promissory Notes.
(b) The Borrower will not, and will not permit any Subsidiary to,
sell, lease or otherwise transfer, in any transaction or series of related
transactions, to any Person (other than the Borrower, a Subsidiary, a Person of
which the Borrower is a Subsidiary or a Subsidiary of
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such a Person) any Property (including, without limitation, the stock of any
Subsidiary) having a net book value in excess of 15% of Consolidated Assets
determined as of the end of the fiscal quarter of the Borrower most recently
ended at the time of such sale or other transaction, or Property (including
without limitation, stock of a Subsidiary) which contributed in excess of 15% of
Consolidated EBIT for the fiscal year of the Borrower most recently ended at the
time of such sale or other transaction.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower for its general corporate purposes,
including, without limitation, capital expenditures and (subject to the
following sentence) acquisitions. None of such proceeds will be used, directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.14. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, on any date before the Parent Guarantee Date,
directly or indirectly, pay any funds to or for the account of, make any
investment (whether by acquisition of stock or indebtedness, by loan, advance,
transfer of property, guarantee or other agreement to pay, purchase or service,
directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate (collectively, "AFFILIATE TRANSACTIONS");
provided, however, that the foregoing provisions of this Section 5.14 shall not
prohibit the Borrower or any of its Subsidiaries from: (a) making Restricted
Payments (including, for this purpose, transactions expressly excluded from the
definition of a Restricted Payment) permitted by Section 5.10, (b) making sales
to or purchases from any Affiliate and, in connection therewith, extending
credit or making payments, or from making payments for services rendered by any
Affiliate, if such sales or purchases are made or such services are rendered in
the ordinary course of business and on terms and conditions at least as
favorable to the Borrower or such Subsidiary as the terms and conditions which
the Borrower would reasonably expect to be obtained in a similar transaction
with a Person which is not an Affiliate at such time, (c) making payments of
principal, interest and premium on any Debt of the Borrower or such Subsidiary
held by an Affiliate if the terms of such Debt are at least as favorable to the
Borrower or such Subsidiary as the terms which the Borrower would reasonably
expect to have been obtained at the time of the creation of such Debt from a
lender which was not an Affiliate, (d) participating in, or effecting any
transaction in connection with, any joint enterprise or other joint arrangement
with any Affiliate if the Borrower or such Subsidiary participates in the
ordinary course of its business and on a basis no less advantageous than the
basis on which such Affiliate participates, (e) paying or granting reasonable
compensation and benefits to any director, officer, employee or agent of the
Borrower or any Subsidiary, (f) paying reasonable legal fees and expenses to a
law firm of which an Affiliate is a member or (g) engaging in any Affiliate
Transaction not otherwise addressed in subsections (a) - (f) of this Section
5.14, the terms of which are not less favorable to the Borrower or such
Subsidiary than those that the Borrower would reasonably expect to be obtained
in a comparable transaction at such time with a Person which is not an
Affiliate.
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ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing and shall not have
been waived in accordance with Section 9.05:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or shall fail to pay within three Domestic Business Days of the due date thereof
any interest on any Loan or any fees payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.08 or 5.09;
(c) the Borrower shall fail to observe or perform any covenant
contained in Section 5.07 or Sections 5.10 to 5.14, inclusive, and such failure
shall not be remedied within five days after any Responsible Officer obtains
actual knowledge thereof;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a),
(b) or (c) of this Section 6.01) for 10 days after notice thereof has been given
to the Borrower by the Agent at the request of any Bank;
(e) any representation, warranty, certification or statement made in
writing by the Borrower or any Guarantor in the Financing Documents or in any
certificate, financial statement or other document required to be delivered to
the Agent or any of the Banks pursuant to the Financing Documents shall prove to
have been incorrect in any material respect when made (or deemed made);
(f) on any date on or after the Parent Guarantee Date, any Guarantor
Event of Default (as defined in the Parent Guarantee);
(g) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt when due (after giving effect to any applicable
grace period);
(h) any event or condition shall occur that results in the
acceleration of the maturity of any Material Debt or that entitles the holder or
holders of any Material Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof;
(i) the Borrower or any Significant Subsidiary shall (i) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
substantially all of its property, or (ii) consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other similar proceeding
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commenced against it, or (iii) make a general assignment for the benefit of
creditors, or (iv) fail generally to pay its debts as they become due, or (v)
take corporate action authorizing any of the foregoing;
(j) (i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or substantially all of its property, and such
involuntary case or other proceeding shall remain in effect and undismissed and
unstayed for a period of 60 consecutive days or (ii) an order for relief shall
be entered against the Borrower or any Significant Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(k) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $25,000,000;
(l) a judgment or order for the payment of money in excess of
$30,000,000 (after deducting amounts covered by insurance, except to the extent
that the insurer providing such insurance has declined such coverage) shall be
rendered against the Borrower or any Subsidiary and, within 60 days after entry
thereof, such judgment or order is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay, such
judgment or order is not discharged;
(m) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 40% or more of the
outstanding shares of common stock of the Borrower; or, on the last day of any
period of twelve consecutive calendar months, a majority of members of the board
of directors of the Borrower shall no longer be composed of individuals (i) who
were members of said board of directors on the first day of such twelve
consecutive calendar month period or (ii) whose election or nomination to said
board of directors was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
said board of directors; provided that, the events described in this subsection
(m) shall not constitute an Event of Default on any date on or after the Parent
Guarantee Date;
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(n) the Borrower or any Subsidiary shall fail to make any payment
owing by it in respect of any performance bond, performance guaranty or bank
guaranty issued in lieu of a performance bond or performance guaranty (other
than a payment which is disputed by the Borrower or such Subsidiary in good
faith), and the aggregate of all such defaulted payments shall exceed
$50,000,000 at any one time for the Borrower and its Subsidiaries;
(o) on any date on or after the Parent Guarantee Date, the Parent
Guarantee shall cease to be valid and enforceable; or
(p) on any date on or after the Parent Guarantee Date, the Borrower
shall cease to be a Wholly-Owned Consolidated Subsidiary of the Parent
Guarantor;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 60% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Promissory Notes evidencing more than 60% in
aggregate principal amount of the Loans, by notice to the Borrower declare the
Promissory Notes (together with accrued interest thereon) to be, and the
Promissory Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in subsection (i) or (j) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Promissory Notes (together
with accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Financing Documents as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of New
York (and any successor acting as Agent) in its capacity as a Bank hereunder
shall have the same rights and powers under the Financing Documents as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company
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of New York (and any successor acting as Agent) and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower as if it were not
the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under the
Financing Documents are only those expressly set forth therein. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with legal
counsel (who may be counsel for the Borrower), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or any Guarantor; (iii) the
satisfaction of any condition specified in Article 3, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Subsidiary Guarantees, the Parent Guarantee,
the Promissory Notes or any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it in good faith to be genuine or to
be signed by or on behalf of the proper party or parties. Without limiting the
generality of the foregoing, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by such indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and
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information as it has deemed appropriate, made its own credit analysis of the
Borrower and its Subsidiaries and its own decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by giving
notice thereof to the Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent, subject to the
consent of the Borrower. If no successor Agent shall have been so appointed by
the Required Banks and consented to by the Borrower and shall have accepted such
appointment within 45 days after the retiring Agent gives notice of resignation,
then the retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $50,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under the Financing Documents. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
acting as the Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon in
writing between the Borrower and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Banks
in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks holding 50% or
more of the aggregate amount of the affected Loans advise the Agent that the
Adjusted CD Rate or the London Interbank Offered Rate, as the case may be, as
determined by the Agent will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
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the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon, until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist (which the Agent agrees to do promptly
upon such circumstances ceasing to exist), (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the case
may be, shall be suspended and (ii) each outstanding CD Loan or Euro-Dollar
Loan, as the case may be, shall be converted into a Base Rate Loan on the last
day of the then current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least one Domestic Business Day before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement, any
Bank has determined in its reasonable judgment that the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency,
shall make it unlawful or impossible for such Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice specifying the
circumstances giving rise to such suspension to the other Banks and the
Borrower, whereupon, until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension no longer exist (which such
Bank agrees to do promptly upon such circumstances ceasing to exist), the
obligation of such Bank to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank in
the good faith exercise of its discretion, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan as a Euro- Dollar Loan to such
day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
the date of this Agreement, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, any Bank has determined in its reasonable
judgment that the adoption of any applicable law, rule or
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regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency, shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding (i) with respect to any CD Loan any such requirement included in an
applicable Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar
Loan any such requirement with respect to which such Bank is entitled to
compensation during the relevant Interest Period under Section 2.15), special
deposit, insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
such Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its Fixed
Rate Loans, its Promissory Note or its obligation to make Fixed Rate Loans and
the result of any of the foregoing is to increase the cost to such Bank (or its
Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Promissory Note
with respect thereto, by an amount deemed by such Bank to be material to such
Bank, then, within 15 days after written demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date of this
Agreement, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days after
written demand by such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date of this Agreement,
which will entitle such Bank to compensation pursuant to this Section; provided
that (i) if any Bank fails to give such notice within 90 days after it obtains
actual knowledge of such an event, such Bank shall only be entitled to payment
under this Section 8.03 for costs incurred from and after the date 90 days prior
to the date that such Bank does give such notice and (ii) each such Bank will
designate a
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different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank in the good faith exercise of its discretion, be otherwise disadvantageous
to such Bank. A certificate of any Bank claiming compensation under this Section
and setting forth in reasonable detail the additional amount or amounts to be
paid to it hereunder and the basis used to determine such amounts shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank will use reasonable averaging and attribution methods and will have a
reasonable basis for any assumptions it makes in connection therewith.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Agent hereunder or under any Promissory Note
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, taxes imposed on or measured by its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on or measured by its income, and
franchise or similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Promissory Note to any Bank or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04 such Bank or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.01, the original or a certified copy of
a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any
Promissory Note or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Financing Document (hereinafter referred to as
"OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04 paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 15 days from the date
such Bank or the Agent (as the case may be) makes demand therefor.
53
<PAGE> 58
(d) At the times indicated herein, each Bank organized under the laws
of a jurisdiction outside the United States shall provide the Borrower with
Internal Revenue Service form 1001 or 4224 (in each case accompanied by any
statements which may be required under applicable Treasury regulations), as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to receive payments under this Agreement
(i) without deduction or withholding of any United States federal income taxes
or (ii) subject to a reduced rate of United States federal withholding tax,
unless, in each case of clause (i) and (ii) of this Section 8.04(d), an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or which would prevent the Bank
from duly completing and delivering any such form with respect to it and the
Bank advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of such taxes. Such forms shall be
provided (x) on or prior to the date of the Bank's execution and delivery of
this Agreement in the case of each Bank listed on the signature pages hereof,
and on or prior to the date on which it becomes a Bank in the case of each other
Bank, and (y) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
so delivered by the Bank. If the form provided by a Bank at the time such Bank
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "TAXES" as defined in Section 8.04(a). In addition, to
the extent that for reasons other than a change of treaty, law or regulation any
Bank becomes subject to an increased rate of United States interest withholding
tax while it is a party to this Agreement, withholding tax at such increased
rate shall be considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form in accordance with Section 8.04(d)
(unless such failure is excused by the terms of Section 8.04(d)), such Bank
shall not be entitled to indemnification under Section 8.04(a) or 8.04(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Bank, which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such change,
in the judgment of such Bank in the good faith exercise of its discretion, is
not otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.
If (i) the obligation of any Bank to make, or to continue or convert outstanding
Loans as or to Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or 8.04 with respect
to its CD Loans or Euro-Dollar Loans and the Borrower shall, by at least five
Euro-Dollar Business Days' prior notice to such Bank through the Agent,
54
<PAGE> 59
have elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer exist (which such
Bank agrees to do promptly upon such circumstances ceasing to exist), all Loans
which would otherwise be made by such Bank as (or continued as or converted to)
CD Loans or Euro-Dollar Loans, as the case may be, shall instead be Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Fixed Rate Loans of the other Banks). If such Bank notifies such
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist, the principal amount of each such Base Rate Loan
shall be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on
the first day of the next succeeding Interest Period applicable to the related
CD Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If any Bank (i) has demanded
compensation for increased costs pursuant to Section 8.03 or 8.04 or is entitled
to payments under Section 8.04(a) or (ii) has determined that the making or
maintaining of any Euro-Dollar Loan has become unlawful or impossible pursuant
to Section 8.02 and similar additional interest or compensation has not been
demanded by, or a similar determination has not been made by, all of the Banks,
the Borrower shall have the right (with the assistance of the Agent) to
designate an Assignee which is not an Affiliate of the Borrower to purchase for
cash, pursuant to an Assignment and Assumption Agreement in substantially the
form of Exhibit G hereto, the outstanding Loans and Commitment of such Bank and
to assume all of such Bank's other rights and obligations hereunder without
recourse to or warranty by, or expense to, such Bank, for a purchase price equal
to the principal amount of all of such Bank's outstanding Loans plus any accrued
but unpaid interest thereon and the accrued but unpaid fees in respect of that
Bank's Commitment hereunder plus such amount, if any, as would be payable
pursuant to Section 2.13 if the outstanding Loans of such Bank were prepaid in
their entirety on the date of consummation of such assignment.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications to
any party provided for hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (x) in the case of the Borrower or the Agent, at
its address or facsimile or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or facsimile or telex number
set forth in its Administrative Questionnaire or (z) in the case of any party,
such other address or facsimile or telex number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 9.01
and electronic, telephonic or other
55
<PAGE> 60
appropriate confirmation of receipt is received by the sender, (iii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified in this Section; provided that
notices to the Agent under Article 2 or Article 8 shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any other Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and
therein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of the Financing Documents, any waiver or consent
hereunder or any amendment thereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including reasonable fees and disbursements
of counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective Bank Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by such Indemnitee (whether or not such
Indemnitee shall be designated a party thereto) arising out of any
investigative, administrative or judicial proceeding (brought or threatened)
relating to or arising out of the Financing Documents, the arrangement,
administration, performance or enforcement thereof or any actual or proposed use
of proceeds of Loans hereunder; provided that no Indemnitee shall have the right
to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction; provided
further that no Indemnitee shall have the right to be indemnified hereunder in
connection with any proceedings between it and another Indemnitee which does not
relate to the Borrower.
(c) If any proceeding or claim shall be brought or asserted against
any Indemnitee in respect of which indemnity may be sought pursuant to the
preceding subsection, such Indemnitee shall promptly notify the Borrower. The
Borrower shall not be liable for any costs or expenses in connection with any
settlement entered into without its consent.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Promissory Note held by it which is
56
<PAGE> 61
greater than the proportion received by any other Bank in respect of the
aggregate amount of principal and interest due with respect to any Promissory
Note held by such other Bank, the Bank receiving such proportionately greater
payment shall purchase such participations in the Promissory Notes held by the
other Banks, and such other adjustments shall be made, as may be required, so
that all such payments of principal and interest with respect to the Promissory
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness under the Promissory Notes.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement or
the Promissory Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Banks (and,
if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for termination of any Commitment,
(iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Promissory Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement or (v) release the Parent Guarantor from
its obligations under the Parent Guarantee.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement and subject to subsection (e), (f) and (g) below, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not
57
<PAGE> 62
permitted by subsection 9.06(c) or 9.06(d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (in an amount
equivalent to an original Commitment of not less than $10,000,000) of all, of
its rights and obligations under this Agreement and the Promissory Notes, and
such Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit G
hereto executed by such Assignee and such transferor Bank, with (and subject to)
the subscribed consent of the Borrower and the Agent; provided that if an
Assignee is an affiliate of such transferor Bank, no such consent shall be
required; and provided further that such assignment may, but need not, include
rights of the transferor Bank in respect of outstanding Money Market Loans. Upon
execution and delivery of such instrument and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrower shall make appropriate arrangements so that, if
required, a new Promissory Note is issued to the Assignee. In connection with
any such assignment, the transferor Bank shall pay to the Agent an
administrative fee for processing such assignment in the amount of $2,500. If
the Assignee is not incorporated under the laws of the United States of America
or a state thereof, it shall deliver to the Borrower and the Agent certification
as to exemption from deduction or withholding of any United States federal
income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Promissory Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(f) Notwithstanding anything to the contrary contained in this Section
9.06 but subject to the terms and conditions set forth in this subsection (f),
any Bank may from time to time, elect to designate a Conduit to provide all or
any part of Loans required to be made by such Bank to the Borrower pursuant to
this Agreement (a "Conduit Designation"), provided the designation of a Conduit
by any Bank for purposes of this Section 9.06(f) shall be subject to the
approval of the Borrower. No additional Note shall be required with regard to a
Conduit Designation; provided,
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<PAGE> 63
however, to the extent any Conduit shall advance funds under a Conduit
Designation, the designating Bank shall be deemed to hold the Note in its
possession as an agent for such Conduit to the extent of the Loan funded by such
Conduit. Notwithstanding any such Conduit Designation, (x) the designating Bank
shall remain solely responsible to the other parties hereto for its obligations
under this Agreement and (y) the Borrower and the Agent may continue to deal
solely and directly with the designating Bank as administrative agent for such
designating Bank's Conduit, in connection with all of such Conduit's rights and
obligations under this Agreement, unless and until the Borrower and the Agent
are notified that the designating Bank has been replaced as administrative agent
for its Conduit; any payments for the benefit of any designating Bank and its
Conduit shall be paid to such designating Bank for itself and as administrative
agent for its Conduit, as applicable; provided neither the Borrower nor the
Agent shall be responsible for any designating Bank's application of any such
payments. In addition, any Conduit may (i) with notice to, but without the prior
written consent of the Borrower and the Agent, and without paying any processing
fee therefor, assign all or portions of its interest in any Loans to the Bank
that designated such Conduit or to any financial institutions consented to by
the Borrower and the Agent providing liquidity and/or credit facilities to or
for the account of such Conduit to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
guarantee, surety, credit or liquidity enhancement to such Conduit.
(g) Each party to this Agreement hereby agrees that, at any time a
Conduit Designation is in effect, it shall not institute against, or join any
other person in instituting against, any Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law, for one year and a day after the
latest maturing commercial paper note issued by such Conduit is paid. This
Section 9.06(g) shall survive the termination of this Agreement.
SECTION 9.07. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. THIS AGREEMENT
AND EACH PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH
59
<PAGE> 64
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 9.09. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.10. Waiver of Jury Trial. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
60
<PAGE> 65
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.
TYCO INTERNATIONAL LTD.
By: /s/ MARK SWARTZ
------------------------------------------------
Title: Vice President - Chief Financial Officer
By: /s/ BARBARA S. MILLER
------------------------------------------------
Title: Vice President - Treasurer
1 Tyco Park
Exeter, New Hampshire 03833
Facsimile number: 603-778-0108
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ ROBERT L. BARRETT
------------------------------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.
(NEW YORK BRANCH)
By: /s/ MASAYOSHI KOMAKI
------------------------------------------------
Title: Assistant Vice President
<PAGE> 66
BANK BRUSSELS LAMBERT, NEW YORK
BRANCH
By: /S/ LUC VERBEKEN
----------------------------------
Title: Senior Vice President
By: /S/ MALLIKA KAMBHAMPATI
----------------------------------
Title: Vice President and Manager
Credit Analysis
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By: /s/ MARK J. RAKOV
----------------------------------
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ ROBERT J. DILLOFF
----------------------------------
Title: Vice President
<PAGE> 67
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ ROBERT L. BARRETT
----------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Robert L. Barrett
Telex number: 177615
Facsimile number: 212-648-5018
<PAGE> 68
Commitment Schedule
<TABLE>
<S> <C>
Morgan Guaranty Trust Company of New York $305,000,000
The Dai-ichi Kangyo Bank, Ltd. (New York Branch) $100,000,000
Bank Brussels Lambert, New York Branch $ 35,000,000
The Hongkong and Shanghai Banking Corporation Limited $ 35,000,000
Bank of Tokyo-Mitsubishi Trust Company $ 25,000,000
Total Commitments:
$500,000,000
</TABLE>
<PAGE> 69
EXHIBIT A
PROMISSORY NOTE
New York, New York
, 19
For value received, TYCO INTERNATIONAL LTD., a Massachusetts corporation
(the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This promissory note is one of the Promissory Notes referred to in the
Bridge Credit Agreement dated as of June 27, 1997 among the Borrower, the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
Except as permitted by Section 9.06 of the Credit Agreement, this
Promissory Note may not be assigned by the Bank to any other Person.
<PAGE> 70
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TYCO INTERNATIONAL LTD.
By ________________________
Title:
By ________________________
Title:
<PAGE> 71
Promissory Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- ----------------------------------------------------------------------------
Amount Type Amount of Unpaid
of of Principal Principal Maturity Notation
Date Loan Loan Repaid Amount Date Made By
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<PAGE> 72
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Tyco International Ltd.
Re: Bridge Credit Agreement (the "Credit Agreement") dated as
of June 27, 1997 among the Borrower, the Banks listed on
the signature pages thereof and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
PRINCIPAL AMOUNT(1) INTEREST PERIOD(2)
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
TYCO INTERNATIONAL LTD.
By
----------------------------------------
Title:
By
----------------------------------------
Title:
- --------------
(1) Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2) Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE> 73
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Tyco International
Ltd. (the "Borrower")
Pursuant to Section 2.03 of the Bridge Credit Agreement dated as of June
27, 1997 among the Borrower, the Banks parties thereto and the undersigned, as
Agent (the "Credit Agreement"), we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
PRINCIPAL AMOUNT INTEREST PERIOD
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30
A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
-------------------------------
Authorized Officer
<PAGE> 74
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: Morgan Guaranty Trust Company of New York,
as Agent
Re: Money Market Quote to Tyco International Ltd. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest Money Market
AMOUNT** PERIOD*** [MARGIN****] [ABSOLUTE RATE*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed $____________.]**
----------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
<PAGE> 75
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Bridge Credit
Agreement dated as of June 27, 1997 (the "Credit Agreement") among the Borrower,
the Banks listed on the signature pages thereof and yourselves, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for which any offer(s)
are accepted, in whole or in part, in accordance with Section 2.03(f) of the
Credit Agreement.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:_______________________________
Authorized Officer
- ----------
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
<PAGE> 76
EXHIBIT E
Form of Opinion of General Counsel
of the Borrower
June 27, 1997
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, As Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the General Counsel of Tyco International Ltd., a Massachusetts
corporation (the "Borrower"), and am rendering this opinion in connection with
that certain Bridge Credit Agreement (the "Credit Agreement"), dated as of June
27, 1997, among the Borrower, the banks listed on the signature pages thereof
(the "Banks") and Morgan Guaranty Trust Company of New York, as Agent. This
opinion is being delivered to you pursuant to Section 3.01(c) of the Credit
Agreement. Each term defined in the Credit Agreement and used herein, but not
otherwise defined herein, has the meaning ascribed thereto in the Credit
Agreement.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreement and Promissory Notes and have examined originals or copies,
certified or otherwise identified to my satisfaction, of (i) the Restated
Articles of Organization and By-laws of the Borrower, each as in effect on the
date hereof and (ii) such other documents, records, certificates and instruments
as I have deemed relevant and necessary as a basis for the opinion hereinafter
expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to me as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements, representations and certificates of officers and other
representatives of the Borrower and certificates of public officials. In
addition, I have assumed that (i) the Credit Agreement has been validly
authorized, executed and delivered by all parties thereto (other than the
Borrower), (ii) each party to the Credit Agreement (other than the Borrower) has
been duly organized and is a corporation or other entity validly existing and in
good standing (to the extent applicable) under the laws of its respective
jurisdiction of organization, with the full corporate or other organizational
power to execute and deliver the Credit Agreement and to perform its respective
obligations thereunder, (iii) the Credit Agreement constitutes the legal, valid
and binding obligations of the respective parties thereto (other than the
Borrower) enforceable against such
<PAGE> 77
parties in accordance with their respective terms, (iv) the execution and
delivery of the Credit Agreement by each party thereto (other than the Borrower)
and the performance by such parties of their respective obligations thereunder
do not violate such parties' respective articles or certificate of incorporation
or by-laws, or other organizational documents, and (v) the execution, delivery
and performance by each party to the Credit Agreement (other than the Borrower)
and the performance by such parties of their respective obligations thereunder
do not violate any agreement, judgment, injunction, decree, order of any
governmental authority, other instrument, law or regulation applicable to such
party.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts, and
has all corporate powers and all material governmental licenses, authorizations,
consents and approvals (collectively, the "Consents") required to carry on its
business as now conducted, other than those powers and Consents, the failure of
which to be possessed or obtained could not, based upon the facts and
circumstances in existence on the date hereof, reasonably be expected to have a
Material Adverse Effect.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Promissory Notes (a) are within the Borrower's
corporate powers; (b) have been duly authorized by all necessary corporate
action on the part of the Borrower; (c) require no action by or in respect of,
or filing with, any governmental body, agency or official, in each case, on the
part of the Borrower; and (d) do not contravene, or constitute a default by the
Borrower under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Borrower or, (iii) any agreement
or instrument evidencing or governing Debt of the Borrower, or any other
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Promissory Notes constitute valid and binding obligations
of the Borrower.
4. There is no action, suit or proceeding pending against, or, to the
best of my knowledge, threatened against or affecting, the Borrower or any of
its Subsidiaries before any court or arbitrator or any governmental body, agency
or official, in which there is a reasonable possibility of an adverse decision
which could, based upon the facts and circumstances in existence on the date
hereof, reasonably be expected to have a Material Adverse Effect or which in any
manner draws into question the validity of the Credit Agreement or the
Promissory Notes.
5. Each of the Borrower's corporate Subsidiaries is a corporation
validly existing and in good standing under the laws of its jurisdiction of
incorporation, except where the failure
2
<PAGE> 78
to be so incorporated, existing or in good standing could not, based upon the
facts and circumstances existing on the date hereof, reasonably be expected to
have a Material Adverse Effect, and has all corporate powers and all Consents
required to carry on its business as now conducted other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence on the date hereof, reasonably be
expected to have a Material Adverse Effect.
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Credit Agreement and the Promissory
Notes may be subject to or limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or transfer or other similar laws
and court decisions, now or hereafter in effect, relating to or affecting the
rights of creditors generally.
(b) The enforceability of the Credit Agreement and the Promissory
Notes is or will be subject to the application of and may be limited by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law). Such principles of equity are of general
application, and in applying such principles a court, among other things, might
not allow a creditor to accelerate maturity of a debt under certain
circumstances including, without limitation, upon the occurrence of a default
deemed immaterial, or might decline to order the Borrower or any of the other
parties to the Credit Agreement to perform covenants. Such principles as applied
by a court might include a requirement that a creditor act with reasonableness
and in good faith. Thus, I express no opinion as to the validity or
enforceability of (i) provisions restricting access to legal or equitable
remedies, such as the specific performance of executory covenants, (ii)
provisions that purport to establish evidentiary standards, (iii) provisions
relating to waivers, severability, set-off, or delay or omission of enforcement
of rights or remedies, and (iv) provisions purporting to convey rights to
persons other than parties to the Credit Agreement.
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) I have not been requested to render, and with your permission I do
not express, any opinion as to the applicability to any provision of the Credit
Agreement or the Promissory Notes, of Section 548 of the Federal Bankruptcy
Code, Article 10 of the New York Debtor & Creditor Law, or any other fraudulent
conveyance, insolvency or transfer laws or any court decisions with respect to
any of the foregoing.
I call your attention to the fact that I am admitted to practice law only
in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of the State of New York, the Commonwealth of Massachusetts
and the Federal laws of the United States of America.
3
<PAGE> 79
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
This opinion is being delivered to you solely for your benefit in
connection with the Credit Agreement, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent.
Very truly yours,
4
<PAGE> 80
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Bridge Credit Agreement
(the "Credit Agreement") dated as of June 27, 1997, among Tyco International
Ltd., a Massachusetts corporation (the "Borrower"), the banks listed on the
signature pages thereof (the "Banks") and Morgan Guaranty Trust Company of New
York, as Agent (the "Agent"), and have acted as special counsel for the Agent
for the purpose of rendering this opinion pursuant to Section 3.01(d) of the
Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Credit
Agreement constitutes a valid and binding agreement of the Borrower and each
Promissory Note constitutes a valid and binding obligation of the Borrower, in
each case enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In giving the foregoing opinion, (i) we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect and (ii) insofar as the foregoing
opinion involves matters governed by the laws of Massachusetts, we have relied,
without independent
<PAGE> 81
investigation, upon the opinion of the General Counsel of the Borrower, a copy
of which has been delivered to you.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 82
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), TYCO INTERNATIONAL LTD. (the "Borrower") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Bridge Credit Agreement dated as of June 27, 1997 among the
Borrower, the Assignor and the other Banks party thereto, as Banks, and the
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the
<PAGE> 83
Assignee hereby accepts such assignment from the Assignor and assumes all of the
obligations of the Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of the corresponding
portion of the principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, [the Borrower and the Agent] and the payment of the
amounts specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.3 It is
understood that commitment and/or facility fees in respect of the Assigned
Amount accrued to the date hereof are for the account of the Assignor and such
fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agent is evidence of this consent. Pursuant to Section 9.06(c) the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of the Borrower, or the
validity and enforceability of the obligations of the Borrower in respect of the
Credit Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Borrower.
- --------
(3) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
2
<PAGE> 84
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
[ASSIGNOR]
By
--------------------------------
Title:
[ASSIGNEE]
By
--------------------------------
Title:
TYCO INTERNATIONAL LTD.
By
--------------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
--------------------------------
Title:
3
<PAGE> 85
EXHIBIT H
SUBSIDIARY GUARANTEE
Dated as of June 27, 1997
WHEREAS, Tyco International Ltd., a Massachusetts corporation (together
with its successors, the "Borrower") has entered into a Bridge Credit Agreement
(as the same may be amended from time to time, the "Credit Agreement") dated as
of June 27, 1997 among the Borrower, the banks listed on the signature pages
thereof, and Morgan Guaranty Trust Company of New York, as Agent, pursuant to
which the Borrower is entitled, subject to certain conditions, to borrow up to
$500,000,000;
WHEREAS, in conjunction with the transactions contemplated by the Credit
Agreement and in consideration of the financial and other support that the
Borrower has provided, and such financial and other support as the Borrower may
in the future provide, to the undersigned (together with its successors, the
"Guarantor") and in order to induce the Banks and the Agent to enter into the
Credit Agreement and to make Loans thereunder, the Guarantor is willing to
guarantee the obligations of the Borrower under the Credit Agreement and the
Promissory Notes;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:
ARTICLE
DEFINITIONS
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined. In addition the
following terms, as used herein, have the following meanings:
"Guaranteed Obligations" means (i) all obligations of the Borrower in
respect of principal of and interest on the Loans and the Promissory Notes, (ii)
all other amounts payable by the Borrower under the Credit Agreement or the
Promissory Notes and (iii) all renewals or extensions of the foregoing, in each
case whether now outstanding or hereafter arising. The Guaranteed Obligations
shall include, without limitation, any interest, costs, fees and expenses which
accrue on or with respect to any of the foregoing and are payable by the
Borrower pursuant to the Credit Agreement or the Promissory Notes, whether
before or after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of any one or more than
one of the Obligors, and any such interest, costs, fees and expenses that would
have accrued thereon or with respect thereto and would have been payable by the
Borrower pursuant to the Credit Agreement or the Promissory Notes but for the
commencement of such case, proceeding or other action.
<PAGE> 86
"Obligors" means the Borrower and each of the Guarantors (as defined in
the Credit Agreement), including the Guarantor, and "Obligor" means any one of
the foregoing.
ARTICLE
GUARANTEE
SECTION 1. The Guarantees. Subject to Section 3, the Guarantor hereby
unconditionally and irrevocably guarantees to the Banks and the Agent and to
each of them, the due and punctual payment of all Guaranteed Obligations as and
when the same shall become due and payable, whether at maturity, by declaration
or otherwise, according to the terms thereof. In case of failure by the Borrower
punctually to pay the indebtedness guaranteed hereby, the Guarantor, subject to
Section 3, hereby unconditionally agrees to cause such payment to be made
punctually as and when the same shall become due and payable, whether at
maturity or by declaration or otherwise, and as if such payment were made by the
Borrower.
SECTION 2. Guarantee unconditional. The obligations of the Guarantor
under this Article 2 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of any other Obligor under any Financing Document,
by operation of law or otherwise;
(b) any modification or amendment of or supplement to any Financing
Document (other than as specified in an amendment or waiver of this Subsidiary
Guarantee effected in accordance with Section 3);
(c) any modification, amendment, waiver, release, non-perfection or
invalidity of any direct or indirect security, or of any guaranty or other
liability of any third party, for any obligation of any other Obligor under any
Financing Document;
(d) any change in the corporate existence, structure or ownership of
any other Obligor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any other Obligor or its assets or any resulting
release or discharge of any obligation of any other Obligor contained in any
Financing Document;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against any other Obligor, the Agent, any Bank or
any other Person, whether or not arising in connection with the Financing
Documents; provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
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<PAGE> 87
(f) any invalidity or unenforceability relating to or against any
other Obligor for any reason of any Financing Document, or any provision of
applicable law or regulation purporting to prohibit the payment by any other
Obligor of the principal of or interest on any Promissory Note or any other
amount payable by any other Obligor under any Financing Document; or
(g) any other act or omission to act or delay of any kind by any other
Obligor, the Agent, any Bank or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the obligations of the Guarantor under this
Article 2.
SECTION 3. Limit of Liability. The Guarantor shall be liable under this
Subsidiary Guarantee only for amounts aggregating up to the largest amount that
would not render its obligations hereunder subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provisions of any
applicable state law.
SECTION 4. Discharge; Reinstatement in Certain Circumstances. Subject to
Section 6, the Guarantor's obligations under this Article 2 shall remain in full
force and effect until the Commitments are terminated and the principal of and
interest on the Promissory Notes and all other amounts payable by the Borrower
under the Financing Documents shall have been paid in full. If at any time any
payment of the principal of or interest on any Promissory Note or any other
amount payable by the Borrower under any Financing Document is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any other Obligor or otherwise, the Guarantor's obligations
under this Article 2 with respect to such payment shall be reinstated at such
time as though such payment had become due but had not been made at such time.
SECTION 5. Waiver. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
other Obligor or any other Person.
SECTION 6. Subrogation and Contribution. (a) The Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder (i) to be subrogated to the rights
of the payee against the Borrower with respect to such payment or otherwise to
be reimbursed, indemnified or exonerated by any other Obligor in respect thereof
or (ii) to receive any payment, in the nature of contribution or for any other
reason, from any other Obligor with respect to such payment
(b) Notwithstanding the provision of subsection (a) of this Section 6,
the Guarantor shall have and be entitled to (i) all rights of subrogation or
contribution otherwise provided by law in respect of any payment it may make or
be obligated to make under this Subsidiary Guarantee and (ii) all claims (as
defined under Chapter 11 of Title 11 of the United States Code, as amended, or
any successor statute (the "Bankruptcy Code")) it would have against the
Borrower or any other Guarantor (each an "Other Party") in the absence of
subsection (a) of this Section 6 and to assert
3
<PAGE> 88
and enforce the same, in each case on and after, but at no time prior to, the
date (the "Subrogation Trigger Date") which is one year and five days after the
Termination Date if, but only if, (x) no Default or Event of Default of the type
described in Section 6.01(i) or 6.01(j) of the Credit Agreement with respect to
the relevant Other Party has existed at any time on and after the date of this
Subsidiary Guarantee to and including the Subrogation Trigger Date and (y) the
existence of such Guarantor's rights under this clause (b) would not make such
Guarantor a creditor (as defined in the Bankruptcy Code) of such Other Party in
any insolvency, bankruptcy, reorganization or similar proceeding commenced on or
prior to the Subrogation Trigger Date.
SECTION 7. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Borrower under the Financing Documents is stayed
upon the insolvency, bankruptcy or reorganization of the Borrower, all such
amounts otherwise subject to acceleration under the terms of the Financing
Documents shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Agent made at the request of the Required Banks.
ARTICLE
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Agent and the Banks that:
SECTION 1. Corporate Existence and Power. The Guarantor is a corporation
duly incorporated, validly existing and in good standing under the laws of
___________.
SECTION 2. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Guarantor of this Subsidiary
Guarantee:
(a) are within the Guarantor's corporate powers;
(b) have been duly authorized by all necessary corporate action on the
part of the Guarantor;
(c) require no action by or in respect of, or filing with, any
governmental body, agency or official, in each case, on the part of the
Guarantor; and
(d) do not contravene, or constitute a default by the Guarantor under,
any provision of (i) applicable law or regulation, (ii) the certificate of
incorporation or by-laws of the Guarantor, or (iii) any agreement or instrument
evidencing or governing Debt of the Guarantor or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Guarantor.
SECTION 3. Binding Effect. This Subsidiary Guarantee constitutes a valid
and binding obligation of the Guarantor.
4
<PAGE> 89
SECTION 4. Not an Investment Company. The Guarantor is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE
MISCELLANEOUS
SECTION 1. Notices. All notices, requests and other communications to be
made to or by the Guarantor hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given: (a) if to the Guarantor, to it at its address or facsimile
number set forth on the signature pages hereof or such other address or
facsimile number as the Guarantor may hereafter specify for the purpose by
notice to the Agent and (b) if to any party to the Credit Agreement, to it at
its address or telex or facsimile number for notices specified in or pursuant to
the Credit Agreement. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section 1 and the appropriate answerback is received,
(ii) if given by facsimile, when such facsimile is transmitted to the facsimile
transmission number specified in this Section 1 and electronic, telephonic or
other appropriate confirmation of receipt thereof is received by the sender,
(iii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iv) if given
by any other means, when delivered at the address specified in this Section 1.
SECTION 2. No Waiver. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under this Subsidiary Guarantee or any
other Financing Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein and therein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 3. Amendments and Waivers. Any provision of this Subsidiary
Guarantee may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Guarantor and the Agent with the prior written
consent of the Required Banks under the Credit Agreement.
SECTION 4. Successors and Assigns. This Subsidiary Guarantee is for the
benefit of the Banks and the Agent and their respective successors and assigns
and in the event of an assignment of the Loans, the Promissory Notes or other
amounts payable under the Financing Documents, the rights hereunder, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness. All the provisions of this Subsidiary Guarantee shall be
binding upon the Guarantor and its successors and assigns.
SECTION 5. Taxes. All payments by the Guarantor hereunder shall be made
free and clear of Taxes in accordance with Section 8.04 of the Credit Agreement.
If the Guarantor is
5
<PAGE> 90
organized under the laws of, or has its principal place of
business in, a jurisdiction outside the United States, this Section 5 shall be
modified in a manner satisfactory to the Agent and the Guarantor to indemnify
for any foreign taxes which may be applicable.
SECTION 6. Effectiveness; Termination. (a) This Agreement shall become
effective when the Agent shall have received a counterpart hereof signed by the
Guarantor.
(b) The Guarantor may at any time elect to terminate this Subsidiary
Guarantee and its obligations hereunder, provided that, after giving effect
thereto, no Default shall have occurred and be continuing. If the Guarantor so
elects to terminate this Subsidiary Guarantee, it shall give the Agent notice to
such effect, which notice shall be accompanied by a certificate of a Responsible
Officer to the effect that, after giving effect to such termination, no Default
shall have occurred and be continuing. The Agent may if it so elects
conclusively rely on such certificate. Upon receipt of such notice and such
certificate, unless the Agent determines that a Default shall have occurred and
be continuing, the Agent shall promptly deliver to the Guarantor the counterpart
of this Subsidiary Guarantee delivered to the Agent pursuant to Section 6(a),
and upon such delivery this Subsidiary Guarantee shall terminate and the
Guarantor shall have no further obligations hereunder.
SECTION 7. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS SUBSIDIARY
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 8. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY WAIVES
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6
<PAGE> 91
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed by its authorized officer as of the date first above written.
[GUARANTOR]
By
--------------------------------------
Title:
[Address]
Facsimile Number:
7
<PAGE> 92
EXHIBIT I
[Form of Opinion of Counsel for the Subsidiary Guarantor]
June 27, 1997
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the [Associate] General Counsel of Tyco International Ltd., a
Massachusetts corporation (the "Borrower"), and have acted as counsel for [name
of Subsidiary Guarantor] (the "Guarantor"), and am rendering this opinion in
connection with that certain Subsidiary Guarantee (the "Subsidiary Guarantee"),
dated as of June 27, 1997, entered into by the Guarantor, pursuant to that
certain Bridge Credit Agreement (the "Credit Agreement"), dated as of June 27,
1997, among the Borrower, the banks listed on the signature pages thereof (the
"Banks") and Morgan Guaranty Trust Company of New York, as Agent. Each term
defined in the Subsidiary Guarantee and used herein, but not otherwise defined
herein, has the meaning ascribed thereto in the Subsidiary Guarantee. This
opinion is being delivered to you pursuant to Section 1.01 of the Credit
Agreement.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreement, the Promissory Notes and the Subsidiary Guarantee and have
examined originals or copies, certified or otherwise identified to my
satisfaction, of (i) the [Certificate of Incorporation] and By-laws of the
Guarantor, each as in effect on the date hereof and (ii) such other documents,
records, certificates and instruments as I have deemed relevant and necessary as
a basis for the opinion hereinafter expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to be as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements, representations and certificates of officers and other
representatives of the Guarantor and certificates of public officials.
<PAGE> 93
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
(1) The Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of _________________.
(2) The execution, delivery and performance by the Guarantor of the
Subsidiary Guarantee (a) are within the Guarantor's corporate powers; (b) have
been duly authorized by all necessary corporate action on the part of the
Guarantor; (c) require no action by or in respect of, or filing on the part of
the Guarantor with, any governmental body, agency or official, in each case, on
the part of the Guarantor; and (d) do not contravene, or constitute a default by
the Guarantor under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Guarantor or, (iii) any agreement
or instrument evidencing or governing Debt of the Guarantor, or any other
material agreement, judgment, injunction, order, decree or other instrument
binding upon the Guarantor.
(3) The Subsidiary Guarantee constitutes a valid and binding
obligation of the Guarantor.
(4) The Guarantor is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Subsidiary Guarantee may be subject to
or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer or other similar laws and court decisions, now
or hereafter in effect, relating to or affecting the rights of creditors
generally.
(b) The enforceability of the Subsidiary Guarantee is or will be
subject to the application of and may be limited by general principles of equity
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law). Such principles of equity are of general application, and in
applying such principles a court, among other things, might not allow a creditor
to accelerate maturity of a debt under certain circumstances including, without
limitation, upon the occurrence of a default deemed immaterial, or might decline
to order the Guarantor to perform covenants. Such principles as applied by a
court might include a requirement that a creditor act with reasonableness and in
good faith. Thus, I express no opinion as to the validity or enforceability of
(i) provisions restricting access to legal or equitable remedies, such as the
specific performance of executory covenants, (ii) provisions that purport to
establish evidentiary standards, (iii) provisions relating to waivers,
severability, set-off, or delay or omission of enforcement of rights or
remedies, and (iv) provisions purporting to convey rights to persons other than
parties to the Subsidiary Guarantee.
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<PAGE> 94
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) I have not been requested to render, and with your permission I do
not express, any opinion as to the applicability to any provisions of the
Subsidiary Guarantee, of Section 548 of the Federal Bankruptcy Code, Article 10
of the New York Debtor & Creditor Law, or any other fraudulent conveyance,
insolvency or transfer laws or any court decisions with respect to any of the
foregoing.
I call your attention to the fact that I am admitted to practice law only
in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of [the jurisdiction of incorporation of the Guarantor], the
State of New York, the Commonwealth of Massachusetts and the Federal laws of the
United States of America.
The opinion expressed herein is based upon the laws in effect on the date
hereof, and I assume no obligation to revise or supplement this opinion should
any such law be changed by legislative action, judicial decision, or otherwise.
This opinion is being delivered to you solely for your benefit in
connection with the Subsidiary Guarantee, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent.
Very truly yours,
3
<PAGE> 95
EXHIBIT K
Form of Opinion of Counsel
for the Parent Guarantor
June 27, 1997
To the Banks and the Agents
named on Schedule 1 to this Opinion
c/o Morgan Guaranty Trust Company of New York (as Agent)
60 Wall Street
New York, NY 10260
Dear Sirs,
Re: TYCO INTERNATIONAL LTD. (THE "COMPANY")
---------------------------------------
We have been instructed by the Company to address this opinion to you in
connection with the Parent Guarantee, dated as of [ ], 1997 (the "Guarantee"),
entered into by the Company in connection with all principal of and interest on
amounts loaned to the Borrower under the Financing Documents.
Unless otherwise defined therein, terms defined in the Guarantee have the
same meanings when used in this opinion.
For the purpose of this opinion, we have been supplied with and have
reviewed, and relied upon the following documents:
(A) a copy of the executed US $500,000,000 Credit Agreement
dated as of June 27, 1997 among the Borrower, the Banks listed on the
signature pages thereof and the Agent;
(B) a copy of the executed US $750,000,000 Credit Agreement
dated as of June 27, 1997 among the Borrower, the Banks listed on the
signature pages thereof and the Agent;
(C) a copy of the executed US $500,000,000 Five Year Credit
Agreement dated as of June 27, 1997 among the Borrower, the Banks on the
signature pages thereof and the Agent;
(D) a copy of the executed Subsidiary Guarantees;
<PAGE> 96
(E) a copy of the executed Promissory Notes;
The Documents referred to in (a) and (e) inclusive are together referred to as
the "Financing Documents".
(F) a copy of the executed Guarantee;
(G) certified copies of the Certificate of Incorporation, the
Certificate evidencing the change of name of the Company from ADT Limited
to TYCO International Ltd. and the Memorandum of Association and the
Bye-laws of the Company;
(H) a certified copy of the minutes of a meeting of the Board
of Directors of the Company held on [ ], 1997 (the "Resolutions");
(I) a certified copy of the Share Certificate evidencing
ownership by the company of TYCO International Ltd, (Mass); and
We also relied upon our searches of documents of public record maintained
by the Registrar of Companies in Bermuda and of the Causes Book of the Supreme
Court of Bermuda which were made in 1997 (the "Searches").
In giving this opinion, we have assumed:
(1) the capacity, power and authority of each of the
parties other than the company to execute, deliver and perform its
obligations under and the due execution and delivery by all
parties other than the Company of the Facility Documents and the
Guarantee;
(2) that each party, other than the Company, has duly
authorised, executed, delivered and taken such other action as may
be required by such party to enter into and perform the Financing
Documents and the Guarantee and that all such actions were duly
authorised when taken;
(3) that no authorisation or approval by, or filing
with, any governmental or regulatory authority, other than such
authorisations, approvals and filings as each party other than the
Company has obtained or made, is necessary for such party to duly
executed and deliver, or to duly perform all of its obligations
under the Financing Documents and the Guarantee, or for the
validity and enforceability of the Financing Documents and the
Guarantee;
2
<PAGE> 97
(4) that each of the Financing Documents and the
Guarantee constitutes the legal, valid and binding of each party
to it, other than the Company, and is enforceable against each
such party in accordance with its terms;
(5) that the Financing Documents are legal, valid and
binding under the laws by which they are expressed to be governed
and that the Guarantee is legal, valid and binding under the laws
of the State of New York by which it is expressed to be governed;
(6) that the information disclosed by the Searches has
not been materially altered and the Searches did not fail to
disclose any material information which has been delivered for
filing or registration, but was not disclosed or did not appear on
the public file at the time of the Searches;
(7) that there is no provision of the law of any
jurisdiction, other than Bermuda, which would have any implication
in relation to the opinions herein expressed;
(8) the genuineness of all signatures on the documents
which we have examined;
(9) the conformity to original documents of all
documents produced to us as copies and the authenticity of all
original documents which, or copies of which, have been submitted
to us;
(10) the accuracy and completeness of all factual
representations made in the Financing Documents, the Guarantee,
the Resolutions and any certificates examined by us; and
(11) that the Resolutions are in full force and effect
and have not been rescinded.
This opinion is limited to Bermuda Law as applied by the Bermuda courts.
We have made no investigation of the laws of any jurisdiction other than Bermuda
and neither express nor imply any opinion as to any other law, in particular the
laws of the State of New York.
Based upon the foregoing, subject to qualifications set out below, to
matters not disclosed to us and matters of fact which would affect the
conclusion set out below and having regard to such legal considerations as we
deem relevant, we are of the opinion that insofar as the present laws of Bermuda
are concerned:
(i). The Company is a company duly incorporated, duly organised and
validly existing under the laws of Bermuda. The Memorandum of Association of the
Company has been duly
3
<PAGE> 98
filed in the office of the Registrar of Companies of Bermuda and no other
filing, recording, publishing or other act is necessary or appropriate in
Bermuda in connection with the transaction as described in the Guarantee except
those which have been duly made or performed.
(ii). The company has the corporate power and authority to enter into
and perform the Guarantee and has taken all corporate action required on its
part to authorise the execution, delivery and performance of the guarantee.
(iii). The execution, delivery and performance of the Guarantee by the
Company (i) does not and will not violate the Certificate of Incorporation,
Bye-laws or Memorandum of Association of the Company; (ii) conflict with any law
or governmental rule or regulation of Bermuda (including the Companies Act of
1981 of Bermuda); and (iii) as far as can be ascertained from the Searches
(which are not conclusive) does not and will not violate or conflict with any
judgement, order, decree, injunction or award of any authority, agency or court
in Bermuda to which the Company is subject.
(iv). The obligations of the company as set out in the guarantee
constitute, legal, valid and binding obligations of the Company.
(v). The Company having been designated as non-resident for the
purposes of the Exchange Control Act 1972, it is not necessary for the consent
of any authority or agency in Bermuda to be obtained to enable the Company to
enter into and perform its obligations set out in the Guarantee.
(vi). The obligations of the Company under the Guarantee will rank at
least par passu in priority of payment with all other unsecured unsubordinated
indebtedness of the Company other than indebtedness which is preferred by virtue
of any provision of Bermuda law of general application.
(vii). As far as can be ascertained from the Searches, no litigation,
arbitration on administrative proceedings of or before any court, arbitrator or
governmental instrumental instrumentality of or in Bermuda is, to the best of
our knowledge, pending with respect to the Company in connection with the
Guarantee or the transactions contemplated thereby.
(viii). The Company will be permitted to make all payments under the
Guarantee free of any deduction or withholding therefrom in Bermuda and such
payments will not be subject to any tax imposed by the government of Bermuda or
any taxing authority thereof or therein.
4
<PAGE> 99
(ix). The entry into, performance and enforcement of the Guarantee will
not give rise to any registration fee or to any stamp, excise or other similar
tax imposed by the government of Bermuda or any taxing authority thereof or
therein.
(x). Subject to paragraph (12) and reservation D below, it is not
necessary or advisable under the laws of Bermuda in order to ensure the
validity, effectiveness or enforceability of the Guarantee that the Guarantee be
filed, registered or recorded in any public office or elsewhere in Bermuda.
(xi). The choice of the laws of the State of New York to govern the
Guarantee is a proper, valid and binding choice of law and will be recognised
and applied by the courts of Bermuda assuming that such choice of law is a valid
and binding choice of law under the laws of the State of New York.
(xii). A final and conclusive judgement obtained in the Courts of the
State of New York or Federal Courts of the United States of America against the
Company based upon the Guarantee under which a sum of money is payable (other
than a sum of money payable in respect of taxes or other charges of a like
nature or in respect of a fine or other penalty or multiple damages) could be
enforced by an action in the Supreme Court of Bermuda, without reexamination of
the merits, under the Common Law Doctrine of Obligation. A final opinion as to
the availability of this remedy should be sought when the facts surrounding the
foreign judgement are known but, on general principles, we would expect such an
application to be successful provided that such judgment:
(A) is final and conclusive;
(B) was not obtained by fraud;
(C) was not and its enforcement would not be contrary to public
policy of Bermuda;
(D) was obtained in circumstances where the proceedings were
not contrary to the rules of natural justice; and
(E) the correct procedures under the laws of Bermuda are duly
complied with.
Neither the Company nor any of its property or assets (or any portion
thereof) enjoys, under the laws of Bermuda, immunity from suit, execution,
attachment or other legal process in any proceedings in Bermuda in connection
with the Guarantee.
Our reservations are as follows:
(a) We express no opinion as to whether specific performance or
injunctive relief, being equitable remedies, would necessarily be available in
respect of any obligations of the Company as set out in the Guarantee.
5
<PAGE> 100
(b) We express no opinion as to the validity or the binding effect of
any obligations of the Borrower in the Financing Documents which provide for the
payment by the Borrower of a higher rate of interest on overdue amounts than on
amounts which are current. A Bermuda court, even if it were applying the laws of
the State of New York might not give effect to such provision if it could be
established that the amount expressed as being payable was such that the
provision was in the nature of a penalty; that is to say a requirement for a
stipulated sum to be paid irrespective of, or necessarily greater than, the loss
likely to be sustained.
(c) The obligations of the Company under the Guarantee will be subject
to any laws from time to time in effect relating to bankruptcy or liquidation or
any other laws or other legal procedures affecting generally the enforcement of
creditors' rights and may also be the subject of the statutory limitation of the
time within which such proceedings may be brought.
(d) To the extent that the Financing Documents, the Guarantee or the
transactions contemplated thereunder, create or give rise to the creation of any
charge over any assets of the Company, such charge will be registerable under
Part V of The Companies Act 1981 of Bermuda. The fee payable for registration of
a charge is $425.00. Registration is not compulsory and there is no time limit
within which it must be effected. However, as a matter of Bermuda law, any
charge registered shall have priority in Bermuda based on the date that it is
registered and not on the date of its creation and shall have such priority over
any unregistered charge. Accordingly, it is advisable to register any such
charge.
(e) Any provision in the Financing Documents or the Guarantee that
certain calculations and/or certificates will be conclusive and binding will not
be effective if such calculations are fraudulent or erroneous on their face and
will not necessarily prevent juridical enquiries into the merits of any claim by
an aggrieved party.
(f) A Bermuda court may refuse to give effect to any provisions of the
Financing Documents or Guarantee in respect of costs of unsuccessful litigation
brought before the court or where that court has itself made an order for costs.
(g) We express no opinion as to any law other than Bermuda law and
none of the opinions expressed herein relates to compliance with or matters
governed by the laws of any jurisdiction except Bermuda. Where an obligation is
to be performed in a jurisdiction other than Bermuda, the Courts of Bermuda may
refuse to enforce it to the extent that such performance would be illegal or
contrary to public policy under the laws of such other jurisdiction.
[(h) The Searches showed a cause of action in which the Company is
named as defendant. The action was commenced in 1991 under action number 01299.
The plaintiff is Laidlaw Investments (Barbados) Ltd. We are unable to verify
whether this litigation is proceeding, or has been discontinued, and whether if
it proceeded and judgement was rendered against the Company, whether this
judgement would have any material effect on the Company.]
6
<PAGE> 101
This opinion is issued on the basis that it will be governed by and
construed in accordance with the laws of Bermuda and that any legal proceedings
with respect thereto will be brought in the courts of Bermuda. It is issued
solely for your benefit for the purpose of the transactions described in the
Guarantee and it is not to be relied upon by any other person (other than
permitted assigns and transferees under the Financing Documents), or for any
other purpose, without our prior written consent.
Yours faithfully,
7
<PAGE> 1
EXHIBIT 10.4
EXECUTION COPY
PARENT GUARANTEE AGREEMENT
dated as of
July 2, 1997
between
Tyco International Ltd.
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
TABLE OF CONTENTS
----------------------
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Accounting Terms and Determinations...........................7
ARTICLE 2
GUARANTEE
SECTION 2.01. The Guarantee.................................................7
SECTION 2.02. Guarantee Unconditional.......................................7
SECTION 2.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances.........................................8
SECTION 2.04. Waiver by the Guarantor.......................................8
SECTION 2.05. Subrogation...................................................9
SECTION 2.06. Stay of Acceleration..........................................9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
SECTION 3.01. Corporate Existence and Power.................................9
SECTION 3.02. Corporate and Governmental Authorization; No Contravention....9
SECTION 3.03. Binding Effect................................................9
SECTION 3.04. Financial Information.........................................9
SECTION 3.05. Litigation...................................................10
SECTION 3.06. Environmental Matters........................................10
SECTION 3.07. Taxes........................................................11
SECTION 3.08. Subsidiaries.................................................11
SECTION 3.09. Not an Investment Company....................................11
SECTION 3.10. Full Disclosure..............................................11
SECTION 3.11. Obligations to be Pari Passu.................................11
<PAGE> 3
PAGE
ARTICLE 4
COVENANTS
SECTION 4.01. Information...................................................12
SECTION 4.02. Payment of Obligations........................................13
SECTION 4.03. Maintenance of Property; Insurance............................13
SECTION 4.04. Conduct of Business and Maintenance of Existence..............14
SECTION 4.05. Compliance with Laws..........................................14
SECTION 4.06. Inspection of Property, Books and Records; Confidentiality....14
SECTION 4.07. Debt..........................................................16
SECTION 4.08. Negative Pledge...............................................16
SECTION 4.09. Consolidations, Mergers and Sales of Assets...................18
SECTION 4.10. Transactions with Affiliates..................................18
ARTICLE 5
DEFAULTS
SECTION 5.01. Guarantor Events of Defaults..................................19
SECTION 5.02. Notice of Default.............................................22
ARTICLE 6
TAXES
SECTION 6.01. Withholding Taxes.............................................22
SECTION 6.02. Certain Other Taxes...........................................22
SECTION 6.03. Reimbursement of Taxes Paid by a Bank.........................22
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Notices.......................................................23
SECTION 7.02. No Waivers....................................................23
SECTION 7.03. Expenses; Indemnification.....................................23
SECTION 7.04. Judicial Proceedings..........................................24
SECTION 7.05. Judgment Currency.............................................25
SECTION 7.06. Amendments and Waivers........................................25
SECTION 7.07. Successors and Assigns........................................26
SECTION 7.08. GOVERNING LAW.................................................26
SECTION 7.09. Counterparts..................................................26
SECTION 7.10. No Seal.......................................................26
ii
<PAGE> 4
PAGE
SECTION 7.11. WAIVER OF JURY TRIAL.........................................26
iii
<PAGE> 5
PARENT GUARANTEE AGREEMENT
AGREEMENT dated as of July 2, 1997 between TYCO INTERNATIONAL LTD. and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Guarantor hereby agrees with the Agent for the
benefit of the Banks as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"ADT" means ADT Limited, a company organized under the laws of Bermuda.
"ADT'S FORM S-4" means ADT's Form S-4 as filed with the Securities and
Exchange Commission on June 3, 1997, pursuant to the Securities Exchange Act of
1934.
"ADT'S 1996 FORM 10-K" means ADT's annual report on Form 10-K for 1996, as
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
"AFFILIATE" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Guarantor (a "Controlling Person") or (ii)
any Person (other than the Guarantor or a Subsidiary) which is controlled by or
is under common control with a Controlling Person. As used herein, the term
"control" means 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. The fact that an
Affiliate of a Person is a member of a law firm that renders services to such
Person or its Affiliates does not mean that the law firm is an Affiliate of such
Person.
"AGENT" means Morgan Guaranty Trust Company of New York in its capacity as
agent for the Banks under the Financing Documents, and its successors in such
capacity.
"BANK" means each Person from time to time a "Bank" party to any of the
Credit Agreements.
<PAGE> 6
"BANK DOMESTIC TAXES" means, with respect to any Bank, any taxes, levies,
imposts, duties, charges or withholding of any nature (and any interest,
penalties, or similar liabilities with respect thereto) which are not Bank
Foreign Taxes with respect to such Bank.
"BANK FOREIGN TAXES" means, with respect to any Bank, any taxes, levies,
imposts, duties, charges or withholdings of any nature (and any interest,
penalties or similar liabilities with respect thereto) now or hereafter imposed
by any jurisdiction or taxing authority (including any possession or territory
thereof) other than the jurisdiction of which such Bank is a citizen or a
resident or under the laws of which such Bank is organized or any political
subdivision thereof or taxing authority thereof or therein.
"BERMUDA COMPANIES LAW" means every Bermuda statute from time to time in
force concerning companies insofar as the same applies to the Guarantor.
"BORROWER" means Tyco International Ltd., a Massachusetts corporation, its
successors and any Person who assumes the rights and obligations of Tyco
International, Ltd. under any of the Credit Agreements.
"CONSENTS" has the meaning set forth in Section 3.01.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the Guarantor
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
time.
"CONSOLIDATED DEBT" means, at any date, the aggregate amount of Debt of the
Guarantor and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date; provided that (i) if a Permitted Receivables Transaction is
outstanding at such date and is accounted for as a sale of accounts receivable
under generally accepted accounting principles, Consolidated Debt determined as
aforesaid shall be adjusted to include the additional Debt, determined on a
consolidated basis as of such date, which would have been outstanding at such
date had such Permitted Receivables Transaction been accounted for as a
borrowing at such date and (ii) Consolidated Debt shall in any event include all
Debt of any Person other than the Guarantor or a Consolidated Subsidiary which
is Guaranteed by the Guarantor or a Consolidated Subsidiary, except that
Consolidated Debt shall not include Debt of a joint venture, partnership or
similar entity which is Guaranteed by the Guarantor or a Consolidated Subsidiary
by virtue of the joint venture, partnership or similar arrangement with respect
to such entity or by operation of applicable law (and not otherwise) so long as
the aggregate outstanding principal amount of such excluded Debt at any date
does not exceed $50,000,000.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated stockholders'
equity of the Guarantor and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date and adjusted so as to exclude the effect of
the currency translation adjustment as of such date.
2
<PAGE> 7
"CONSOLIDATED SUBSIDIARY" means, at any date, with respect to any Person,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date; unless otherwise specified, Consolidated
Subsidiary means a Consolidated Subsidiary of the Guarantor.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, (i) Consolidated Net
Worth as of such date minus (ii) Intangible Assets as of such date.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any date, the sum of
Consolidated Debt and Consolidated Net Worth, each determined as of such date.
"CREDIT AGREEMENTS" means (i) the Bridge Credit Agreement dated as of June
27, 1997 among the Borrower, the Banks listed on the signature pages thereof and
the Agent (ii) the 364-Day Credit Agreement dated as of June 27, 1997 among the
Borrower, the Banks listed on the signature pages thereof and the Agent and
(iii) the Five-Year Credit Agreement dated as of June 27, 1997 among the
Borrower, the Banks listed on the signature pages thereof and the Agent, in each
case as amended from time to time.
"DEBT" of any Person means, at any date, without duplication, (i) the
principal amount of all obligations of such Person for borrowed money, (ii) the
principal amount of all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (it being understood that,
subject to the proviso to this definition of "Debt," performance bonds,
performance guaranties, letters of credit, bank guaranties and similar
instruments shall not constitute Debt of such Person to the extent that the
outstanding reimbursement obligations of such Person in respect thereof are
collateralized by cash or cash equivalents, which cash or cash equivalents would
not be reflected as assets on a balance sheet of such Person prepared in
accordance with generally accepted accounting principles), (iii) all obligations
of such Person to pay the deferred purchase price of property or services
recorded on the books of such Person, except for (a) trade and similar accounts
payable and accrued expenses arising in the ordinary course of business, and (b)
employee compensation and pension obligations, and other obligations arising
from employee benefit programs and agreements or other similar employment
arrangements, (iv) all obligations of such Person as lessee which are
capitalized on the books of such Person in accordance with generally accepted
accounting principles, (v) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person, and
(vi) all Debt of others Guaranteed by such Person; provided, however, that Debt
shall not include:
(A) contingent reimbursement obligations in respect of performance
bonds, performance guaranties, bank guaranties or letters of
credit issued in lieu of performance bonds or performance
guaranties or similar instruments, in each case, incurred by such
Person in the ordinary course of business;
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(B) contingent reimbursement obligations in respect of trade letters
of credit, or similar instruments, in each case, incurred by such
Person in the ordinary course of business; or
(C) contingent reimbursement obligations in respect of standby
letters of credit or similar instruments securing self-insurance
obligations of such Person;
in each case, so long as the underlying obligation supported thereby does not
itself constitute Debt.
"ENVIRONMENTAL LAWS" means any and all statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or releases of
pollutants, contaminants, hazardous substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other remediation thereof.
"FINANCING DOCUMENTS" means this Agreement, the Credit Agreements, the
Subsidiary Guarantees (as defined in any of the Credit Agreements) and the
Promissory Notes (as defined in any of the Credit Agreements).
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the holder of such Debt of the payment
thereof or to protect such holder against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"GUARANTOR" means ADT (to be renamed Tyco International Ltd. upon
consummation of the Merger), and its successors.
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"GUARANTOR DEFAULT" means any condition or event which constitutes a
Guarantor Event of Default or which with the giving of notice or lapse of time
or both would, unless cured or waived, become a Guarantor Event of Default.
"GUARANTOR EVENT OF DEFAULT" has the meaning set forth in Section 4.01.
"INDEMNITEE" has the meaning set forth in Section 7.03(b).
"INTANGIBLE ASSETS" means, at any date, the amount (if any) which would be
stated under the heading "Costs in Excess of Net Assets of Acquired Companies"
or under any other heading relating to intangible assets separately listed, in
each case, on the face of a balance sheet of the Guarantor and its Consolidated
Subsidiaries prepared on a consolidated basis as of such date.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Guarantor or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating lease)
relating to such asset.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, consolidated financial position or consolidated results of operations
of the Guarantor and its Consolidated Subsidiaries, considered as a whole, or
(ii) the ability of the Guarantor to perform its obligations under this
Agreement.
"MATERIAL DEBT" means Debt (other than (i) any Guarantee by the Guarantor
of Debt of a Subsidiary, (ii) any Guarantee by a Subsidiary of Debt of the
Guarantor or another Subsidiary, (iii) any Debt of the Guarantor owed to a
Wholly-Owned Consolidated Subsidiary or (iv) any Debt of a Subsidiary owed to
the Guarantor or a Wholly-Owned Consolidated Subsidiary) of the Guarantor and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate outstanding principal amount exceeding
$50,000,000.
"MERGER" means the merger of a Subsidiary of ADT with and into the Borrower
pursuant to the Plan of Merger dated March 17, 1997.
"PERMITTED RECEIVABLES TRANSACTION" means any sale or sales of, refinancing
of and/or financing secured by, any accounts receivable of the Guarantor and/or
any of its Subsidiaries (the "RECEIVABLES") pursuant to which the Guarantor and
its Subsidiaries realize aggregate net proceeds of not more than $500,000,000 at
any one time outstanding, including, without limitation, any revolving
purchase(s) of Receivables where the maximum aggregate uncollected purchase
price (exclusive of any deferred purchase price) for such Receivables at any
time outstanding does not exceed $500,000,000.
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"PERSON" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PROPERTY" means any interest of any kind in any property or assets,
whether real, mixed or personal and whether tangible or intangible.
"PROSPECTS" means, at any time, results of future operations which are
reasonably foreseeable based upon the facts and circumstances in existence at
such time.
"RESPONSIBLE OFFICER" means any of the following: the Chairman, President,
Vice President and Chief Financial Officer, Treasurer and Secretary of the
Guarantor.
"SIGNIFICANT SUBSIDIARY" means, at any date, each Consolidated Subsidiary
which, including its consolidated subsidiaries, meets any of the following
conditions:
(i) the investments in and advances to such Consolidated
Subsidiary by the Guarantor and its other Consolidated Subsidiaries
exceed 15% of the total assets of the Guarantor and its Consolidated
Subsidiaries, determined on a consolidated basis as of the end of the
most recently completed fiscal year; or
(ii) the proportionate share attributable to such Consolidated
Subsidiary of the total assets of the Guarantor and its Consolidated
Subsidiaries (after intercompany eliminations) exceeds 15% of the
total assets of the Guarantor and the Consolidated Subsidiaries,
determined on a consolidated basis as of the end of the most recently
completed fiscal year; or
(iii) the Guarantor's and its Consolidated Subsidiaries' equity
in the income of such Consolidated Subsidiary from continuing
operations before income taxes, extraordinary items and cumulative
effect of a change in accounting principle exceeds 15% of such income
of the Guarantor and its Consolidated Subsidiaries, determined on a
consolidated basis for the most recently completed fiscal year.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, Subsidiary means a Subsidiary of the Guarantor.
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"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which (except
directors' qualifying shares and investments by foreign nationals mandated by
applicable law) are at the time beneficially owned, directly or indirectly, by
the Guarantor.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with United
States generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the
Guarantor's independent public accountants) with the then most recent audited
consolidated financial statements of the Guarantor and its Consolidated
Subsidiaries delivered to the Banks; provided that, if either (i) the Guarantor
notifies the Agent that the Guarantor wishes to eliminate the effect of any
change in generally accepted accounting principles on the operation of any
covenant contained in Article 2 or (ii) the Agent notifies the Guarantor that it
wishes to effect such an elimination, then the Guarantor's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either (A) such notice is
withdrawn by the party giving such notice or (B) such covenant is amended in a
manner satisfactory to the Guarantor and the Agent to reflect such change in
generally accepted accounting principles.
ARTICLE 2
GUARANTEE
SECTION 2.01. The Guarantee. The Guarantor hereby guarantees the full and
punctual payment (whether at stated maturity, upon acceleration or otherwise) of
all principal of and interest on amounts loaned to the Borrower under the
Financing Documents and all other amounts payable by the Borrower under the
Financing Documents. Upon failure by the Borrower to pay punctually any such
amount, the Guarantor shall forthwith on demand pay the amount not so paid at
the place and in the manner specified in the applicable Financing Document.
SECTION 2.02. Guarantee Unconditional. The obligations of the Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected, at any time by:
(i) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Borrower under any Financing Document,
by operation of law or otherwise;
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(ii) any modification or amendment of or supplement to any Financing
Document;
(iii) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Borrower under any
Financing Document;
(iv) any change in the corporate existence, structure or ownership of
the Borrower, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or its assets or any resulting
release or discharge of any obligation of the Guarantor or the Borrower
contained in any Financing Document;
(v) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Borrower, the Agent, any Bank or
any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower for any reason of any Financing Document, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Borrower of any amount payable by it under any Financing Document; or
(vii) any other act or omission to act or delay of any kind by the
Borrower, the Agent, any Bank or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of or defense to the Guarantor's
obligations hereunder.
SECTION 2.03. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. This Agreement shall remain in full force and effect until the
commitments of the Banks under the Credit Agreements shall have terminated and
the principal of and interest on the Promissory Notes (as defined in any Credit
Agreement) and all other amounts payable by the Borrower under the Financing
Documents shall have been paid in full. If at any time any payment of principal
of or interest on any Promissory Note (as defined in any Credit Agreement) or
any other amount payable by the Borrower under the Financing Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, the Guarantor's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
SECTION 2.04. Waiver by the Guarantor. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower or any other Person.
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SECTION 2.05. Subrogation. Upon making any payment hereunder with respect
to the Borrower, the Guarantor shall be subrogated to the rights of the payee
against the Borrower with respect to such payment; provided that the Guarantor
shall not enforce any payment by way of subrogation until all amounts of
principal of and interest on the Promissory Notes (as defined in any Credit
Agreement) and all other amounts payable by the Borrower under the Financing
Documents have been paid in full.
SECTION 2.06. Stay of Acceleration. In the event that acceleration of the
time for payment of any amount payable by the Borrower under any Financing
Document is stayed upon insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Guarantor hereunder forthwith
on demand by the Agent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
The Guarantor represents and warrants to the Agent that:
SECTION 3.01. Corporate Existence and Power. The Guarantor is a company
limited by shares duly incorporated and validly existing under the laws of
Bermuda. The Guarantor has all corporate powers and all governmental licenses,
authorizations, consents and approvals (collectively, the "Consents") required
in order to carry on its business as now conducted, other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Guarantor of this Agreement: (a)
are within the Guarantor's corporate powers; (b) have been duly authorized by
all necessary corporate action on the part of the Guarantor; (c) require no
action by or in respect of, or filing with, any governmental body, agency or
official, in each case, on the part of the Guarantor; and (d) do not contravene,
or constitute a default by the Guarantor under, any provision of (i) applicable
law or regulation, (ii) the Memorandum of Association or Bye-Laws of the
Guarantor, or (iii) any agreement or instrument evidencing or governing Debt of
the Guarantor or any other material agreement, judgment, injunction, order,
decree or other instrument binding upon the Guarantor.
SECTION 3.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Guarantor.
SECTION 3.04. Financial Information.
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(a) The consolidated balance sheet of ADT and its Consolidated Subsidiaries
as of December 31, 1996 and the related consolidated statements of income, of
shareholders' equity and of cash flows for the fiscal year then ended, reported
on by Coopers & Lybrand L.L.P. and set forth in the ADT's 1996 Form 10-K, a copy
of which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the ADT and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) The unaudited pro forma condensed consolidated balance sheet of ADT,
the Borrower and their respective Consolidated Subsidiaries as of March 31, 1997
and the related unaudited pro forma condensed consolidated statements of income
for the years ended December 31, 1994, 1995, and 1996 and the three-month period
ended March 31, 1997, set forth in ADT's Form S-4, subject to the footnotes
thereto, have been prepared on the basis described therein and otherwise in
conformity with generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in subsection (a) of this
Section and fairly present the consolidated financial position and results of
operations of ADT, the Borrower and their respective Consolidated Subsidiaries
as if the Merger had occurred, in the case of the condensed consolidated
statements of income, as of January 1, 1994, and in the case of the condensed
consolidated balance sheets, as of March 31, 1997 (subject in the case of the
interim financial statements to year-end adjustments).
(c) Since March 31, 1997 there has been no material adverse change in the
business, financial position, results of operations or Prospects of the
Guarantor and its Consolidated Subsidiaries, considered as a whole.
SECTION 3.05. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Guarantor threatened against or affecting,
the Guarantor or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect or which in any manner
draws into question the validity of the Financing Documents.
SECTION 3.06. Environmental Matters. In the ordinary course of its
business, the Guarantor conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Guarantor
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
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conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or hazardous substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Guarantor has reasonably concluded that such
associated liabilities and costs, including the costs of compliance with
Environmental Laws, could not, based upon the facts and circumstances existing
at the time this representation and warranty is made or deemed made, reasonably
be expected to have a Material Adverse Effect.
SECTION 3.07. Taxes. The Guarantor and its Significant Subsidiaries have
filed all material tax returns which are required to be filed by them and have
paid all taxes shown on such returns or pursuant to any assessment received by
the Guarantor or any Subsidiary, except those assessments which are being
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Guarantor and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Guarantor, adequate.
SECTION 3.08. Subsidiaries. Each of the Guarantor's corporate Consolidated
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, except where the
failure to be so incorporated, existing or in good standing could not, based
upon the facts and circumstances existing at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has all corporate powers and all Consents
required to carry on its business as now conducted, other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.09. Not an Investment Company. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.10. Full Disclosure. All information heretofore furnished by or
on behalf of the Guarantor to the Agent in connection with this Agreement, does
not contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading.
SECTION 3.11. Obligations to be Pari Passu. The Guarantor's obligations
under this Agreement rank PARI PASSU as to priority of payment and in all other
respects with all other unsecured and unsubordinated obligations of the
Guarantor.
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ARTICLE 4
COVENANTS
The Guarantor agrees that:
SECTION 4.01. Information. The Guarantor will deliver to each of the Banks:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of the Guarantor, consolidated balance sheets of the Guarantor
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, of shareholders' equity and of cash
flows for such fiscal year, setting forth, in each case in comparative form, the
figures for the previous fiscal year, all reported on by Coopers & Lybrand
L.L.P. or other independent public accountants of nationally recognized standing
in a manner complying with the applicable rules and regulations promulgated by
the Securities and Exchange Commission;
(b) as soon as available and in any event within 60 days after the end of
each of the first three quarters of each fiscal year of the Guarantor,
consolidated balance sheets of the Guarantor and its Consolidated Subsidiaries
as of the end of such quarter and the related consolidated statements of income
and consolidated statements of cash flows for such quarter and for the portion
of the Guarantor's fiscal year ended at the end of such quarter, setting forth
in the case of such statements of income and of cash flows in comparative form
the figures for the corresponding quarter and the corresponding portion of the
Guarantor's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency on behalf of the Guarantor by the chief financial
officer, the chief accounting officer or the treasurer of the Guarantor;
(c) simultaneously with the delivery of each set of financial statements
referred to in subsections (a) and (b) above, a certificate on behalf of the
Guarantor signed by the chief financial officer, the chief accounting officer or
the treasurer of the Guarantor (i) setting forth in reasonable detail the
calculations required to establish whether the Guarantor was in compliance with
the requirements of Sections 4.07 and 4.08 on the date of such financial
statements and (ii) stating whether any Guarantor Default exists on the date of
such certificate and, if any Guarantor Default then exists, setting forth, in
reasonable detail, the nature thereof and the action which the Guarantor is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial statements
referred to in clause 4.01(a) above, a statement of the firm of independent
public accountants which reported on such financial statements stating that, in
making the audit necessary for the certification of such financial statements,
such firm of accountants has obtained no knowledge of any Guarantor Default, or
if it has obtained knowledge of such Guarantor Default, specifying the nature
and period of existence thereof; provided such firm of accountants shall not be
liable to any Person
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by reason of such firm's failure to obtain knowledge of any Guarantor Default
which would not be disclosed in the course of an audit conducted in accordance
with generally accepted accounting principles;
(e) within five business days after any Responsible Officer obtains
knowledge of any Guarantor Default, if such Guarantor Default is then
continuing, a certificate on behalf of the Guarantor signed by the chief
financial officer, the chief accounting officer or the treasurer of the
Guarantor setting forth, in reasonable detail, the nature thereof and the action
which the Guarantor is taking or proposes to take with respect thereto;
(f) promptly following the mailing thereof to the shareholders of the
Guarantor generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all final registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and final reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Guarantor shall have filed with the Securities and
Exchange Commission;
(h) promptly following, and in any event within 10 days of, any change in a
Debt Rating by any Rating Agency, notice thereof; and
(i) from time to time, upon reasonable notice, such additional information
regarding the financial position or business of the Guarantor and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably request.
SECTION 4.02. Payment of Obligations. The Guarantor will pay and discharge,
and will cause each Subsidiary to pay and discharge, at or before maturity, all
their respective material obligations and liabilities, including, without
limitation, tax liabilities, except where (i) any such failure to so pay or
discharge could not, based upon the facts and circumstances in existence at the
time, reasonably be expected to have a Material Adverse Effect or (ii) such
liabilities or obligations may be contested in good faith by appropriate
proceedings. The Guarantor will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of such liabilities or obligations
SECTION 4.03. Maintenance of Property; Insurance. (a) Except as permitted
by Section 4.04 or 4.09, the Guarantor will keep, and will cause each Subsidiary
to keep, all property necessary in its business in good working order and
condition, ordinary wear and tear excepted, unless the failure to so keep could
not, based upon the facts and circumstances existing at the time, reasonably be
expected to have a Material Adverse Effect.
(b) The Guarantor will maintain, and will cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its assets and business against
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such casualties and contingencies, of such types (including, without limitation,
loss or damage, product liability, business interruption, larceny, embezzlement
or other criminal misappropriation) and in such amounts as is customary in the
case of similarly situated corporations of established reputations engaged in
the same or a similar business, unless the failure to maintain such insurance
could not, based upon the facts and circumstances existing at the time,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.04. Conduct of Business and Maintenance of Existence. The
Guarantor (a) will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as now conducted by the Guarantor
and its Subsidiaries and reasonably related extensions thereof, and (b) will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect (x) their
respective corporate existence and (y) their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business, unless in
the case of either the failure of the Guarantor to comply with subclause (b) (y)
of this Section 4.04 or the failure of a Subsidiary to comply with clauses (a)
or (b) of this Section 4.04, such failure could not, based upon the facts and
circumstances existing at the time, reasonably be expected to have a Material
Adverse Effect; provided that nothing in this Section 4.04 shall prohibit (i)
the merger or consolidation of a Subsidiary with or into the Guarantor or a
Wholly-Owned Consolidated Subsidiary, (ii) the sale, lease, transfer, assignment
or other disposition by a Subsidiary of all or any part of its assets to the
Guarantor or to a Wholly-Owned Consolidated Subsidiary, (iii) the merger or
consolidation of a Subsidiary with or into a Person other than the Guarantor or
a Wholly-Owned Consolidated Subsidiary, if the Person surviving such
consolidation or merger is a Subsidiary and immediately after giving effect
thereto, no Guarantor Default shall have occurred and be continuing, (iv) the
sale, lease, transfer, assignment or other disposition by a Subsidiary of all or
any part of its assets to a Person other than the Guarantor or a Wholly-Owned
Consolidated Subsidiary, if the Person to which such sale, lease, transfer,
assignment or other disposition is made is a Subsidiary and immediately after
giving effect thereto, no Guarantor Default shall have occurred and be
continuing, (v) any transaction permitted pursuant to Section 4.09 or (vi) the
termination of the corporate existence of any Subsidiary if the Guarantor in
good faith determines that such termination is in the best interest of the
Guarantor and is not materially disadvantageous to the Banks.
SECTION 4.05. Compliance with Laws. The Guarantor will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
except where (a) noncompliance therewith could not, based upon the facts and
circumstances in existence at the time, reasonably be expected to have a
Material Adverse Effect or (b) the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
SECTION 4.06. Inspection of Property, Books and Records; Confidentiality.
(a) The Guarantor will keep, and will cause each Subsidiary to keep, proper
books of record and account
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in which true and correct entries shall be made of its business transactions and
activities so that financial statements that fairly present its business
transactions and activities can be properly prepared in accordance with
generally accepted accounting principles.
(b) The Guarantor will permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all upon reasonable notice to the Guarantor, at such reasonable
times and as often as may reasonably be requested by any Bank.
(c) Each Bank and the Agent shall, by its receipt of Confidential
Information (as defined below) pursuant to or in connection with this Agreement
or its exercise of any of its rights hereunder, be deemed to have agreed (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to (i) keep such information confidential, (ii) (except as
permitted by clause (iii) of this Section 4.06(c)) not disclose such information
to any Person other than an officer, director, employee, legal counsel,
independent auditor or authorized agent or advisor of the Agent or such Bank
needing to know such information (it being understood that any such officer,
director, employee, legal counsel, independent auditor or authorized agent or
advisor shall be informed by the Agent or such Bank of the confidential nature
of such information), (iii) not disclose such information to any Assignee or
Participant (or prospective Assignee or Participant), unless such Assignee or
Participant (or prospective Assignee or Participant) shall agree in writing to
be bound by the provisions of this Section 4.06(c) and (iv) not use any such
information except for purposes relating to this Agreement or the Notes. The
term "Confidential Information" shall mean non-public information furnished by
or on behalf of the Guarantor or any of its Subsidiaries to the Agent, any Bank
or other Person exercising rights hereunder or required to be bound hereby
(collectively "Recipients"), but shall not include any such information which
(1) has become or hereafter becomes available to the public other than as a
result of a disclosure by a Recipient, or (2) has become or hereafter becomes
available to a Recipient, on a non-confidential basis, from a source other than
the Guarantor or any of its Subsidiaries (or any of their respective
representatives or agents) or any Recipient, which source, to the knowledge of
the Recipient, is not prohibited from disclosing such information by a
confidentiality agreement with, or other legal or fiduciary obligation to, the
Guarantor or its Subsidiaries.
The restrictions set forth in the immediately preceding paragraph shall not
prevent the disclosure by a Recipient of any such information:
(A) with the prior written consent of the Guarantor,
(B) at the request of a bank regulatory agency or in connection
with an examination by bank examiners, or
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(C) upon order of any court or administrative agency of competent
jurisdiction, to the extent required by such order and not effectively
stayed on appeal or otherwise, or as otherwise required by law;
provided that in the case of any intended disclosure under this clause
(C), the Recipient shall (unless otherwise required by applicable law)
give the Guarantor not less than five business days prior notice (or
such shorter period as may, in the good faith discretion of the
Recipient, be reasonable under the circumstances or may be required by
any court or agency under the circumstances), specifying the
Confidential Information involved and stating such Recipient's
intention to disclose such Confidential Information (including the
manner and extent of such disclosure) in order to allow the Guarantor
an opportunity to seek an appropriate protective order.
Each Recipient shall agree that, in addition to all other remedies
available, the Guarantor shall be entitled to specific performance and
injunctive and other equitable relief as a remedy for any breach of this Section
4.06(c) by such Recipient.
SECTION 4.07. Debt. Consolidated Debt will at no time exceed 52.5% of
Consolidated Total Capitalization. For purposes of this Section any preferred
stock of a Consolidated Subsidiary held by a Person other than the Guarantor or
a Wholly-Owned Consolidated Subsidiary shall be included, at the higher of its
voluntary or involuntary liquidation value, in "Consolidated Debt" and in the
"Debt" of such Consolidated Subsidiary.
SECTION 4.08. Negative Pledge. Neither the Guarantor nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) any Lien existing on any asset on the Closing Date securing Debt
outstanding on the Closing Date;
(b) any Lien existing on any asset of, or capital stock of, or other
ownership interest in, any Person (such capital stock and other ownership
interests are collectively referred to herein as "Stock") at the time such
Person becomes a Subsidiary, which Lien was not created in contemplation of such
event;
(c) any Lien on any asset securing the payment of all or part of the
purchase price of such asset upon the acquisition thereof by the Guarantor or a
Subsidiary or securing Debt (including any obligation as lessee incurred under a
capital lease) incurred or assumed by the Guarantor or a Subsidiary prior to, at
the time of or within one year after such acquisition (or in the case of real
property, the completion of construction (including any improvements on an
existing property) or the commencement of full operation of such asset or
property, whichever is later), which Debt is incurred or assumed for the purpose
of financing all or part of the cost of acquiring such asset or, in the case of
real property, construction or improvements thereon; provided, that in the case
of any such acquisition, construction or improvement, the Lien shall
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not apply to any asset theretofore owned by the Guarantor or a Subsidiary, other
than assets so acquired, constructed or improved;
(d) any Lien existing on any asset or Stock of any Person at the time such
Person is merged or consolidated with or into the Guarantor or a Subsidiary
which Lien was not created in contemplation of such event;
(e) any Lien existing on any asset or Stock of any Person at the time of
acquisition thereof by the Guarantor or a Subsidiary, which Lien was not created
in contemplation of such acquisition;
(f) any Lien arising out of the refinancing of any Debt secured by any Lien
permitted by any of the subsections (a) through (e) of this Section 4.08,
provided the principal amount of Debt is not increased and is not secured by any
additional assets, except as provided in the last sentence of this Section 4.08;
(g) any Lien to secure Debt of a Subsidiary to the Guarantor or to a
Wholly-Owned Consolidated Subsidiary;
(h) any Lien created pursuant to a Permitted Receivables Transaction;
(i) any Lien in favor of any country (or any department, agency,
instrumentality or political subdivision of any country) securing obligations
arising in connection with partial, progress, advance or other payments pursuant
to any contract, statute, rule or regulation or securing obligations incurred
for the purpose of financing all or any part of the purchase price (including
the cost of installation thereof or, in the case of real property, the cost of
construction or improvement or installation of personal property thereon) of the
asset subject to such Lien (including, but not limited to, any Lien incurred in
connection with pollution control, industrial revenue or similar financings);
(j) Liens arising in the ordinary course of its business which (i) do not
secure Debt, (ii) do not secure any single obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business; and
(k) Liens not otherwise permitted by the foregoing clauses (a) through (j)
of this Section 4.08 securing Debt (without duplication) in an aggregate
principal amount at any time outstanding not to exceed an amount equal to the
greater of (i) $50,000,000 or (ii) 10% of Consolidated Tangible Net Worth. It is
understood that any Lien permitted to exist on any asset pursuant to the
foregoing provisions of this Section 4.08 may attach to the proceeds of such
asset and, with respect to Liens permitted pursuant to subsections (a), (b),
(d), (e), (f) (but only with respect to the refinancing of a Debt
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secured by a Lien permitted pursuant to subsections (a), (b), (d) or (e)) or (g)
of this Section 4.08, may attach to an asset acquired in the ordinary course of
business as a replacement of such former asset.
SECTION 4.09. Consolidations, Mergers and Sales of Assets. (a) The
Guarantor will not (i) consolidate or merge with or into any other Person or
(ii) sell, lease or otherwise transfer all or substantially all of its assets to
any other Person, unless
(A) the Guarantor or a Subsidiary is the surviving corporation;
(B) the Person (if other than the Guarantor) formed by such
consolidation or into which the Guarantor is merged, or the Person
which acquires by sale or other transfer, or which leases, all or
substantially all of the assets of the Guarantor (any such Person, the
"Successor"), shall be organized and existing under the laws of
Bermuda or of the United States, any state thereof or the District of
Columbia and shall expressly assume, in a writing executed and
delivered to the Agent for delivery to each of the Banks, in form
reasonably satisfactory to the Agent, the due and punctual payment of
the principal of and interest on the Promissory Notes and the
performance of the other obligations under this Agreement and the
Promissory Notes on the part of the Guarantor to be performed or
observed, as fully as if such Successor were originally named as the
Guarantor in this Agreement;
(C) immediately after giving effect to such transaction, no
Guarantor Default shall have occurred and be continuing; and
(D) the Guarantor has delivered to the Agent a certificate on
behalf of the Guarantor signed by a Responsible Officer and an opinion
of counsel, each stating that all conditions provided in this Section
4.09 relating to such transaction have been satisfied.
The foregoing provisions of this Section 4.09 shall not restrict the merger
or consolidation of any Subsidiary with and into the Guarantor.
SECTION 4.10. Transactions with Affiliates. The Guarantor will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate (collectively, "AFFILIATE TRANSACTIONS"); provided, however, that the
foregoing provisions of this Section 4.10 shall not prohibit the Guarantor or
any of its Subsidiaries from (a) making sales to or purchases from any Affiliate
and, in
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connection therewith, extending credit or making payments, or from making
payments for services rendered by any Affiliate, if such sales or purchases are
made or such services are rendered in the ordinary course of business and on
terms and conditions at least as favorable to the Guarantor or such Subsidiary
as the terms and conditions which the Guarantor would reasonably expect to be
obtained in a similar transaction with a Person which is not an Affiliate at
such time, (b) making payments of principal, interest and premium on any Debt of
the Guarantor or such Subsidiary held by an Affiliate if the terms of such Debt
are at least as favorable to the Guarantor or such Subsidiary as the terms which
the Guarantor would reasonably expect to have been obtained at the time of the
creation of such Debt from a lender which was not an Affiliate, (c)
participating in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the Guarantor or
such Subsidiary participates in the ordinary course of its business and on a
basis no less advantageous than the basis on which such Affiliate participates,
(d) paying or granting reasonable compensation and benefits to any director,
officer, employee or agent of the Guarantor or any Subsidiary, (e) paying
reasonable legal fees and expenses to a law firm of which an Affiliate is a
member or (f) engaging in any Affiliate Transaction not otherwise addressed in
subsections (a)-(e) of this Section 4.10, the terms of which are not less
favorable to the Guarantor or such Subsidiary than those that the Guarantor
would reasonably expect to be obtained in a comparable transaction at such time
with a Person which is not an Affiliate.
ARTICLE 5
DEFAULTS
SECTION 5.01. Guarantor Events of Defaults. The following events shall
constitute "GUARANTOR EVENTS OF DEFAULT" for purposes of the Financing
Documents:
(a) the Guarantor shall fail to pay when due any principal of any Loan (as
defined in the Credit Agreements), or shall fail to pay within three Domestic
Business Days (as defined in the Credit Agreements) of the due date thereof any
interest on any Loan (as defined in the Credit Agreements) or any fees payable
hereunder;
(b) the Guarantor shall fail to observe or perform any covenant contained
in Section 4.07;
(c) the Guarantor shall fail to observe or perform any covenant contained
in Section 4.08 or 4.09 and such failure shall not be remedied within five days
after any Responsible Officer obtains actual knowledge thereof;
(d) the Guarantor shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a),
(b) or (c) of this Section 5.01) for 10
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days after notice thereof has been given to the Guarantor by the Agent at the
request of any Bank;
(e) any representation, warranty, certification or statement made in
writing by the Guarantor in the Financing Documents or in any certificate,
financial statement or other document required to be delivered to the Agent or
any of the Banks pursuant to the Financing Documents shall prove to have been
incorrect in any material respect when made (or deemed made);
(f) the Guarantor or any Subsidiary shall fail to make any payment in
respect of any Material Debt when due (after giving effect to any applicable
grace period);
(g) any event or condition shall occur that results in the acceleration of
the maturity of any Material Debt or that entitles the holder or holders of any
Material Debt or any Person acting on behalf of such holder or holders to
accelerate the maturity thereof; provided that neither an "Event of Default"
under (and as defined in) the Indentures of ADT Operations, Inc. dated as of
August 4, 1993, nor any right of holders of Debt issued thereunder to compel
redemption of such Debt, shall constitute an Event of Default hereunder;
(h) (i) any corporate action is taken authorizing the winding up,
liquidation, any arrangement or the taking of any other similar action of or
with respect to the Guarantor or authorizing any corporate action to be taken to
facilitate any such winding up, liquidation, arrangement, reorganization or
amalgamation or other similar action or any members' voluntary winding up of the
Guarantor as provided under the Bermuda Companies Law shall be commenced;
(ii) (A) any petition shall be filed seeking the liquidation, any
arrangement or the taking of any other similar action of or with respect to
the Guarantor by the Registrar of Companies in Bermuda, or by any other
Person or Persons, or (B) any petition shall be presented for the winding
up of the Guarantor to a court of Bermuda as provided with the Bermuda
Companies Law, or (C) any creditors' winding up of the Guarantor as
provided under the Bermuda Companies Law shall be commenced, or (D) any
receiver shall be appointed by a creditor of the Guarantor or by a court of
Bermuda on the application of a creditor of the Guarantor as provided under
any instrument giving rights for the appointment of a receiver thereto, and
in the case of any such petition, winding up, appointment, order or other
matter, such petition, winding up, appointment, order or other matter,
shall remain undismissed and unstayed for a period of 60 days;
(iii) the Guarantor or any Significant Subsidiary shall (A) commence a
voluntary case or other proceeding seeking liquidation, winding up,
reorganization or other relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or substantially all of its property, or (B)
consent
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to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other similar proceeding commenced
against it, or (C) make a general assignment for the benefit of creditors,
or (D) fail generally to pay its debts as they become due, or (E) take any
corporate action to authorize any of the foregoing; or
(iv) (A) an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking liquidation,
winding up, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or substantially all of its
property, and such involuntary case or other proceeding shall remain in
effect and undismissed and unstayed for a period of 60 days; or (B) an
order for relief shall be entered against the Guarantor or any Significant
Subsidiary under the bankruptcy laws of any jurisdiction as now or
hereafter in effect;
(i) a judgment or order for the payment of money in excess of $30,000,000
(after deducting amounts covered by insurance, except to the extent that the
insurer providing such insurance has declined such coverage) shall be rendered
against the Guarantor or any Subsidiary and, within 60 days after entry thereof,
such judgment or order is not discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such stay, such judgment
or order is not discharged;
(j) any person or group of persons (within the meaning of Section 13 or 14
of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 40% or more of the
outstanding shares of common stock of the Guarantor; or, on the last day of any
period of twelve consecutive calendar months commencing on or after the day
after the date on which the Merger is consummated, a majority of members of the
board of directors of the Guarantor shall no longer be composed of individuals
(i) who were members of said board of directors on the first day of such twelve
consecutive calendar month period or (ii) whose election or nomination to said
board of directors was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
said board of directors; or
(k) the Guarantor or any Subsidiary shall fail to make any payment owing by
it in respect of any performance bond, performance guaranty or bank Guaranty
issued in lieu of a performance bond or performance guaranty (other than a
payment which is disputed by the Guarantor or such Subsidiary in good faith),
and the aggregate of all such defaulted payments shall exceed $50,000,000 at any
one time for the Guarantor and its Subsidiaries.
SECTION 5.02. Notice of Default. The Agent shall give notice to the
Guarantor under Section 5.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
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ARTICLE 6
TAXES
SECTION 6.01. Withholding Taxes. Each payment by the Guarantor hereunder to
or for the account of any Bank (a "Payment") shall be made without any deduction
or withholding for any Bank Foreign Taxes with respect to such Bank; provided
that if the Guarantor shall be required by law to make any such deduction or
withholding from any Payment, the Guarantor will:
(i) pay such amounts in addition to such Payment as may be necessary
so that the amount received by the payee, after all such withholdings and
deductions, will be equal to the full amount provided for in this
Agreement;
(ii) pay the full amount deducted or withheld to the relevant taxation
or other authorities within the time allowed under applicable law; and
(iii) furnish within 45 days thereafter to the Agent, the official
receipt or receipts from the relevant taxation or other authorities for the
full amount so deducted or withheld.
SECTION 6.02. Certain Other Taxes. The Guarantor will pay (i) all Bank
Foreign Taxes imposed (otherwise than by deduction or withholding) on any Bank
which constitute Bank Foreign Taxes with respect to such Bank and (ii) all Bank
Domestic Taxes imposed on any Bank which constitute Bank Domestic Taxes with
respect to such Bank to the extent any such Bank Foreign Taxes or Bank Domestic
Taxes result from Bank Foreign Taxes or Bank Domestic Taxes paid or reimbursed
by the Guarantor pursuant to this Article 6.
SECTION 6.03. Reimbursement of Taxes Paid by a Bank. If any Bank Foreign
Taxes or Bank Domestic Taxes to be paid by the Guarantor pursuant to this
Article 6 are imposed on and paid by any Bank, the Guarantor shall, upon request
of such Bank and whether or not such Bank Foreign Taxes or Bank Domestic Taxes
shall have been correctly or legally imposed, reimburse such Bank therefor,
together with any interest, penalties and expenses in connection therewith, plus
interest thereof at the rate specified in the first sentence of Section 2.07(a)
of each Credit Agreement. To the extent that any Bank which is reimbursed by the
Guarantor as provided in this Section thereafter receives any payment allocated
to Bank Foreign Taxes or Bank Domestic Taxes in respect of which such Bank was
so reimbursed from a governmental taxing authority because such Bank Foreign
Taxes or Bank Domestic Taxes were incorrectly or illegally imposed, such Bank
shall return to the Guarantor (without interest) any such payment.
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ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Notices. All notices, requests and other communications to
any party provided for hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party at its address or facsimile or telex number set
forth on the signature pages hereof or such other address or facsimile or telex
number as such party may hereafter specify for the purpose by notice to the
other party. Each such notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answerback is received, (ii) if
given by facsimile, when such facsimile is transmitted to the facsimile number
specified on the signature pages hereof and electronic, telephonic or other
appropriate confirmation of receipt is received by the sender, (iii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified on the signature pages hereof.
SECTION 7.02. No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any other Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and
therein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 7.03. Expenses; Indemnification. (a) The Guarantor shall pay (i)
all reasonable out-of-pocket expenses of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment thereof or any default or alleged default hereunder
and (ii) if an Event of Default (as defined in any Credit Agreement) occurs, all
reasonable out-of-pocket expenses incurred by the Agent and each Bank, including
reasonable fees and disbursements of counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
in respect of this Agreement resulting therefrom.
(b) The Guarantor agrees to indemnify the Agent and each Bank, their
respective Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by such Indemnitee (whether or not such
Indemnitee shall be designated a party thereto) arising out of any
investigative, administrative or judicial proceeding (brought or threatened)
relating to or arising out of this Agreement, the arrangement, administration,
performance or enforcement thereof; provided that no Indemnitee
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shall have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction; provided further that no Indemnitee shall have the right to be
indemnified hereunder in connection with any proceedings between it and another
Indemnitee which does not relate to the Guarantor.
(c) If any proceeding or claim shall be brought or asserted against any
Indemnitee in respect of which indemnity may be sought pursuant to the preceding
subsection, such Indemnitee shall promptly notify the Guarantor. The Guarantor
shall not be liable for any costs or expenses in connection with any settlement
entered into without its consent.
SECTION 7.04. Judicial Proceedings. (a) Consent to Jurisdiction. The
Guarantor irrevocably submits to the non-exclusive jurisdiction of any federal
or New York State court sitting in New York City over any suit, action or
proceeding arising out of or relating to this Agreement. The Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in such court and any claim that any suit, action or
proceeding brought in such court has been brought in an inconvenient forum. The
Guarantor agrees that a final judgment in any such suit, action or proceeding
brought in such a court shall be conclusive and binding upon it and will be
given effect in Bermuda to the fullest extent permitted by applicable law and
may be enforced in any federal or New York State court sitting in New York City
(or any other courts to the jurisdiction of which the Guarantor is or may be
subject) by a suit upon such judgment, provided that service of process is
effected upon it in one of the manners specified herein or as otherwise
permitted by law.
(b) Appointment of Agent for Service of Process. The Guarantor hereby
irrevocably designates and appoints CT Corporation System having an office on
the date hereof at 1633 Broadway, New York, New York 10019 as its authorized
agent, to accept and acknowledge on its behalf, service or any and all process
which may be served in any suit, action or proceeding of the nature referred to
in subsection (a) above in any federal or New York State court sitting in New
York City. The Guarantor represents and warrants that such agent has agreed in
writing to accept such appointment and that a true copy of such designation and
acceptance has been delivered to the Agent. Such designation and appointment
shall be irrevocable until all principal and interest and all other amounts
payable hereunder shall have been paid in full in accordance with the provisions
hereof. If such agent shall cease so to act, the Guarantor covenants and agrees
to designate irrevocably and appoint without delay another such agent
satisfactory to the Agent and to deliver promptly to the Agent evidence in
writing of such other agent's acceptance of such appointment.
(c) Service of Process. The Guarantor hereby consents to process being
served in any suit, action, or proceeding of the nature referred to in
subsection (a) above in any federal or New York State court sitting in New York
City by service of process upon the agent of the Guarantor, as the case may be,
for service of process in such jurisdiction appointed as provided in subsection
(b) above; provided that, to the extent lawful and possible, written notice of
said service upon
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such agent shall be mailed by registered airmail, postage prepaid, return
receipt requested, to the Guarantor at its address specified on the signature
pages hereof or to any other address of which the Guarantor shall have given
written notice to the Agent. The Guarantor irrevocably waives, to the fullest
extent permitted by law, all claim of error by reason of any such service and
agrees that such service shall be deemed in every respect effective service of
process upon the Guarantor in any such suit, action or proceeding and shall, to
the fullest extent permitted by law, be taken and held to be valid and personal
service upon and personal delivery to the Guarantor.
(d) No Limitation on Service or Suit. Nothing in this Section 7.04 shall
affect the right of the Agent or any Bank to serve process in any other manner
permitted by law or limit the right of the Agent or any Bank to bring proceeding
against the Guarantor in the courts of any jurisdiction or jurisdictions.
SECTION 7.05. Judgment Currency. If, under any applicable law and whether
pursuant to a judgment being made or registered against the Guarantor or for any
other reason, any payment under or in connection with this Agreement, is made or
satisfied in a currency (the "Other Currency") other than that in which the
relevant payment is due (the "Required Currency") then, to the extent that the
payment (when converted into the Required Currency at the rate of exchange on
the date of payment or, if it is not practicable for the party entitled thereto
(the "Payee") to purchase the Required Currency with the other Currency on the
date of payment, at the rate of exchange as soon thereafter as it is practicable
for it to do so) actually received by the Payee falls short of the amount due
under the terms of this Agreement, the Guarantor shall, to the extent permitted
by law, as a separate and independent obligation, indemnify and hold harmless
the Payee against the amount of such short-fall. For the purpose of this
Section, "rate of exchange" means the rate at which the Payee is able on the
relevant date to purchase the Required Currency with the Other Currency and
shall take into account any premium and other costs of exchange.
SECTION 7.06. Amendments and Waivers. Any provision of this Agreement or
the Promissory Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Guarantor and the Agent with the prior
written consent of the Required Banks under (and as defined in) each of the
Credit Agreements.
SECTION 7.07. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon the Guarantor and its successors and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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SECTION 7.09. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 7.10. No Seal. As contemplated by the Bye-Laws of the Guarantor,
this Agreement shall not be required to be issued under the seal of the
Guarantor.
SECTION 7.11. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE AGENT
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
26
<PAGE> 31
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.
TYCO INTERNATIONAL LTD.
By:
---------------------------------
Title: Executive Vice President
Cedar House
41 Cedar Avenue
Hamilton HM12
Bermuda
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By:
---------------------------------
Title:
60 Wall Street
New York, New York 10260-0060
Attention:
Telex number: 177615
Facsimile number: 212-648-5018
<PAGE> 1
EXHIBIT 11
TYCO INTERNATIONAL (US) INC.
EARNINGS PER SHARE COMPUTATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Calculation of earnings per share:
PRIMARY:
Weighted average common shares
outstanding during the period 159,733 152,714 147,889
Dilutive effect of the restricted stock
plan, stock options and warrants using
the treasury stock method 535 148 3,129
-------- -------- --------
Total common equivalent shares 160,268 152,862 151,018
======== ======== ========
Income before extraordinary item $419,002 $310,147 $216,593
Extraordinary item - - (2,600)
-------- -------- --------
Net income $419,002 $310,147 $213,993
======== ======== ========
Earnings per share:
Before extraordinary item $ 2.61 $ 2.03 $ 1.43
Extraordinary item - - (.02)
-------- -------- ---------
Net income per share $ 2.61 $ 2.03 $ 1.42
======== ======== ========
FULLY DILUTED:(1)
Weighted average common shares
outstanding during the period 159,733 152,714 147,889
Dilutive effect of the restricted stock
plan, stock options and warrants using
the treasury stock method 651 236 3,201
-------- -------- --------
Total common equivalent shares 160,384 152,950 151,090
======== ======== ========
Income before extraordinary item $419,002 $310,147 $216,593
Extraordinary item - - (2,600)
-------- --------- ---------
Net income $419,002 $310,147 $213,993
======== ======== ========
Earnings per share:
Before extraordinary item $ 2.61 $ 2.03 $ 1.43
Extraordinary item - - (.02)
-------- --------- ---------
Net income per share $ 2.61 $ 2.03 $ 1.42
======== ======== ========
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by Footnote 2 to Paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF TYCO INTERNATIONAL (US) INC. AS OF AND FOR THE
YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 170,616
<SECURITIES> 0
<RECEIVABLES> 1,062,084
<ALLOWANCES> 62,400
<INVENTORY> 849,626
<CURRENT-ASSETS> 5,446,524
<PP&E> 1,787,293
<DEPRECIATION> (766,836)
<TOTAL-ASSETS> 5,888,329
<CURRENT-LIABILITIES> 1,735,265
<BONDS> 919,308
0
0
<COMMON> 84,203
<OTHER-SE> 2,967,374
<TOTAL-LIABILITY-AND-EQUITY> 5,888,329
<SALES> 6,597,629
<TOTAL-REVENUES> 6,597,629
<CGS> 4,751,987
<TOTAL-COSTS> 4,751,987
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 16,765
<INTEREST-EXPENSE> 90,762
<INCOME-PRETAX> 687,889
<INCOME-TAX> 268,887
<INCOME-CONTINUING> 419,002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 419,002
<EPS-PRIMARY> 2.61
<EPS-DILUTED> 2.61
</TABLE>
