<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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1-5482
(Commission File Number)
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TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2297459
(State of Incorporation) (IRS Employer
Identification Number)
One Tyco Park, Exeter, New Hampshire 03833
(Address of registrant's principal executive office)
603-778-9700
(Registrant's telephone number)
-----------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares of common stock outstanding as of May 9, 1997 was
168,357,982.
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TYCO INTERNATIONAL LTD.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Part I--Financial Information:
Item 1--Financial Statements -
Consolidated Balance Sheets--March 31, 1997 and June 30, 1996.......................................... 1-2
Consolidated Statements of Income for the Third Quarter and Nine Months ended March 31, 1997 and
1996.................................................................................................. 3
Consolidated Statements of Changes in Shareholders' Equity for the Nine Months ended March 31, 1997 and
1996.................................................................................................. 4
Consolidated Statements of Cash Flows for the Nine Months ended March 31, 1997 and 1996................ 5
Notes to Consolidated Financial Statements............................................................. 6
Item 2--Management's Discussion and Analysis of Financial Condition and Operating Results................ 10
Part II--Other Information:
Item 6--Exhibits and Reports on Form 8-K................................................................. 14
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
(IN THOUSANDS) MARCH 31, 1997 JUNE 30, 1996
- ----------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents.......................................................... $ 63,204 $ 69,404
Receivables, less allowance for doubtful accounts of $63,334 in fiscal 1997 and
$36,672 in fiscal 1996........................................................... 956,874 688,741
Contracts in process............................................................... 125,118 130,473
Inventories........................................................................ 839,884 608,526
Deferred income taxes.............................................................. 147,468 126,282
Prepaid expenses and other current assets.......................................... 92,872 72,098
-------------- -------------
2,225,420 1,695,524
-------------- -------------
Property, Plant and Equipment:
Land............................................................................... 46,413 37,560
Buildings.......................................................................... 408,476 320,034
Machinery and equipment............................................................ 1,129,463 934,918
Leasehold improvements............................................................. 33,025 22,658
Construction in progress........................................................... 121,616 52,289
Accumulated depreciation........................................................... (741,362) (641,717)
-------------- -------------
997,631 725,742
-------------- -------------
Goodwill and Other Intangible Assets............................................... 2,071,453 1,232,617
Reorganization Value in Excess of Identifiable Assets.............................. 97,778 102,591
Deferred Income Taxes.............................................................. 61,909 69,823
Other Assets....................................................................... 152,065 127,639
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Total Assets....................................................................... $ 5,606,256 $ 3,953,936
-------------- -------------
-------------- -------------
</TABLE>
See notes to consolidated financial statements.
1
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LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE DATA) MARCH 31, 1997 JUNE 30, 1996
- ----------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Current Liabilities:
Loans payable and current maturities of long-term debt............................. $ 115,726 $ 127,822
Accounts payable................................................................... 598,224 470,819
Accrued expenses................................................................... 706,017 506,270
Contracts in process--billings in excess of costs.................................. 147,988 89,640
Income taxes....................................................................... 103,630 84,196
Deferred income taxes.............................................................. 12,038 13,063
-------------- -------------
1,683,623 1,291,810
-------------- -------------
Long-term Debt..................................................................... 838,232 511,622
Other Liabilities.................................................................. 212,908 192,839
Deferred Income Taxes.............................................................. 25,755 19,226
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $1 par value, authorized 2,000,000 shares; none outstanding....... -- --
Common stock, $.50 par value, authorized 500,000,000 shares; outstanding
166,829,391 shares in fiscal 1997 and 152,977,282 shares in fiscal 1996, net of
reacquired shares of 12,998,106 in fiscal 1997 and 16,024,221 in fiscal 1996 (at
cost)............................................................................ 83,414 76,488
Capital in excess of par value, net of deferred compensation of $25,151 in fiscal
1997 and $11,500 in fiscal 1996.................................................. 1,312,508 627,985
Currency translation adjustment.................................................... (75,787) (34,571)
Retained earnings.................................................................. 1,525,603 1,268,537
-------------- -------------
2,845,738 1,938,439
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Total Liabilities and Shareholders' Equity......................................... $ 5,606,256 $ 3,953,936
-------------- -------------
-------------- -------------
</TABLE>
See notes to consolidated financial statements.
2
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED MARCH 31, FISCAL THIRD QUARTER FISCAL NINE MONTHS
1997 AND 1996 -------------------------- --------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA) 1997 1996 1997 1996
- --------------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales.................................................... $ 1,654,241 $ 1,257,619 $ 4,746,297 $ 3,717,706
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of sales............................................ 1,194,536 910,078 3,439,645 2,715,724
Selling, general and administrative...................... 264,764 195,378 768,380 586,260
Interest................................................. 20,131 16,309 72,888 46,646
------------ ------------ ------------ ------------
1,479,431 1,121,765 4,280,913 3,348,630
------------ ------------ ------------ ------------
Income before income taxes............................... 174,810 135,854 465,384 369,076
Income taxes............................................. (68,106) (56,380) (184,310) (153,167)
------------ ------------ ------------ ------------
Net Income............................................... $ 106,704 $ 79,474 $ 281,074 $ 215,909
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net Income Per Share..................................... $ .67 $ .52 $ 1.79 $ 1.41
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash dividends per common share.......................... $ .05 $ .05 $ .15 $ .15
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common equivalent shares................................. 159,841 152,791 157,300 152,809
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
3
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
For the Nine Months ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN CURRENCY
$.50 PAR EXCESS OF TRANSLATION RETAINED
(IN THOUSANDS) VALUE PAR VALUE ADJUSTMENT EARNINGS
- --------------------------------------------------------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Balance at June 30, 1995................................. $ 76,366 $ 582,450 $ (9,451) $ 985,316
Net income............................................... 215,909
Dividends................................................ (22,900)
Restricted stock grants, cancellations, tax benefits and
other.................................................. (17) 22,911
Warrants, options exercised.............................. 12 188
Currency translation adjustment.......................... (19,884)
Amortization of deferred compensation.................... 7,543
Common stock reacquired.................................. (101) (6,769)
------------- ------------ ----------- ------------
Balance at March 31, 1996................................ $ 76,260 $ 606,323 $ (29,335) $ 1,178,325
------------- ------------ ----------- ------------
------------- ------------ ----------- ------------
Balance at June 30, 1996................................. $ 76,488 $ 627,985 $ (34,571) $ 1,268,537
Net income............................................... 281,074
Dividends................................................ (24,008)
Restricted stock grants, cancellations, tax benefits and
other.................................................. 283 1,749
Warrants, options exercised.............................. 141 6,341
Currency translation adjustment.......................... (41,216)
Amortization of deferred compensation.................... 8,411
Sale of common stock..................................... 5,000 556,027
Issuance of treasury stock for acquisition............... 1,537 114,515
Other treasury stock transactions, net................... (35) (2,520)
------------- ------------ ----------- ------------
Balance at March 31, 1997................................ $ 83,414 $ 1,312,508 $ (75,787) $ 1,525,603
------------- ------------ ----------- ------------
------------- ------------ ----------- ------------
</TABLE>
See notes to consolidated financial statements.
4
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED MARCH 31,
(IN THOUSANDS) 1997 1996
- ---------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income.............................................................................. $ 281,074 $ 215,909
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation.......................................................................... 90,152 69,647
Amortization.......................................................................... 52,534 37,048
Deferred income taxes................................................................. 39,966 38,330
Provision for losses on accounts receivable and inventory writedowns.................. 28,817 20,647
Changes in assets and liabilities net of the effects of acquisitions:
Increase in accounts receivable and contracts in process............................ (34,794) (62,017)
Increase in inventory............................................................... (105,963) (27,101)
Decrease in accounts payable and accrued expenses................................... (130,194) (77,938)
Increase in income taxes payable.................................................... 10,553 7,540
Other............................................................................... (3,273) 4,195
----------- -----------
Net cash provided by operating activities............................................. 228,872 226,260
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures.................................................................... (151,431) (90,215)
Purchase of businesses, net of cash acquired............................................ (784,148) (245,318)
Proceeds from sale of acquired assets................................................... -- 49,768
----------- -----------
Net cash used in investing activities................................................. (935,579) (285,765)
----------- -----------
Cash Flows From Financing Activities:
Proceeds from long-term debt............................................................ 298,490 --
(Payments on) proceeds from lines of credit............................................. (136,913) 84,671
Proceeds from sale of common stock...................................................... 561,027 --
Dividends paid.......................................................................... (23,270) (22,900)
Issuance of stock and warrants.......................................................... 6,482 200
Common stock reacquired................................................................. (5,309) (6,870)
----------- -----------
Net cash provided by financing activities............................................. 700,507 55,101
----------- -----------
Decrease in cash and cash equivalents................................................... (6,200) (4,404)
Cash and cash equivalents at beginning of year.......................................... 69,404 66,021
----------- -----------
Cash and cash equivalents at end of period.............................................. $ 63,204 $ 61,617
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The unaudited financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. These statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Form 10-K for the year ended June 30, 1996.
The accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements
include all adjustments, consisting only of normal recurring
adjustments, necessary to summarize fairly the Company's financial
position and results of operations.
2. During the first nine months of fiscal 1997 the Company acquired
companies in each of its business segments for an aggregate of $1.06
billion, including $784.1 million in cash, approximately 3.1 million
shares of the Company's common stock, valued at $116.1 million, and the
assumption of approximately $155.0 million in debt. The cash portion of
the consideration for 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 $863.2 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 $34.6
million for transaction and other direct costs, $38.7 million for
severance costs and $27.6 million for costs associated with the shut
down and consolidation of certain acquired facilities. At March 31, 1997
liabilities for approximately $16.6 million in transaction and other
costs, $27.1 million in severance costs and $22.8 million for facility
related costs associated with fiscal 1997 acquisitions remained on the
balance sheet, and liabilities for approximately $8.7 million in
severance costs and $4.1 million for facility related costs associated
with fiscal 1996 acquisitions remained on the balance sheet.
3. On March 17, 1997, the Company entered into a definitive merger
agreement pursuant to which Tyco will effectively acquire ADT Limited
("ADT"), an installer and servicer of electronic security systems, in a
stock for stock transaction. A subsidiary of ADT will merge with and
into Tyco, and Tyco shareholders will receive one share of ADT for each
Tyco share they currently hold. ADT shareholders, through a reverse
stock split, will receive 0.48133 of an ADT share for each ADT share
they currently hold. ADT will be renamed Tyco International Ltd. ("New
Tyco"). Immediately following the closing of the transaction former Tyco
shareholders will own approximately 64% of the outstanding shares of New
Tyco and ADT shareholders will own approximately 36% of the outstanding
shares of New Tyco. The transaction, which will be taxable to Tyco
shareholders and accounted for as a pooling of interests, is contingent
upon customary regulatory review and approval by the shareholders of
both companies. The Boards of Directors of both companies have approved
the transaction, which is expected to close on or about June 30, 1997.
6
<PAGE>
On April 11, 1997, the Company entered into an agreement with AT&T
to acquire its submarine systems business ("SSI") for cash of
approximately $850.0 million. SSI is a world leader in the design,
development, manufacture, installation, supply and maintenance of
undersea fiber optic telecommunication cable systems. The acquisition
will be accounted for as a purchase and is expected to close in June
1997.
On May 13,1997, the Company entered into a definitive merger
agreement pursuant to which Tyco will acquire INBRAND in a stock for
stock transaction valued at approximately $320 million. INBRAND
manufactures and distributes adult incontinence products, as well as
feminine hygiene products and disposable baby diapers to hospitals,
retail and alternate care sites throughout North America and Europe. The
acquisition, which will be accounted for as a pooling of interests, will
be structured with INBRAND shareholders receiving 0.43 shares of Tyco
stock for each share of INBRAND stock outstanding. The transaction is
contingent upon customary regulatory review and approval by the INBRAND
shareholders. The transaction is expected to close following the
completion of the aforementioned transaction with ADT.
4. LONG-TERM DEBT IS AS FOLLOWS:
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
(IN THOUSANDS) 1997 1996
- ------------------------------------------------------------------------------------------- ---------- ---------
<S> <C> <C>
Credit agreement........................................................................... $ -- $ --
Uncommitted lines of credit................................................................ 57,400 91,000
8.125% public notes due 1999............................................................... 144,941 144,924
6.5% public notes due 2001................................................................. 298,567 --
6.375% public notes due 2004............................................................... 104,445 104,386
9.5% public debentures due 2022............................................................ 199,604 199,592
8.0% public debentures due 2023............................................................ 49,961 49,960
Other...................................................................................... 99,040 49,582
---------- ---------
953,958 639,444
Less current portion and loans payable..................................................... 115,726 127,822
---------- ---------
$ 838,232 $ 511,622
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</TABLE>
Under the Company's credit agreement with a group of commercial
banks, which was renegotiated in December 1996, the Company has the
right to borrow $300 million or a portion thereof until December 2001
for its general corporate purposes. The principal amount then
outstanding will be due and payable at that time. Interest payable on
borrowings is variable based upon the Company's option of selecting
either a Eurodollar rate plus 0.21%, a certificate of deposit rate plus
0.335%, or a base rate, as defined.
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 significant terms other than due dates and
interest rates. The due dates generally range from overnight to 90 days
and interest rates approximate those available under the credit
agreement.
7
<PAGE>
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.
Under its various loan agreements, the Company is required to meet
certain covenants, none of which is considered restrictive to the
operations of the Company.
5. The Company has an agreement under which it sells participating
interests in a defined pool of trade accounts receivable. The proceeds
of sale are less than the face amount of accounts receivable sold by an
amount which approximates the purchaser's financing cost of issuing its
own commercial paper backed by these accounts receivable. The discount
from the face amount of receivables sold during the third quarter of
fiscal 1997 and fiscal 1996 was $3.0 million and $2.8 million,
respectively. The discount from the face amount of receivables sold
during the first nine months of fiscal 1997 and 1996 was $9.2 million
and $9.5 million, respectively. These amounts have been included in
selling, general and administrative expense in the Company's
Consolidated Statements of Income.
6. Selected information for the Company's four industry segments is as
follows (in thousands):
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------ ------------ ------------ ------------
Sales:
Disposable and Specialty Products........................ $ 499,605 $ 357,734 $ 1,446,351 $ 1,060,600
Fire and Safety Services................................. 630,131 497,151 1,882,828 1,452,043
Flow Control Products.................................... 379,439 276,193 1,035,548 840,364
Electrical and Electronic Components..................... 145,066 126,541 381,570 364,699
------------ ------------ ------------ ------------
$ 1,654,241 $ 1,257,619 $ 4,746,297 $ 3,717,706
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income Before Income Taxes:
Disposable and Specialty Products........................ $ 89,828 $ 75,397 $ 260,075 $ 205,615
Fire and Safety Services................................. 46,689 33,235 135,722 90,563
Flow Control Products.................................... 41,987 28,441 104,885 80,152
Electrical and Electronic Components..................... 28,769 24,314 72,044 67,113
------------ ------------ ------------ ------------
Total operations....................................... 207,273 161,387 572,726 443,443
Interest expense......................................... (20,131) (16,309) (72,888) (46,646)
Corporate and other amounts.............................. (12,332) (9,224) (34,454) (27,721)
------------ ------------ ------------ ------------
$ 174,810 $ 135,854 $ 465,384 $ 369,076
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
7. Inventories are classified as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
<S> <C> <C>
Purchased materials and manufactured parts....................................... $ 236,595 $ 162,600
Work in process.................................................................. 143,765 108,733
Finished goods................................................................... 459,524 337,193
-------------- -------------
$ 839,884 $ 608,526
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</TABLE>
8
<PAGE>
8. In the normal course of business, the Company is liable for contract
completion and product performance. In addition, the Company is in
receipt of notifications from various environmental agencies that
conditions at a number of sites where hazardous wastes were disposed of
by the Company and other persons may require cleanup and other possible
remedial action. In the opinion of management, these obligations will
not materially affect the Company's financial position or results of
operations.
9. In January 1997 the Company filed a shelf registration to enable
it to offer from time to time unsecured debt securities or shares of
common stock, or any combination of the foregoing, at an aggregate
initial offering price not to exceed $900 million. The Securities and
Exchange Commission has declared the shelf registration effective. In
March 1997, the Company sold 10 million shares of common stock at $57.75
per share. The net proceeds from the sale of $561.0 million were used to
repay indebtedness incurred for previous acquisitions. In April 1997,
the company sold an additional 1.5 million shares at $57.75 per share
and received net proceeds of $84.2 million.
10. The Financial Accounting Standards Board (the "FASB") has issued
Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation." The standard defines a fair
value based method of accounting for employee stock options. The
compensation expense arising from this method can be reflected in the
financial statements or, alternatively, the pro forma net income and
income per share effect of the fair value based accounting can be
disclosed in the footnotes to the financial statements. The Company will
adopt SFAS 123 in fiscal 1997 and expects to adopt the footnote
disclosure alternative.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per
Share," which is effective for fiscal years ending after December 15,
1997, including interim periods. Earlier adoption is not permitted.
However, an entity is permitted to disclose 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
standard 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.
9
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATING RESULTS
OVERVIEW
For the first nine months of fiscal 1997, net income was $281.1 million, or
$1.79 per share, compared with $215.9 million, or $1.41 per share, for the
first nine months of fiscal 1996. The increase was attributable to strong
earnings in each of the Company's business segments.
RESULTS OF OPERATIONS
Third Quarter of Fiscal 1997 Compared to Third Quarter of Fiscal 1996:
Sales increased 32% during the third quarter of fiscal 1997 to $1.65 billion
from $1.26 billion in the third quarter of fiscal 1996. Sales of the
Disposable and Specialty Products group increased $141.9 million to $499.6
million, or 40%, due to increased sales at Kendall, Ludlow, and Armin, as
well as the inclusion of Carlisle Plastics ("Carlisle") acquired in September
1996. The increase in sales resulted principally from the Carlisle
acquisition. Sales at Kendall increased primarily due to increased volume in
the Polyken business. Armin's sales increased due to higher selling prices.
Sales of the Fire and Safety Services group increased $133.0 million to
$630.1 million, or 27%, reflecting increased sales in each geographic region
of the contracting businesses, 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. Sales of the Flow Control Products group increased
$103.2 million to $379.4 million, or 37%, principally reflecting increased
volume at the European Flow Control operations, primarily from businesses
acquired in the second and third quarters of fiscal 1997, and at Mueller,
which includes businesses acquired in the first quarter of fiscal 1997, as
well as increased volume in existing businesses. Sales of the Electrical and
Electronic Components group increased $18.5 million to $145.1 million, or
15%, due to increased sales at the Printed Circuit Group operations primarily
resulting from the operations of ElectroStar, Inc. ("ElectroStar"), acquired
in January 1997, partially offset by decreased sales at Allied's electrical
conduit operations and at Simplex, where there was a decrease in kilometers
of cable shipped.
For the third quarter of fiscal 1997, as compared to the third quarter of
fiscal 1996, operating profits of the Disposable and Specialty Products group
increased $14.4 million to $89.8 million, or 19%, due primarily to higher
earnings at Kendall, principally due to the Polyken business, and Ludlow, as
well as the inclusion of Carlisle, which accounted for a substantial portion
of the increased profits. Operating profits of the Fire and Safety Services
group increased $13.5 million to $46.7 million, or 41%, due to higher margins
in contracting, primarily in North America, Europe and Asia, and the
inclusion of Thorn. The higher margins in contracting were the result of a
higher mix of service work within the contracting businesses. Operating
profits of the Flow Control Products group increased $13.5 million to $42.0
million, or 48%, due to increased earnings at each of the group's operations,
which include businesses acquired in the first, second and third quarters.
Increases in Europe Flow Control were primarily the result of acquisitions.
Increases at Mueller and Grinnell's distribution operations were the result
of margin increases and the impact of cost reductions. Operating profits of
the Electrical and Electronic Components group increased $4.5 million to
$28.8 million, or 18%, due principally to higher earnings at
10
<PAGE>
the Printed Circuit Group, including ElectroStar, partially offset by a
decrease at Simplex 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 value of the U.S. dollar for the
third quarter of fiscal 1997 as compared to the same period of fiscal 1996
was not material.
Interest expense increased $3.8 million to $20.1 million during the third
quarter of fiscal 1997 from the third quarter of fiscal 1996 due to higher
average debt balances for monies borrowed to make acquisitions.
FIRST NINE MONTHS OF FISCAL 1997 COMPARED WITH FIRST NINE MONTHS OF FISCAL 1996:
Sales during the first nine months of fiscal 1997 were $4.75 billion, a 28%
increase over fiscal 1996 sales of $3.72 billion. Sales of the Disposable and
Specialty Products group increased $385.8 million to $1.45 billion, or 36%,
due to increased sales principally at Kendall, Ludlow and Armin, as well as
the inclusion of 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 increased due to higher selling prices. Sales of
the Fire and Safety Services group increased $430.8 million to $1.88 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 and Earth Tech. Sales of the Flow Control
Products group increased $195.2 million to $1.04 billion, or 23%, reflecting
higher volume at Europe Flow Control, primarily from businesses acquired in
the second and third quarters of fiscal 1997, as well as 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 $16.9 million to $381.6
million, or 5%, resulting principally from increased sales at the Printed
Circuit Group operations, where approximately 60% of the Group's increase
resulted from the acquisition of ElectroStar, partially offset by lower sales
of underwater communications cable systems at Simplex, where there was a
decrease in kilometers of cable shipped.
For the first nine months of fiscal 1997 as compared to the first nine months
of fiscal 1996, operating profits of the Disposable and Specialty Products
group increased $54.5 million to $260.1 million, or 27%, reflecting higher
earnings at Kendall, resulting from the volume increases noted above, and
Ludlow, as well as the inclusion of Carlisle from September 1996. Operating
profits of the Fire and Safety Services group rose $45.2 million to $135.7
million, or 50%, due principally 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 $24.7 million to $104.9 million,
or 31%, resulting principally from increased earnings at Allied, Mueller and
European distribution operations, including businesses acquired during fiscal
1997. Increases in Europe Flow Control were primarily the result of
acquisitions. Increases at Allied and Mueller were the result of margin
increases and the impact of cost reductions. Operating profits of the
Electrical and Electronic Components group increased $4.9 million to $72.0
million, or 7%, due to increased earnings at the Printed Circuit Group
operations and Allied's electrical conduit operations, partially offset by
decreased earnings at Simplex.
11
<PAGE>
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 the
first nine months of fiscal 1997 as compared to the same period of fiscal
1996 was not material.
Interest expense increased $26.2 million to $72.9 million during the first
nine months of fiscal 1997 as compared to the first nine months of fiscal
1996 due principally to higher average debt balances for monies borrowed to
make acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Consolidated Statement of Cash Flows, net cash provided
by operating activities was $228.9 million during the first nine months of
fiscal 1997. The significant changes in working capital accounts were an
increase of $34.8 million in accounts receivable and contracts in process,
$106.0 million in inventory and a $130.2 million decrease in accounts payable
and accrued expenses. Net changes in other working capital accounts were not
significant during the period.
During the first nine months of fiscal 1997, the Company used cash to (i)
acquire companies in each of its business segments for an aggregate of $1.06
billion, including $784.1 million in cash, 3.1 million shares of the
Company's common stock, valued at $116.1 million, and the assumption of
$155.0 million in debt; (ii) purchase $151.4 million of property and
equipment; (iii) pay dividends of $23.3 million, and (iv) reacquire shares
for $5.3 million. The Company received net proceeds of $561.0 million from
the sale of 10 million shares of common stock.
At March 31, 1997 the Company's total debt was $954.0 million as compared to
$639.4 million at June 30, 1996. The increase resulted from the acquisitions
discussed above, partially offset by net operating cash flows and the net
proceeds from the sale of common stock.
Shareholders' equity was $2.85 billion, or $17.06 per share, at March 31,
1997, compared to $1.94 billion, or $12.67 per share, at June 30, 1996. The
increase is due primarily to net income of $281.1 million, the issuance of
the Company's shares for the Carlisle acquisition, and the sale of 10 million
shares of common stock. Total debt as a percent of total capitalization
(total debt and shareholders' equity) was 25% both at March 31, 1997 and June
30, 1996.
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 in the
Carlisle acquisition, as well as to reduce certain amounts outstanding under
the Company's credit agreement and uncommitted lines of credit. The Company
believes that its funding sources are adequate for its anticipated capital
and operating requirements through expected cash flows from operations and
established financing arrangements.
In January 1997 the Company filed a shelf registration to enable it to offer
from time to time unsecured debt securities or shares of common stock, or any
combination of the foregoing, at an aggregate initial offering price not to
exceed $900 million. The Securities and Exchange Commission has declared the
shelf registration effective. In March 1997, the Company sold 10 million
shares of common stock at $57.75 per share. The net proceeds from the sale of
$561.0 million were used to repay indebtedness incurred for previous
acquisitions. In April 1997, the Company sold an additional 1.5 million
shares at $57.75 per share and received net proceeds of $84.2 million.
12
<PAGE>
In April 1997 the company entered into an agreement with AT&T to acquire its
submarine systems business for approximately $850.0 million in cash. The
Company is in the process of establishing a commercial paper program and
increasing bank credit facilities, which will be used to fund the purchase.
Working capital requirements for the remainder of fiscal 1997 are not
expected to significantly exceed fiscal 1996 levels. The level of capital
expenditures is expected to increase in fiscal 1997 as compared to fiscal
1996 due to recent acquisitions as well as certain capital projects in
process, and the source of funds for such expenditures is expected to be cash
from operations.
BACKLOG
The backlog of unfilled orders was approximately $1.53 billion at March 31,
1997 and $1.15 billion at June 30, 1996. Backlog increased in the Company's
Disposable and Specialty Products, Fire and Safety Services, and Flow Control
Products segments, partially offset by a decrease in the Electrical and
Electronic Components segment. Within Fire and Safety Services, backlog
increased in each geographic region as well as from the acquisition of Thorn.
Within Electrical and Electronic Components, a decrease at Simplex was
partially offset by increases at the Printed Circuit Group.
ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (the "FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." The standard defines a fair value based method of accounting
for employee stock options. The compensation expense arising from this method
can be reflected in the financial statements or, alternatively, the pro forma
net income and income per share effect of the fair value based accounting can
be disclosed in the footnotes to the financial statements. The Company will
adopt SFAS 123 in fiscal 1997 and expects to adopt the footnote disclosure
alternative.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," which
is effective for fiscal years ending after December 15, 1997, including
interim periods. Earlier adoption is not permitted. However, an entity is
permitted to disclose 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 standard 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.
13
<PAGE>
PART II--OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10--Credit Agreement dated December 23, 1996
11--Earnings Per Share Computation
27--Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K on March 4, 1997 to put on file
the Underwriting Agreements in connection with its sale of 10 million shares
of common stock through Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Credit Suisse First Boston Corporation, Lehman Brothers, Inc., and J.P.
Morgan Securities, Inc.
The Company filed a Report on Form 8-K on March 25, 1997 to put on file
the Agreement and Plan of Merger, dated as of March 17, 1997, by and among
ADT Limited, Limited Apache, Inc. and Tyco International Ltd.
The Company filed a Report on Form 8-K on March 28, 1997 to put on file
the audited financial statements of ADT Limited as of December 31, 1996 and
1995 and for the three years in the period ended December 31, 1996, the
unaudited pro forma combined financial information giving effect to the
merger of ADT Limited and Tyco International Ltd. as of and for the three
years in the period ended December 31, 1996, and the consent of Coopers &
Lybrand.
14
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TYCO INTERNATIONAL LTD.
/s/ Mark H. Swartz
---------------------------------
Mark H. Swartz
Vice President--Chief Financial Officer
(Principal Accounting and Financial Officer)
Date: May 14, 1997
15
<PAGE>
TYCO INTERNATIONAL LTD.
INDEX TO EXHIBITS
EXHIBIT NO.
- -----------
10 Credit Agreement dated December 23, 1996
11 Earnings Per Share Computation
27 Financial Data Schedule
<PAGE>
Exhibit 10
[FINAL EXECUTION COPY]
$300,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
December 23, 1996
among
Tyco International Ltd.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions..................................... 1
SECTION 1.02. Accounting Terms and
Determinations............................... 18
SECTION 1.03. Types of Borrowings............................. 19
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend............................. 19
SECTION 2.02. Notice of Committed Borrowing................... 19
SECTION 2.03. Money Market Borrowings......................... 20
SECTION 2.04. Notice to Banks; Funding of Loans............... 24
SECTION 2.05. Promissory Notes................................ 25
SECTION 2.06. Maturity of Loans............................... 26
SECTION 2.07. Interest Rates.................................. 26
SECTION 2.08. Facility Fee.................................... 30
SECTION 2.09. Optional Termination or Reduction
of Commitments............................... 31
SECTION 2.10. Mandatory Termination of
Commitments.................................. 31
SECTION 2.11. Optional Prepayments............................ 31
SECTION 2.12. General Provisions as to Payments............... 32
SECTION 2.13. Funding Losses.................................. 32
SECTION 2.14. Computation of Interest and Fees................ 33
SECTION 2.15. Regulation D Compensation.................... 33
SECTION 2.16. Method of Electing Interest Rates............... 34
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness................................... 36
SECTION 3.02. Borrowings...................................... 37
- --------
*The Table of Contents is not a part of this Agreement.
i
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Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power................... 38
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention.............. 38
SECTION 4.03. Binding Effect.................................. 39
SECTION 4.04. Financial Information........................... 39
SECTION 4.05. Litigation...................................... 39
SECTION 4.06. Compliance with ERISA........................... 40
SECTION 4.07. Environmental Matters........................... 40
SECTION 4.08. Taxes........................................... 41
SECTION 4.09. Subsidiaries.................................... 41
SECTION 4.10. Not an Investment Company....................... 41
SECTION 4.11. Full Disclosure................................. 41
ARTICLE V
COVENANTS
SECTION 5.01. Information..................................... 42
SECTION 5.02. Payment of Obligations.......................... 45
SECTION 5.03. Maintenance of Property; Insurance.............. 45
SECTION 5.04. Conduct of Business and Maintenance
of Existence................................. 45
SECTION 5.05. Compliance with Laws............................ 46
SECTION 5.06. Inspection of Property, Books and
Records; Confidentiality..................... 46
SECTION 5.07. Limitation on Restrictions on
Subsidiary Dividends and Other
Distributions................................ 48
SECTION 5.08. Debt............................................ 50
SECTION 5.09. Fixed Charge Coverage........................... 51
SECTION 5.10. Restricted Payments............................. 51
SECTION 5.11. Negative Pledge................................. 51
SECTION 5.12. Consolidations, Mergers and Sales
of Assets.................................... 53
SECTION 5.13. Use of Proceeds................................. 54
SECTION 5.14. Transactions with Affiliates.................... 54
ARTICLE VI
ii
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Page
----
DEFAULTS
SECTION 6.01. Events of Default............................... 56
SECTION 6.02. Notice of Default............................... 59
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization................... 59
SECTION 7.02. Agent and Affiliates............................ 59
SECTION 7.03. Action by Agent................................. 59
SECTION 7.04. Consultation with Experts....................... 60
SECTION 7.05. Liability of Agent.............................. 60
SECTION 7.06. Indemnification................................. 60
SECTION 7.07. Credit Decision................................. 61
SECTION 7.08. Successor Agent................................. 61
SECTION 7.09. Agent's Fee..................................... 61
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair......................... 62
SECTION 8.02. Illegality...................................... 62
SECTION 8.03. Increased Cost and Reduced Return............... 63
SECTION 8.04. Taxes........................................... 65
SECTION 8.05. Base Rate Loans Substituted for
Affected Fixed Rate Loans.................... 67
SECTION 8.06 Substitution of Bank............................. 68
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices......................................... 68
SECTION 9.02. No Waivers...................................... 69
SECTION 9.03. Expenses; Indemnification....................... 69
SECTION 9.04. Sharing of Set-Offs............................. 70
SECTION 9.05. Amendments and Waivers.......................... 70
iii
<PAGE>
SECTION 9.06. Successors and Assigns.......................... 71
SECTION 9.07. Collateral...................................... 73
SECTION 9.08. GOVERNING LAW; SUBMISSION TO
JURISDICTION................................. 73
SECTION 9.09. Counterparts; Integration....................... 73
SECTION 9.10. WAIVER OF JURY TRIAL............................ 73
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
iv
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
AGREEMENT dated as of December 23, 1996 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, the Banks listed on the signature pages
hereof and the Agent are parties to a Credit Agreement dated as of October 17,
1994 (as amended to the Effective Date (as defined below), the "Original
Agreement"); and
WHEREAS, the parties hereto wish to modify the Original Agreement in
a number of respects, as more fully set forth below;
NOW, THEREFORE, the parties hereto hereby agree that, on and as of
the Effective Date, the Original Agreement is hereby amended and restated in its
entirety as follows:
ARTICLE I
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.
"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
<PAGE>
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, any successor
agent that becomes the Agent pursuant to Section 7.08, and the respective
corporate successors of the foregoing acting in such capacity.
"Agreement" means the Original Agreement as amended and restated by
this Amended Agreement and as the same may be further amended from time to time
in accordance with the terms hereof.
"Amended Agreement" means this Amended and Restated Credit Agreement
dated as of December 23, 1996 among the Borrower, the Banks and the Agent.
"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.
2
<PAGE>
"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
VIII.
"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.
"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 Mellon Bank, N.A., The Toronto Dominion
Bank 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.
3
<PAGE>
"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.
"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) 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 such
excluded Debt at any date does not exceed $40,000,000.
"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
4
<PAGE>
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, any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"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.
5
<PAGE>
"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
6
<PAGE>
guarantee, letter of credit or other form of credit enhancement. If a Debt
Rating 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 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,
7
<PAGE>
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.
"ERISA Group" means the Borrower, any 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
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
Mellon Bank, N.A., The Toronto Dominion Bank 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.
"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
8
<PAGE>
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 and the Promissory Notes.
"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 VIII, 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.
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"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.
"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:
(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
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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) below) 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
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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
(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 and A3 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 BBB+ by S&P or Baa1 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 Baa2 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 BBBby S&P or Baa3 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.
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"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.
"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 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 WhollyOwned
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 $30,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"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.
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"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)).
"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.
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"Original Agreement" has the meaning set forth in the recitals
hereto.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"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,
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 $300,000,000 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 $300,000,000.
"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.
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"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.
"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 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 Guarantor and
(B) any other Consolidated Subsidiary
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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.
"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 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 the Borrower.
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"Subsidiary Guarantee" means a Guarantee entered into by a
Subsidiary substantially in the form of Exhibit H hereto.
"Termination Date" means December 23, 2001, 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.
"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 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 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 V 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
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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 II 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 II
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).
ARTICLE II
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 3.02(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 10:30 A.M.
(New York City time)
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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. 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 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
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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 (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 capacity of a Bank may be submitted, and may only
be
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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 III and VI, 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:
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(A) is not substantially in conformity with Exhibit D hereto or does
not specify all of the information required by subsection (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
(D) arrives after the time set forth in subsection (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 (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 (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
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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 (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
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<PAGE>
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III 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 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
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<PAGE>
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
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<PAGE>
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 clause (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.
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<PAGE>
"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.
"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. ss. 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.
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<PAGE>
(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 clause (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.
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<PAGE>
(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 0.175% 0.210% 0.250% 0.300% 0.400%
CD Loans 0.300% 0.335% 0.375% 0.425% 0.525%
</TABLE>
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) 0.075% if Level I Status
exists at such date, (ii) 0.090% if Level II Status exists at such date, (iii)
0.125% if Level III Status exists at such date, (iv) 0.150% if Level IV Status
exists at such date or (v) 0.225% if Level V Status exists at such date.
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<PAGE>
(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
Domestic 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 such prepayment and once notice is so
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<PAGE>
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 II, VI or VIII (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
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<PAGE>
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 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 EuroDollar 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 EuroDollar
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
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<PAGE>
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 (d) of this Section and the provisions of Article VIII), 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
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<PAGE>
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 (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
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<PAGE>
$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 III
CONDITIONS
SECTION 3.01. Effectiveness. This Amended 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 Closing 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 Guarantor under the Original
Agreement of (i) a Subsidiary Guarantee in substantially the form of
Exhibit H hereto, duly executed by such Guarantor, (ii) an opinion of
counsel for such 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,
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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
(g) receipt by the Agent of evidence satisfactory to it of the
payment of all principal of and interest on any loans outstanding under,
and of all other amounts payable under, the Original Credit Agreement;
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
December 31, 1996. On the Effective Date the Original Agreement will be
automatically amended and restated in its entirety to read as set forth herein.
On and after the Effective Date the rights and obligations of the parties hereto
shall be governed by this Amended Agreement; provided the rights and obligations
of the parties hereto with respect to the period prior to the Effective Date
shall continue to be governed by the provisions of the Original Agreement. On
the Effective Date, any Bank whose Commitment is changed to zero shall cease to
be a Bank party to this Agreement and all accrued fees and other amounts payable
under this Agreement for the account of such Bank shall be due and payable on
such date; provided that the provisions of Section 9.03 of this Agreement shall
continue to inure to the benefit of each such Bank. The Notes delivered to each
Bank under the Original Agreement shall be cancelled and Notes under this
Amended Agreement shall be given in substitution therefor. Each Bank shall
promptly after the Effective Date deliver to the Borrower for cancellation the
Note delivered to such Bank under the Original Agreement. The Agent shall
promptly notify the Borrower and each Bank of the effectiveness of this Amended
Agreement, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.02. 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:
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(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 clauses
(b), (c) and (d) of this Section.
ARTICLE IV
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
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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.
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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 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
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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 November 15, 1996 by
J.P. Morgan Securities Inc. to a limited number of banks which were being
invited to participate in this Amended 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 V
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 95 days after the
end of each fiscal year of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries as of the
end of such fiscal year and the related consolidated and consolidating
statements of income and consolidated statements 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, such
consolidated balance sheet and statements 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 50 days after the
end of each of the first three quarters of each fiscal year of the
Borrower, consolidated and consolidating balance sheets of the Borrower
and its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated and consolidating 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 clauses (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 clause (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
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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
(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.
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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
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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 or (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.
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
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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:
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(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 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,
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(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
Closing 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 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,
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(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) $40,000,000 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 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 $150,000,000 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.
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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 related out-of-pocket fees
and expenses) 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). 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 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 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
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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 clauses (a) through (e) of this Section
5.12, 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);
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(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) $40,000,000 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 clauses (a), (b), (d),
(e), (f) (but only with respect to the Refinancing of a Debt secured by a Lien
permitted pursuant to clauses (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 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;
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(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 or a Subsidiary, 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,
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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 clauses (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 VI
DEFAULTS
SECTION 6.01. Events of Default. 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 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) 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);
(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
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such holder or holders to accelerate the maturity thereof;
(h) 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;
(i) (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;
(j) 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
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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;
(k) 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;
(l) 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; or
(m) 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 $25,000,000 at any one time for the Borrower and its Subsidiaries;
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
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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 clause (h) or (i) 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 VII
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 VI.
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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 III, 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 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
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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 $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.
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ARTICLE VIII
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 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 Amended
Agreement, any Bank has determined in its reasonable judgment that the adoption
of any applicable
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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 Amended 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
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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
Amended 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.
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<PAGE>
(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 Amended
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 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
65
<PAGE>
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 Amended 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
66
<PAGE>
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
67
<PAGE>
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 IX
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)
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<PAGE>
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 II or Article VIII 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
69
<PAGE>
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 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
70
<PAGE>
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, or (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.
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) below, be entitled to the
benefits of Article VIII with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (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
71
<PAGE>
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.
72
<PAGE>
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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<PAGE>
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:
By
---------------------------------
Title:
1 Tyco Park
Exeter, New Hampshire 03833
Facsimile number: 603-778-0108
Commitments
$45,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
---------------------------------
Title:
<PAGE>
$45,000,000 THE TORONTO DOMINION BANK
By
---------------------------------
Title:
$30,000,000 BANKERS TRUST COMPANY
By
---------------------------------
Title:
$30,000,000 CREDIT SUISSE
By
---------------------------------
Title:
By
---------------------------------
Title:
$30,000,000 THE FIRST NATIONAL BANK OF BOSTON
By
---------------------------------
Title:
$30,000,000 MELLON BANK, N.A.
By
---------------------------------
Title:
$22,500,000 BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
By
---------------------------------
Title:
By
---------------------------------
Title:
<PAGE>
$22,500,000 COMMERZBANK AKTIENGESELLSCHAFT
By
---------------------------------
Title:
By
---------------------------------
Title:
$22,500,000 ISTITUTO BANCARIO SAN PAOLO DI
TORINO SPA
By
---------------------------------
Title:
$22,500,000 THE SANWA BANK, LIMITED
By
---------------------------------
Title:
- -----------------
Total Commitments
$300,000,000
=================
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>
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 Amended and Restated Credit Agreement dated as of December 23, 1996 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
<PAGE>
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.
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>
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>
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Tyco International Ltd.
Re: Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of December 23,
1996 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* Interest Period**
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
- --------
* Amount must be $5,000,000 or a larger multiple of $1,000,000.
** 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>
Terms used herein have the meanings assigned to them in the Credit
Agreement.
TYCO INTERNATIONAL LTD.
By
----------------------------------
Title:
By
----------------------------------
Title:
<PAGE>
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 Amended and Restated Credit
Agreement dated as of December 23, 1996 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>
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
<PAGE>
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)
We understand and agree that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Amended and
Restated Credit Agreement dated as of December 23, 1996 (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 7 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>
EXHIBIT E
Form of Opinion of General Counsel
of the Borrower
December 23, 1996
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 Amended and Restated Credit Agreement (the "Credit Agreement"),
dated as of December 23, 1996, 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
<PAGE>
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 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)
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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.
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.
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<PAGE>
(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
4
<PAGE>
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,
5
<PAGE>
Distribution List
Agent
Morgan Guaranty Trust Company of New York
Banks
Bank Brussels Lambert, New York Branch
Bankers Trust Company
Commerzbank Aktiengesellschaft
Credit Suisse
The First National Bank of Boston
Istituto Bancario San Paolo Di Torino SPA
Mellon Bank, N.A.
Morgan Guaranty Trust Company of New York
The Sanwa Bank, Limited
The Toronto Dominion Bank
<PAGE>
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 Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of December 23, 1996, 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
<PAGE>
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.
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>
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 Amended and Restated Credit Agreement dated as of December 23,
1996 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.
<PAGE>
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 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.* 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
- --------
* 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.
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<PAGE>
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.
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:
3
<PAGE>
TYCO INTERNATIONAL LTD.
By
------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
------------------------------
Title:
4
<PAGE>
EXHIBIT H
SUBSIDIARY GUARANTEE
Dated as of December 23, 1996
WHEREAS, Tyco International Ltd., a Massachusetts corporation
(together with its successors, the "Borrower") has entered into an Amended and
Restated Credit Agreement (as the same may be amended from time to time, the
"Credit Agreement") dated as of December 23, 1996 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 $300,000,000;
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 I
DEFINITIONS
SECTION 1.01. 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
<PAGE>
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.
ARTICLE II
GUARANTEE
SECTION 2.01. The Guarantees. Subject to Section 2.03, 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 2.03, 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 2.02. Guarantee Unconditional. The obligations of the
Guarantor under this Article II 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 4.03);
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(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 the provisions of this
paragraph, constitute a legal or equitable discharge of the obligations of
the Guarantor under this Article II.
SECTION 2.03. 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 2.04. Discharge; Reinstatement in Certain Circumstances.
Subject to Section 4.06, the Guarantor's obligations under this Article II 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
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<PAGE>
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 II 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 2.05. 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 2.06. 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
2.06, 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 2.06 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(h)
or 6.01(i) 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.
4
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SECTION 2.07. 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 III
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Agent and the Banks
that:
SECTION 3.01. Corporate Existence and Power. The Guarantor is a
corporation duly incorporated, validly existing and in good standing under the
laws of ___________.
SECTION 3.02. 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 3.03. Binding Effect. This Subsidiary Guarantee constitutes
a valid and binding obligation of the Guarantor.
SECTION 3.04. Not an Investment Company. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
5
<PAGE>
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. 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 4.01 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 4.01 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 4.01.
SECTION 4.02. 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 4.03. 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 4.04. 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
6
<PAGE>
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 4.05. 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
4.05 shall be modified in a manner satisfactory to the Agent and the Guarantor
to indemnify for any foreign taxes which may be applicable.
SECTION 4.06. 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 4.06(a),
and upon such delivery this Subsidiary Guarantee shall terminate and the
Guarantor shall have no further obligations hereunder.
SECTION 4.07. 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
7
<PAGE>
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 4.08. 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.
8
<PAGE>
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:
9
<PAGE>
EXHIBIT I
[Form of Opinion of Counsel for the Guarantor]
December 23, 1996
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 Guarantor] (the "Guarantor"), and am rendering this opinion in connection
with that certain Subsidiary Guarantee (the "Subsidiary Guarantee"), dated as of
December 23, 1996, entered into by the Guarantor, pursuant to that certain
Amended and Restated Credit Agreement (the "Credit Agreement"), dated as of
December 23, 1996, 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.
<PAGE>
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:
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
2
<PAGE>
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.
(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
3
<PAGE>
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,
4
<PAGE>
TYCO INTERNATIONAL LTD.
EXHIBIT 11
EARNINGS PER SHARE COMPUTATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- --------- ---------- ----------
Calculation of earnings per share:
Primary:
Weighted average common shares outstanding during the period............ 159,841 152,530 156,853 152,700
Effect of the restricted stock plan, stock options and warrants using
the treasury stock method............................................. 0 261 447 109
---------- --------- ---------- ----------
Total common equivalent shares.......................................... 159,841 152,791 157,300 152,809
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Net income.............................................................. $ 106,704 $ 79,474 $ 281,074 $ 215,909
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Earnings per share...................................................... $ 0.67 $ 0.52 $ 1.79 $ 1.41
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Fully Diluted(1):
Weighted average common shares outstanding during the period............ 159,841 152,530 156,853 152,700
Effect of the restricted stock plan, stock options and warrants using
the treasury stock method............................................. 162 261 532 204
---------- --------- ---------- ----------
Total common equivalent shares.......................................... 160,003 152,791 157,385 152,904
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Net income.............................................................. $ 106,704 $ 79,474 $ 281,074 $ 215,909
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Earnings per share...................................................... $ 0.67 $ 0.52 1.79 $ 1.41
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</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>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF TYCO INTERNATIONAL LTD. AS OF AND FOR THE NINE
MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 63,204
<SECURITIES> 0
<RECEIVABLES> 976,957
<ALLOWANCES> 63,334
<INVENTORY> 839,884
<CURRENT-ASSETS> 2,225,420
<PP&E> 1,738,993
<DEPRECIATION> 741,362
<TOTAL-ASSETS> 5,606,256
<CURRENT-LIABILITIES> 1,683,623
<BONDS> 838,232
0
0
<COMMON> 83,414
<OTHER-SE> 2,762,324
<TOTAL-LIABILITY-AND-EQUITY> 5,606,266
<SALES> 4,746,297
<TOTAL-REVENUES> 4,746,297
<CGS> 3,439,645
<TOTAL-COSTS> 3,439,645
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,888
<INCOME-PRETAX> 465,384
<INCOME-TAX> 184,310
<INCOME-CONTINUING> 281,074
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 281,074
<EPS-PRIMARY> 1.79
<EPS-DILUTED> 1.79
</TABLE>
