<PAGE> 1
FORM 8-B
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION OF SECURITIES OF CERTAIN SUCCESSOR ISSUERS
FILED PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
ITT Industries, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 13-5158950
- ---------------------------- -------------------------------
(State or other Jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
Four West Red Oak Lane, White Plains, NY 10604
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class
to be so registered is to be registered
- ------------------- -------------------
Common Stock New York Stock
Exchange, Inc.
(also on Pacific Stock Exchange)
8-7/8% Senior Debentures New York Stock
Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act: None.
<PAGE> 2
Item 1. General Information.
(a) ITT Industries, Inc. ("ITT Industries") was organized as
a corporation under the laws of the State of Indiana on September 5, 1995 under
the name "ITT Indiana, Inc."
(b) The fiscal year of the ITT Industries ends on December
31.
Item 2. Transaction of Succession.
(a) ITT Corporation, a Delaware corporation, was the
predecessor corporation which had securities registered pursuant to Section
12(b) of the Securities Exchange Act of 1934 at the time of succession.
(b) The transaction of succession is summarized under the
captions "Proxy Statement Summary--The Distribution" and "Proxy Statement
Summary--The Reincorporation of ITT" and described in greater detail under the
captions "The Distribution" and "The Reincorporation of ITT" in the ITT
Corporation Notice of Special Meeting and Proxy Statement dated August 30, 1995
included herewith as Exhibit B (the "Proxy Statement") and such sections are
incorporated herein by reference.
Item 3. Securities to be Registered.
(a) As to the shares of common stock, par value $1.00 per
share, of ITT Industries ("ITT Industries Common Stock") being registered, as
of December 14, 1995, there were (i) 200,000,000 shares authorized, (ii)
116,967,739 shares issued and (iii) 28,180,269 shares issued which were held by
or for the account of ITT Industries.
(b) As to the 8-7/8% Senior Debentures due June 1, 2010 (the
"Senior Debentures") being registered, as of December 14, 1995, there were (i)
$1,438,000 in aggregate principal amount of the debentures authorized and
issued and (ii) $0 in aggregate principal amount of the debentures issued which
were held by or for the account of ITT Industries.
Page 2
<PAGE> 3
Item 4. Description of Registrant's Securities to Be Registered.
(a) The information required by this Item 4 in respect of the
ITT Industries Common Stock is set forth under the caption "Description of ITT
Industries Capital Stock" of the Proxy Statement and such section is
incorporated herein by reference.
(b) The information required by this Item 4 in respect of the
Senior Debentures is set forth under the captions "Description of the
Debentures" of ITT Financial Corporation's ("ITT Financial") Prospectus
Supplement dated May 24, 1990 and "Description of Debt Securities" of ITT
Financial's Prospectus dated November 15, 1989, each contained in the
Registration Statement of ITT Financial (Reg. No. 33-31957) and such sections
are incorporated herein by reference.
Item 5. Financial Statements and Exhibits.
(a) Pursuant to Instruction (a), no financial statements are required
to be filed as part of this registration statement.
(b) The following documents are filed as exhibits hereto:
Exhibits Required
by Form 8-B Description
----------- -----------
A Agreement and Plan of Merger dated as of November 1,
1995 between ITT Corporation and ITT Indiana, Inc.
B ITT Corporation Notice of Special Meeting and Proxy
Statement dated August 30, 1995 (filed with the
Securities and Exchange Commission on September 21,
1995 and incorporated herein by reference) (File No.
1-5627)
Exhibits Required
by Form 10 Description
---------- -----------
3.1 Articles of Incorporation of ITT Indiana, Inc.
3.2 By-laws of ITT Indiana, Inc.
Page 3
<PAGE> 4
Exhibits Required
by Form 10 Description
---------- -----------
4.1 Specimen Common Share certificate
4.2 Articles of Incorporation of ITT Indiana, Inc.
(filed as Exhibit 3.1 hereto)
4.3 By-laws of ITT Indiana, Inc. (filed as Exhibit 3.2
hereto)
4.4 Rights Agreement dated as of November 1, 1995
between ITT Indiana, Inc. and The Bank of New York,
as Rights Agent
4.5 Form of Articles of Amendment Setting Forth the
Designations, Voting Powers, Preferences and
Relative, Participating, Optional and Other Special
Rights and Qualifications, Limitations or
Restrictions of Series A Participating Cumulative
Preferred Stock of ITT Indiana, Inc. (attached as
Exhibit A to the Rights Agreement filed as Exhibit
4.4 hereto)
4.6 Form of Right Certificate (attached as Exhibit B to
the Rights Agreement filed as Exhibit 4.4 hereto)
4.7 Agreement to furnish instruments upon request by the
Securities and Exchange Commission (incorporated by
reference to ITT Corporation's Form 10-K for the
fiscal year ended December 31, 1994) (File No.
1-5627)
10.1 Distribution Agreement among ITT Corporation, ITT
Destinations, Inc. and ITT Hartford Group, Inc.
10.2 Intellectual Property License Agreement between and
among ITT Corporation, ITT Destinations, Inc. and
ITT Hartford Group, Inc.
10.3 Form of Tax Allocation Agreement among ITT
Corporation, ITT Destinations, Inc. and ITT Hartford
Group, Inc.
10.4 Trademark Assignment Agreement between ITT
Corporation and ITT Destinations, Inc.
Page 4
<PAGE> 5
Exhibits Required
by Form 10 Description
---------- -----------
10.5 License Assignment Agreement between ITT Corporation
and ITT Destinations, Inc.
10.6 Trade Name and Service Mark License Agreement
between ITT Corporation and ITT Hartford Group, Inc.
10.7 Employee Benefit Services and Liability Agreement
among ITT Corporation, ITT Destinations, Inc. and
ITT Hartford Group, Inc.
10.8 364-Day Competitive Advance and Revolving Credit
Facility Agreement dated as of November 10, 1995
among ITT Industries, Inc., the Lenders named
therein, and Chemical Bank, as Administrative Agent
10.9 Five-Year Competitive Advance and Revolving Credit
Facility Agreement dated as of November 10, 1995
among ITT Industries, Inc., the Lenders named
therein and Chemical Bank, as Administrative Agent
10.10 Form of 1996 ITT Corporation Restricted Stock Plan
for Non-Employee Directors (attached as Annex G to
the ITT Corporation Notice of Special Meeting and
Proxy Statement filed as Exhibit B hereto)
10.11 Form of indemnification agreement with members of
the Board of Directors (incorporated by reference to
ITT Corporation's Form SE dated March 28, 1988 (CIK
No. 216228) relating to ITT Corporation's Form 10-K
for the fiscal year ended December 31, 1987) (File
No. 1-5627)
10.12 ITT Corporation 1994 Incentive Stock Plan
(incorporated by reference to ITT Corporation's
Registration Statement on Form S-8) (Reg. No. 33-
53771)
Page 5
<PAGE> 6
Exhibits Required
by Form 10 Description
---------- -----------
10.13 ITT Corporation 1986 Incentive Stock Plan
(incorporated by reference to ITT Corporation's
Registration Statement on Form S-8) (Reg. No.
33-5412)
10.14 ITT Corporation 1977 Stock Option Incentive Plan
(incorporated by reference to ITT Corporation's
Registration Statement on Form S-8) (Reg. No.
33-5412)
10.15 ITT Industries, Inc. Senior Executive Severance Pay
Plan
10.16 Form of D. Travis Engen employment agreement
21 Subsidiaries of ITT Industries, Inc.
Page 6
<PAGE> 7
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
ITT INDUSTRIES, INC.
By: /s/ Robert W. Beicke
-------------------------
Name: Robert W. Beicke
Title: Vice President
Dated: December 20, 1995
Page 7
<PAGE> 8
<TABLE>
<CAPTION>
Exhibits Required
by Form 8-B Description
----------- -----------
<S> <C>
A Agreement and Plan of Merger dated as of November 1,
1995 between ITT Corporation and ITT Indiana, Inc.
B ITT Corporation Notice of Special Meeting and Proxy
Statement dated August 30, 1995 (filed with the
Securities and Exchange Commission on September 21,
1995 and incorporated herein by reference) (File No.
1-5627)
</TABLE>
<TABLE>
<CAPTION>
Exhibits Required
by Form 10 Description
---------- -----------
<S> <C>
3.1 Articles of Incorporation of ITT Indiana, Inc.
3.2 By-laws of ITT Indiana, Inc.
4.1 Specimen Common Share certificate
4.2 Articles of Incorporation of ITT Indiana, Inc.
(filed as Exhibit 3.1 hereto)
4.3 By-laws of ITT Indiana, Inc. (filed as Exhibit 3.2
hereto)
4.4 Rights Agreement dated as of November 1, 1995
between ITT Indiana, Inc. and The Bank of New York,
as Rights Agent
4.5 Form of Articles of Amendment Setting Forth the
Designations, Voting Powers, Preferences and
Relative, Participating, Optional and Other Special
Rights and Qualifications, Limitations or
Restrictions of Series A Participating Cumulative
Preferred Stock of ITT Indiana, Inc. (attached as
Exhibit A to the Rights Agreement filed as Exhibit
4.4 hereto)
4.6 Form of Right Certificate (attached as Exhibit B to
the Rights Agreement filed as Exhibit 4.4 hereto)
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
Exhibits Required
by Form 10 Description
---------- -----------
<S> <C>
4.7 Agreement to furnish instruments upon request by the
Securities and Exchange Commission (incorporated by
reference to ITT Corporation's Form 10-K for the
fiscal year ended December 31, 1994) (File No.
1-5627)
10.1 Distribution Agreement among ITT Corporation, ITT
Destinations, Inc. and ITT Hartford Group, Inc.
10.2 Intellectual Property License Agreement between and
among ITT Corporation, ITT Destinations, Inc. and
ITT Hartford Group, Inc.
10.3 Form of Tax Allocation Agreement among ITT
Corporation, ITT Destinations, Inc. and ITT Hartford
Group, Inc.
10.4 Trademark Assignment Agreement between ITT
Corporation and ITT Destinations, Inc.
10.5 License Assignment Agreement between ITT Corporation
and ITT Destinations, Inc.
10.6 Trade Name and Service Mark License Agreement
between ITT Corporation and ITT Hartford Group, Inc.
10.7 Employee Benefit Services and Liability Agreement
among ITT Corporation, ITT Destinations, Inc. and
ITT Hartford Group, Inc.
10.8 364-Day Competitive Advance and Revolving Credit
Facility Agreement dated as of November 10, 1995
among ITT Industries, Inc., the Lenders named
therein and Chemical Bank, as Administrative Agent
10.9 Five-Year Competitive Advance and Revolving Credit
Facility Agreement dated as of November 10, 1995
among ITT Industries, Inc., the Lenders named
therein and Chemical Bank, as Administrative Agent
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Exhibits Required
by Form 10 Description
---------- -----------
<S> <C>
10.10 Form of 1996 ITT Corporation Restricted Stock Plan
for Non-Employee Directors (attached as Annex G to
the ITT Corporation Notice of Special Meeting and
Proxy Statement filed as Exhibit B hereto)
10.11 Form of indemnification agreement with members of
the Board of Directors (incorporated by reference to
ITT Corporation's Form SE dated March 28, 1988 (CIK
No. 216228) relating to ITT Corporation's Form 10-K
for the fiscal year ended December 31, 1987) (File
No. 1-5627)
10.12 ITT Corporation 1994 Incentive Stock Plan
(incorporated by reference to ITT Corporation's
Registration Statement on Form S-8) (Reg. No. 33-
53771)
10.13 ITT Corporation 1986 Incentive Stock Plan
(incorporated by reference to ITT Corporation's
Registration Statement on Form S-8) (Reg. No.
33-5412)
10.14 ITT Corporation 1977 Stock Option Incentive Plan
(incorporated by reference to ITT Corporation's
Registration Statement on Form S-8) (Reg. No.
33-5412)
10.15 ITT Industries, Inc. Senior Executive Severance Pay
Plan
10.16 Form of D. Travis Engen employment agreement
21 Subsidiaries of ITT Industries, Inc.
</TABLE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER dated as of November 1, 1995, between ITT
CORPORATION, a Delaware corporation ("ITT"), and ITT INDIANA, INC., an Indiana
corporation and a wholly owned subsidiary of ITT ("ITT Indiana").
WHEREAS ITT has authorized capital stock consisting of (a) 200,000,000
shares of Common Stock, par value $1 per share ("ITT Common Stock"), of which
116,641,417 shares were issued and outstanding and 28,506,591 shares were held
in the treasury of ITT as of October 23, 1995, and (b) 50,000,000 shares of
Preferred Stock, without par value, of which none are issued and outstanding;
WHEREAS ITT Indiana has authorized capital stock consisting of (a)
200,000,000 shares of Common Stock, par value $1 per share ("ITT Indiana Common
Stock" and after the Effective Time of the Merger, as defined below, "Surviving
Corporation Common Stock"), of which 100 shares are issued and outstanding and
held by ITT, and (b) 50,000,000 shares of Preferred Stock, without par value, of
which none are issued and outstanding; and
WHEREAS ITT and ITT Indiana desire that ITT merge with and into ITT Indiana
and that ITT Indiana shall continue as the surviving corporation in such merger,
upon the terms and subject to the conditions herein set forth and in accordance
with the laws of the State of Delaware and the laws of the State of Indiana.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
MERGER
SECTION 1.01. Merger. Subject to the terms and conditions of this
Agreement, ITT shall be merged (the "Merger") with and into ITT Indiana in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and the Business Corporation Law of the State of Indiana (the "IBCL"),
the separate existence of ITT shall cease and ITT Indiana shall be the surviving
corporation (hereinafter sometimes referred to as the "Surviving Corporation")
and continue its corporate existence under the laws of the State of Indiana. The
Surviving Corporation shall succeed, insofar as permitted by law, to all the
rights, assets, liabilities and obligations of ITT (including, without
limitation, as contemplated by Article IV).
SECTION 1.02. Effective Time of the Merger. The Merger shall become
effective as of the date and time (the "Effective Time of the Merger") the
following actions are completed: (a) this Agreement or an appropriate
certificate of merger is filed with the Secretary of State of the State of
Delaware in accordance with the DGCL and (b) appropriate articles of merger are
filed with the Secretary of State of the State of Indiana in accordance with the
IBCL.
SECTION 1.03. Further Assurances. From time to time, as and when required
by the Surviving Corporation or by its successors or assigns, there shall be
executed and delivered on behalf of ITT such deeds and other instruments, and
there shall be taken or caused to be taken by it all such further and other
action, as shall be appropriate, advisable or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation the
title to and possession of all property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of ITT, and otherwise to carry out
the purpose of this Agreement, and the officers and directors of the Surviving
Corporation are fully authorized in the name and on behalf of ITT or otherwise,
to take any and all such action and to execute and deliver any and all such
deeds and other instruments.
<PAGE> 2
ARTICLE II
NAME, ARTICLES OF INCORPORATION,
BY-LAWS, DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION
SECTION 2.01. Name of Surviving Corporation. The name of the Surviving
Corporation shall be ITT Industries, Inc.
SECTION 2.02. Articles of Incorporation. At the Effective Time of the
Merger, Article First of the Articles of Incorporation of ITT Indiana shall be
amended to read in its entirety as follows:
The name of the corporation is ITT Industries, Inc.
The Articles of Incorporation of ITT Indiana in effect immediately prior to
the Effective Time of the Merger, as so amended, shall be the Articles of
Incorporation of the Surviving Corporation after the Effective Time of the
Merger until further amended thereafter as provided therein or by law.
SECTION 2.03. By-laws. The By-laws of ITT Indiana in effect at the
Effective Time of the Merger shall be the By-laws of the Surviving Corporation
after the Effective Time of the Merger until amended thereafter as provided
therein or by law.
SECTION 2.04. Directors and Officers. The directors and officers of ITT
at the Effective Time of the Merger shall continue to be the directors and
officers, respectively, of the Surviving Corporation after the Effective Time of
the Merger until expiration of their current terms as such, or prior
resignation, removal or death, subject to the Articles of Incorporation and
By-laws of the Surviving Corporation.
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
SECTION 3.01. Conversion. At the Effective Time of the Merger, each of
the following transactions shall be deemed to occur simultaneously:
(a) Each share of ITT Common Stock issued and outstanding or held in
the treasury of ITT immediately prior to the Effective Time of the Merger
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become one validly issued, fully paid
and nonassessable share of Surviving Corporation Common Stock.
(b) Each share of ITT Indiana Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger and held by ITT shall
be cancelled without any consideration being issued or paid therefor.
SECTION 3.02. Exchange. (a) After the Effective Time of the Merger, each
certificate theretofore representing issued and outstanding shares of ITT Common
Stock shall represent the same number of shares of Surviving Corporation Common
Stock.
(b) At any time on or after the Effective Time of the Merger, any
holder of certificates theretofore evidencing ownership of shares of ITT
Common Stock will be entitled, upon surrender of such certificates to the
transfer agent of the Surviving Corporation, to receive in exchange
therefor one or more new stock certificates evidencing ownership of the
number of shares of Surviving Corporation Common Stock into which the ITT
Common Stock shall have been converted in the Merger. If any certificate
representing shares of Surviving Corporation Common Stock is to be issued
in a name other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance therefor
that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the transfer agent any transfer or other taxes
required by reason of the issuance of a certificate representing shares of
Surviving Corporation Common Stock in any name other than that of the
registered holder of the certificate surrendered, or otherwise
2
<PAGE> 3
required, or shall establish to the satisfaction of the transfer agent that
such tax has been paid or is not payable.
(c) As soon as reasonably practicable after the Effective Time of the
Merger, the transfer agent for the Surviving Corporation or other designee
shall mail to each holder of record of a certificate or certificates of
Surviving Corporation Common Stock (i) a letter of transmittal (which shall
be in such form as Surviving Corporation may specify) and (ii) instructions
for use in effecting an exchange of certificates contemplated by paragraph
(b) of this Section 3.02 and the distribution of certificates contemplated
by the distribution by ITT of shares of common stock of ITT Destinations,
Inc. and ITT Hartford Group, Inc. to shareholders of ITT.
ARTICLE IV
EMPLOYEE STOCK, EMPLOYEE BENEFIT, INCENTIVE COMPENSATION
AND DIVIDEND REINVESTMENT PLANS
At the Effective Time of the Merger, each employee stock plan, employee
benefit plan, incentive compensation plan and dividend reinvestment plan to
which ITT is then a party shall be assumed by, and continue to be the plan of,
the Surviving Corporation. To the extent any employee stock plan, employee
benefit plan, incentive compensation plan or dividend reinvestment plan of ITT
or any of its subsidiaries provides for the issuance or purchase of, or
otherwise relates to, ITT Common Stock, after the Effective Time of the Merger
such plan shall be deemed to provide for the issuance or purchase of, or
otherwise relate to, Surviving Corporation Common Stock.
ARTICLE V
CONDITIONS
Consummation of the Merger is subject to the satisfaction at or prior to
the Effective Time of the Merger of the following conditions:
SECTION 5.01. Stockholder Approval. This Agreement and the Merger shall
have been adopted and approved by the vote of the majority of the shares of ITT
Common Stock outstanding on the record date fixed for determining the
stockholders of ITT entitled to vote thereon. This Agreement and the Merger
shall also have been adopted and approved by ITT as the holder of all the
outstanding shares of ITT Indiana Common Stock prior to the Effective Time of
the Merger.
SECTION 5.02. Listing. The shares of Surviving Corporation Common Stock
to be issued in the Merger, or reserved for issuance immediately after the
Effective Time of the Merger, shall have been approved for listing, subject to
official notice of issuance, by the NYSE.
SECTION 5.03. Distribution. The distribution by ITT of all the
outstanding shares of common stock of (a) ITT Destinations, Inc., and (b) ITT
Hartford Group, Inc., each wholly owned subsidiaries of ITT, shall have
occurred.
SECTION 5.04. Tax Opinion. ITT shall have received an opinion from its
legal counsel, with respect to the tax consequences of the Merger, in form and
substance satisfactory to ITT.
ARTICLE VI
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
Pursuant to Section 252(d) of the DGCL, the Surviving Corporation
irrevocably appoints the Secretary of State of Delaware to accept service of
process in any proceeding for enforcement of any obligation of ITT, as well as
for enforcement of any obligation of the Surviving Corporation arising from the
Merger. The Delaware Secretary of State shall mail a copy of such process to ITT
Industries, Four West Red Oak Lane, White Plains, New York 10528.
3
<PAGE> 4
ARTICLE VII
GENERAL
SECTION 7.01. Termination and Abandonment. At any time prior to the
consummation of the Merger, this Agreement may be terminated and the Merger
abandoned by the Board of Directors of ITT.
SECTION 7.02. Amendment. This Agreement may be amended at any time prior
to the Effective Time of the Merger with the mutual consent of the Boards of
Directors of ITT and ITT Indiana; provided, however, that this Agreement may not
be amended after it has been adopted by the stockholders of ITT in any manner
not permitted under applicable law.
SECTION 7.03. Headings. The headings set forth herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
SECTION 7.04. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, and all of which, when
taken together, shall constitute one and the same instrument.
SECTION 7.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, except to the
extent the laws of the State of Indiana shall mandatorily apply to the Merger.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf and attested by its officers hereunto duly authorized,
all as of the day and year first above written.
ITT CORPORATION,
by /s/ Walter F. Diehl, Jr.
------------------------------------
Name: Walter F. Diehl, Jr.
Title: Vice President
Attest:
/s/ Robert W. Beicke
- ---------------------------------------------------------
Name: Robert W. Beicke
Title: Assistant Secretary
ITT INDIANA, INC.,
by /s/ Robert W. Beicke
------------------------------------
Name: Robert W. Beicke
Title: Vice President
Attest:
/s/ Walter F. Diehl, Jr.
- ---------------------------------------------------------
Name: Walter F. Diehl, Jr.
Title: Assistant Secretary
4
<PAGE> 5
CERTIFICATES
The undersigned, Assistant Secretary of ITT CORPORATION, a Delaware
corporation, hereby certifies, pursuant to Section 252(c) of the General
Corporation Law of the State of Delaware, that the foregoing Agreement and Plan
of Merger to which this Certificate is attached, which has been duly signed on
behalf of ITT CORPORATION by its Vice President and attested to by its Assistant
Secretary, was duly submitted to the stockholders of ITT CORPORATION at a
meeting thereof called for the purpose of considering and acting upon said
Agreement and Plan of Merger, held after due notice on September 21, 1995, and
at said meeting said Agreement and Plan of Merger was adopted by the
stockholders of ITT CORPORATION in accordance with the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on the
27th day of November, 1995.
/s/ Robert W. Beicke
--------------------------------------
Assistant Secretary
The undersigned, Assistant Secretary of ITT INDIANA, INC., an Indiana
corporation, hereby certifies, pursuant to Section 252(c) of the General
Corporation Law of the State of Delaware, that the foregoing Agreement and Plan
of Merger to which this Certificate is attached, which has been duly signed on
behalf of ITT INDIANA, INC. by its Vice President and attested to by its
Assistant Secretary, was duly submitted to the sole stockholder of ITT INDIANA,
INC. at a meeting thereof called for the purpose of considering and acting upon
said Agreement and Plan of Merger, held on October 10, 1995, and that at said
meeting said Agreement and Plan of Merger was adopted by the sole stockholder of
ITT INDIANA, INC. in accordance with the Business Corporation Law of the State
of Indiana.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on the
27th day of November, 1995.
/s/ Walter F. Diehl, Jr.
--------------------------------------
Assistant Secretary
5
<PAGE> 1
ARTICLES OF INCORPORATION
of
ITT INDIANA, INC.
The undersigned, for the purpose of forming a corporation,
pursuant to and by virtue of the Indiana Business Corporation Law, hereby adopts
and acknowledges the following Articles of Incorporation.
ARTICLE FIRST
The name of the corporation is ITT Indiana, Inc. (the
"Corporation").
ARTICLE SECOND
The address of the registered office of the Corporation in the
State of Indiana is One North Capitol Avenue, Suite 1180, Indianapolis, Indiana
46204. The name of the registered agent of the Corporation at such address is
The Corporation Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Indiana Business
Corporation Law.
ARTICLE FOURTH
(a) The aggregate number of shares of stock that the
Corporation shall have authority to issue is 250,000,000 shares, consisting of
200,000,000 shares designated "Common Stock" and 50,000,000 shares designated
"Preferred Stock". The shares of Common Stock shall have a par value of $1 per
share, and the shares of Preferred Stock shall not have any par or stated value,
except that, solely for the purpose of any statute or regulation imposing any
fee or tax based upon the capitalization of the Corporation, the shares of
Preferred Stock shall be deemed to have a par value of $.01 per share.
<PAGE> 2
(b) The Board of Directors of the Corporation shall have the
full authority permitted by law, at any time and from time to time, to divide
the authorized and unissued shares of Preferred Stock into classes or series, or
both, and to determine the following provisions, designations, powers,
preferences and relative, participating, optional and other special rights and
the qualifications, limitations or restrictions thereof for shares of any such
class or series of Preferred Stock:
(1) the designation of such class or series, the number of
shares to constitute such class or series and the stated or liquidation
value thereof;
(2) whether the shares of such class or series shall have
voting rights, in addition to any voting rights provided by law, and,
if so, the terms of such voting rights;
(3) the dividends, if any, payable on such class or series,
whether any such dividends shall be cumulative, and, if so, from what
dates, the conditions and dates upon which such dividends shall be
payable, the preference or relation which such dividends shall bear to
the dividends payable on any shares of stock of any other class or any
other series of the same class;
(4) whether the shares of such class or series shall be subject
to redemption at the election of the Corporation and/or the holders of
such class or series and, if so, the times, price and other conditions
of such redemption, including securities or other property payable upon
any such redemption, if any;
(5) the amount or amounts, if any, payable upon shares of such
class or series upon, and the rights of the holders of such class or
series in, the voluntary or involuntary liquidation, dissolution or
winding up, or any distribution of the assets, of the Corporation;
provided that in no event shall the amount or amounts, if any, exceed
$100 per share plus accrued dividends in the case of involuntary
liquidation, dissolution or winding up;
(6) whether the shares of such class or series shall be subject
to the operation of a retirement or sinking fund and, if so, the extent
to and manner in which any such retirement or sinking fund shall be
<PAGE> 3
3
applied to the purchase or redemption of the shares of such class or
series for retirement or other corporate purposes and the terms and
provisions relative to the operation thereof;
(7) whether the shares of such class or series shall be
convertible into, or exchangeable for, shares of stock of any other
class or any other series of the same class or any securities, whether
or not issued by the Corporation, and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;
(8) the limitations and restrictions, if any, to be effective
while any shares of such class or series are outstanding upon the
payment of dividends or the making of other distributions on, and upon
the purchase, redemption or other acquisition by the Corporation of,
the Common Stock or shares of stock of any other class or any other
series of the same class;
(9) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issuance of any
additional shares of stock, including additional shares of such class
or series or of any other series of the same class or of any other
class;
(10) the ranking (be it pari passu, junior or senior) of each
class or series vis-a-vis any other class or series of any class of
Preferred Stock as to the payment of dividends, the distribution of
assets and all other matters; and
(11) any other powers, preferences and relative, participating,
optional and other special rights and any qualifications, limitations
or restrictions thereof, insofar as they are not inconsistent with the
provisions of these Articles of Incorporation, to the full extent
permitted in accordance with the laws of the State of Indiana.
(c) Such divisions and determinations may be accomplished by an
amendment to this ARTICLE FOURTH, which amendment may be made solely by action
of the Board of Directors, which shall have the full authority permitted by law
to make such divisions and determinations.
<PAGE> 4
4
(d) The powers, preferences and relative, participating,
optional and other special rights of each class or series of Preferred Stock and
the qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other classes or series at any time outstanding; provided
that each series of a class is given a distinguishing designation and that all
shares of a series have powers, preferences and relative, participating,
optional and other special rights and the qualifications, limitations or
restrictions thereof identical with those of other shares of the same series
and, except to the extent otherwise provided in the description of the series,
with those other series of the same class.
(e) Holders of shares of Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available for the payment thereof, dividends at the rates fixed by the
Board of Directors for the respective series before any dividends shall be
declared and paid, or set aside for payment, on shares of Common Stock with
respect to the same dividend period. Nothing in this ARTICLE FOURTH shall limit
the power of the Board of Directors to create a series of Preferred Stock with
dividends the rate of which is calculated by reference to, and the payment of
which is concurrent with, dividends on shares of Common Stock.
(f) In the event of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, holders of shares of each series
of Preferred Stock will be entitled to receive the amount fixed for such series
upon any such event (not in excess of $100 per share in the case of involuntary
liquidation, dissolution or winding up) plus, in the case of any series on which
dividends will have been determined by the Board of Directors to be cumulative,
an amount equal to all dividends accumulated and unpaid thereon to the date of
final distribution whether or not earned or declared before any distribution
shall be paid, or set aside for payment, to holders of Common Stock. If the
assets of the Corporation are not sufficient to pay such amounts in full,
holders of all shares of Preferred Stock will participate in the distribution of
assets ratably in proportion to the full amounts to which they are entitled or
in such order or priority, if any, as will have been fixed in the resolution or
resolutions providing for the issue of the series of Preferred Stock. Neither
the merger nor consolidation of the Corporation into or with any other
corporation, nor a sale, transfer or lease of all or part of
<PAGE> 5
5
its assets, will be deemed a liquidation, dissolution or winding up of the
Corporation within the meaning of this paragraph except to the extent
specifically provided for herein. Nothing in this ARTICLE FOURTH shall limit the
power of the Board of Directors to create a series of Preferred Stock for which
the amount to be distributed upon any liquidation, dissolution or winding up of
the Corporation is calculated by reference to, and the payment of which is
concurrent with, the amount to be distributed to the holders of shares of Common
Stock.
(g) The Corporation, at the option of the Board of Directors,
may redeem all or part of the shares of any series of Preferred Stock on the
terms and conditions fixed for such series.
(h) Except as otherwise required by law, as otherwise provided
herein or as otherwise determined by the Board of Directors as to the shares of
any series of Preferred Stock prior to the issuance of any such shares, the
holders of Preferred Stock shall have no voting rights and shall not be entitled
to any notice of meetings of shareholders.
(i) Each holder of shares of Common Stock shall be entitled to
one vote for each share of Common Stock held of record on all matters on which
the holders of shares of Common Stock are entitled to vote. Subject to the
provisions of applicable law and any certificate of designation providing for
the issuance of any series of Preferred Stock, the holders of outstanding shares
of Common Stock shall have and possess the exclusive right to notice of
shareholders' meetings and the exclusive power to vote. No shareholder will be
permitted to cumulate votes at any election of directors.
(j) Subject to all the rights of the Preferred Stock, the
holders of the Common Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment thereof, dividends payable in cash, stock or otherwise. Upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, and after the holders of the Preferred Stock of each series shall
have been paid in full in cash the amounts to which they respectively shall be
entitled or a sum sufficient for such payment in full shall have been set aside,
the remaining net assets of the Corporation shall be distributed pro rata to the
holders of
<PAGE> 6
6
the Common Stock in accordance with their respective rights and interests, to
the exclusion of the holders of the Preferred Stock.
ARTICLE FIFTH
(a) Special meetings of shareholders of the Corporation may be
called by the Chairman of the Board of Directors or by a majority vote of the
entire Board of Directors.
(b) Shareholders of the Corporation shall not have any
preemptive rights to subscribe for additional issues of stock of the Corporation
except as may be agreed from time to time by the Corporation and any such
shareholder.
(c) Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of Preferred Stock issued by the Corporation, if
any, shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of shareholders, an election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the applicable resolution or resolutions of the Board
of Directors adopted pursuant to ARTICLE FOURTH of these Articles of
Incorporation.
ARTICLE SIXTH
To the fullest extent permitted by applicable law as then in
effect, no director or officer shall be personally liable to the Corporation or
any of its shareholders for damages for breach of fiduciary duty as a director
or officer, except for liability (a) for breach of duty if such breach
constitutes wilful misconduct or recklessness or (b) for the payment of
distributions to shareholders in violation of Section 23-1-28-3 of the Indiana
Business Corporation Law. Any repeal or modification of this ARTICLE SIXTH by
the shareholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation existing at the time of
such repeal or modification with respect to acts or omissions occurring prior to
such repeal or modification.
<PAGE> 7
7
ARTICLE SEVENTH
The holders of the capital stock of the Corporation shall not
be personally liable for the payment of the Corporation's debts and the private
property of the holders of the capital stock of the Corporation shall not be
subject to the payment of debts of the Corporation to any extent whatsoever.
ARTICLE EIGHTH
Subject to any express provision of the laws of the State of
Indiana, these Articles of Incorporation or the By-laws of the Corporation, the
By-laws of the Corporation may from time to time be supplemented, amended or
repealed, or new By-laws may be adopted, by the Board of Directors at any
regular or special meeting of the Board of Directors, if such supplement,
amendment, repeal or adoption is approved by a majority of the entire Board of
Directors. Subject to any express provision of the laws of the State of Indiana,
these Articles of Incorporation or the By-laws of the Corporation, the By-laws
of the Corporation may from time to time be supplemented, amended or repealed,
or new By-laws may be adopted, by the shareholders at any regular or special
meeting of the shareholders at which a quorum is present, if such supplement,
amendment, repeal or adoption is approved by the affirmative vote of the holders
of at least a majority of the voting power of all outstanding shares of stock of
the Corporation entitled to vote generally in an election of directors.
ARTICLE NINTH
The Corporation reserves the right to supplement, amend or
repeal any provision contained in these Articles of Incorporation, in the manner
now or hereafter prescribed by the laws of the State of Indiana and all rights
conferred on shareholders herein are granted subject to this reservation.
<PAGE> 8
8
ARTICLE TENTH
The name and address of the incorporator signing these Articles
of Incorporation is:
Name Address
---- -------
George W. Bilicic, Jr. 825 Eighth Avenue
New York, New York 10019
IN WITNESS WHEREOF, the undersigned, being the sole
incorporator of said Corporation, executes these Articles of Incorporation and
verifies, subject to penalties of perjury, that the statements contained herein
are true on this 1st day of September 1995.
------------------------------
Name: George W. Bilicic, Jr.
Title: Sole Incorporator
<PAGE> 1
------------------------------------------------------------
BY-LAWS
of
ITT INDIANA, INC.
------------------------------------------------------------
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
1. SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Place of Shareholders' Meetings . . . . . . . . . . . . . . . . . . 1
1.2 Day and Time of Annual Meetings of Shareholders . . . . . . . . . . 1
1.3 Purposes of Annual Meetings . . . . . . . . . . . . . . . . . . . . 1
1.4 Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . 2
1.5 Notice of Meetings of Shareholders . . . . . . . . . . . . . . . . . 2
1.6 Quorum of Shareholders . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Chairman and Secretary of Meeting . . . . . . . . . . . . . . . . . 4
1.8 Voting by Shareholders . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 List of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 5
1.12 Confidential Voting . . . . . . . . . . . . . . . . . . . . . . . . 6
2. DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Powers of Directors . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Number, Method of Election, Terms of Office of Directors . . . . . . 6
2.3 Vacancies on Board . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Meetings of the Board . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Quorum and Action . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Presiding Officer and Secretary of Meeting . . . . . . . . . . . . . 9
2.7 Action by Consent without Meeting . . . . . . . . . . . . . . . . . 9
2.8 Standing Committees . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
2.10 Compensation of Directors . . . . . . . . . . . . . . . . . . . . . 11
2.11 Independent Directors . . . . . . . . . . . . . . . . . . . . . . . 12
3. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Officers, Titles, Elections, Terms . . . . . . . . . . . . . . . . . 12
3.2 General Powers of Officers . . . . . . . . . . . . . . . . . . . . . 13
3.3 Powers and Duties of the Chairman . . . . . . . . . . . . . . . . . 14
3.4 Powers and Duties of a Vice Chairman . . . . . . . . . . . . . . . . 14
3.5 Powers and Duties of the President . . . . . . . . . . . . . . . . . 14
3.6 Powers and Duties of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents . . . . . . . . . . . . . . . . . . 14
3.7 Powers and Duties of a Chief Financial Officer . . . . . . . . . . . 14
3.8 Powers and Duties of the Controller and Assistant Controllers . . . 15
3.9 Powers and Duties of the Treasurer and Assistant Treasurers . . . . 15
3.10 Powers and Duties of the Secretary and Assistant Secretaries . . . . 16
4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Right to Indemnification and Effect of Amendments . . . . . . . . . 17
4.2 Insurance, Contracts and Funding . . . . . . . . . . . . . . . . . . 18
4.3 Indemnification; Not Exclusive Right . . . . . . . . . . . . . . . . 18
4.4 Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies . . . . . . . . . . . . . . . . . . . 18
4.5 Indemnification of Employees and Agents . . . . . . . . . . . . . . 23
4.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
5.2 Record Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Transfer of Record Ownership . . . . . . . . . . . . . . . . . . . . 25
5.4 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . 25
5.5 Transfer Agent; Registrar; Rules Respecting Certificates . . . . . . 25
5.6 Fixing Record Date for Determination of Shareholders of Record . . . 25
6. SECURITIES HELD BY THE CORPORATION . . . . . . . . . . . . . . . . . . 26
6.1 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 General Authorization to Transfer Securities Held by the
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. DEPOSITARIES AND SIGNATORIES . . . . . . . . . . . . . . . . . . . . . 27
7.1 Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Signatories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8. SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10. WAIVER OF OR DISPENSING WITH NOTICE . . . . . . . . . . . . . . . . . 28
11. POLITICAL NONPARTISANSHIP OF THE CORPORATION . . . . . . . . . . . . . 29
12. AMENDMENT OF BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 29
13. OFFICES AND AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE> 5
BY-LAWS
OF
ITT INDIANA, INC.
(AN INDIANA CORPORATION, THE "CORPORATION")
(ADOPTED SEPTEMBER 6, 1995)
1. SHAREHOLDERS.
1.1 Place of Shareholders' Meetings. All meetings of the shareholders
of the Corporation shall be held at such place or places, within or outside the
state of Indiana, as may be fixed by the Corporation's Board of Directors (the
"Board", and each member thereof a "Director") from time to time or as shall be
specified in the respective notices thereof.
1.2 Day and Time of Annual Meetings of Shareholders. An annual meeting
of shareholders shall be held at such place (within or outside the state of
Indiana), date and hour as shall be determined by the Board and designated in
the notice thereof. Failure to hold an annual meeting of shareholders at such
designated time shall not affect otherwise valid corporate acts or work a
forfeiture or dissolution of the Corporation.
1.3 Purposes of Annual Meetings. (a) At each annual meeting, the
shareholders shall elect the members of the Board for the succeeding year. At
any such annual meeting any business properly brought before the meeting may be
transacted.
(b) To be properly brought before an annual meeting, business must be
(i) specified in the notice of the meeting (or any supplement thereto) given by
or at the direction of the Board, (ii) otherwise properly brought before the
meeting by or at the direction of the Board or (iii) otherwise properly brought
before the meeting by a shareholder. For business to be properly brought before
an annual meeting by a shareholder, the shareholder must have given written
notice thereof, either by personal delivery or by United States mail, postage
prepaid, to the Secretary, not later than 90 days in advance of the anniversary
date of the immediately preceding annual meeting (or not more than
<PAGE> 6
2
ten days after the first public disclosure, which may include any public filing
with the Securities and Exchange Commission, of the Originally Scheduled Date of
the annual meeting, whichever is earlier). Any such notice shall set forth as to
each matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting and in the event that
such business includes a proposal to amend either the Articles of Incorporation
or By-laws of the Corporation, the language of the proposed amendment, (ii) the
name and address of the shareholder proposing such business, (iii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to propose such business, and (iv) any material interest
of the shareholder in such business. No business shall be conducted at an annual
meeting of shareholders except in accordance with this Section 1.3(b), and the
chairman of any annual meeting of shareholders may refuse to permit any business
to be brought before an annual meeting without compliance with the foregoing
procedures. For purposes of this Section 1.3(b), the "Originally Scheduled Date"
of any meeting of shareholders shall be the date first publicly disclosed on
which such meeting is scheduled to occur regardless of whether such meeting is
continued or adjourned and regardless of whether any subsequent notice is given
for such meeting or the record date of such meeting is changed.
1.4 Special Meetings of Shareholders. Except as otherwise expressly
required by applicable law, special meetings of the shareholders or of any class
or series entitled to vote may be called for any purpose or purposes by the
Chairman or by a majority vote of the entire Board, to be held at such place
(within or outside the state of Indiana), date and hour as shall be determined
by the Board and designated in the notice thereof. Only such business as is
specified in the notice of any special meeting of the shareholders shall come
before such meeting.
1.5 Notice of Meetings of Shareholders. Except as otherwise expressly
required or permitted by applicable law, not less than ten days nor more than
sixty days before the date of every shareholders' meeting the Secretary shall
give to each shareholder of record entitled to vote at such meeting written
notice stating the place, day and time of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Except
<PAGE> 7
3
as provided in Section 1.6(d) or as otherwise expressly required by applicable
law, notice of any adjourned meeting of shareholders need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken. Any notice, if mailed, shall be deemed to be given when deposited in the
United States mail, postage prepaid, addressed to the shareholder at the address
for notices to such shareholder as it appears on the records of the Corporation.
1.6 Quorum of Shareholders. (a) Unless otherwise expressly required by
applicable law, at any meeting of the shareholders, the presence in person or by
proxy of shareholders entitled to cast a majority of votes thereat shall
constitute a quorum. Shares of the Corporation's stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in an election of the directors of such other corporation is held by the
Corporation, shall neither be counted for the purpose of determining the
presence of a quorum nor entitled to vote at any meeting of the shareholders.
(b) At any meeting of the shareholders at which a quorum shall be
present, a majority of those present in person or by proxy may adjourn the
meeting from time to time without notice other than announcement at the meeting.
In the absence of a quorum, the officer presiding thereat shall have power to
adjourn the meeting from time to time until a quorum shall be present. Notice of
any adjourned meeting other than announcement at the meeting shall not be
required to be given, except as provided in Section 1.6(d) below and except
where expressly required by applicable law.
(c) At any adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called, but only those shareholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the Board.
(d) If an adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in the manner specified in Section 1.5(a)
to each shareholder of record entitled to vote at the meeting.
<PAGE> 8
4
1.7 Chairman and Secretary of Meeting. The Chairman or, in his or her
absence, another officer of the Corporation designated by the Chairman, shall
preside at meetings of the shareholders. The Secretary shall act as secretary of
the meeting, or in the absence of the Secretary, an Assistant Secretary shall so
act, or if neither is present, then the presiding officer may appoint a person
to act as secretary of the meeting.
1.8 Voting by Shareholders. (a) Except as otherwise expressly required
by applicable law, at every meeting of the shareholders each shareholder shall
be entitled to the number of votes specified in the Articles of Incorporation,
in person or by proxy, for each share of stock standing in his or her name on
the books of the Corporation on the date fixed pursuant to the provisions of
Section 5.6 of these By-laws as the record date for the determination of the
shareholders who shall be entitled to receive notice of and to vote at such
meeting.
(b) When a quorum is present at any meeting of the shareholders, all
questions shall be decided by the vote of a majority in voting power of the
shareholders present in person or by proxy and entitled to vote at such meeting,
unless a question is one upon which by express provision of law, the Articles of
Incorporation or these By-laws, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
(c) Except as required by applicable law, the vote at any meeting of
shareholders on any question need not be by ballot, unless so directed by the
chairman of the meeting. On a vote by ballot, each ballot shall be signed by the
shareholder voting, or by his or her proxy, if there be such proxy, and shall
state the number of shares voted.
1.9 Proxies. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person or by his or her attorney-in-fact. Every
proxy shall be in writing and shall be subscribed by the shareholder or his or
her duly authorized attorney-in-fact, but need not be sealed, witnessed or
acknowledged.
1.10 Inspectors. (a) The election of Directors and any other vote by
ballot at any meeting of the shareholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the Chairman before or at the
meeting. If the Chairman shall not have so appointed such
<PAGE> 9
5
inspectors or if one or both inspectors so appointed shall refuse to serve or
shall not be present, such appointment shall be made by the officer presiding at
the meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability.
(b) The inspectors shall (i) ascertain the number of shares of the
Corporation outstanding and the voting power of each, (ii) determine the shares
represented at any meeting of shareholders and the validity of the proxies and
ballots, (iii) count all proxies and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors, and (v) certify their determination of the
number of shares represented at the meeting, and their count of all proxies and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
1.11 List of Shareholders. (a) At least ten days before every meeting
of shareholders, the Treasurer shall cause to be prepared and made a complete
list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order by voting group, if any, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
(b) During ordinary business hours for a period of at least ten days
prior to the meeting, such list shall be open to examination by any shareholder
for any purpose germane to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the Corporation's principal office.
(c) The list shall also be produced and kept at the time and place of
the meeting during the whole time of the meeting, and it may be inspected by any
shareholder who is present.
(d) The stock ledger shall be the only evidence as to who are the
shareholders entitled to examine the stock ledger, the list required by this
Section 1.11 or the books of the Corporation, or to vote in person or by proxy
at any meeting of shareholders.
<PAGE> 10
6
1.12 Confidential Voting. (a) Proxies and ballots that identify the
votes of specific shareholders shall be kept in confidence by the tabulators and
the inspectors of election unless (i) there is an opposing solicitation with
respect to the election or removal of Directors, (ii) disclosure is required by
applicable law, (iii) a shareholder expressly requests or otherwise authorizes
disclosure, or (iv) the Corporation concludes in good faith that a bona fide
dispute exists as to the authenticity of one or more proxies, ballots or votes,
or as to the accuracy of any tabulation of such proxies, ballots or votes.
(b) The tabulators and inspectors of election and any authorized agents
or other persons engaged in the receipt, count and tabulation of proxies and
ballots shall be advised of this By-law and instructed to comply herewith.
(c) The inspectors of election shall certify, to the best of their
knowledge based on due inquiry, that proxies and ballots have been kept in
confidence as required by this Section 1.12.
2. DIRECTORS.
2.1 Powers of Directors. The business and affairs of the Corporation
shall be managed by or under the direction of the Board, which may exercise all
the powers of the Corporation except such as are by applicable law, the Articles
of Incorporation or these By-laws required to be exercised or performed by the
shareholders.
2.2 Number, Method of Election, Terms of Office of Directors. The
number of Directors which shall constitute the whole Board shall be such as from
time to time shall be determined by resolution adopted by a majority of the
entire Board, but the number shall not be less than three nor more than
twenty-five, provided that the tenure of a Director shall not be affected by any
decrease in the number of Directors so made by the Board. Each Director shall
hold office until the next annual meeting of shareholders and until his or her
successor is elected and qualified or until his or her earlier death,
retirement, resignation or removal. Directors need not be shareholders of the
Corporation or citizens of the United States of America.
Nominations of persons for election as Directors may be made by the
Board or by any shareholder entitled to vote for the election of Directors. Any
shareholder entitled to vote for the election of Directors may nominate a person
or
<PAGE> 11
7
persons for election as Directors only if written notice of such shareholder's
intent to make such nomination is given in accordance with the procedures for
bringing business before the meeting set forth in Section 1.3(b) of these
By-laws, either by personal delivery or by United States mail, postage prepaid,
to the Secretary not later than (i) with respect to an election to be held at an
annual meeting of shareholders, 90 days in advance of the anniversary date of
the immediately preceding annual meeting (or not more than ten days after the
first public disclosure, which may include any public filing with the Securities
and Exchange Commission, of the Originally Scheduled Date of the annual meeting,
whichever is earlier) and (ii) with respect to an election to be held at a
special meeting of shareholders for the election of Directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to shareholders. Each such notice shall set forth: (a) the name
and address of the shareholder who intends to make the nomination and of the
person or persons to be nominated; (b) a representation that the shareholder is
a holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (d) such other information
regarding each nominee proposed by such shareholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated, or intended
to be nominated, by the Board; and (e) the consent of each nominee to serve as a
Director if so elected. The chairman of any meeting of shareholders to elect
Directors and the Board may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure. For purposes of this
Section 2.2, the "Originally Scheduled Date" of any meeting of shareholders
shall be the date first publicly disclosed on which such meeting is scheduled to
occur regardless of whether such meeting is continued or adjourned and
regardless of whether any subsequent notice is given for such meeting or the
record date of such meeting is changed.
<PAGE> 12
8
At each meeting of the shareholders for the election of Directors at
which a quorum is present, the persons receiving the greatest number of votes,
up to the number of Directors to be elected, shall be the Directors.
2.3 Vacancies on Board. (a) Any Director may resign from office at any
time by delivering a written resignation to the Chairman or the Secretary. The
resignation will take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
(b) Any vacancy and any newly created Directorship resulting from any
increase in the authorized number of Directors may be filled by vote of a
majority of the Directors then in office, though less than a quorum, and any
Director so chosen shall hold office until the next annual election of Directors
by the shareholders and until a successor is duly elected and qualified or until
his or her earlier death, retirement, resignation or removal. If there are no
Directors in office, then an election of Directors may be held in the manner
provided by applicable law.
2.4 Meetings of the Board. (a) The Board may hold its meetings, both
regular and special, either within or outside the state of Indiana, at such
places as from time to time may be determined by the Board or as may be
designated in the respective notices or waivers of notice thereof.
(b) Regular meetings of the Board shall be held at such times and at
such places as from time to time shall be determined by the Board.
(c) The first meeting of each newly elected Board shall be held as soon
as practicable after the annual meeting of the shareholders and shall be for the
election of officers and the transaction of such other business as may come
before it.
(d) Special meetings of the Board shall be held whenever called by
direction of the Chairman or at the request of Directors constituting one-third
of the number of Directors then in office.
(e) Members of the Board or any Committee of the Board may participate
in a meeting of the Board or Committee, as the case may be, by means of
conference telephone or similar
<PAGE> 13
9
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting.
(f) The Secretary shall give notice to each Director of any meeting of
the Board by mailing the same at least two days before the meeting or by
telegraphing or delivering the same not later than the day before the meeting.
Such notice need not include a statement of the business to be transacted at, or
the purpose of, any such meeting. Any and all business may be transacted at any
meeting of the Board. No notice of any adjourned meeting need be given. No
notice to or waiver by any Director shall be required with respect to any
meeting at which the Director is present.
2.5 Quorum and Action. Except as otherwise expressly required by
applicable law, the Articles of Incorporation or these By-laws, at any meeting
of the Board, the presence of at least one-third of the entire Board shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. Unless otherwise provided by applicable
law, the Articles of Incorporation or these By-laws, the vote of a majority of
the Directors present (and not abstaining) at any meeting at which a quorum is
present shall be necessary for the approval and adoption of any resolution or
the approval of any act of the Board.
2.6 Presiding Officer and Secretary of Meeting. The Chairman or, in the
absence of the Chairman, a member of the Board selected by the members present,
shall preside at meetings of the Board. The Secretary shall act as secretary of
the meeting, but in the Secretary's absence the presiding officer may appoint a
secretary of the meeting.
2.7 Action by Consent without Meeting. Any action required or permitted
to be taken at any meeting of the Board or of any Committee thereof may be taken
without a meeting if all members of the Board or Committee, as the case may be,
consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board or Committee.
2.8 Standing Committees. By resolution adopted by a majority of the
entire Board, the Board shall elect, from among its members, individuals to
serve on the Standing Committees established by this Section 2.8. Each Standing
<PAGE> 14
10
Committee shall be comprised of such number of Directors, not less than three,
as shall be elected to such Committee, provided that no officer or employee of
the Corporation shall be eligible to serve on the Audit, Compensation and
Personnel or Nominating Committees. Each Committee shall keep a record of all
its proceedings and report the same to the Board. One-third of the members of a
Committee, but not less than two, shall constitute a quorum, and the act of a
majority of the members of a Committee present at any meeting at which a quorum
is present shall be the act of the Committee. Each Standing Committee shall meet
at the call of its chairman or any two of its members. The chairmen of the
various Committees shall preside, when present, at all meetings of such
Committees, and shall have such powers and perform such duties as the Board may
from time to time prescribe. The Standing Committees of the Board, and functions
of each, are as follows:
(a) Compensation and Personnel Committee. The Compensation and
Personnel Committee shall exercise the power of oversight of the compensation
and benefits of the employees of the Corporation, and shall be charged with
evaluating management performance, and establishing executive compensation. This
Committee shall have access to its own independent outside compensation counsel
and shall consist of a majority of independent directors. For purposes of this
Section 2.8(a), "independent director" shall mean a Director who: (i) has not
been employed by the Corporation in an executive capacity within the past five
years; (ii) is not, and is not affiliated with a company or firm that is, an
advisor or consultant to the Corporation; (iii) is not affiliated with a
significant customer or supplier of the Corporation; (iv) has no personal
services contract(s) with the Corporation; (v) is not affiliated with a
tax-exempt entity that receives significant contributions from the Corporation;
and (vi) is not a familial relative of any person described by Clauses (i)
through (v). This By-law shall not be amended or repealed except by a majority
of the voting power of the shareholders present in person or by proxy and
entitled to vote at any meeting at which a quorum is present.
(b) Audit Committee. The Audit Committee shall recommend the selection
of independent auditors for the Corporation, confirm the scope of audits to be
performed by such auditors, review audit results and internal accounting and
control procedures and policies, review the fees paid to the Corporation's
independent auditors, and review and recommend approval of the audited financial
statements of
<PAGE> 15
11
the Corporation and the annual reports to shareholders. The Audit Committee
shall also review expense accounts of senior executives.
(c) Capital Committee. The Capital Committee shall have the
responsibility for maximizing the effective use of the assets of the Corporation
and its subsidiaries and reviewing capital expenditures and appropriations.
(d) Corporate Responsibility Committee. The Corporate Responsibility
Committee shall review and define social responsibilities and shall review and
consider major claims and litigation and legal, regulatory, intellectual
property and related governmental policy matters affecting the Corporation and
its subsidiaries. The Corporate Responsibility Committee shall also review and
approve management policies and programs relating to compliance with legal and
regulatory requirements and business ethics.
(e) Nominating Committee. The Nominating Committee shall make
recommendations as to the organization, size and composition of the Board and
Committees thereof, propose nominees for election to the Board and the
Committees thereof, and consider the qualifications, compensation and retirement
of Directors.
2.9 Other Committees. By resolution passed by a majority of the entire
Board, the Board may also appoint from among its members such other Committees,
Standing or otherwise, as it may from time to time deem desirable and may
delegate to such Committees such powers of the Board as it may consider
appropriate, consistent with applicable law, the Articles of Incorporation and
these By-laws.
2.10 Compensation of Directors. Unless otherwise restricted by the
Articles of Incorporation or these By-laws, Directors shall receive for their
services on the Board or any Committee thereof such compensation and benefits,
including the granting of options, together with expenses, if any, as the Board
may from time to time determine. The Directors may be paid a fixed sum for
attendance at each meeting of the Board or Committee thereof and/or a stated
annual sum as a Director, together with expenses, if any, of attendance at each
meeting of the Board or Committee thereof. Nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
<PAGE> 16
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2.11 Independent Directors. (a) Independence of Nominees for Election
as Directors at the Annual Meeting. The persons nominated by the Board for
election as Directors at any annual meeting of the shareholders of the
Corporation shall include a sufficient number of persons who have been, on the
date of their nomination, determined by the Board to be eligible to be
classified as independent directors such that if all such nominees are elected,
the majority of all Directors holding office would be independent directors.
(b) Directors Elected to Fill Vacancies on the Board. If the Board
elects Directors between annual meetings of shareholders to fill vacancies or
newly created Directorships, the majority of all Directors holding office
immediately after such elections shall be independent directors.
(c) Definition of Independent Director. For purposes of this Section
2.11, "independent director" shall mean a Director who: (i) has not been
employed by the Corporation in an executive capacity within the past five years;
(ii) is not, and is not affiliated with a company or a firm that is, an adviser
or consultant to the Corporation; (iii) is not affiliated with a significant
customer or supplier of the Corporation; (iv) has no personal services
contract(s) with the Corporation; (v) is not affiliated with a tax-exempt entity
that receives significant contributions from the Corporation; (vi) is not a
familial relative of any person described by Clauses (i) through (v); and (vii)
is free of any other relationship which would interfere with the exercise of
independent judgment by such Director.
3. OFFICERS.
3.1 Officers, Titles, Elections, Terms. (a) The Board may from time to
time elect a Chairman, a Vice Chairman, a President, one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Chief Financial Officer, a Controller, a Treasurer, a Secretary, a General
Counsel, one or more Assistant Controllers, one or more Assistant Treasurers,
one or more Assistant Secretaries, and one or more Associate or Assistant
General Counsels, to serve at the pleasure of the Board or otherwise as shall be
specified by the Board at the time of such election and until their successors
are elected and qualified or until their earlier death, retirement, resignation
or removal.
<PAGE> 17
13
(b) The Board may elect or appoint at any time such other officers or
agents with such duties as it may deem necessary or desirable. Such other
officers or agents shall serve at the pleasure of the Board or otherwise as
shall be specified by the Board at the time of such election or appointment and,
in the case of such other officers, until their successors are elected and
qualified or until their earlier death, retirement, resignation or removal. Each
such officer or agent shall have such authority and shall perform such duties as
may be provided herein or as the Board may prescribe. The Board may from time to
time authorize any officer or agent to appoint and remove any other such officer
or agent and to prescribe such person's authority and duties.
(c) No person may be elected or appointed an officer who is not a
citizen of the United States of America if such election or appointment is
prohibited by applicable law or regulation.
(d) Any vacancy in any office may be filled for the unexpired portion
of the term by the Board. Each officer elected or appointed during the year
shall hold office until the next annual meeting of the Board at which officers
are regularly elected or appointed and until his or her successor is elected or
appointed and qualified or until his or her earlier death, retirement,
resignation or removal.
(e) Any officer or agent elected or appointed by the Board may be
removed at any time by the affirmative vote of a majority of the entire Board.
(f) Any officer may resign from office at any time. Such resignation
shall be made in writing and given to the President or the Secretary. Any such
resignation shall take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
3.2 General Powers of Officers. Except as may be otherwise provided by
applicable law or in Article 6 or Article 7 of these By-laws, the Chairman, any
Vice Chairman, the President, any Executive Vice President, any Senior Vice
President, any Vice President, any Chief Financial Officer, the General Counsel,
the Controller, the Treasurer and the Secretary, or any of them, may (i) execute
and deliver in the name of the Corporation, in the name of any Division of
<PAGE> 18
14
the Corporation or in both names any agreement, contract, instrument, power of
attorney or other document pertaining to the business or affairs of the
Corporation or any Division of the Corporation, including without limitation
agreements or contracts with any government or governmental department, agency
or instrumentality, and (ii) delegate to any employee or agent the power to
execute and deliver any such agreement, contract, instrument, power of attorney
or other document.
3.3 Powers and Duties of the Chairman. The Chairman shall be the Chief
Executive of the Corporation and shall report directly to the Board. Except in
such instances as the Board may confer powers in particular transactions upon
any other officer, and subject to the control and direction of the Board, the
Chairman shall manage and direct the business and affairs of the Corporation and
shall communicate to the Board and any Committee thereof reports, proposals and
recommendations for their respective consideration or action. He or she may do
and perform all acts on behalf of the Corporation and shall preside at meetings
of the Board and the shareholders.
3.4 Powers and Duties of a Vice Chairman. A Vice Chairman shall have
such powers and perform such duties as the Board or the Chairman may from time
to time prescribe or as may be prescribed in these By-laws, and in the event of
the absence, incapacity or inability to act of the Chairman, then any Vice
Chairman shall perform the duties and exercise the powers of the Chairman.
3.5 Powers and Duties of the President. The President shall have such
powers and perform such duties as the Board or the Chairman may from time to
time prescribe or as may be prescribed in these By-laws.
3.6 Powers and Duties of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents. Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents shall have such powers and perform such duties as
the Board or the Chairman may from time to time prescribe or as may be
prescribed in these By-laws.
3.7 Powers and Duties of a Chief Financial Officer. A Chief Financial
Officer shall have such powers and perform such duties as the Board, the
Chairman or any Vice Chairman may from time to time prescribe or as may be
prescribed in these By-laws.
<PAGE> 19
15
3.8 Powers and Duties of the Controller and Assistant Controllers. (a)
The Controller shall be responsible for the maintenance of adequate accounting
records of all assets, liabilities, capital and transactions of the Corporation.
The Controller shall prepare and render such balance sheets, income statements,
budgets and other financial statements and reports as the Board or the Chairman
may require, and shall perform such other duties as may be prescribed or
assigned pursuant to these By-laws and all other acts incident to the position
of Controller.
(b) Each Assistant Controller shall perform such duties as from time to
time may be assigned by the Controller or by the Board. In the event of the
absence, incapacity or inability to act of the Controller, then any Assistant
Controller may perform any of the duties and may exercise any of the powers of
the Controller.
3.9 Powers and Duties of the Treasurer and Assistant Treasurers. (a)
The Treasurer shall have the care and custody of all the funds and securities of
the Corporation except as may be otherwise ordered by the Board, and shall cause
such funds (i) to be invested or reinvested from time to time for the benefit of
the Corporation as may be designated by the Board, the Chairman, any Vice
Chairman, the President, any Chief Financial Officer or the Treasurer or (ii) to
be deposited to the credit of the Corporation in such banks or depositories as
may be designated by the Board, the Chairman, any Vice Chairman, the President,
any Chief Financial Officer or the Treasurer, and shall cause such securities to
be placed in safekeeping in such manner as may be designated by the Board, the
Chairman, any Vice Chairman, the President, any Chief Financial Officer or the
Treasurer.
(b) The Treasurer shall cause to be prepared and maintained (i) at the
office of the Corporation, a stock ledger containing the names and addresses of
all shareholders and the number of shares of each class and series held by each
and (ii) the list of shareholders for each meeting of the shareholders as
required by Section 1.11 of these By-laws. The Treasurer shall be responsible
for the custody of all stock books and of all unissued stock certificates.
(c) The Treasurer, any Assistant Treasurer or such other person or
persons as may be designated for such purpose by the Board, the Chairman, any
Vice Chairman, the President, any Chief Financial Officer or the Treasurer may
<PAGE> 20
16
endorse in the name and on behalf of the Corporation all instruments for the
payment of money, bills of lading, warehouse receipts, insurance policies and
other commercial documents requiring such endorsement.
(d) The Treasurer, any Assistant Treasurer or such other person or
persons as may be designated for such purpose by the Board, the Chairman, any
Vice Chairman, the President, any Chief Financial Officer or the Treasurer (i)
may sign all receipts and vouchers for payments made to the Corporation, (ii)
shall render a statement of the cash account of the Corporation to the Board as
often as it shall require the same; and (iii) shall enter regularly in books to
be kept for that purpose full and accurate account of all moneys received and
paid on account of the Corporation and of all securities received and delivered
by the Corporation.
(e) The Treasurer shall perform such other duties as may be prescribed
or assigned pursuant to these By-laws and all other acts incident to the
position of Treasurer. Each Assistant Treasurer shall perform such duties as may
from time to time be assigned by the Treasurer or by the Board. In the event of
the absence, incapacity or inability to act of the Treasurer, then any Assistant
Treasurer may perform any of the duties and may exercise any of the powers of
the Treasurer.
3.10 Powers and Duties of the Secretary and Assistant Secretaries. (a)
The Secretary shall keep the minutes of all proceedings of the shareholders, the
Board and the Committees of the Board. The Secretary shall attend to the giving
and serving of all notices of the Corporation, in accordance with the provisions
of these By-laws and as required by applicable law. The Secretary shall be the
custodian of the seal of the Corporation. The Secretary shall affix or cause to
be affixed the seal of the Corporation to such contracts, instruments and other
documents requiring the seal of the Corporation, and when so affixed may attest
the same and shall perform such other duties as may be prescribed or assigned
pursuant to these By-laws and all other acts incident to the position of
Secretary.
(b) Each Assistant Secretary shall perform such duties as may from time
to time be assigned by the Secretary or by the Board. In the event of the
absence, incapacity or inability to act of the Secretary, then any Assistant
Secretary may perform any of the duties and may exercise any of the powers of
the Secretary.
<PAGE> 21
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4. INDEMNIFICATION.
4.1(a) Right to Indemnification. The Corporation, to the fullest extent
permitted by applicable law as then in effect, shall indemnify any person who is
or was a Director or officer of the Corporation and who is or was involved in
any manner (including, without limitation, as a party or a witness) or is
threatened to be made so involved in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation, any action, suit
or proceeding by or in the right of the Corporation to procure a judgment in its
favor) (a "Proceeding") by reason of the fact that such person is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan) (a
"Covered Entity"), against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such Proceeding; provided, however, that the foregoing
shall not apply to a Director or officer of the Corporation with respect to a
Proceeding that was commenced by such Director or officer prior to a Change in
Control (as defined in Section 4.4(e)(i) of this Article 4). Any Director or
officer of the Corporation entitled to indemnification as provided in this
Section 4.1(a) is hereinafter called an "Indemnitee". Any right of an Indemnitee
to indemnification shall be a contract right and shall include the right to
receive, prior to the conclusion of any Proceeding, payment of any expenses
incurred by the Indemnitee in connection with such Proceeding, consistent with
the provisions of applicable law as then in effect and the other provisions of
this Article 4.
(b) Effect of Amendments. Neither the amendment or repeal of, nor the
adoption of a provision inconsistent with, any provision of this Article 4
(including, without limitation, this Section 4.1(b)) shall adversely affect the
rights of any Director or officer under this Article 4 (i) with respect to any
Proceeding commenced or threatened prior to such amendment, repeal or adoption
of an inconsistent provision or (ii) after the occurrence of a Change in
Control, with respect to any Proceeding arising out of any action or omission
occurring prior to such amendment, repeal or adoption of an inconsistent
provision,
<PAGE> 22
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in either case without the written consent of such Director or officer.
4.2 Insurance, Contracts and Funding. The Corporation may purchase and
maintain insurance to protect itself and any indemnified person against any
expenses, judgments, fines and amounts paid in settlement as specified in
Section 4.1(a) or Section 4.5 of this Article 4 or incurred by any indemnified
person in connection with any Proceeding referred to in such Sections, to the
fullest extent permitted by applicable law as then in effect. The Corporation
may enter into contracts with any Director, officer, employee or agent of the
Corporation or any director, officer, employee, fiduciary or agent of any
Covered Entity in furtherance of the provisions of this Article 4 and may create
a trust fund or use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article 4.
4.3 Indemnification; Not Exclusive Right. The right of indemnification
provided in this Article 4 shall not be exclusive of any other rights to which
any indemnified person may otherwise be entitled, and the provisions of this
Article 4 shall inure to the benefit of the heirs and legal representatives of
any indemnified person under this Article 4 and shall be applicable to
Proceedings commenced or continuing after the adoption of this Article 4,
whether arising from acts or omissions occurring before or after such adoption.
4.4 Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies. In furtherance, but not in limitation, of the
foregoing provisions, the following procedures, presumptions and remedies shall
apply with respect to the advancement of expenses and the right to
indemnification under this Article 4:
(a) Advancement of Expenses. All reasonable expenses incurred by or on
behalf of the Indemnitee in connection with any Proceeding shall be advanced to
the Indemnitee by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Any such statement or statements shall
reasonably evidence the expenses incurred by the Indemnitee and shall include
any written affirmation or undertaking
<PAGE> 23
19
required by applicable law in effect at the time of such advance.
(b) Procedures for Determination of Entitlement to Indemnification. (i)
To obtain indemnification under this Article 4, an Indemnitee shall submit to
the Secretary of the Corporation a written request, including such documentation
and information as is reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
indemnification (the "Supporting Documentation"). The determination of the
Indemnitee's entitlement to indemnification shall be made not later than 60 days
after receipt by the Corporation of the written request for indemnification
together with the Supporting Documentation. The Secretary of the Corporation
shall, promptly upon receipt of such a request for indemnification, advise the
Board in writing that the Indemnitee has requested indemnification.
(ii) The Indemnitee's entitlement to indemnification under this Article
4 shall be determined in one of the following ways: (A) by a majority vote of
the Disinterested Directors (as hereinafter defined), if they constitute a
quorum of the Board; (B) by a written opinion of Independent Counsel as
hereinafter defined) if (x) a Change in Control (as hereinafter defined) shall
have occurred and the Indemnitee so requests or (y) a quorum of the Board
consisting of Disinterested Directors is not obtainable or, even if obtainable,
a majority of such Disinterested Directors so directs; (C) by the shareholders
of the Corporation (but only if a majority of the Disinterested Directors, if
they constitute a quorum of the Board, presents the issue of entitlement to
indemnification to the shareholders for their determination); or (D) as provided
in Section 4.4(c) of this Article 4.
(iii) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 4.4(b)(ii), a majority
of the Disinterested Directors shall select the Independent Counsel, but only an
Independent Counsel to which the Indemnitee does not reasonably object;
provided, however, that if a Change in Control shall have occurred, the
Indemnitee shall select such Independent Counsel, but only an Independent
Counsel to which a majority of the Disinterested Directors does not reasonably
object.
<PAGE> 24
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(c) Presumptions and Effect of Certain Proceedings. Except as otherwise
expressly provided in this Article 4, if a Change in Control shall have
occurred, the Indemnitee shall be presumed to be entitled to indemnification
under this Article 4 (with respect to actions or failures to act occurring prior
to such Change in Control) upon submission of a request for indemnification
together with the Supporting Documentation in accordance with Section 4.4(b) of
this Article 4, and thereafter the Corporation shall have the burden of proof to
overcome that presumption in reaching a contrary determination. In any event, if
the person or persons empowered under Section 4.4(b) of this Article 4 to
determine entitlement to indemnification shall not have been appointed or shall
not have made a determination within 60 days after receipt by the Corporation of
the request therefor together with the Supporting Documentation, the Indemnitee
shall be deemed to be, and shall be, entitled to indemnification unless (A) the
Indemnitee misrepresented or failed to disclose a material fact in making the
request for indemnification or in the Supporting Documentation or (B) such
indemnification is prohibited by law. The termination of any Proceeding
described in Section 4.1 of this Article 4, or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, adversely affect the right
of the Indemnitee to indemnification or create a presumption that the Indemnitee
did not act in good faith and in a manner which the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation or,
with respect to any criminal Proceeding, that the Indemnitee had reasonable
cause to believe that his or her conduct was unlawful.
(d) Remedies of Indemnitee. (i) In the event that a determination is
made pursuant to Section 4.4(b) of this Article 4 that the Indemnitee is not
entitled to indemnification under this Article 4, (A) the Indemnitee shall be
entitled to seek an adjudication of his or her entitlement to such
indemnification either, at the Indemnitee's sole option, in (x) an appropriate
court of the state of Indiana or any other court of competent jurisdiction or
(y) an arbitration to be conducted by a single arbitrator pursuant to the rules
of the American Arbitration Association; (B) any such judicial proceeding or
arbitration shall be de novo and the Indemnitee shall not be prejudiced by
reason of such adverse determination; and (C) if a Change in Control shall have
occurred, in any such judicial proceeding or arbitration the Corporation shall
have the burden of proving that the Indemnitee is not
<PAGE> 25
21
entitled to indemnification under this Article 4 (with respect to actions or
failures to act occurring prior to such Change in Control).
(ii) If a determination shall have been made or deemed to have been
made, pursuant to Section 4.4(b) or (c) of this Article 4, that the Indemnitee
is entitled to indemnification, the Corporation shall be obligated to pay the
amounts constituting such indemnification within five days after such
determination has been made or deemed to have been made and shall be
conclusively bound by such determination unless (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (B) such indemnification
is prohibited by law. In the event that (x) advancement of expenses is not
timely made pursuant to Section 4.4(a) of this Article 4 or (y) payment of
indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Section 4.4(b) or (c) of this Article 4, the Indemnitee shall be
entitled to seek judicial enforcement of the Corporation's obligation to pay to
the Indemnitee such advancement of expenses or indemnification. Notwithstanding
the foregoing, the Corporation may bring an action, in an appropriate court in
the state of Indiana or any other court of competent jurisdiction, contesting
the right of the Indemnitee to receive indemnification hereunder due to the
occurrence of an event described in Subclause (A) or (B) of this Clause (ii) (a
"Disqualifying Event"); provided, however, that in any such action the
Corporation shall have the burden of proving the occurrence of such
Disqualifying Event.
(iii) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4.4(d) that the
procedures and presumptions of this Article 4 are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Corporation is bound by all the provisions of this Article 4.
(iv) In the event that the Indemnitee, pursuant to this Section 4.4(d),
seeks a judicial adjudication of or an award in arbitration to enforce his or
her rights under, or to recover damages for breach of, this Article 4, the
Indemnitee shall be entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any expenses actually and reasonably
incurred by
<PAGE> 26
22
the Indemnitee if the Indemnitee prevails in such judicial adjudication or
arbitration. If it shall be determined in such judicial adjudication or
arbitration that the Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred by the
Indemnitee in connection with such judicial adjudication or arbitration shall be
prorated accordingly.
(e) Definitions. For purposes of this Article 4:
(i) "Change in Control" means a change in control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A (or any amendment or
successor provision thereto) promulgated under the Securities Exchange Act of
1934 (the "Act"), whether or not the Corporation is then subject to such
reporting requirement; provided that, without limitation, such a change in
control shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d- 3 under the Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the voting power of
all outstanding shares of stock of the Corporation entitled to vote generally in
an election of Directors without the prior approval of at least two-thirds of
the members of the Board in office immediately prior to such acquisition; (B)
the Corporation is a party to any merger or consolidation in which the
Corporation is not the continuing or surviving corporation or pursuant to which
shares of the Corporation's common stock would be converted into cash,
securities or other property, other than a merger of the Corporation in which
the holders of the Corporation's common stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, (C) there is a sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, the assets of the Corporation, or liquidation or
dissolution of the Corporation; (D) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board thereafter; or
(E) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board (including for this purpose any new
Director whose election or
<PAGE> 27
23
nomination for election by the shareholders was approved by a vote of at least
two-thirds of the Directors then still in office who were Directors at the
beginning of such period) cease for any reason to constitute at least a majority
of the Board.
(ii) "Disinterested Director" means a Director who is not or was not a
party to the proceeding in respect of which indemnification is sought by the
Indemnitee.
(iii) "Independent Counsel" means a law firm or a member of a law firm
that neither presently is, nor in the past five years has been, retained to
represent: (a) the Corporation or the Indemnitee in any matter material to
either such party or (b) any other party to the Proceeding giving rise to a
claim for indemnification under this Article 4. Notwithstanding the foregoing,
the term "Independent Counsel" shall not include any person who, under
applicable standards of professional conduct, would have a conflict of interest
in representing either the Corporation or the Indemnitee in an action to
determine the Indemnitee's rights under this Article 4.
4.5 Indemnification of Employees and Agents. Notwithstanding any other
provision of this Article 4, the Corporation, to the fullest extent permitted by
applicable law as then in effect, may indemnify any person other than a Director
or officer of the Corporation who is or was an employee or agent of the
Corporation and who is or was involved in any manner (including, without
limitation, as a party or a witness) or is threatened to be made so involved in
any threatened, pending or completed Proceeding by reasons of the fact that such
person is or was an employee or agent of the Corporation or, at the request of
the Corporation, a director, officer, employee, fiduciary or agent of a Covered
Entity against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such Proceeding. The Corporation may also advance expenses
incurred by such employee, fiduciary or agent in connection with any such
Proceeding, consistent with the provisions of applicable law as then in effect.
4.6 Severability. If any of this Article 4 shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (i) the validity, legality
and enforceability of the remaining provisions of this Article 4 (including,
without limitation, all portions of any Section of this Article 4 containing any
such provision held to be invalid,
<PAGE> 28
24
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (ii) to
the fullest extent possible, the provisions of this Article 4 (including,
without limitation, all portions of any Section of this Article 4 containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
5. CAPITAL STOCK
5.1 Stock Certificates. (a) Every holder of stock in the Corporation
shall be entitled to have a certificate certifying the number of shares owned by
him or her in the Corporation and designating the class and series of stock to
which such shares belong, which certificate shall otherwise be in such form as
the Board shall prescribe and as provided in Section 5.1(d). Each such
certificate shall be signed by, or in the name of, the Corporation by the
Chairman or any Vice Chairman or the President or any Vice President, and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary.
(b) If such certificate is countersigned by a transfer agent other than
the Corporation or its employee, or by a registrar other than the Corporation or
its employee, the signatures of the officers of the Corporation may be
facsimiles, and, if permitted by applicable law, any other signature on the
certificate may be a facsimile.
(c) In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer at the date of issue.
(d) Certificates of stock shall be issued in such form not inconsistent
with the Articles of Incorporation. They shall be numbered and registered in the
order in which they are issued. No certificate shall be issued until fully paid.
(e) All certificates surrendered to the Corporation shall be cancelled
(other than treasury shares) with the date of cancellation and shall be retained
by the Treasurer, together with the powers of attorney to transfer and the
<PAGE> 29
25
assignments of the shares represented by such certificates, for such period of
time as such officer shall designate.
5.2 Record Ownership. A record of the name of the person, firm or
corporation and address of such holder of each certificate, the number of shares
of each class and series represented thereby and the date of issue thereof shall
be made on the Corporation's books. The Corporation shall be entitled to treat
the holder of record of any share of stock as the holder in fact thereof, and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in any share on the part of any person, whether or not it shall have
express or other notice thereof, except as required by applicable law.
5.3 Transfer of Record Ownership. Transfers of stock shall be made on
the books of the Corporation only by direction of the person named in the
certificate or such person's attorney, lawfully constituted in writing, and only
upon the surrender of the certificate therefor and a written assignment of the
shares evidenced thereby. Whenever any transfer of stock shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the Corporation for
transfer, both the transferor and transferee request the Corporation to do so.
5.4 Lost, Stolen or Destroyed Certificates. Certificates representing
shares of the stock of the Corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board from time to time may authorize in
accordance with applicable law.
5.5 Transfer Agent; Registrar; Rules Respecting Certificates. The
Corporation shall maintain one or more transfer offices or agencies where stock
of the Corporation shall be transferable. The Corporation shall also maintain
one or more registry offices where such stock shall be registered. The Board may
make such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of stock certificates in accordance with applicable
law.
5.6 Fixing Record Date for Determination of Shareholders of Record. (a)
The Board may fix, in advance, a date as the record date for the purpose of
determining the shareholders entitled to notice of, or to vote at, any
<PAGE> 30
26
meeting of the shareholders or any adjournment thereof, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board, and which record date shall not be more than sixty days nor less
than ten days before the date of a meeting of the shareholders. If no record
date is fixed by the Board, the record date for determining the shareholders
entitled to notice of or to vote at a shareholders' meeting shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting and shall fix a new record date if such
adjourned meeting is more than 120 days after the date of the original meeting.
(b) The Board may fix, in advance, a date as the record date for the
purpose of determining the shareholders entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or in order to make a determination of the shareholders for the purpose of any
other lawful action, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which record date
shall not be more than sixty calendar days prior to such action. If no record
date is fixed by the Board, the record date for determining the shareholders for
any such purpose shall be at the close of business on the day on which the Board
adopts the resolution relating thereto.
6. SECURITIES HELD BY THE CORPORATION.
6.1 Voting. Unless the Board shall otherwise order, the Chairman, any
Vice Chairman, the President, any Executive Vice President, any Senior Vice
President, any Vice President, any Chief Financial Officer, the Controller, the
Treasurer or the Secretary shall have full power and authority, on behalf of the
Corporation, to attend, act and vote at any meeting of the shareholders of any
corporation in which the Corporation may hold stock and at such meeting to
exercise any or all rights and powers incident to the ownership of such stock,
and to execute on behalf of the Corporation a proxy or proxies empowering
another or others
<PAGE> 31
27
to act as aforesaid. The Board from time to time may confer like powers upon any
other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation. (a) Any of the following officers, to wit: the Chairman, any Vice
Chairman, the President, any Executive Vice President, any Senior Vice
President, any Vice President, any Chief Financial Officer, the Controller, the
Treasurer, any Assistant Controller, any Assistant Treasurer, and each of them,
hereby is authorized and empowered to transfer, convert, endorse, sell, assign,
set over and deliver any and all shares of stock, bonds, debentures, notes,
subscription warrants, stock purchase warrants, evidences of indebtedness, or
other securities now or hereafter standing in the name of or owned by the
Corporation, and to make, execute and deliver any and all written instruments of
assignment and transfer necessary or proper to effectuate the authority hereby
conferred.
(b) Whenever there shall be annexed to any instrument of assignment and
transfer executed pursuant to and in accordance with the foregoing Section
6.2(a), a certificate of the Secretary or any Assistant Secretary in office at
the date of such certificate setting forth the provisions hereof and stating
that they are in full force and effect and setting forth the names of persons
who are then officers of the corporation, all persons to whom such instrument
and annexed certificate shall thereafter come shall be entitled, without further
inquiry or investigation and regardless of the date of such certificate, to
assume and to act in reliance upon the assumption that (i) the shares of stock
or other securities named in such instrument were theretofore duly and properly
transferred, endorsed, sold, assigned, set over and delivered by the
Corporation, and (ii) with respect to such securities, the authority of these
provisions of these By-laws and of such officers is still in full force and
effect.
7. DEPOSITARIES AND SIGNATORIES.
7.1 Depositaries. The Chairman, any Vice Chairman, the President, any
Chief Financial Officer, and the Treasurer are each authorized to designate
depositaries for the funds of the Corporation deposited in its name or that of a
Division of the Corporation, or both, and the signatories with respect thereto
in each case, and from time to time, to change such depositaries and
signatories, with the same force and effect as if each such depositary and the
signatories with respect thereto and changes therein had
<PAGE> 32
28
been specifically designated or authorized by the Board; and each depositary
designated by the Board or by the Chairman, any Vice Chairman, the President,
any Chief Financial Officer, or the Treasurer shall be entitled to rely upon the
certificate of the Secretary or any Assistant Secretary of the Corporation or of
a Division of the Corporation setting forth the fact of such designation and of
the appointment of the officers of the Corporation or of the Division or of both
or of other persons who are to be signatories with respect to the withdrawal of
funds deposited with such depositary, or from time to time the fact of any
change in any depositary or in the signatories with respect thereto.
7.2 Signatories. Unless otherwise designated by the Board or by the
Chairman, any Vice Chairman, the President, any Chief Financial Officer or the
Treasurer, all notes, drafts, checks, acceptances, orders for the payment of
money and all other negotiable instruments obligating the Corporation for the
payment of money shall be (a) signed by the Treasurer or any Assistant Treasurer
and (b) countersigned by the Controller or any Assistant Controller, or (c)
either signed or countersigned by the Chairman, any Vice Chairman, the
President, any Executive Vice President, any Senior Vice President or any Vice
President in lieu of either the officers designated in Clause (a) or the
officers designated in Clause (b) of this Section 7.2.
8. SEAL.
The seal of the Corporation shall be in such form and shall have such
content as the Board shall from time to time determine.
9. FISCAL YEAR.
The fiscal year of the Corporation shall end on December 31 in each
year, or on such other date as the Board shall determine.
10. WAIVER OF OR DISPENSING WITH NOTICE.
(a) Whenever any notice of the time, place or purpose of any meeting of
the shareholders is required to be given by applicable law, the Articles of
Incorporation or these By-laws, a written waiver of notice, signed by a
shareholder entitled to notice of a shareholders' meeting, whether by telegraph,
cable or other form of recorded communication, whether signed before or after
the time set for a given meeting, shall be deemed equivalent to notice of such
<PAGE> 33
29
meeting. Attendance of a shareholder in person or by proxy at a shareholders'
meeting shall constitute a waiver of notice to such shareholder of such meeting,
except when the shareholder attends the meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting was not lawfully called or convened.
(b) Whenever any notice of the time or place of any meeting of the
Board or Committee of the Board is required to be given by applicable law, the
Articles of Incorporation or these By-laws, a written waiver of notice signed by
a Director, whether by telegraph, cable or other form of recorded communication,
whether signed before or after the time set for a given meeting, shall be deemed
equivalent to notice of such meeting. Attendance of a Director at a meeting
shall constitute a waiver of notice to such Director of such meeting.
(c) No notice need be given to any person with whom communication is
made unlawful by any law of the United States or any rule, regulation,
proclamation or executive order issued under any such law.
11. POLITICAL NONPARTISANSHIP OF THE CORPORATION.
The Corporation shall not make, directly or indirectly, any
contributions or expenditures in connection with the election of any candidate
for federal, state or local political office, or any committee campaigning for
such a candidate, except to the extent necessary to permit in the United States
the expenditure of corporate assets for the payment of expenses for
establishing, registering and administering any political action committee and
of soliciting contributions thereto, all as may be authorized by federal or
state laws.
12. AMENDMENT OF BY-LAWS.
Except as otherwise provided in Section 2.8(a) of these By-laws, these
By-laws, or any of them, may from time to time be supplemented, amended or
repealed, or new By-laws may be adopted, by the Board at any regular or special
meeting of the Board, if such supplement, amendment, repeal or adoption is
approved by a majority of the entire Board. These By-laws, or any of them, may
from time to time be supplemented, amended or repealed, or new By-laws may be
adopted, by the shareholders at any regular or special meeting of the
shareholders at which a quorum is present, if
<PAGE> 34
30
such supplement, amendment, repeal or adoption is approved by the affirmative
vote of the holders of at least a majority of the voting power of all
outstanding shares of stock of the Corporation entitled to vote generally in an
election of directors.
13. OFFICES AND AGENT
(a) Registered Office and Agent. The registered office of the
Corporation in the State of Indiana shall be One North Capitol Avenue, Suite
1180, Indianapolis, Indiana 46204. The name of the registered agent is The
Corporation Trust Company. Such registered agent has a business office identical
with such registered office.
(b) Other Offices. The Corporation may also have offices at other
places, either within or outside the State of Indiana, as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
<PAGE> 1
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS
OF INDIANA
NUMBER [LOGO] SHARES
IIN
CUSIP 450911 10 2
SEE LEGEND ON REVERSE
ITT INDUSTRIES, INC.
This Certifies that
SPECIMEN
IIN IIN
is the owner of
CERTIFICATE OF STOCK
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
ITT Industries, Inc. transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Certificate of Incorporation and the amendments thereto (copies of which are on
file with the Transfer Agent), to all of which provisions the holder by
acceptance hereof, assents. This certificate is not valid unless countersigned
by the Transfer Agent and registered by the Registrar.
Witness the signatures of the duly authorized officers.
DATED:
/s/ Gwenn L. Carr
COUNTERSIGNED AND REGISTERED: VICE PRESIDENT AND CORPORATE
SECRETARY
THE BANK OF NEW YORK
BY TRANSFER AGENT
AND REGISTRAR
/s/ William J. Skinner /s/ D. Travis Engen
AUTHORIZED SIGNATURE CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
American
Banknote
Company
<PAGE> 2
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of November 1, 1995,
as it may be amended from time to time (the "Rights Agreement"), between ITT
Indiana, Inc., to be renamed ITT Industries, Inc. (the "Company"), and The Bank
of New York, as Rights Agent (the "Rights Agent"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Rights
Agent will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or Associates (as
such terms are defined in the Rights Agreement) and by any subsequent holder of
such Rights are null and void and nontransferable.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common GIFT MIN ACT -- ______ Custodian _______ Under
TEN ENT -- as tenants by the (Cust) (Minor)
entireties the _________ Transfers to Minors Act
JT TEN -- as joint tenants with (State)
right of survivorship
and not as tenants
in common
Additional abbreviations may also be used though not in the above list.
For value received, _____________ hereby will, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
| |
| |
|____________________________________|
____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
____________________________________________________________________________
____________________________________________________________________________
_____________________________________________________________ common shares
represented by the within Certificate, and do hereby irrevocably constitute
and appoint
________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ___________________________
________________________________________________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate in every particular without
alteration or enlargement or any change whatever. The signature of the person
executing this power must be guaranteed by an Eligible Guarantor Institution
such as a Commercial Bank, Trust Company, Securities Broker/Dealer, Credit
Union, or a Savings Association participating in a Medallion program Approved
by the Securities Transfer Association, Inc.
<PAGE> 1
------------------------------------------------------------
RIGHTS AGREEMENT
Dated as of November 1, 1995
between
ITT INDIANA, INC.
and
THE BANK OF NEW YORK,
as Rights Agent
------------------------------------------------------------
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . 9
3. Issue of Rights and Right Certificates . . . . . . . . . . . . . . . . 10
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . 12
5. Execution, Countersignature and Registration . . . . . . . . . . . . . 12
6. Transfer, Split-Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates;
Uncertificated Rights . . . . . . . . . . . . . . . . . . . . . . . 13
7. Exercise of Rights; Expiration Date of Rights . . . . . . . . . . . . 14
8. Cancelation and Destruction of Right Certificates . . . . . . . . . . 16
9. Reservation and Availability of Preferred Shares . . . . . . . . . . . 17
10. Preferred Shares Record Date . . . . . . . . . . . . . . . . . . . . . 19
11. Adjustments in Rights After There Is an Acquiring Person; Exchange of
Rights for Shares; Business Combinations . . . . . . . . . . . . . 19
12. Certain Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . 25
13. Certificate of Adjustment . . . . . . . . . . . . . . . . . . . . . . 26
14. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . 27
16. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
17. Transfer and Ownership of Rights and Right Certificates . . . . . . . 29
18. Right Certificate Holder Not Deemed a Stockholder . . . . . . . . . . 29
19. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
20. Merger or Consolidation or Change of Rights Agent . . . . . . . . . . 30
21. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . 31
22. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . 35
23. Issuance of Additional Rights and Right Certificates . . . . . . . . . 37
24. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . 37
25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . 39
27. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
28. Benefits of Rights Agreement; Determinations and Actions by the Borad
of Directors, etc. . . . . . . . . . . . . . . . . . . . . . . . . 40
29. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
30. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
31. Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . 41
32. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . 41
Exhibits
--------
A Certificate of Designation
B Form of Right Certificate
</TABLE>
<PAGE> 4
RIGHTS AGREEMENT dated as of November 1,
1995, between ITT Indiana, Inc., the name of which is
to be changed to ITT Industries, Inc., an Indiana
corporation (the "Company"), and The Bank of New
York, a New York banking corporation, as Rights Agent
(the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one Right (as hereinafter defined) for each share of
Common Stock, $1.00 par value per share, of the Company (the "Common Stock")
outstanding at the Close of Business (as hereinafter defined) on the day
immediately following the effectiveness of the merger of ITT Corporation, a
Delaware corporation, with and into the Company (the "Record Date") and has
authorized the issuance of one Right (as such number may hereafter be adjusted
pursuant to the provisions of this Rights Agreement) with respect to each share
of Common Stock that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Expiration Date
(as such terms are hereinafter defined); provided, however, that Rights may be
issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the earlier of the Redemption Date or
the Expiration Date in accordance with the provisions of Section 23. Each
Right shall initially represent the right to purchase one one-thousandths
(1/1,000ths) of a share of Series A Participating Cumulative Preferred Stock,
without par value, of the Company (the "Preferred Shares"), having the powers,
rights and preferences set forth in the Certificate of Designation attached as
Exhibit A.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone
or together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of more than 15% of the Common Shares then outstanding but
shall not include (a) the Company, any Subsidiary of the Company, any
<PAGE> 5
2
employee benefit or compensation plan of the Company or of any of its
Subsidiaries, or any Person holding Common Shares for or pursuant to the terms
of any such employee benefit or compensation plan or (b) any such Person who
has become and is such a Beneficial Owner solely because (i) of a change in the
aggregate number of Common Shares outstanding since the last date on which such
Person acquired Beneficial Ownership of any Common Shares or (ii) it acquired
such Beneficial Ownership in the good faith belief that such acquisition would
not (x) cause such Beneficial Ownership to exceed 15% of the Common Shares then
outstanding and such Person relied in good faith in computing the percentage of
its Beneficial Ownership on publicly filed reports or documents of the Company
which are inaccurate or out-of-date or (y) otherwise cause a Distribution Date
or the adjustment provided for in Section 11(a) to occur. Notwithstanding
clause (b)(ii) of the prior sentence, if any Person that is not an Acquiring
Person due to such clause (b)(ii) does not reduce its percentage of Beneficial
Ownership of Common Shares to 15% or less by the Close of Business on the fifth
Business Day after notice from the Company (the date of notice being the first
day) that such Person's Beneficial Ownership of Common Shares so exceeds 15%,
such Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (b)(ii) shall no longer apply to such
Person). For purposes of this definition, the determination whether any Person
acted in "good faith" shall be conclusively determined by the Board of
Directors of the Company, acting by a vote of those directors of the Company
whose approval would be required to redeem the Rights under Section 24.
"Affiliate" and "Associate", when used with reference to any
Person, shall have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on
the date of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own", and shall be deemed to have "Beneficial
Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as
in effect on the date of this Rights Agreement;
<PAGE> 6
3
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (written or oral), or upon
the exercise of conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, or to have Beneficial Ownership of, securities
tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange
thereunder or cease to be subject to withdrawal by the tendering
security holder, or (B) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if (1) the agreement, arrangement or
understanding (written or oral) to vote such security arises solely
from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made generally to all holders of
Common Stock pursuant to, and in accordance with, the applicable rules
and regulations under the Exchange Act and (2) the beneficial ownership
of such security is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (written or oral) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in clause
(ii)(B) of this definition) or disposing of any securities of the
Company; or
(iv) which would be beneficially owned by such Person but for
the application of the provisions of the Indiana Business Corporation
Law pertaining to Control Share Acquisitions or any comparable or
successor provisions.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", any
<PAGE> 7
4
securities acquired in a bona fide firm commitment underwriting pursuant to an
underwriting agreement with the Company.
"Book Value", when used with reference to Common Shares issued
by any Person, shall mean the amount of equity of such Person applicable to
each Common Share, determined (i) in accordance with generally accepted
accounting principles in effect on the date as of which such Book Value is to
be determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after giving
effect to (A) the exercise of all rights, options and warrants to purchase such
Common Shares (other than the Rights), and the conversion of all securities
convertible into such Common Shares, at an exercise or conversion price, per
Common Share, which is less than such Book Value before giving effect to such
exercise or conversion (whether or not exercisability or convertibility is
conditioned upon occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date, and (C) any other agreement, arrangement or understanding (written or
oral), or transaction or other action contemplated prior to the date as of
which such Book Value is to be determined which would have the effect of
thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in
Section 11(c)(I).
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in the
Borough of Manhattan, The City of New York, are authorized or obligated by law
or executive order to close.
"Certificate of Designation" shall mean the Certificate of
Designation of Series A Participating Cumulative Preferred Stock setting forth
the powers, preferences, rights, qualifications, limitations and restrictions
of such series of Preferred Stock of the Company, a copy of which is attached
as Exhibit A.
<PAGE> 8
5
"Close of Business" on any given date shall mean 5:00 p.m.,
New York City time, on such date; provided, however, that, if such date is not
a Business Day, "Close of Business" shall mean 5:00 p.m., New York City time,
on the next succeeding Business Day.
"Common Shares", when used with reference to the Company prior
to a Business Combination, shall mean the shares of Common Stock of the Company
or any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares", when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as
a maximum amount and not merely in proportional terms) the amount of dividends
or income payable or distributable on such class or series or the amount of
assets distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that, if at any
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time
unless any such class or series is identical to another such class except for
voting power, in which case "Common Shares" shall include such higher voting
class in place of such lower voting class.
"Common Stock" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of
this Rights Agreement; provided, however, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section 11(c)(III).
The term "control" with respect to any Person shall mean the
power to direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
or in
<PAGE> 9
6
connection with an agreement, arrangement or understanding (written or oral)
with one or more other Persons by or through stock ownership, agency or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in
Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as in effect on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in
Section 11(b)(I).
"Expiration Date" shall have the meaning set forth in Section
7(a).
"Major Part", when used with reference to the assets of the
Company and its Subsidiaries as of any date, shall mean assets (i) having a
fair market value aggregating 50% or more of the total fair market value of all
the assets of the Company and its Subsidiaries (taken as a whole) as of the
date in question, (ii) accounting for 50% or more of the total value (net of
depreciation and amortization) of all the assets of the Company and its
Subsidiaries (taken as a whole) as would be shown on a consolidated or combined
balance sheet of the Company and its Subsidiaries as of the date in question,
prepared in accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of earnings
before interest, taxes, depreciation and amortization or of the revenues of the
Company and its Subsidiaries (taken as a whole) as would be shown on, or
derived from, a consolidated or combined statement of income or operations of
the Company and its Subsidiaries for the period of 12 months ending on the last
day of the Company's monthly accounting period next preceding the date in
question, prepared in accordance with generally accepted accounting principles
then in effect.
"Market Value", when used with reference to Common Shares on
any date, shall be deemed to be the average of the daily closing prices, per
share, of such Common Shares for the period which is the shorter of (1) 30
consecutive Trading Days immediately prior to the date in question or (2) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public
<PAGE> 10
7
announcement of the event requiring a determination of the Market Value and
ending on the Trading Day immediately prior to the record date of such event;
provided, however, that, in the event that the Market Value of such Common
Shares is to be determined in whole or in part during a period following the
announcement by the issuer of such Common Shares of any action of the type
described in Section 12(a) that would require an adjustment thereunder, then,
and in each such case, the Market Value of such Common Shares shall be
appropriately adjusted to reflect the effect of such action on the market price
of such Common Shares. The closing price for each Trading Day shall be the
closing price quoted on the principal United States securities exchange
registered under the Exchange Act (or any recognized foreign stock exchange) on
which such securities are listed, or, if such securities are not listed on any
such exchange, the closing price quoted on The Nasdaq Stock Market or, if such
securities are not so quoted, the average of the closing bid and asked
quotations with respect to a share of such securities on any National
Association of Securities Dealers, Inc. quotations system, or if no such
quotations are available, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such securities
selected by the Board of Directors of the Company. If on any such Trading Day
no market maker is making a market in such securities, the closing price of
such securities on such Trading Day shall be deemed to be the fair value of
such securities as determined in good faith by the Board of Directors of the
Company acting by a vote of those directors whose approval would be required to
redeem the Rights under Section 24 (whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent,
the holders of Rights and all other Persons); provided, however, that for the
purpose of determining the closing price of the Preferred Shares for any
Trading Day on which there is no such market maker for the Preferred Shares the
closing price on such Trading Day shall be deemed to be the Formula Number (as
defined in the Certificate of Designation) times the closing price of the
Common Shares of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
"Preferred Shares" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this Rights
Agreement to
<PAGE> 11
8
Preferred Shares shall be deemed to include any authorized fraction of a
Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a
Business Combination; provided, however, that, if such Surviving Person is a
direct or indirect Subsidiary of any other Person, "Principal Party" shall mean
the Person which is the ultimate parent of such Surviving Person and which is
not itself a Subsidiary of another Person. In the event ultimate control of
such Surviving Person is shared by two or more Persons, "Principal Party" shall
mean that Person that is immediately controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $108,
as such amount may from time to time be adjusted as provided herein, and shall
be payable in lawful money of the United States of America. All references
herein to the Purchase Price shall mean the Purchase Price as in effect at the
time in question.
"Record Date" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section
24(a).
"Redemption Price" with respect to each Right shall mean $.01,
as such amount may from time to time be adjusted in accordance with Section 12.
All references herein to the Redemption Price shall mean the Redemption Price
as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares which are,
as of the date of consummation of a Business Combination, and have continuously
been for the 12 months immediately preceding such date, registered under
Section 12 of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a
Right in substantially the form attached as Exhibit B.
"Rights" shall mean the rights to purchase Preferred Shares
(or other securities) as provided in this Rights Agreement.
<PAGE> 12
9
"Securities Act" shall mean the Securities Act of 1933, as in
effect on the date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the
total outstanding voting power (being the power under ordinary circumstances
(and not merely upon the happening of a contingency) to vote in the election of
directors of such Person (if such Person is a corporation) or to participate in
the management and control of such Person (if such Person is not a
corporation)) of which is owned, directly or indirectly, by another Person or
by one or more other Subsidiaries of such other Person or by such other Person
and one or more other Subsidiaries of such other Person.
"Surviving Person" shall mean (1) the Person which is the
continuing or surviving Person in a consolidation or merger specified in
Section 11(c)(I)(i) or 11(c)(I)(ii) or (2) the Person to which the Major Part
of the assets of the Company and its Subsidiaries is sold, leased, exchanged or
otherwise transferred or disposed of in a transaction specified in Section
11(c)(I)(iii); provided, however, that, if the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise
transferred or disposed of in one or more related transactions specified in
Section 11(c)(I)(iii) to more than one Person, the "Surviving Person" in such
case shall mean the Person that acquired assets of the Company and/or its
Subsidiaries with the greatest fair market value in such transaction or
transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the
case may be) on which any securities or Rights, as the case may be, are listed
or admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint one or more co-Rights
Agents as it may deem necessary or desirable upon notice to the Rights Agent
(the term "Rights
<PAGE> 13
10
Agent" being used herein to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
SECTION 3. Issue of Rights and Right Certificates. (a) One
Right shall be associated with each Common Share outstanding on the Record
Date, each additional Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the Expiration Date and each additional Common Share with which Rights are
issued after the Distribution Date but prior to the earlier of the Redemption
Date or the Expiration Date as provided in Section 23; provided, however, that,
if the number of outstanding Rights are combined into a smaller number of
outstanding Rights pursuant to Section 12(a), the appropriate fractional Right
determined pursuant to such Section shall thereafter be associated with each
such Common Share.
(b) Until the earlier of (i) such time as the Company learns
that a Person has become an Acquiring Person or (ii) the Close of Business on
such date, if any, as may be designated by the Board of Directors of the
Company following the commencement of, or first public disclosure of an intent
to commence, a tender or exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit or compensation plan of the
Company or of any of its Subsidiaries, or any Person holding Common Shares for
or pursuant to the terms of any such employee benefit or compensation plan) for
outstanding Common Shares, if upon consummation of such tender or exchange
offer such Person could be the Beneficial Owner of more than 15% of the
outstanding Common Shares (the Close of Business on the earlier of such dates
being the "Distribution Date"), (x) the Rights will be evidenced by the
certificates for Common Shares registered in the names of the holders thereof
and not by separate Right Certificates and (y) the Rights, including the right
to receive Right Certificates, will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Rights Agent will send, by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate evidencing
one whole Right for each Common Share (or for the number of Common Shares with
which one whole Right is then associated if the number of
<PAGE> 14
11
Rights per Common Share held by such record holder has been adjusted in
accordance with the proviso in Section 3(a)). If the number of Rights
associated with each Common Share has been adjusted in accordance with the
proviso in Section 3(a), at the time of distribution of the Right Certificates
the Company may make any necessary and appropriate rounding adjustments so that
Right Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Right in accordance with Section
15(a). As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(c) With respect to any certificate for Common Shares, until
the earliest of the Distribution Date, the Redemption Date or the Expiration
Date, the Rights associated with the Common Shares represented by any such
certificate shall be evidenced by such certificate alone, the registered
holders of the Common Shares shall also be the registered holders of the
associated Rights and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares after the Record
Date (including, without limitation, upon transfer or exchange of outstanding
Common Shares), but prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, shall have printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement dated as of
November 1, 1995, as it may be amended from time to time (the "Rights
Agreement"), between ITT Indiana, Inc., to be renamed ITT Industries,
Inc. (the "Company") and The Bank of New York, as Rights Agent (the
"Rights Agent"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Rights Agent will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Rights beneficially owned by Acquiring
<PAGE> 15
12
Persons or their Affiliates or Associates (as such terms are defined
in the Rights Agreement) and by any subsequent holder of such Rights
are null and void and nontransferable.
Notwithstanding this paragraph (d), the omission of a legend
shall not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of Rights.
SECTION 4. Form of Right Certificates. The Right Certificates
(and the form of election to purchase and form of assignment to be printed on
the reverse side thereof) shall be in substantially the form set forth as
Exhibit B and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 7, 11 and 23, the Right
Certificates, whenever issued, shall be dated as of the Distribution Date, and
on their face shall entitle the holders thereof to purchase such number of
Preferred Shares as shall be set forth therein for the Purchase Price set forth
therein, subject to adjustment from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a)
The Right Certificates shall be executed on behalf of the Company by the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Treasurer or a Vice President (whether preceded by any
additional title) of the Company, either manually or by facsimile signature,
and have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary, an Assistant Secretary or a Vice President
(whether preceded by any additional title, provided that such Vice President
shall not have also executed the Right Certificates) of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid or obligatory for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such an officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company,
<PAGE> 16
13
such Right Certificates may nevertheless be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as
though the person who signed such Right Certificates had not ceased to be such
an officer of the Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of execution of this Rights Agreement any
such person was not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its designated office in New York, New York, books
for registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each of the Right Certificates,
the certificate number of each of the Right Certificates and the date of each
of the Right Certificates.
SECTION 6. Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates;
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15,
at any time after the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date, any
Right Certificate or Right Certificates may be transferred, split-up, combined
or exchanged for another Right Certificate or Right Certificates representing,
in the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
Certificate or Right Certificates to be transferred, split-up, combined or
exchanged at the designated office of the Rights Agent; provided, however, that
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered
for transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon
<PAGE> 17
14
the Rights Agent shall, subject to Sections 7(e) and 15, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment by the holders of Rights of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company or the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a valid Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancelation of the Right Certificate if mutilated, the Company will make a
new Right Certificate of like tenor and deliver such new Right Certificate to
the Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company
and the Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced by Right
Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights.
(a) Subject to Section 7(e) and except as otherwise provided herein (including
Section 11), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase Price, at any
time after the Distribution Date and at or prior to the earlier of (i) the
Close of Business on the 10th anniversary of the date of this Rights Agreement
(the Close of Business on such date being the "Expiration Date"), or (ii) the
Redemption Date, one one-thousandths (1/1,000ths) of a Preferred Share, subject
to adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date, upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the designated office of the
Rights Agent in New York, New York, together with payment of the Purchase Price
for
<PAGE> 18
15
each one one-thousandths (1/1,000ths) of a Preferred Share as to which the
Rights are exercised, at or prior to the earlier of (i) the Expiration Date or
(ii) the Redemption Date.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Preferred Shares to be
purchased together with an amount equal to any applicable transfer tax, in
lawful money of the United States of America, in cash or by certified check or
money order payable to the order of the Company, the Rights Agent shall
thereupon (i) either (A) promptly requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the Preferred
Shares with a depositary agent under a depositary arrangement, promptly
requisition from the depositary agent depositary receipts representing the
number of one one-thousandths (1/1,000ths) of a Preferred Share to be purchased
(in which case certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company will direct the depositary agent to comply with all such
requests, (ii) when appropriate, promptly requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise fewer than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by an Acquiring
Person or any Affiliate
<PAGE> 19
16
or Associate of an Acquiring Person shall be null and void and nontransferable,
and any holder of any such Right (including any purported transferee or
subsequent holder) shall not have any right to exercise or transfer any such
Right.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificates upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
(g) The Company may temporarily suspend, for a period of time
not to exceed 90 calendar days after the Distribution Date, the exercisability
of the Rights in order to prepare and file a registration statement under the
Securities Act, on appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such
time as the suspension is no longer in effect. Notwithstanding any provision
herein to the contrary, the Rights shall not be exercisable in any jurisdiction
if the requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained or the exercise of the Rights shall
not be permitted under applicable law.
SECTION 8. Cancelation and Destruction of Right Certificates.
All Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented
<PAGE> 20
17
to the Company or to any of its agents, be delivered to the Rights Agent for
cancelation or in canceled form, or, if surrendered or presented to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Rights Agreement. The
Company shall deliver to the Rights Agent for cancelation and retirement, and
the Rights Agent shall so cancel and retire, any Right Certificate purchased or
acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company.
SECTION 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares or any
authorized and issued Preferred Shares held in its treasury, free from
preemptive rights or any right of first refusal, a number of Preferred Shares
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred
Shares issued but not outstanding or authorized but unissued to permit the
exercise or exchange of Rights in accordance with Section 11, the Company
covenants and agrees that it will take all such action as may be necessary to
authorize additional Preferred Shares for issuance upon the exercise or
exchange of Rights pursuant to Section 11; provided, however, that if the
Company is unable to cause the authorization of additional Preferred Shares,
then the Company shall, or in lieu of seeking any such authorization, the
Company may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (A) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing Preferred Shares and requiring payment therefor, (B) upon
due exercise of a Right and payment of the Purchase Price for each Preferred
Share as to which such Right is exercised, issue equity securities having a
value equal to the value of the Preferred Shares which otherwise would have
been issuable pursuant to Section 11, which value shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company or (C) upon due exercise of a Right and payment of the
Purchase Price for each Preferred Share as to which such Right is exercised,
distribute a combination of Preferred Shares, cash and/or other equity and/or
debt securities having an aggregate value equal to the value of the Preferred
Shares which otherwise would have been issuable pursuant to
<PAGE> 21
18
Section 11, which value shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors of the Company. To
the extent that any legal or contractual restrictions (pursuant to agreements
or instruments in effect prior to the Distribution Date to which it is party)
prevent the Company from paying the full amount payable in accordance with the
foregoing sentence, the Company shall pay to holders of the Rights as to which
such payments are being made all amounts which are not then restricted on a pro
rata basis as such payments become permissible under such legal or contractual
restrictions until such payments have been paid in full.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise or exchange of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) So long as the Preferred Shares issuable upon the
exercise or exchange of Rights are to be listed on any national securities
exchange, the Company covenants and agrees to use its best efforts to cause,
from and after such time as the Rights become exercisable or exchangeable, all
Preferred Shares reserved for such issuance to be listed on such securities
exchange upon official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all Federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of Right
Certificates or of any Preferred Shares or Common Shares or other securities
upon the exercise or exchange of the Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or in
respect of the issuance or delivery of certificates for the Preferred Shares or
Common Shares or other securities, as the case may be, in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or exchange or to issue or deliver any certificates
for Preferred Shares or Common Shares or other securities, as the case may be,
upon the exercise or exchange of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been
<PAGE> 22
19
established to the Company's satisfaction that no such tax is due.
SECTION 10. Preferred Shares Record Date. Each Person in
whose name any certificate for Preferred Shares or Common Shares or other
securities is issued upon the exercise or exchange of Rights shall for all
purposes be deemed to have become the holder of record of the Preferred Shares
or Common Shares or other securities, as the case may be, represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of any
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that, if the date of such surrender and payment is a date upon which the
transfer books of the Company for the Preferred Shares or Common Shares or
other securities, as the case may be, are closed, such Person shall be deemed
to have become the record holder of such Preferred Shares or Common Shares or
other securities, as the case may be, on, and such certificate shall be dated,
the next succeeding Business Day on which the transfer books of the Company for
the Preferred Shares or Common Shares or other securities, as the case may be,
are open.
SECTION 11. Adjustments in Rights After There Is an Acquiring
Person; Exchange of Rights for Shares; Business Combinations. (a) Upon a
Person becoming an Acquiring Person, proper provision shall be made so that
each holder of a Right, except as provided in Section 7(e), shall thereafter
have a right to receive, upon exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement, such number of one
one-thousandths (1/1,000ths) of a Preferred Share as shall equal the result
obtained by multiplying the Purchase Price by a fraction, the numerator of
which is the number of one one- thousandths (1/1,000ths) of a Preferred Share
for which a Right is then exercisable and the denominator of which is 50% of
the Market Value of the Common Shares on the date on which a Person becomes an
Acquiring Person. As soon as practicable after a Person becomes an Acquiring
Person (provided the Company shall not have elected to make the exchange
permitted by Section 11(b)(I) for all outstanding Rights), the Company
covenants and agrees to use its best efforts to:
(I) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred
Shares purchasable upon exercise of the Rights;
<PAGE> 23
20
(II) cause such registration statement to become effective as
soon as practicable after such filing;
(III) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and
(IV) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)(I) The Board of Directors of the Company may, at its
option, at any time after a Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that shall have become null and void and
nontransferable pursuant to the provisions of Section 7(e)) for consideration
per Right consisting of either one-half of the securities that would be
issuable at such time upon the exercise of one Right in accordance with Section
11(a) or, if applicable, Section 9(b)(B) or (C) or, if applicable the cash
consideration specified in Section 9(b)(A) (the consideration issuable per
Right pursuant to this Section 11(b)(I) being the "Exchange Consideration").
The Board of Directors of the Company may, at its option, issue, in
substitution for Preferred Shares, Common Shares in an amount per Preferred
Share equal to the Formula Number (as defined in the Certificate of
Designation) if there are sufficient Common Shares issued but not outstanding
or authorized but unissued. If the Board of Directors of the Company elects to
exchange all the Rights for Exchange Consideration pursuant to this Section
11(b)(I) prior to the physical distribution of the Rights Certificates, the
Corporation may distribute the Exchange Consideration in lieu of distributing
Right Certificates, in which case for purposes of this Rights Agreement holders
of Rights shall be deemed to have simultaneously received and surrendered for
exchange Right Certificates on the date of such distribution.
(II) Any action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 11(b)(I) shall be
irrevocable and, immediately upon the taking of such action and without any
further action and without any notice, the right to exercise any such Right
pursuant to Section 11(a) shall terminate and the only right thereafter of a
holder of such Right shall be to receive the
<PAGE> 24
21
Exchange Consideration in exchange for each such Right held by such holder or,
if the Exchange Consideration shall not have been paid or issued, to exercise
any such Right pursuant to Section 11(c)(I). The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Rights for the Exchange Consideration will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which shall have become null and void and nontransferable pursuant to
the provisions of Section 7(e)) held by each holder of Rights.
(c)(I) In the event that, following a Distribution Date,
directly or indirectly, any transactions specified in the following clause (i),
(ii) or (iii) of this Section 11(c) (each such transaction being a "Business
Combination") shall be consummated:
(i) the Company shall consolidate with, or merge with and
into, any Acquiring Person or any Affiliate or Associate of an
Acquiring Person;
(ii) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in
connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for capital stock or other securities of the
Company or of any Acquiring Person or Affiliate or Associate of an
Acquiring Person or cash or any other property; or
(iii) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell,
lease, exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of the Company and its
Subsidiaries (taken as a whole) to any Acquiring Person or any
Affiliate or Associate of an Acquiring Person,
<PAGE> 25
22
then, in each such case, proper provision shall be made so that each holder of
a Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with
the terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement,
such number of Registered Common Shares of such Principal Party, free
and clear of all liens, encumbrances or other adverse claims, as shall
have an aggregate Market Value equal to the result obtained by
multiplying the Purchase Price by two;
(B) If the Principal Party involved in such Business
Combination does not have Registered Common Shares outstanding, each
Right shall thereafter represent the right to receive, upon the
exercise thereof for the Purchase Price in accordance with the terms
of this Rights Agreement, at the election of the holder of such Right
at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an aggregate
Book Value immediately after giving effect to such Business
Combination equal to the result obtained by multiplying the
Purchase Price by two;
(2) such number of Common Shares of the Principal
Party in such Business Combination (if the Principal Party is
not also the Surviving Person in such Business Combination) as
shall have an aggregate Book Value immediately after giving
effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two; or
(3) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons which has
Registered Common Shares outstanding, such number of
Registered Common Shares of whichever of such Affiliates of
the Principal
<PAGE> 26
23
Party has Registered Common Shares with the greatest aggregate Market
Value on the date of consummation of such Business Combination as
shall have an aggregate Market Value on the date of such Business
Combination equal to the result obtained by multiplying the Purchase
Price by two.
(II) The Company shall not consummate any Business
Combination unless each issuer of Common Shares for which Rights may be
exercised, as set forth in this Section 11(c), shall have sufficient authorized
Common Shares that have not been issued or reserved for issuance (and which
shall, when issued upon exercise thereof in accordance with this Rights
Agreement, be validly issued, fully paid and nonassessable and free of
preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof) to permit the exercise in
full of the Rights in accordance with this Section 11(c) and unless prior
thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights, shall be
effective under the Securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such
issuer of the obligations set forth in this Section 11(c)
(including the obligation of such issuer to issue Common
Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 11(c)(I) and 11(c)(III)) and
further providing that such issuer, at its own expense, will
use its best efforts to:
(1) cause a registration statement under the
Securities Act on an appropriate form, with respect
to the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
<PAGE> 27
24
(2) qualify or register the Rights and the
Common Shares of such issuer purchasable upon
exercise of the Rights under the blue sky or
securities laws of such jurisdictions as may be
necessary or appropriate; and
(3) list the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights
on each national securities exchange on which the
Common Shares were listed prior to the consummation
of the Business Combination or, if the Common Shares
were not listed on a national securities exchange
prior to the consummation of the Business
Combination, on a national securities exchange;
(B) furnished to the Rights Agent a written opinion
of independent counsel stating that such supplemental
agreement is a valid, binding and enforceable agreement of
such issuer; and
(C) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting
forth the number of Common Shares of such issuer which may be
purchased upon the exercise of each Right after the
consummation of such Business Combination.
(III) After consummation of any Business Combination and
subject to the provisions of Section 11(c)(II), (i) each issuer of Common
Shares for which Rights may be exercised as set forth in this Section 11(c)
shall be liable for, and shall assume, by virtue of such Business Combination,
all the obligations and duties of the Company pursuant to this Rights
Agreement, (ii) the term "Company" shall thereafter be deemed to refer to such
issuer, (iii) each such issuer shall take such steps in connection with such
consummation as may be necessary to assure that the provisions hereof
(including the provisions of Sections 11(a) and 11(c)) shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights, and (iv) the number of
Common Shares of each such issuer thereafter receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions of Sections 11 and 12 and
the provisions of Section 7, 9 and 10 with respect to the Preferred Shares
<PAGE> 28
25
shall apply, as nearly as reasonably may be, on like terms to any such Common
Shares.
SECTION 12. Certain Adjustments. (a) To preserve the actual
or potential economic value of the Rights, if at any time after the date of
this Rights Agreement there shall be any change in the Common Shares or the
Preferred Shares, whether by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations or exchanges of
securities, split- ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to
holders of Common Shares or Preferred Shares, as the case may be (other than
distribution of the Rights or regular quarterly cash dividends) or otherwise,
then, in each such event the Board of Directors of the Company shall make such
appropriate adjustments in the number of Preferred Shares (or the number and
kind of other securities) issuable upon exercise of each Right, the Purchase
Price and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each Common Share) such that following such adjustment such
event shall not have had the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities other than Preferred Shares, thereafter the number of
such securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as
nearly as reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to
any adjustment made to the amount of Preferred Shares or other securities
relating to a Right shall evidence the right to purchase, for the Purchase
Price, the adjusted number and kind of securities purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
<PAGE> 29
26
(d) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Shares or number or kind of other securities
issuable upon the exercise of the Rights, the Right Certificates theretofore
and thereafter issued may continue to express the terms which were expressed in
the initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section
12(a) requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
SECTION 13. Certificate of Adjustment. Whenever an
adjustment is made as provided in Section 11 or 12, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Preferred Shares a copy
of such certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate (or, prior to the Distribution Date, of the Common Shares) in
accordance with Section 25. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.
SECTION 14. Additional Covenants. (a) Notwithstanding any
other provision of this Rights Agreement, no adjustment to the number of
Preferred Shares (or fractions of a share) or other securities for which a
Right is exercisable or the number of Rights outstanding or associated with
each Common Share or any similar or other adjustment shall be made or be
effective if such adjustment would have the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Sections 11 and 12, unless
the terms of this Rights Agreement are amended so as to preserve such benefits.
<PAGE> 30
27
(b) The Company covenants and agrees that, after the
Distribution Date, except as permitted by Section 26, it will not take (or
permit any Subsidiary of the Company to take) any action if at the time such
action is taken it is intended or reasonably foreseeable that such action will
reduce or otherwise limit the benefits the holders of the Rights would have had
absent such action, including, without limitation, the benefits under Sections
11 and 12. Any action taken by the Company during any period after any Person
becomes an Acquiring Person but prior to the Distribution Date shall be null
and void unless such action could be taken under this Section 14(b) from and
after the Distribution Date. The Company shall not consummate any Business
Combination if any issuer of Common Shares for which Rights may be exercised
after such Business Combination in accordance with Section 11(c) shall have
taken or contemplated taking any action that reduces or otherwise limits the
benefits the holders of the Rights would have had absent such action,
including, without limitation, the benefits under Sections 11 and 12.
SECTION 15. Fractional Rights and Fractional Shares. (a)
The Company may, but shall not be required to, issue fractions of Rights or
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, the Company may pay to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue
fractions of Preferred Shares upon exercise of the Rights or distribute
certificates which evidence fractional Preferred Shares. In lieu of fractional
Preferred Shares, the Company may elect to (i) utilize a depository arrangement
as provided by the terms of the Preferred Shares or (ii) in the case of a
fraction of a Preferred Share (other than one one-thousandths (1/1,000ths) of a
Preferred Share or any integral multiple thereof), pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of
<PAGE> 31
28
one Preferred Share, if any are outstanding and publicly traded (or the Formula
Number times the current market value of one Common Share if the Preferred
Shares are not outstanding and publicly traded). For purposes of this Section
15(b), the current market value of a Preferred Share (or Common Share) shall be
the closing price of a Preferred Share (or Common Share) (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date of
such exercise. If, as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities other than Preferred Shares, the provisions of this
Section 15(b) shall apply, as nearly as reasonably may be, on like terms to
such other securities.
(c) The Company may, but shall not be required to, issue
fractions of Common Shares upon exchange of Rights pursuant to Section 11(b),
or to distribute certificates which evidence fractional Common Shares. In lieu
of such fractional Common Shares, the Company may pay to the registered holders
of the Right Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person
became an Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as provided in this Section 15.
SECTION 16. Rights of Action. (a) All rights of action in
respect of this Rights Agreement are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares) may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of
<PAGE> 32
29
Rights would not have an adequate remedy at law for any breach of this Rights
Agreement and shall be entitled to specific performance of the obligations of
any Person under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce
the provisions of this Rights Agreement shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
SECTION 17. Transfer and Ownership of Rights and Right
Certificates. (a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares and the
Rights associated with the Common Shares shall be automatically transferred
upon the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates will
be transferable, subject to Section 7(e), only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the
Person in whose name a Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated certificate
for Common Shares made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary.
SECTION 18. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate shall be entitled to
vote or receive dividends or be deemed, for any purpose, the holder of the
Preferred Shares or of any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company, including, without limitation, any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give
<PAGE> 33
30
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance
with the provisions hereof.
SECTION 19. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent, as shall be agreed to in writing between the
Company and the Rights Agent, compensation for all services rendered by it
hereunder from time to time and its reasonable expenses and counsel fees and
expenses and other disbursements incurred in the administration and execution
of this Rights Agreement and the exercise and performance of its duties
hereunder. The provisions of this Section 19(a) shall survive the expiration
of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon
any Right Certificate or certificate for the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, opinion, instruction,
direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be signed and executed by the proper Person or
Persons.
SECTION 20. Merger or Consolidation or Change of Rights
Agent. (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 22. In case, at the time such successor Rights Agent
shall succeed to the agency created by this Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor
<PAGE> 34
31
Rights Agent and deliver such Right Certificates so countersigned; and, in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and, in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
SECTION 21. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates (or, prior to the Distribution Date, of the Common Shares),
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
satisfactory to it (who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken, suffered or omitted by it in good faith
and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person) be proved or established by the Company prior to taking, refraining
from taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Operating Officer, the Chief Financial Officer, a Vice President
(whether preceded by any additional title), the Treasurer or the Secretary of
the Company and delivered to the Rights
<PAGE> 35
32
Agent or by the directors of the Company whose vote would be sufficient to
redeem the Rights under Section 24. Such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Rights Agreement in reliance upon such
certificate. In the event any such certificate signed by such directors is
inconsistent with any other such certificate, the certificate signed by such
directors shall control.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any Preferred Shares or Common Shares will, when
so issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be
<PAGE> 36
33
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, a Vice President (whether preceded by
any additional title), the Secretary or the Treasurer of the Company or from
the directors of the Company whose vote would be sufficient to redeem the
Rights under Section 24, and to apply to such officers or directors for advice
and instructions in connection with its duties and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officers or directors or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in such application on or after the date specified in
such application (which date shall not be less than three Business Days after
the date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to any earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer,
employee or affiliate of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any
<PAGE> 37
34
duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct provided
reasonable care was exercised in the selection thereof.
(j) The Company agrees to indemnify and to hold the Rights
Agent harmless against any loss, liability, damage or expense (including
reasonable fees and expenses of legal counsel) which the Rights Agent may incur
in connection with this Rights Agreement; provided, however, that the Rights
Agent shall not be indemnified or held harmless with respect to any such loss,
liability, damage or expense incurred by the Rights Agent as a result of, or
arising out of, its own gross negligence, bad faith or wilful misconduct. If
any action, proceeding (including, but not limited to, any governmental
investigation), claim or dispute (collectively, a "Proceeding") in respect of
which indemnity may be sought is brought or asserted against the Rights Agent,
the Rights Agent shall promptly (and in no event more than ten (10) days after
receipt of written notice of such Proceeding) notify the Company of such
Proceeding. The failure of the Rights Agent to so notify the Company shall not
impair the Rights Agent's ability to seek indemnification from the Company (but
only for costs, expenses and liabilities incurred after such notice) unless
such failure adversely affects the Company's ability to adequately oppose or
defend such Proceeding. Upon receipt of such notice from the Rights Agent, the
Company shall be entitled to participate in such Proceeding and, to the extent
that it shall so desire and provided no conflict of interest exists as
specified in (b) below or there are no other defenses available to the Rights
Agent as specified in (d) below, to assume the defense thereof with counsel
reasonably satisfactory to the Rights Agent (in which case all attorney's fees
and expenses shall be borne by the Company and the Company shall in good faith
defend the Rights Agent). The Rights Agent shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be borne by the Rights
Agent unless (a) the Company agrees in writing to pay such fees and expenses,
(b) the Rights Agent shall have reasonably and in good faith concluded that
there is a conflict of interest between the Company and the Rights Agent in the
conduct of the defense of such action, (c) the Company fails, within ten (10)
days prior to the date the first response or
<PAGE> 38
35
appearance is required to be made in such Proceeding, to assume the defense of
such Proceeding with counsel reasonably satisfactory to the Rights Agent or (d)
there are legal defenses available to the Rights Agent that are different from
or are in addition to those available to the Company. No compromise or
settlement of such Proceeding may be effected by either party without the other
party's consent unless (i) there is no finding or admission of any violation of
law and no effect on any other claims that may be made against such other party
and (ii) the sole relief provided is monetary damages that are paid in full by
the party seeking the settlement. Neither party shall have any liability with
respect to any compromise or settlement effected without its consent, which
consent shall not be unreasonably withheld. The Company shall have no
obligation to indemnify and hold harmless the Rights Agent from any loss,
expense or liability incurred by the Rights Agent as a result of a default
judgment entered against the Rights Agent unless such judgment was entered
after the Company agreed, in writing, to assume the defense of such Proceeding.
The provisions of this Section 21(j) shall survive expiration
of the Rights and the termination of this Agreement.
(k) The Rights Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of Right
Certificates shall furnish the Rights Agent with security and indemnity to its
satisfaction for any costs and expenses which may be incurred.
(l) The Rights Agent shall not be liable for failure to
perform any duties except as specifically set forth herein and no implied
covenants or obligations shall be read into this Agreement against the Rights
Agent, whose duties and obligations are ministerial and shall be determined
solely by the express provisions hereof.
SECTION 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and the Preferred Shares by registered
or certified mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor
<PAGE> 39
36
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and the Preferred Shares by registered or certified mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (or, prior to the Distribution Date, of the
Common Shares) (who shall, with such notice, submit his Right Certificate or,
prior to the Distribution Date, the certificate representing his Common Shares,
for inspection by the Company), then the Rights Agent or the registered holder
of any Right Certificate (or, prior to the Distribution Date, of the Common
Shares) may apply to any court of competent jurisdiction for the appointment of
a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York (or of any
other state of the United States so long as such corporation is authorized to
conduct a stock transfer or corporate trust business in the State of New York),
in good standing, having a principal office in the State of New York, which is
authorized under such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by Federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000; provided that the principal transfer agent for
the Common Shares shall in any event be qualified to be the Rights Agent.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and the Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates (or, prior to the Distribution
Date, of the Common Shares). Failure to give any notice provided for in this
Section 22, however, or any defect therein shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
<PAGE> 40
37
appointment of the successor Rights Agent, as the case may be.
SECTION 23. Issuance of Additional Rights and Right
Certificates. Notwithstanding any of the provisions of this Rights Agreement
or of the Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change made in accordance with
the provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of Common Shares following the Distribution Date and prior to
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall, with respect to Common Shares so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Company, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued, and (ii)
no such Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 24. Redemption and Termination. (a) The Board of
Directors of the Company may, at its option, at any time prior to the earlier
of (i) such time as a Person becomes an Acquiring Person and (ii) the
Expiration Date, order the redemption of all, but not fewer than all, the then
outstanding Rights at the Redemption Price (the date of such redemption being
the "Redemption Date"), and the Company, at its option, may pay the Redemption
Price either in cash or Common Shares or other securities of the Company deemed
by the Board of Directors of the Company, in the exercise of its sole
discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be
<PAGE> 41
38
to receive the Redemption Price. Within 10 Business Days after the action of
the Board of Directors of the Company ordering the redemption of the Rights,
the Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Each such notice of redemption will state the method by which
payment of the Redemption Price will be made. The notice, if mailed in the
manner herein provided, shall be conclusively presumed to have been duly given,
whether or not the holder of Rights receives such notice. In any case, failure
to give such notice by mail, or any defect in the notice, to any particular
holder of Rights shall not affect the sufficiency of the notice to other
holders of Rights.
SECTION 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
ITT Industries, Inc.
4 West Red Oak Lane
White Plains, NY 10604
Attn: Senior Vice President and
General Counsel
Subject to the provisions of Section 22, any notice or demand authorized by
this Rights Agreement to be given or made by the Company or by the holder of a
Right Certificate (or, prior to the Distribution Date, of the Common Shares) to
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
The Bank of New York
101 Barclay Street, 12W
New York, NY 10286
Attn: Stock Transfer Administration
<PAGE> 42
39
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to
the Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs, supplement
or amend any provision of this Rights Agreement (including, without limitation,
the date on which the Distribution Date shall occur, the definition of
"Acquiring Person", the time during which the Rights may be redeemed pursuant
to Section 24 or any provision of the Certificate of Designation) without the
approval of any holder of the Rights. From and after the Distribution Date and
subject to applicable law, the Company may, and the Rights Agent shall if the
Company so directs, amend this Rights Agreement without the approval of any
holders of Right Certificates (i) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision of this Rights Agreement or (ii) to make
any other provisions in regard to matters or questions arising hereunder which
the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Any
supplement or amendment adopted during any period after any Person has become
an Acquiring Person but prior to the Distribution Date shall be null and void
unless such supplement or amendment could have been adopted under the prior
sentence from and after the Distribution Date. Any supplement or amendment to
this Rights Agreement duly approved by the Company that does not amend Sections
19, 20, 21 or 22 in a manner adverse to the Rights Agent shall become effective
immediately upon execution by the Company, whether or not also executed by the
Rights Agent. The Rights Agent shall receive prompt written notice from the
Company of any amendment hereunder. In addition, notwithstanding anything to
the contrary contained in this Rights Agreement, no supplement or amendment to
this Rights Agreement shall be made which (a) reduces the Redemption Price
(except as required by Section 12(a)) or (b) provides for an earlier Expiration
Date. Upon the delivery of a
<PAGE> 43
40
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 26
which alters the Rights Agent's rights or duties.
SECTION 27. Successors. All the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28. Benefits of Rights Agreement; Determinations and
Actions by the Board of Directors, etc. (a) Nothing in this Rights Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, of the Common Shares) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors of the Company shall have the exclusive power
and authority to administer this Rights Agreement and to exercise all rights
and powers specifically granted to the Board of Directors of the Company or to
the Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement and whether there is an
Acquiring Person).
<PAGE> 44
41
(c) Nothing contained in this Rights Agreement shall be
deemed to be in derogation of the obligation of the Board of Directors of the
Company to exercise its fiduciary duty. Without limiting the foregoing,
nothing contained herein shall be construed to suggest or imply that the Board
of Directors shall not be entitled to reject any tender offer, or to recommend
that holders of Common Shares reject any tender offer or other acquisition
proposal, or to take any other action (including, without limitation, the
commencement, prosecution, defense or settlement of any litigation and the
submission of additional or alternative offers or other proposals) with respect
to any tender offer or other acquisition proposal that the Board of Directors
believes is necessary or appropriate in the exercise of such fiduciary duty.
SECTION 29. Severability. If any term, provision, covenant
or restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
SECTION 30. GOVERNING LAW. THIS RIGHTS AGREEMENT AND EACH
RIGHT CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAW OF THE STATE OF INDIANA AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF SUCH STATE APPLICABLE TO CONTRACTS TO
BE MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE, PROVIDED, HOWEVER, THAT THE
RIGHTS AND OBLIGATIONS OF THE RIGHTS AGENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 31. Counterparts; Effectiveness. This Rights
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. This
Rights Agreement shall be effective as of the Close of Business on the date
hereof.
SECTION 32. Descriptive Headings. Descriptive headings of
the several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions of this Rights Agreement.
<PAGE> 45
42
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
ITT Indiana, Inc.
by
--------------------------
Name:
Title:
The Bank of New York,
as Rights Agent,
by
--------------------------
Name:
Title:
<PAGE> 46
EXHIBIT A
ARTICLES OF AMENDMENT SETTING FORTH
THE DESIGNATIONS, VOTING POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS
AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK
OF ITT INDIANA, INC.
Pursuant to Section 23-1-25-1 and Section 23-1-25-2 of the
Business Corporation Law of the State of Indiana, ITT Indiana, Inc., to be
renamed ITT Industries, Inc. (the "Corporation"), a corporation organized and
existing under the Business Corporation Law of the State of Indiana, in
accordance with the provisions of Section 23-1-18-1 and Section 23-1-38-6
thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of
Directors of the Corporation by ARTICLE FOURTH of the Articles of Incorporation
of the Corporation (the "Articles of Incorporation"), the Board of Directors of
the Corporation on October 10, 1995, adopted the following resolution amending
the Articles of Incorporation to create a series of Preferred Stock designated
as Series A Participating Cumulative Preferred Stock:
RESOLVED that pursuant to the authority vested in the Board of
Directors of the Corporation in ARTICLE FOURTH of the Articles of
Incorporation, the designations, voting powers, preferences and
relative, participating, optional and other special rights and
qualifications, limitations or restrictions of a series of Preferred
Stock be, and they hereby are, fixed as follows:
SECTION 1. Designation and Number of Shares. The shares
of such series shall be designated as "Series A Participating Cumulative
Preferred Stock" (the "Series A Preferred Stock"), without par value. The number
of shares initially constituting the Series A Preferred Stock shall be 300,000;
provided, however, that, if more than a total of 300,000 shares
of Series A Preferred Stock shall be issuable upon the exercise of Rights (the
"Rights") issued pursuant to that Rights Agreement between the Corporation and
The Bank of New York, a New York banking corporation, as Rights Agent (the
"Rights Agreement"), the Board of Directors of the Corporation, pursuant to
Section 23-1-25-2(d) of the Business Corporation Law of the State of Indiana,
shall direct by resolution or resolutions that articles of amendment be properly
executed and delivered to the
<PAGE> 47
2
Secretary of State for the State of Indiana for filing in accordance with the
provisions of Section 23-1-18-1 and Section 23-1-38-6 thereof, providing for the
total number of shares of Series A Preferred Stock authorized to be issued to be
increased (to the extent that the Articles of Incorporation then permit) to the
largest number of whole shares (rounded up to the nearest whole number) issuable
upon exercise of such Rights.
SECTION 2. Dividends or Distributions. (a) Subject to
the prior and superior rights of the holders of shares of any other series of
Preferred Stock or other class of capital stock of the Corporation ranking prior
and superior to the shares of Series A Preferred Stock with respect to
dividends, the holders of shares of the Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
the assets of the Corporation legally available therefor, (1) quarterly
dividends payable in cash on the last day of each fiscal quarter in each year,
or such other dates as the Board of Directors of the Corporation shall approve
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or a fraction of a share of Series A Preferred Stock, in the
amount of $.01 per whole share (rounded to the nearest cent) less the amount of
all cash dividends declared on the Series A Preferred Stock pursuant to the
following clause (2) since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock
(the total of which shall not, in any event, be less than zero) and (2)
dividends payable in cash on the payment date for each cash dividend declared on
the Common Stock in an amount per whole share (rounded to the nearest cent)
equal to the Formula Number (as hereinafter defined) then in effect times the
cash dividends then to be paid on each share of Common Stock. In addition, if
the Corporation shall pay any dividend or make any distribution on the Common
Stock payable in assets, securities or other forms of noncash consideration
(other than dividends or distributions solely in shares of Common Stock), then,
in each such case, the Corporation shall simultaneously pay or make on each
outstanding whole share of Series A Preferred Stock a dividend or distribution
in like kind equal to the Formula Number then in effect times such dividend or
distribution on each share of the Common Stock. As used herein, the "Formula
Number" shall be 1,000; provided, however, that, if at any time
after the Distribution Record
<PAGE> 48
3
Date (as defined in that Notice of Special Meeting and Proxy Statement, dated
August 30, 1995, filed with the Securities and Exchange Commission by ITT
Corporation), the Corporation shall (i) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or make any distribution on the
Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of shares
of Common Stock or (iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then in each such event the Formula Number shall be adjusted to a number
determined by multiplying the Formula Number in effect immediately prior to such
event by a fraction, the numerator of which is the number of shares of Common
Stock that are outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that are outstanding immediately
prior to such event (and rounding the result to the nearest whole number); and
provided further, that, if at any time after the Distribution Record
Date, the Corporation shall issue any shares of its capital stock in a merger,
reclassification, or change of the outstanding shares of Common Stock, then in
each such event the Formula Number shall be appropriately adjusted to reflect
such merger, reclassification or change so that each share of Preferred Stock
continues to be the economic equivalent of a Formula Number of shares of Common
Stock prior to such merger, reclassification or change.
(b) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in Section 2(a)
immediately prior to or at the same time it declares a dividend or distribution
on the Common Stock (other than a dividend or distribution solely in shares of
Common Stock); provided, however, that, in the event no dividend or distribution
(other than a dividend or distribution in shares of Common Stock) shall have
been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $.01 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a dividend or distribution declared
thereon, which record date shall be the same as the record date for any
corresponding dividend or distribution on the Common Stock.
<PAGE> 49
4
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the Quarterly
Dividend Payment Date next preceding the date of original issue of such shares
of Series A Preferred Stock; provided, however, that dividends
on such shares which are originally issued after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and on or prior to the next succeeding Quarterly
Dividend Payment Date shall begin to accrue and be cumulative from and after
such Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends
on shares of Series A Preferred Stock which are originally issued prior to the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend on the first Quarterly Dividend
Payment Date shall be calculated as if cumulative from and after the last day of
the fiscal quarter next preceding the date of original issuance of such shares.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding.
(d) So long as any shares of the Series A Preferred Stock
are outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock
shall not be entitled to receive any dividends or other distributions except as
provided herein.
SECTION 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be
entitled to a number of votes equal to the Formula Number then in effect, for
each share of Series A Preferred Stock held of record on each matter on which
holders of the Common Stock or shareholders generally are entitled to vote,
multiplied by the maximum number of votes per share which any holder of the
Common Stock or shareholders generally then have with respect to such matter
(assuming any holding
<PAGE> 50
5
period or other requirement to vote a greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock shall vote together as one class for the election of directors
of the Corporation and on all other matters submitted to a vote of shareholders
of the Corporation.
(c) If, at the time of any annual meeting of shareholders
for the election of directors, the equivalent of six quarterly dividends
(whether or not consecutive) payable on any share or shares of Series A
Preferred Stock are in default, the number of directors constituting the Board
of Directors of the Corporation shall be increased by two. In addition to voting
together with the holders of Common Stock for the election of other directors of
the Corporation, the holders of record of the Series A Preferred Stock, voting
separately as a class to the exclusion of the holders of Common Stock, shall be
entitled at said meeting of shareholders (and at each subsequent annual meeting
of shareholders), unless all dividends in arrears have been paid or declared and
set apart for payment prior thereto, to vote for the election of two directors
of the Corporation, the holders of any Series A Preferred Stock being entitled
to cast a number of votes per share of Series A Preferred Stock equal to the
Formula Number. Until the default in payments of all dividends which permitted
the election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series A Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series A Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(c) shall be in
<PAGE> 51
6
addition to any other voting rights granted to the holders of the Series A
Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by
applicable law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
authorizing or taking any corporate action.
SECTION 4. Certain Restrictions. (a) Whenever quarterly
dividends or other dividends or distributions payable on the Series A Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock; provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A
<PAGE> 52
7
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. Liquidation Rights. Upon the liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
no distribution shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received an amount equal to the accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, plus an amount equal to the greater of (x) $.01 per whole share
or (y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up; provided that in no event shall the amount or amounts, if any,
exceed $100 per share plus accrued dividends in the case of involuntary
liquidation, dissolution or winding up of the Corporation.
SECTION 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash or any other property, then in any such
case the then outstanding shares of Series A Preferred Stock shall at the same
time be similarly exchanged or changed
<PAGE> 53
8
into an amount per share equal to the Formula Number then in effect times the
aggregate amount of stock, securities, cash or any other property (payable in
kind), as the case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and Section 2 appear to
apply to a transaction, this Section 6 will control.
SECTION 7. No Redemption; No Sinking Fund. (a) The
shares of Series A Preferred Stock shall not be subject to redemption by the
Corporation or at the option of any holder of Series A Preferred Stock;
provided, however, that the Corporation may purchase or
otherwise acquire outstanding shares of Series A Preferred Stock in the open
market or by offer to any holder or holders of shares of Series A Preferred
Stock.
(b) The shares of Series A Preferred Stock shall not be
subject to or entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall
rank junior to all other series of Preferred Stock of the Corporation, unless
the Board of Directors shall specifically determine otherwise in fixing the
powers, preferences and relative, participating, optional and other special
rights of the shares of such series and the qualifications, limitations or
restrictions thereof.
SECTION 9. Fractional Shares. The Series A Preferred
Stock shall be issuable upon exercise of the Rights issued pursuant to the
Rights Agreement in whole shares or in any fraction of a share that is one
one-thousandths (1/1,000ths) of a share or any integral multiple of such
fraction which shall entitle the holder, in proportion to such holder's
fractional shares, to receive dividends, exercise voting rights, participate in
distributions and to have the benefit of all other rights of holders of Series A
Preferred Stock. In lieu of fractional shares, the Corporation, prior to the
first issuance of a share or a fraction of a share of Series A Preferred Stock,
may elect (1) to make a cash payment as provided in the Rights Agreement for
fractions of a share other than one one-thousandths (1/1,000ths) of a share or
any integral multiple thereof or (2) to issue depository receipts evidencing
such authorized fraction of a share of Series A Preferred Stock pursuant to an
appropriate agreement between the Corporation and a depository selected by the
Corporation; provided that such agreement shall provide that
<PAGE> 54
9
the holders of such depository receipts shall have all the rights, privileges
and preferences to which they are entitled as holders of the Series A Preferred
Stock.
SECTION 10. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancelation become authorized but unissued
shares of Preferred Stock, without designation as to series until such shares
are once more designated as part of a particular series by the Board of
Directors pursuant to the provisions of ARTICLE FOURTH of the Articles of
Incorporation.
SECTION 11. Amendment. None of the powers, preferences
and relative, participating, optional and other special rights of the Series A
Preferred Stock as provided herein or in the Articles of Incorporation shall be
amended in any manner which would alter or change the powers, preferences,
rights or privileges of the holders of Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least 66-2/3%
of the outstanding shares of Series A Preferred Stock, voting as a separate
class; provided, however, that no such amendment approved by the
holders of at least 66-2/3% of the outstanding shares of Series A Preferred
Stock shall be deemed to apply to the powers, preferences, rights or privileges
of any holder of shares of Series A Preferred Stock originally issued upon
exercise of a Right after the time of such approval without the approval of such
holder.
<PAGE> 55
10
The foregoing amendment was duly adopted by the Board of
Directors of the Corporation pursuant to Section 23-1-25-2(d) and Section
23-1-38-2(7) of the Business Corporation Law of the State of Indiana, and,
accordingly, shareholder action was not required.
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be duly executed in its corporate name on this day of November,
1995.
ITT INDIANA, INC.
by
-------------------------
Name:
Title:
Attest:
- -------------------------
Name:
Title:
<PAGE> 56
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
___________ Rights
NOT EXERCISABLE AFTER NOVEMBER 1, 2005, OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND
NONTRANSFERABLE.
Right Certificate
ITT INDUSTRIES, INC.
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of November 1, 1995 (the "Rights Agreement"), between ITT Indiana,
Inc., to be renamed ITT Industries, Inc., an Indiana corporation (the
"Company"), and The Bank of New York, a New York banking corporation, as Rights
Agent (the "Rights Agent"), unless the Rights evidenced hereby shall have been
previously redeemed by the Company, to purchase from the Company at any time
after the Distribution Date (as defined in the Rights Agreement) and prior to
5:00 p.m., New York City time, on the 10th anniversary of the date of the Rights
Agreement (the "Expiration Date"), at the designated office of the Rights Agent,
or its successors as Rights Agent, in New York, New York, one one-thousandths
(1/1,000ths) of a fully paid, nonassessable share of Series A Participating
Cumulative Preferred Stock, without par value, of the Company (the "Preferred
Shares"), at a purchase price per one one-thousandths (1/1,000ths) of a share
equal to $108 (the "Purchase Price") payable in cash, upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
<PAGE> 57
2
The Purchase Price and the number and kind of shares which may
be purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of . As provided in the Rights Agreement, the Purchase
Price and the number and kind of shares which may be purchased upon the exercise
of each Right evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any
time beneficially owned by an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
reference to the Rights Agreement is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal stock transfer or corporate trust
office of the Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number and kind of shares as the Rights evidenced
by the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price (in cash or shares of Common Stock or other securities of
<PAGE> 58
3
the Company deemed by the Board of Directors to be at least equivalent in value)
of $.01 per Right (which amount shall be subject to adjustment as provided in
the Rights Agreement) at any time prior to the earlier of (i) such time as a
Person becomes an Acquiring Person and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions
of Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares, the Company may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
one-thousandths (1/1,000ths) of a share or any integral multiple thereof or to
issue certificates or utilize a depository arrangement as provided in the terms
of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company, including, without limitation,
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as
provided in accordance with the provisions of the Rights Agreement.
<PAGE> 59
4
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory of the
Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of:
ITT INDUSTRIES, INC.,
by
-------------------------
Name:
Title:
Attest:
- -------------------------
Name:
Title:
Date of countersignature:
Countersigned:
The Bank of New York,
as Rights Agent,
by
-------------------------
Authorized Signatory
<PAGE> 60
5
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise _______
Rights represented by this Right Certificate to purchase the Preferred Shares
(or other shares) issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
<PAGE> 61
6
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: , 19
------------- --
-----------------------------
Signature
Signature Guaranteed:
<PAGE> 62
7
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________ hereby
sells, assigns and transfer unto ____________________
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated: ____________, 19__
------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (1) the Rights evidenced
by this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), (2) this
Rights Certificate is not being sold, assigned or transferred to or on behalf of
any such Acquiring Person, Affiliate or Associate and (3) after inquiry and to
the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).
------------------------------
Signature
<PAGE> 63
8
NOTICE
The signature on the foregoing Form of Election to Purchase or
Form of Assignment must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE> 1
DISTRIBUTION AGREEMENT dated as of November 1,
1995, among ITT CORPORATION, a Delaware corporation
("ITT"), ITT DESTINATIONS, INC., a Nevada corporation
("ITT Destinations"), and ITT HARTFORD GROUP, INC., a
Delaware corporation ("ITT Hartford").
WHEREAS, the Board of Directors of ITT has determined that it
is appropriate and desirable to distribute to the holders of shares of Common
Stock, par value $1.00 per share, of ITT (the "ITT Common Stock") all the
outstanding shares of common stock of ITT Destinations (the "ITT Destinations
Common Shares") and all the outstanding shares of common stock of ITT Hartford
(the "ITT Hartford Common Shares");
WHEREAS, each of ITT, ITT Destinations and ITT Hartford has
determined that it is necessary and desirable to allocate and assign
responsibility for those liabilities in respect of the activities of the
businesses of such entities on the Distribution Date (as defined herein) and
those liabilities in respect of other businesses and activities of ITT and its
former subsidiaries and other matters; and
WHEREAS, each of ITT, ITT Destinations and ITT Hartford has
determined that it is necessary and desirable to set forth the principal
corporate transactions required to effect such distribution and to set forth
other agreements that will govern certain other matters following the
distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. General. As used in this Agreement, the following
terms shall have the following meanings
<PAGE> 2
2
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any arbitration
tribunal.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
person specified.
"Agent" shall have the meaning as defined in Section 2.01(b).
"Ancillary Agreements" shall mean all of the written
agreements, instruments, understandings, assignments or other arrangements
(other than this Agreement) entered into in connection with the transactions
contemplated hereby, including, without limitation, the Conveyancing and
Assumption Instruments, the Employee Benefits Services and Liability Agreement,
the Tax Allocation Agreement and the Intellectual Property Agreements.
"Claims Administration" shall mean the processing of claims
made under the Company Policies, including, without limitation, the reporting of
losses or claims to insurance carriers (including, without limitation, as a
result of reports provided to ITT Industries by ITT Destinations or ITT
Hartford), management and defense of claims, the settlement of claims (except to
the extent settlement authority remains with another party as contemplated by
the second proviso to Section 7.03(a)) and providing for appropriate releases
upon settlement of claims.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including any
successor legislation.
"Commission" shall have the meaning as defined in Section
4.02(b).
"Company Policies" shall mean all Policies, current or past,
which are or at any time were maintained by or on behalf of or for the benefit
or protection of ITT or any
<PAGE> 3
3
of its predecessors which relate to any Shared Liability, the ITT Industries
Business, the ITT Destinations Business or the ITT Hartford Business, or current
or past directors, officers, employees or agents of any of the foregoing
Businesses, including, without limitation, the Policies identified on Schedule
7.01(a) hereto.
"Conveyancing and Assumption Instruments" shall mean,
collectively, the various agreements, instruments and other documents to be
entered into to effect the transfer of assets and the assumption of Liabilities
in the manner contemplated by this Agreement.
"Distribution" shall mean the distribution on the Distribution
Date to holders of record of shares of ITT Common Stock as of the Distribution
Record Date of (i) the ITT Destinations Common Shares owned by ITT on the basis
of one ITT Destinations Common Share for each outstanding share of ITT Common
Stock and (ii) the ITT Hartford Common Shares owned by ITT on the basis of one
ITT Hartford Common Share for each outstanding share of ITT Common Stock.
"Distribution Date" shall mean such date as may hereafter be
determined by ITT's Board of Directors as the date as of which the Distribution
shall be effected.
"Distribution Record Date" shall mean such date as may
hereafter be determined by ITT's Board of Directors as the record date for the
Distribution.
"Effective Time" shall mean 11:59 p.m., New York time, on the
Distribution Date.
"Employee Benefits Services and Liability Agreement" shall mean
the Employee Benefits Services and Liability Agreement dated as of November 1,
1995, among ITT, ITT Destinations and ITT Hartford.
"Indemnifiable Losses" shall mean any and all losses,
liabilities, claims, damages, demands, costs or expenses (including, without
limitation, reasonable attorneys' fees and any and all out-of-pocket expenses)
whatsoever reasonably incurred in investigating, preparing for or defending
against any Actions or potential Actions.
"Indemnifying Party" shall have the meaning as defined in
Section 3.04.
<PAGE> 4
4
"Indemnitee" shall have the meaning as defined in Section
3.04.
"Insurance Administration" shall mean, with respect to each
Company Policy, the accounting for premiums, retrospectively-rated premiums,
defense costs, indemnity payments, deductibles and retentions, as appropriate,
under the terms and conditions of each of the Company Policies, and the
distribution of Insurance Proceeds as contemplated by this Agreement.
"Insurance Proceeds" shall mean those monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier on behalf
of an insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, or cost of reserve paid or
held by or for the benefit of such insured.
"Insured Claims" shall mean those Liabilities that,
individually or in the aggregate, are covered within the terms and conditions of
any of the Company Policies, whether or not subject to deductibles,
co-insurance, uncollectability or retrospectively-rated premium adjustments, but
only to the extent that such Liabilities are within applicable Company Policy
limits, including aggregates.
"Intellectual Property Agreements" shall mean the various
intellectual property and licensing agreements entered into in connection with
the Distribution.
"ITT" shall mean ITT Corporation, a Delaware corporation and
its predecessor Maryland corporation.
"ITT Destinations" shall mean ITT Destinations, Inc., a Nevada
corporation.
"ITT Destinations Assets" shall mean, collectively, all the
rights and assets of ITT and its Subsidiaries relating to the ITT Destinations
Business, including, without limitation, (i) the assets included on the
consolidated balance sheet of ITT Destinations as of September 30, 1995, and any
assets acquired by ITT or any of its Subsidiaries relating to the ITT
Destinations Business from October 1, 1995, to the Distribution Date, (ii) all
the outstanding capital stock or other interests of ITT
<PAGE> 5
5
Destinations in Subsidiaries of ITT Destinations and (iii) rights to the Company
Policies to the extent set forth in Article VII hereof.
"ITT Destinations Business" shall mean the businesses of (i)
those business entities listed on Schedule 1.01(b) hereto, (ii) any other
division, Subsidiary or investment of ITT managed or operated as of the date of
this Agreement or any prior time by any such business entity unless such other
division, Subsidiary or investment is listed on Schedule 1.01(a), Schedule
1.01(c) or Schedule 1.01(d) hereto and (iii) business entities acquired or
established by or for ITT Destinations or any of its Subsidiaries after the date
of this Agreement.
"ITT Destinations Indemnitees" shall mean ITT Destinations,
each Affiliate of ITT Destinations, each of their respective directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
"ITT Destinations Liabilities" shall mean, collectively, (i)
all the Liabilities of ITT Destinations and its Subsidiaries under this
Agreement and any of the Ancillary Agreements and (ii) all the Liabilities of
the parties hereto or their respective Subsidiaries (whenever arising whether
prior to, at or following the Effective Time) arising out of or in connection
with or otherwise relating to the management or conduct before or after the
Effective Time of the ITT Destinations Business (the Liabilities listed in
clauses (i) and (ii) above being collectively referred to as the "True ITT
Destinations Liabilities") and (iii) 33-1/3% of the amount of all Shared
Liabilities.
"ITT Hartford" shall mean ITT Hartford Group, Inc., a Delaware
corporation.
"ITT Hartford Assets" shall mean, collectively, all the rights
and assets of ITT and its Subsidiaries relating to the ITT Hartford Business,
including, without limitation, (i) the assets included on the consolidated
balance sheet of ITT Hartford as of September 30, 1995, and any assets acquired
by ITT or any of its Subsidiaries relating to the ITT Hartford Business from
October 1, 1995, to the Distribution Date, (ii) all the outstanding capital
stock or other interests of ITT Hartford in Subsidiaries of ITT Hartford and
(iii) rights to the Company Policies to the extent set forth in Article VII
hereof.
<PAGE> 6
6
"ITT Hartford Business" shall mean the businesses of (i) those
business entities listed on Schedule 1.01(c) hereto, (ii) any other division,
Subsidiary or investment of ITT managed or operated as of the date of this
Agreement or any prior time by any such business entity unless such other
division, Subsidiary or investment is listed on Schedule 1.01(a), Schedule
1.01(b) or Schedule 1.01(d) hereto and (iii) business entities acquired or
established by or for ITT Hartford or any of its Subsidiaries after the date of
this Agreement.
"ITT Hartford Indemnitees" shall mean ITT Hartford, each
Affiliate of ITT Hartford, each of their respective directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"ITT Hartford Liabilities" shall mean, collectively, (i) all
the Liabilities of ITT Hartford and its Subsidiaries under this Agreement and
any of the Ancillary Agreements and (ii) all the Liabilities of the parties
hereto or their respective Subsidiaries (whenever arising whether prior to, at
or following the Effective Time) arising out of or in connection with or
otherwise relating to the management or conduct before or after the Effective
Time of the ITT Hartford Business (the Liabilities listed in clauses (i) and
(ii) above being collectively referred to as the "True ITT Hartford
Liabilities") and (iii) 33-1/3% of the amount of all Shared Liabilities.
"ITT Industries" shall mean (i) ITT Industries, Inc., an
Indiana corporation and the legal successor to ITT, or (ii) ITT, after giving
effect to the transactions contemplated by Section 2.01 hereof or as if such
transactions had occurred, in each case as the context requires.
"ITT Industries Assets" shall mean, collectively, all the
rights and assets of ITT and its Subsidiaries relating to the ITT Industries
Business, including, without limitation, (i) the assets included on the
consolidated balance sheet of ITT Industries as of September 30, 1995, and any
assets acquired by ITT or any of its Subsidiaries relating to the ITT Industries
Business from October 1, 1995, to the Distribution Date, (ii) all the
outstanding capital stock or other interests of ITT Industries in Subsidiaries
of ITT Industries and (iii) rights to the Company Policies to the extent set
forth in Article VII hereof.
<PAGE> 7
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"ITT Industries Business" shall mean the businesses of (i)
those business entities listed on Schedule 1.01(a) hereto, (ii) any other
division, Subsidiary or investment of ITT managed or operated as of the date of
this Agreement or any prior time by any such business entity unless such other
division, Subsidiary or investment is listed on Schedule 1.01(b), Schedule
1.01(c) or Schedule 1.01(d) hereto and (iii) business entities acquired or
established by or for ITT Industries or any of its Subsidiaries after the date
of this Agreement.
"ITT Industries Indemnitees" shall mean ITT Industries, each
Affiliate of ITT Industries, each of their respective directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"ITT Industries Liabilities" shall mean collectively, (i) all
the Liabilities of ITT Industries and its Subsidiaries under this Agreement and
any of the Ancillary Agreements and (ii) all the Liabilities of the parties
hereto or their respective Subsidiaries (whenever arising whether prior to, at
or following the Effective Time) arising out of or in connection with or
otherwise relating to the management or conduct before or after the Effective
Time of the ITT Industries Business (the Liabilities listed in clauses (i) and
(ii) above being collectively referred to as the "True ITT Industries
Liabilities") and (iii) 33-1/3% of the amount of all Shared Liabilities.
"Liabilities" shall mean any and all debts, liabilities and
obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising,
including, without limitation, those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any court, any governmental or other regulatory or administrative
agency or commission or any award of any arbitration tribunal, and those arising
under any contract, guarantee, commitment or undertaking.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Policies" shall mean insurance policies and insurance
contracts of any kind (other than life and
<PAGE> 8
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benefits policies or contracts), including, without limitation, primary, excess
and umbrella policies, commercial general liability policies, fiduciary
liability, automobile, aircraft, property and casualty, workers' compensation
and employee dishonesty insurance policies, bonds and self-insurance and captive
insurance company arrangements, together with the rights, benefits and
privileges thereunder.
"Provider" shall have the meaning as defined in Section 5.01.
"Proxy Statement" shall mean the Proxy Statement sent to the
holders of shares of ITT Common Stock in connection with the Distribution,
including any amendment or supplement thereto.
"Recipient" shall have the meaning as defined in Section 5.01.
"Shared Liability" means any Liability of the parties hereto or
their respective Subsidiaries (whether arising prior to, at or following the
Effective Time) which (i) arises out of or is in connection with or otherwise
relates to the management or conduct prior to the Effective Time of the
businesses of ITT and its Subsidiaries and (ii) is not a True ITT Industries
Liability, True ITT Destinations Liability or True ITT Hartford Liability,
including, without limitation, Shared Liabilities listed on Schedule 1.01(d)
hereto.
"Subsidiary" shall mean any corporation, partnership or other
entity of which another entity (i) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the Board of Directors (or persons
performing similar functions) (irrespective of whether at the time any other
class or classes of ownership interests of such corporation, partnership or
other entity shall or might have such voting power upon the occurrence of any
contingency) or (ii) is a general partner or an entity performing similar
functions (e.g., a trustee). For purposes of this Agreement, Madison Square
Garden, L.P., and ITT-Dow Jones Television and their respective Subsidiaries are
Subsidiaries of ITT Destinations.
"Tax" shall mean all Federal, state, local and foreign taxes
and assessments, including all interest,
<PAGE> 9
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penalties and additions imposed with respect to such amounts.
"Tax Allocation Agreement" shall mean the Tax Allocation
Agreement dated as of November 1, 1995, among ITT, ITT Destinations and ITT
Hartford.
"Third Party Claim" shall have the meaning as defined in
Section 3.05.
"True ITT Destinations Liabilities" shall have the meaning as
defined under "ITT Destinations Liabilities."
"True ITT Hartford Liabilities" shall have the meaning as
defined under "ITT Hartford Liabilities."
"True ITT Industries Liabilities" shall have the meaning as
defined under "ITT Industries Liabilities."
SECTION 1.02. References; Interpretation. References to an
"Exhibit" or to a "Schedule" are, unless otherwise specified, to one of the
Exhibits or Schedules attached to this Agreement, and references to a "Section"
are, unless otherwise specified, to one of the Sections of this Agreement.
ARTICLE II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
SECTION 2.01. The Distribution and Other Transactions.
(a) Certain Transactions. On or prior to the Distribution
Date:
(i) ITT will contribute to ITT Destinations the business
entities that are to comprise the ITT Destinations Business (to the extent they
are not owned by ITT Destinations or any of its Subsidiaries).
(ii) ITT will contribute to ITT Hartford the business entities
that are to comprise the ITT Hartford Business (to the extent they are not owned
by ITT Hartford or any of its Subsidiaries).
(iii) ITT Industries shall, on behalf of itself and its
Subsidiaries, transfer to ITT Destinations effective as of the Effective Time
all of ITT Industries' and its
<PAGE> 10
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Subsidiaries' right, title and interest in the ITT Destinations Assets. ITT
Industries shall, on behalf of itself and its Subsidiaries, transfer to ITT
Hartford effective as of the Effective Time all of ITT Industries' and its
Subsidiaries' right, title and interest in the ITT Hartford Assets.
(iv) ITT Destinations shall, on behalf of itself and its
Subsidiaries, transfer to ITT Industries effective as of the Effective Time all
of ITT Destinations' and its Subsidiaries' right, title and interest in the ITT
Industries Assets. ITT Destinations shall, on behalf of itself and its
Subsidiaries, transfer to ITT Hartford effective as of the Effective Time all of
ITT Destinations' and its Subsidiaries' right, title and interest in the ITT
Hartford Assets.
(v) ITT Hartford shall, on behalf of itself and its
Subsidiaries, transfer to ITT Destinations effective as of the Effective Time
all of ITT Hartford's and its Subsidiaries' right, title and interest in the ITT
Destinations Assets. ITT Hartford shall, on behalf of itself and its
Subsidiaries, transfer to ITT Industries effective as of the Effective Time all
of ITT Hartford's and its Subsidiaries' right, title and interest in the ITT
Industries Assets.
(b) Stock Dividends to ITT. On or prior to the Distribution
Date:
(i) ITT Destinations shall issue to ITT as a stock dividend a
number of ITT Destinations Common Shares as required to effect the Distribution,
as certified by the ITT Corporate Stock Services Department (the "Agent"). In
connection therewith ITT shall deliver to ITT Destinations for cancellation the
share certificate (or certificates) currently held by it representing ITT
Destinations Common Shares and shall receive a new certificate (or certificates)
representing the total number of ITT Destinations Common Shares to be owned by
ITT after giving effect to such stock dividend.
(ii) ITT Hartford shall issue to ITT as a stock dividend a
number of ITT Hartford Common Shares as required to effect the Distribution, as
certified by the Agent. In connection therewith ITT shall deliver to ITT
Hartford for cancellation the share certificate currently held by it
representing ITT Hartford Common Shares and shall receive a new certificate (or
certificates) representing the total
<PAGE> 11
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number of ITT Hartford Common Shares to be owned by ITT after giving effect to
such stock dividend.
(c) Charters; By-laws. On or prior to the Distribution Date:
(i) All necessary actions shall have been taken to provide for
the adoption of the form of Articles of Incorporation and By-laws filed by ITT
Destinations with the Commission.
(ii) All necessary actions shall have been taken to provide for
the adoption of the form of Articles of Incorporation and By-laws filed by ITT
Hartford with the Commission.
(iii) ITT Destinations shall have filed with the Secretary of
State of Nevada an amendment to its Articles of Incorporation to change its name
to "ITT Corporation".
(d) Directors. On or prior to the Distribution Date, ITT, as
the sole shareholder of ITT Destinations and ITT Hartford, shall have taken all
necessary action to elect, or cause to be elected, to the Board of Directors of
ITT Destinations and the Board of Directors of ITT Hartford the individuals
identified in the Proxy Statement as directors of New ITT (as defined in the
Proxy Statement) and ITT Hartford, respectively.
(e) Certain Licenses and Permits. (i) On or prior to the
Distribution Date or as soon as reasonably practicable thereafter, all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which relate to the ITT Destinations Business or the ITT
Hartford Business but which are held in the name of ITT or any of its
Subsidiaries (other than ITT Destinations or ITT Hartford or any of their
respective Subsidiaries), or any of their respective employees, officers,
directors, stockholders, agents, or otherwise, on behalf of ITT Destinations (or
its Subsidiaries) or ITT Hartford (or its Subsidiaries), as applicable, shall be
duly and validly transferred by ITT to ITT Destinations (or its Subsidiaries) or
ITT Hartford (or its Subsidiaries), as applicable.
(ii) On or prior to the Distribution Date or as soon as
reasonably practicable thereafter, all transferrable licenses, permits and
authorizations issued by governmental or regulatory entities which relate to the
ITT Industries
<PAGE> 12
12
Business or the ITT Hartford Business but which are held in the name of ITT
Destinations or any of its Subsidiaries, or any of their respective employees,
officers, directors, stockholders, agents, or otherwise, on behalf of ITT
Industries (or its Subsidiaries) or ITT Hartford (or its Subsidiaries), as
applicable, shall be duly and validly transferred by ITT Destinations to ITT
Industries (or its Subsidiaries) or ITT Hartford (or its Subsidiaries), as
applicable.
(iii) On or prior to the Distribution Date or as soon as
reasonably practicable thereafter, all transferrable licenses, permits and
authorizations issued by governmental or regulatory entities which relate to the
ITT Destinations Business or the ITT Industries Business but which are held in
the name of ITT Hartford or any of its Subsidiaries, or any of their respective
employees, officers, directors, stockholders, agents, or otherwise, on behalf of
ITT Destinations (or its Subsidiaries) or ITT Industries (or its Subsidiaries),
as applicable, shall be duly and validly transferred by ITT Hartford to ITT
Destinations (or its Subsidiaries) or ITT Industries (or its Subsidiaries), as
applicable.
(f) Transfer of Agreements. (i) ITT hereby agrees that on or
prior to the Distribution Date or as soon as reasonably practicable thereafter,
subject to the limitations set forth in this Section 2.01(f), it will, and it
will cause its Subsidiaries (other than ITT Destinations or ITT Hartford or any
of their respective Subsidiaries) to, assign, transfer and convey to ITT
Destinations or ITT Hartford, as applicable, all of ITT's or such Subsidiary's
respective right, title and interest in and to any and all agreements that
relate exclusively to the ITT Destinations Business or ITT Hartford Business, as
applicable. ITT Destinations hereby agrees that on or prior to the Distribution
Date or as soon as reasonably practicable thereafter, subject to the limitations
set forth in this Section 2.01(f), it will, and it will cause its Subsidiaries
to, assign, transfer and convey to ITT Industries or ITT Hartford, as
applicable, all of ITT Destinations' or such Subsidiary's respective right,
title and interest in and to any and all agreements that relate exclusively to
the ITT Industries Business or ITT Hartford Business, as applicable. ITT
Hartford hereby agrees that on or prior to the Distribution Date or as soon as
reasonably practicable thereafter, subject to the limitations set forth in this
Section 2.01(f), it will, and it will cause its Subsidiaries
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to, assign, transfer and convey to ITT Industries or ITT Destinations, as
applicable, all of ITT Hartford's or such Subsidiary's respective right, title
and interest in and to any and all agreements that relate exclusively to the ITT
Industries Business or ITT Destinations Business, as applicable.
(ii) Subject to the provisions of this Section 2.01(f), any
agreement to which any of the parties hereto or any of their Subsidiaries is a
party that inures to the benefit of more than one of the ITT Industries
Business, ITT Destinations Business and ITT Hartford Business shall be assigned
in part, on or prior to the Distribution Date or as soon as reasonably
practicable thereafter, so that each party shall be entitled to the rights and
benefits inuring to its business under such agreement.
(iii) The assignee of any agreement assigned, in whole or in
part, hereunder (an "Assignee") shall assume and agree to pay, perform, and
fully discharge all obligations of the assignor under such agreement or, in the
case of a partial assignment under paragraph (f)(ii), such Assignee's related
portion of such obligations as determined in accordance with the terms of the
relevant agreement, where determinable on the face thereof, and otherwise as
determined in accordance with the practice of the parties prior to the
Distribution.
(iv) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
agreement, in whole or in part, or any rights thereunder if the agreement to
assign or attempt to assign, without the consent of a third party, would
constitute a breach thereof or in any way adversely affect the rights of the
Assignee thereof. Until such consent is obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights of any party
hereto so that the Assignee would not, in fact, receive all such rights, the
parties will cooperate with each other in any arrangement designed to provide
for the Assignee the benefits of, and to permit the Assignee to assume
liabilities under, any such agreement.
(g) Consents. The parties hereto shall use their
commercially reasonable efforts to obtain required consents to assignment of
agreements hereunder.
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(h) Delivery of Shares to Agent. ITT shall deliver to the Agent
the share certificates representing the ITT Destinations Common Shares and the
ITT Hartford Common Shares issued to ITT by ITT Destinations and ITT Hartford,
respectively, pursuant to Section 2.01(b) and shall instruct the Agent to
distribute, on or as soon as practicable following the Distribution Date, such
Common Shares to holders of record of shares of ITT Common Stock on the
Distribution Record Date as further contemplated by, and subject to the
conditions contained in, the Proxy Statement and this Agreement. ITT
Destinations and ITT Hartford shall provide all share certificates that the
Agent shall require in order to effect the Distribution.
(i) Other Transactions. On or prior to the Distribution Date,
each of ITT, ITT Destinations and ITT Hartford shall have consummated those
other transactions in connection with the Distribution that are contemplated by
the Proxy Statement and the ruling request submission by ITT to the Internal
Revenue Service dated June 22, 1995 (as subsequently supplemented), and not
specifically referred to in subparagraphs (a)-(h) above.
SECTION 2.02. Certain Financial and Other Arrangements.
(a) Intercompany Accounts.
(i) Without limiting the terms of Section 2.03, all
intercompany receivables, payables and loans (other than receivables, payables
and loans otherwise specifically provided for in any of the Ancillary Agreements
or hereunder), including, without limitation, in respect of any cash balances,
any cash balances representing deposited checks or drafts for which only a
provisional credit has been allowed or any cash held in any centralized cash
management system, between ITT Destinations or any of its Subsidiaries, on the
one hand, and ITT Industries or any of its Subsidiaries, on the other hand,
shall, as of the Effective Time, be settled, capitalized or converted into
ordinary trade accounts, in each case as may be agreed in writing prior to the
Effective Time by duly authorized representatives of ITT Industries and ITT
Destinations.
(ii) Without limiting the terms of Section 2.03, all
intercompany receivables, payables and loans (other than receivables, payables
and loans otherwise specifically provided for in any of the Ancillary Agreements
or hereunder),
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including, without limitation, in respect of any cash balances, any cash
balances representing deposited checks or drafts for which only a provisional
credit has been allowed or any cash held in any centralized cash management
system, between ITT Hartford or any of its Subsidiaries, on the one hand, and
ITT Industries or any of its Subsidiaries, on the other hand, shall, as of the
Effective Time, be settled, capitalized or converted into ordinary trade
accounts, in each case as may be agreed in writing prior to the Effective Time
by duly authorized representatives of ITT Industries and ITT Hartford.
(iii) Without limiting the terms of Section 2.03, all
intercompany receivables, payables and loans (other than receivables, payables
and loans otherwise specifically provided for in any of the Ancillary Agreements
or hereunder), including, without limitation, in respect of any cash balances,
any cash balances representing deposited checks or drafts for which only a
provisional credit has been allowed or any cash held in any centralized cash
management system, between ITT Destinations or any of its Subsidiaries, on the
one hand, and ITT Hartford or any of its Subsidiaries, on the other hand, shall,
as of the Effective Time, be settled, capitalized or converted into ordinary
trade accounts, in each case as may be agreed in writing prior to the Effective
Time by duly authorized representatives of ITT Destinations and ITT Hartford.
(b) Operations in Ordinary Course. Each of ITT Industries, ITT
Destinations and ITT Hartford covenants and agrees that, except as otherwise
provided in any Ancillary Agreement, during the period from the date of this
Agreement through the Distribution Date, it will, and will cause any entity that
is a Subsidiary of such party at any time during such period to, conduct its
business in a manner substantially consistent with current and past operating
practices and in the ordinary course, including, without limitation, with
respect to the payment and administration of accounts payable and the
administration of accounts receivable, the purchase of capital assets and
equipment and the management of inventories.
SECTION 2.03. Capital Structure. ITT, ITT Destinations and ITT
Hartford each agrees to use its commercially reasonable efforts to achieve a
capitalization at December 31, 1995 which is substantially the same as its
respective forecasted capitalization under the heading "ITT Industries
Forecasted Capitalization", "New ITT Forecasted
<PAGE> 16
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Capitalization" or "ITT Hartford Forecasted Capitalization" in ITT's Current
Report on Form 8-K filed with the Commission on November 7, 1995.
SECTION 2.04. Assumption and Satisfaction of Liabilities;
Management Responsibility for Shared Liabilities; Rights and Assets Relating to
Shared Liabilities. (a) Except as otherwise specifically set forth in any
Ancillary Agreement, from and after the Effective Time, (i) ITT Industries
shall, and shall cause its Subsidiaries to, assume, pay, perform and discharge
all ITT Industries Liabilities, (ii) ITT Destinations shall, and shall cause its
Subsidiaries to, assume, pay, perform and discharge all ITT Destinations
Liabilities, and (iii) ITT Hartford shall, and shall cause its Subsidiaries to,
assume, pay, perform and discharge all ITT Hartford Liabilities.
(b) The parties acknowledge that various claims and
administrative matters may arise from time to time in respect of Shared
Liabilities and that it would be in the best interests of the parties hereto to
designate responsibility for managing and administering Shared Liabilities,
including, without limitation, as contemplated by Section 3.05(b) hereto. The
parties accordingly agree that such responsibilities shall be allocated as
provided in Schedule 1.01(d) hereto; such responsibilities for Shared
Liabilities not covered by Schedule 1.01(d) shall be as mutually agreed upon
among the parties. All costs and expenses (including, without limitation,
reasonable attorneys' fees and all out-of-pocket expenses whatsoever reasonably
incurred) incurred by or on behalf of the party with such management and
administrative responsibility shall be shared among the parties equally.
(c) The parties hereto shall be entitled to share in any rights
and assets (including, without limitation, recoveries, claims and proceeds of
asset sales) that relate to Shared Liabilities (including, without limitation,
Insurance Proceeds received under Company Policies) equally.
SECTION 2.05. Resignations. (a) ITT Industries shall cause
all its employees to resign, effective as of the Effective Time, from all
positions as officers of ITT Destinations or as officers or directors of any
Subsidiary of ITT Destinations in which they serve. ITT Destinations shall
cause all its employees to resign, effective as of the Effective Time, from all
positions as officers of ITT
<PAGE> 17
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Industries or as officers or directors of any Subsidiary of ITT Industries in
which they serve.
(b) ITT Industries shall cause all its employees to resign,
effective as of the Effective Time, from all positions as officers of ITT
Hartford or as officers or directors of any Subsidiary of ITT Hartford in which
they serve. ITT Hartford shall cause all its employees to resign, effective as
of the Effective Time, from all positions as officers of ITT Industries or as
officers or directors of any Subsidiary of ITT Industries in which they serve.
(c) ITT Hartford shall cause all its employees to resign,
effective as of the Effective Time, from all positions as officers of ITT
Destinations or as officers or directors of any Subsidiary of ITT Destinations
in which they serve. ITT Destinations shall cause all its employees to resign,
effective as of the Effective Time, from all positions as officers of ITT
Hartford or as officers or directors of any Subsidiary of ITT Hartford in which
they serve.
SECTION 2.06. Further Assurances. In case at any time after the
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement and the Ancillary Agreements, the proper
officers of each party to this Agreement shall take all such necessary action.
Without limiting the foregoing, ITT, ITT Destinations and ITT Hartford shall use
their commercially reasonable efforts to obtain all consents and approvals, to
enter into all amendatory agreements and to make all filings and applications
that may be required for the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements, including, without limitation, all
applicable governmental and regulatory filings.
SECTION 2.07. No Representations or Warranties. Each of the
parties hereto understands and agrees that, except as otherwise expressly
provided, no party hereto is, in this Agreement or in any other agreement or
document contemplated by this Agreement or otherwise, making any representation
or warranty whatsoever, including, without limitation, as to title, value or
legal sufficiency. It is also agreed and understood that all assets either
transferred to or retained by the parties, as the case may be, shall be "as is,
where is" and that (subject to Section 2.06) the party to which such assets are
to be transferred hereunder shall
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bear the economic and legal risk that any conveyances of such assets shall prove
to be insufficient or that such party's or any of the Subsidiaries' title to any
such assets shall be other than good and marketable and free from encumbrances.
Similarly, each party hereto understands and agrees that no party hereto is, in
this Agreement or in any other agreement or document contemplated by this
Agreement or otherwise, representing or warranting in any way that the obtaining
of any consents or approvals, the execution and delivery of any amendatory
agreements and the making of any filings or applications contemplated by this
Agreement will satisfy the provisions of any or all applicable agreements or the
requirements of any or all applicable laws or judgments, it being agreed and
understood that the party to which any assets are transferred shall bear the
economic and legal risk that any necessary consents or approvals are not
obtained or that any requirements of laws or judgments are not complied with.
SECTION 2.08. Guarantees. (a) Except as otherwise specified in
any Ancillary Agreement, ITT Industries, ITT Destinations and ITT Hartford shall
use their commercially reasonable efforts to have, on or prior to the
Distribution Date, or as soon as practicable thereafter, ITT Industries and any
of its Subsidiaries removed as guarantor of or obligor for any ITT Destinations
Liability or ITT Hartford Liability, including, without limitation, in respect
of those guarantees set forth on Schedule 2.08(a).
(b) Except as otherwise specified in any Ancillary Agreement,
ITT Industries, ITT Destinations and ITT Hartford shall use their commercially
reasonable efforts to have, on or prior to the Distribution Date, or as soon as
practicable thereafter, ITT Destinations and any of its Subsidiaries removed as
guarantor of or obligor for any ITT Industries Liability or ITT Hartford
Liability, including, without limitation, in respect of those guarantees set
forth on Schedule 2.08(b).
(c) Except as otherwise specified in any Ancillary Agreement,
ITT Industries, ITT Destinations and ITT Hartford shall use their commercially
reasonable efforts to have, on or prior to the Distribution Date, or as soon as
practicable thereafter, ITT Hartford and any of its Subsidiaries removed as
guarantor of or obligor for any ITT Industries Liability or ITT Destinations
Liability, including, without limitation, in respect of those guarantees set
forth on Schedule 2.08(c).
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SECTION 2.09. Witness Services. At all times from and after the
Distribution Date, each of ITT Industries, ITT Destinations and ITT Hartford
shall use their commercially reasonable efforts to make available to each other
party hereto, upon reasonable written request, its and its Subsidiaries'
officers, directors, employees and agents as witnesses to the extent that (i)
such persons may reasonably be required in connection with the prosecution or
defense of any Action in which the requesting party may from time to time be
involved and (ii) there is no conflict in the Action between the requesting
party and ITT Industries, ITT Destinations or ITT Hartford, as applicable. A
party providing witness services to the other party under this Section shall be
entitled to receive from the recipient of such services, upon the presentation
of invoices therefor, payments for such amounts, relating to supplies,
disbursements and other out-of-pocket expenses and direct and indirect costs of
employees who are witnesses, as may be reasonably incurred in providing such
witness services.
SECTION 2.10. Certain Post-Distribution Transactions. (a)(i)
ITT Industries shall comply with and otherwise not take action inconsistent with
each representation and statement made, or to be made, to the Internal Revenue
Service in connection with the request by ITT for a revenue ruling in respect of
the Distribution or to ITT's outside tax counsel in connection with such firm's
rendering an opinion to ITT, ITT Destinations and ITT Hartford as to certain tax
aspects of the Distribution and (ii) until one year after the Distribution Date,
ITT Industries will maintain its status as a company engaged in the active
conduct of a trade or business, as defined in Section 355(b) of the Code.
(b)(i) ITT Destinations shall comply with and otherwise not
take action inconsistent with each representation and statement made, or to be
made, to the Internal Revenue Service in connection with the request by ITT for
a revenue ruling in respect of the Distribution or to ITT's outside tax counsel
in connection with such firm's rendering an opinion to ITT, ITT Destinations and
ITT Hartford as to certain tax aspects of the Distribution and (ii) until one
year after the Distribution Date, ITT Destinations will maintain its status as a
company engaged in the active conduct of a trade or business, as defined in
Section 355(b) of the Code.
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20
(c)(i) ITT Hartford shall comply with and otherwise not take
action inconsistent with each representation and statement made, or to be made,
to the Internal Revenue Service in connection with the request by ITT for a
revenue ruling in respect of the Distribution or to ITT's outside tax counsel in
connection with such firm's rendering an opinion to ITT, ITT Destinations and
ITT Hartford as to certain tax aspects of the Distribution and (ii) until one
year after the Distribution Date, ITT Hartford will maintain its status as a
company engaged in the active conduct of a trade or business, as defined in
Section 355(b) of the Code.
SECTION 2.11. Directors and Officers Liability Insurance. ITT
Industries agrees that, from and after the Effective Time to the seventh
anniversary of the Distribution Date, it will maintain in full force and effect
the Company Policy numbered 16 on Schedule 7.01(a) hereto (or, through the
purchase of extended discovery, the full benefits and coverage of such Company
Policy) and shall not amend the terms of such Policy in a manner adverse to any
persons covered by such insurance. The provisions of this Section 2.11 are
intended for the benefit of, and shall be enforceable by, each of the persons
covered by the Company Policy numbered 16 on Schedule 7.01(a) hereto.
SECTION 2.12. Insurance. Except as contemplated by Article VII
and Section 2.11 hereof, any and all coverage of ITT Destinations, ITT Hartford
and their respective Subsidiaries under Company Policies has terminated or will
terminate no later than the Effective Time (and will not be replaced by ITT).
SECTION 2.13. Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution Date. To the extent that any
transfers contemplated by this Article II shall not have been consummated on or
prior to the Distribution Date, the parties shall cooperate to effect such
transfers as promptly following the Distribution Date as shall be practicable.
Nothing herein shall be deemed to require the transfer of any assets or the
assumption of any Liabilities which by their terms or operation of law cannot be
transferred; provided, however, that the parties hereto and their respective
Subsidiaries shall cooperate to seek to obtain any necessary consents or
approvals for the transfer of all assets and Liabilities contemplated to be
transferred pursuant to this Article II. In the event that any such transfer of
assets or Liabilities has not been consummated, from and after the Distribution
<PAGE> 21
21
Date the party retaining such asset or Liability shall hold such asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto) or retain such Liability for the account of the party by
whom such Liability is to be assumed pursuant hereto, as the case may be, and
take such other action as may be reasonably requested by the party to whom such
asset is to be transferred, or by whom such Liability is to be assumed, as the
case may be, in order to place such party, insofar as is reasonably possible, in
the same position as would have existed had such asset or Liability been
transferred as contemplated hereby. As and when any such asset or Liability
becomes transferable, such transfer shall be effected forthwith. The parties
agree that, as of the Distribution Date, each party hereto shall be deemed to
have acquired complete and sole beneficial ownership over all of the assets,
together with all rights, powers and privileges incident thereto, and shall be
deemed to have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement.
SECTION 2.14. Ancillary Agreements. Prior to the Distribution
Date, each of ITT Industries, ITT Destinations and ITT Hartford shall enter
into, and/or (where applicable) shall cause their respective Subsidiaries to
enter into, the Ancillary Agreements and any other agreements in respect of the
Distribution reasonably necessary or appropriate in connection with the
transactions contemplated hereby and thereby.
ARTICLE III. INDEMNIFICATION
SECTION 3.01. Indemnification by ITT Industries. Except as
otherwise specifically set forth in any provision of this Agreement or of any
Ancillary Agreement, ITT Industries shall indemnify, defend and hold harmless
the ITT Destinations Indemnitees and the ITT Hartford Indemnitees from and
against any and all Indemnifiable Losses of the ITT Destinations Indemnitees and
the ITT Hartford Indemnitees, respectively, arising out of, by reason of or
otherwise in connection with (i) the ITT Industries Liabilities or (ii) the
breach by ITT Industries of any provision of this Agreement or any Ancillary
Agreement.
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22
SECTION 3.02. Indemnification by ITT Destinations. Except as
otherwise specifically set forth in any provision of this Agreement or of any
Ancillary Agreement, ITT Destinations shall indemnify, defend and hold harmless
the ITT Industries Indemnitees and the ITT Hartford Indemnitees from and against
any and all Indemnifiable Losses of the ITT Industries Indemnitees and the ITT
Hartford Indemnitees, respectively, arising out of, by reason of or otherwise in
connection with (i) the ITT Destinations Liabilities or (ii) the breach by ITT
Destinations of any provision of this Agreement or any Ancillary Agreement.
SECTION 3.03. Indemnification by ITT Hartford. Except as
otherwise specifically set forth in any provision of this Agreement or of any
Ancillary Agreement, ITT Hartford shall indemnify, defend and hold harmless the
ITT Industries Indemnitees and the ITT Destinations Indemnitees from and against
any and all Indemnifiable Losses of the ITT Industries Indemnitees and the ITT
Destinations Indemnitees, respectively, arising out of, by reason of or
otherwise in connection with (i) the ITT Hartford Liabilities or (ii) the breach
by ITT Hartford of any provision of this Agreement or any Ancillary Agreement.
SECTION 3.04. Limitations on Indemnification Obligations. The
amount that any party (an "Indemnifying Party") is or may be required to pay to
any other person (an "Indemnitee") pursuant to Section 3.01, Section 3.02 or
Section 3.03, as applicable, shall be reduced (retroactively or prospectively)
by any Insurance Proceeds or other amounts actually recovered by or on behalf of
such Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee
shall have received the payment required by this Agreement from an Indemnifying
Party in respect of an Indemnifiable Loss and shall subsequently actually
receive Insurance Proceeds or other amounts in respect of such Indemnifiable
Loss, then such Indemnitee shall pay to such Indemnifying Party a sum equal to
the amount of such Insurance Proceeds or other amounts actually received, up to
the aggregate amount of any payments received from such Indemnifying Party
pursuant to this Agreement in respect of such Indemnifiable Loss.
SECTION 3.05. Procedures for Indemnification. (a) Third Party
Claims (other than in respect of Shared Liabilities). If a claim or demand is
made against an Indemnitee by any person who is not a party to this Agree-
<PAGE> 23
23
ment (a "Third Party Claim") as to which such Indemnitee is entitled to
indemnification pursuant to this Agreement, such Indemnitee shall notify the
Indemnifying Party in writing, and in reasonable detail, of the Third Party
Claim promptly (and in any event within 15 business days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver
to the Indemnifying Party, promptly (and in any event within 15 business days)
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
Indemnitee therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall control such defense. The Indemnifying Party shall be liable for the
fees and expenses of counsel employed by the Indemnitee for any period during
which the Indemnifying Party has failed to assume the defense thereof (other
than during the period prior to the time the Indemnitee shall have given notice
of the Third Party Claim as provided above). If the Indemnifying Party so elects
to assume the defense of any Third Party Claim, all of the Indemnitees shall
cooperate with the Indemnifying Party in the defense or prosecution thereof.
If the Indemnifying Party acknowledges in writing liability for
a Third Party Claim, then in no event will the
<PAGE> 24
24
Indemnitee admit any liability with respect to, or settle, compromise or
discharge, any Third Party Claim without the Indemnifying Party's prior written
consent; provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for a Third Party Claim, the Indemnitee will agree to any settlement,
compromise or discharge of a Third Party Claim that the Indemnifying Party may
recommend and that by its terms obligates the Indemnifying Party to pay the full
amount of the liability in connection with such Third Party Claim and releases
the Indemnitee completely in connection with such Third Party Claim and that
would not otherwise adversely affect the Indemnitee; provided, however, that the
Indemnitee may refuse to agree to any such settlement, compromise or discharge
if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation with respect to such Third Party Claim shall not exceed the amount
that would be required to be paid by or on behalf of the Indemnifying Party in
connection with such settlement, compromise or discharge.
Notwithstanding the foregoing, the Indemnifying Party shall not
be entitled to assume the defense of any Third Party Claim (and shall be liable
for the fees and expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnitee which the Indemnitee reasonably determines, after conferring with its
counsel, cannot be separated from any related claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
This Section 3.05(a) shall govern all claims under this Article
III for indemnification against Third Party Claims except Third Party Claims in
respect of Shared Liabilities, as to which Section 3.05(b) shall govern.
<PAGE> 25
25
(b) Third Party Claims in Respect of Shared Liabilities. If a
Third Party Claim in respect of a Shared Liability is made against an
Indemnitee, such Indemnitee shall notify the Indemnifying Parties in writing,
and in reasonable detail, of the Third Party Claim promptly (and in any event
within 15 business days) after receipt by such Indemnitee of written notice of
the Third Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent an
Indemnifying Party shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Parties shall not be liable for any
expenses incurred during the period in which the Indemnitee failed to give such
notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Parties,
promptly (and in any event within 15 business days) after the Indemnitee's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnitee relating to the Third Party Claim.
Each Indemnifying Party shall be entitled to participate in the
defense of such Third Party Claim subject to the following provisions of this
paragraph. Without limiting the terms of Section 3.01, Section 3.02 or Section
3.03 hereof, the Indemnitee and Indemnifying Parties shall use commercially
reasonable efforts to agree as soon as reasonably practicable upon a party (the
"Managing Party") which shall have management and administrative responsibility
in respect of the Third Party Claim against the Indemnitee unless a party is
designated on Schedule 1.01(d) to have management responsibility for the related
Shared Liability (in which case the party so designated shall be the "Managing
Party"). Such management and administrative responsibility shall entail the
defense of such Third Party Claim, negotiation with claimants and potential
claimants (subject to the limitations in the following paragraph) and other
reasonably related activities. If the Indemnifying Parties acknowledge in
writing their respective obligations to indemnify the Indemnitee for the Third
Party Claim to the extent contemplated by this Agreement, and an Indemnifying
Party is selected as the Managing Party, such Indemnifying Party may assume the
defense thereof with counsel selected by such Indemnifying Party; provided that
such counsel is not reasonably objected to by the Indemnitee or any other
Indemnifying Party. If there is a Managing Party and such party conducts the
defense of the Third Party Claim, the legal or other expenses in respect of such
Third Party Claim incurred by or
<PAGE> 26
26
on behalf of any person other than such Managing Party shall not be
Indemnifiable Losses for purposes of this Agreement; provided, however, the
Indemnifying Parties shall be liable for fees and expenses of counsel employed
by the Indemnitee for any period during which an Indemnifying Party, in its
capacity as Managing Party, has failed to assume the defense thereof (other than
during the period prior to the time the Indemnitee shall have given notice of
such Third Party Claim as provided above), but only to the extent contemplated
by the final paragraph of this Section 3.05(b). If there is a Managing Party and
such party conducts the defense of the Third Party Claim, the Managing Party
shall control the defense of such Third Party Claim, although the Indemnitee (if
not the Managing Party) shall have the right to participate in such defense and
to employ counsel, at its own expense, separate from the counsel employed by the
Managing Party. All of the Indemnitees and each Indemnifying Party shall
cooperate with any Managing Party and each other in the defense or prosecution
of such Third Party Claim.
If each of the Indemnifying Parties acknowledges in writing
liability for such Third Party Claim to the extent contemplated by this
Agreement, then in no event will the Indemnitee admit any liability with respect
to, or settle, compromise or discharge, any such Third Party Claim without each
of the Indemnifying Party's prior written consent; provided, however, that the
Indemnitee shall have the right to settle, compromise or discharge such Third
Party Claim without the consent of the Indemnifying Parties if the Indemnitee
releases each of the Indemnifying Parties from their respective indemnification
obligation hereunder with respect to such Third Party Claim and such settlement,
compromise or discharge would not otherwise adversely affect the Indemnifying
Parties. If the Indemnifying Parties acknowledge in writing liability for such
Third Party Claim, an Indemnitee will agree to any settlement, compromise or
discharge of such Third Party Claim that the Managing Party may recommend and
that by its terms obligates the Indemnifying Parties to pay the full amount of
the liability in connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party Claim (or portion
thereof, as applicable) and that would not otherwise adversely affect the
Indemnitee; provided, however, that the Indemnitee may refuse to agree to any
such settlement, compromise or discharge if the Indemnitee agrees that each of
the Indemnifying Party's indemnification obligations with respect to such Third
Party Claim shall not
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27
exceed the amount that would be required to be paid by or on behalf of such
Indemnifying Party in connection with such settlement, compromise or discharge.
Notwithstanding the foregoing, an Indemnifying Party shall not
be entitled to assume the defense of such Third Party Claim (and shall be liable
for the fees and expenses of counsel incurred by an Indemnitee in defending such
Third Party Claim to the extent contemplated by this Agreement) if the Third
Party Claim seeks an order, injunction or other equitable relief or relief for
other than money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its counsel, cannot be separated from any
related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, an Indemnifying Party shall be entitled to assume the defense of the
portion relating to money damages as contemplated above.
Legal and other expenses incurred in connection with each such
Third Party Claim which are Indemnifiable Losses shall be shared by the parties
in the same proportions in which the related Shared Liability is shared.
SECTION 3.06. Indemnification Payments. Indemnification
required by this Article III shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or loss, liability, claim, damage or expense is incurred.
SECTION 3.07. Other Adjustments. (i) The amount of any
Indemnifiable Loss shall be (x) increased to take into account any net Tax cost
actually incurred by the Indemnitee arising from any payments received from the
Indemnifying Party (grossed up for such increase) and (y) reduced to take
account of any net Tax benefit actually realized by the Indemnitee arising from
the incurrence or payment of any such Indemnifiable Loss. In computing the
amount of such Tax cost or Tax benefit, the Indemnitee shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt of any payment with respect to an
Indemnifiable Loss or the incurrence or payment of any Indemnifiable Loss.
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(ii) In addition to any adjustments required pursuant to
Section 3.04 hereof or clause (i) of this Section 3.07, if the amount of any
Indemnifiable Loss shall, at any time subsequent to the payment required by this
Agreement, be reduced by recovery, settlement or otherwise, the amount of such
reduction, less any expenses incurred in connection therewith, shall promptly be
repaid by the Indemnitee to the Indemnifying Party, up to the aggregate amount
of any payments received from such Indemnifying Party pursuant to this Agreement
in respect of such Indemnifiable Loss.
SECTION 3.08. Survival of Indemnities. The obligations of ITT
Industries, ITT Destinations and ITT Hartford under this Article III shall
survive the sale or other transfer by any of them of any assets or businesses or
the assignment by any of them of any Liabilities, with respect to any
Indemnifiable Loss of any Indemnitee related to such assets, businesses or
Liabilities.
ARTICLE IV. ACCESS TO INFORMATION
SECTION 4.01. Provision of Corporate Records.
(a) Unless otherwise specified in the procedures set forth in
Schedule 4.03(b) hereto, after the Distribution Date, upon the prior written
request by ITT Destinations or ITT Hartford for specific and identified
agreements, documents, books, records or files including, without limitation,
computer files, microfiche, tape recordings and photographs (collectively,
"Records"), relating to or affecting ITT Destinations or ITT Hartford, as
applicable, ITT Industries shall arrange, as soon as reasonably practicable
following the receipt of such request, for the provision of appropriate copies
of such Records (or the originals thereof if the party making the request has a
reasonable need for such originals) in the possession of ITT Industries or any
of its Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
(b) Unless otherwise specified in the procedures set forth in
Schedule 4.03(b) hereto, after the Distribution Date, upon the prior written
request by ITT Industries or ITT Hartford for specific and identified Records
relating to or affecting ITT Industries or ITT Hartford, as applicable, ITT
Destinations shall arrange, as soon as reasonably prac-
<PAGE> 29
29
ticable following the receipt of such request, for the provision of appropriate
copies of such Records (or the originals thereof if the party making the request
has a reasonable need for such originals) in the possession of ITT Destinations
or any of its Subsidiaries, but only to the extent such items are not already in
the possession of the requesting party.
(c) Unless otherwise specified in the procedures set forth in
Schedule 4.03(b) hereto, after the Distribution Date, upon the prior written
request by ITT Industries or ITT Destinations for specific and identified
Records relating to or affecting ITT Industries or ITT Destinations, as
applicable, ITT Hartford shall arrange, as soon as reasonably practicable
following the receipt of such request, for the provision of appropriate copies
of such Records (or the originals thereof if the party making the request has a
reasonable need for such originals) in the possession of ITT Hartford or any of
its Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
SECTION 4.02. Access to Information. (a) Unless otherwise
specified in the procedures set forth in Schedule 4.03(b) hereto, from and after
the Distribution Date, each of ITT Industries, ITT Destinations and ITT Hartford
shall afford to the other and its authorized accountants, counsel and other
designated representatives reasonable access during normal business hours,
subject to appropriate restrictions for classified, privileged or confidential
information, to the personnel, properties, books and records of such party and
its Subsidiaries insofar as such access is reasonably required by the other
party.
(b) For a period of five years following the Distribution Date,
each of ITT Industries, ITT Destinations and ITT Hartford shall provide to the
other, promptly following such time at which such documents shall be filed with
the Securities and Exchange Commission (the "Commission"), all documents that
shall be filed by it and by any of its respective Subsidiaries with the
Commission pursuant to the periodic and interim reporting requirements of the
Securities Exchange Act of 1934, and the rules and regulations of the Commission
promulgated thereunder.
SECTION 4.03. Reimbursement; Other Matters. (a) Except to
the extent otherwise contemplated by any Ancillary Agreement, a party providing
Records or access to
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information to the other party under this Article IV shall be entitled to
receive from the recipient, upon the presentation of invoices therefor, payments
for such amounts, relating to supplies, disbursements and other out-of-pocket
expenses, as may be reasonably incurred in providing such Records or access to
information.
(b) The parties hereto shall comply with those document
retention policies as shall be set forth in Schedule 4.03(b) hereto or
established and agreed to in writing by their respective authorized officers on
or prior to the Distribution Date in respect of Records and related matters.
SECTION 4.04. Confidentiality. Each of (i) ITT Industries and
its Subsidiaries, (ii) ITT Destinations and its Subsidiaries and (iii) ITT
Hartford and its Subsidiaries shall not use or permit the use of (without the
prior written consent of the other) and shall hold, and shall cause its
consultants and advisors to hold, in strict confidence, all information
concerning the other parties in its possession, its custody or under its control
(except to the extent that (A) such information has been in the public domain
through no fault of such party or (B) such information has been later lawfully
acquired from other sources by such party or (C) this Agreement or any other
Ancillary Agreement or any other agreement entered into pursuant hereto permits
the use or disclosure of such information) to the extent such information (x)
relates to the period up to the Effective Time, (y) relates to any Ancillary
Agreement or (z) is obtained in the course of performing services for the other
party pursuant to any Ancillary Agreement, and each party shall not (without the
prior written consent of the other) otherwise release or disclose such
information to any other person, except such party's auditors and attorneys,
unless compelled to disclose such information by judicial or administrative
process or unless such disclosure is required by law and such party has used
commercially reasonable efforts to consult with the other affected party or
parties prior to such disclosure. To the extent that a party hereto is compelled
by judicial or administrative process to disclose such information under
circumstances in which any evidentiary privilege would be available, such party
agrees to assert such privilege in good faith prior to making such disclosure.
Each of the parties hereto agrees to consult with each relevant other party in
connection with any such judicial or administrative process, including, without
limitation, in determining whether any privilege is
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31
available, and further agrees to allow each such relevant party and its counsel
to participate in any hearing or other proceeding (including, without
limitation, any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.
ARTICLE V. ADMINISTRATIVE SERVICES
SECTION 5.01. Performance of Services. Beginning on the
Distribution Date, each party will provide, or cause one or more of its
Subsidiaries to provide, to the other party and its Subsidiaries such services
on such terms as may be agreed upon between (i) ITT Industries (or any of its
Subsidiaries) and ITT Destinations (or any of its Subsidiaries), (ii) ITT
Industries (or any of its Subsidiaries) and ITT Hartford (or any of its
Subsidiaries) or (iii) ITT Destinations (or any of its Subsidiaries) and ITT
Hartford (or any of its Subsidiaries) from time to time in writing. The party
that is to provide the services (the "Provider") will use (and will cause its
Subsidiaries to use) its commercially reasonable efforts to provide such
services to the other party (the "Recipient") and its Subsidiaries in a
satisfactory and timely manner and as further specified in writing by the
parties.
SECTION 5.02. Independence. All employees and representatives
of the Provider providing the scheduled services to the Recipient will be deemed
for purposes of all compensation and employee benefits matters to be employees
or representatives of the Provider and not employees or representatives of the
Recipient. In performing such services, such employees and representatives will
be under the direction, control and supervision of the Provider (and not the
Recipient) and the Provider will have the sole right to exercise all authority
with respect to the employment (including, without limitation, termination of
employment), assignment and compensation of such employees and representatives.
SECTION 5.03. Non-exclusivity. Nothing in this Agreement
precludes any party from obtaining, in whole or in part, services of any nature
that may be obtainable from the other parties from its own employees or from
providers other than the other parties.
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ARTICLE VI. DISPUTE RESOLUTION
In the event of a controversy, dispute or claim arising out of,
in connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, including, without limitation, any
claim based on contract, tort, statute or constitution (collectively, "Agreement
Disputes"), the general counsels of the relevant parties shall negotiate in good
faith for a reasonable period of time to settle such Agreement Dispute.
If after such reasonable period such general counsels are
unable to settle such Agreement Dispute (and in any event after 60 days have
elapsed from the time the relevant parties began such negotiations), such
Agreement Dispute shall be determined, at the request of any relevant party, by
arbitration conducted in New York City, before and in accordance with the
then-existing Rules for Commercial Arbitration of the American Arbitration
Association (the "Rules"), and any judgment or award rendered by the arbitrator
shall be final, binding and nonappealable (except upon grounds specified in 9
U.S.C. Section 10(a) as in effect on the date hereof), and judgment may be
entered by any state or Federal court having jurisdiction thereof in accordance
with Section 8.19 hereof. Unless the arbitrator otherwise determines, the
pre-trial discovery of the then-existing Federal Rules of Civil Procedure and
the then-existing Rules 46 and 47 of the Civil Rules for the United States
District Court for the Southern District of New York shall apply to any
arbitration hereunder. Any controversy concerning whether an Agreement Dispute
is an arbitrable Agreement Dispute, whether arbitration has been waived, whether
an assignee of this Agreement is bound to arbitrate, or as to the interpretation
of enforceability of this Article VI shall be determined by the arbitrator. The
arbitrator shall be a retired or former judge of any United States District
Court or Court of Appeals or such other qualified person as the relevant parties
may agree to designate, provided such individual has had substantial
professional experience with regard to settling sophisticated commercial
disputes. The parties intend that the provisions to arbitrate set forth herein
be valid, enforceable and irrevocable. The designation of a situs or a governing
law for this Agreement or the arbitration shall not be deemed an election to
preclude application of the Federal Arbitration Act, if it would be applicable.
In his award the arbitrator shall allocate, in
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his discretion, among the parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of the
arbitrator and reasonable attorneys' fees, costs and expert witness expenses of
the parties. The undersigned agree to comply with any award made in any such
arbitration proceedings that has become final in accordance with the Rules and
agree to the entry of a judgment in any jurisdiction upon any award rendered in
such proceedings becoming final under the Rules. The arbitrator shall be
entitled, if appropriate, to award any remedy in such proceedings, including,
without limitation, monetary damages, specific performance and all other forms
of legal and equitable relief; provided, however, the arbitrator shall not be
entitled to award punitive damages.
ARTICLE VII. INSURANCE
SECTION 7.01. Policies and Rights Included Within Assets. (a)
The ITT Destinations Assets shall include any and all rights of an insured party
under each of the Company Policies set forth on Schedule 7.01(a) hereto and all
predecessor Policies thereto, subject to the terms of such Company Policies and
any limitations or obligations of ITT Destinations contemplated by this Article
VII or Schedule 7.01(a), specifically including rights of indemnity and the
right to be defended by or at the expense of the insurer, with respect to all
claims, suits, actions, proceedings, injuries, losses, liabilities, damages and
expenses incurred or claimed to have been incurred prior to the Distribution
Date by any party in or in connection with the conduct of the ITT Destinations
Business or, to the extent any claim is made against ITT Destinations or any of
its Subsidiaries, the conduct of the ITT Industries Business or the ITT Hartford
Business, and which claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses may arise out of an insured or insurable
occurrence under one or more of such Company Policies; provided, however, that
nothing in this clause shall be deemed to constitute (or to reflect) an
assignment of such Company Policies, or any of them, to ITT Destinations.
(b) The ITT Hartford Assets shall include any and all rights of
an insured party under the Company Policies numbered 16 and 17 on Schedule
7.01(a) hereto and all predecessor Policies thereto, subject to the terms of
such Company Policies and any limitations or obligations of ITT Hartford
contemplated by this Article VII or
<PAGE> 34
34
Schedule 7.01(a), specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses
incurred or claimed to have been incurred prior to the Distribution Date by any
party in or in connection with the conduct of the ITT Hartford Business or, to
the extent any claim is made against ITT Hartford or any of its Subsidiaries,
the conduct of the ITT Industries Business or the ITT Destinations Business, and
which claims, suits, actions, proceedings, injuries, losses, liabilities,
damages and expenses may arise out of an insured or insurable occurrence under
either such Company Policy; provided, however, that nothing in this clause shall
be deemed to constitute (or to reflect) an assignment of either of such Company
Policies to ITT Hartford.
(c) The ITT Industries Assets shall include any and all rights
of a named additional insured party under Policies where ITT is a named
additional insured party, subject to the terms of such Policies and any
limitations or obligations of ITT contemplated by this Article VII, specifically
including rights of indemnity and the right to be defended by or at the expense
of the insurer, with respect to all claims, suits, actions, proceedings,
injuries, losses, liabilities, damages and expenses incurred or claimed to have
been incurred prior to the Distribution Date by any party in or in connection
with the conduct of the ITT Industries Business or, to the extent any claim is
made against ITT Industries or any of its Subsidiaries, the conduct of the ITT
Destinations Business or the ITT Hartford Business, and which claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses may
arise out of an insured or insurable occurrence under either such Policy;
provided, however, that nothing in this clause shall be deemed to constitute (or
to reflect) an assignment of such Policies to ITT Industries.
SECTION 7.02. Post-Distribution Date Claims. (a) If, subsequent
to the Distribution Date, any person shall assert a claim against ITT
Destinations or any of its Subsidiaries (including, without limitation, where
ITT Destinations or its Subsidiaries are joint defendants with other persons)
with respect to any claim, suit, action, proceeding, injury, loss, liability,
damage or expense incurred or claimed to have been incurred prior to the
Distribution Date in or in connection with the conduct of the ITT Destinations
Business or, to the extent any claim is made
<PAGE> 35
35
against ITT Destinations or any of its Subsidiaries (including, without
limitation, where ITT Destinations or its Subsidiaries are joint defendants with
other persons), the conduct of the ITT Industries Business or the ITT Hartford
Business, and which claim, suit, action, proceeding, injury, loss, liability,
damage or expense may arise out of an insured or insurable occurrence under one
or more of the Company Policies, ITT Industries shall, at the time such claim is
asserted, to the extent any such Policy may require that Insurance Proceeds
thereunder be collected directly by the party against whom the Insured Claim is
asserted, be deemed to designate, without need of further documentation, ITT
Destinations as the agent and attorney-in-fact to assert and to collect any
related Insurance Proceeds under such Company Policy, and shall further be
deemed to assign, without need of further documentation, to ITT Destinations any
and all rights of an insured party under such Company Policy with respect to
such asserted claim, specifically including rights of indemnity and the right to
be defended by or at the expense of the insurer and the right to any applicable
Insurance Proceeds thereunder; provided, however, that nothing in this Section
7.02(a) shall be deemed to constitute (or to reflect) an assignment of the
Company Policies, or any of them, to ITT Destinations; provided further,
however, that, with respect to those Company Policies set forth on Schedule
7.01(a) hereto for which ITT Destinations has payment obligations as reflected
on such Schedule, ITT Destinations and its Subsidiaries shall only have the
rights set forth under this Section 7.02(a) with respect to such Company
Policies if such payment obligations have been satisfied by ITT Destinations at
the relevant time as contemplated by Schedule 7.01(a).
(b) If, subsequent to the Distribution Date, any person shall
assert a claim against ITT Hartford or any of its Subsidiaries (including,
without limitation, where ITT Hartford or its Subsidiaries are joint defendants
with other persons) with respect to any claim, suit, action, proceeding, injury,
loss, liability, damage or expense incurred or claimed to have been incurred
prior to the Distribution Date in or in connection with the conduct of the ITT
Hartford Business or, to the extent any claim is made against ITT Hartford or
any of its Subsidiaries (including, without limitation, where ITT Hartford or
its Subsidiaries are joint defendants with other persons), the conduct of the
ITT Industries Business or the ITT Destinations Business, and which claim, suit,
action, pro-
<PAGE> 36
36
ceeding, injury, loss, liability, damage or expense may arise out of an insured
or insurable occurrence under the Company Policy numbered 16 or 17 on Schedule
7.01(a) hereto, ITT Industries shall, at the time such claim is asserted, to the
extent such Policy may require that Insurance Proceeds thereunder be collected
directly by the party against whom the Insured Claim is asserted, be deemed to
designate, without need of further documentation, ITT Hartford as the agent and
attorney-in-fact to assert and to collect any related Insurance Proceeds under
such Company Policy, and shall further be deemed to assign, without need of
further documentation, to ITT Hartford any and all rights of an insured party
under such Company Policy with respect to such asserted claim, specifically
including rights of indemnity and the right to be defended by or at the expense
of the insurer and the right to any applicable Insurance Proceeds thereunder;
provided, however, that nothing in this Section 7.02(b) shall be deemed to
constitute (or to reflect) an assignment of either of such Company Policies to
ITT Hartford; provided further, however, that, with respect to the Company
Policy numbered 17 on Schedule 7.01(a) hereto, ITT Hartford and its Subsidiaries
shall only have the rights set forth under this Section 7.02(b) with respect to
such Company Policy if the payment obligations of ITT Hartford set forth in
Schedule 7.01(a) with respect to such Policy have been satisfied by ITT Hartford
at the relevant time as contemplated by Schedule 7.01(a).
SECTION 7.03. Administration; Other Matters. (a)
Administration. Except as otherwise provided in Section 7.02 hereof, from and
after the Distribution Date ITT Industries shall be responsible for (i)
Insurance Administration of the Company Policies and (ii) Claims Administration
under such Company Policies with respect to ITT Industries Liabilities, ITT
Destinations Liabilities and ITT Hartford Liabilities; provided that the
retention of such responsibilities by ITT Industries is in no way intended to
limit, inhibit or preclude any right to insurance coverage for any Insured Claim
of a named insured under such Policies as contemplated by the terms of this
Agreement; and provided further that ITT Industries' retention of the
administrative responsibilities for the Company Policies shall not relieve the
party submitting any Insured Claim of the primary responsibility for reporting
such Insured Claim accurately, completely and in a timely manner (it being
understood that, as specified in the definitions of "Claims Administration" and
"Insurance Administration", ITT Destinations and ITT Hartford shall report
Insured
<PAGE> 37
37
Claims to the relevant carrier through ITT Industries) or of such party's
authority to settle (within the periods specified in Schedule 7.01(a) in the
cases of the Company Policies numbered 1, 3 and 4 on said Schedule) any such
Insured Claim. ITT Industries may discharge its administrative responsibilities
under this Section 7.03 by contracting for the provision of services by
independent parties. Except as contemplated by Schedule 7.01(a) hereto or this
Agreement, each of the parties hereto shall administer and pay any costs
relating to defending its respective Insured Claims under Company Policies to
the extent such defense costs are not covered under such Policies and shall be
responsible for obtaining or reviewing the appropriateness of releases upon
settlement of its respective Insured Claims under Company Policies. The
disbursements, out-of-pocket expenses and direct and indirect costs of employees
or agents of ITT Industries relating to Claims Administration and Insurance
Administration contemplated by this Section 7.03(a) shall be the responsibility
of ITT Industries, provided that, if such disbursements, out-of-pocket expenses
and direct and indirect costs of employees or agents of ITT Industries shall be
materially in excess of the comparable historical disbursements, out-of-pocket
expenses and direct and indirect costs of employees or agents of ITT, the
relevant parties hereto agree to negotiate in good faith an equitable allocation
of responsibility for such disbursements, out-of-pocket expenses and direct and
indirect costs of employees or agents of ITT Industries.
(b) Access to Specified Policies. Where ITT Destinations
Liabilities or ITT Hartford Liabilities, as applicable, are specifically covered
under the Company Policies set forth on Schedule 7.01(a) hereto numbered 16 or
17 for periods prior to the Distribution Date, or under either such Company
Policy covering claims made after the Distribution Date with respect to an
occurrence prior to the Distribution Date, then from and after the Distribution
Date ITT Destinations and ITT Hartford may claim coverage for Insured Claims
under such Company Policy as and to the extent that such insurance is available
up to the full extent of the applicable limits of liability of such Company
Policy (and may receive any Insurance Proceeds with respect thereto as
contemplated by Section 7.02 or Section 7.03(d) hereof).
(c) Liability Limitation. Except as specifically
contemplated by lettered items under Schedule 7.01(a), ITT
<PAGE> 38
38
Industries, ITT Destinations and ITT Hartford shall not be liable to one another
for claims not reimbursed by insurers for any reason not within the control of
ITT Industries, ITT Destinations or ITT Hartford, as the case may be, including,
without limitation, coinsurance provisions, deductibles, quota share
deductibles, exhaustion of aggregates, self-insured retentions, bankruptcy or
insolvency of an insurance carrier, Company Policy limitations or restrictions,
any coverage disputes, any failure to timely claim by ITT Industries, ITT
Destinations or ITT Hartford or any defect in such claim or its processing.
(d) Allocation of Insurance Proceeds. Except as otherwise
provided in Section 7.02, Insurance Proceeds received with respect to claims,
costs and expenses under the Company Policies shall be paid to ITT Industries in
trust, which shall thereafter administer the Company Policies by paying the
Insurance Proceeds, as appropriate, to ITT Industries with respect to ITT
Industries Liabilities, to ITT Destinations with respect to ITT Destinations
Liabilities, to ITT Hartford with respect to the ITT Hartford Liabilities and as
provided in Section 2.04(c) with respect to Shared Liabilities. Payment of the
allocable portions of indemnity costs of Insurance Proceeds resulting from such
Policies will be made by ITT Industries to the appropriate party upon receipt
from the insurance carrier. In the event that the aggregate limits on any
Company Policies are exceeded by the aggregate of outstanding Insured Claims by
two or more of the relevant parties hereto, such parties shall agree on an
equitable allocation of Insurance Proceeds based upon their respective bona fide
claims. The parties agree to use commercially reasonable efforts to maximize
available coverage under those Company Policies applicable to it, and to take
all commercially reasonable steps to recover from all other responsible parties
in respect of an Insured Claim to the extent coverage limits under a Company
Policy have been exceeded or would be exceeded as a result of such Insured
Claim.
SECTION 7.04. Agreement for Waiver of Conflict and Shared
Defense. In the event that Insured Claims of more than one of the parties hereto
exist relating to the same occurrence, the relevant parties shall jointly defend
and waive any conflict of interest necessary to the conduct of the joint
defense. Nothing in this Section 7.04 shall be
<PAGE> 39
39
construed to limit or otherwise alter in any way the obligations of the parties
to this Agreement, including those created by this Agreement, by operation of
law or otherwise.
SECTION 7.05. Cooperation. The parties agree to use their
commercially reasonable efforts to cooperate with respect to the various
insurance matters contemplated by this Agreement (including, without limitation,
in connection with Policies where ITT is a named additional insured party).
ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
Notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be a conflict between the provisions of
this Agreement and the provisions of any Ancillary Agreement, such Ancillary
Agreement shall control.
SECTION 8.02. Ancillary Agreements. This Agreement is not
intended to address, and should not be interpreted to address, the matters
specifically and expressly covered by the Ancillary Agreements.
SECTION 8.03. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 8.04. Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
SECTION 8.05. Expenses. Except as otherwise set forth in
this Agreement or any Ancillary Agreement, all costs and expenses incurred on
or prior to the Distribution
<PAGE> 40
40
Date (whether or not paid on or prior to the Distribution Date) in connection
with the preparation, execution, delivery and implementation of this Agreement
and any Ancillary Agreement, the Proxy Statement and the Distribution and the
consummation of the transactions contemplated thereby shall be charged to and
paid by ITT, provided that ITT shall not be responsible for those costs or
expenses incurred by ITT Hartford or ITT Destinations (including, without
limitation, any attorney or financial advisor fees owing to attorneys or
financial advisors retained by ITT Destinations or ITT Hartford). Except as
otherwise set forth in this Agreement or any Ancillary Agreement, each party
shall bear its own costs and expenses incurred after the Distribution Date.
SECTION 8.06. Notices. All notices and other communications
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and will be deemed given on the date on which
such notice is received:
To ITT Corporation (ITT Industries, Inc.
after the Distribution):
4 West Red Oak Lane
White Plains, NY 10604
Attn: Senior Vice President and General Counsel
To ITT Destinations, Inc. (ITT Corporation
after the Distribution):
1330 Avenue of the Americas
New York, NY 10019
Attn: Executive Vice President
and General Counsel
To ITT Hartford Group, Inc.:
Hartford Plaza
Hartford, CT 06115
Attn: Senior Vice President and General Counsel
<PAGE> 41
41
SECTION 8.07. Waivers. The failure of either party to require
strict performance by the other party of any provision in this Agreement will
not waive or diminish that party's right to demand strict performance thereafter
of that or any other provision hereof.
SECTION 8.08. Amendments. Subject to the terms of Section
8.11 hereof, this Agreement may not be modified or amended except by an
agreement in writing signed by the parties.
SECTION 8.09. Assignment. This Agreement shall be assignable in
whole in connection with a merger or consolidation or the sale of all or
substantially all the assets of a party hereto so long as the resulting,
surviving or transferee entity assumes all the obligations of the relevant party
hereto by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other parties to this Agreement. Otherwise this
Agreement shall not be assignable, in whole or in part, directly or indirectly,
by any party hereto without the prior written consent of the others, and any
attempt to assign any rights or obligations arising under this Agreement without
such consent shall be void.
SECTION 8.10. Successors and Assigns. The provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective permitted successors and permitted assigns.
SECTION 8.11. Termination. This Agreement (including, without
limitation, Section 2.11 and Article III hereof) may be terminated and the
Distribution may be amended, modified or abandoned at any time prior to the
Distribution by and in the sole discretion of ITT without the approval of ITT
Destinations or ITT Hartford or the shareholders of ITT. In the event of such
termination, no party shall have any liability of any kind to any other party or
any other person. After the Distribution, this Agreement may not be terminated
except by an agreement in writing signed by the parties; provided, however, that
Section 2.11 and Article III shall not be terminated or amended after the
Distribution in respect of the third party beneficiaries thereto without the
consent of such persons.
SECTION 8.12. Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations
<PAGE> 42
42
set forth herein to be performed by any Subsidiary of such party or by any
entity that is contemplated to be a Subsidiary of such party on and after the
Distribution Date.
SECTION 8.13. Third Party Beneficiaries. Except as provided in
Section 2.11 relating to directors and officers liability insurance and in
Article III relating to Indemnitees, this Agreement is solely for the benefit of
the parties hereto and their respective Subsidiaries and Affiliates and should
not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
SECTION 8.14. Attorney Fees. Except as contemplated by the
third to the last sentence of Article VI hereof, a party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other parties hereto
for and against all out-of- pocket expenses, including, without limitation,
legal fees, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement. The payment of such expenses is
in addition to any other relief to which such other party may be entitled
hereunder or otherwise.
SECTION 8.15. Title and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
SECTION 8.16. Exhibits and Schedules. The Exhibits and
Schedules shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
SECTION 8.17. Specific Performance. Each of the parties hereto
acknowledges that there is no adequate remedy at law for failure by such parties
to comply with the provisions of this Agreement and that such failure would
cause immediate harm that would not be adequately compensable in damages, and
therefore agree that their agreements contained herein may be specifically
enforced without the requirement of posting a bond or other security, in
addition to all other remedies available to the parties hereto under this
Agreement.
SECTION 8.18. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
<PAGE> 43
43
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE
PERFORMED IN THAT STATE.
SECTION 8.19. Consent to Jurisdiction. Without limiting the
provisions of Article VI hereof, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern District
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each of the
parties agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 8.19. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 8.20. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
<PAGE> 44
44
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
ITT CORPORATION,
by
--------------------------------
Name:
Title:
ITT DESTINATIONS, INC.,
by
--------------------------------
Name:
Title:
ITT HARTFORD GROUP, INC.,
by
--------------------------------
Name:
Title:
<PAGE> 1
(1)
INTELLECTUAL PROPERTY
LICENSE AGREEMENT
INTELLECTUAL PROPERTY LICENSE AGREEMENT ("IP Agreement") dated as of
November 1, 1995 between and among ITT CORPORATION, a Delaware corporation ("ITT
Corporation"), ITT DESTINATIONS, INC., a Nevada corporation ("ITT
Destinations"), and ITT HARTFORD GROUP, INC., a Delaware corporation ("ITT
Hartford") (collectively the "Parties").
RECITALS
WHEREAS, in order to carry out the Distribution (as hereinafter
defined) whereby the holders of the shares of common stock of ITT Corporation
will receive all of the outstanding shares of common stock of ITT Destinations
(as hereinafter defined) and all the outstanding shares of common stock of ITT
Hartford (as hereinafter defined), it is necessary to license certain
intellectual property assets and rights between and among the Parties to provide
for the continued conduct of the Parties' respective businesses;
WHEREAS, a series of General Relations Agreements are in effect between
and among ITT Corporation and its Subsidiaries, including ITT Destinations, ITT
Hartford and their Subsidiaries, granting certain rights and licenses under
intellectual property in connection with the conduct of their respective
businesses; and
WHEREAS, the Parties desire that certain rights and licenses under such
intellectual property enjoyed by the Parties and their Subsidiaries prior to the
Distribution Date should continue after the Distribution Date as specified
herein.
NOW, THEREFORE, in consideration of the mutual agreements, undertakings
and covenants herein, the Parties hereby agree as follows:
1
<PAGE> 2
(1)
ARTICLE I. DEFINITIONS
Section 1.01 General. As used in this IP Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Intellectual Property" shall mean and include inventions, invention
disclosures, patents, patent applications, computer programs (including source
code, object code and data), copyrights, copyright registrations, copyright
registration applications, mask works, designs, technical information,
proprietary information, trade secrets, manufacturing processes, formulas,
algorithms, data, and all other kinds of intellectual property protected or
protectable under state, federal or foreign law owned by a Party or its
Subsidiaries as of the Distribution Date, except Trademarks (as hereinafter
defined).
"Distribution Agreement" shall mean the Distribution Agreement to be
entered into by ITT Corporation, ITT Destinations, and ITT Hartford relating to
the distribution of the shares of ITT Destinations and ITT Hartford to the
holders of ITT Corporation Common Stock.
"Distribution Date" shall mean such date as may hereafter be determined
by ITT Corporation's Board of Directors as the date on which the Distribution
shall be effected.
"Effective Time" shall mean 11:59 p.m., New York time, on the
Distribution Date.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record of shares of ITT Corporation Common Stock as of the
Distribution Record Date of (i) the ITT Destinations Common Shares owned by ITT
Corporation on the basis of one ITT Destinations Common Share for each
outstanding share of ITT Corporation Common Stock, and (ii) the ITT Hartford
Common Shares owned by ITT Corporation on the basis of one ITT Hartford Common
Share for each outstanding share of ITT Corporation Common Stock.
2
<PAGE> 3
(1)
"Distribution Record Date" shall mean such date as may hereafter be
determined by ITT Corporation 's Board of Directors as the record date for the
Distribution.
"GRA" shall mean the General Relations Agreements in effect as of the
Distribution Date between and among ITT Corporation and its Subsidiaries,
including ITT Destinations, ITT Hartford and their Subsidiaries, pursuant to ITT
Corporation Administrative Practice 60.3.
"ITT Corporation" shall mean ITT Corporation, a Delaware corporation
and its predecessor Maryland corporation up to the Effective Time and at all
times thereafter ITT Industries, Inc., an Indiana corporation and legal
successor to ITT Corporation.
"ITT Destinations" shall mean ITT Destinations, Inc., a Nevada
Corporation, to be renamed "ITT Corporation" in connection with the
Distribution.
"ITT Destinations Business" shall mean the principal businesses and
operations conducted by ITT Destinations and its Subsidiaries on the
Distribution Date, such businesses being hospitality, entertainment, information
and educational services as specifically described in Exhibit A1 annexed hereto
and, in addition, shall also mean the Closely Related Businesses described in
Exhibit A1, provided that ITT Destinations Business shall not include the ITT
Industries Business or the ITT Hartford Business.
"ITT Hartford" means ITT Hartford Group, Inc., a Delaware corporation.
"ITT Hartford Business" shall mean the principal businesses and
operations conducted by ITT Hartford and its Subsidiaries on the Distribution
Date, such businesses being the insurance services in the fields of property,
casualty, life and reinsurance as specifically described in Exhibit A2 annexed
hereto and, in addition, shall also mean the Closely Related Businesses
described in Exhibit A2, provided that ITT Hartford
3
<PAGE> 4
(1)
Business shall not include the ITT Industries Business or the ITT Destinations
Business.
"ITT Industries" shall mean (i) ITT Industries, Inc., an Indiana
corporation and the legal successor to ITT Corporation, or (ii) ITT Corporation,
after giving legal effect to the transactions contemplated by Section 2.01 of
the Distribution Agreement or as if such transactions had occurred, in each case
as the context requires.
"ITT Industries Business" shall mean the principal businesses and
operations conducted by ITT Industries and its Subsidiaries on the Distribution
Date, such businesses being the design, manufacture, sale, and servicing of
automotive products, defense products, electronic component products, fluid
handling products, and management services for military and space satellite
launch facilities as specifically described in Exhibit A3 annexed hereto and, in
addition, shall also mean the Closely Related Businesses described in Exhibit
A3, provided that ITT Industries Business shall not include ITT Destinations
Business or ITT Hartford Businesses.
"Proxy Statement" shall mean the Proxy Statement sent to the holders of
shares of ITT Corporation Common Stock in connection with the Distribution,
including any amendment or supplement thereto.
"Subsidiary", with respect to any Party, shall mean any corporation,
partnership, joint venture or other entity of which such Party, directly or
indirectly, owns an interest sufficient to elect a majority of the Board of
Directors (or persons performing similar functions) (irrespective of whether at
the time any other class or classes of ownership interests of such corporation,
partnership or other entity shall or might have such voting power upon the
occurrence of any contingency). Irrespective of this definition and for purposes
of this IP Agreement, Madison Square Garden, L.P., and ITT-Dow Jones Television
and their respective Subsidiaries are Subsidiaries of ITT Destinations.
4
<PAGE> 5
(1)
"Trademarks" shall mean and include trademarks, trade names, company
names, service marks, trade dress, the registrations thereof, the applications
therefor and the goodwill associated therewith.
ARTICLE II. OWNERSHIP OF INTELLECTUAL PROPERTY ASSETS
Section 2.01 The Parties agree that ITT Hartford and the ITT Hartford
Subsidiaries own all right, title, and interest, including the right to sue and
collect past and future damages, in any Intellectual Property which: (i)
originated with ITT Hartford or the ITT Hartford Subsidiaries in the conduct of
ITT Hartford Business; (ii) was obtained by, or exclusively or primarily for,
ITT Hartford or the ITT Hartford Subsidiaries for the conduct of ITT Hartford
Business; (iii) was developed exclusively or primarily for ITT Hartford or the
ITT Hartford Subsidiaries for the conduct of ITT Hartford Business; (iv) arose
from funding by, or exclusively or primarily for the benefit of, ITT Hartford or
the ITT Hartford Subsidiaries in the conduct of ITT Hartford Business; or, (v)
as of the Distribution Date is used or held for use exclusively by ITT Hartford
or the ITT Hartford Subsidiaries solely for the conduct of ITT Hartford
Business. If a conflict exists between any of the subsections (i) through (iv)
of this Section on the one hand and subsection (v) of this Section on the other
hand, then subsection (v) shall prevail.
Section 2.02 The Parties agree that ITT Destinations and the ITT
Destinations Subsidiaries own all right, title, and interest, including the
right to sue and collect past and future damages, in any Intellectual Property
which: (i) originated with ITT Destinations or the ITT Destinations Subsidiaries
in the conduct of ITT Destinations Business; (ii) was obtained by, or
exclusively or primarily for, ITT Destinations or the ITT Destinations
Subsidiaries for the conduct of ITT Destinations Business; (iii) was developed
exclusively or primarily for ITT Destinations or the ITT Destinations
Subsidiaries for the conduct of ITT Destinations Business; (iv) arose from
funding by, or exclusively or primarily for the benefit of, ITT Destinations or
the ITT Destinations Subsidiaries in the conduct of ITT Destinations Business;
or, (v) as of the Distribution Date is used or held for use exclusively by ITT
Destinations or the ITT Destinations Subsidiaries solely for the conduct of ITT
Destinations Business. If a conflict exists
5
<PAGE> 6
(1)
between any of the subsections (i) through (iv) of this Section on the one hand
and subsection (v) of this Section on the other hand, then subsection (v) shall
prevail.
Section 2.03 The Parties agree that ITT Industries and the ITT
Industries Subsidiaries own all right, title, and interest, including the right
to sue and collect past and future damages, in any Intellectual Property which:
(i) originated with ITT Industries or the ITT Industries Subsidiaries in the
conduct of ITT Industries Business; (ii) was obtained by, or exclusively or
primarily for, ITT Industries or the ITT Industries Subsidiaries for the conduct
of ITT Industries Business; (iii) was developed exclusively or primarily for ITT
Industries or the ITT Industries Subsidiaries for the conduct of ITT Industries
Business; (iv) arose from funding by, or exclusively or primarily for the
benefit of, ITT Industries or the ITT Industries Subsidiaries in the conduct of
ITT Industries Business; or, (v) as of the Distribution Date is used or held for
use exclusively by ITT Industries or the ITT Industries Subsidiaries solely for
the conduct of ITT Industries Business. If a conflict exists between any of the
subsections (i) through (iv) of this Section on the one hand and subsection (v)
of this Section on the other hand, then subsection (v) shall prevail.
Section 2.04 Except as otherwise specifically provided for in this IP
Agreement or the Distribution Agreement, the Parties agree that no Party shall
be obligated to provide any technical assistance, or to transfer any technical
information or documentation associated therewith.
Section 2.05 The confirmation of ownership of the Intellectual Property
rights provided for under Sections 2.01-2.03 are subject to all pre-existing
third party rights, obligations and restrictions as of the Distribution Date.
ARTICLE III. INTELLECTUAL PROPERTY LICENSES
Section 3.01 ITT Industries, on behalf of itself and the ITT Industries
Subsidiaries, hereby grants as of the Distribution Date to ITT Hartford, ITT
Destinations and their respective Subsidiaries a non-assignable, worldwide,
6
<PAGE> 7
(1)
perpetual, paid up, royalty free, non-exclusive license, without right to grant
sublicenses except to future Subsidiaries and except as provided in Section
3.06, under Intellectual Property owned by ITT Industries or the ITT Industries
Subsidiaries as of the Distribution Date to manufacture, have manufactured, use,
offer to sell, and sell any and all methods, processes, compositions, and
products and offer and provide any services in connection with all fields of
activity other than the fields of activity of the ITT Industries Business.
Section 3.02 ITT Destinations, on behalf of itself and the ITT
Destinations Subsidiaries, hereby grants as of the Distribution Date to ITT
Industries, ITT Hartford and their Subsidiaries a non-assignable, worldwide,
perpetual, paid up, royalty free, non-exclusive license, without right to grant
sublicenses except to future Subsidiaries and except as provided in Section
3.06, under Intellectual Property owned by ITT Destinations or the ITT
Destinations Subsidiaries as of the Distribution Date to manufacture, have
manufactured, use, offer to sell, and sell any and all methods, processes,
compositions, and products and offer and provide any services in connection with
all fields of activity other than the fields of activity of the ITT Destinations
Business.
Section 3.03 ITT Hartford, on behalf of itself and the ITT Hartford
Subsidiaries, hereby grants as of the Distribution Date to ITT Industries, ITT
Destinations and their Subsidiaries a non-assignable, worldwide, perpetual, paid
up, royalty free, non-exclusive license, without right to grant sublicenses
except to future Subsidiaries and except as provided in Section 3.06, under
Intellectual Property owned by ITT Hartford or the ITT Hartford Subsidiaries as
of the Distribution Date to manufacture, have manufactured, use, offer to sell,
and sell any and all methods, processes, compositions, and products and offer
and provide any services in connection with all fields of activity other than
the fields of activity of the ITT Hartford Business.
Section 3.04 The rights granted by the Parties under Sections 3.01-3.03
are subject to all pre-existing third party rights, obligations and restrictions
as of the Distribution Date.
7
<PAGE> 8
(1)
Section 3.05 Any GRA between a Party and its Subsidiaries on the one
hand and any other Party and/or its Subsidiaries on the other hand will be
terminated as of the Effective Time. To the extent that residual rights under
Section 10.4 of the GRAs are in conflict with the rights and licenses granted
under this Article III, then this IP Agreement controls.
Section 3.06 Each Party may sublicense the rights granted to such Party
under Sections 3.01 - 3.03 hereof to third parties, provided, however, the scope
of such sublicenses shall be in writing and shall be expressly limited to the
scope of the license granted to such Party.
Section 3.07 Each of the Parties hereto understands and agrees that,
except as otherwise expressly provided, no party hereto is, in this IP Agreement
or in any other agreement or document contemplated by this IP Agreement or
otherwise, making any representation or warranty whatsoever, including, without
limitation, as to title, value or legal sufficiency. It is also agreed and
understood that any and all assets either transferred or licensed to or retained
or licensed by the Parties, as the case may be, shall be "as is, where is".
ARTICLE IV. UNDERTAKINGS
Section 4.01 To the extent that the grants of Intellectual Property
rights and licenses under Articles II and III herein would violate or be
prohibited by any agreement with a third party, and such Intellectual Property
is actually used by the grantee Party, then the granting Party undertakes to use
reasonable efforts to obtain the necessary consent(s) from such third party so
as to be permitted to make such grants. However, each Party hereto understands
and agrees that no Party hereto is, in this IP Agreement or in any other
agreement or document contemplated by this IP Agreement or otherwise,
representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any amendatory agreements and the
making of any filings or applications, possibly contemplated by this IP
Agreement will satisfy the provisions of any and all applicable agreements or
the requirements of any or all applicable laws or judgments.
8
<PAGE> 9
(1)
Section 4.02 To the extent a Party or its Subsidiaries shall require
technical assistance in connection with technology, technical information or
software transferred or licensed from another Party, then that technical
assistance shall be provided pursuant to a separate agreement entered into by
the Parties pursuant to terms agreed to by the Parties.
ARTICLE V. DISPUTE RESOLUTION
In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this IP Agreement or otherwise arising out
of, or in any way related to this IP Agreement, including, without limitation,
any claim based on contract, tort, statute or constitution (collectively,
"Agreement Disputes"), the general counsels of the relevant parties shall
negotiate in good faith for a reasonable period of time to settle such Agreement
Dispute.
If after such reasonable period such general counsels are unable to
settle such Agreement Dispute (and in any event after 60 days have elapsed from
the time the relevant parties began such negotiations), such Agreement Dispute
shall be determined, at the request of any relevant party, by arbitration
conducted in New York City, before and in accordance with the then-existing
Rules for Commercial Arbitration of the American Arbitration Association (the
"Rules"), and any judgment or award rendered by the arbitrator shall be final,
binding and unappealable (except upon grounds specified in 9 U.S.C., Section
10(a) as in effect on the date hereof), and judgment may be entered by any state
or Federal court having jurisdiction thereof in accordance with Section 6.16
hereof. Unless the arbitrator otherwise determines, the pre- trial discovery of
the then-existing Federal Rules of Civil Procedure and the then-existing Federal
Rules of Civil Procedure and the then-existing Rules 46 and 47 of the Civil
Rules for the United States District Court for the Southern District of New York
shall apply to any arbitration hereunder. Any controversy concerning whether an
Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has
been waived, whether an assignee of this IP Agreement is bound to
9
<PAGE> 10
(1)
arbitrate, or as to the interpretation of enforceability of this Article shall
be determined by the arbitrator. The arbitrator shall be a retired or former
judge of any United States District Court or Court of Appeals or such other
qualified person as the relevant parties may agree to designate, provided such
individual has had substantial professional experience with regard to settling
sophisticated commercial disputes. The parties intent that the provisions to
arbitrate set forth herein be valid, enforceable and irrevocable. The
designation of a situs or a governing law for this IP Agreement or the
arbitration shall not be deemed an election to preclude application of the
Federal Arbitration Act, if it would be applicable. In his award the arbitrator
shall allocate, in his discretion, among the parties to the arbitration all
costs of the arbitration, including, without limitation, the fees and expenses
of the arbitrator and reasonable attorneys' fees, costs and expert witness
expenses of the parties. The undersigned agree to comply with any award made in
any such arbitration proceedings that has become final in accordance with the
Rules and agree to the entry of a judgment in any jurisdiction upon any award
rendered in such proceedings becoming final under the Rules. The arbitrator
shall be entitled, if appropriate, to award any remedy in such proceedings,
including, without limitation, monetary damages, specific performance and all
other forms of legal and equitable relief; provided, however, the arbitrator
shall not be entitled to award punitive damages.
ARTICLE VI. MISCELLANEOUS
Section 6.01 Complete Agreement; Construction. This IP Agreement,
including the Exhibits, together with the Distribution Agreement and the other
Ancillary Agreements (as defined in the Distribution Agreement), shall
constitute the entire agreement between the Parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. Notwithstanding any other
provisions in this IP Agreement to the contrary, in the event and to the extent
that there shall be a conflict between the provisions of this IP Agreement as it
relates to Intellectual Property rights and obligations and the provisions of
the Distribution Agreement or any other Ancillary Agreement, this IP Agreement
shall control.
10
<PAGE> 11
(1)
Section 6.02 Counterparts. This IP Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
Section 6.03 Survival of Agreements. Except as otherwise contemplated
by this IP Agreement, all covenants and agreements of the Parties contained in
this IP Agreement shall survive the Distribution Date.
Section 6.04 Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the Parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
To ITT Destinations, Inc. (ITT Corporation after the
Distribution):
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
Attn: Vice President and
Associate General Counsel - Intellectual Property
To ITT Corporation (ITT Industries, Inc. after the Distribution):
ITT Industries, Inc.
4 West Red Oak Lane
White Plains, NY 10604
Attn: General Counsel
11
<PAGE> 12
(1)
To ITT Hartford Group, Inc.:
ITT Hartford Group, Inc.
Hartford Plaza
Hartford, CT 06115
Attn: Senior Vice President and
General Counsel
Section 6.05 Waivers. The failure of any Party to require
strict performance by any other Party of any provision in this IP Agreement will
not waive or diminish the first Party's right to demand strict performance
thereafter of that or any other provision hereof.
Section 6.06 Amendments. This IP Agreement may not be modified or
amended except by an agreement in writing signed by the Parties.
Section 6.07 Assignment. This IP Agreement shall be assignable in whole
in connection with a merger or consolidation or the sale of all or substantially
all the assets of a Party hereto or in part in connection with a Party's sale or
other divestiture of a Subsidiary whose field of activity is within the scope of
rights granted to such Party by this IP Agreement. Otherwise this IP Agreement
shall not be assignable, in whole or in part, directly or indirectly, by any
Party hereto without the prior written consent of the others, and any attempt to
assign any rights or obligations arising under this IP Agreement without such
consent shall be void.
Section 6.08 Successors and Assigns. The provisions of this IP
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and permitted assigns.
Section 6.09 Termination. This IP Agreement may be terminated at any
time prior to the Distribution by and in the sole discretion of ITT Corporation
without the approval of ITT Destinations or ITT Hartford or the shareholders of
ITT Corporation. In the event of such termination, no party shall have any
liability of any kind to any other party or any other person.
12
<PAGE> 13
(1)
After the Distribution Date, this IP Agreement may not be terminated except by
an agreement in writing signed by the Parties.
Section 6.10 Subsidiaries. Each of the Parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such Party or
by any entity that becomes a Subsidiary of such Party on and after the
Distribution Date.
Section 6.11 Third Party Beneficiaries. This IP Agreement is solely for
the benefit of the Parties hereto and their respective Subsidiaries and should
not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this IP Agreement.
Section 6.12 Title and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
Section 6.13 Specific Performance. Each of the Parties hereto
acknowledges that there is no adequate remedy at law for failure by such Parties
to comply with the provisions of this Agreement and that such failure would
cause immediate harm that would not be adequately compensable in damages, and
therefore agree that their agreements contained herein may be specifically
enforced without the requirement of posting a bond or other security, in
addition to all other remedies available to the Parties hereto under this IP
Agreement.
Section 6.14 Governing Law. This IP Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
Section 6.15 Consent to Jurisdiction. Without limiting the provisions
of Article V hereof, each of the Parties irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York
13
<PAGE> 14
(1)
County, and (b) the United States District Court for the Southern District of
New York, for the purposes of any suit, action or other proceeding arising out
of this IP Agreement or any transaction contemplated hereby. Each of the Parties
agrees to commence any action, suit or proceeding relating hereto either in the
United States District Court for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the Parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such Party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 6.15. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this IP Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) or the United States District Court for the Southern District of New York,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 6.16 Severability. In the event any one or more of the
provisions contained in this IP Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The Parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
14
<PAGE> 15
(1)
IN WITNESS WHEREOF, the Parties have caused this IP Agreement to be
duly executed as of the day and year first above written.
ITT CORPORATION
By: _______________________
Name:
Title:
ITT DESTINATIONS, INC.
By: ______________________
Name:
Title:
ITT HARTFORD GROUP, INC.
By _______________________
Name:
Title:
15
<PAGE> 16
EXHIBIT A1
ITT DESTINATIONS BUSINESS
I. Hospitality, Entertainment and Gaming
A. Scope of Business:
Hospitality, entertainment and gaming services, facilities, and
content of all types including, sports teams and franchises,
television, theatrical studios, networks, broadcasting, arenas,
theaters and other performance facilities, television programs,
resort and destination facilities, hotels, gaming operations,
lodging, transportation, and related marketing, distribution,
promotion, advertising and licensing.
B. Major Businesses and Service Groupings
1. ITT Sheraton and Ciga S.p.A. Hotels
a. Hotel operations
(1) reservation services
(2) national marketing
(3) promotional services
b. Hotel management
c. Hotel ownership
2. Caesars World, Inc.
a. resorts/hotels
b. casinos/gaming operations
<PAGE> 17
c. merchandising of Caesars branded products
(fragrances, clothing, accessories, gift items
w/Caesars' name)
3. Madison Square Garden
a. New York Knicks
(1) ticket revenues
(2) merchandising
b. New York Rangers
(1) ticket revenues
(2) merchandising
c. Madison Square Garden Arena
(1) sports events
(2) concerts
(3) family shows
(4) trade shows - conventions
d. The Paramount Theater
e. WNYC-TV (Nationally broadcast business and
sports TV station in a joint venture with Dow
Jones)
f. Supply and distribution of television
programming for cable
g. Rights to New York Yankees' games
h. MSG Network-Advertiser supported cable
television entertainment program service
<PAGE> 18
II. Information Services
A. Scope of Business
Information services, facilities, and content, in connection
with information training and educational services, electronic
and print publication of informational and educational
materials, collection, creation, production, compilation,
storage and translation of informational and educational
materials.
B. Major Businesses and Services Groupings
1. ITT World Directories, Inc.
a. publishing traditional telephone directories
internationally
b. contracts for the publication of telephone
directories with monopoly providers of
telecommunications services
2. ITT Educational Services, Inc.
a. ITT Technical Institutes
III. Closely Related Businesses:
A. Acquisition, management, ownership and operation of:
1. Entertainment services, facilities and content of all
types, including, without limitation: sports teams and
franchises, television, theatrical studios, networks,
broadcasting, theme parks, arenas, theaters and other
performance facilities, musical recordings,
merchandizing, movies, television programs, magazines,
<PAGE> 19
electronic entertainment, interactive media and
related marketing, distribution, promotion,
advertising and licensing;
2. Hospitality, tourism, recreation and gaming services,
including, without limitation, resort and destination
facilities, services, hotels, gaming operations,
lodging and transportation; and
3. Information services facility and content, including,
without limitation
(a) training and educational services, electronic
and print publication of informational and
educational materials;
(b) collection, creation, production, compilation,
storage and transmission, including
interactive services, of informational and
educational materials;
(c) commercial communication equipment, services
and facilities including, without limitation,
telecommunications, satellites, cable and all
other storage, access and transmission means.
<PAGE> 20
EXHIBIT A2
ITT HARTFORD BUSINESS
A. ITT Hartford is engaged in:
1. All lines of property and casualty insurance
2. All lines of life company business, including without
limitation all lines of life, disability, health, stop-loss and
special risk (accidental death and dismemberment, blanket
lines, and Medicare Supplements) insurance and annuities (the
"Life Company Business")
3. Ceded and assumed reinsurance in all lines of property
and casualty insurance and life Company Business
4. The following services related to property and
casualty insurance and Life Company Business and reinsurance:
a. Underwriting
b. Loss control
c. Premium collection, audit and financing
d. Actuarial
e. Administrative (including without limitation,
benefit plan administration and consulting)
f. Claim administration (including without
limitation, processing)
g. Reinsurance consulting
h. Catastrophe evaluation
i. Reinsurance and insurance market research and
assistance
j. Runoff of liabilities for discontinued
insurance operations
<PAGE> 21
k. Servicing or administration of voluntary and
residual market plans, pools and other residual
market mechanisms
l. Establishing and maintaining risk retention
and purchasing group
m. Insurance-related information management
5. Surety and fidelity/burglary bonds including, but not
limited to, contract, miscellaneous and financial guarantee
bonds and credit insurance.
6. The providing of investment advisory services to
mutual funds and/or the operation of mutual funds and/or any
other pooled investment vehicles and/or the distribution of
interests in such funds or other vehicles
B. Closely Related Businesses:
1. Any insurance-related business permitted to be
conducted by a company under applicable regulatory authority
and any other business which may only be conducted by
companies regulated by the applicable insurance regulatory
authorities
2. Investment banking activities, including but not
limited to the underwriting of securities and stock brokerage
activities
<PAGE> 22
EXHIBIT A3
ITT INDUSTRIES BUSINESS
I. Automotive Group
A. Scope of Business: Supplier of systems and components to
automotive vehicle manufacturers worldwide and related
automotive aftermarket products
B. Major Automotive Product/Service Groupings:
1. Brake and Chassis Systems
(a) antilock brake systems and components
(b) traction control system and components
(c) chassis systems and components
(d) foundation brake system and components
(e) fluid handling systems and components
(f) shock absorbers
(g) brake activation systems and components
(h) friction products
2. Body and Electrical Systems
(a) electric motors and motor controllers
(b) wiper system and components
(c) activator systems and components
(d) switches and lamps
(e) body hardware
(f) seat sub-systems
(g) precesion die cast products
(h) structural stampings
(i) door systems and components
(j) air management systems and components
(k) modular chassis systems
<PAGE> 23
3. Front and Rear Corner Modules
(a) brake sub-systems and components
(b) suspension sub-systems and components
(c) bearings
(d) complete axle assemblies and sub-assemblies
(e) vehicle stability management systems and
components
(f) steering systems and components
II. Defense & Electronics Group
A. Scope of Business: Develop, manufacture and support high
technology electronic systems and components specifically
designed for military and defense application on a worldwide
basis.
B. Major Products/Service Groupings for Military and Defense
Application:
1. communications systems, equipment, and components:
(a) military communications equipment;
(b) tactical radios and components;
(c) air traffic control radio equipment;
(d) networking equipment;
(e) air traffic control radio equipment;
(f) switches;
(g) military Private Mobile Radio equipment;
(h) communications software;
(i) wireless LANS;
(j) tactical data systems and components;
(k) communications security devices and software;
(l) computer security products;
(m) INFOSEC products;
<PAGE> 24
(n) biometric authentication products;
(o) speech and speaker recognition, identification
and verification systems and components;
(p) communication intelligence workstation
components and subsystems;
(q) language and dialect identification products;
(r) Communications-Navigation-Identification
systems and components;
(s) secure voice/data communications systems and
components;
(t) command and control systems and components;
(u) communications and signal intelligence systems
and components;
(v) satellite payload systems and components;
(w) military Personal Communications Services
radios
2. electronic warfare systems including:
(a) Advanced Threat Radar Jammar and components;
(b) Airborne Self-Protection Jammer and
components;
(c) electronic countermeasures and counter-
countermeasures systems and components;
(d) decoy systems and components;
(e) electro-optical and infrared systems and
components;
3. night vision devices incorporating image intensifiers
including:
(a) infantrymen's night vision devices and
components;
(b) aviator's night vision devices and components;
(c) image intensifier tubes;
(d) night vision weapon sights and components;
(e) special purpose photosensitive devices;
<PAGE> 25
(f) vehicle mounted night vision devices and
components;
4. radar systems including:
(a) shipboard radars and components;
(b) air-traffic radars and components;
(c) coastal defense radars and components;
(d) transmit/receive modules;
(e) bistatic radar systems and components;
5. space payload products including:
(a) navigation payloads;
(b) meteorological instruments;
(c) suites of meteorological and navigation
instruments;
(d) RF/microware/millimeter wave sensor systems
and components;
(e) control segment integration software;
6. navigation systems including:
(a) global positioning satellite systems and
components;
(b) TACAN systems and components;
(c) tactical navigation systems and components;
7. semiconductor IC devices:
(a) Gallium Arsenide integrated circuits;
(b) MMIC products;
(c) RF products;
8. connectors and cable assemblies
<PAGE> 26
C. Defense and Electronics Products for Commercial Application
1. night vision devices incorporating image intensifiers:
(a) personal image identifier night vision devices and
components; (b) commercial image intensifier tubes;
(c) vehicle-mounted image identifier night vision
devices and components; (d) Retinitis Pigmentosa image
intensifier night vision devices and components;
2. Manufacture of Gallium Arsenide semiconductor IC
devices and circuits
3. biometric authentication products
4. speech and speaker recognition, identification and
verification systems and devices
5. language and dialect identification products
6. Security Access Control Systems for accessing computer
systems having application in computer and financial
networks
7. global positioning satellite products
8. connectors and cable assemblies
9. integrated circuit cards and components
10. switches
<PAGE> 27
III. Fluid Technology Group
A. Business: Engaged in the design, development, production,
marketing and sale of products, systems and services used to
move, handle, transfer, control and contain fluids. The
principal markets are water and wastewater treatment,
industrial and process, and construction. The other markets
consist of chemical processing, pharmaceutical and biotech
sectors, selected segments of oil and gas and mining markets,
HVAC, commercial and leisure marine aerospace and power
industry markets.
B. Major Product/Service Products:
1. Pump products including drivers, controllers,
accessories and components thereof for use in the
markets specified in C.1 above.
2. Mixer products including drivers, controllers,
accessories and components thereof for use in the
markets specified in C.1 above.
3. Valve products including drivers, actuators and
components thereof for use in the markets specified in
C.1 above.
4. Instrument and control products including drivers,
actuators, sensors, microprocessors, accessories and
components thereof for use in the markets specified in
C.1 above.
5. Regulators, transducers, seals including drivers,
actuators, sensors, microprocessors, accessories and
components thereof for use in the markets specified in
C.1 above.
<PAGE> 28
6. Boiler and condensate equipment and products including
drivers, controllers, accessories and components
thereof for use in the markets specified in C.1 above.
7. Switches including actuators, sensors, controllers,
and components thereof for use in the markets
specified in C.1 above.
8. Heat transfer products and components thereof for use
in the markets specified in C.1 above.
9. Lighting and sanitary products and components thereof
for use in markets specified in C.1 above.
10. Software programs for the selection and design of
above specified products.
IV. Closely Related Businesses:
A. Transportation Products: The design, manufacture, sale,
marketing and servicing of OEM and aftermarket automotive,
truck, train and other such transportation products.
B. Fluid Products: The design, manufacture, sale, marketing and
servicing of fluid handling products consisting of the major
products/service products set out in III B above.
C. Military and Defense Products/Services: The design,
manufacture, sale, marketing and servicing of products and
systems specially designed for the military and defense
application.
D. Components: The design, manufacture, sale, marketing and
servicing of components consisting of connectors, cable
assemblies, integrated circuit cards and components thereof,
and switches.
<PAGE> 1
TAX ALLOCATION AGREEMENT
TAX ALLOCATION AGREEMENT, dated as of November 1,
1995, among ITT Corporation, a Delaware corporation (which will
be reincorporated in Indiana and renamed ITT Industries, Inc.;
"ITT INDUSTRIES"), ITT Destinations, Inc., a Nevada corporation
(which will be renamed ITT Corporation; "ITT DESTINATIONS"),
and ITT Hartford Group, Inc., a Delaware corporation ("ITT
HARTFORD"). ITT Industries, ITT Destinations and ITT Hartford
are hereinafter jointly referred to as the "COMPANIES".
WHEREAS, as of the date hereof, ITT Industries is the common parent of
an affiliated group of domestic corporations, including ITT Destinations and ITT
Hartford, which has elected to file consolidated Federal income tax returns;
WHEREAS, ITT Industries proposes to distribute all of the outstanding
common stock of ITT Destinations and ITT Hartford to its shareholders (the
"DISTRIBUTION") and, as a result of the Distribution, ITT Destinations and ITT
Hartford will not be included in the consolidated Federal income tax return of
ITT Industries for the portion of the year following the Distribution or in
future years;
WHEREAS, the Companies have entered into an agreement (the
"DISTRIBUTION AGREEMENT") to, among other things, allocate and assign
responsibility for certain liabilities of the present ITT Corporation and its
former subsidiaries; and
WHEREAS, the Companies desire to allocate the tax burdens and benefits
of transactions which occurred on or prior to the Distribution Date and to
provide for certain other tax matters, including the assignment of
responsibility for the preparation and filing of tax returns and the prosecution
and defense of any tax controversies;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Companies (each on its own behalf and on behalf of each of its
subsidiaries as of the Distribution Date) hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meaning:
"ADJUSTED ALLOCABLE FEDERAL INCOME TAX LIABILITY" shall mean
the Allocable Federal Income Tax Liability, adjusted as provided in
paragraphs 8(c) and 8(d) hereof.
"AGREEMENT" shall mean this Tax Allocation Agreement.
"ALLOCABLE FEDERAL INCOME TAX LIABILITY" shall mean the
Separate Consolidated Federal Income Tax Liability, but including the
AMT and adjusted as provided in paragraphs 8(a), 8(e) and 15(b) hereof.
"AMT" shall mean the alternative minimum tax imposed by
Section 55 of the Code.
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"CONSOLIDATED RETURN" shall mean the consolidated federal
income tax return of ITT Industries for the period commencing on
January 1, 1995; or, if the Distribution occurs after December 31,
1995, the consolidated federal income tax return of ITT Industries for
the period commencing on January 1, 1996; and including the ITT
Destinations Group and the ITT Hartford Group through the Distribution
Date.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute.
"DISTRIBUTION" shall have the meaning assigned to such term in
the recitals to this Agreement.
"DISTRIBUTION AGREEMENT" shall have the meaning assigned to
such term in the recitals to this Agreement.
"DISTRIBUTION DATE" shall mean the date on which ITT
Industries distributes to its shareholders all of the outstanding
common stock of ITT Destinations and ITT Hartford.
"FEDERAL TAX ADMINISTRATOR" shall mean James P. Whitson, the
Director of Taxes of ITT Destinations, or such other person as ITT
Destinations shall appoint with the consent of each of ITT Industries
and ITT Hartford, which consent shall not be unreasonably withheld or
delayed.
"FINAL DETERMINATION" shall mean the final resolution of
liability for any tax for any taxable period, including any related
interest or penalties, by or as a result of: (i) a final and
unappealable decision, judgment, decree or other order of a court of
competent jurisdiction; (ii) a closing agreement or accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable
agreement under the laws of other jurisdictions which resolves the
entire tax liability for any tax period; (iii) any allowance of a
refund or credit in respect of an overpayment of tax, but only after
the expiration of all periods during which such refund may be recovered
(including by way of offset) by the tax imposing jurisdiction; or (iv)
any other final disposition, including by reason of the expiration of
the applicable statute of limitations.
"FTC" shall mean the foreign tax credit pursuant to Section 27
of the Code.
"GROUP" shall mean the ITT Industries Group, the ITT
Destinations Group and/or the ITT Hartford Group, as the context may
require.
"IRS" shall mean the United States Internal Revenue Service.
"ITT DESTINATIONS" shall have the meaning assigned to such
term in the preamble to this Agreement.
"ITT DESTINATIONS GROUP" shall mean ITT Destinations and each
ITT Destinations Subsidiary.
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<PAGE> 3
"ITT DESTINATIONS SUBSIDIARY" shall mean all of the direct or
indirect subsidiaries of ITT Destinations as of the Distribution Date
which have joined or are eligible to join the Consolidated Return or
any Prior Period Consolidated Return.
"ITT FINANCIAL OPERATIONS" shall have the meaning assigned to
such term in paragraph 8(e).
"ITT HARTFORD" shall have the meaning assigned to such term in
the preamble to this Agreement.
"ITT HARTFORD GROUP" shall mean ITT Hartford and each ITT
Hartford Subsidiary.
"ITT HARTFORD SUBSIDIARY" shall mean all of the direct or
indirect subsidiaries of ITT Hartford as of the Distribution Date which
have joined or are eligible to join the Consolidated Return or any
Prior Period Consolidated Return.
"ITT INDUSTRIES" shall have the meaning assigned to such term
in the preamble to this Agreement.
"ITT INDUSTRIES GROUP" shall mean ITT Industries and each ITT
Industries Subsidiary.
"ITT INDUSTRIES SUBSIDIARY" shall mean all of the direct or
indirect subsidiaries of ITT Industries as of the Distribution Date
which have joined or are eligible to join the Consolidated Return or
any Prior Period Consolidated Return, other than subsidiaries which are
members of the ITT Destinations Group or the ITT Hartford Group.
"NET REVERSAL BENEFIT" shall have the meaning assigned to such
term in paragraph 8(a).
"PRIME RATE" shall mean the "prime rate" charged by Citibank,
N.A., New York, New York, as such rate shall be changed from time to
time, compounded daily on the basis of a year of 365/366 days and
actual days elapsed.
"PRIOR PERIOD CONSOLIDATED RETURN" shall mean any consolidated
tax return of the present ITT Corporation filed, or to be filed, for
years prior to the Consolidated Return year.
"SEPARATE CONSOLIDATED FEDERAL INCOME TAX LIABILITY" shall
mean, with respect to any year or portion thereof, the tax liability
which a Group would have incurred if such Group, on a stand alone
basis, had been an affiliated group eligible to file a consolidated
return for any portion of such taxable year during which it is included
in the Consolidated Return or any Prior Period Consolidated Return and
had filed a return for such period, computed without regard to AMT.
"STATE TAX ADMINISTRATOR" shall mean Richard W. Powers, the
Director of Taxes of ITT Industries, or such other person as ITT
Industries shall appoint with the consent of
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<PAGE> 4
each of ITT Destinations and ITT Hartford, which consent shall not be
unreasonably withheld or delayed.
"TAX CREDITS" shall include all credits against tax pursuant to
Subtitle A, Chapter 1, Part IV of the Code.. "TAX ITEM" shall
have the meaning specified in paragraph 8(a).
2. Consolidated Return to be Filed. Each of the Companies will join,
and will cause each of their subsidiaries to join, in the Consolidated Return to
the extent each is eligible to join in such return under the provisions of the
Code and the regulations thereunder.
3. Documentation. The Companies hereby agree to execute and deliver all
documentation reasonably required (including powers of attorney, if requested)
to enable the Federal Tax Administrator to file, and to take all actions
necessary or incidental to the filing of, the Consolidated Return (including,
without limitation, the execution of Treasury Form 1122), or, with the consent
of each of the Companies, which consent shall not be unreasonably withheld or
delayed, any amendment of the Consolidated Return or any Prior Period
Consolidated Return. No consent of any Company shall be required for the filing
of an amended return pursuant to Section 905(c) of the Code.
4. Tax Return Preparation and Audits. (a) The Federal Tax Administrator
will cause the Consolidated Return to be timely prepared and filed. The Federal
Tax Administrator shall be responsible for the preparation and filing of any
consents and requests for extension of time within which to file the
Consolidated Return or any related information or similar returns. The Federal
Tax Administrator shall make the Consolidated Return available to the Directors
of Taxes of ITT Industries and ITT Hartford for their review prior to filing and
shall furnish them a copy of the return promptly after it is filed.
(b) ITT Industries and ITT Hartford agree that each will cause their
respective Director of Taxes to furnish to the Federal Tax Administrator on a
timely basis such information, schedules, analyses and any other items as may be
necessary to prepare the Consolidated Return. Such information, schedules,
analyses and other items will be prepared in a manner consistent with existing
practice and in accordance with a work plan and schedule to be agreed upon among
the Directors of Taxes of each of the Companies, acting reasonably, no later
than the Distribution Date.
(c) In preparing the Consolidated Return, the Federal Tax Administrator
shall retain Arthur Andersen LLP to review the Consolidated Return (with a scope
to be agreed upon among the Directors of Taxes of each of the Companies and the
cost of such review to be shared equally among the Companies) and may retain
other advisors and charge the cost of their services to the appropriate Group or
Groups; provided that, without the consent of the affected Group, the cost to
any Group of such services in any calendar year shall not exceed $25,000.
(d) The Federal Tax Administrator shall have overall responsibility for
obtaining and coordinating all responses in connection with any audit of the
Consolidated Return and all Prior Period Consolidated Returns. Such responses
shall be prepared by the affected Group in a manner consistent with prior
practice. IRS adjustments affecting the taxable income, loss or deductions
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<PAGE> 5
of, or tax credits generated by, any Group may be agreed upon or settled only
upon approval of that Group, which approval shall not be unreasonably withheld
or delayed. In connection with the defense of any audit of the Consolidated
Return or any Prior Period Consolidated Return, the Federal Tax Administrator
may retain advisors and charge the cost of their services to the appropriate
Group or Groups; provided that, without the consent of the affected Group, the
cost to any Group of such services in any calendar year shall not exceed
$50,000.
5. Consolidated Return Computations of Tax and Payments. (a) On or
before December 14, 1995, the ITT Destinations Group and the ITT Hartford Group
each agree to make appropriate payments to ITT Industries for estimated taxes
and ITT Industries agrees to make appropriate payments to the ITT Destinations
Group and the ITT Hartford Group for the refund of estimated payments previously
made with respect to their Consolidated Return year Separate Consolidated
Federal Income Tax Liability. Such payment shall take into account the benefit
of any net capital loss, net operating loss, credit or deduction of the ITT
Destinations Group or the ITT Hartford Group if the Federal Tax Administrator
reasonably determines that such item will produce a benefit in the Consolidated
Return.
(b) Each of the ITT Destinations Group and the ITT Hartford
Group further agrees to make an interim tax settlement with ITT Industries on or
before March 14, 1996 equal to their Separate Consolidated Federal Income Tax
Liability, modified and increased as described in paragraph 5(a) and reduced by
prior estimated tax payments.
(c) Based on computations to be prepared by the affected Group and
approved by the Federal Tax Administrator, an adjusting payment for the
difference between amounts previously paid and the Allocable Federal Income Tax
Liability shall be made by or to the ITT Destinations Group and the ITT Hartford
Group, as the case may be, on or before October 15, 1996 based on the
Consolidated Return as filed. Each of the ITT Destinations Group and the ITT
Hartford Group shall increase their liability for such adjusting payment by the
amount of any AMT credit carryforward allocated to them under the consolidated
return regulations which exceeds the AMT calculated on a separate consolidated
basis.
6. Recomputations of Tax and Payments. (a) The computation of the
Adjusted Allocable Federal Income Tax Liability of the ITT Destinations Group or
the ITT Hartford Group for the Consolidated Return or any Prior Period
Consolidated Return shall be adjusted in computations to be prepared by the
affected Group and approved by the Federal Tax Administrator with respect to
changes in the taxable income, loss, deduction or tax credits of the ITT
Destinations Group or the ITT Hartford Group:
(i) in each instance when payments are to be made to, or
refunds are received from, the IRS;
(ii) when no payment is to be made or refund is to be received
due to offsetting adjustments, upon filing of an amended return,
completion of an IRS audit and completion of an IRS appellate review;
and
(iii) to reflect the results of any Final Determination.
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<PAGE> 6
ITT Destinations and ITT Hartford each agree to pay to ITT Industries
any additional amounts (including penalties and additions to tax) due on account
of increases in the Adjusted Allocable Federal Income Tax Liability of the ITT
Destinations Group or the ITT Hartford Group resulting from any such changes,
and ITT Industries agrees to pay ITT Destinations or ITT Hartford any refunds to
which the ITT Destinations or ITT Hartford Group may be entitled, in each case,
together with any interest relating thereto. For purposes of this agreement,
unless specifically provided otherwise, interest shall be computed at the
Federal statutory rate used, pursuant to Section 6621(a) of the Code, by the IRS
in computing the interest payable to or by it on the net balance due to or from
the IRS. Any interest under Section 6621(c) of the Code shall be charged to the
Group whose separate deficiencies gave rise to such interest. If the separate
deficiencies of more than one Group gave rise to such interest, then such
interest shall be allocated between or among such Groups. Penalties levied in
respect of the Consolidated Return or any Prior Period Consolidated Return shall
be charged to the Group whose separate computations gave rise to the penalty. If
the separate computations of more than one Group gave rise to the penalty, then
such penalty shall be allocated between or among such Groups. If a penalty does
not arise from the separate computations of the Groups, it shall be allocated in
proportion to the tax in the separate tax computations of the Groups.
(b) Amounts payable to or by ITT Industries by or to ITT Destinations
or ITT Hartford under this paragraph 6(b) shall be paid upon written request
therefor approved by the Federal Tax Administrator, together with interest
thereon from the original due date or such other date as may be appropriate
under the circumstances. Any amounts due from ITT Industries to ITT Destinations
or ITT Hartford as a result of the receipt of a refund shall be paid within five
working days after receipt, together with appropriate interest thereon. If no
refund is to be received due to offsetting items among the various Groups, then
tax and interest (computed at the IRS overpayment rates) shall be paid within 30
calendar days after the completion of each of the IRS audit and appellate review
of the tax period in question and a Final Determination. After expiration of the
five day period (or, if applicable, 30 day period) any amounts unpaid shall bear
interest computed from the date of receipt at the Prime Rate.
(c) No settlement of any Adjusted Allocable Federal Income Tax
Liability relating to any Group shall be made by one Group with respect to the
IRS audit of the Consolidated Return or a Prior Period Consolidated Return until
the audit has been completed with respect to all Groups, unless such advance
settlement has been approved by ITT Industries and such Group.
7. Special Rules. (a) If the Consolidated Return or any Prior Period
Consolidated Return tax liability (including any interest relating thereto)
exceeds or is less than the total of the three Groups Allocable Federal Income
Tax Liability or Adjusted Allocable Federal Income Tax Liability, as
appropriate, (including any interest relating thereto) the cost or benefit of
any net difference shall be allocated equally to ITT Industries and ITT
Destinations, provided, that AMT in an amount equal to any AMT credit
carryforward from the Consolidated Return allocated to a Group shall be borne by
such Group.
(b) The liability for any environmental tax shall be apportioned among
the ITT Industries Group, the ITT Destinations Group and the ITT Hartford Group
in proportion to their separate Group liability therefor, computed without the
benefit of the amount referred to in Section 59A(a)(2) of the Code.
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<PAGE> 7
(c) Each of the Companies agrees that, unless it obtains consent of
each of the other Companies, all members of its Group will waive the carryback
of any net operating loss from a tax period beginning on or after January 1,
1996 to the Consolidated Return or Prior Period Consolidated Return.
8. Treatment of Various Items. (a) In computing the Allocable Federal
Income Tax Liability of any Group for the purposes of this Agreement, each Group
shall be entitled to the benefits of any net operating loss, net capital loss,
deduction or credit or any adjustment arising from an IRS audit, amended return
or otherwise (each, a "TAX ITEM") attributable to it, or any carryback of a Tax
Item attributable to it, which produces a benefit in the Consolidated Return or
any Prior Period Consolidated Return. In determining whether a Tax Item or
carryback of a Tax Item produces such a benefit, no Group shall be entitled to
the benefits of any Tax Item which is a carryforward into a taxable year which
begins after the Distribution Date. If the Tax Item or carryback of a Tax Item
results in a carryforward into a taxable year which begins after the
Distribution Date and such carryforward subsequently produces a realized benefit
(including a realized benefit as the result of a tax basis increase), or other
use, in such year after considering all other items of taxable income or credits
otherwise available to such other Group (a "NET REVERSAL BENEFIT"), then such
Net Reversal Benefit, when realized, shall be paid by such other Group to the
Group generating, or otherwise bearing the cost of, such Tax Item or carryback
of a Tax Item. For purposes of this Agreement, a Net Reversal Benefit shall be
deemed to be realized when included in a filed tax return and shall be
recomputed if adjusted upon audit by the IRS. Settlement of a Net Reversal
Benefit and any related interest shall be made within 30 days. The benefit of
any carryback of a Tax Item to the Consolidated Return or any Prior Period
Consolidated Return shall be payable only as and to the extent that such
carryback reduces the Consolidated Return or Prior Period Consolidated Return
tax or produces a Net Reversal Benefit. In the event that ITT Industries pays an
amount to ITT Destinations or ITT Hartford with respect to any Tax Item or
carryback of a Tax Item and the benefit of such item or carryback to the
Consolidated Return or any Prior Period Consolidated Return is subsequently
modified (whether as the result of an IRS or foreign tax authority's adjustment
or any other reason), then the amount previously paid shall be appropriately
increased or repaid, as the case may be, with interest, penalties and additions
to tax as provided in paragraph 6(a). If no AMT is payable in the Consolidated
Return or any Prior Period Consolidated Return, no Group shall include AMT in
its Allocable Federal Income Tax Liability for such year. To the extent that AMT
results from a carryback from a year beginning after the end of the Consolidated
Return year, then such AMT shall be allocated to the Group giving rise to the
carryback and such Group shall be entitled to recover any Net Reversal Benefit
resulting from any AMT credit carryforwards associated with such AMT.
(b) In the event that two or more carrybacks of Tax Items are available
for use in the Consolidated Return or in any Prior Period Consolidated Return,
their order of use will be determined by the Code and the regulations
thereunder. Where two or more carrybacks of Tax Items have equal priority and
can not be used in full, each such carryback shall be used by the affected
Groups in proportion to the total of such carrybacks.
(c) Amounts equal to research credits allowed upon any audit of the
Consolidated Return or any Prior Period Consolidated Return which are
attributable to the activities of the ITT Destinations Group or the ITT Hartford
Group prior to the Distribution Date will be paid by
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<PAGE> 8
ITT Industries to ITT Destinations or ITT Hartford. However, if no credit is
allowed, no payment will be made. If a portion of the total credit claimed on
the Consolidated Return or any Prior Period Consolidated Return is not allowed,
only a portion of the credit as finally allowed (computed in proportion to
qualified expenditures as finally allowed) will be paid by ITT Industries to ITT
Destinations or ITT Hartford.
(d) Adjustments pursuant to paragraphs 6 and 7 hereof to the tax
liability (including interest and penalties) of or with respect to any business
listed on Schedule 1.01(d) of the Distribution Agreement for any taxable year
before or including the Distribution Date, shall be apportioned among the Groups
in the same manner as the other liabilities with respect to such business are
apportioned in the Distribution Agreement; provided, that any adjustment with
respect to any issue which has not been cleared with the Federal Tax
Administrator, or for which a "more likely than not" opinion from tax advisors
reasonably acceptable to the Federal Tax Administrator has not been received by
him prior to the filing of the Consolidated Return, shall be charged to the
Group in whose tax return the adjustment arose, with the balance being
apportioned. Any benefit (including any Net Reversal Benefit) arising as a
result of an adjustment pursuant to this paragraph 8(d) or paragraph 8(e) below
shall be similarly allocated and apportioned. In computing the effect of
adjustments with respect to companies listed on Schedule 1.01(d) of the
Distribution Agreement, all such adjustments shall be combined and treated as if
they were deemed to be a separate fourth Group. Notwithstanding the foregoing,
changes in FTC's generated by a company listed on Schedule 1.01(d) of the
Distribution Agreement and related gross-up pursuant to Section 78 of the Code
shall be allocated to the Group owning such Company and no FTC benefits or FTC
carryforwards shall be computed for such deemed fourth Group.
(e) If United States Federal income taxes with respect to the
operations or sale of the businesses of or assets of ITT Financial Corporation,
and the legal entities which were direct or indirect subsidiaries of ITT
Financial Corporation prior to its liquidation, (such operations or sale,
collectively "ITT FINANCIAL OPERATIONS") differ from the amounts reflected in
any Prior Period Consolidated Return or in the Consolidated Return, when filed,
then such difference in tax liability shall be apportioned equally among the
three Groups. To the extent that the statutory tax rate on capital gains with
respect to ITT Financial Operations is less than 35%, the difference, when
realized, shall be apportioned equally among the three Groups. However, the tax
benefit of the anticipated closedown cost reserve of $103 million with respect
to ITT Financial Corporation and subsidiaries as of December 1, 1995 shall be
for the account of ITT Industries. In addition, state, local and foreign taxes
with respect to ITT Financial Operations which differ from the amounts in the
returns as originally filed (including the returns to be filed with respect to
1995), shall be similarly apportioned.
(f) If actions taken on or before the Distribution Date cause any of
the Companies to be liable under the tax indemnities contained in the covenants,
loan agreements or offering memoranda of any debt instruments of a company
included in the Consolidated Return and listed on Schedule 1.01(d) of the
Distribution Agreement, with respect to obligations which remain outstanding at
the Distribution Date, then the cost of such tax indemnity shall be shared
equally among the Groups.
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9. Taxes Other Than Federal Taxes. (a) The Companies and their
subsidiaries shall file income and franchise tax returns in those jurisdictions
in which they are required to do so. Consistent with prior practice, the
Companies and their subsidiaries shall file combined tax returns in certain
jurisdictions. If any state or local income or franchise tax audit adjustment
attributable to any of the Companies, or any subsidiary of any of the Companies,
increases or decreases such combined tax liability for a taxable period
beginning on or before the Distribution Date, then an amount in respect of that
adjustment shall be paid as provided in paragraph 9(c) hereof. The State Tax
Administrator shall have the power and responsibility to act in a manner
substantially identical to the Federal Tax Administrator in connection with all
combined state and local tax returns and settlements with respect thereto;
provided that, without the consent of any affected Group, the cost to any Group
of outside services in any calendar year shall not exceed $5,000. In connection
with any Connecticut Combined Group Return, the Director of Taxes of ITT
Hartford shall act for the State Tax Administrator with respect to the ITT
Hartford Group.
(b) Tax liabilities incurred and refunds received by any of the
Companies or by a subsidiary of any of the Companies (other than those relating
to Federal, state and local income or franchise taxes computed on a combined or
consolidated basis) and all taxes not measured by income, including, but not
limited to, premium, ad valorem, capital stock, sales, use, real and personal
property, special assessment, franchise, automobile registration, employment,
earnings, duty and import taxes (plus interest) shall be for the account of ITT
Industries, ITT Destinations or ITT Hartford, as the case may be. All foreign
taxes shall be allocated to the Group which has legal ownership of the taxpayer
as of the Distribution Date, except that foreign taxes incurred with respect to
transactions undertaken in order to arrange the ownership of foreign companies
or assets to conform with management responsibility for such companies or assets
shall be apportioned equally among the Groups and that foreign taxes with
respect to operations of divisions of or subsidiaries of a foreign company which
are managed by a Group other than the Group having legal ownership shall be
allocated to such other Group. If, as a result of changes in foreign taxes which
are allocated or apportioned to one or more Groups under this paragraph 9(b) or
under paragraph 8(e), another Group realizes a benefit in the Consolidated
Return or any Prior Period Consolidated Return, after considering all other
credits otherwise available to such other Group except credit carrybacks from a
taxable year beginning after the Distribution, or a Net Reversal Benefit, then
such other Group shall pay the amount of such benefit or Net Reversal Benefit to
the Group or Groups to which the foreign taxes were allocated or apportioned.
(c) Consistent with prior practice, the Companies will reimburse each
other for any payment by one of them to a state or local tax authority which is
determined to be for the account of another Company, provided however that such
matter is timely referred to the State Tax Administrator. The rules contained in
paragraph 6(b) will apply to amounts any party must pay.
10. Tax Deficiencies and Claims. (a) The Federal Tax Administrator
shall defend or prosecute proposed or actual income tax deficiencies or refund
claims with respect to the Consolidated Return or any Prior Period Consolidated
Return where that deficiency or claim relates to the businesses of all of the
Groups or with respect to any businesses listed on Schedule 1.01(d) of the
Distribution Agreement. In connection with such defense or prosecution, the
Federal Tax Administrator may retain such accountants and counsel as required
and charge their costs ratably to each Group with the prior approval of each
Group, which approval shall not be unreasonably withheld or delayed. Similarly,
any compromise or settlement of such a claim or
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<PAGE> 10
deficiency may be made by the Federal Tax Administrator only after receipt of
the approval of each Group, which shall not be unreasonably withheld or delayed.
The Federal Tax Administrator will keep all Groups timely advised of all matters
relating to such defense or prosecution.
(b) Any proposed or actual income tax deficiencies or refund claims
with respect to the Consolidated Return or any Prior Period Consolidated Return
which arise from the business activities of only one Group may be defended or
prosecuted by that interested Group at its own cost and expense and with counsel
and accountants of its own selection. Either of the remaining Groups may
participate in any such prosecution or defense at its own cost and expense (in
either event such cost or expense is not to include the amount of any payment of
any tax claim, interest or penalties, or of any compromise settlement or other
disposition thereof). The interested Group may control the proceedings, but it
may not compromise or settle any deficiency of tax or refund claim for the
Consolidated Return year or any Prior Period Consolidated Return year without
the prior written consent of the other Groups, which shall not be unreasonably
withheld. Notwithstanding the foregoing, no Group shall have a right to an
extension of the statute of limitations beyond the time reasonably necessary to
complete review at the Appeals Division of the IRS or to any waiver of any other
procedural safeguard. The limitation expressed in the preceding sentence
applies, but is not limited to, the filing of a petition with the United States
Tax Court. If any Group defends or prosecutes an action, it shall keep each
other Group informed of matters relating to such defense or prosecution.
(c) Where proposed or actual income tax deficiencies or refund claims
of the type described in paragraph 10(b) above arise from the business
activities of two Groups, those Groups may jointly participate in the
prosecution or defense of such claims or deficiencies on the basis of and
subject to the limitations of paragraph 10(b) above.
11. Dispute Resolution. In the event of a disagreement between the
Federal Tax Administrator (or, if with respect to state or local taxes, the
State Tax Administrator) and another party hereto, all computations or
recomputations of Federal or state and local income and franchise tax liability,
and all computations or recomputations of any amount or any payment (including,
but not limited to, computations of the amount of the tax liability, any loss or
credit or deduction, Federal statutory tax rate change for a year, utilization
of carryback items, interest, penalties, and adjustments) and all determinations
of the amount of payments or repayments, or determinations of any other nature
necessary to carry out the terms of this Agreement will be reviewed by Arthur
Andersen LLP or another mutually satisfactory third party, with the costs of
such review to be shared equally by the disputing parties. If any disagreement
remains after any such review, including any disagreement as to the
applicability or the binding nature of this Agreement, that disagreement will be
resolved as provided by Article VI of the Distribution Agreement. In such case,
the arbitrator shall be a retired or former judge of the United States Tax Court
or such other qualified person as the relevant parties may agree to designate,
provided that such individual has had substantial experience with regard to
settling complex tax disputes.
12. Tax Benefit Transfer Leases. (a) In computing any ITT Destinations
and ITT Hartford payment to ITT Industries under this Agreement, ITT
Destinations and ITT Hartford, and their respective subsidiaries and Groups,
will determine their tax liability as if their tax benefit transfer leases were
not in effect.
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(b) ITT Destinations and ITT Hartford will indemnify ITT Industries if
ITT Industries is required to make any termination payments or other payments,
including interest and penalties, resulting from their failure to perform under
a tax benefit transfer lease.
(c) ITT Industries agrees to continue to provide assistance to ITT
Destinations and ITT Hartford in connection with their tax benefit transfer
leases.
13. Survival of Terms. The provisions of this Agreement shall survive
the Distribution and remain in full force until all periods of limitations,
including any extensions or waiver periods, as well as the ten-year statute of
limitations with respect to foreign tax credit redeterminations, for the
Consolidated Return period and Prior Period Consolidated Return periods have
expired and no further carrybacks to such periods are possible. At that time all
remaining payments required under this Agreement shall become immediately due
and payable.
14. Parties to Cooperate. Each of the Companies and their subsidiaries
shall cooperate fully and to the extent reasonably requested by the other party
in connection with the preparation and filing of any return or the conduct of
any audit, dispute, proceeding, suit or action concerning any issues or any
other matter contemplated hereunder. Such cooperation shall include, without
limitation, (i) the retention and provision on demand of books, records,
documentation or other information relating to any tax matter until the later of
(x) the expiration of the applicable statute of limitation (giving effect to any
extension, waiver, or mitigation thereof) and (y) in the event any claim has
been made under this Agreement for which such information is relevant, until a
Final Determination with respect to such claim; (ii) the provision of additional
information with respect to and explanation of tax practices (elections,
accounting methods, conventions and principles of taxation) and material
provided under clause (i) of this paragraph 14; (iii) the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any tax return by any member of one of the Groups, or in connection
with any audit, proceeding, suit or action addressed in the preceding sentence;
and (iv) the use by each of the Companies of its reasonable efforts to obtain
any documentation from a governmental authority or a third party that may be
necessary or helpful in connection with the foregoing. Each of the companies
shall make its employees and facilities available on a mutually convenient basis
to facilitate such cooperation and shall retain as permanent records all
documentation necessary to enable it to determine any obligation under this
Agreement. The records described above will be made available to representatives
of any of the Companies within a reasonable time upon request and may be
photocopied on an as needed basis.
15. Distribution Taxes. (a) If the Distribution is ultimately held to
be a taxable transaction and there has been no material breach of the covenants
contained in Section 2.10 of the Distribution Agreement, then any tax liability
incurred by ITT Industries (as well as any tax liability of the Companies with
respect to the cost of additional taxes paid by its shareholders receiving ITT
Destinations and ITT Hartford stock in the Distribution) shall be divided
equally among the Companies. If any of the Companies (or any subsidiary thereof)
take any action after the Distribution which materially contributes to a Final
Determination that the distribution is a taxable event, then such Company will
indemnify ITT Industries for its tax liability (including interest and
penalties) and any resulting payments (computed after any available tax benefit)
which ITT Industries makes to its shareholders with respect to the cost of
additional taxes, whether or not ITT Industries is legally obligated to make
such payments. No such settlement shall be
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entered into without the agreement of each Group having liability with respect
thereto under the terms of this Agreement.
(b) Taxes which are triggered in the Consolidated Return and which
relate to the intercompany sale or distribution of stock of a subsidiary by one
Group to another Group (but not those which relate to the intercompany sale or
distribution of other assets) shall be shared equally by the three Groups.
16. Gain Recognition Agreements. Adjustments to the tax liability
(including interest and penalties) of ITT Industries which result because of
actions taken by either ITT Destinations or ITT Hartford after the Distribution
Date which trigger any gain recognition agreements entered into in a Prior
Period Consolidated Return year by ITT Industries pursuant to Section 367 of the
Code shall be charged to the ITT Destinations Group or to the ITT Hartford
Group, as the case may be. ITT Industries shall make available to ITT
Destinations and ITT Hartford copies of such gain recognition agreements
immediately after the Distribution.
17. No Self-Approval. Any computation or issue of the ITT Destinations
Group which is to be approved by or cleared with the Federal Tax Administrator
shall also be approved by or cleared with the Director of Taxes of ITT
Industries and any computation or issue of the ITT Industries Group which is to
be approved by or cleared with the State Tax Administrator shall also be
approved by or cleared with the Director of Taxes of ITT Destinations.
18. Notices. Any notices, payments or other communications required by
this Agreement shall be made as provided in the Distribution Agreement with a
copy to the attention of the Director of Taxes of the appropriate Company.
19. Indemnification. ITT Industries shall indemnify ITT Destinations
and ITT Hartford for any Federal or state income or franchise taxes for any
taxable period (or portion of a taxable period) ending before or including the
Distribution Date for which the ITT Destinations Group or the ITT Hartford Group
or any ITT Destinations Subsidiary or ITT Hartford Subsidiary may be liable
solely as a result of the operation of Treasury Regulation Sections 1.1502-6 and
1.1502-77 or any state counterpart statute or regulation.
20. Certain Pending Claims. The tax and interest effects of the tax
refund litigation covering the period 1970 through 1980 (with possible rollover
effects on subsequent years) shall be allocated 50% to ITT Industries and 50% to
ITT Destinations. The tax and interest effects of the tax refund claim with
respect to the 1987 reserve strengthening issue shall be allocated solely to ITT
Hartford.
21. Choice of Law; Successors and Assigns. This Agreement shall be
governed and construed in accordance with the laws of the State of New York
applicable to contracts executed in and to be performed in that state. This
Agreement shall be binding on the successors and assignees of the Companies.
22. Entire Agreement. This Agreement contains the entire agreement
among the Companies with respect to the subject matter hereof and supersedes all
prior written tax sharing or tax allocation agreements, memoranda, negotiations
and oral understandings, if any, and may not be amended, supplemented or
discharged except by performance or by an instrument in
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<PAGE> 13
writing signed by all of the Companies. However, this Agreement does not
supersede the certain Agreement and Plan of Merger identified in the first
footnote on page 3 of Schedule 1.01(c) of the Distribution Agreement, provided,
however, that the liabilities of ITT Corporation with respect to tax matters
under such Agreement and Plan of Merger shall be apportioned as provided in the
Distribution Agreement for liabilities of ITT Financial Corporation and its
subsidiaries.
23. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Companies have duly executed this Agreement as
of the date first above written.
ITT CORPORATION
(Corporate Seal)
ATTEST: By: ____________________________
Name:
Title:
ITT DESTINATIONS, INC.
(Corporate Seal)
ATTEST: By: ____________________________
Name:
Title:
ITT HARTFORD GROUP, INC.
(Corporate Seal)
ATTEST: By: ____________________________
Name:
Title:
13
<PAGE> 1
TRADEMARK ASSIGNMENT AGREEMENT
TRADEMARK ASSIGNMENT AGREEMENT ("Assignment") effective as of November 2,
1995 between ITT CORPORATION, a Delaware corporation ("ITT Corporation") and ITT
DESTINATIONS, INC., a Nevada corporation ("ITT Destinations") (collectively the
"Parties").
RECITALS
WHEREAS, the Board of Directors of ITT Corporation has decided to carry
out the Distribution (as hereinafter defined) whereby the holders of shares of
Common Stock of ITT Corporation will receive all the outstanding shares of
Common Stock of ITT Destinations and all the outstanding shares of Common Stock
of ITT Hartford Group, Inc. (as hereinafter defined);
WHEREAS, the shareholders of ITT Corporation have approved the aforesaid
Distribution and certain other related transactions considered necessary by ITT
Corporation to carry out the Distribution;
WHEREAS, as part of carrying out the Distribution, ITT Corporation has
entered into Trade Name and Trademark License Agreements each effective as of
November 1, 1995 with ITT Manufacturing Enterprises, Inc. ("Enterprises License
Agreement") and with ITT Hartford Group, Inc. ("Hartford License Agreement")
granting them and certain of their Sublicensees the continued right and license
to use the ITT Name and the ITT Marks (each as hereinafter defined);
WHEREAS, ITT Corporation owns and is assigning to ITT Destinations
effective simultaneously with this Assignment, the Enterprises License Agreement
and the Hartford License Agreement; and
WHEREAS, ITT Corporation is the owner of the worldwide right, title and
interest in and to the ITT Name and the ITT Marks and the goodwill associated
therewith.
NOW, THEREFORE, in connection with and to carry out the Distribution and
in consideration of the premises and mutual agreements and covenants herein, the
Parties agree as follows:
1. DEFINITIONS. As used in this Assignment, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
(a) "Distribution" shall mean the distribution on the Distribution
Date to holders of record of shares of ITT Corporation Common Stock as of the
Distribution
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<PAGE> 2
(4)
Record Date of (i) the ITT Destinations Common Shares owned by ITT Corporation
on the basis of one ITT Destinations Common Share for each outstanding share of
ITT Corporation Common Stock and (ii) the ITT Hartford Group, Inc. Common Shares
owned by ITT Corporation on the basis of one ITT Hartford Group, Inc. Common
Share for each outstanding share of ITT Corporation Common Stock.
(b) "Distribution Agreement" shall mean the Distribution Agreement
entered into by ITT Corporation, ITT Destinations, and ITT Hartford Group, Inc.
relating to the distribution of the shares of ITT Destinations and ITT Hartford
Group, Inc. to the holders of ITT Corporation Common Stock.
(c) "Distribution Date" shall mean such date as may hereafter be
determined by ITT Corporation's Board of Directors as the date on which the
Distribution shall be effected.
(d) "Effective Time" shall mean 11:59 p.m., New York time, on the
Distribution Date.
(e) "ITT Corporation" shall mean (i) ITT Corporation, a Delaware
corporation and its predecessor Maryland corporation up to the Effective Time to
be merged thereafter into ITT Indiana, Inc., an Indiana corporation, and renamed
"ITT Industries, Inc." in connection with the Distribution.
(f) "ITT Destinations" shall mean ITT Destinations, Inc., a Nevada
corporation, to be renamed "ITT Corporation" immediately prior to the Effective
Time.
(g) "ITT Industries" shall mean ITT Industries, Inc., an Indiana
corporation and the legal successor after the Distribution to ITT Corporation.
(h) "ITT Hartford Group, Inc." shall mean ITT Hartford Group,
Inc., a Delaware corporation.
(i) "ITT Manufacturing Enterprises, Inc." shall mean ITT
Manufacturing Enterprises, Inc., a Delaware corporation.
(j) "ITT Logo" shall mean the worldwide rights including License
Rights in and to the stylized trademark and service mark shown in Exhibit A
annexed hereto together with all registrations thereof and all applications
therefor, now or hereinafter obtained or filed, including those registrations
and applications set forth in Exhibit A, and the goodwill associated therewith.
(k) "ITT Marks" shall mean the worldwide rights including License
Rights in and to (i) the ITT Logo, and (ii) all other trademarks and service
marks consisting of the letters "ITT", together with all registrations thereof
and all applications therefor now or
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<PAGE> 3
(4)
hereinafter filed or obtained, and the goodwill associated therewith, including
those registrations and applications set forth in Exhibit A hereto.
(l) "ITT Name" shall mean the worldwide rights including License
Rights in and to that portion of any company or trade name consisting of the
letters "ITT", and the goodwill associated therewith.
(m) "License Rights" shall mean any and all rights in and to
licenses and other grants received from or licensed to third parties under any
contracts, memoranda or other understandings relating to the ITT Logo, the ITT
Marks and/or the ITT Name.
2. REPRESENTATIONS. ITT Corporation represents and warrants that it
is the owner of the ITT Name and the ITT Marks.
3. ASSIGNMENT. ITT Corporation hereby transfers and assigns to ITT
Destinations, without charge to ITT Destinations, effective as of November 2,
1995, all of its worldwide right, title and interest in and to the ITT Name and
the ITT Marks, including the right to sue and recover for past infringements
thereof.
4. ACCEPTANCE. ITT Destinations hereby accepts the aforesaid transfer and
assignment of the ITT Name and the ITT Marks, including the right to sue and
recover for past infringements thereof.
5. DOCUMENTS. To the extent the assignments pursuant to paragraph 3
herein may be incomplete or ineffective for any reason including errors or
omissions in Exhibits A hereto, then ITT Corporation or, after the Distribution
Date its successor ITT Industries, shall execute and deliver to ITT
Destinations, upon ITT Destinations' request, any and all documents and take
other reasonable actions which may be necessary to make such assignment complete
and effective.
IN WITNESS WHEREOF, the Parties have caused this Assignment to be duly
executed by their respective authorized officers as of the day and year first
written above.
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<PAGE> 4
(4)
ITT CORPORATION
By: ________________________
Name: ________________________
Title: ________________________
ITT DESTINATIONS, INC.
By: ________________________
Name: ________________________
Title: ________________________
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<PAGE> 5
(4)
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this ___ day of ____________, 1995, before me appeared
___________________________, to me personally known and known to me the person
who executed the foregoing Assignment; and who being by me duly sworn, did
depose and say that he is ______________________ of ITT CORPORATION, that he is
authorized to sign this Assignment on behalf of said corporation, and that said
assignment was signed on behalf of the corporation by authority of its Board of
Directors, and unto me acknowledged said Assignment to be the free act and deed
of said corporation.
--------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this ___ day of ____________, 1995, before me appeared
___________________________, to me personally known and known to me the person
who executed the foregoing Assignment; and who being by me duly sworn, did
depose and say that he is ______________________ of ITT DESTINATIONS, INC., that
he is authorized to sign this Assignment on behalf of said corporation, and that
said Assignment was signed on behalf of the corporation by authority of its
Board of Directors, and unto me acknowledged said Assignment to be the free act
and deed of said corporation.
--------------------------
Notary Public
5
<PAGE> 6
(4)
EXHIBIT A
ITT LOGO REGISTRATIONS AND REGISTRATION APPLICATIONS
[The graphic image of the "ITT" logo and a
detailed listing of the active registrations and
registration applications throughout the world
which relate to the ITT name, mark and logo
will be included in this Exhibit A.]
6
<PAGE> 1
(5)
LICENSE ASSIGNMENT AGREEMENT
LICENSE ASSIGNMENT AGREEMENT ("License Assignment") effective as of
November 2, 1995 between ITT CORPORATION, a Delaware corporation ("ITT
Corporation") and ITT DESTINATIONS, INC., a Nevada corporation ("ITT
Destinations") (the "Parties").
RECITALS
WHEREAS, the Board of Directors of ITT Corporation (as hereinafter
defined) has decided to carry out the Distribution (as hereinafter defined)
whereby the holders of shares of Common Stock of ITT Corporation will receive
all the outstanding shares of Common Stock of ITT Destinations and all the
outstanding shares of Common Stock of ITT Hartford Group, Inc. (as hereinafter
defined);
WHEREAS, the shareholders of ITT Corporation have approved the
aforesaid Distribution and certain other related transactions considered
necessary by ITT Corporation to carry out the Distribution;
WHEREAS, as part of carrying out the Distribution, ITT Corporation has
entered into Trade Name and Trademark License Agreements each effective November
1, 1995 with ITT Manufacturing Enterprises, Inc. ("Enterprises License
Agreement") and with ITT Hartford Group, Inc. ("Hartford License Agreement")
granting them and certain of their Sublicensees the continued right and license
to use the ITT Name and the ITT Marks (each as hereinafter defined); and
WHEREAS, ITT Corporation owns and is assigning to ITT Destinations
effective simultaneous with this License Assignment, all worldwide right, title,
and interest in and to the ITT Name and the ITT Marks.
NOW, THEREFORE, in connection with and to carry out the Distribution
and in consideration of the premises and mutual agreements and covenants herein,
the Parties hereby agree as follows:
1. DEFINITIONS. As used in this License Assignment, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
(a) "Distribution" shall mean the distribution on the
Distribution Date to holders of record of shares of ITT Corporation Common Stock
as of the Distribution Record Date of (i) the ITT Destinations Common Shares
owned by ITT Corporation on the basis of one ITT Destinations Common Share for
each outstanding share of ITT
1
<PAGE> 2
(5)
Corporation Common Stock and (ii) the ITT Hartford Common Shares owned by ITT
Corporation on the basis of one ITT Hartford Common Share for each outstanding
share of ITT Corporation Common Stock.
(b) "Distribution Agreement" shall mean the Distribution
Agreement entered into by ITT Corporation, ITT Destinations, and ITT Hartford
relating to the distribution of the shares of ITT Destinations and ITT Hartford
to the holders of ITT Corporation Common Stock.
(c) "Distribution Date" shall mean such date as may hereafter
be determined by ITT Corporation's Board of Directors as the date on which the
Distribution shall be effected.
(d) "Effective Time" shall mean 11:59 p.m., New York time, on
the Distribution Date.
(e) "ITT Corporation" shall mean ITT Corporation, a Delaware
corporation and its predecessor Maryland corporation, up to the Effective Time
to be merged thereafter into ITT Indiana, Inc., an Indiana corporation, which
will be renamed "ITT Industries, Inc." in connection with the Distribution.
(f) "ITT Destinations" shall mean ITT Destinations, Inc., a
Nevada corporation, to be renamed "ITT Corporation" immediately prior to the
Effective Time.
(g) "ITT Hartford" or "ITT Hartford Group, Inc." shall mean
ITT Hartford Group, Inc., a Delaware corporation.
(h) "ITT Manufacturing Enterprises, Inc." or "ITT Enterprises"
shall mean ITT Manufacturing Enterprises, Inc., a Delaware corporation and a
wholly owned subsidiary of ITT Corporation.
(i) "ITT Logo" shall mean the worldwide rights to the stylized
trademark and service mark shown in Exhibit B annexed to the Enterprises License
Agreement and the Hartford License Agreement together with all registrations
thereof and all applications thereof now or hereinafter obtained or filed, and
the goodwill associated therewith.
(j) "ITT Marks" shall mean the worldwide rights to (i) the ITT
Logo, and (ii) all other trademarks and service marks consisting of the letters
"ITT", together with all registrations thereof and all applications therefor now
or hereinafter filed or obtained, and the goodwill associated therewith.
2
<PAGE> 3
(5)
(k) "ITT Name" shall mean the worldwide rights to that portion
of any company or trade name consisting of the letters "ITT", and the goodwill
associated therewith.
2. ASSIGNMENT. ITT Corporation hereby transfers and assigns to ITT
Destinations, without charge to ITT Destinations, effective as of November 2,
1995, the Enterprises License Agreement and the Hartford License Agreement and
all rights and obligations thereunder.
3. ACCEPTANCE. ITT Destinations hereby accepts the transfer and
assignment of the Enterprises License Agreement and the Hartford License
Agreement and all rights and obligations thereunder.
4. GUARANTEE. ITT Corporation acknowledges the obligations imposed upon
its subsidiary ITT Manufacturing Enterprises, Inc. and upon any ITT Enterprises
Sublicensees (as the term is defined in the Enterprises License Agreement) to
comply with the terms and conditions of the Enterprises License Agreement and
hereby guarantees to ITT Destinations the performance of ITT Enterprises and the
ITT Enterprises Licensees of those terms and conditions.
IN WITNESS WHEREOF, the Parties have caused this License Assignment to
be duly executed by their respective authorized officers as of the day and year
first written above.
ITT CORPORATION
By: ____________________
Name: ____________________
Title:____________________
ITT DESTINATIONS, INC.
By: ____________________
Name: ____________________
Title:____________________
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<PAGE> 1
EXHIBIT 10.6
TRADE NAME AND SERVICE MARK LICENSE AGREEMENT
TRADE NAME AND SERVICE MARK LICENSE AGREEMENT ("License Agreement")
effective as of November 1, 1995 between ITT CORPORATION, a Delaware
corporation, ("ITT Corporation"), and ITT HARTFORD GROUP, INC., a Delaware
corporation ("ITT Hartford"), (collectively the "Parties").
RECITALS
WHEREAS, in order to carry out the Distribution (as hereinafter
defined) approved by the Board of Directors and by the shareholders of ITT
Corporation whereby the holders of the shares of common stock of ITT Corporation
will receive all of the outstanding shares of common stock of ITT Destinations
(as hereinafter defined) and all the outstanding shares of common stock of ITT
Hartford (as hereinafter defined), it is necessary for these companies to enter
into agreements for the continued right and license to use the "ITT" company
name, trade name, trademark and service mark;
WHEREAS, ITT Corporation is the owner of the company and trade name
"ITT" and of the trademark and the service mark "ITT", and of all rights
worldwide in such name and marks and the goodwill associated therewith;
WHEREAS, ITT Corporation will assign effective November 2, 1995 this
License Agreement to ITT Destinations along with the right, title, and interest
in the "ITT" name and marks, and the registrations, registration applications
and goodwill associated therewith;
WHEREAS, ITT Destinations will assign effective immediately prior to
the Effective Time (as hereinafter defined) this License Agreement to ITT
Sheraton (as hereinafter defined) along with all right, title and interest in
the "ITT" name and marks, and the registrations, registration applications and
goodwill associated therewith;
WHEREAS, ITT Hartford and its Subsidiaries (each as hereinafter
defined) have expended and will in the future expend time and money in
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<PAGE> 2
advertising and promoting the ITT name and marks in connection with conducting
the ITT Hartford Business (as hereinafter defined) for the mutual benefit of the
parties hereto;
WHEREAS, ITT Hartford and its Subsidiaries currently have the right to
use and desire to continue to have the right to use after the Distribution Date
"ITT" as part of their company names and trade names and as a trademark and
service mark in connection with conducting the ITT Hartford Business; and
WHEREAS, ITT Corporation is willing to formally grant a license to ITT
Hartford, with the right to grant certain sublicenses to ITT Hartford
Subsidiaries, to continue to use the ITT name and marks in connection with
conducting the ITT Hartford Business and otherwise as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements, undertakings
and covenants herein, the Parties hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01 General. As used in this License Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
(a) "Distribution Agreement" shall mean the Distribution Agreement to
be entered into by ITT Corporation, ITT Destinations, and ITT Hartford relating
to the distribution of the shares of ITT Destinations and ITT Hartford to the
holders of ITT Corporation Common Stock.
(b) "Distribution" shall mean the distribution on the Distribution Date
to holders of record of shares of ITT Corporation Common Stock as of the
Distribution Record Date of (i) the ITT Destinations Common Shares owned by ITT
Corporation on the basis of one ITT Destinations Common Share for each
outstanding share of ITT Corporation Common Stock and (ii) the ITT Hartford
Common Shares owned by ITT Corporation on the basis of one ITT Hartford Common
Share for each outstanding share of ITT Corporation Common Stock.
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<PAGE> 3
(c) "Distribution Date" shall mean such date as may hereafter be
determined by ITT Corporation's Board of Directors as the date on which the
Distribution shall be effected.
(d) "Distribution Record Date" shall mean such date as may hereafter be
determined by ITT Corporation's Board of Directors as the record date for the
Distribution.
(e) "Effective Time" shall mean 11:59 p.m., New York time, on the
Distribution Date.
(f) "ITT Corporation" shall mean ITT Corporation, a Delaware
corporation and its predecessor Maryland corporation up to the Effective Time
(to be merged thereafter into ITT Indiana, Inc., an Indiana corporation which
will be renamed "ITT Industries, Inc.").
(g) "ITT Destinations" shall mean ITT Destinations, Inc., a Nevada
Corporation, to be renamed "ITT Corporation" immediately prior to the Effective
Time.
(h) "ITT Destinations Business" shall mean the principal businesses and
operations conducted by ITT Destinations and its Subsidiaries on the
Distribution Date, such businesses being the hospitality, entertainment,
information and educational services as specifically described in Exhibit A1
annexed hereto and, in addition, shall also mean the Closely Related Businesses
described in Exhibit A1, provided that ITT Destinations Business does not
include the ITT Industries Business or the ITT Hartford Business.
(i) "ITT Hartford" shall mean ITT Hartford Group, Inc., a Delaware
corporation.
(j) "ITT Hartford Business" shall mean the principal businesses and
operations conducted by ITT Hartford and its Subsidiaries on the Distribution
Date, such businesses being the insurance services in the fields of property,
casualty, life and reinsurance as specifically described in Exhibit A2 annexed
hereto and, in addition, shall also mean the Closely Related Businesses
described in Exhibit A2, provided that ITT Hartford Business does not include
the ITT Industries Business or the ITT Destinations Business.
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<PAGE> 4
(k) "ITT Hartford Expanded Business" shall mean any businesses not
included in the ITT Hartford Business, the ITT Industries Business, or the ITT
Destinations Business except as specifically precluded by Sections 2.10 and
2.11.
(l) "ITT Industries" shall mean ITT Industries, Inc., an Indiana
corporation and the legal successor after the Distribution to ITT Corporation as
defined in Section 1.01(f).
(m) "ITT Industries Business" shall mean the principal businesses and
operations conducted by ITT Industries and its Subsidiaries on the Distribution
Date, such businesses being the design, manufacture, sale, and servicing of the
automotive products, defense products, electronic component products, fluid
handling products and management services for military and space satellite
launch facilities as specifically described in Exhibit A3 annexed hereto and, in
addition, shall also mean the Closely Related Businesses described in Exhibit
A3, provided that ITT Industries Business does not include the ITT Destinations
Business or the ITT Hartford Business.
(n) "ITT Logo" shall mean the worldwide rights to the stylized
trademark and service mark shown in Exhibit B annexed hereto together with all
registrations thereof and all applications thereof now or hereafter filed or
obtained, and the goodwill associated therewith.
(o) "ITT Marks" shall mean the worldwide rights to (i) the ITT Logo;
and (ii) all other trademarks and service marks consisting of the letters "ITT",
together with all registrations thereof and all applications thereof now or
hereafter filed or obtained, and the goodwill associated therewith.
(p) "ITT Name" shall mean the worldwide rights to that portion of any
company and trade name consisting of the letters "ITT" and the goodwill
associated therewith.
(q) "ITT Sheraton" shall mean ITT Sheraton Corporation, a Delaware
corporation.
(r) "Licensor" shall mean (i) effective as of November 1, 1995, ITT
Corporation, (ii) effective as of November 2, 1995, ITT Destinations, and (iii)
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<PAGE> 5
effective as of immediately prior to the Effective Time and thereafter, ITT
Sheraton.
(s) "Permitted Manner of Use" shall mean use of the ITT Name and ITT
Marks in accordance with all legal requirements and also with Licensor's policy
and style standards as currently existing and as may be reasonably amended from
time to time by Licensor.
(t) "Phaseout Period" shall be a period of one and one-half (1 1/2)
years from the termination of this License Agreement during which period all use
of the ITT Name and ITT Marks by ITT Hartford and/or the ITT Hartford
Sublicensees (as hereinafter defined), as the case may be, shall be phased out
in accordance with the provisions of this License Agreement.
(u) "Proxy Statement" shall mean the Proxy Statement sent to the
holders of shares of ITT Common Stock in connection with the Distribution,
including any amendment or supplement thereto.
(v) "Subsidiary", with respect to any Party, shall mean any
corporation, partnership, joint venture or other entity of which a Party or
Licensor, directly or indirectly owns an interest sufficient to elect a majority
of the Board of Directors (or persons performing similar functions)
(irrespective of whether at the time any other class or classes of ownership
interests of such corporation, partnership or other entity shall or might have
such voting power upon the occurrence of any contingency). Irrespective of this
definition and for purposes of this License Agreement, Madison Square Garden,
L.P. and ITT-Dow Jones Television, and their respective Subsidiaries will be
deemed Subsidiaries of ITT Destinations, and immediately prior to the Effective
Time and thereafter, ITT Destinations and its Subsidiaries will be deemed
Subsidiaries of ITT Sheraton.
(w) "ITT Hartford Sublicensee" shall mean:
(i) ITT Hartford and any Subsidiary of ITT Hartford in
existence as of, or acquired or formed after, the Distribution Date; or
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<PAGE> 6
(ii) any direct or indirect affiliate of ITT Hartford in which
ITT Hartford owns at least 40% of such affiliate if the remaining ownership is
held by a single third party or at least 25% of such affiliate if the remaining
ownership is held by more than one third party and in which ITT Hartford,
through its control, can exercise a veto over major decisions of such affiliate;
provided that the business of any such Subsidiary or affiliate is solely within
the field of the ITT Hartford Business and/or the ITT Hartford Expanded Business
and that ITT Hartford (or by ITT Hartford Life International, Ltd. or ITT
Hartford International, Inc. as provided in Sections 2.01 and 2.02) grants a
formal sublicense to such Subsidiary or affiliate pursuant to Section 2.03
hereof.
(x) "Major Subsidiaries" shall mean the subsidiaries of ITT
Hartford set forth in Exhibit D annexed hereto.
(y) "Change in Control" shall mean any one of the following
events:
(i) a report on Schedule 13D shall be filed with the Securities
and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act
of 1934 (the "Act") disclosing that any person (within the meaning of Section
13(d) of the Act) other than ITT Hartford or an ITT Hartford Subsidiary or any
employee benefit plan sponsored by ITT Hartford or an ITT Hartford Subsidiary is
the beneficial owner directly or indirectly of twenty percent (20%) or more of
the outstanding Common Stock of ITT Hartford;
(ii) any person (within the meaning of Section 13(d) of the Act)
other than ITT Hartford or an ITT Hartford Subsidiary or any employee benefit
plan sponsored by ITT Hartford or an ITT Hartford Subsidiary shall purchase
shares pursuant to a tender offer or exchange offer to acquire any Common Stock
of ITT Hartford (or securities convertible into such Common Stock), for cash,
securities or any other consideration, provided that after consummation of the
offer, the person in question is the beneficial owner (as such term is defined
in Rule 13d-3 under the Act) directly or indirectly of fifteen percent (15%) or
more of the outstanding Stock of ITT Hartford (calculated as provided in
paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire
Common Stock);
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(iii) the stockholders of ITT Hartford shall approve (a) any
consolidation or merger of ITT Hartford in which ITT Hartford is not the
continuing or surviving corporation or pursuant to which shares of Common Stock
of ITT Hartford would be converted into cash, securities or other property,
other than a merger of ITT Hartford in which holders of Common Stock of ITT
Hartford immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger as
immediately before, or (b) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all the
assets of ITT Hartford; or
(iv) there shall have been a change in a majority of the members
of the Board of Directors of ITT Hartford within a 12-month period unless the
election or nomination for election by ITT Hartford stockholders of each new
director during such 12-month period was approved by the vote of two-thirds of
the directors then still in office who were directors at the beginning of such
12-month period.
ARTICLE II. LICENSES
Section 2.01 GRANT OF LICENSES TO USE THE ITT MARKS. Licensor
hereby grants to ITT Hartford, during the term of this License Agreement, a
personal, non-assignable (except as otherwise provided in this License
Agreement), non-transferable worldwide license to use, with the right to grant
sublicenses solely to ITT Hartford Sublicensees as provided for in Section 2.03
hereof to use, the ITT Marks in accordance with the applicable Permitted Manner
of Use (i) on an exclusive basis for the ITT Hartford Business and (ii) on a
non-exclusive basis for the ITT Hartford Expanded Business. ITT Hartford shall
have the right to grant to ITT Hartford International, Inc. and ITT Hartford
Life International Ltd. the right to sublicense the ITT Marks, in accordance
with the terms and conditions of this Agreement, to non-U.S. Subsidiaries of
ITT Hartford. ITT Hartford agrees that it shall assume full responsibility, in
accordance with the terms and conditions of this Agreement, with respect to any
such sublicenses granted by ITT Hartford International, Inc. and ITT Hartford
Life International Ltd. in the event that ITT Hartford International, Inc.
and/or ITT Hartford Life International Ltd. as sublicensors or any of their
Sublicensees fail to comply with any obligations or responsibilities pursuant
to this Agreement. ITT
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Hartford and its Subsidiaries shall not have the right to use "ITT Corporation"
or any company name substantially identical thereto.
Section 2.02 GRANT OF LICENSES TO USE THE ITT NAME. Licensor hereby
grants to ITT Hartford, during the term of this License Agreement, a personal,
non-assignable (except as otherwise provided in this Agreement),
non-transferrable worldwide license to use, with the right to grant sublicenses
solely to ITT Hartford Sublicensees as provided for in Section 2.03 hereof to
use, the ITT Name in their company names and in their trade or popular names in
accordance with the Permitted Manner of Use. ITT Hartford shall have the right
to grant to ITT Hartford International, Inc. and ITT Hartford Life International
Ltd. the right to sublicense the ITT Name, in accordance with the terms and
conditions of this Agreement, to non-U.S. Subsidiaries of ITT Hartford. ITT
Hartford agrees that it shall assume full responsibility, in accordance with the
terms and conditions of this Agreement, with respect to any such sublicenses
granted by ITT Hartford International, Inc. and ITT Hartford Life International
Ltd. in the event that ITT Hartford International, Inc. and/or ITT Hartford Life
International Ltd. as sublicensors or any of their Sublicensees fail to comply
with any obligations or responsibilities pursuant to this Agreement. The
aforementioned license with respect to the ITT Name shall be exclusive for those
company names in the exact form listed in Exhibit C annexed hereto, subject to
all other provisions of this License Agreement. The form of using the ITT Name
in the company and trade names as set forth in Exhibit C annexed hereto is
hereby approved for purposes of granting the aforementioned sublicenses. The
form of using the ITT Name in the company and trade names of an ITT Hartford
Sublicensee which is acquired or formed after the Distribution Date shall be
subject to ITT Corporation's approval, which approval shall not be unreasonably
withheld. The principal basis for withholding such approval would be if the
proposed company and/or trade name used in conjunction with the ITT Name would
(i) be objectionable from a legal standpoint, or (ii) likely to create
confusion, for example, if the proposed name is descriptive of a field of
business of the ITT Destinations Business or the ITT Industries Business or too
close to a name used by a business of ITT Industries or ITT Destinations. Any
such approved name shall thereafter be deemed to be included in Exhibit C
annexed hereto.
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Section 2.03 SUBLICENSES. Each sublicense granted by ITT Hartford to
an ITT Hartford Sublicensee shall: (i) be in writing; (ii) specifically require
the ITT Hartford Sublicensee to agree to comply with and observe the terms and
conditions of this License Agreement; and (iii) require the Sublicensee to
acknowledge its obligations to Licensor by executing an agreement in the form
annexed hereto as Exhibit E, which shall then be forwarded to Licensor by ITT
Hartford.
Section 2.04 PROHIBITED USES OF ITT NAME AND ITT MARKS. Neither ITT
Hartford, nor any of the ITT Hartford Sublicensees shall use the ITT Name or ITT
Marks for any product or service, or with or for any entity, in the ITT
Destinations Business or the ITT Industries Business.
Section 2.05 EXPANSION OF LICENSES. All requests for an expansion of
license rights granted under Sections 2.01, 2.02 and 2.05 shall be made by ITT
Hartford in writing to Licensor. Licensor may grant or deny such requests in its
sole discretion. For purposes of this Section 2.05, expansion of license rights
shall mean a right to use the ITT Name and/or the ITT Marks: (i) within the
scope of the ITT Hartford Business and/or ITT Hartford Expanded Business by an
ITT Hartford Sublicensee after it ceases to be a Subsidiary of ITT Hartford; or
(ii) outside or within the scope of the ITT Hartford Business or ITT Hartford
Expanded Business by ITT Hartford or the ITT Hartford Sublicensees if a Change
of Control of ITT Hartford occurs. For the purpose of this License Agreement,
any expansion of rights granted pursuant to this Section 2.05 shall thereafter
be deemed to be within the ITT Hartford Expanded Business and subject to any
reasonable limitations imposed by Licensor. Notwithstanding Section 2.05(i), ITT
Hartford may extend the rights previously granted to an ITT Hartford Sublicensee
under Sections 2.01 or 2.02 for a period of at least one and one-half (1 1/2)
years ("Extension Period") after such ITT Hartford Sublicensee ceases to be a
Subsidiary of ITT Hartford, provided that such former ITT Hartford Subsidiary
will not be an ITT Hartford Sublicensee for purposes of Article VIII of this
License Agreement, but shall agree to remain an ITT Hartford Sublicensee
pursuant to Section 2.03 hereof for all other purposes, including Section 3.01
hereof, and further provided that any Agreement Disputes (as defined in Section
8.01(a) hereof) may be resolved in any manner deemed appropriate in the sole
discretion of Licensor.
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Section 2.06 REDUCTION OF LICENSES. In the event ITT Hartford and/or
ITT Hartford Sublicensees shall abandon their use of the ITT Name or one or more
of the ITT Marks for all or a portion of the ITT Hartford Business, then the
scope of the exclusive rights granted in Sections 2.01, 2.02 and 2.05 with
respect to such abandoned ITT Name or ITT Marks shall be reduced by an amount
equal to the scope of the ITT Hartford Business so abandoned. For purpose of
this Section 2.06, abandonment shall mean the failure of ITT Hartford and its
sublicensed Major Subsidiaries to use the ITT Name or one or more of the ITT
Marks for a period of two (2) years, any such period to commence only after the
Distribution Date, except that should ITT Hartford or a new ITT Hartford
Sublicensee revive use in the activity previously abandoned, then the reduced
exclusive rights shall be expanded commensurate with the scope of the revived
use, subject to any intervening licenses or rights granted by or entered into or
then being negotiated by Licensor.
Section 2.07 QUALITY STANDARDS. In view of the status of the Parties
immediately prior to the Distribution Date as one company, each Party's intimate
knowledge with standards and procedures for assuring consistent quality,
Licensor's knowledge of the standards and procedures used in the ITT Hartford
Business, the integrity of ITT Hartford Business and its history of trouble-free
goods and services, Licensor adopts ITT Hartford Business quality standards and
ITT Hartford and the ITT Hartford Sublicensees agree to maintain such standards
and procedures to assure the consistent quality of its goods and services. ITT
Hartford and the ITT Hartford Sublicensees shall not materially lower such
quality standards without the prior written approval of Licensor.
Section 2.08 INSPECTIONS AND SAMPLES. Should Licensor have reason to
believe based on information available to it that the quality standards referred
to in Section 2.07 have not been maintained then, at the request of Licensor,
ITT Hartford and the ITT Hartford Sublicensees shall permit a knowledgeable
independent expert or consultant specifically retained by Licensor to have
reasonable access to their premises and personnel during normal working hours
and shall furnish or permit inspection of, at Licensor's request and without
charge to Licensor or to such expert or consultant, product samples, cartons,
containers, packaging, wrapping and service materials bearing or used in
connection with the ITT Name and/or the
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ITT Marks for the purpose of ensuring that ITT Hartford and the ITT Hartford
Sublicensees are complying with such quality standards. Any information obtained
during such inspection and provided to Licensor shall be limited to that which
is necessary to ensure compliance with such quality standards.
Section 2.09 ADVERTISING, PACKAGING AND LABELS. ITT Hartford and the
ITT Hartford Sublicensees shall furnish, at Licensor's request and without
charge, to Licensor or to its authorized designee(s) samples of promotional and
advertising material or the like to be used in connection with any products or
services offered by ITT Hartford and the ITT Hartford Sublicensees and bearing
or used in connection with the ITT Marks.
Section 2.10 THIRD PARTY RIGHTS. ITT Hartford and the ITT Hartford
Sublicensees acknowledge that the rights granted by Licensor under Sections
2.01, 2.02, and 2.05 are subject to all pre-existing third party rights,
obligations and restrictions as of the Distribution Date.
Section 2.11 INTERVENING THIRD PARTY RIGHTS. Notwithstanding Section
2.01(ii), Licensor shall be free to grant exclusive rights hereafter to a third
party to use the ITT Name and ITT Marks for use with a business within the ITT
Hartford Expanded Business, provided that ITT Hartford has not given notice to
Licensor prior thereto that it has commenced operations in the identical
business. In the event that ITT Hartford gives notice to Licensor that it or an
ITT Hartford Sublicensee is operating in a specific business within the ITT
Hartford Expanded Business, Licensor shall not thereafter grant any rights to a
third party to use the ITT Name or ITT Marks in the identical specific business.
Section 2.12 RIGHTS TO ENTER BUSINESSES. Nothing in this License
Agreement shall preclude ITT Industries, ITT Destinations, ITT Hartford nor any
of their respective subsidiaries or affiliates from operating any business
provided neither the ITT Name nor the ITT Marks are used in such business.
ARTICLE III. UNDERTAKINGS
Section 3.01 INDEMNIFICATION BY ITT HARTFORD. ITT Hartford and the
ITT Hartford Sublicensees hereby agree to indemnify and defend Licensor and its
Subsidiaries and their
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respective employees, officers, directors, and agents and shall hold each of
them harmless from any and all claims, demands, suits, actions, damages, and
judgments brought or obtained by a third party ("Claims"), of whatever type or
kind (excluding only such claims or legal action as may arise under Sections
3.02 and 4.02 respectively) arising out of:
(a) any use of the ITT Name or the ITT Marks by ITT Hartford or the
ITT Hartford Sublicensees, including, without limitation, product liability or
personal injury Claims; or
(b) any breach by ITT Hartford or the ITT Hartford Sublicensees
of any of the terms and conditions of this License Agreement;
provided Licensor shall cooperate with, and assist, ITT Hartford with respect to
any such Claim by (i) promptly notifying ITT Hartford of any such Claim, (ii)
agreeing to be defended by counsel of ITT Hartford's choice and to any
reasonable settlement proposed by ITT Hartford, (iii) promptly providing to ITT
Hartford any reasonably requested documents in its possession, custody, or
control, and (iv) making its personnel familiar with the facts available to ITT
Hartford, except that ITT Hartford shall reimburse Licensor for any
out-of-pocket travel, lodging, and subsistence expenses necessarily and
reasonably incurred by Licensor in effecting such cooperation.
Section 3.02 INDEMNIFICATION BY LICENSOR. Licensor and its
Subsidiaries hereby agree to indemnify and defend ITT Hartford and the ITT
Hartford Sublicensees and their respective employees, officers, directors, and
agents and shall hold each of them harmless from any and all claims, demands,
suits, actions, damages, and judgments brought or obtained by a third party
("Claims"), of whatever type or kind (excluding only such claims or legal action
as may arise under Section 3.01) arising out of:
(a) any use of the ITT Name or the ITT Marks by Licensor or its
Subsidiaries (excluding ITT Hartford, ITT Industries and their Subsidiaries)
including, without limitation, product liability or personal injury Claims; or
(b) any breach by Licensor or its Subsidiaries of any of the
terms and conditions of this License Agreement;
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provided ITT Hartford shall cooperate with, and assist, Licensor with respect to
any such Claim by (i) promptly notifying Licensor of any such Claim, (ii)
agreeing to be defended by counsel of Licensor's choice and to any reasonable
settlement proposed by Licensor, (iii) promptly providing to Licensor any
reasonably requested documents in its possession, custody, or control, and (iv)
making its personnel familiar with the facts available to Licensor, except that
Licensor shall reimburse ITT Hartford for any out-of-pocket travel, lodging,
and subsistence expenses necessarily and reasonably incurred by ITT Hartford in
effecting such cooperation and assistance.
Section 3.03 DEFENSE OF INFRINGEMENT CLAIMS. Licensor further agrees
to defend ITT Hartford and/or any ITT Hartford Sublicensee to the extent that
any and all demands, suits, or actions ("Claims") solely arise out of an
assertion or claim that the use of the ITT Name or ITT Marks by ITT Hartford or
the ITT Hartford Sublicensees pursuant to the terms of this License Agreement
infringes the trade names or trademarks of a third party, provided, ITT Hartford
shall cooperate with, and assist, Licensor with respect to any such Claim by (i)
promptly notifying Licensor of any such Claim, (ii) agreeing to be defended by
counsel of Licensor's choice and to any reasonable settlement proposed by
Licensor, except that if a third party should institute a legal action against
ITT Hartford and/or an ITT Hartford Sublicensee involving their alleged
infringement of a third party mark based on their use of an ITT Mark in the ITT
Hartford Business then choice of counsel and the control of the legal action
shall be mutual between ITT Hartford and Licensor, (iii) promptly providing to
Licensor any reasonably requested documents in its possession, custody, or
control, and (iv) making its personnel familiar with the facts available to
Licensor. The costs associated with any such defense shall be borne equally by
Licensor and ITT Hartford.
Section 3.04 PHASE-OUT. Licensor agrees not to grant a license during
the Phaseout Period to any third party after any termination of this License
Agreement to use the ITT Name or the ITT Marks in the field of activity of the
ITT Hartford Business, except in the case of an abandonment as specified in the
last sentence of Section 2.06 herein.
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Section 3.05 ABSENCE OF ITT HARTFORD INTEREST IN ITT MARKS. ITT
Hartford and the ITT Hartford Sublicensees agree that nothing herein shall give
ITT Hartford or the ITT Hartford Sublicensees any right, title or interest in
the ITT Name or the ITT Marks apart from the rights to use, and to sublicense
the use, granted or to be granted hereunder, and to retain any remuneration
resulting therefrom, all such right, title and interest, including but not
limited to rights of registration, maintenance and enforcement, being solely
with Licensor. The ITT Name and the ITT Marks are the sole property of Licensor,
and any and all uses by ITT Hartford of the ITT Name or of the ITT Marks shall
inure to the benefit of Licensor. In no event shall such use be deemed or
construed to have created or vested any right, title or interest whatever in and
to ITT Hartford. To the extent that any jurisdiction shall find for any reason
as a matter of law or otherwise that such use has vested in ITT Hartford or its
Subsidiaries any right, title or interest in or to the ITT Name or the ITT
Marks, ITT Hartford and its Subsidiaries, upon the request of Licensor, shall
execute and deliver to Licensor, without charge, appropriate assignments to vest
such rights, title and interest in Licensor.
Section 3.06 ITT NAME AND ITT MARKS NOT CONTESTED. ITT Hartford and
its Subsidiaries agree not to raise or cause to be raised any questions
concerning or objections to the validity of the ITT Name or the ITT Marks in any
jurisdiction, or to any registrations thereof or applications therefor, or to
the sole proprietary rights of Licensor thereto, on any grounds whatsoever.
Section 3.07 FILING, REGISTRATION OR USE OF NAMES, TRADEMARKS AND
SERVICE MARKS. ITT Hartford and its Subsidiaries agree not to:
(a) file, apply to register or register the ITT Name or the ITT
Marks, alone or in combination with any other word or device or symbol or any
name, mark, term, script or device colorably similar thereto, except if, as,
when, and to the extent as may be expressly consented to in writing in advance
by Licensor in specific instances;
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(b) use the ITT Name or the ITT Marks in conjunction or in
combination with any other name, mark, term, script or device whatever, except
as specifically set forth in Article II, or if, as and to the extent approved in
writing in advance by Licensor; and
(c) use the ITT Name or the ITT Marks in any jurisdiction, or any
name, mark, term, script or device colorably similar thereto, except as
specifically permitted under this License Agreement.
At the request of ITT Hartford, Licensor shall file registration
applications and maintain any such applications and registrations issued thereon
for the ITT Name and ITT Marks for activities within the ITT Hartford Business
or the ITT Hartford Expanded Business. Any expenses incurred by Licensor in
connection with registering or maintaining registrations of the ITT Name or the
ITT Marks for the ITT Hartford Business or for the benefit of ITT Hartford in
the ITT Hartford Expanded Business, including expenses incurred in connection
with proving or establishing use for the purpose of trade name or trademark
registration or maintenance of the ITT Name or ITT Marks for the ITT Hartford
Business or the ITT Hartford Expanded Business, shall be reimbursed by ITT
Hartford.
Section 3.08 INJUNCTIVE RELIEF UPON TERMINATION. ITT Hartford and its
Subsidiaries agree that should ITT Hartford and/or its Subsidiaries upon any
termination in whole or in part of this License Agreement, fail to cease use of
the ITT Name and the ITT Marks, as appropriate, in accordance with the
provisions of Article VI hereof, such failure will result in immediate and
irreparable injury to Licensor and, in addition to any provable damages and the
right to the costs and expenses of any litigation, Licensor shall be entitled to
equitable relief by way of temporary and permanent restraining orders and
injunctions and such other further relief as any court with jurisdiction may
deem just and proper without the necessity of posting a bond.
Section 3.09 OTHER LICENSOR LICENSES. Subject to Section 2.11 and to
the exact form of company names set forth in Exhibit C hereto, nothing in this
License Agreement shall be
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construed to limit the right of Licensor to use, or to grant a license to any
entity or person to use, the ITT Name or the ITT Marks anywhere for any products
or services, or in connection with any activities outside the ITT Hartford
Business even if such entity or person competes with ITT Hartford or the ITT
Hartford Sublicensees, or its products or services are shipped, sold or offered
in the same channels of trade as those of ITT Hartford or the ITT Hartford
Sublicensees.
Section 3.10 EXECUTION OF DOCUMENTS. At Licensor's request, ITT
Hartford and the ITT Hartford Sublicensees agree to assist Licensor in the
procurement or maintenance of any filings or registrations for the ITT Name or
ITT Marks in any jurisdiction by providing any information available from ITT
Hartford and the ITT Hartford Sublicensees and executing any documents necessary
therefor. The rights granted or to be granted hereunder to ITT Hartford or the
ITT Hartford Sublicensees shall be recorded in any jurisdiction where such
recordation is required by statute or in the sole discretion of Licensor is
advisable, and ITT Hartford and the ITT Hartford Sublicensees shall extend to
Licensor its full cooperation in filing and completing any such recordation.
ARTICLE IV. INFRINGEMENT BY THIRD PARTIES
Section 4.01 INFRINGEMENT BY THIRD PARTIES. Upon discovery by ITT
Hartford or by an ITT Hartford Sublicensee, ITT Hartford shall notify Licensor
of any adverse uses confusingly similar or otherwise damaging to the ITT Name
and/or ITT Marks, but shall take no other action of any kind with respect
thereto except by the express prior written authorization of Licensor. The
determination of whether or not legal action shall be taken in any case shall
lie exclusively with and at the sole discretion of Licensor, except that if such
adverse use is in the same field of activity as the ITT Hartford Business, ITT
Hartford may, by such notice, require that Licensor institute and reasonably
pursue legal action.
Section 4.02 COSTS OF LEGAL ACTION. In the event that Licensor is
required to institute legal action pursuant to the notice under Section 4.01,
the costs of any such legal action shall be borne by ITT Hartford. In the
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event that Licensor decides to institute legal action and such confusingly
similar or otherwise damaging use is within the field of activity of the ITT
Hartford Business or the ITT Hartford Expanded Business the cost of any such
legal action shall be shared equally by ITT Hartford and Licensor. In all such
circumstances, Licensor may bring suit in its own name and in the name of ITT
Hartford or the ITT Hartford Sublicensees, with choice of counsel and control of
the legal action by Licensor in close coordination and consultation with ITT
Hartford. All other legal actions for third party infringements instituted by
Licensor shall be at the expense and under the control of Licensor. ITT Hartford
and ITT Hartford Sublicensees shall cooperate with and assist Licensor in any
such suit by promptly providing any reasonably requested documents in their
possession, custody or control, and by making their personnel familiar with the
facts available to Licensor and otherwise, without charge.
Section 4.03 RESOLUTION OF LEGAL ACTION. In the event that threatened
or actual legal action by Licensor results in a settlement or resolution that
provides damages or other monies to Licensor and/or ITT Hartford and the ITT
Hartford Sublicensees, such monies shall first be used to reimburse the Parties
for their respective costs of such legal action. Any remaining damages or other
monies after reimbursement of the aforesaid costs shall be retained by Licensor,
except that any remaining damages assessed as lost profits of ITT Hartford or
any ITT Hartford Sublicensee shall be paid to ITT Hartford and any remaining
damages assessed as royalties shall be shared equally by ITT Hartford and
Licensor.
ARTICLE V. TERMINATION
Section 5.01 CHANGE OF CONTROL. In the event that there is a Change
of Control of ITT Hartford without the prior written consent of Licensor
pursuant to Section 2.05 hereof, then this License Agreement may be terminated
by ITT Corporation. In the event ITT Hartford gives notice to Licensor of a
Change of Control and ITT Corporation does not object to such Change of Control
within forty-five (45) days of receipt of such notice, then it shall be deemed
that Licensor shall have granted an expansion of the license pursuant to Section
2.05(ii) hereof.
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ARTICLE VI. TERM AND EFFECT OF TERMINATION
Section 6.01 LICENSE TERM. This License Agreement shall continue
unless sooner terminated pursuant to other provisions hereof, until ITT Hartford
gives written notice of an intent to terminate this License Agreement effective
six (6) months thereafter.
Section 6.02 EFFECT OF TERMINATION. Upon the termination of this
License Agreement, except in the case of termination for abandonment pursuant to
Section 2.06, ITT Hartford and the ITT Hartford Sublicensees during the Phaseout
Period shall phase out all use of the ITT Name and the ITT Marks. By the end of
the Phaseout Period ITT Hartford shall fully discontinue all use of the ITT
Marks and the ITT Name.
Following termination of this License Agreement, ITT Hartford and the
ITT Hartford Sublicensees shall:
(i) continue, without any time limitation, to indemnify and
hold harmless Licensor (including subsidiaries, affiliates, employees, officers,
directors, agents or anyone connected with it in any way) pursuant to Section
3.01 hereof; and
(ii) within thirty (30) days thereafter, account to Licensor
and make any such compensation payments as may be due or called for under
Section 4.02 herein up to and including the effective date of termination of
this License Agreement.
ITT Corporation and its Subsidiaries shall continue, for a period of
two (2) years, to indemnify and hold harmless ITT Hartford and ITT Hartford
Sublicensees (including subsidiaries, affiliates, employees, officers,
directors, or agents) pursuant to Section 3.02 hereof.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
Section 7.01 ABSENCE OF OTHER WARRANTIES AND REPRESENTATIONS. Other
than as specifically set forth
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herein, neither Party, nor any of their Subsidiaries makes any representations
or warranties including, without limitation, any statement with respect to the
validity, enforceability or coverage of the ITT Name and ITT Marks, with or
without respect to the ITT Hartford Business or the ITT Hartford Expanded
Business.
ARTICLE VIII. DISPUTE RESOLUTION
Section 8.01 DISPUTES. The general counsels of the relevant parties
shall negotiate in good faith for a reasonable period of time to settle any:
(a) dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance, non-performance or validity of
this License Agreement or otherwise arising out of, or in any way related to
this License Agreement, including, without limitation, any claim based on
contract, tort, statute or constitution (collectively, "Agreement Disputes"); or
(b) any breach of any provision of this License Agreement by ITT
Hartford or ITT Hartford Sublicensees, other than a Change of Control as set
forth in Section 5.01 or by Licensor, provided the breach has not been cured
within ninety (90) days after receipt of notice of such breach ("Uncured
Breach").
Section 8.02 ARBITRATION. If after such reasonable period such
general counsel are unable to settle such Agreement Dispute or Uncured Breach
(and in any event after 60 days have elapsed from the time the relevant parties
began such negotiations), such Agreement Dispute or Uncured Breach shall be
determined, at the request of any relevant party, by arbitration conducted in
New York City, before and in accordance with the then-existing Rules for
Commercial Arbitration of the American Arbitration Association (the "Rules"),
and any judgment or award rendered by the arbitrator shall be final, binding and
nonappealable (except upon grounds specified in 9 U.S.C. Section 10(a) as in
effect on the date hereof), and judgment may be entered by any state or Federal
court having jurisdiction thereof in accordance with Section 9.14 hereof. Unless
the arbitrator otherwise determines, the pre-trial discovery of the
then-existing Federal Rules of Civil Procedure and the then-existing Rules 46
and 47 of the Civil Rules for the United States District Court for the Southern
District of New York shall apply to any arbitration hereunder. Any controversy
concerning
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whether an Agreement Dispute or an Uncured Breach is an arbitrable Agreement
Dispute, whether arbitration has been waived, whether an assignee of this
License Agreement is bound to arbitrate, or as to the interpretation of
enforceability of this Article shall be determined by the arbitrator. The
arbitrator shall be a retired or former judge of any United States District
Court or Court of Appeals or such other qualified person as the relevant parties
may agree to designate, provided such individual has had substantial
professional experience with regard to settling sophisticated commercial
disputes. The Parties intend that the provisions to arbitrate set forth herein
be valid, enforceable and irrevocable. The designation of a situs or a governing
law for this License Agreement or the arbitration shall not be deemed an
election to preclude application of the Federal Arbitration Act, if it would be
applicable. In his award the arbitrator shall allocate, in his discretion, among
the Parties to the arbitration all costs of the arbitration, including, without
limitation, the fees and expenses of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the Parties. The undersigned agree to
comply with any award made in any such arbitration proceedings that has become
final in accordance with the Rules and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such proceedings becoming final under
the Rules. The arbitrator shall be entitled, if appropriate, to award any remedy
in such proceedings, including, without limitation, monetary damages, specific
performance and all other forms of legal and equitable relief; provided,
however, the arbitrator shall not be entitled to award punitive damages.
Section 8.03 INJUNCTIONS. In the event the Arbitrator should find
that ITT Hartford or the ITT Hartford Sublicensees or Licensor have breached
this License Agreement, then the Arbitrator may order specific performance of
the provisions so breached. Should ITT Hartford or the ITT Hartford Sublicensees
or Licensor not so specifically perform, then the Parties recognize that the
damage caused thereby to either party would be irreparable and not adequately
compensable by monetary damages, and that either Party may immediately seek and
be entitled to an injunction by a Federal Court having jurisdiction thereof,
without the requirement of posting a bond or other security.
ARTICLE IX. MISCELLANEOUS
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Section 9.01 COMPLETE AGREEMENT; CONSTRUCTION. This License
Agreement, including the Exhibits, together with the Distribution Agreement, and
the other Ancillary Agreements (as defined in the Distribution Agreement) shall
constitute the entire agreement between the Parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. Notwithstanding any other
provisions in this License Agreement to the contrary, in the event and to the
extent that there shall be a conflict between the provisions of this License
Agreement as it relates to the ITT Name and ITT Marks, and the provisions of the
Distribution Agreement or the IP Agreement, this License Agreement shall
control.
Section 9.02 COUNTERPARTS. This License Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the Parties and delivered to the other party.
Section 9.03 SURVIVAL OF AGREEMENT. Except as otherwise contemplated
by this License Agreement, all covenants and agreements of the Parties contained
in this License Agreement shall survive the Distribution Date.
Section 9.04 NOTICES. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the Parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
To Licensor:
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
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Attn: Vice President and
Associate General Counsel - Intellectual Property
To ITT Hartford, Inc.:
Hartford Plaza
Hartford, CT 06115
Attn: Senior Vice President and
General Counsel
Section 9.05 WAIVERS. The failure of either Party to require strict
performance by the other Party of any provision in this License Agreement will
not waive or diminish that Party's right to demand strict performance thereafter
of that or any other provision hereof.
Section 9.06 AMENDMENTS. This License Agreement may not be modified
or amended except by an agreement in writing signed by the Parties.
Section 9.07 ASSIGNMENT. This License Agreement shall not be
assignable, in whole or in part, directly or indirectly, by ITT Hartford without
the prior written consent of Licensor, and any attempt to assign any rights or
obligations arising under this License Agreement without such consent shall be
void. This License Agreement may be assigned by Licensor to ITT Destinations or
any other company which hereafter owns the ITT Marks and ITT Name.
Section 9.08 SUCCESSORS AND ASSIGNS. The provisions of this License
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and permitted assigns.
Section 9.09 TERMINATION. This License Agreement may be terminated at
any time prior to the Distribution by and in the sole discretion of Licensor
without the approval of ITT Hartford or the shareholders of Licensor. In the
event of such termination, no party shall have any liability of any kind to any
other party.
22
<PAGE> 23
Section 9.10 SUBSIDIARIES. ITT Hartford hereby guarantees the
performance of the ITT Hartford Sublicensees under the terms and conditions of
this License Agreement.
Section 9.11 THIRD PARTY BENEFICIARIES. This License Agreement is
solely for the benefit of the Parties hereto and the ITT Hartford Sublicensees
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this License Agreement.
Section 9.12 TITLE AND HEADINGS. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
Section 9.13 GOVERNING LAW. This License Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts executed in and to be performed in that State.
Section 9.14 CONSENT TO JURISDICTION. Without limiting the provisions
of Article VIII hereof each of the Parties irrevocably submits to the
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
agreement or any transaction contemplated hereby. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
the Parties further agrees that service of any process, summons, notice or
document by U.S. registered mail to such Party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 9.14. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this License Agreement or the transactions
contemplated hereby in (i) the Supreme Court
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of the State of New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in any inconvenient forum.
IN WITNESS WHEREOF, the Parties have caused this License Agreement to
be duly executed as of the day and year first above written.
ITT CORPORATION
By____________________
Name:
Title:
ITT HARTFORD GROUP, INC.
By____________________
Name:
Title:
24
<PAGE> 25
EXHIBIT A1
ITT DESTINATIONS BUSINESS
I. Hospitality, Entertainment and Gaming
A. Scope of Business:
Hospitality, entertainment and gaming services, facilities, and
content of all types including, sports teams and franchises,
television, theatrical studios, networks, broadcasting, arenas,
theaters and other performance facilities, television programs,
resort and destination facilities, hotels, gaming operations,
lodging, transportation, and related marketing, distribution,
promotion, advertising and licensing.
B. Major Businesses and Service Groupings
1. ITT Sheraton and Ciga S.p.A. Hotels
a. Hotel operations
(1) reservation services
(2) national marketing
(3) promotional services
b. Hotel management
c. Hotel ownership
2. Caesars World, Inc.
a. resorts/hotels
b. casinos/gaming operations
c. merchandising of Caesars branded products
(fragrances, clothing, accessories, gift
items w/Caesars' name)
3. Madison Square Garden
<PAGE> 26
a. New York Knicks
(1) ticket revenues
(2) merchandising
b. New York Rangers
(1) ticket revenues
(2) merchandising
c. Madison Square Garden Arena
(1) sports events
(2) concerts
(3) family shows
(4) trade shows - conventions
d. The Paramount Theater
e. WNYC-TV (Nationally broadcast business and
sports TV station in a joint venture with Dow
Jones)
f. Supply and distribution of television
programming for cable
g. Rights to New York Yankees' games
h. MSG Network-Advertiser supported cable
television entertainment program service
II. Information Services
A. Scope of Business
Information services, facilities, and content, in connection
with information training and educational services, electronic
and print publication of informational and educational
materials, collection, creation, production, compilation,
storage and translation of informational and educational
materials.
B. Major Businesses and Services Groupings
<PAGE> 27
1. ITT World Directories, Inc.
a. publishing traditional telephone directories
internationally
b. contracts for the publication of telephone
directories with monopoly providers of
telecommunications services
2. ITT Educational Services, Inc.
a. ITT Technical Institutes
III. Closely Related Businesses:
A. Acquisition, management, ownership and operation of:
1. Entertainment services, facilities and content of all
types, including, without limitation: sports teams
and franchises, television, theatrical studios,
networks, broadcasting, theme parks, arenas, theaters
and other performance facilities, musical recordings,
merchandizing, movies, television programs,
magazines, electronic entertainment, interactive
media and related marketing, distribution, promotion,
advertising and licensing;
2. Hospitality, tourism, recreation and gaming services,
including, without limitation, resort and destination
facilities, services, hotels, gaming operations,
lodging and transportation; and
3. Information services facility and content, including,
without limitation
(a) training and educational services, electronic
and print publication of informational and
educational materials;
(b) collection, creation, production,
compilation, storage and transmission,
including interactive services, of
informational and educational materials;
<PAGE> 28
(c) commercial communication equipment, services
and facilities including, without limitation,
telecommunications, satellites, cable and all
other storage, access and transmission means.
<PAGE> 29
EXHIBIT A2
ITT HARTFORD BUSINESS
A. ITT Hartford is engaged in:
1. All lines of property and casualty insurance
2. All lines of life company business, including without
limitation all lines of life, disability, health, stop-loss and
special risk (accidental death and dismemberment, blanket
lines, and Medicare Supplements) insurance and annuities (the
"Life Company Business")
3. Ceded and assumed reinsurance in all lines of property and
casualty insurance and life Company Business
4. The following services related to property and casualty
insurance and Life Company Business and reinsurance:
a. Underwriting
b. Loss control
c. Premium collection, audit and financing
d. Actuarial
e. Administrative (including without limitation, benefit
plan administration and consulting)
f. Claim administration (including without limitation,
processing)
g. Reinsurance consulting
h. Catastrophe evaluation
i. Reinsurance and insurance market research and
assistance
j. Runoff of liabilities for discontinued insurance
operations
k. Servicing or administration of voluntary and residual
market plans, pools and other residual market
mechanisms
l. Establishing and maintaining risk retention and
purchasing group
m. Insurance-related information management
5. Surety and fidelity/burglary bonds including, but not limited
to, contract, miscellaneous and financial guarantee bonds and
credit insurance.
<PAGE> 30
6. The providing of investment advisory services to mutual funds
and/or the operation of mutual funds and/or any other pooled
investment vehicles and/or the distribution of interests in
such funds or other vehicles
B. Closely Related Businesses:
1. Any insurance-related business permitted to be conducted by a
company under applicable regulatory authority and any other
business which may only be conducted by companies regulated by
the applicable insurance regulatory authorities
2. Investment banking activities, including but not limited to
the underwriting of securities and stock brokerage activities
<PAGE> 31
EXHIBIT A3
ITT INDUSTRIES BUSINESS
I. Automotive Group
A. Scope of Business: Supplier of systems and components to
automotive vehicle manufacturers worldwide and related
automotive aftermarket products
B. Major Automotive Product/Service Groupings:
1. Brake and Chassis Systems
(a) antilock brake systems and components
(b) traction control system and components
(c) chassis systems and components
(d) foundation brake system and components
(e) fluid handling systems and components
(f) shock absorbers
(g) brake activation systems and components
(h) friction products
2. Body and Electrical Systems
(a) electric motors and motor controllers
(b) wiper system and components
(c) activator systems and components
(d) switches and lamps
(e) body hardware
(f) seat sub-systems
(g) precision die cast products
(h) structural stampings
(i) door systems and components
(j) air management systems and components
(k) modular chassis systems
3. Front and Rear Corner Modules
(a) brake sub-systems and components
(b) suspension sub-systems and components
(c) bearings
<PAGE> 32
(d) complete axle assemblies and sub-assemblies
(e) vehicle stability management systems and
components
(f) steering systems and components
II. Defense & Electronics Group
A. Scope of Business: Develop, manufacture and support high
technology electronic systems and components specifically
designed for military and defense application on a worldwide
basis.
B. Major Products/Service Groupings for Military and Defense
Application:
1. communications systems, equipment, and components:
(a) military communications equipment;
(b) tactical radios and components;
(c) air traffic control radio equipment;
(d) networking equipment;
(e) air traffic control radio equipment;
(f) switches;
(g) military "Private Mobile Radio" equipment;
(h) communications software;
(i) wireless LANS;
(j) tactical data systems and components;
(k) communications security devices and software;
(l) computer security products;
(m) INFOSEC products;
(n) biometric authentication products;
(o) speech and speaker recognition, identification
and verification systems and components;
(p) communication intelligence workstation
components and subsystems;
(q) language and dialect identification products;
(r) Communications-Navigation-Identification
systems and components;
(s) secure voice/data communications systems and
components;
(t) command and control systems and components;
<PAGE> 33
(u) communications and signal intelligence
systems and components;
(v) satellite payload systems and components;
(w) military "Personal Communications Services"
radios;
2. electronic warfare systems including:
(a) Advanced Threat Radar Jammer and components;
(b) Airborne Self-Protection Jammer and
components;
(c) electronic countermeasures and
counter-countermeasures systems and
components;
(d) decoy systems and components;
(e) electro-optical and infrared systems and
components;
3. night vision devices incorporating image intensifiers
including:
(a) infantrymen's night vision devices and
components;
(b) aviator's night vision devices and
components;
(c) image intensifier tubes;
(d) night vision weapon sights and components;
(e) special purpose photosensitive devices;
(f) vehicle mounted night vision devices and
components;
4. radar systems including:
(a) shipboard radars and components;
(b) air-traffic radars and components;
(c) coastal defense radars and components;
(d) transmit/receive modules;
(e) bistatic radar systems and components;
5. space payload products including:
(a) navigation payloads;
(b) meteorological instruments;
(c) suites of meteorological and navigation
instruments;
(d) RF/microwave/millimeter wave sensor systems
and components;
(e) control segment integration software;
<PAGE> 34
6. navigation systems including:
(a) global positioning satellite systems and
components;
(b) TACAN systems and components;
(c) tactical navigation systems and components;
7. semiconductor IC devices:
(a) Gallium Arsenide integrated circuits;
(b) MMIC products;
(c) RF products;
8. connectors and cable assemblies
C. Defense and Electronics Products for Commercial Application
1. night vision devices incorporating image
intensifiers:
(a) personal image identifier night vision
devices and components;
(b) commercial image intensifier tubes;
(c) vehicle-mounted image identifier night vision
devices and components;
(d) Retinitis Pigmentosa image intensifier night
vision devices and components;
2. Manufacture of Gallium Arsenide semiconductor IC
devices and circuits
3. biometric authentication products
4. speech and speaker recognition, identification and
verification systems and devices
5. language and dialect identification products
6. Security Access Control Systems for accessing
computer systems having application in computer and
financial networks
7. global positioning satellite products
<PAGE> 35
8. connectors and cable assemblies
9. integrated circuit cards and components
10. switches
III. Fluid Technology Group
A. Business: Engaged in the design, development, production,
marketing and sale of products, systems and services used to
move, handle, transfer, control and contain fluids. The
principal markets are water and wastewater treatment,
industrial and process, and construction. The other markets
consist of chemical processing, pharmaceutical and biotech
sectors, selected segments of oil and gas and mining markets,
HVAC, commercial and leisure marine aerospace and power
industry markets.
B. Major Product/Service Products:
1. Pump products including drivers, controllers,
accessories and components thereof for use in the
markets specified in C.1 above.
2. Mixer products including drivers, controllers,
accessories and components thereof for use in the
markets specified in C.1 above.
3. Valve products including drivers, actuators and
components thereof for use in the markets specified
in C.1 above.
4. Instrument and control products including drivers,
actuators, sensors, microprocessors, accessories and
components thereof for use in the markets specified
in C.1 above.
5. Regulators, transducers, seals including drivers,
actuators, sensors, microprocessors, accessories and
components thereof for use in the markets specified
in C.1 above.
<PAGE> 36
6. Boiler and condensate equipment and products
including drivers, controllers, accessories and
components thereof for use in the markets specified
in C.1 above.
7. Switches including actuators, sensors, controllers,
and components thereof for use in the markets
specified in C.1 above.
8. Heat transfer products and components thereof for use
in the markets specified in C.1 above.
9. Lighting and sanitary products and components thereof
for use in markets specified in C.1 above.
10. Software programs for the selection and design of
above specified products.
IV. Closely Related Businesses:
A. Transportation Products: The design, manufacture, sale,
marketing and servicing of OEM and aftermarket automotive,
truck, train and other such transportation products.
B. Fluid Products: The design, manufacture, sale, marketing and
servicing of fluid handling products consisting of the major
products/service products set out in III B above.
C. Military and Defense Products/Services: The design,
manufacture, sale, marketing and servicing of products and
systems specially designed for the military and defense
application.
D. Components: The design, manufacture, sale, marketing and
servicing of components consisting of connectors, cable
assemblies, integrated circuit cards and components thereof,
and switches.
<PAGE> 37
EXHIBIT B
ITT LOGO
[A graphic image of the ITT Logo
will be inserted as Exhibit B]
<PAGE> 38
EXHIBIT C
ITT HARTFORD GROUP, INC. COMPANY NAMES
ITT Hartford Group, Inc.
ITT Fencourt Reinsurance Company, Ltd.
ITT Hartford Canada Holdings, Inc.
ITT Hartford Life Insurance Company of Canada
ITT Comprehensive Employee Benefits Service Company
ITT Hartford Life and Annuity Insurance Company
ITT Hartford International Life Reassurance Corp.
ITT Hartford Seguros de Retiro S.A.
ITT Cenit (Holding) Argentina S.A.
ITT Cenit Ultravida Seguros de Vida S.A.
ITT Specialty Risk Services, Inc.
ITT Hartford Life Insurance Company of Canada
ITT Hartford Insurance Center, Inc.
ITT Hartford Insurance Group Foundation, Inc.
ITT Hartford International, Inc.
ITT Ercos de Seguros y Reaseguros, S.A.
ITT Assurances S.A.
ITT New England Management Company, Inc.
ITT Hartford Life International
ITT London & Edinburgh Insurance Company
<PAGE> 39
EXHIBIT D
ITT HARTFORD MAJOR SUBSIDIARIES
Hartford Life and Accident Insurance Company
Hartford Life Insurance Company
Hartford Re Company
Hartford Casualty Insurance Company
ITT Specialty Risk Services, Inc.
ITT Lyndon Life Insurance
ITT Lyndon Property Insurance
London & Edinburgh Insurance Group
Hartford Accident & Indemnity Company
Hartford Fire Insurance Company
<PAGE> 40
HARTFORD
EXHIBIT E
SUBLICENSEE ACKNOWLEDGEMENT AND AGREEMENT
SUBLICENSEE ACKNOWLEDGEMENT AND AGREEMENT ("Agreement") dated as of
______________________ between __________________________, a
___________________________, ("ITT Hartford Sublicensee"), ITT Hartford Group,
Inc., a Delaware corporation ("ITT Hartford") with a principal address at
Hartford Plaza, Hartford, Connecticut 06115, and ITT Corporation, a Nevada
corporation ("ITT Corporation") with a principal address at 1330 Avenue of the
Americas, New York, New York 10019 (the "Parties").
WHEREAS, ITT Corporation is the owner of the company and trade name
"ITT" and the trademark and service mark "ITT", and of all rights worldwide in
such name and marks and the goodwill associated therewith;
WHEREAS, ITT Corporation is the owner of a Trade Name and Trademark
License Agreement dated ____________________ with ITT Hartford ("License
Agreement"), which License Agreement is the sole source of rights for ITT
Hartford to use and to grant sublicensees to use the ITT Name and Marks (as
defined in the License Agreement);
WHEREAS, ITT Hartford Sublicensee is desirous of obtaining from ITT
Hartford the right to use one or more of the ITT Name and/or Marks and ITT
Hartford is willing to grant such rights to ITT Hartford Sublicensee under
Section 2.03 of the License Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
acknowledgements, agreements and covenants herein, the Parties hereto hereby
agree as follows:
1. ITT Hartford has determined that ITT Hartford Sublicensee qualifies
as an ITT Hartford Sublicensee, as that term is defined in Section 1.01(v) of
the License Agreement.
2. ITT Hartford has prepared a written agreement pursuant to which ITT
Hartford Sublicensee is to be granted the right to use certain of the ITT Name
and Marks ("Sublicense") as more fully set forth in said Sublicense.
<PAGE> 41
3. ITT Hartford and ITT Hartford Sublicensee acknowledge that the ITT
Hartford Sublicensee requires ITT Hartford Sublicensee to comply with and
observe the terms and conditions of the License Agreement, and ITT Hartford
Sublicensee covenants that it has read, understands and will comply with those
terms and conditions.
4. ITT Hartford Sublicensee acknowledges its obligation to ITT
Corporation to comply with the terms and conditions of the License Agreement,
and acknowledges that ITT Hartford is guaranteeing to ITT Corporation ITT
Hartford Sublicensee's performance of those terms and conditions.
5. ITT Hartford Sublicensee further acknowledges that the rights
granted to it under the Sublicense are 1) personal, non-assignable,
non-transferable; 2) do not include the right to grant sublicenses, and 3) may
be restricted or terminated pursuant to the terms of the License Agreement.
6. ITT Corporation acknowledges ITT Hartford Sublicensee's rights under
the Sublicense, subject to the terms and conditions of the License Agreement and
subject to this Agreement.
-------------------------------
[ITT Hartford Sublicensee]
Date: _______________ By: _________________________
Name: _________________________
Title: _________________________
ITT HARTFORD GROUP, INC.
Date: _______________ By: _________________________
Name: _________________________
Title: _________________________
<PAGE> 42
ITT CORPORATION
Date: _______________ By: _________________________
Name: _________________________
Title: _________________________
<PAGE> 1
EXECUTION COPY
EMPLOYEE BENEFIT SERVICES AND LIABILITY AGREEMENT
dated as of November 1, 1995, among ITT CORPORATION, a Delaware
corporation (which, together with its subsidiaries, is herein
referred to as "ITT"), ITT DESTINATIONS, INC., a Nevada
corporation, (which, together with its subsidiaries, is herein
referred to as "ITT Destinations"), and ITT HARTFORD GROUP,
INC., a Delaware corporation (which, together with its
subsidiaries, is herein referred to as "ITT Hartford").
WHEREAS, the Board of Directors of ITT has determined that it
is appropriate and desirable to distribute to the holders of shares of common
stock, par value $1.00 per share, of ITT (the "ITT Common Stock") all the
outstanding shares of common stock of ITT Destinations (the "ITT Destinations
Common Stock") and all the outstanding shares of common stock of ITT Hartford
(the "ITT Hartford Common Stock"); and
WHEREAS, each of ITT, ITT Destinations and ITT Hartford has
determined that it is necessary and desirable to allocate and assign
responsibility for certain employee benefit liabilities in respect of the
activities of the businesses of such entities on the Distribution Date (as
defined herein) and those liabilities in respect of other businesses and
activities of ITT and its former subsidiaries and certain other matters.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, ITT, ITT Destinations and ITT Hartford agree as
follows:
1. RETIREMENT PLANS. (a) Continuation of Retirement
Plans. (i) Following the Distribution, (x) ITT Industries shall continue to
sponsor the ITT Salaried Retirement Plan, which shall be renamed as the "ITT
Industries Salaried Retirement Plan", (y) ITT Hartford shall continue to sponsor
the ITT Hartford Retirement Plan and (z) ITT Destinations shall adopt the
Sheraton Salaried Retirement Plan as the ITT Destinations Salaried Retirement
Plan.
(ii) Amendment of Retirement Plans. Effective as of the
Distribution Date, (x) ITT Industries shall cause the
<PAGE> 2
2
ITT Salaried Retirement Plan to be amended as provided pursuant to Section 1 of
this Agreement; (y) ITT Destinations shall cause the ITT Destinations Salaried
Retirement Plan to be amended as provided pursuant to Section 1 of this
Agreement; and (z) ITT Hartford shall cause the ITT Hartford Retirement Plan to
be amended as provided pursuant to Section 1 of this Agreement.
(b) Recognition of Service Rendered Prior to the
Distribution Date. This paragraph (b) is intended to set forth the steps to
be taken to provide for recognition of service rendered prior to the
Distribution Date by ITT Employees who, immediately prior to the Distribution
Date, (x) have an accrued benefit under more than one of the ITT Salaried
Retirement Plan, the Sheraton Salaried Retirement Plan and the ITT Hartford
Retirement Plan or (y) have an accrued benefit under any such plan and, on the
Distribution Date, will be a participant in any other such plan.
(i) This clause (i) applies solely to ITT Employees who,
immediately prior to the Distribution Date, have an accrued benefit under the
ITT Salaried Retirement Plan and who, on such date, are employed by either ITT
Destinations or ITT Hartford.
Each of the ITT Destinations Salaried Retirement Plan and the
ITT Hartford Retirement Plan shall be amended to recognize all service rendered
by such ITT Employees prior to the Distribution Date which is recognized as
Eligibility Service (as defined in the ITT Salaried Retirement Plan, as in
effect immediately prior to the Distribution Date) under the terms of the ITT
Salaried Retirement Plan for purposes of determining eligibility and vesting,
including, without limitation, eligibility service for purposes of determining
eligibility for plan membership, preretirement survivor benefits, early
retirement benefits and normal retirement benefits. Each of the ITT Destinations
Salaried Retirement Plan and the ITT Hartford Retirement Plan shall further be
amended to (A) recognize as service for benefit accrual purposes all service
rendered by such ITT Employees prior to the Distribution Date which is
recognized as Benefit Service (as defined in the ITT Salaried Retirement Plan,
as in effect immediately prior to the Distribution Date) under the terms of the
ITT Salaried Retirement Plan and (B) provide for an offset of any benefit
payable with respect to service recognized under the ITT Salaried Retirement
Plan or any other defined benefit
<PAGE> 3
3
retirement plan maintained by ITT or its Affiliates covering the same period of
service.
(ii) This clause (ii) applies solely to ITT Employees who,
immediately prior to the Distribution Date, have an accrued benefit under the
Sheraton Salaried Retirement Plan and who, on such date, are employed by either
ITT Industries or ITT Hartford.
Each of the ITT Salaried Retirement Plan and the ITT Hartford
Retirement Plan shall be amended to recognize all service rendered by such ITT
Employees prior to the Distribution Date which is recognized as Eligibility
Service (as defined in the Sheraton Salaried Retirement Plan, as in effect
immediately prior to the Distribution Date) under the terms of the Sheraton
Salaried Retirement Plan for purposes of determining eligibility and vesting,
including, without limitation, eligibility service for purposes of determining
eligibility for plan membership, preretirement survivor benefits, early
retirement benefits and normal retirement benefits. Each of the ITT Salaried
Retirement Plan and the ITT Hartford Retirement Plan shall further be amended to
(A) recognize as service for benefit accrual purposes all service rendered by
such ITT Employees prior to the Distribution Date which is recognized as Benefit
Service (as defined in the Sheraton Salaried Retirement Plan, as in effect
immediately prior to the Distribution Date) under the terms of the Sheraton
Salaried Retirement Plan and (B) provide for an offset of any benefit payable
with respect to service recognized under the Sheraton Salaried Retirement Plan
or any other defined benefit retirement plan maintained by ITT or its Affiliates
covering the same period of service.
(iii) This clause (iii) applies solely to ITT Employees who,
immediately prior to the Distribution Date, have an accrued benefit under the
ITT Hartford Retirement Plan and who, on such date, are employed by either ITT
Industries or ITT Destinations.
Each of the ITT Salaried Retirement Plan and the ITT
Destinations Salaried Retirement Plan shall be amended to recognize all service
rendered by such ITT Employees prior to the Distribution Date which is
recognized as Eligibility Service (as defined in the ITT Hartford Retirement
Plan, as in effect immediately prior to the Distribution Date) under the terms
of the ITT Hartford Retirement Plan for purposes of determining eligibility and
<PAGE> 4
4
vesting, including, without limitation, eligibility service for purposes of
determining eligibility for plan membership, preretirement survivor benefits,
early retirement benefits and normal retirement benefits. Each of the ITT
Salaried Retirement Plan and the ITT Destinations Salaried Retirement Plan shall
further be amended to (A) recognize as service for benefit accrual purposes all
service rendered by such ITT Employees prior to the Distribution Date which is
recognized as Benefit Service (as defined in the ITT Hartford Retirement Plan,
as in effect immediately prior to the Distribution Date) under the terms of the
ITT Hartford Retirement Plan and (B) provide for an offset of any benefit
payable with respect to service recognized under the ITT Hartford Retirement
Plan or any other defined benefit retirement plan maintained by ITT or its
Affiliates covering the same period of service.
(iv) For purposes of determining the offset to be provided
pursuant to subclause (B) of each of clauses (i), (ii) and (iii) of this
paragraph (b), the benefits payable under each plan shall be determined as a
straight life annuity payable at normal or postponed retirement age, and the
offset shall be applied to reduce the benefit payable under the appropriate
plan. The offset shall be taken as of the date benefits commence under the plan
against which the offset is applied, and the offset shall be computed as if the
benefit being offset commenced as of the same date.
(c) Recognition of Service Rendered On and After the
Distribution Date. This paragraph (c) is intended to set forth the steps to
be taken to provide for recognition of service rendered on and after the
Distribution Date by ITT Employees who, immediately prior to the Distribution
Date (x) have an accrued benefit under more than one of the ITT Salaried
Retirement Plan, the Sheraton Salaried Retirement Plan and the ITT Hartford
Retirement Plan or (y) have an accrued benefit under any such plan and, on the
Distribution Date, will be a participant in any other such plan.
(i) This clause (i) applies solely to ITT Employees who,
on the Distribution Date, are employed by ITT Industries and have an accrued
benefit under either the Sheraton Salaried Retirement Plan or the ITT Hartford
Retirement Plan.
Subject to Section 1(e) hereof and to the extent permitted by
applicable law, each of the ITT Destinations Salaried Retirement Plan and the
ITT Hartford Retirement
<PAGE> 5
5
Plan shall be amended to recognize service rendered on and after the
Distribution Date with ITT Industries for each such ITT Employee for purposes of
eligibility and vesting, including, without limitation, eligibility service for
purposes of preretirement death benefits, early retirement benefits and normal
retirement benefits. For purposes of the ITT Destinations Salaried Retirement
Plan and the ITT Hartford Retirement Plan, the final average pay of such ITT
Employees shall be determined immediately prior to the Distribution Date.
(ii) This clause (ii) applies solely to ITT Employees who,
on the Distribution Date, are employed by ITT Destinations and have an accrued
benefit under either the ITT Salaried Retirement Plan or the ITT Hartford
Retirement Plan.
Subject to Section 1(e) hereof and to the extent permitted by
applicable law, each of the ITT Salaried Retirement Plan and the ITT Hartford
Retirement Plan shall be amended to recognize service rendered on and after the
Distribution Date with ITT Destinations for each such ITT Employee for purposes
of eligibility and vesting, including, without limitation, eligibility service
for purposes of preretirement death benefits, early retirement benefits and
normal retirement benefits. For purposes of the ITT Salaried Retirement Plan and
the ITT Hartford Retirement Plan, the final average pay of such ITT Employees
shall be determined immediately prior to the Distribution Date.
(iii) This clause (iii) applies solely to ITT Employees who,
on the Distribution Date, are employed by ITT Hartford and have an accrued
benefit under either the ITT Salaried Retirement Plan or the Sheraton Salaried
Retirement Plan.
Subject to Section 1(e) hereof and to the extent permitted by
applicable law, each of the ITT Salaried Retirement Plan and the ITT
Destinations Salaried Retirement Plan shall be amended to recognize service
rendered on and after the Distribution Date with ITT Hartford for each such ITT
Employee for purposes of eligibility and vesting, including, without limitation,
eligibility service for purposes of preretirement death benefits, early
retirement benefits and normal retirement benefits. For purposes of the ITT
Salaried Retirement Plan and the ITT Destinations Salaried Retirement Plan, the
final average pay of such ITT
<PAGE> 6
6
Employees shall be determined immediately prior to the Distribution Date.
(d) Effect of Employment On and After the Distribution
Date with ITT Industries, ITT Destinations or ITT Hartford. (i) Any ITT Employee
who, on the Distribution Date, is employed by ITT Industries and for whom
service rendered on and after the Distribution Date is recognized pursuant to
Section 1(c) under the ITT Destinations Salaried Retirement Plan or the ITT
Hartford Retirement Plan while such person is employed with ITT Industries
(including periods after re-employment following a termination of employment
occurring after the Distribution Date), (I) shall not be deemed either to have
terminated employment or to be in retirement status under the ITT Destinations
Salaried Retirement Plan or the ITT Hartford Retirement Plan and (II) except to
the extent required by law, shall not be eligible to receive payment of his or
her vested benefit or retirement allowance under the ITT Destinations Salaried
Retirement Plan or the ITT Hartford Retirement Plan.
(ii) Any ITT Employee who, on the Distribution Date, is
employed by ITT Destinations and for whom service rendered on and after the
Distribution Date is recognized pursuant to Section 1(c) under the ITT Salaried
Retirement Plan or the ITT Hartford Retirement Plan while such person is
employed with ITT Destinations (including periods after re-employment following
a termination of employment occurring after the Distribution Date) (I) shall not
be deemed either to have terminated employment or to be in retirement status
under the ITT Salaried Retirement Plan or the ITT Hartford Retirement Plan and
(II) except to the extent required by law, shall not be eligible to receive
payment of his or her vested benefit or retirement allowance under the ITT
Salaried Retirement Plan or the ITT Hartford Retirement Plan.
(iii) Any ITT Employee who, on the Distribution Date, is
employed by ITT Hartford and for whom service rendered on and after the
Distribution Date is recognized pursuant to Section 1(c) under the ITT Salaried
Retirement Plan or the ITT Destinations Salaried Retirement Plan while such
person is employed with ITT Hartford (including periods after re-employment
following a termination of employment occurring after the Distribution Date) (I)
shall not be deemed either to have terminated employment or to be in retirement
status under the ITT Salaried Retirement Plan or
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7
the ITT Destinations Salaried Retirement Plan and (II) except to the extent
required by law, shall not be eligible to receive payment of his or her vested
benefit or retirement allowance under the ITT Salaried Retirement Plan or the
ITT Destinations Salaried Retirement Plan.
(e) Limited Obligation To Recognize Service Rendered On
and After the Distribution Date. (i) With respect to any ITT Employee, service
rendered on and after the Distribution Date that is required to be recognized by
ITT Industries under the ITT Salaried Retirement Plan pursuant to Section 1(c)
hereof shall be the same years and portions thereof of service recognized for
similar purposes under the ITT Hartford Retirement Plan, as in effect
immediately prior to the Distribution Date, with respect to ITT Hartford
Employees, and under the ITT Destinations Salaried Retirement Plan, as in effect
immediately prior to the Distribution Date, with respect to ITT Destinations
Salaried Employees. In no event shall the ITT Salaried Retirement Plan be
required to recognize any enhanced service benefits that might be provided on
and after the Distribution Date under the ITT Destinations Salaried Retirement
Plan or the ITT Hartford Retirement Plan.
(ii) With respect to any ITT Employee, service rendered on
and after the Distribution Date that is required to be recognized by ITT
Destinations under the ITT Destinations Salaried Retirement Plan pursuant to
Section 1(c) hereof shall be the same years and portions thereof of service
recognized for similar purposes under the ITT Salaried Retirement Plan, as in
effect immediately prior to the Distribution Date, with respect to ITT
Industries Salaried Employees, and under the ITT Hartford Retirement Plan, as in
effect immediately prior to the Distribution Date, with respect to ITT Hartford
Employees. In no event shall the ITT Destinations Salaried Retirement Plan be
required to recognize any enhanced service benefits that might be provided on
and after the Distribution Date under the ITT Salaried Retirement Plan or the
ITT Hartford Retirement Plan.
(iii) With respect to any ITT Employee, service rendered on
and after the Distribution Date that is required to be recognized by ITT
Hartford under the ITT Hartford Retirement Plan pursuant to Section 1(c) hereof
shall be the same years and portions thereof of service recognized for similar
purposes under the ITT Salaried Retirement Plan, as in effect immediately prior
to the Distribution Date, with
<PAGE> 8
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respect to ITT Industries Salaried Employees, and under the ITT Destinations
Salaried Retirement Plan, as in effect immediately prior to the Distribution
Date, with respect to ITT Destinations Salaried Employees. In no event shall the
ITT Hartford Retirement Plan be required to recognize any enhanced service
benefits that might be provided on and after the Distribution Date under the ITT
Salaried Retirement Plan or the ITT Destinations Salaried Retirement Plan.
(f) Plan Asset Transfers. It is intended that, at any
time or from time to time following the Distribution, ITT Industries, ITT
Destinations and ITT Hartford may cause to occur transfers of assets from the
ITT Salaried Retirement Plan, the ITT Destinations Salaried Retirement Plan
and/or the ITT Hartford Retirement Plan, to any other such plan, subject to
agreement by the sponsor of the transferor plan and the sponsor of the
transferee plan, with respect to benefits that have accrued as of the
Distribution Date and that are attributable to a person no longer employed by
the sponsor of the transferor plan or its affiliates.
2. INVESTMENT AND SAVINGS PROGRAMS.
(a) Effective as of the Distribution Date, ITT
Destinations shall adopt the ITT Destinations Savings Plan, which shall have
terms similar in all material respects to the ITT Savings Plan. ITT Industries
shall cause the transfer, as soon as practicable on or after the Distribution
Date, of the accounts of all ITT Destinations Salaried Employees from the ITT
Savings Plan to the ITT Destinations Savings Plan. Such assets will be
transferred in kind to the maximum extent practicable.
(b) Effective as of the Distribution Date, ITT Hartford
shall adopt the ITT Hartford Savings Plan, which shall have terms similar in all
material respects to the ITT Savings Plan. ITT Industries shall cause the
transfer, as soon as practicable on or after the Distribution Date, of the
accounts of all ITT Hartford Employees from the ITT Savings Plan to the ITT
Hartford Savings Plan. Such assets will be transferred in kind to the maximum
extent practicable.
(c) With respect to any former ITT employee who is
entitled to a benefit as of the Distribution Date under the ITT Destinations
Salaried Retirement Plan or any other
<PAGE> 9
9
defined benefit retirement plan to be maintained by ITT Destinations following
the Distribution or who was a participant in any such plan on such employee's
last day of service with ITT, ITT Industries shall cause the account of such
former employee under the ITT Savings Plan to be transferred in the manner
described in Section 2(a) hereof.
(d) With respect to any former ITT employee entitled to a
benefit as of the Distribution Date under the ITT Hartford Retirement Plan or
any other defined benefit retirement plan to be maintained by ITT Hartford
following the Distribution or who was a participant in any such plan on such
employee's last day of service with ITT, ITT Industries shall cause the account
of such former employee under the ITT Savings Plan to be transferred in the
manner described in Section 2(b) hereof.
(e) The account of any other current or former ITT
employee shall remain in the ITT Savings Plan, which shall continue to be
sponsored by ITT Industries and shall be renamed as the "ITT Industries
Investment and Savings Plan."
3. EXCESS NON-QUALIFIED SUPPLEMENTAL BENEFIT PLANS. (a)
Excess Pension Plans. (i) Effective as of the Distribution Date, ITT
Industries shall continue to sponsor the ITT Excess Pension Plan and ITT Excess
Pension Plan Trust. Effective as of the Distribution Date, ITT Destinations
shall adopt the Sheraton Excess Pension Plan as the ITT Destinations Excess
Pension Plan and shall adopt the ITT Destinations Excess Pension Plan Trust
under which excess pension benefits for certain officers will be funded.
Effective as of the Distribution Date, ITT Hartford shall continue to sponsor
the ITT Hartford Excess Pension Plan and the ITT Hartford Excess Pension Plan
Trust.
(ii) ITT Industries does hereby assume all liability for
benefits (whether funded or unfunded) that have accrued prior to the
Distribution Date under the Sheraton Excess Pension Plan and the ITT Hartford
Excess Pension Plan with respect to ITT Industries Salaried Employees, except
that, to the extent such benefits are funded under the ITT Hartford Excess
Pension Plan Trust, ITT Industries' assumption of liability for benefits to any
ITT Industries Salaried Employee shall be effective only if and to the extent
that such employee waives his or her right to receive such benefits under the
ITT Hartford Excess Pension Plan and ITT Hartford Excess Pension Plan Trust. ITT
<PAGE> 10
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Industries and ITT Hartford shall each use its commercially reasonable efforts
to obtain such waivers from ITT Industries Salaried Employees, and ITT Hartford
shall notify ITT Industries upon receipt of any such waiver.
(iii) ITT Destinations does hereby assume all liability for
benefits (whether funded or unfunded) that have accrued prior to the
Distribution Date under the ITT Excess Pension Plan and the ITT Hartford Excess
Pension Plan with respect to ITT Destinations Salaried Employees, except that,
to the extent such benefits are funded under the ITT Excess Pension Plan Trust
or the ITT Hartford Excess Plan Trust, ITT Destinations' assumption of liability
for benefits to any ITT Destinations Salaried Employee shall be effective only
if and to the extent that such employee waives his or her right to receive such
benefits under the ITT Excess Pension Plan and ITT Excess Pension Plan Trust or
the ITT Hartford Excess Pension Plan and ITT Hartford Excess Pension Plan Trust,
as the case may be. ITT Industries, ITT Destinations and ITT Hartford shall each
use its commercially reasonable efforts to obtain such waivers from ITT
Destinations Salaried Employees, and ITT Industries and ITT Hartford shall
notify ITT Destinations upon receipt of any such waiver.
(iv) ITT Hartford does hereby assume all liability for
benefits (whether funded or unfunded) that have accrued prior to the
Distribution Date under the ITT Excess Pension Plan and the Sheraton Excess
Pension Plan with respect to ITT Hartford Employees, except that, to the extent
such benefits are funded under the ITT Excess Pension Plan Trust, ITT Hartford's
assumption of liability for benefits to any ITT Hartford Employee shall be
effective only if and to the extent that such employee waives his or her right
to receive such benefits under the ITT Excess Pension Plan and ITT Excess
Pension Plan Trust. ITT Industries and ITT Hartford shall each use its
commercially reasonable efforts to obtain such waivers from ITT Hartford
Employees, and ITT Industries shall notify ITT Hartford upon receipt of any such
waiver.
(b) Excess Savings Plans. Effective as of the
Distribution Date, ITT Industries shall remain liable for benefits accrued under
the ITT Excess Savings Plan prior to the Distribution Date with respect to ITT
Industries Salaried Employees. Effective as of the Distribution Date, ITT
Destinations shall adopt the ITT Destinations Excess Savings Plan, which shall
be identical in all material respects to the ITT Excess Savings Plan as in
effect
<PAGE> 11
11
immediately prior to the Distribution Date. Effective as of the Distribution
Date, ITT Hartford shall continue to sponsor the ITT Hartford Excess Savings
Plan. ITT Destinations does hereby assume liability for benefits accrued prior
to the Distribution Date under the ITT Excess Savings Plan with respect to ITT
Destinations Salaried Employees, and ITT Hartford does hereby assume liability
for benefits accrued prior to the Distribution Date under the ITT Excess Savings
Plan with respect to ITT Hartford Employees.
(c) Guarantee. (i) ITT Destinations and ITT Hartford
jointly and severally guarantee and agree, in the event ITT Industries fails to
satisfy its obligations in respect of benefits that have accrued prior to the
Distribution Date under the ITT Excess Pension Plan (including, without
limitation, to the extent that ITT Industries has assumed any such liability
pursuant to an employee's waiver of benefits under the ITT Hartford Excess
Pension Plan Trust, as contemplated by Section 3(a) above) or benefits that have
accrued prior to the Distribution Date under the ITT Excess Savings Plan, to
make payment when due in respect of all such obligations of ITT Industries in
respect of the ITT Excess Pension Plan or the ITT Excess Savings Plan, as
applicable. To the extent ITT Destinations or ITT Hartford makes payment in
respect of this guarantee, it will have a right of contribution from the
nonpaying guarantor of 50% of the payment made.
(ii) ITT Industries and ITT Hartford jointly and severally
guarantee and agree, in the event ITT Destinations fails to satisfy its
obligations in respect of benefits under the ITT Destinations Excess Pension
Plan that have accrued prior to the Distribution Date (including, without
limitation, to the extent that ITT Destinations has assumed any such liability
pursuant to an employee's waiver of benefits under the ITT Excess Pension Plan
Trust or the ITT Hartford Excess Pension Plan Trust, as contemplated by Section
3(a) above) or benefits that have accrued prior to the Distribution Date under
the ITT Destinations Excess Savings Plan with respect to ITT Destinations
Salaried Employees (including, without limitation, by reason of the assumption
by ITT Destinations of liability for such benefits under Section 3(b) above), to
make payment when due in respect of all such obligations of ITT Destinations in
respect of the ITT Destinations Excess Pension Plan or the ITT Destinations
Excess Savings Plan, as applicable. To the extent ITT Industries or ITT Hartford
makes payment in
<PAGE> 12
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respect of this guarantee, it will have a right of contribution from the
nonpaying guarantor of 50% of the payment made.
(iii) ITT Destinations and ITT Industries jointly and
severally guarantee and agree, in the event ITT Hartford fails to satisfy its
obligations in respect of benefits under the ITT Hartford Excess Plan that have
accrued prior to the Distribution Date (including, without limitation, to the
extent that ITT Hartford has assumed any such liability pursuant to an
employee's waiver of benefits under the ITT Excess Pension Plan Trust, as
contemplated by Section 3(a) above) or benefits that have accrued prior to the
Distribution Date under the ITT Hartford Excess Savings Plan with respect to ITT
Hartford Employees (including, without limitation, by reason of the assumption
by ITT Hartford of liability for such benefits under Section 3(b) above), to
make payment when due in respect of all such obligations of ITT Hartford in
respect of the ITT Hartford Excess Pension Plan or the ITT Hartford Excess
Savings Plan, as applicable. To the extent ITT Destinations or ITT Industries
makes payment in respect of this guarantee, it will have a right of contribution
from the nonpaying guarantor of 50% of the payment made.
(iv) This Section 3(c) is not intended to modify the
allocation and assumption of liabilities in respect of the excess pension plans
and excess savings plans contemplated by Section 3(a) and Section 3(b) hereof.
(v) It is the intention of the parties to this Agreement
that the provisions of this Section 3(c) shall be enforceable by any ITT
Employee or ITT retiree or their respective surviving beneficiaries.
4. ITT EMPLOYEE WELFARE BENEFIT PLANS. (a)
Establishment of Plans. (i) Subject to Section 10(c), effective as of
the Distribution Date, ITT Industries shall continue to sponsor the employee
welfare benefit plans of ITT for ITT Industries Salaried Employees. Such
employee welfare benefit plans shall include coverage for life insurance,
disability, health, accident and post-retirement health and life insurance.
(ii) Subject to Section 10(c), effective as of the
Distribution Date, ITT Destinations shall adopt the broad-based employee welfare
benefit plans of ITT Sheraton as the ITT Destinations salaried employee welfare
benefit program.
<PAGE> 13
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Such employee welfare benefit plans shall include coverage for life insurance,
health, accident and post-retirement health and life insurance. ITT Destinations
shall also adopt a long-term disability insurance plan and an excess long-term
disability plan, as provided in Section 4(d) hereof. Subject to Section 10(c),
ITT Destinations shall further cause CWI, ITT Educational Services and ITT
Intermedia, and use its commercially reasonable efforts to cause MSG, to
continue their respective separate employee welfare benefit plans covering their
respective employees.
(iii) Subject to Section 10(c), effective as of the
Distribution Date, ITT Hartford shall continue its broad-based employee welfare
benefit plans. Such employee welfare benefit plans shall include coverage for
life insurance, disability, health, accident and post-retirement health and life
insurance.
(b) Post-Retirement Benefits. (i) ITT Sheraton and ITT
Hartford each maintains separate employee welfare benefit programs that include
retiree medical and health benefits for certain of their respective salaried
employees. ITT Destinations acknowledges that, following the Distribution, it
will retain all liability with respect to such plans maintained by ITT Sheraton.
ITT Hartford acknowledges that, following the Distribution, it will retain all
liability with respect to such plans maintained by ITT Hartford.
ITT Industries shall retain all liability with respect to, and
all Code Section 501(c)(9) assets attributable to, retiree life insurance and
medical benefits under the ITT employee welfare benefit plans, except that (i)
ITT Industries shall transfer to ITT Destinations the liability of ITT with
respect to, and any assets attributable to, certain ITT Destinations Salaried
Employees whose employment is transferred to ITT Destinations in connection with
the Distribution, and ITT Destinations does hereby assume such liability and
(ii) ITT Industries shall transfer to ITT Hartford the liability with respect
to, and assets attributable to, certain ITT Employees whose employment is
transferred to ITT Hartford in connection with the Distribution, and ITT
Hartford does hereby assume such liability.
(ii) If there is a Change in Control of ITT Industries, ITT
Destinations or ITT Hartford during the ten-year period following the
Distribution, then the company in
<PAGE> 14
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which such Change in Control occurred shall not, during the balance of such
ten-year period, reduce or eliminate health benefits in effect immediately prior
to such Change in Control provided to former employees who retired from ITT or
any of its Affiliates on or prior to the Distribution Date (or as set forth in
the next succeeding sentence), or increase associated retiree contributions,
unless the other companies consent in writing to such a reduction, elimination
or cost increase; provided, however, that the company in which
the Change in Control occurred may, in its sole discretion, modify such benefits
in accordance with the changes contemplated in the assumptions in effect
immediately prior to the Change in Control that are used to establish such
company's Accumulated Postretirement Benefit Obligation (as defined in Statement
of Financial Accounting Standard No. 106). Persons who are receiving severance
payments in connection with the Distribution and who are or become eligible to
retire on or before the end of such severance period shall be afforded the
treatment of this Section 4(b)(ii).
(iii) Indemnity. In the event that any of ITT
Industries, ITT Destinations or ITT Hartford is asked to consent to a reduction,
elimination or cost increase with respect to retiree health benefits after a
Change in Control as described in clause (ii) above, each such company shall
determine whether to provide such consent in its sole and absolute discretion.
Each of ITT Industries, ITT Destinations and ITT Hartford does hereby agree to
indemnify any other company asked by it to provide such consent against any and
all liability that might arise with respect to the granting or withholding of
such consent.
(c) Severance. As of the Distribution Date, each of ITT
Industries, ITT Destinations and ITT Hartford shall provide severance plans for
all ITT Employees which are substantially equivalent to those ITT severance
plans covering such employees immediately prior to the Distribution Date. Such
severance plans shall be maintained without modification for a minimum of one
year.
(d) Long-Term Disability Insurance. (i) As of the
Distribution Date, ITT Destinations shall adopt a long-term disability plan,
identical in all material respects to the ITT Long-Term Disability Plan, as in
effect on the Distribution Date, covering eligible ITT Destinations Salaried
Employees. ITT Destinations shall be allocated a proportionate share of any
assets attributable thereto,
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including any assets (and any related liability) for incurred but unreported
claims. ITT Hartford shall be allocated a proportionate share of any assets
attributable thereto, including any assets (and any related liability) for
incurred but unreported claims. The reasonable determination of Metropolitan
Life Insurance Company with respect to the allocation of such assets among ITT
Industries, ITT Destinations and ITT Hartford shall be binding on the parties
hereto.
(ii) Effective as of the Distribution Date, ITT
Destinations shall adopt an excess long-term disability plan, identical in all
material respects to the ITT Excess Long-Term Disability Plan, as in effect on
the Distribution Date, covering those eligible ITT Destinations employees. ITT
Destinations does hereby assume all liabilities to ITT Destinations Salaried
Employees under the ITT Excess Long-Term Disability Plan.
5. BONUS PLAN; LONG-TERM PERFORMANCE PLAN. ITT
currently maintains certain bonus plans and the ITT Long-Term Performance Plan,
pursuant to which certain ITT Employees employed by ITT World Headquarters might
become entitled to payments after the Distribution Date with respect to their
performance with ITT prior to the Distribution Date. With respect to such ITT
Employees who continue in employment on the Distribution Date, ITT Industries
shall remain liable for such payments, including any such payments to be made
following the Distribution Date, except that any such payments deferred by any
such ITT Employee pursuant to the ITT Deferred Compensation Plan shall be the
liability of the company employing such ITT Employee on the Distribution Date.
With respect to such ITT Employees who do not continue in employment immediately
following the Distribution Date, ITT Industries shall remain liable for (i) the
payments described in the first sentence of this Section 5 and for any payments
under applicable severance arrangements, including any such payments to be made
following the Distribution Date, and (ii) any of the payments referred to in (i)
above deferred by any such ITT Employee pursuant to the ITT Deferred
Compensation Plan. ITT Industries, ITT Destinations and ITT Hartford shall cause
any such payments under the bonus plans to be recognized as compensation for
purposes of their respective retirement plans without regard to the source of
such payments, provided that all other terms and conditions of such retirement
plans shall apply to the determination of whether such payments are recognized
as compensation.
<PAGE> 16
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6. COLI. (i) Effective as of the Distribution Date, a
portion of the COLI policy underwritten by Penn Insurance and Annuity Company
covering ITT Destinations Salaried Employees shall be allocated to ITT
Destinations.
(ii) Effective as of the Distribution Date, the COLI policy
underwritten by Hartford Life Insurance Company covering certain ITT Employees
and directors of ITT, ITT Destinations and ITT Hartford who are eligible for
participation in the ITT Deferred Compensation Plan shall be allocated among the
three companies based on the employment of each such ITT Employee or service of
such director immediately following the Distribution Date.
7. STOCK OPTIONS AND OTHER AWARDS. (a) Effective as of
the Distribution Date, outstanding stock options, stock appreciation rights and
restricted stock awards ("ITT stock awards") under the ITT 1977 Stock Option
Incentive Plan, the ITT 1986 Incentive Stock Plan, and the ITT 1994 Incentive
Stock Plan, as each such plan may have been amended from time to time (the "ITT
Stock Plans"), shall be treated as follows:
(i) ITT Industries Salaried Employees. ITT stock awards
held by ITT Industries Salaried Employees shall be adjusted to reflect
the Distribution, as provided pursuant to the terms of the ITT Stock
Plans.
(ii) ITT Destinations Salaried Employees. ITT
Destinations Salaried Employees holding ITT stock awards shall receive
substitute stock awards in respect of ITT Destinations Common Stock
pursuant to the terms of the ITT Destinations Stock Plan, to be adopted
by ITT Destinations as of the Distribution Date, provided that such ITT
Destinations Salaried Employees surrender their ITT stock awards for
cancellation. Any such ITT stock awards not so surrendered and
cancelled shall be adjusted to reflect the Distribution, as provided
pursuant to the terms of the ITT Stock Plans and as described in
Section 7(a)(i).
(iii) ITT Hartford Employees. ITT Hartford Employees
holding ITT stock awards shall receive substitute stock awards in
respect of ITT Hartford Common Stock pursuant to the terms of the ITT
Hartford Stock Plan, to be adopted by ITT Hartford as of the
Distribution Date, provided that such ITT Hartford Employees surrender
their ITT stock awards for
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cancellation. Any such ITT stock awards not so surrendered and
cancelled shall be adjusted to reflect the Distribution, as provided
pursuant to the terms of the ITT Stock Plans and as described in
Section 7(a)(i).
(iv) Other Persons. Prior to the Distribution Date, the
Compensation and Personnel Committee of the Board of Directors of ITT
shall be asked to waive any remaining restrictions on the
exercisability and vesting of ITT stock awards held by other
individuals, including retirees and former employees of ITT. The
Compensation and Personnel Committee shall be asked to cause such
waiver to occur beginning on October 1, 1995 (or such earlier date as
it may determine). Any ITT stock awards held by such individuals that
have not been exercised as of the Distribution Date shall be adjusted
to reflect the Distribution, as provided pursuant to the terms of the
ITT Stock Plans and as described in Section 7(a)(i).
(b) Manner of Substitution. With respect to each
cancelled ITT stock award, the number and exercise price of substitute stock
awards granted under the ITT Destinations Stock Plan or the ITT Hartford Stock
Plan with respect thereto, and the other terms and conditions of the substitute
stock awards, shall be equitably determined to preserve the economic value of
the cancelled ITT stock award.
8. FOREIGN BENEFIT PLANS. Certain current and former
employees of ITT Industries, ITT Destinations and ITT Hartford participate in
(i) ITT Group pension plans and savings plans made available for ITT Group
employees in Canada, the United Kingdom, Belgium and Ireland or (ii) expatriate
pension plans. The plan actuary for each such plan shall be responsible for
determining the appropriate amount of assets to be allocated to comparable plans
to be established and adopted by the companies as required, in each case in
accordance with applicable local law.
9. DIRECTOR PLANS. (a) Effective as of the Distribution
Date, ITT Industries shall continue the ITT Deferred Compensation Plan, the ITT
Directors Retirement Plan (which was suspended as of October 1, 1995), the group
life insurance program of ITT and the ITT Group Accident Program. With respect
to any non-employee director of ITT Industries immediately following the
Distribution who is not
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also a director of ITT Destinations at such time and who has an accrued benefit
under the suspended ITT Directors Retirement Plan, ITT Industries shall provide
such accrued benefit in accordance with the terms of such plan, but only to the
extent such accrued benefit is not duplicated under a plan maintained by ITT
Destinations or ITT Hartford.
(b) Effective as of the Distribution Date, ITT
Destinations shall adopt plans and programs for non-employee directors that are
identical in all material respects to the ITT Deferred Compensation Plan, the
ITT Directors Retirement Plan (which was suspended as of October 1, 1995), the
group life insurance program of ITT and the ITT Group Accident Program. With
respect to any non-employee director of ITT Destinations immediately following
the Distribution who has an accrued benefit under the suspended ITT Directors
Retirement Plan, ITT Destinations shall provide such accrued benefit in
accordance with the terms of such plan, but only to the extent such accrued
benefit is not duplicated under a plan maintained by ITT Industries or ITT
Hartford.
(c) Effective as of the Distribution Date, ITT Hartford
intends to adopt plans and programs for non-employee directors that are
identical in all material respects to the group life insurance program of ITT
and the ITT Group Accident Program. With respect to any non-employee director of
ITT Hartford who has an accrued benefit under the suspended retirement plan
covering ITT Hartford non-employee directors, ITT Hartford shall provide such
accrued benefit in accordance with the terms of such plan, but only to the
extent such accrued benefit is not duplicated under a plan maintained by ITT
Industries or ITT Destinations.
10. BENEFIT PROGRAM PARTICIPATION. (a) Except as
specifically provided herein, all ITT Destinations and ITT Hartford employees
(including ITT Destinations Salaried Employees and ITT Hartford Employees) will
cease participation in all ITT benefit plans and programs immediately prior to
the Distribution Date. As soon as reasonably practicable, ITT Industries will
provide an accounting of the 1995 claims experience for ITT Destinations
employees and ITT Hartford Employees who participate in the ITT welfare benefit
plans and programs and reasonably determine any reconciliation payment
necessary.
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(b) ITT Destinations shall cause to be recognized each ITT
Destinations Salaried Employee's service with ITT for purposes of determining
(i) eligibility for vacation benefits, short-term disability and severance
benefits and (ii) eligibility for vesting under all other employee benefit plans
and policies of ITT Destinations applicable to such ITT Destinations Salaried
Employees, to the extent such service was recognized by ITT for such purposes.
ITT Hartford shall cause to be recognized each ITT Hartford Employee's service
with ITT for purposes of determining (i) eligibility for vacation benefits,
short-term disability and severance benefits and (ii) eligibility for vesting
under all other employee benefit plans and policies of ITT Hartford applicable
to such ITT Hartford Employees, to the extent such service was recognized by ITT
for such purposes.
(c) Nothing in this Agreement shall be construed or
interpreted to restrict ITT Industries', ITT Destinations' or ITT Hartford's
right or authority to amend or terminate any of its employee benefit plans,
policies or programs effective as of a date following the Distribution Date,
except as explicitly stated in Section 4(b) hereof.
11. ALLOCATION OF BALANCE SHEET ACCOUNTS. Effective as
of the Distribution Date, certain balance sheet accounts attributable to
employee benefit plans for which responsibility is being transferred from ITT to
ITT Destinations and/or ITT Hartford shall be allocated to the balance sheets of
ITT Destinations or ITT Hartford, as appropriate, on the following basis:
(a) All accruals on the balance sheets of ITT Destinations
(including accruals on the balance sheet of ITT Sheraton) and ITT Hartford which
relate to benefit plans sponsored by the respective companies shall be
unaffected by the provisions of this Section 11.
(b)(i) With respect to the unfunded pension plan liabilities
assumed by ITT Destinations (excluding all liabilities assumed pursuant to a
waiver described in Section 3 of this Agreement), the then current balance sheet
accrual shall be transferred.
(ii) With respect to the unfunded pension plan liabilities
assumed by ITT Destinations pursuant to a waiver described in Section 3 of this
Agreement, the then current balance sheet accrual for the ITT Excess Pension
Plan shall be allocated between ITT Industries and ITT Destinations in
<PAGE> 20
20
proportion to the Accumulated Benefit Obligation (as that term is defined in
Statement of Financial Accounting Standard No. 87) assumed by such companies.
(c) With regard to the ITT Directors Retirement Plan,
there shall be allocated to the responsible party, determined in accordance with
Section 9 of this Agreement, the present value of the accrued pension benefit as
of the Distribution Date for those eligible directors for whom the liability is
being assumed by either ITT Destinations or ITT Hartford using the discount rate
last adopted by ITT for purposes of Statement of Financial Accounting Standard
No. 87.
(d) With respect to the liabilities being assumed by ITT
Destinations and ITT Hartford in connection with the provisions of Section 4(b)
of this Agreement, ITT shall allocate to the respective parties the "Accumulated
Postretirement Benefit Obligation" (as that term is defined in Statement of
Financial Accounting Standard No. 106), using the assumptions in effect as of
the Distribution Date, for ITT Employees who, immediately after the
Distribution, are employed by ITT Destinations or ITT Hartford.
(e) In connection with the book reserves maintained by ITT
with respect to the liabilities for Other Postemployment Benefits, as that term
is described in Statement of Financial Accounting Standard No. 112, ITT shall
allocate to ITT Destinations and ITT Hartford, respectively, the amounts
previously provided by operations which, after the Distribution Date, shall be
part of ITT Destinations and ITT Hartford, adjusted to reflect the gain
recognized by ITT in connection with the 1993 changes to Medicare.
(f) With regard to the liabilities recorded by ITT with
respect to the ITT Excess Savings Plan that will, in accordance with Section
3(b), be assumed by ITT Destinations and ITT Hartford, respectively, ITT shall
allocate to the respective new employing entity an amount equal to the sum of
the plan balances for such affected employees.
(g) With respect to the liabilities accrued by ITT in
connection with the ITT Excess Long-Term Disability Plan, ITT shall allocate to
ITT Destinations a share of such book reserves based on the proportion of the
exposure
<PAGE> 21
21
assumed by ITT Destinations to the total exposure under the plan as determined
by Metropolitan Life Insurance Company.
(h) In connection with the assumption by ITT Destinations
of a portion of the responsibility for the ITT Third Country National Pension
Plan, with an appropriate transfer of assets, as provided in Section 8 of this
Agreement, ITT shall allocate to ITT Destinations a portion of the prepaid
pension expense in the same proportion that the assets transferred relate to the
total assets of the plan.
(i) For each category of balance sheet account enumerated in
this Section 11, there has been recorded a corresponding deferred tax debit or
credit, as the case may be, which shall also be allocated to the respective
companies based on the amount allocated for the stated reason above.
(j) To the extent that a balance sheet account requiring
allocation among the companies exists that is not specifically included in this
Section 11, ITT shall make the allocation on a reasonable basis, subject to the
agreement of the party in whose favor the allocation is being made.
12. ACCESS TO INFORMATION AND DATA EXCHANGE. (a)
Provision of Corporate Records. (i) Unless otherwise specified in the
procedures set forth in Schedule 12(c)(ii) hereto, after the Distribution Date,
upon the prior written request by ITT Destinations or ITT Hartford for specific
and identified agreements, documents, books, records or files including, without
limitation, computer files, microfiche, tape recordings and photographs
(collectively, "Records"), relating to or affecting ITT Destinations or ITT
Hartford, as applicable, ITT Industries shall arrange, as soon as reasonably
practicable following the receipt of such request, for the provision of
appropriate copies of such Records (or the originals thereof if the party making
the request has a reasonable need for such originals) in the possession of ITT
Industries or any of its Subsidiaries, but only to the extent such items are not
already in the possession of the requesting party.
(ii) Unless otherwise specified in the procedures set forth
in Schedule 12(c)(ii) hereto, after the Distribution Date, upon the prior
written request by ITT Industries or ITT Hartford for specific and identified
Records relating to or affecting ITT Industries or ITT
<PAGE> 22
22
Hartford, as applicable, ITT Destinations shall arrange, as soon as reasonably
practicable following the receipt of such request, for the provision of
appropriate copies of such Records (or the originals thereof if the party making
the request has a need for such originals) in the possession of ITT Destinations
or any of its Subsidiaries, but only to the extent such items are not already in
the possession of the requesting party.
(iii) Unless otherwise specified in the procedures set forth
in Schedule 12(c)(ii) hereto, after the Distribution Date, upon the prior
written request by ITT Industries or ITT Destinations for specific and
identified Records relating to or affecting ITT Industries or ITT Destinations,
as applicable, ITT Hartford shall arrange, as soon as reasonably practicable
following the receipt of such request, for the provision of appropriate copies
of such Records (or the originals thereof if the party making the request has a
need for such originals) in the possession of ITT Hartford or any of its
Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
(b) Access to Information. (i) Unless otherwise
specified in the procedures set forth in Schedule 12(c)(ii) hereto, from and
after the Distribution Date, each of ITT Industries, ITT Destinations and ITT
Hartford shall afford to the other and its authorized accountants, counsel and
other designated representatives reasonable access during normal business hours,
subject to appropriate restrictions for classified, privileged or confidential
information, to the personnel, properties, books and Records of such party and
its Subsidiaries insofar as such access is reasonably required by the other
party.
(ii) Without limiting the generality of the foregoing
clause (i), except as otherwise provided by law, each party hereto shall
furnish, or shall cause to be furnished to the other parties, a list of all
benefit plan participants and employee data or information in its possession
which is necessary for such other parties to maintain and implement any benefit
plan or arrangement covered by this Agreement, or to comply with the provisions
of this Agreement, and which is not otherwise readily available to such other
party.
(c) Reimbursement; Other Matters. (i) Except to the
extent otherwise contemplated by the Distribution
<PAGE> 23
23
Agreement or any Ancillary Agreement or Schedule 12(c)(ii) hereto, a party
providing Records or access to information to the other party under this Section
12 shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, payments for such amounts, relating to supplies,
disbursements and other out-of-pocket expenses, as may be reasonably incurred in
providing such Records or access to information.
(ii) The parties hereto shall comply with those document
retention policies, cost sharing arrangements, expense reimbursement procedures
and request procedures as shall be set forth in Schedule 12(c)(ii) hereto or
established and agreed to in writing by their respective authorized officers on
or prior to the Distribution Date in respect of Records and related matters.
(d) Confidentiality. Each of (i) ITT Industries and its
Subsidiaries, (ii) ITT Destinations and its Subsidiaries and (iii) ITT Hartford
and its Subsidiaries shall not use or permit the use of (without the prior
written consent of the other) and shall hold, and shall cause its consultants
and advisors to hold, in strict confidence, all information concerning the other
parties in its possession, its custody or under its control (except to the
extent that (A) such information has been in the public domain through no fault
of such party or (B) such information has been later lawfully acquired from
other sources by such party or (C) the Distribution Agreement, this Agreement or
any other Ancillary Agreement or any other agreement entered into pursuant
hereto permits the use or disclosure of such information) to the extent such
information (x) relates to the period up to the Effective Time, (y) relates to
the Distribution Agreement or any Ancillary Agreement or (z) is obtained in the
course of performing services for the other party pursuant to the Distribution
Agreement or any Ancillary Agreement, and each party shall not (without the
prior written consent of the other) otherwise release or disclose such
information to any other person, except such party's auditors and attorneys,
unless compelled to disclose such information by judicial or administrative
process or unless such disclosure is required by law and such party has used
commercially reasonable efforts to consult with the other affected party or
parties prior to such disclosure. To the extent that a party hereto is compelled
by judicial or administrative process to disclose such information under
circumstances in which any evidentiary privilege would be available, such party
agrees
<PAGE> 24
24
to assert such privilege in good faith prior to making such disclosure. Each of
the parties hereto agrees to consult with each relevant other party in
connection with any such judicial or administrative process, including, without
limitation, in determining whether any privilege is available, and further
agrees to allow each such relevant party and its counsel to participate in any
hearing or other proceeding (including, without limitation, any appeal of an
initial order to disclose) in respect of such disclosure and assertion of
privilege. Notwithstanding anything to the contrary contained herein, each party
shall be entitled to use information disclosed pursuant to this Agreement to the
extent reasonably necessary for the administration of its employee benefit plans
in accordance with applicable law.
13. NOTICES; COOPERATION. Notwithstanding anything in
this Agreement to the contrary, all actions contemplated herein with respect to
benefit plans which are to be consummated pursuant to this Agreement shall be
subject to such notices to, and/or approvals by, the Internal Revenue Service
(or other governmental agency or entity) as are required or deemed appropriate
by such benefit plan's sponsor. Each of ITT Industries, ITT Destinations and ITT
Hartford agrees to use its commercially reasonable efforts to cause all such
notices and/or approvals to be filed or obtained, as the case may be. Each party
hereto shall reasonably cooperate with the other parties with respect to any
government filings, employee notices or any other actions reasonably necessary
to maintain and implement the employee benefit arrangements covered by this
Agreement.
14. FURTHER ASSURANCES. From time to time, as and when
reasonably requested by any other party hereto, each party hereto shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to effect
the purposes of this Agreement and the transactions contemplated hereunder.
15. INDEMNIFICATION. (a) Indemnification by ITT
Industries. Except as otherwise specifically set forth in this Agreement or
the Distribution Agreement, ITT Industries shall indemnify, defend and hold
harmless the ITT Destinations Indemnitees and the ITT Hartford Indemnitees from
and against any and all Indemnifiable Losses of the ITT Destinations Indemnitees
and the ITT Hartford Indemnitees,
<PAGE> 25
25
respectively, arising out of, by reason of or otherwise in connection with (i)
any employee benefit plan, policy, program or arrangement established or adopted
by ITT Industries effective on or after the Distribution Date, (ii) any
liability assumed or retained by ITT Industries pursuant to the terms and
conditions set forth in this Agreement or (iii) the breach by ITT Industries of
any provision of this Agreement.
(b) Indemnification by ITT Destinations. Except as
otherwise specifically set forth in this Agreement or the Distribution
Agreement, ITT Destinations shall indemnify, defend and hold harmless the ITT
Industries Indemnitees and the ITT Hartford Indemnitees from and against any and
all Indemnifiable Losses of the ITT Industries Indemnitees and the ITT Hartford
Indemnitees, respectively, arising out of, by reason of or otherwise in
connection with (i) any employee benefit plan, policy, program or arrangement
established or adopted by ITT Destinations effective on or after the
Distribution Date, (ii) any liability assumed or retained by ITT Destinations
pursuant to the terms and conditions set forth in this Agreement or (iii) the
breach by ITT Destinations of any provision of this Agreement.
(c) Indemnification by ITT Hartford. Except as
otherwise specifically set forth in this Agreement or the Distribution
Agreement, ITT Hartford shall indemnify, defend and hold harmless the ITT
Industries Indemnitees and the ITT Destinations Indemnitees from and against any
and all Indemnifiable Losses of the ITT Industries Indemnitees and the ITT
Destinations Indemnitees, respectively, arising out of, by reason of or
otherwise in connection with (i) any employee benefit plan, policy, program or
arrangement established or adopted by ITT Hartford effective on or after the
Distribution Date, (ii) any liability assumed or retained by ITT Hartford
pursuant to the terms and conditions set forth in this Agreement and (iii) the
breach by ITT Hartford of any provision of this Agreement.
(d) Limitations on Indemnification Obligations. (i) The
amount that any party (an "Indemnifying Party") is or may be required to pay to
any other person (an "Indemnitee") pursuant to paragraphs (a), (b) or (c) of
this Section 15, as applicable, shall be reduced (retroactively or
prospectively) by any Insurance Proceeds or other amounts actually recovered by
or on behalf of such Indemnitee in respect of the related Indemnifiable Loss. If
an Indemnitee shall have received the payment required by this Agreement
<PAGE> 26
26
from an Indemnifying Party in respect of an Indemnifiable Loss and shall
subsequently actually receive Insurance Proceeds or other amounts in respect of
such Indemnifiable Loss, then such Indemnitee shall pay to such Indemnifying
Party a sum equal to the amount of such Insurance Proceeds or other amounts
actually received, up to the aggregate amount of any payments received from such
Indemnifying Party pursuant to this Agreement in respect of such Indemnifiable
Loss.
(ii) An Indemnifying Party shall not be required to
indemnify or pay an Indemnitee pursuant to paragraphs (a), (b) or (c) of this
Section 15, as applicable, for any Indemnifiable Losses relating to or
associated with any employee benefit plan, policy, program or arrangement of the
Indemnifying Party arising out of, by reason of or otherwise in connection with
any act or failure to act on the part of such Indemnitee (including for this
purpose any subsidiaries, businesses or operations which become associated with
the Indemnitee by virtue of or in connection with the Distribution) with respect
to or in connection with such employee benefit plan, policy, program or
arrangement, including, without limitation, any such act or failure to act in
connection with the administration by the Indemnitee of such employee benefit
plan, policy, program or arrangement.
(e) Procedures for Indemnification (Third Party
Claims). If a claim or demand is made against an Indemnitee by any person
who is not a party to this Agreement (a "Third Party Claim") as to which such
Indemnitee is entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the Indemnifying Party in writing, and in reasonable
detail, of the Third Party Claim promptly (and in any event within 15 business
days) after receipt by such Indemnitee of written notice of the Third Party
Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnitee failed to give such notice).
Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly
(and in any event within 15 business days) after the Indemnitee's receipt
thereof, copies of all notices and documents (including court papers) received
by the Indemnitee relating to the Third Party Claim.
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27
If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
Indemnitee therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably
objected to by the Indemnitee. Should the Indemnifying Party so elect to assume
the defense of a Third Party Claim, the Indemnifying Party shall not be liable
to the Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the Indemnifying Party
assumes such defense, the Indemnitee shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense. The Indemnifying Party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof (other than during the period prior to the time the Indemnitee shall
have given notice of the Third Party Claim as provided above). If the
Indemnifying Party so elects to assume the defense of any Third Party Claim, all
of the Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof.
If the Indemnifying Party acknowledges in writing liability for
a Third Party Claim, then in no event will the Indemnitee admit any liability
with respect to, or settle, compromise or discharge, any Third Party Claim
without the Indemnifying Party's prior written consent; provided,
however, that the Indemnitee shall have the right to settle, compromise
or discharge such Third Party Claim without the consent of the Indemnifying
Party if the Indemnitee releases the Indemnifying Party from its indemnification
obligation hereunder with respect to such Third Party Claim and such settlement,
compromise or discharge would not otherwise significantly adversely affect the
Indemnifying Party. If the Indemnifying Party acknowledges in writing liability
for a Third Party Claim, the Indemnitee will agree to any settlement, compromise
or discharge of a Third Party Claim that the Indemnifying Party may recommend
and that by its terms obligates the Indemnifying Party to pay the full amount of
the liability in connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party Claim and that would
not otherwise adversely affect the Indemnitee; provided,
however, that the
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28
Indemnitee may refuse to agree to any such settlement, compromise or discharge
if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation with respect to such Third Party Claim shall not exceed the amount
that would be required to be paid by or on behalf of the Indemnifying Party in
connection with such settlement, compromise or discharge.
Notwithstanding the foregoing, the Indemnifying Party shall not
be entitled to assume the defense of any Third Party Claim (and shall be liable
for the fees and expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnitee which the Indemnitee reasonably determines, after conferring with its
counsel, cannot be separated from any related claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
Indemnification required by this Section 15 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or loss, liability, claim, damage or
expense is incurred.
All claims under Section 15 that are Third Party Claims shall
be governed by this Section 15(e).
(f) Other Adjustments. (i) The amount of any
Indemnifiable Loss shall be (x) increased to take into account any net Tax cost
actually incurred by the Indemnitee arising from any payments received from the
Indemnifying Party (grossed up for such increase) and (y) reduced to take
account of any net Tax benefit actually realized by the Indemnitee arising from
the incurrence or payment of any such Indemnifiable Loss. In computing the
amount of any such Tax cost or Tax benefit, the Indemnitee shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt of any payment with respect to an
Indemnifiable Loss or the incurrence or payment of any Indemnifiable Loss.
(ii) In addition to any adjustments required pursuant to
Section 15(d) hereof or clause (i) of this
<PAGE> 29
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Section 15(f), if the amount of any Indemnifiable Loss shall, at any time
subsequent to the payment required by this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less any expenses
incurred in connection therewith, shall promptly be repaid by the Indemnitee to
the Indemnifying Party, up to the aggregate amount of any payments received from
such Indemnifying Party pursuant to this Agreement in respect of such
Indemnifiable Loss.
(g) Survival of Indemnities. The obligations of ITT
Industries, ITT Destinations and ITT Hartford under this Section 15 shall
survive the sale or other transfer by any of them of any assets or businesses or
the assignment by any of them of any Liabilities, with respect to any
Indemnifiable Loss of the other related to such assets, businesses or
Liabilities.
16. DISPUTE RESOLUTION. In the event of a controversy,
dispute or claim arising out of, in connection with, or in relation to the
interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement,
including, without limitation, any claim based on contract, tort, statute or
constitution (collectively, "Agreement Disputes"), the general counsels of the
relevant parties shall negotiate in good faith for a reasonable period of time
to settle such Agreement Dispute.
If after such reasonable period such general counsels are
unable to settle such Agreement Dispute (and in any event after 60 days have
elapsed from the time the relevant parties began such negotiations), such
Agreement Dispute shall be determined, at the request of any relevant party, by
arbitration conducted in New York City, before and in accordance with the
then-existing Rules for Commercial Arbitration of the American Arbitration
Association (the "Rules"), and any judgment or award rendered by the arbitrator
shall be final, binding and nonappealable (except upon grounds specified in 9
U.S.C. Section 10(a) as in effect on the date hereof), and judgment may be
entered by any state or Federal court having jurisdiction thereof in accordance
with Section 17(q) hereof. Unless the arbitrator otherwise determines, the
pre-trial discovery of the then-existing Federal Rules of Civil Procedure and
the then-existing Rules 46 and 47 of the Civil Rules for the United States
District Court for the Southern District of New York shall apply to any
arbitration hereunder. Any controversy
<PAGE> 30
30
concerning whether an Agreement Dispute is an arbitrable Agreement Dispute,
whether arbitration has been waived, whether an assignee of this Agreement is
bound to arbitrate, or as to the interpretation of enforceability of this
Section 15 shall be determined by the arbitrator. The arbitrator shall be a
retired or former judge of any United States District Court or Court of Appeals
or such other qualified person as the relevant parties may agree to designate,
provided such individual has had substantial professional experience
with regard to settling sophisticated commercial disputes. The parties intend
that the provisions to arbitrate set forth herein be valid, enforceable and
irrevocable. The designation of a situs or a governing law for this Agreement or
the arbitration shall not be deemed an election to preclude application of the
Federal Arbitration Act, if it would be applicable. In his award the arbitrator
shall allocate, in his discretion, among the parties to the arbitration all
costs of the arbitration, including, without limitation, the fees and expenses
of the arbitrator and reasonable attorneys' fees, costs and expert witness
expenses of the parties. The undersigned agree to comply with any award made in
any such arbitration proceedings that has become final in accordance with the
Rules and agree to the entry of a judgment in any jurisdiction upon any award
rendered in such proceedings becoming final under the Rules. The arbitrator
shall be entitled, if appropriate, to award any remedy in such proceedings,
including, without limitation, monetary damages, specific performance and all
other forms of legal and equitable relief; provided, however,
the arbitrator shall not be entitled to award punitive damages.
17. MISCELLANEOUS. (a) Complete Agreement;
Construction. This Agreement, including the Schedule, shall constitute the
entire agreement between the parties with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter. The Schedule shall be construed with and as an
integral part of this Agreement to the same extent as if the same had been set
forth verbatim herein.
(b) Ancillary Agreements. This Agreement is not
intended to address, and should not be interpreted to address, the matters
explicitly and expressly covered by the Distribution Agreement or the Ancillary
Agreements.
(c) Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be
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31
considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties.
(d) Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
(e) Notices. All notices and other communications
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and will be deemed given on the date on which
such notice is received:
To ITT Corporation (ITT Industries, Inc.
after the Distribution):
4 West Red Oak Lane
White Plains, NY 10604
Attn: General Counsel
To ITT Destinations, Inc. (ITT Corporation
after the Distribution):
1330 Avenue of the Americas
New York, NY 10019
Attn: Executive Vice President and
General Counsel
To ITT Hartford Group, Inc.:
Hartford Plaza
Hartford, CT 06115
Attn: General Counsel
(f) Waivers. The failure of either party to require
strict performance by the other party of any
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provision in this Agreement will not waive or diminish that party's right to
demand strict performance thereafter of that or any other provision thereof.
(g) Amendments. Subject to the terms of Section 17(j),
this Agreement may not be modified or amended except by an agreement in writing
signed by the parties.
(h) Assignment. This Agreement shall be assignable in
whole in connection with a merger or consolidation or the sale of all or
substantially all the assets of a party hereto so long as the resulting,
surviving or transferee entity assumes all the obligations of the relevant party
hereto by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other parties to this Agreement. Otherwise this
Agreement shall not be assignable, in whole or in part, directly or indirectly,
by any party hereto without the prior written consent of the others, and any
attempt to assign any rights or obligations arising under this Agreement without
such consent shall be void.
(i) Successors and Assigns. The provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective permitted successors and permitted assigns.
(j) Termination. This Agreement (including, without
limitation, Section 3(c) and Section 15 hereof) may be terminated, amended,
modified or abandoned at any time prior to the Distribution by and in the sole
discretion of ITT without the approval of ITT Destinations or ITT Hartford or
the shareholders of ITT. In the event of such termination, no party shall have
any liability of any kind to any other party or any other person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties; provided, however, that Section 3(c) and
Section 15 shall not be terminated or amended after the Distribution in respect
of the third party beneficiaries thereto without the consent of such persons.
(k) Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Subsidiary of
such party or by any entity that is contemplated to be a Subsidiary of such
party on and after the Distribution Date.
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(l) Third Party Beneficiaries. Except as provided in
Section 3(c) hereof relating to excess pension plan guarantees and excess
savings plan guarantees and in Section 15 hereof relating to Indemnitees, this
Agreement is solely for the benefit of the parties hereto and their respective
Subsidiaries and Affiliates and should not be deemed to confer upon third
parties any remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without reference to this Agreement.
(m) Attorney Fees. Except as contemplated by the third
to the last sentence of Section 16 hereof, a party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other parties hereto for and
against all out-of-pocket expenses, including, without limitation, legal fees,
incurred by such other party by reason of the enforcement and protection of its
rights under this Agreement. The payment of such expenses is in addition to any
other relief to which such party may be entitled hereunder or otherwise.
(n) Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
(o) Specific Performance. Each of the parties hereto
acknowledges that there is no adequate remedy at law for failure by such parties
to comply with the provisions of this Agreement and that such failure would
cause immediate harm that would not be adequately compensable in damages, and
therefore agree that their agreements contained herein may be specifically
enforced without the requirement of posting a bond or other security, in
addition to all other remedies available to the parties hereto under this
Agreement.
(p) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED IN AND TO BE PERFORMED IN THAT STATE.
(q) Consent to Jurisdiction. Without limiting the
provisions of Section 16 hereof, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern
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34
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Southern District of New York
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 17(q). Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
herein in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient form.
(r) Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
<PAGE> 35
35
(s) Effectiveness. This Agreement shall be effective as
of the Distribution Date, subject to the consummation of the Distribution.
(t) Definitions. Capitalized terms used herein shall
have the respective meanings specified in the Appendix attached hereto unless
otherwise herein defined or the context hereof shall otherwise require.
IN WITNESS WHEREOF, the parties have duly executed and entered
into this Agreement, as of the date first above written.
ITT Corporation,
By:______________________
Name:____________________
Title:___________________
ITT Destinations, Inc.,
By:______________________
Name:____________________
Title:___________________
ITT Hartford Group, Inc.,
By:______________________
Name:____________________
Title:___________________
<PAGE> 36
Appendix
As used in the Agreement, the following terms have the
following meanings:
"Action" means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any arbitration
tribunal.
"Affiliate" means, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
person specified.
"Agreement Disputes" has the meaning set forth in Section 16 of
this Agreement.
"Ancillary Agreements" means all of the written agreements,
instruments, understandings, assignments or other written arrangements (other
than this Agreement and the Distribution Agreement) entered into in connection
with the transactions contemplated hereby, including, without limitation, the
Conveyancing and Assumption Instruments, the Tax Allocation Agreement and the
Intellectual Property Agreements.
"CWI" means Caesars World, Inc.
"Change in Control" means the occurrence of any of the
following events with respect to the relevant corporation: (i) a report on
Schedule 13D shall be filed with the Securities and Exchange Commission pursuant
to Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") or
any successor provision disclosing that any person (within the meaning of
Section 13(d) of the Exchange Act), other than the relevant corporation or a
subsidiary thereof, or any employee benefit plan maintained by the relevant
corporation or a subsidiary thereof, is the beneficial owner directly or
indirectly of 20% or more of the outstanding common stock of the relevant
corporation; (ii) any person (within the meaning of Section 13(d) of the
Exchange Act), other than the relevant corporation or a subsidiary thereof, or
any employee benefit plan maintained by the relevant corporation or a subsidiary
thereof, shall purchase shares pursuant to a tender offer or exchange offer
<PAGE> 37
2
to acquire any of the common stock of such relevant corporation (or securities
convertible into such common stock) for cash, securities or any other
consideration, provided that after the consummation of the offer, the person in
question is the beneficial owner (as defined in Rule 13d-3 of the Exchange Act)
directly or indirectly of 15% or more of the outstanding common stock of the
relevant corporation (calculated as provided in paragraph (d) of Rule 13d-3
under the Exchange Act in the case of rights to acquire common stock); (iii) the
shareholders of the relevant corporation shall approve (A) any consolidation or
merger of the relevant corporation in which such corporation is not the
continuing or surviving corporation or pursuant to which shares of the common
stock of the relevant corporation would be converted into cash, securities or
other property, other than a merger of the relevant corporation in which holders
of the common stock thereof immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger as immediately before or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the relevant corporation; or (iv) there shall
have been a change in majority of the members of the board of directors of the
relevant corporation within a 12-month period unless the election or nomination
for election by the shareholders of the relevant corporation of each new
director during such 12-month period was approved by the vote of two-thirds of
the directors then still in office who were directors at the beginning of such
12-month period.
"Code" means the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including any
successor legislation.
"Conveyancing and Assumption Instruments" means,
collectively, the various agreements, instruments and other documents to be
entered into to effect the transfer of assets and the assumption of Liabilities
in the manner contemplated by the Distribution Agreement, this Agreement and the
Ancillary Agreements.
"Distribution" means the distribution on the
Distribution Date to holders of record of shares of ITT Common Stock as of the
Distribution Record Date of (i) the ITT Destinations Common Stock owned by ITT
on the basis of one share of ITT Destinations Common Stock for each
<PAGE> 38
3
outstanding share of ITT Common Stock and (ii) the ITT Hartford Common Stock
owned by ITT on the basis of one share of ITT Hartford Common Stock for each
outstanding share of ITT Common Stock.
"Distribution Agreement" means the Distribution
Agreement dated as of November 1, 1995, among ITT, ITT Destinations and ITT
Hartford.
"Distribution Date" means such date as may hereafter be
determined by ITT's Board of Directors as the date as of which the Distribution
shall be effected.
"Distribution Record Date" means such date as may
hereafter be determined by ITT's Board of Directors as the record date for the
Distribution.
"Effective Time" means 11:59 p.m., New York time, on
the Distribution Date.
"Indemnifiable Losses" means any and all losses,
liabilities, claims, damages, demands, costs or expenses (including, without
limitation, reasonable attorneys' fees and any and all out-of-pocket expenses)
whatsoever reasonably incurred in investigating, preparing for or defending
against any Actions or potential Actions.
"Indemnifying Party" has the meaning set forth in Section
15(d).
"Indemnitee" has the meaning set forth in Section 15(d).
"Insurance Proceeds" means those monies (i) received by
an insured from an insurance carrier or (ii) paid by an insurance carrier on
behalf of the insured, in either case net of any applicable premium adjustment,
retroactively-rated premium, deductible, retention, cost of reserve paid or held
by or for the benefit of such insured.
"Intellectual Property Agreements" means the various
intellectual property and licensing agreements entered into in connection with
the Distribution.
"ITT" means ITT Corporation, a Delaware corporation and
its predecessor Maryland corporation, together with its Subsidiaries, to be
renamed "ITT
<PAGE> 39
4
Industries, Inc." and reincorporated under Indiana law in connection with the
Distribution.
"ITT Bonus Plan" means the ITT Annual Incentive Bonus
Plan maintained by ITT.
"ITT Common Stock" has the meaning set forth in the preamble to
this Agreement.
"ITT Deferred Compensation Plan" means (i) the 1995 ITT
Deferred Compensation Plan or (ii) the 1995 ITT Industries Deferred Compensation
Plan, after giving effect to the Distribution, in each case as the context
requires.
"ITT Destinations" means ITT Destinations, Inc., a
Nevada corporation, together with its Subsidiaries, to be renamed "ITT
Corporation" in connection with the Distribution, and referred to in the Proxy
Statement as "New ITT".
"ITT Destinations Common Stock" has the meaning set forth in
the preamble to this Agreement.
"ITT Destinations Excess Pension Plan" means the excess
pension plan to be adopted by ITT Destinations effective as of the Distribution
Date, to be known after the Distribution as the "ITT Excess Pension Plan" and
referred to in the Proxy Statement as the "New ITT Excess Plan".
"ITT Destinations Excess Pension Plan Trust" means the
excess pension plan trust to be adopted by ITT Destinations effective as of the
Distribution Date.
"ITT Destinations Excess Savings Plan" means the excess
investment and savings plan to be adopted by ITT Destinations effective as of
the Distribution Date, to be known after the Distribution as the "ITT Excess
Savings Plan" and referred to in the Proxy Statement as the "New ITT Excess
Savings Plan".
"ITT Destinations Indemnitees" means ITT Destinations,
each Affiliate of ITT Destinations, each of their respective directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
"ITT Destinations Salaried Employees" means persons who,
immediately after the Distribution, are
<PAGE> 40
5
employed on a salaried basis by ITT Destinations, including such persons absent
from work at ITT Destinations by reason of layoff, leave of absence or
disability.
"ITT Destinations Salaried Retirement Plan" means the
Sheraton Salaried Retirement Plan, as adopted by ITT Destinations effective as
of the Distribution Date, to be known as the "ITT Salaried Retirement Plan" and
referred to in the Proxy Statement as the "New ITT Salaried Retirement Plan".
"ITT Destinations Savings Plan" means the defined
contribution investment and savings plan to be adopted by ITT Destinations
effective as of the Distribution Date, to be known after the Distribution as the
"ITT Investment and Savings Plan" and referred to in the Proxy Statement as the
"New ITT Savings Plan".
"ITT Destinations Stock Plan" means the ITT 1995
Incentive Stock Plan to be adopted by ITT Destinations effective as of the
Distribution.
"ITT Directors Retirement Plan" means (i) the
Retirement Plan for Non-Management Directors of ITT Corporation or (ii) the ITT
Industries Directors Retirement Plan, after giving effect to the Distribution,
in each case as the context requires.
"ITT Employees" means (i) persons employed in the
United States on a salaried basis by the ITT Group immediately prior to the
Distribution, except those persons who are employed by CWI and MSG as of such
time; (ii) persons employed in the United States by ITT Hartford immediately
prior to the Distribution; (iii) persons employed on an hourly basis by the ITT
Group immediately prior to the Distribution who have accrued benefits under the
ITT Salaried Retirement Plan, the Sheraton Salaried Retirement Plan or the ITT
Hartford Retirement Plan and (iv) persons included in clauses (i), (ii) and
(iii) above who are absent from work immediately prior to the Distribution by
reason of layoff, leave of absence or disability.
"ITT Excess Long-Term Disability Plan" means (i) the
ITT Excess Long-Term Disability Plan or (ii) the excess long-term disability
plan maintained by ITT Industries, after giving effect to the Distribution, in
each case as the context requires.
<PAGE> 41
6
"ITT Excess Pension Plan" means (i) the ITT Excess Plan
or (ii) the excess pension plan maintained by ITT Industries, after giving
effect to the Distribution, in each case as the context requires.
"ITT Excess Pension Plan Trust" means (i) the excess
pension plan trust maintained by ITT or (ii) the excess pension plan trust
maintained by ITT Industries, after giving effect to the Distribution, in each
case as the context requires.
"ITT Excess Savings Plan" means (i) the ITT Excess
Savings Plan or (ii) the excess savings plan maintained by ITT Industries, after
giving effect to the Distribution, in each case as the context requires.
"ITT Group" means ITT and its affiliates prior to the
Distribution.
"ITT Group Accident Program" means (i) the ITT Group
Accident Program for Officers and Directors or (ii) the ITT Industries Group
Accident Program for Officers and Directors, after giving effect to the
Distribution, in each case as the context requires.
"ITT Hartford" has the meaning set forth in the preamble to
this Agreement.
"ITT Hartford Common Stock" has the meaning set forth in the
preamble to this Agreement.
"ITT Hartford Employees" means persons who, immediately
after the Distribution, are employed by ITT Hartford or absent from work by
reason of layoff, leave of absence or disability.
"ITT Hartford Excess Pension Plan" means the excess
pension plan maintained by ITT Hartford.
"ITT Hartford Excess Pension Plan Trust" means the
excess pension plan trust maintained by ITT Hartford.
"ITT Hartford Excess Savings Plan" has the meaning set
forth in Section 3(b) of this Agreement.
"ITT Hartford Indemnitees" means ITT Hartford, each
Affiliate of ITT Hartford, each of their respective directors, officers,
employees and agents and each of the
<PAGE> 42
7
heirs, executors, successors and assigns of any of the foregoing.
"ITT Hartford Retirement Plan" means the Hartford Fire
Insurance Company Retirement Plan.
"ITT Hartford Savings Plan" means the defined contribution
investment and savings plan to be adopted by ITT Hartford effective as of the
Distribution Date.
"ITT Hartford Stock Plan" means the ITT Hartford 1995 Incentive
Stock Plan to be adopted by ITT Hartford effective as of the Distribution.
"ITT Industries" means (i) ITT Industries, Inc., an Indiana
corporation and the legal successor to ITT, together with its Subsidiaries, or
(ii) ITT, together with its Subsidiaries, after giving effect to the
Distribution or as if such transaction had occurred, in each case as the context
requires.
"ITT Industries Indemnitees" means ITT Industries, each
Affiliate of ITT Industries, each of their respective directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"ITT Industries Salaried Employees" means persons who,
immediately after the Distribution, are employed on a salaried basis by ITT
Industries, including such persons absent from work at ITT Industries by reason
of layoff, leave of absence or disability.
"ITT Long-Term Disability Plan" means (i) the ITT
Long-Term Disability Plan or (ii) the long-term disability plan maintained by
ITT Industries, after giving effect to the Distribution, in each case as the
context requires.
"ITT Long-Term Performance Plan" means the ITT
Long-Term Performance Plan maintained by ITT.
"ITT Salaried Retirement Plan" means (i) the Retirement
Plan for Salaried Employees of ITT Corporation or (ii) the ITT Industries
Salaried Retirement Plan, after giving effect to the Distribution, in each case
as the context requires.
<PAGE> 43
8
"ITT Savings Plan" means (i) the ITT Investment and
Savings Plan for Salaried Employees or (ii) the ITT Industries Investment and
Savings Plan, after giving effect to the Distribution, in each case as the
context requires.
"ITT Sheraton" means ITT Sheraton Corporation.
"ITT Stock Awards" has the meaning set forth in Section 7 of
this Agreement.
"ITT Stock Plans" has the meaning set forth in Section 7 of
this Agreement.
"Liabilities" means any and all debts, liabilities and
obligations, absolute and contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising,
including, without limitation, those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any court, any governmental or other regulatory or administrative
agency or commission or any award of any arbitration tribunal, and those arising
under any contract, guarantee, commitment or undertaking.
"MSG" means Madison Square Garden, L.P.
"person" means any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
"Proxy Statement" means the proxy statement sent to the
holders of shares of ITT Common Stock in connection with the Distribution,
including any amendment or supplement thereto.
"Records" has the meaning set forth in Section 12 of this
Agreement.
"Rules" has the meaning set forth in Section 16 of this
Agreement.
"Sheraton Excess Pension Plan" means the excess pension
plan maintained by ITT Sheraton prior to the Distribution.
<PAGE> 44
9
"Sheraton Salaried Retirement Plan" means the Sheraton
Corporation Retirement Plan for Salaried Employees.
"Subsidiary" means any corporation, partnership or other entity
of which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
trustee). For purposes of this Agreement, MSG and ITT-Dow Jones Television and
their respective Subsidiaries are Subsidiaries of ITT Destinations.
"Tax" means all Federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect to such amounts.
"Tax Allocation Agreement" means the Tax Allocation Agreement
dated as of November 1, 1995, among ITT, ITT Destinations and ITT Hartford.
"Third Party Claim" has the meaning set forth in Section 15(e)
of this Agreement.
<PAGE> 1
CONFORMED COPY
================================================================================
364-DAY COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of November 10, 1995
among
ITT INDUSTRIES, INC.
THE LENDERS NAMED HEREIN
and
CHEMICAL BANK, as Administrative Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
I. DEFINITIONS
1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . 1
1.02. Terms Generally . . . . . . . . . . . . . . . . . . . . 12
II. THE CREDITS
2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . 12
2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.03. Competitive Bid Procedure . . . . . . . . . . . . . . . 13
2.04. Standby Borrowing Procedure . . . . . . . . . . . . . . 15
2.05. Conversion and Continuation of Standby Loans . . . . . . 15
2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.07. Repayment of Loans; Evidence of Debt . . . . . . . . . . 17
2.08. Interest on Loans . . . . . . . . . . . . . . . . . . . 17
2.09. Default Interest . . . . . . . . . . . . . . . . . . . . 18
2.10. Alternate Rate of Interest . . . . . . . . . . . . . . . 18
2.11. Termination and Reduction of Commitments . . . . . . . . 18
2.12. Prepayment . . . . . . . . . . . . . . . . . . . . . . . 19
2.13. Reserve Requirements; Change in Circumstances . . . . . . 19
2.14. Change in Legality . . . . . . . . . . . . . . . . . . . 20
2.15. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 21
2.16. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . 21
2.17. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . 22
2.18. Payments . . . . . . . . . . . . . . . . . . . . . . . . 22
2.19. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.20. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances . . . . . . . . . . . . . . 25
III. REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers . . . . . . . . . . . . . . . . . . 25
3.02. Authorization . . . . . . . . . . . . . . . . . . . . . 25
3.03. Enforceability . . . . . . . . . . . . . . . . . . . . . 26
3.04. Governmental Approvals . . . . . . . . . . . . . . . . . 26
3.05. Financial Statements . . . . . . . . . . . . . . . . . . 26
3.06. Litigation; Compliance with Laws . . . . . . . . . . . . 26
3.07. Federal Reserve Regulations . . . . . . . . . . . . . . . 27
3.08. Investment Company Act; Public Utility Holding
Company Act . . . . . . . . . . . . . . . . . . . . . 27
3.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 27
3.10. Full Disclosure; No Material Misstatements . . . . . . . 27
3.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE> 3
Contents, p. 2
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
3.12. Employee Pension Benefit Plans . . . . . . . . . . . . . 27
3.13. Distribution . . . . . . . . . . . . . . . . . . . . . . 27
IV. CONDITIONS OF LENDING
4.01. All Borrowings . . . . . . . . . . . . . . . . . . . . . 28
4.02. Effective Date . . . . . . . . . . . . . . . . . . . . . 28
4.03. First Borrowing by Each Borrowing Subsidiary . . . . . . 29
V. COVENANTS
5.01. Existence . . . . . . . . . . . . . . . . . . . . . . . . 29
5.02. Business and Properties . . . . . . . . . . . . . . . . 29
5.03. Financial Statements, Reports, Etc. . . . . . . . . . . . 30
5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . 30
5.05. Obligations and Taxes . . . . . . . . . . . . . . . . . 30
5.06. Litigation and Other Notices . . . . . . . . . . . . . . 31
5.07. Maintaining Records; Access to Properties
and Inspections . . . . . . . . . . . . . . . . . . . 31
5.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 31
5.09. Consolidations, Mergers, and Sales of Assets . . . . . . 31
5.10. Limitation on Liens . . . . . . . . . . . . . . . . . . 31
5.11. Limitations on Sale and Leaseback Transactions . . . . . 33
5.12. Consolidated EBITDA to Consolidated Interest Expense . . 34
VI. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 34
VII. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
VIII. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . 37
IX. MISCELLANEOUS
9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.02. Survival of Agreement . . . . . . . . . . . . . . . . . 39
9.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . 40
9.04. Successors and Assigns . . . . . . . . . . . . . . . . . 40
9.05. Expenses; Indemnity . . . . . . . . . . . . . . . . . . 42
9.06. Applicable Law . . . . . . . . . . . . . . . . . . . . . 42
9.07. Waivers; Amendment . . . . . . . . . . . . . . . . . . . 43
9.08. Entire Agreement . . . . . . . . . . . . . . . . . . . . 43
9.09. Severability . . . . . . . . . . . . . . . . . . . . . . 43
9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . 43
9.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . 43
9.12. Right of Setoff . . . . . . . . . . . . . . . . . . . . 44
9.13. Jurisdiction; Consent to Service of Process . . . . . . . 44
9.14. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 44
</TABLE>
<PAGE> 4
Contents, p. 3
<TABLE>
<CAPTION>
Article Section Page
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<S> <C> <C>
9.15. Addition of Borrowing Subsidiaries . . . . . . . . 45
9.16. Execution . . . . . . . . . . . . . . . . . . .. . . 45
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Opinion of Counsel for ITT Industries, Inc.
Exhibit E Form of Borrowing Subsidiary Agreement
Exhibit F Form of Letter Agreement
Schedule 2.01 Commitments
Schedule 3.13 Assumptions
Schedule 5.10 Existing Liens
</TABLE>
<PAGE> 5
364-DAY COMPETITIVE ADVANCE AND REVOLVING
CREDIT FACILITY AGREEMENT (as it may be amended,
supplemented or otherwise modified, the "Agreement")
dated as of November 10, 1995, among ITT INDUSTRIES,
INC., an Indiana corporation (the "Company"), each
Borrowing Subsidiary party hereto, the lenders listed
in Schedule 2.01 (together with their permitted
assigns, the "Lenders") and CHEMICAL BANK, a New York
banking corporation, as administrative agent for the
Lenders (in such capacity, the "Administrative
Agent").
The Lenders have been requested to extend credit to the
Borrowers (such term and each other capitalized term used but not defined herein
having the meaning assigned to it in Article I) to enable them to borrow on a
standby revolving credit basis on and after the date hereof and at any time and
from time to time prior to the Maturity Date a principal amount not in excess of
$1,500,000,000 at any time outstanding. The Lenders have also been requested to
provide a procedure pursuant to which the Borrowers may invite the Lenders to
bid on an uncommitted basis on short-term borrowings by the Borrowers. The
proceeds of such borrowings are to be used for working capital and other general
corporate purposes. The Lenders are willing to extend credit on the terms and
subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Standby Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Administrative Fees" shall have the meaning assigned to such
term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly or indirectly controls or is controlled by
or is under common control with the person specified.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof,
<PAGE> 6
2
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective. "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as released on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
released for any day which is a Business Day, the arithmetic average (rounded
upwards to the next 1/100th of 1%), as determined by the Administrative Agent,
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" shall mean on any date, with respect to
Eurodollar Loans or with respect to the Facility Fee, as the case may be, the
applicable percentage set forth below under the caption "Eurodollar Spread" or
"Facility Fee Percentage", as the case may be, based upon the Ratings in effect
on such date:
<TABLE>
<CAPTION>
Category 1 Eurodollar Spread Facility Fee Percentage
- ---------- ----------------- -----------------------
<S> <C> <C>
AA- or higher by D&P; .130% .045%
AA- or higher by Fitch;
Aa3 or higher by Moody's;
AA- or higher by S&P
Category 2
- ----------
A+ or A by D&P; .150% .050%
A+ or A by Fitch;
A1 or A2 by Moody's;
A+ or A by S&P
Category 3
- ----------
A- by D&P; .195% .055%
A- by Fitch;
A3 by Moody's;
A- by S&P
Category 4
- ----------
BBB+ by D&P; .225% .075%
BBB+ by Fitch;
Baa1 by Moody's;
BBB+ by S&P
</TABLE>
<PAGE> 7
3
<TABLE>
<CAPTION>
Category 5 Eurodollar Spread Facility Fee Percentage
- ---------- ------------------ ------------------------
<S> <C> <C>
BBB by D&P; .250% .100%
BBB by Fitch;
Baa2 by Moody's;
BBB by S&P
Category 6
- ----------
BBB- or lower by D&P; .275% .125%
BBB- or lower by Fitch;
Baa3 or lower by Moody's;
BBB- or lower by S&P
</TABLE>
For purposes of the foregoing, (i) if the Ratings shall fall within different
Categories, then (A) if all the Ratings fall within two adjacent Categories, the
Applicable Percentage will be determined by reference to the superior (or
numerically lower) of such Categories unless one or more of the Ratings shall
fall within Category 6, in which case the Applicable Percentage shall be
determined by reference to Category 6, and (B) if the Ratings fall within more
than two Categories or within two Categories that are not adjacent, then one
Rating from each of the highest Category and the lowest Category in which
Ratings shall fall shall be excluded and the Applicable Percentage shall be
determined by reference to the superior (or numerically lower) of the remaining
Ratings unless one or both of such Ratings shall fall within Category 6, in
which case the Applicable Percentage shall be determined by reference to
Category 6, (ii) if only two Ratings exist, the Applicable Percentage shall be
based upon the lower (numerically higher) of the available Ratings, (iii) if
only one Rating exists, the Applicable Percentage will be based upon the lower
(numerically higher) of Category 5 and the Category corresponding to the
available Rating, (iv) if no Ratings exist, the Applicable Percentage shall be
based upon Category 6, and (v) if any Rating shall be changed (other than as a
result of a change in the rating system of the applicable Rating Agency), such
change shall be effective as of the date on which it is first announced by the
Rating Agency making such change. Each such change in the Applicable Percentage
shall apply to all outstanding Eurodollar Loans and to Facility Fees accruing
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of any Rating Agency shall change, the parties hereto shall
negotiate in good faith to amend the references to specific ratings in this
definition to reflect such changed rating system.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee in the form of Exhibit C.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Board of Directors" shall mean the Board of Directors of a
Borrower or any duly authorized committee thereof.
"Borrower" shall mean any of the Company and the Borrowing
Subsidiaries.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on a
single date and as to which a single Interest Period is in effect.
<PAGE> 8
4
"Borrowing Subsidiary" shall mean any Restricted Subsidiary
which shall have executed and delivered to the Administrative Agent for
distribution to each Lender a Borrowing Subsidiary Agreement.
"Borrowing Subsidiary Agreement" shall mean an agreement, in
the form of Exhibit E hereto, duly executed by the Company and a Subsidiary.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capitalized Lease-Back Obligation" shall mean with respect to
a Principal Property, at any date as of which the same is to be determined, the
total net rental obligations of the Company or a Restricted Subsidiary under a
lease of such Principal Property, entered into as part of an arrangement to
which the provisions of Section 5.11 are applicable (or would have been
applicable had such Restricted Subsidiary been a Restricted Subsidiary at the
time it entered into such lease), discounted to the date of computation at the
rate of interest per annum implicit in the lease (determined in accordance with
GAAP). The amount of the net rental obligation for any calendar year under any
lease shall be the sum of the rental and other payments required to be paid in
such calendar year by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee (whether or not therein designated as rental
or additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges.
A "Change in Control" shall be deemed to have occurred if (a)
any person or group of persons shall have acquired beneficial ownership of more
than 30% of the outstanding Voting Shares of the Company (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, and
the applicable rules and regulations thereunder), or (b) during any period of 12
consecutive months, commencing after the Effective Date, individuals who on the
first day of such period were directors of the Company (together with any
replacement or additional directors who were nominated or elected by a majority
of directors then in office) cease to constitute a majority of the Board of
Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender hereunder as set forth as of the Effective Date in
Schedule 2.01 hereto as such Lender's Commitment may be permanently terminated
or reduced from time to time pursuant to Section 2.11. The Commitment of each
Lender shall automatically and permanently terminate on the Maturity Date if not
terminated earlier pursuant to the terms hereof.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by a Borrower pursuant to Section 2.03(d) in the form of
Exhibit A-4.
<PAGE> 9
5
"Competitive Bid Rate" shall mean, as to any Competitive Bid,
(i) in the case of a Eurodollar Loan, the Margin, and (ii) in the case of a
Fixed Rate Loan, the fixed rate of interest offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.03(a) in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan made pursuant to the
bidding procedure described in Section 2.03. Each Competitive Loan shall be a
Eurodollar Competitive Loan or a Fixed Rate Loan.
"Consolidated EBITDA" shall mean, for any period, the sum of
(a) Consolidated Net Income, (b) provisions for taxes based on income, (c)
Consolidated Interest Expense, (d) total depreciation expense and (e) total
amortization expense, all of the foregoing as determined on a consolidated basis
for the Company and the Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the
gross interest expense of the Company and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, net
income or loss of the Company and the Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean the total of all
assets appearing on a consolidated balance sheet of the Company and its
Restricted Subsidiaries, prepared in accordance with GAAP (and as of a date not
more than 90 days prior to the date as of which Consolidated Net Tangible Assets
are to be determined), less the sum of the following items as shown on said
consolidated balance sheet:
(i) the book amount of all segregated intangible assets,
including such items as good will, trademarks, trademark rights, trade
names, trade name rights, copyrights, patents, patent rights and
licenses and unamortized debt discount and expense less unamortized
debt premium;
(ii) all depreciation, valuation and other reserves;
(iii) current liabilities;
(iv) any minority interest in the shares of stock (other
than Preferred Stock) and surplus of Restricted Subsidiaries of the
Company;
(v) the investment of the Company and its Restricted
Subsidiaries in any Unrestricted Subsidiary of the Company;
(vi) the total indebtedness of the Company and its
Restricted Subsidiaries incurred in any manner to finance or recover
the cost to the Company or any Restricted Subsidiary of any physical
property, real or personal, which prior to or simultaneously with the
creation of such
<PAGE> 10
6
indebtedness shall have been leased by the Company or a Restricted
Subsidiary to the United States of America or a department or agency
thereof at an aggregate rental, payable during that portion of the
initial term of such lease (without giving effect to any options of
renewal or extension) which shall be unexpired at the date of the
creation of such indebtedness, sufficient (taken together with any
amounts required to be paid by the lessee to the lessor upon any
termination of such lease) to pay in full at the stated maturity date
or dates thereof the principal of and the interest on such
indebtedness;
(vii) deferred income and deferred liabilities; and
(viii) other items deductible under GAAP.
"D&P" shall mean Duff & Phelps Credit Rating Co. or any of its
successors.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Distribution" shall mean the consummation of the transactions
described in the Proxy Statement.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Effective Date" shall mean the first date on or after November
10, 1995, on which the conditions set forth in Section 4.02 are satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Company, is treated as a single
employer under Section 414(b) or (c) of the Code, or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Company or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Company or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by the Company or any ERISA Affiliate of any notice
that Withdrawal Liability is being imposed or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; and (h) the occurrence of a "prohibited
transaction" with respect to which the Company or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975) of the Code, or with
respect to which the Company or any such Subsidiary could otherwise be liable.
<PAGE> 11
7
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan
or Eurodollar Standby Loan.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term
in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Existing Credit Facilities" shall mean the 364-Day Competitive
Advance and Revolving Credit Facility Agreement dated as of February 24, 1995
and the Five-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of February 24, 1995, among Old ITT, certain lenders and Chemical Bank,
as administrative agent.
"Facility B Credit Agreement" shall mean the $1,500,000,000
Five-Year Competitive Advance and Revolving Credit Facility Agreement dated the
date hereof among the parties hereto, as such agreement may be amended,
supplemented or modified from time to time.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Fair Value", when used with respect to property, shall mean
the fair value as determined in good faith by the board of directors of the
Company.
"Fees" shall mean the Facility Fee and the Administrative Fees.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, associate or
assistant treasurer or director of treasury services of such corporation.
"Fitch" shall mean Fitch Investors Service, Inc. or any of its
successors.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (the "Fixed Rate") (expressed in
the form of a decimal to no more than four decimal places) specified by the
Lender making such Loan in its Competitive Bid.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
<PAGE> 12
8
"Guaranteed Obligations" shall mean the principal of and
interest on the Loans made to, and the other obligations, monetary or otherwise,
of, the Borrowing Subsidiaries hereunder.
"Indebtedness" of any person shall mean all indebtedness
representing money borrowed or the deferred purchase price of property (other
than trade accounts payable) or any capitalized lease obligation which in any
case is created, assumed, incurred or guaranteed in any manner by such
corporation or for which such corporation is responsible or liable (whether by
agreement to purchase indebtedness of, or to supply funds to or invest in,
others or otherwise).
"Interest Payment Date" shall mean, with respect to any Loan,
the last day of each Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration or a
Fixed Rate Loan with an Interest Period of more than 90 days' duration, each day
that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case may
be, been applicable to such Loan and, in addition, the date of any prepayment of
each Loan or conversion of such Loan to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, (b) as
to any ABR Borrowing, the period commencing on the date of such Borrowing or on
the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the earliest of (i) the next
succeeding March 31, June 30, September 30 or December 31, (ii) the Maturity
Date, and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.05 or repaid or prepaid in
accordance with Section 2.07 or Section 2.12 and (c) as to any Fixed Rate
Borrowing, the period commencing on the date of such Borrowing and ending on the
date specified in the Competitive Bids in which the offers to make the Fixed
Rate Loans comprising such Borrowing were extended, which shall not be earlier
than seven days after the date of such Borrowing or later than 360 days after
the date of such Borrowing; provided, however, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless, in the case of Eurodollar Loans
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the rate at which dollar deposits
approximately equal in principal amount to (i) in the case of a Standby
Borrowing, the Administrative Agent's portion of such Eurodollar Borrowing and
(ii) in the case of a Competitive Borrowing, a principal amount that would have
been the Administrative Agent's portion of such Competitive Borrowing had such
Competitive Borrowing been a Standby Borrowing, and for a maturity comparable to
such Interest Period as are offered to the principal London offices of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" shall mean, with respect to any property or asset, any
mortgage, deed of trust, lien, pledge, security interest, charge or other
encumbrance on, of or in such property or asset.
<PAGE> 13
9
"Loan" shall mean a Competitive Loan or a Standby Loan, whether
made as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as permitted
hereby.
"Loan Documents" shall mean this Agreement, the Borrowing
Subsidiary Agreements, and promissory notes, if any, issued pursuant to Section
9.04(i).
"Margin" shall mean, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal to no
more than four decimal places) to be added to or subtracted from the LIBO Rate
in order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.
"Margin Regulations" shall mean Regulations G, T, U and X of
the Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Margin Stock" shall have the meaning given such term under
Regulation U of the Board.
"Material Adverse Effect" shall mean a materially adverse
effect on the business, assets, operations or condition, financial or otherwise,
of the Company and its subsidiaries taken as a whole.
"Maturity Date" shall mean the date 364 days after the date
hereof.
"Moody's" shall mean Moody's Investors Service, Inc. or any of
its successors.
"Multiemployer Plan" shall mean a multiemployer plan as defined
in Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate
(other than one considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Code Section 414) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Notice of Competitive Bid Request" shall mean a notification
made pursuant to Section 2.03(a) in the form of Exhibit A-2.
"Old ITT" shall mean ITT Corporation, a Delaware Corporation
and a predecessor of the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than
a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which any Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
<PAGE> 14
10
"Principal Property" shall mean any single manufacturing or
processing facility owned by the Company or any Restricted Subsidiary having a
gross book value in excess of 2% of Consolidated Net Tangible Assets, except any
such facility or portion thereof which the board of directors of the Company by
resolution declares is not of material importance to the total business
conducted by the Company and its Restricted Subsidiaries as an entirety.
"Proxy Statement" shall mean the Proxy Statement of Old ITT
dated August 30, 1995, and filed with the SEC under the Exchange Act.
"Rating Agencies" shall mean D&P, Fitch, Moody's and S&P.
"Ratings" shall mean the ratings from time to time established
by the Rating Agencies for senior, unsecured, non- credit-enhanced long-term
debt of the Company.
"Register" shall have the meaning given such term in Section
9.04(d).
"Regulation D" shall mean Regulation D of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Reportable Event" shall mean any reportable event as defined
in Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing at least 66-2/3% of the Total Commitment or, for
purposes of acceleration pursuant to clause (ii) of Article VI, Lenders holding
Loans representing at least 66-2/3% of the aggregate principal amount of the
Loans outstanding.
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"Restricted Subsidiary" shall mean any Subsidiary other than
an Unrestricted Subsidiary.
"S&P" shall mean Standard and Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or any of its successors.
"SEC" shall mean the Securities and Exchange Commission.
"Standby Borrowing" shall mean a Borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant
to Section 2.04 in the form of Exhibit A-5.
"Standby Loans" shall mean the revolving loans made pursuant to
Section 2.04. Each Standby Loan shall be a Eurodollar Standby Loan or an ABR
Loan.
<PAGE> 15
11
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority to which
the Administrative Agent is subject for new negotiable nonpersonal time deposits
in dollars of over $100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (the
"parent"), any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean a subsidiary of the Company.
"Total Commitment" shall mean, at any time, the aggregate
amount of Commitments of all the Lenders, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and the Fixed Rate.
"Unrestricted Subsidiary" shall mean (a) any Subsidiary which
has been designated an Unrestricted Subsidiary by resolution of the board of
directors of the Company (which resolution has been communicated in a notice
delivered by the Company to the Administrative Agent for distribution to the
Lenders) as an Unrestricted Subsidiary, other than any such Subsidiary as to
which such a designation has been rescinded by resolution of said board of
directors and not thereafter, or after some subsequent such rescission, restored
by resolution of said board, and (b) any Subsidiary 50% or less of the Voting
Shares of which is owned directly by the Company and/or one or more Restricted
Subsidiaries. A Subsidiary may not be designated as (or otherwise permitted to
become) an Unrestricted Subsidiary unless, immediately after such Subsidiary
becomes an Unrestricted Subsidiary, such Subsidiary would not own any capital
stock of, or hold any indebtedness of, any Restricted Subsidiary. A designation
as an Unrestricted Subsidiary may not be rescinded (or an Unrestricted
Subsidiary otherwise permitted to become a Restricted Subsidiary) unless such
Subsidiary (i) is not a party to any lease which it would have been prohibited
by this Agreement from entering into had it been a Restricted Subsidiary at the
time it entered into such lease, unless (x) such Subsidiary had not been a
Restricted Subsidiary prior to its entering into such lease, or (y) the property
subject to such lease shall be owned by the Company and/or one or more
Subsidiaries, or (z) such Subsidiary would not be prohibited by this Agreement
from entering into such lease immediately after it becomes a Restricted
Subsidiary, and (ii) does not have outstanding upon any of its property any
mortgage, pledge or other lien which it would be prohibited by this Agreement
from creating, suffering to be created, or assuming, immediately after it
becomes a Restricted Subsidiary.
"Voting Shares" shall mean, as to a particular corporation or
other person, outstanding shares of stock or other equity interests of any class
of such person entitled to vote in the election of directors, or otherwise to
participate in the direction of the management and policies, of such person,
excluding shares or interests entitled so to vote or participate only upon the
happening of some contingency.
<PAGE> 16
12
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided,
however, that for purposes of determining compliance with any covenant set forth
in Article V, such terms shall be construed in accordance with GAAP as in effect
on the date hereof applied on a basis consistent with the application used in
preparing the Company's audited financial statements referred to in Section
3.05.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Lender agrees, severally and not jointly, to make Standby Loans to the
Borrowers, at any time and from time to time on and after the date hereof and
until the earlier of the Maturity Date and the termination of the Commitment of
such Lender, in an aggregate principal amount at any time outstanding not to
exceed such Lender's Commitment minus the amount by which the Competitive Loans
outstanding at such time shall be deemed to have used such Commitment pursuant
to Section 2.16, subject, however, to the conditions that (i) at no time shall
(A) the sum of (x) the outstanding aggregate principal amount of all Standby
Loans made by all Lenders plus (y) the outstanding aggregate principal amount of
all Competitive Loans made by all Lenders exceed (B) the Total Commitment and
(ii) at all times, the outstanding aggregate principal amount of all Standby
Loans made by each Lender shall equal the product of (A) the percentage which
its Commitment represents of the Total Commitment times (B) the outstanding
aggregate principal amount of all Standby Loans.
Within the foregoing limits, the Borrowers may borrow, pay or
prepay and reborrow Standby Loans hereunder, on and after the Effective Date and
prior to the Maturity Date, subject to the terms, conditions and limitations set
forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments; provided, however, that the
failure of any Lender to make any Standby Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any other Lender to make
any Loan required to be made by such other Lender). Each Competitive Loan shall
be made in accordance with the procedures set forth in Section 2.03. The Standby
Loans or Competitive Loans comprising any Borrowing shall be (i) in the case of
Competitive Loans, in an aggregate principal amount which is an integral
multiple of $1,000,000 and not less than $5,000,000 and (ii) in the case of
Standby Loans, in an aggregate principal amount which is an integral multiple of
$5,000,000 and not less than $20,000,000 (or an aggregate principal amount equal
to the remaining balance of the available Commitments).
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.03
<PAGE> 17
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or 2.04, as applicable. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch, agency or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time. For purposes of the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Loans.
(c) Subject to Section 2.05, each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Administrative Agent in New York, New York,
not later than 12:00 noon, New York City time, and the Administrative Agent
shall by 3:00 p.m., New York City time, credit the amounts so received to the
account or accounts specified from time to time in one or more notices delivered
by the Company to the Administrative Agent or, if a Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Lenders. Competitive Loans
shall be made by the Lender or Lenders whose Competitive Bids therefor are
accepted pursuant to Section 2.03 in the amounts so accepted. Standby Loans
shall be made by the Lenders pro rata in accordance with Section 2.16. Unless
the Administrative Agent shall have received notice from a Lender prior to the
date (or, in the case of ABR Borrowings, on the date) of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's portion
of such Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date of such Borrowing
in accordance with this paragraph (c) and the Administrative 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 Lender shall not have made
such portion available to the Administrative Agent, such Lender and the Borrower
severally agree to repay to the Administrative 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 Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, a Borrower (the "Applicable Borrower") shall hand
deliver or telecopy to the Administrative Agent a duly completed Competitive Bid
Request in the form of Exhibit A-1 hereto, to be received by the Administrative
Agent (i) in the case of a Eurodollar Competitive Loan, not later than 10:00
a.m., New York City time, four Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00
a.m., New York City time, one Business Day before a proposed Competitive
Borrowing. No ABR Loan shall be requested in, or made pursuant to, a Competitive
Bid Request. A Competitive Bid Request that does not conform substantially to
the format of Exhibit A-1 may be rejected in the Administrative Agent's sole
discretion, and the Administrative Agent shall promptly notify the Borrower of
such rejection by telecopy. Each Competitive Bid Request shall refer to this
Agreement and specify (w) whether the Borrowing then being requested is to be a
Eurodollar Borrowing or a Fixed Rate Borrowing, (x) the date of such Borrowing
(which shall be a Business Day) and the aggregate principal amount thereof,
which shall be in a minimum principal amount of $10,000,000 and in an integral
multiple of $5,000,000, and (y) the Interest Period with respect thereto (which
may not end after the Maturity Date). Promptly after its receipt of a
Competitive Bid Request that is not rejected as aforesaid, the Administrative
Agent shall telecopy to the Lenders a Notice of Competitive Bid Request inviting
the Lenders to bid, on the terms and conditions of this Agreement, to make
Competitive Loans.
<PAGE> 18
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(b) Each Lender invited to bid may, in its sole discretion,
make one or more Competitive Bids to the Applicable Borrower responsive to such
Borrower's Competitive Bid Request. Each Competitive Bid by a Lender must be
received by the Administrative Agent by telecopy, in the form of Exhibit A-3
hereto, (i) in the case of a Eurodollar Competitive Loan, not later than 9:30
a.m., New York City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30
a.m., New York City time, on the day of a proposed Competitive Borrowing. A
Lender may submit multiple bids to the Administrative Agent. Competitive Bids
that do not conform substantially to the format of Exhibit A-3 may be rejected
by the Administrative Agent, and the Administrative Agent shall notify the
Lender making such nonconforming bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may equal the entire principal amount
of the Competitive Borrowing requested) of the Competitive Loan or Loans that
the Lender is willing to make, (y) the Competitive Bid Rate or Rates at which
the Lender is prepared to make the Competitive Loan or Loans and (z) the
Interest Period and the last day thereof. If any Lender invited to bid shall
elect not to make a Competitive Bid, such Lender shall so notify the
Administrative Agent by telecopy (I) in the case of Eurodollar Competitive
Loans, not later than 9:30 a.m., New York City time, three Business Days before
a proposed Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not
later than 9:30 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided, however, that failure by any Lender to give such notice
shall not cause such Lender to be obligated to make any Competitive Loan as part
of such Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant
to this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall as promptly as practicable
notify the Borrower, by telecopy, of all the Competitive Bids made, the
Competitive Bid Rate and the principal amount of each Competitive Loan in
respect of which a Competitive Bid was made and the identity of the Lender that
made each bid. The Administrative Agent shall send a copy of all Competitive
Bids to the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.03.
(d) The Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Borrower shall notify
the Administrative Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject any of or all the bids referred to in paragraph (c) above
not more than one hour after it shall have been notified of such bids by the
Administrative Agent pursuant to such paragraph (c); provided, however, that (i)
the failure of the Borrower to give such notice shall be deemed to be a
rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower
shall not accept a bid made at a particular Competitive Bid Rate if it has
decided to reject a bid made at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the principal amount specified in the Competitive Bid Request, (iv) if
the Borrower shall accept a bid or bids made at a particular Competitive Bid
Rate but the amount of such bid or bids shall cause the total amount of bids to
be accepted to exceed the amount specified in the Competitive Bid Request, then
the Borrower shall accept a portion of such bid or bids in an amount equal to
the amount specified in the Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such Competitive
Bid Rate, and (v) except pursuant to clause (iv) above, no bid shall be accepted
for a Competitive Loan unless such Competitive Loan is in a minimum principal
amount of $5,000,000 and an integral multiple of $1,000,000; provided further,
however, that if a Competitive Loan must be in an amount less than $5,000,000
because of the provisions of clause (iv) above, such Competitive Loan may be for
a
<PAGE> 19
15
minimum of $1,000,000 or any integral multiple thereof, and in calculating the
pro rata allocation of acceptances of portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to
integral multiples of $1,000,000 in a manner which shall be in the discretion of
the Borrower. A notice given pursuant to this paragraph (d) shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Lender whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telecopy, and each successful bidder
will thereupon become bound, subject to the other applicable conditions hereof,
to make the Competitive Loan in respect of which its bid has been accepted.
(f) No Competitive Borrowing shall be requested or made
hereunder if after giving effect thereto any of the conditions set forth in
paragraphs (i) or (ii) of Section 2.01 would not be met.
(g) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to the Applicable Borrower one quarter of an hour earlier than the latest time
at which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
SECTION 2.04. Standby Borrowing Procedure. In order to request
a Standby Borrowing, a Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Standby Borrowing Request in the form of
Exhibit A-5 (a) in the case of a Eurodollar Standby Loan, not later than 10:30
a.m., New York City time, three Business Days before such Borrowing, and (b) in
the case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on
the day of such Borrowing. No Fixed Rate Loan shall be requested or made
pursuant to a Standby Borrowing Request. Such notice shall be irrevocable and
shall in each case specify (i) whether the Borrowing then being requested is to
be a Eurodollar Standby Loan or an ABR Borrowing; (ii) the date of such Standby
Borrowing (which shall be a Business Day) and the amount thereof; and (iii) if
such Borrowing is to be a Eurodollar Standby Loan, the Interest Period with
respect thereto, which shall not end after the Maturity Date. If no election as
to the Type of Standby Borrowing is specified in any such notice, then the
requested Standby Borrowing shall be an ABR Borrowing. If no Interest Period
with respect to any Eurodollar Standby Loan is specified in any such notice,
then the Borrower shall be deemed to have selected an Interest Period of one
month's duration, in the case of a Eurodollar Borrowing. Notwithstanding any
other provision of this Agreement to the contrary, no Standby Borrowing shall be
requested if the Interest Period with respect thereto would end after the
Maturity Date. The Administrative Agent shall promptly advise each of the
Lenders of any notice given pursuant to this Section 2.04 and of each Lender's
portion of the requested Borrowing.
SECTION 2.05. Conversion and Continuation of Standby Loans.
Each Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (i) not later than 10:30 a.m., New York City time, on
the day of the conversion, to convert all or any part of any Eurodollar Standby
Loan into an ABR Borrowing, and (ii) not later than 10:30 a.m., New York City
time, three Business Days prior to conversion or continuation, to convert any
ABR Borrowing into a
<PAGE> 20
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Eurodollar Standby Loan or to continue any Eurodollar Standby Loan as a
Eurodollar Standby Loan for an additional Interest Period, subject in each case
to the following:
(a) if less than all the outstanding principal amount of any
Standby Borrowing shall be converted or continued, the aggregate
principal amount of the Standby Borrowing converted or continued shall
be an integral multiple of $5,000,000 and not less than $20,000,000;
(b) accrued interest on a Standby Borrowing (or portion
thereof) being converted shall be paid by the Borrower at the time of
conversion;
(c) if any Eurodollar Standby Loan is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.15;
(d) any portion of a Standby Borrowing maturing or required to
be repaid in less than one month may not be converted into or continued
as a Eurodollar Standby Loan;
(e) any portion of a Eurodollar Standby Loan which cannot be
continued as a Eurodollar Standby Loan by reason of clause (d) above
shall be automatically converted at the end of the Interest Period in
effect for such Eurodollar Standby Borrowing into an ABR Borrowing;
(f) no Interest Period may be selected for any Eurodollar
Standby Loan that would end later than the Maturity Date; and
(g) at any time when there shall have occurred and be
continuing any Default or Event of Default, no Borrowing may be
converted into or continued as a Eurodollar Standby Loan.
Each notice pursuant to this Section 2.05 shall be irrevocable
and shall refer to this Agreement and specify (i) the identity and amount of the
Standby Borrowing to be converted or continued, (ii) whether such Standby
Borrowing is to be converted to or continued as a Eurodollar Standby Loan or an
ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Standby Borrowing is
to be converted to or continued as a Eurodollar Standby Loan, the Interest
Period with respect thereto. If no Interest Period is specified in any such
notice with respect to any conversion to or continuation as a Eurodollar Standby
Loan, the Borrower shall be deemed to have selected an Interest Period of one
month's duration. If no notice shall have been given in accordance with this
Section 2.05 to convert or continue any Standby Borrowing, such Standby
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a new
Interest Period as an ABR Borrowing.
SECTION 2.06. Fees. (a) The Company agrees to pay to each
Lender, through the Administrative Agent, on each March 31, June 30, September
30 and December 31 (with the first payment being due on December 31, 1995) and
on each date on which the Commitment of such Lender shall be terminated as
provided herein, a facility fee (a "Facility Fee"), at a rate per annum equal to
the Applicable Percentage from time to time in effect on the amount of the
Commitment of such Lender, whether used or unused, during the preceding quarter
(or other period commencing on the Effective Date, or ending with the Maturity
Date or any date on which the Commitment of such Lender shall be terminated).
All Facility Fees shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due
to each Lender shall commence to
<PAGE> 21
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accrue on the Effective Date, and shall cease to accrue on the earlier of the
Maturity Date and the termination of the Commitment of such Lender as provided
herein.
(b) The Company agrees to pay the Administrative Agent, for its
own account, the administrative and other fees separately agreed to by the
Company and the Administrative Agent (the "Administrative Fees").
(c) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders except that the Administrative Fees shall be paid
pursuant to paragraph (b) above. Once paid, none of the Fees shall be refundable
under any circumstances.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) Each
Borrower hereby agrees that the outstanding principal balance of each Standby
Loan shall be payable on the Maturity Date and that the outstanding principal
balance of each Competitive Loan shall be payable on the last day of the
Interest Period applicable thereto. Each Loan shall bear interest on the
outstanding principal balance thereof as set forth in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Type of each Loan
made and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from each Borrower and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section 2.07 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrowers to repay the Loans in
accordance with their terms.
SECTION 2.08. Interest on Loans. (a) Subject to the provisions
of Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to (i) in the case of each Eurodollar
Standby Loan, the LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage from time to time in effect and (ii) in the case
of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in
effect for such Borrowing plus the Margin offered by the Lender making such Loan
and accepted by the Borrower pursuant to Section 2.03.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, for periods during which the Alternate Base Rate is determined by reference
to the Prime Rate and 360 days for other periods) at a rate per annum equal to
the Alternate Base Rate.
(c) Subject to the provisions of Section 2.09, each Fixed Rate
Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of
<PAGE> 22
18
360 days) equal to the fixed rate of interest offered by the Lender making such
Loan and accepted by the Borrower pursuant to Section 2.03.
(d) Interest on each Loan shall be payable on each Interest
Payment Date applicable to such Loan except as otherwise provided in this
Agreement. The applicable LIBO Rate or Alternate Base Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.09. Default Interest. If a Borrower shall default in
the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, whether by scheduled maturity, notice of prepayment,
acceleration or otherwise, such Borrower shall on demand from time to time from
the Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed as provided in Section
2.08(b)) equal to the Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. In the event, and on
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing, the Administrative Agent shall
have determined (i) that dollar deposits in the principal amounts of the
Eurodollar Loans comprising such Borrowing are not generally available in the
London interbank market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination to the
Borrower and the Lenders. In the event of any such determination under clauses
(i) or (ii) above, until the Administrative Agent shall have advised the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (x) any request by a Borrower for a Eurodollar Competitive Loan
pursuant to Section 2.03 shall be of no force and effect and shall be denied by
the Administrative Agent and (y) any request by a Borrower for a Eurodollar
Standby Loan pursuant to Section 2.04 shall be deemed to be a request for an ABR
Borrowing. In the event the Required Lenders notify the Administrative Agent
that the rates at which dollar deposits are being offered will not adequately
and fairly reflect the cost to such Lenders of making or maintaining Eurodollar
Loans during such Interest Period, the Administrative Agent shall notify the
applicable Borrower of such notice and until the Required Lenders shall have
advised the Administrative Agent that the circumstances giving rise to such
notice no longer exist, any request by such Borrower for a Eurodollar Standby
Loan shall be deemed a request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be made in good faith and shall be
conclusive absent manifest error.
SECTION 2.11. Termination and Reduction of Commitments. (a)
The Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
telecopy notice to the Administrative Agent, the Company may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Total Commitment; provided, however, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $10,000,000 and in a
minimum principal amount of $50,000,000 and (ii) no such termination or
reduction shall be made which would reduce the Total Commitment to an amount
less than the aggregate outstanding principal amount of the Competitive Loans.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Lenders in accordance with their respective Commitments.
The Borrowers shall pay to the
<PAGE> 23
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Administrative Agent for the account of the Lenders, on the date of each
termination of the Total Commitment, the Facility Fees on the amount of the
Commitments so terminated accrued through the date of such termination or
reduction.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Standby Borrowing, in
whole or in part, upon giving telecopy notice (or telephone notice promptly
confirmed by telecopy) to the Administrative Agent: (i) before 10:00 a.m., New
York City time, three Business Days prior to prepayment, in the case of
Eurodollar Loans, and (ii) before 10:00 a.m., New York City time, one Business
Day prior to prepayment, in the case of ABR Loans; provided, however, that each
partial prepayment shall be in an amount which is an integral multiple of
$10,000,000 and not less than $50,000,000. No prepayment may be made in respect
of any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.11, the Borrowers shall pay or prepay so much
of the Standby Borrowings as shall be necessary in order that the sum of the
aggregate Competitive Loan Exposures and Standby Loan Exposures outstanding will
not exceed the Total Commitment, after giving effect to such termination or
reduction.
(c) Each notice of prepayment shall specify the prepayment date
and the principal amount of each Borrowing (or portion thereof) to be prepaid,
shall be irrevocable and shall commit the applicable Borrower to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise without premium or penalty. All prepayments under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall result in the imposition, modification or applicability of any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by any Lender, or shall result in the
imposition on any Lender or the London interbank market of any other condition
affecting this Agreement, such Lender's Commitment or any Eurodollar Loan or
Fixed Rate Loan made by such Lender, and the result of any of the foregoing
shall be to increase the cost to such Lender of making or maintaining any
Eurodollar Loan or Fixed Rate Loan or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then such
additional amount or amounts as will compensate such Lender for such additional
costs or reduction will be paid by the Borrowers to such Lender upon demand.
Notwithstanding the foregoing, no Lender shall be entitled to request
compensation under this paragraph with respect to any Competitive Loan if the
change giving rise to such request was applicable to such Lender at the time of
submission of the Competitive Bid pursuant to which such Competitive Loan was
made.
(b) If any Lender shall have determined that the adoption of
any law, rule, regulation or guideline arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption after the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any
<PAGE> 24
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lending office of such Lender or any Lender's holding company with 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 such Lender's capital or on the capital
of such Lender's holding company, if any, as a consequence of this Agreement,
such Lender's Commitment or the Loans made by such Lender pursuant hereto to a
level below that which such Lender or such Lender's holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time such additional amount or amounts as will compensate such
Lender for such reduction will be paid by the Borrowers to such Lender. It is
acknowledged that this Agreement is being entered into by the Lenders on the
understanding that the Lenders will not be required to maintain capital against
their Commitments under currently applicable laws, regulations and regulatory
guidelines. In the event the Lenders shall be advised by any Governmental
Authority or shall otherwise determine on the basis of pronouncements of any
Governmental Authority that such understanding is incorrect, it is agreed that
the Lenders will be entitled to make claims under this paragraph (b) based upon
market requirements prevailing on the date hereof for commitments under
comparable credit facilities against which capital is required to be maintained.
(c) A certificate of any Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in paragraph (a) or (b) above, as the case may be, shall be
delivered to the Company and shall be conclusive absent manifest error. The
Borrowers shall pay such Lender the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute a
waiver of such Lender's right to demand compensation with respect to such period
or any other period; provided, however, that no Lender shall be entitled to
compensation under this Section 2.13 for any costs incurred or reductions
suffered with respect to any date unless it shall have notified the Company that
it will demand compensation for such costs or reductions under paragraph (c)
above not more than 90 days after the later of (i) such date and (ii) the date
on which it shall have become aware of such costs or reductions. The protection
of this Section shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Company and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, whereupon such Lender shall not submit a
Competitive Bid in response to a request for a Eurodollar Competitive
Loan and any request for a Eurodollar Standby Loan shall, as to such
Lender only, be deemed a request for an ABR Loan, unless such
declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans, made by
it be converted to ABR Loans, in which event all such Eurodollar Loans,
shall be automatically converted to ABR Loans, as of the effective date
of such notice as provided in paragraph (b) below.
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In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans, that would have been made by such Lender or the
converted Eurodollar Loans, of such Lender shall instead be applied to repay the
ABR Loans, made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice by any Lender
shall be effective as to each Eurodollar Loan, if lawful, on the last day of the
Interest Period currently applicable to such Eurodollar Loan; in all other cases
such notice shall be effective on the date of receipt.
SECTION 2.15. Indemnity. The Borrowers shall indemnify each
Lender against any out-of-pocket loss or expense which such Lender may sustain
or incur as a consequence of (a) any failure to borrow or to refinance, convert
or continue any Loan hereunder after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03,
2.04 or 2.05, (b) any payment, prepayment or conversion, or assignment required
under Section 2.20, of a Eurodollar Loan required by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last day of
the Interest Period, if any, applicable thereto, (c) any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, whether
by scheduled maturity, acceleration, irrevocable notice of prepayment or
otherwise) or (d) the occurrence of any Event of Default, including, in each
such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid, refinanced or not borrowed
(assumed to be the LIBO Rate applicable thereto) for the period from the date of
such payment, prepayment, refinancing or failure to borrow or refinance to the
last day of the Interest Period for such Loan (or, in the case of a failure to
borrow or refinance the Interest Period for such Loan which would have commenced
on the date of such failure) over (ii) the amount of interest (as reasonably
determined by such Lender) that would be realized by such Lender in reemploying
the funds so paid, prepaid or not borrowed or refinanced for such period or
Interest Period, as the case may be. A certificate of any Lender setting forth
any amount or amounts which such Lender is entitled to receive pursuant to this
Section shall be delivered to such Borrower and shall be conclusive absent
manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under
Sections 2.14 and 2.20, each payment or prepayment of principal of any Standby
Borrowing, each payment of interest on the Standby Loans, each payment of the
Facility Fees, each reduction of the Commitments and each refinancing or
conversion of any Borrowing with a Standby Borrowing of any Type, shall be
allocated pro rata among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Standby
Loans). Each payment of principal of any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing. Each payment of interest on any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Competitive Loans comprising
such Borrowing. For purposes of determining the available Commitments of the
Lenders at any time, each outstanding Competitive Borrowing shall be deemed to
have utilized the Commitments of the Lenders (including those Lenders which
shall not have made Loans as part of such Competitive Borrowing) pro rata in
accordance with such respective Commitments. Each Lender agrees that in
computing such Lender's portion of any
<PAGE> 26
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Borrowing to be made hereunder, the Administrative Agent may, in its discretion,
round each Lender's percentage of such Borrowing to the next higher or lower
whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim,
or pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Standby Loan or Loans as a
result of which the unpaid principal portion of its Standby Loans shall be
proportionately less than the unpaid principal portion of the Standby Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Standby Loans of such other Lender,
so that the aggregate unpaid principal amount of the Standby Loans and
participations in the Standby Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Standby Loans then
outstanding as the principal amount of its Standby Loans prior to such exercise
of banker's lien, setoff or counterclaim or other event was to the principal
amount of all Standby Loans outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.17
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. Any
Lender holding a participation in a Standby Loan deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing to such Lender by reason
thereof as fully as if such Lender had made a Standby Loan in the amount of such
participation.
SECTION 2.18. Payments. (a) The Borrowers shall make each
payment (including principal of or interest on any Borrowing and any Fees or
other amounts) hereunder from an account in the United States not later than
12:00 noon, local time at the place of payment, on the date when due in funds to
the Administrative Agent at its offices at 270 Park Avenue, New York, New York,
in immediately available funds. Each such payment shall be made in dollars.
(b) Whenever any payment (including principal of or interest on
any Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments to the Lenders
hereunder shall be made, in accordance with Section 2.18, free and clear of and
without deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) income taxes imposed on the income of the Administrative Agent or
any Lender (or any transferee or assignee thereof, including a participation
holder (any such entity a "Transferee")) and (ii) franchise taxes imposed on the
income, assets or net worth of the Administrative Agent or any Lender (or
Transferee), in each case by the jurisdiction under the laws of which the
Administrative Agent or such Lender (or Transferee) is organized or doing
business (other than as a result of entering into this Agreement, performing any
obligations hereunder, receiving any payments hereunder or enforcing any rights
hereunder), or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively
or individually, "Taxes"). If any Borrower shall be required to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender (or any
Transferee) or the Administrative Agent, (i) the sum payable shall be increased
by the amount (an "additional amount") necessary so that after making all
required deductions (including
<PAGE> 27
23
deductions applicable to additional sums payable under this Section 2.19) such
Lender (or Transferee) or the Administrative Agent (as the case may be) shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) such Borrower shall make such deductions and (iii) such Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers shall pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Taxes").
(c) The Borrowers shall indemnify each Lender (or Transferee)
and the Administrative Agent for the full amount of Taxes and Other Taxes paid
by such Lender (or Transferee) or the Administrative Agent, as the case may be,
and any liability (including penalties, interest and expenses (including
reasonable attorney's fees and expenses)) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability prepared by a Lender (or Transferee) or the
Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date any Lender (or Transferee) or the Administrative
Agent, as the case may be, makes written demand therefor, which written demand
shall be made within 60 days of the date such Lender (or Transferee) or the
Administrative Agent receives written demand for payment of such Taxes or Other
Taxes from the relevant Governmental Authority.
(d) If a Lender (or Transferee) or the Administrative Agent
shall become aware that it is entitled to claim a refund from a Governmental
Authority in respect of Taxes or Other Taxes as to which it has been indemnified
by the Borrowers, or with respect to which the Borrowers have paid additional
amounts, pursuant to this Section 2.19, it shall promptly notify the Borrowers
of the availability of such refund claim and shall, within 30 days after receipt
of a request by the Borrowers, make a claim to such Governmental Authority for
such refund at the Borrowers' expense. If a Lender (or Transferee) or the
Administrative Agent receives a refund (including pursuant to a claim for refund
made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes
as to which it has been indemnified by the Borrowers or with respect to which
the Borrowers have paid additional amounts pursuant to this Section 2.19, it
shall within 30 days from the date of such receipt pay over such refund to the
Borrowers (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrowers under this Section 2.19 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
such Lender (or Transferee) or the Administrative Agent and without interest
(other than interest paid by the relevant Governmental Authority with respect to
such refund); provided, however, that the Borrowers, upon the request of such
Lender (or Transferee) or the Administrative Agent, agree to repay the amount
paid over to the Borrowers (plus penalties, interest or other charges) to such
Lender (or Transferee) or the Administrative Agent in the event such Lender (or
Transferee) or the Administrative Agent is required to repay such refund to such
Governmental Authority.
(e) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Borrowers to the relevant Governmental Authority,
the Borrowers will deliver to the Administrative Agent, at its address referred
to in Section 9.01, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing payment thereof.
<PAGE> 28
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(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(g) Each Lender (or Transferee) that is organized under the
laws of a jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Lender") shall deliver to the Company and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10 percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a
controlled foreign corporation related to the Company (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Company under this Agreement. Such
forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on or before the date such participation holder becomes a
Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender
changes its applicable lending office by designating a different lending office
(a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Notwithstanding any other provision of this
Section 2.19(g), a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.19(g) that such Non-U.S. Lender is not legally able
to deliver.
(h) The Company shall not be required to indemnify any Non-U.S.
Lender, or to pay any additional amounts to any Non-U.S. Lender, in respect of
United States Federal withholding tax pursuant to paragraph (a) or (c) above to
the extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, however,
that this clause (i) shall not apply to any Transferee or New Lending Office
that becomes a Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the request of the Company; and
provided further, however, that this clause (i) shall not apply to the extent
the indemnity payment or additional amounts any Transferee, or Lender (or
Transferee) through a New Lending Office, would be entitled to receive (without
regard to this clause (i)) do not exceed the indemnity payment or additional
amounts that the person making the assignment, participation or transfer to such
Transferee, or Lender (or Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of paragraph (g) above.
(i) Any Lender (or Transferee) claiming any indemnity payment
or additional amounts payable pursuant to this Section 2.19 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by the Company or to
change the jurisdiction of its applicable lending office if the making of such a
filing or change would avoid the need for or reduce the amount of any such
indemnity payment or additional amounts that may thereafter accrue and would
not, in the sole determination of such Lender (or Transferee), be otherwise
disadvantageous to such Lender (or Transferee).
<PAGE> 29
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(j) Nothing contained in this Section 2.19 shall require any
Lender (or Transferee) or the Administrative Agent to make available any of its
tax returns (or any other information that it deems to be confidential or
proprietary).
SECTION 2.20. Duty to Mitigate; Assignment of Commitments Under
Certain Circumstances. (a) Any Lender (or Transferee) claiming any additional
amounts payable pursuant to Section 2.13 or Section 2.19 or exercising its
rights under Section 2.14 shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document requested by
the Company or to change the jurisdiction of its applicable lending office if
the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue or avoid the
circumstances giving rise to such exercise and would not, in the sole
determination of such Lender (or Transferee), be otherwise disadvantageous to
such Lender (or Transferee).
(b) In the event that any Lender shall have delivered a notice
or certificate pursuant to Section 2.13 or 2.14, or the Company shall be
required to make additional payments to any Lender under Section 2.19, the
Company shall have the right, at its own expense, upon notice to such Lender and
the Administrative Agent, to require such Lender to transfer and assign without
recourse, representation or warranty (in accordance with and subject to the
restrictions contained in Section 9.04) all interests, rights and obligations
contained hereunder to another financial institution approved by the
Administrative Agent (which approval shall not be unreasonably withheld) which
shall assume such obligations; provided that (i) no such assignment shall
conflict with any law, rule or regulation or order of any Governmental Authority
and (ii) the assignee or the Company, as the case may be, shall pay to the
affected Lender in immediately available funds on the date of such assignment
the principal of and interest accrued to the date of payment on the Loans made
by it hereunder and all other amounts accrued for its account or owed to it
hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders that:
SECTION 3.01. Organization; Powers. Each Borrower and each of
the Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to own its property and assets and to carry on
its business as now conducted and as proposed to be conducted, (c) is qualified
to do business in every jurisdiction where such qualification is required,
except where the failure so to qualify would not result in a Material Adverse
Effect, and (d) in the case of each Borrower, has the corporate power and
authority to execute, deliver and perform its obligations under the Loan
Documents and to borrow hereunder and thereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by the Borrowers of this Agreement, the promissory notes, if any,
issued pursuant to Section 9.04(i) (and by the Borrowing Subsidiaries of each
Borrowing Subsidiary Agreement), the Borrowings hereunder and the completion of
the Distribution (collectively, the "Transactions") (a) have been duly
authorized by all requisite corporate action and (b) will not (i) violate (A)
any provision of any law, statute, rule or regulation (including the Margin
Regulations) or of the certificate of incorporation or other constitutive
documents or by-laws of the Borrowers, (B) any order of any Governmental
Authority or (C) any provision of any indenture, agreement or other instrument
to which any Borrower is a party or by
<PAGE> 30
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which it or any of its property is or may be bound, (ii) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under any such indenture, agreement or other instrument or (iii)
result in the creation or imposition of any lien upon any property or assets of
any Borrower.
SECTION 3.03. Enforceability. This Agreement and each Loan
Document to which a Borrower is a party constitutes a legal, valid and binding
obligation of each Borrower enforceable in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any Governmental
Authority, other than those which have been taken, given or made, as the case
may be, is or will be required with respect to any Borrower in connection with
the Transactions.
SECTION 3.05. Financial Statements. (a) The Company has
heretofore furnished to the Administrative Agent and the Lenders copies of its
combined balance sheet and statements of income, cash flow and retained earnings
as of and for the year ended December 31, 1994, and the six months ended June
30, 1995, as included in the Proxy Statement. Such financial statements present
fairly, in all material respects, the consolidated combined financial condition
and the results of operations of the Company and the Subsidiaries as of such
dates and for such periods in accordance with GAAP.
(b) The Company has heretofore furnished to the Administrative
Agent and the Lenders copies of its pro forma combined balance sheet and
statements of income as of June 30, 1995, and for the year and the six months
ended December 31, 1994, and June 30, 1995, respectively, giving effect to the
Distribution and certain related transactions. Such financial statements present
fairly, in all material respects, the consolidated combined financial condition
and the results of operations of the Company and the Subsidiaries on a pro forma
basis as of such dates and for such periods in accordance with GAAP.
(c) As of the Effective Date, there has been no material
adverse change in the consolidated financial condition of the Company and the
Subsidiaries taken as a whole from the financial condition reported in the
financial statements referenced in paragraph (a) of this Section 3.05.
SECTION 3.06. Litigation; Compliance with Laws. (a) As of the
Effective Date, there are no actions, proceedings or investigations filed or (to
the knowledge of the Borrowers) threatened affecting any Borrower or any
Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal which question the validity or legality of this Agreement, the
Transactions or any action taken or to be taken pursuant to this Agreement and
no order or judgment has been issued or entered restraining or enjoining any
Borrower or any Subsidiary from the execution, delivery or performance of this
Agreement nor is there any other action, proceeding or investigation filed or
(to the knowledge of any Borrower or any Subsidiary) threatened against any
Borrower or any Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal which would be reasonably likely to result in a
Material Adverse Effect or materially restrict the ability of any Borrower to
comply with its obligations under the Loan Documents.
(b) Neither any Borrower nor any Subsidiary is in violation of
any law, rule or regulation (including any law, rule or regulation relating to
the protection of the environment or to employee health or safety), or in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default would be reasonably
likely to result in a Material Adverse Effect.
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SECTION 3.07. Federal Reserve Regulations. (a) Neither any
Borrower nor any Subsidiary that will receive proceeds of the Loans hereunder
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry Margin Stock or to refund indebtedness originally incurred for
such purpose, or for any other purpose which entails a violation of, or which is
inconsistent with, the provisions of the Margin Regulations.
SECTION 3.08. Investment Company Act; Public Utility Holding
Company Act. No Borrower is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 (the "1940 Act")
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Use of Proceeds. All proceeds of the Loans
shall be used for the purposes referred to in the recitals to this Agreement.
SECTION 3.10. Full Disclosure; No Material Misstatements. None
of the representations or warranties made by any Borrower in connection with
this Agreement as of the date such representations and warranties are made or
deemed made, and no report, financial statement or other information furnished
by or on behalf of any Borrower to the Administrative Agent or any Lender
pursuant to or in connection with this Agreement or the credit facilities
established hereby contains or will contain any material misstatement of fact or
omits or will omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were or will be
made, not misleading.
SECTION 3.11. Taxes. Each Borrower and each of the material
Subsidiaries have filed or caused to be filed all Federal, state and local tax
returns which are required to be filed by them, and have paid or caused to be
paid all taxes shown to be due and payable on such returns or on any assessments
received by any of them, other than any taxes or assessments the validity of
which is being contested in good faith by appropriate proceedings, and with
respect to which appropriate accounting reserves have to the extent required by
GAAP been set aside.
SECTION 3.12. Employee Pension Benefit Plans. The present
aggregate value of accumulated benefit obligations of all unfunded and
underfunded pension plans of the Company and its Subsidiaries (based on those
assumptions used for disclosure in corporate financial statements in accordance
with GAAP) did not, as of December 31, 1994, exceed by more than $605,000,000
the value of the assets of all such plans. Of such $605,000,000, $540,000,000 is
primarily attributable to employee pension plans in countries where the funding
of such obligations is not required or customary and $65,000,000 relates
primarily to domestic pension plans where funding is not permitted under current
tax regulations. In these cases the Company has recorded book reserves to meet
the obligations. Trust assets totalling approximately $45,000,000 have been
established to provide for certain of the foregoing domestic pension benefits,
however, because of restrictions relating to bankruptcy or insolvency, such
funds are not included in the funded amount of plans for purposes of GAAP.
SECTION 3.13. Distribution. At or prior to the Effective Date,
the Distribution will have been duly completed in accordance with applicable law
and as described in the Proxy Statement, and the assets, liabilities and
capitalization of the Company will have been consistent at the time of and after
giving effect to the Distribution in all material respects with the forecasted
capitalization table of
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the Company set forth in the Proxy Statement and the pro forma financial
statements referred to in Section 3.05(b), except that in the event the
Distribution shall occur prior to December 31, 1995, the transactions set forth
in Schedule 3.13 which are reflected as having occurred in such capitalization
table and such pro forma financial statements might not yet have occurred.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. On the date of each Borrowing:
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 or Section 2.04, as
applicable.
(b) The representations and warranties set forth in Article III
hereof shall be true and correct in all material respects on and as of
the date of such Borrowing with the same effect as though made on and
as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing no
Event of Default or Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. Effective Date. On the Effective Date:
(a) The Administrative Agent shall have received a favorable
written opinion of Robert Beicke, Esq., dated the Effective Date and addressed
to the Lenders and satisfactory to the Lenders, the Administrative Agent and
Cravath, Swaine & Moore, counsel for the Administrative Agent, to the effect set
forth in Exhibit D hereto.
(b) The Administrative Agent shall have received (i) a copy of
the certificate of incorporation, including all amendments thereto, of the
Company, certified as of a recent date by the Secretary of State of its state of
incorporation, and a certificate as to the good standing of the Company as of a
recent date from such Secretary of State; (ii) a certificate of the Secretary or
an Assistant Secretary of the Company dated the Effective Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws of the
Company as in effect on the Effective Date and at all times since a date prior
to the date of the resolutions described in clause (B) below, (B) that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of the Company authorizing the execution, delivery and performance of
this Agreement and the Borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, (C) that
the certificate of incorporation referred to in clause (i) above has not been
amended since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to such clause (i) and (D) as to the incumbency
and specimen signature of each officer executing this Agreement or any other
document delivered in connection herewith on behalf of the Company; and
<PAGE> 33
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(iii) a certificate of another officer of the Company as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above.
(c) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by a Financial Officer of the Company,
confirming compliance with the conditions precedent set forth in paragraphs (b)
and (c) of Section 4.01.
(d) The principal of and accrued and unpaid interest on any
loans outstanding under the Existing Credit Facilities shall have been paid in
full, all other amounts due in respect of the Existing Credit Facilities shall
have been paid in full and the commitments to lend under the Existing Credit
Facilities shall have been permanently terminated.
(e) The Administrative Agent shall have received any Fees or
other amounts due and payable on or prior to the Effective Date.
SECTION 4.03. First Borrowing by Each Borrowing Subsidiary.
On or prior to the first date on which Loans are made to any Borrowing
Subsidiary:
(a) The Lenders shall have received the favorable written
opinion of counsel satisfactory to the Administrative Agent, addressed
to the Lenders and satisfactory to the Lenders, the Administrative
Agent and Cravath, Swaine & Moore, counsel for the Administrative
Agent, to the effect set forth in Exhibit D hereto.
(b) Each Lender shall have received a copy of the Borrowing
Subsidiary Agreement executed by such Borrowing Subsidiary.
ARTICLE V
COVENANTS
A. Affirmative Covenants. Each Borrower covenants and agrees
with each Lender and the Administrative Agent that so long as this Agreement
shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid, unless the Required Lenders
shall otherwise consent in writing, it will, and will cause each of the
Subsidiaries to:
SECTION 5.01. Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence,
rights and franchises, except as expressly permitted under Section 5.09;
provided, however, that nothing in this Section shall prevent the abandonment or
termination of the existence, rights or franchises of any Subsidiary or any
rights or franchises of any Borrower if such abandonment or termination is in
the best interests of the Borrowers and is not disadvantageous in any material
respect to the Lenders.
SECTION 5.02. Business and Properties. Comply in all material
respects with all applicable laws, rules, regulations and orders of any
Governmental Authority (including any of the foregoing relating to the
protection of the environment or to employee health and safety), whether now in
effect or hereafter enacted; and at all times maintain and preserve all property
material to the conduct of its business and keep such property in good repair,
working order and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
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SECTION 5.03. Financial Statements, Reports, Etc. In the case
of the Company, furnish to the Administrative Agent for distribution to each
Lender:
(a) within 120 days after the end of each fiscal year, its
consolidated balance sheet and the related consolidated statements of
income, cash flows and retained earnings showing its consolidated
financial condition as of the close of such fiscal year and the
consolidated results of its operations during such year, all audited by
Arthur Andersen LLP or other independent certified public accountants
of recognized national standing selected by the Company and accompanied
by an opinion of such accountants to the effect that such consolidated
financial statements fairly present its financial condition and results
of operations on a consolidated basis in accordance with GAAP (it being
agreed that the requirements of this paragraph may be satisfied by the
delivery pursuant to paragraph (d) below of an annual report on Form
10-K containing the foregoing);
(b) within 90 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet and
related consolidated statements of income, cash flow and retained
earnings, showing its consolidated financial condition as of the close
of such fiscal quarter and the consolidated results of its operations
during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly
presenting its financial condition and results of operations on a
consolidated basis in accordance with GAAP, subject to normal year-end
audit adjustments (it being agreed that the requirements of this
paragraph may be satisfied by the delivery pursuant to paragraph (d)
below of a quarterly report on Form 10-Q containing the foregoing);
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer
certifying that, to the best of such Financial Officer's knowledge, no
Event of Default or Default has occurred or, if such an Event of
Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto;
(d) promptly after the same become publicly available, copies
of all reports on forms 10-K, 10-Q and 8-K filed by it with the SEC, or
any Governmental Authority succeeding to any of or all the functions of
the SEC, or, in the case of the Company, copies of all reports
distributed to its shareholders, as the case may be;
(e) promptly, from time to time, such other information as any
Lender shall reasonably request through the Administrative Agent; and
(f) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, calculations of the financial test
referred to in Section 5.12.
SECTION 5.04. Insurance. Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers, and
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies similarly situated and in the same or similar businesses (it being
understood that the Borrowers and their Subsidiaries may self-insure to the
extent customary with companies similarly situated and in the same or similar
businesses).
SECTION 5.05. Obligations and Taxes. Pay and discharge promptly
when due all taxes, assessments and governmental charges imposed upon it or upon
its income or profits or in respect of its property, as well as all other
material liabilities, in each case before the same shall
<PAGE> 35
31
become delinquent or in default and before penalties accrue thereon, unless and
to the extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves with respect thereto shall, to the extent
required by GAAP, have been set aside.
SECTION 5.06. Litigation and Other Notices. Give the
Administrative Agent prompt written notice of the following (which the
Administrative Agent shall promptly provide to the Lenders):
(a) the filing or commencement of, or any written threat or
written notice of intention of any person to file or commence, any
action, suit or proceeding which could reasonably be expected to result
in a Material Adverse Effect;
(b) any Event of Default or Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken
with respect thereto; and
(c) any change in any of the Ratings.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain financial records in accordance with GAAP and, upon
reasonable notice, at all reasonable times, permit any authorized representative
designated by the Administrative Agent to visit and inspect the properties of
the Company and of any material Subsidiary and to discuss the affairs, finances
and condition of the Company and any material Subsidiary with a Financial
Officer of the Company and such other officers as the Company shall deem
appropriate.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans
only for the purposes set forth in the recitals to this Agreement.
B. Negative Covenants. Each Borrower covenants and agrees with
each Lender and the Administrative Agent that so long as this Agreement shall
remain in effect or the principal of or interest on any Loan, any Fees or any
other amounts payable hereunder shall be unpaid, unless the Required Lenders
shall otherwise consent in writing, it will not, and will not cause or permit
any of the Subsidiaries to:
SECTION 5.09. Consolidations, Mergers, and Sales of Assets.
Consolidate or merge with or into any other person or sell, lease or transfer
all or substantially all of its property and assets, or agree to do any of the
foregoing, unless (a) no Default or Event of Default has occurred and is
continuing or would have occurred immediately after giving effect thereto, and
(b) in the case of a consolidation or merger or transfer of assets involving the
Company and in which the Company is not the surviving corporation or sells,
leases or transfers all or substantially all of its property and assets, the
surviving corporation or person purchasing, leasing or receiving such property
and assets is organized in the United States of America or a state thereof and
agrees to be bound by the terms and provisions applicable to the Company
hereunder.
SECTION 5.10. Limitations on Liens. In the case of the Company,
create, suffer to be created, or assume (directly or indirectly) any mortgage,
pledge or other lien upon any Principal Property, or permit any Restricted
Subsidiary to create, suffer to be created, or assume (directly or indirectly)
any mortgage, pledge or other lien upon any Principal Property; provided,
however, that this covenant shall not apply to any of the following:
(a) any mortgage, pledge or other lien on any Principal
Property hereafter acquired, constructed or improved by the Company or
any Restricted Subsidiary which is created or
<PAGE> 36
32
assumed to secure or provide for the payment of any part of the
purchase price of such property or the cost of such construction or
improvement, or any mortgage, pledge or other lien on any Principal
Property existing at the time of acquisition thereof, provided,
however, that the mortgage, pledge or other lien shall not extend to
any Principal Property theretofore owned by the Company or any
Restricted Subsidiary;
(b) any mortgage, pledge or other lien on any Principal
Property existing on the date of this Agreement as described in
Schedule 5.10;
(c) any mortgage, pledge or other lien existing upon any
property of a company which is merged with or into or is consolidated
into, or substantially all the assets or shares of capital stock of
which are acquired by, the Company or a Restricted Subsidiary, at the
time of such merger, consolidation or acquisition, provided that such
mortgage, pledge or other lien does not extend to any other Principal
Property, other than improvements to the property subject to such
mortgage, pledge or other lien;
(d) any pledge or deposit to secure payment of workers'
compensation or insurance premiums, or in connection with tenders,
bids, contracts (other than contracts for the payment of money) or
leases;
(e) any pledge of, or other lien upon, any assets as security
for the payment of any tax, assessment or other similar charge by any
Governmental Authority or public body, or as security required by law
or governmental regulation as a condition to the transaction of any
business or the exercise of any privilege or right;
(f) any pledge or lien necessary to secure a stay of any legal
or equitable process in a proceeding to enforce a liability or
obligation contested in good faith by the Company or a Restricted
Subsidiary or required in connection with the institution by the
Company or a Restricted Subsidiary of any legal or equitable proceeding
to enforce a right or to obtain a remedy claimed in good faith by the
Company or a Restricted Subsidiary, or required in connection with any
order or decree in any such proceeding or in connection with any
contest of any tax or other governmental charge; or the making of any
deposit with or the giving of any form of security to any governmental
agency or any body created or approved by law or governmental
regulation in order to entitle the Company or a Restricted Subsidiary
to maintain self-insurance or to participate in any fund in connection
with workers' compensation, unemployment insurance, old age pensions or
other social security or to share in any provisions or other benefits
provided for companies participating in any such arrangement or for
liability on insurance of credits or other risks;
(g) any mechanics', carriers', workmen's, repairmen's, or other
like liens, if arising in the ordinary course of business, in respect
of obligations which are not overdue or liability for which is being
contested in good faith by appropriate proceedings;
(h) any lien or encumbrance on property in favor of the United
States of America, or of any agency, department or other
instrumentality thereof, to secure partial, progress or advance
payments pursuant to the provisions of any contract;
(i) any mortgage, pledge or other lien securing any
indebtedness incurred in any manner to finance or recover the cost to
the Company or any Restricted Subsidiary of any physical property, real
or personal, which prior to or simultaneously with the creation of such
indebtedness shall have been leased by the Company or a Restricted
Subsidiary to the United
<PAGE> 37
33
States of America or a department or agency thereof at an aggregate
rental, payable during that portion of the initial term of such lease
(without giving effect to any options of renewal or extension) which
shall be unexpired at the date of the creation of such indebtedness,
sufficient (taken together with any amounts required to be paid by the
lessee to the lessor upon any termination of such lease) to pay in full
at the stated maturity date or dates thereof the principal of and the
interest on such indebtedness;
(j) any mortgage, pledge or other lien securing indebtedness of
a Restricted Subsidiary to the Company or a Restricted Subsidiary,
provided that in the case of any sale or other disposition of such
indebtedness by the Company or such Restricted Subsidiary, such sale or
other disposition shall be deemed to constitute the creation of another
mortgage, pledge or other lien not permitted by this clause (j);
(k) any mortgage, pledge or other lien affecting property of
the Company or any Restricted Subsidiary securing indebtedness of the
United States of America or a State thereof (or any instrumentality or
agency of either thereof) issued in connection with a pollution control
or abatement program required in the opinion of the Company to meet
environmental criteria with respect to manufacturing or processing
operations of the Company or any Restricted Subsidiary and the proceeds
of which indebtedness have financed the cost of acquisition of such
program;
(l) the renewal, extension, replacement or refunding of any
mortgage, pledge, lien, deposit, charge or other encumbrance permitted
by the foregoing provisions of this covenant upon the same property
theretofore subject thereto, or the renewal, extension, replacement or
refunding of the amount secured thereby, provided that in each case
such amount outstanding at that time shall not be increased; or
(m) any other mortgage, pledge or other lien, provided that
immediately after the creation or assumption of such mortgage, pledge
or other lien, the total of (x) the aggregate principal amount of
indebtedness of the Company and all Restricted Subsidiaries secured by
all mortgages, pledges and other liens created or assumed under the
provisions of this clause (m), plus (y) the aggregate amount of
Capitalized Lease-Back Obligations of the Company and Restricted
Subsidiaries under the entire unexpired terms of all leases entered
into in connection with sale and lease-back transactions which would
have been precluded by the provisions of Section 5.11 but for the
satisfaction of the condition set forth in clause (b) thereof, shall
not exceed an amount equal to 5% of Consolidated Net Tangible Assets.
The lease of any property by the Company or a Restricted Subsidiary and rental
obligations with respect thereto (whether or not arising out of a sale and
lease-back of properties and whether or not in accordance with GAAP such
property is carried as an asset and such rental obligations are carried as
indebtedness on the Company's or a Restricted Subsidiary's balance sheet) shall
not in any event be deemed to be the creation of a mortgage, pledge or other
lien.
SECTION 5.11. Limitations on Sale and Leaseback Transactions.
In the case of the Company or any Restricted Subsidiary, enter into any
arrangement with any person providing for the leasing by the Company or any
Restricted Subsidiary of any Principal Property (except for temporary leases for
a term of not more than three years and except for leases between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries), which property
has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such person more than 120 days after the acquisition thereof or
the completion of construction and commencement of full operation thereof,
unless either (a) the Company shall apply an amount equal to the greater of the
Fair Value of such
<PAGE> 38
34
property or the net proceeds of such sale, within 120 days of the effective date
of any such arrangement, to the retirement (other than any mandatory retirement
or by way of payment at maturity) of Indebtedness or to the acquisition,
construction, development or improvement of properties, facilities or equipment
used for operating purposes which are, or upon such acquisition, construction,
development or improvement will be, a Principal Property or a part thereof; or
(b) at the time of entering into such arrangement, such Principal Property could
have been subjected to a mortgage, pledge or lien securing indebtedness of the
Company or a Restricted Subsidiary in a principal amount equal to the
Capitalized Lease-Back Obligations with respect to such Principal Property under
paragraph (m) of Section 5.10.
SECTION 5.12. Consolidated EBITDA to Consolidated Interest
Expense. Permit the ratio of (a) Consolidated EBITDA to (b) Consolidated
Interest Expense for any period of four consecutive fiscal quarters to be less
than 3.75 to 1.0.
ARTICLE VI
EVENTS OF DEFAULT
In case of the happening of any of the following events (each
an "Event of Default"):
(a) any representation or warranty made or deemed made in or in
connection with the execution and delivery of this Agreement or the
Borrowings hereunder shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Loan or any Fee or any other amount (other than an amount referred to
in paragraph (b) above) due hereunder, when and as the same shall
become due and payable, and such default shall continue unremedied for
a period of ten days;
(d) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.01,
5.09, 5.10, 5.11, 5.12 or 5.13 and, in the case of any default under
Section 5.10, such default shall continue for 30 days;
(e) default shall be made in the due observance or performance
of any covenant, condition or agreement contained herein (other than
those specified in clauses (b), (c) or (d) above) and such default
shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent or any Lender to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $20,000,000, beyond the
period of grace, if any, provided in the agreement or instrument under
which such Indebtedness was created, or (ii) fail to observe or perform
any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such Indebtedness,
or any other event shall occur or condition shall exist, beyond the
period of grace, if any, provided in such agreement or instrument, if
the effect of any failure referred to in this clause (ii) is to cause,
or to permit the holder or holders of such
<PAGE> 39
35
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice) to cause, such Indebtedness to become due prior to
its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company, or of a
substantial part of the property or assets of the Company or any
Subsidiary with assets having gross book value in excess of
$25,000,000, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or for a substantial
part of the property or assets of the Company or any Subsidiary with
assets having gross book value in excess of $25,000,000 or (iii) the
winding up or liquidation of the Company; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) the Company or any Subsidiary with assets having gross book
value in excess of $25,000,000 shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Company or for a substantial part of the property or
assets of the Company, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more final judgments shall be entered by any court
against the Company or any of the Subsidiaries for the payment of money
in an aggregate amount in excess of $100,000,000 and such judgment or
judgments shall not have been paid, covered by insurance, discharged or
stayed for a period of 60 days, or a warrant of attachment or execution
or similar process shall have been issued or levied against property of
the Company or any of the Subsidiaries to enforce any such judgment or
judgments;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in a Material Adverse
Effect; or
(k) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Company
or any Subsidiary with assets having gross book value in excess of $25,000,000
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Company, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued hereunder,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived anything contained herein to the contrary
notwithstanding; and, in the case of any event with respect to the Company or
any Subsidiary
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with assets having gross book value in excess of $25,000,000 described in
paragraph (g) or (h) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrowers
accrued hereunder shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived anything contained herein to the contrary
notwithstanding.
ARTICLE VII
GUARANTEE
The Company unconditionally and irrevocably guarantees the due
and punctual payment and performance, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, of the
Guaranteed Obligations. The Company further agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from it and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Guaranteed Obligations.
The Company waives presentment to, demand of payment from and
protest to the Borrowing Subsidiaries of any of the Guaranteed Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. The obligations of the Company hereunder shall not be affected by
(a) the failure of any Lender to assert any claim or demand or to enforce any
right or remedy against the Borrowing Subsidiaries under the provisions of this
Agreement or otherwise; (b) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Agreement, any guarantee or any other
agreement; or (c) the failure of any Lender to exercise any right or remedy
against any other guarantor of the Guaranteed Obligations.
The Company further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Administrative Agent or any Lender to any
security, if any, held for payment of the Guaranteed Obligations or to any
balance of any deposit account or credit on its books, in favor of the Borrowing
Subsidiaries or any other person.
The obligations of the Company hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of the Company hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement, any guarantee or any other agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, wilful or otherwise, in the performance of the Guaranteed Obligations, or
by any other act or omission which may or might in any manner or to any extent
vary the risk of the Company or otherwise operate as a discharge of the Company
as a matter of law or equity.
To the extent permitted by applicable law, the Company waives
any defense based on or arising out of any defense available to the Borrowing
Subsidiaries, including any defense based on or arising out of any disability of
the Borrowing Subsidiaries, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the
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37
Borrowing Subsidiaries, other than final payment in full of the Guaranteed
Obligations. The Administrative Agent and the Lenders may, at their election,
foreclose on any security held by one or more of them by one or more judicial or
non-judicial sales, or exercise any other right or remedy available to them
against the Borrowing Subsidiaries, or any security without affecting or
impairing in any way the liability of the Company hereunder except to the extent
the Guaranteed Obligations have been fully and finally paid. The Company waives
any defense arising out of any such election even though such election operates
to impair or to extinguish any right of reimbursement or subrogation or other
right or remedy of the Company against the Borrowing Subsidiaries or any
security.
The Company further agrees that its guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Guaranteed Obligation is
rescinded or must otherwise be restored by any Lender upon the bankruptcy or
reorganization of any Borrowing Subsidiary or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which the Administrative Agent or any Lender may have at law or in
equity against the Company by virtue hereof, upon the failure of any Borrowing
Subsidiary to pay any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Company hereby promises to and will, upon receipt of written
demand by the Administrative Agent or any Lender, forthwith pay or cause to be
paid to the Administrative Agent or such Lender in cash the amount of such
unpaid Guaranteed Obligation.
The Company hereby irrevocably waives and releases any and all
rights of subrogation, indemnification, reimbursement and similar rights which
it may have against or in respect of the Borrowing Subsidiaries at any time
relating to the Guaranteed Obligations, including all rights that would result
in its being deemed a "creditor" of the Borrowing Subsidiaries under the United
States Code as now in effect or hereafter amended, or any comparable provision
of any successor statute.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Administrative Agent on
behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes the
Administrative Agent to take such actions on behalf of such Lender and to
exercise such powers as are specifically delegated to the Administrative Agent
by the terms and provisions hereof, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrowers of any Event of
Default of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Borrowers pursuant to this Agreement as received by the Administrative Agent.
Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his or her own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
<PAGE> 42
38
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrowers of any of the terms, conditions,
covenants or agreements contained in this Agreement. The Administrative Agent
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or other instruments
or agreements. The Administrative Agent may deem and treat the Lender which
makes any Loan as the holder of the indebtedness resulting therefrom for all
purposes hereof until it shall have received notice from such Lender, given as
provided herein, of the transfer thereof. The Administrative Agent shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. The
Administrative Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the Borrowers on account of
the failure of or delay in performance or breach by any Lender of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrowers of any of their
respective obligations hereunder or in connection herewith. The Administrative
Agent may execute any and all duties hereunder by or through agents or employees
and shall be entitled to rely upon the advice of legal counsel selected by it
with respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice of
such counsel.
The Lenders hereby acknowledge that the Administrative Agent
shall be under no duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders and the Company. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Administrative
Agent acceptable to the Company. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After the Administrative
Agent's resignation hereunder, the provisions of this Article and Section 9.05
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.
With respect to the Loans made by it hereunder, the
Administrative Agent in its individual capacity and not as Administrative Agent
shall have the same rights and powers as any other Lender and may exercise the
same as though it were not the Administrative Agent, and the Administrative
Agent and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrowers or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agent,
on demand, in the amount of its pro rata share (based on its Commitment
hereunder or, if the Commitments shall have been terminated, the amount of its
outstanding Loans) of any expenses incurred for the benefit of the
<PAGE> 43
39
Lenders by the Administrative Agent, including counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, which
shall not have been reimbursed by the Borrowers and (ii) to indemnify and hold
harmless the Administrative Agent and any of its directors, officers, employees
or agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against it in its
capacity as the Administrative Agent in any way relating to or arising out of
this Agreement or any action taken or omitted by it under this Agreement to the
extent the same shall not have been reimbursed by the Borrowers; provided that
no Lender shall be liable to the Administrative Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents. Each Lender agrees that any allocation made in good faith
by the Administrative Agent of expenses or other amounts referred to in this
paragraph between this Agreement and the Facility B Credit Agreement shall be
conclusive and binding for all purposes.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, as follows:
(a) if to any Borrower, to ITT Industries, Inc., Red Oak
Corporate Park, 4 West Red Oak Lane, Harrison, New York 10604,
Attention of Treasurer (Telecopy No. 914-696-2950);
(b) if to the Administrative Agent, to Chemical Bank Agency
Services Corp., 140 East 45th Street, 29th Floor, New York, New York
10017, Attention of Mr. Chris Moriarty, (Telecopy No. 212-622-0002),
with a copy to Chemical Bank at 270 Park Avenue, New York, New York
10017, Re: ITT Industries, Inc.; and
(c) if to a Lender, to it at its address (or telecopy number)
set forth in Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments prepared or
<PAGE> 44
40
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement is outstanding and unpaid or the Commitments have
not been terminated. The provisions of Sections 2.13, 2.15, 2.19 and 9.05 shall
remain operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the invalidity or unenforceability of any term or provision of this Agreement,
or any investigation made by or on behalf of the Administrative Agent or any
Lender.
SECTION 9.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company and the Administrative
Agent and when the Administrative Agent shall have received copies hereof
(telecopied or otherwise) which, when taken together, bear the signature of each
Lender, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Borrowers shall not have the right to assign any rights hereunder or any
interest herein without the prior consent of all the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any party that are contained in this
Agreement shall bind and inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it);
provided, however, that (i) except in the case of an assignment to a Lender or
an Affiliate of a Lender, the Company must give its prior written consent to
such assignment (which consent, if required, shall not be unreasonably withheld
in the event an Event of Default has occurred and is continuing), (ii) the
parties to each such assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, and a processing and recordation fee of
$3,000 (provided that, in the case of simultaneous assignment of interests under
this Agreement and the Facility B Credit Agreement, the aggregate fee shall be
$3,000), (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire, and (iv) the amount of the
Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 and the
amount of the Commitment of such Lender remaining after such assignment shall
not be less than $5,000,000 or shall be zero. Upon acceptance and recording
pursuant to paragraph (e) of this Section, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto (but shall continue to be entitled to the benefits of Sections 2.13,
2.15, 2.19 and 9.05, as well as to any Fees accrued for its account hereunder
and not yet paid)). Notwithstanding the foregoing, any Lender assigning its
rights and obligations under this Agreement may retain any Competitive Loans
made by it outstanding at such time, and in such case shall retain its rights
hereunder in respect of any Loans so retained until such Loans have been repaid
in full in accordance with this Agreement.
<PAGE> 45
41
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.03 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Administrative Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its
offices in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, and the principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the "Register").
The entries in the Register shall be conclusive in the absence of manifest error
and the Borrowers, the Administrative Agent and the Lenders may treat each
person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by each party hereto, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee together with an
Administrative Questionnaire completed in respect of the assignee (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above and the written consent of the Company to
such assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance and (ii) record the information contained therein in the Register.
(f) Each Lender may sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) each
participating bank or other entity shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.13, 2.15 and 2.19 to the same
extent as if it were the selling Lender (and limited to the amount that could
have been claimed by the selling Lender had it continued to hold the interest of
such participating bank or other entity), except that all claims made pursuant
to such Sections shall be made through such selling Lender, and (iv) the
Borrowers, the Administrative Agent and the other Lenders shall continue to deal
solely and
<PAGE> 46
42
directly with such selling Lender in connection with such Lender's rights and
obligations under this Agreement.
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender;
provided that, prior to any such disclosure, each such assignee or participant
or proposed assignee or participant shall execute an agreement for the benefit
of the Company whereby such assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of any such information.
(h) The Borrowers shall not assign or delegate any rights and
duties hereunder without the prior written consent of all Lenders.
(i) Any Lender may at any time pledge all or any portion of its
rights under this Agreement to a Federal Reserve Bank; provided that no such
pledge shall release any Lender from its obligations hereunder or substitute any
such Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, each Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to such Borrower by the assigning Lender
hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree to
pay all reasonable out-of-pocket expenses incurred by the Administrative Agent
in connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof, or incurred by
the Administrative Agent or any Lender in connection with the enforcement or
protection of their rights in connection with this Agreement or in connection
with the Loans made hereunder, including the fees and disbursements of counsel
for the Administrative Agent or, in the case of enforcement, the Lenders.
(b) The Borrowers agree to indemnify the Administrative Agent,
each Lender, each of their Affiliates and the directors, officers, employees and
agents of the foregoing (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of (i) the
consummation of the transactions contemplated by this Agreement, (ii) the use of
the proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any investigation made by or on behalf of the
Administrative Agent or any Lender. All amounts due under this Section shall be
payable on written demand therefor.
SECTION 9.06. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 47
43
SECTION 9.07. Waivers; Amendment. (a) No failure or delay of
the Administrative Agent or any Lender in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on any
Borrower or any Subsidiary in any case shall entitle such party to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest or fees on any Loan, or waive or excuse any such payment
or any part thereof, or decrease the rate of interest on any Loan, without the
prior written consent of each Lender affected thereby, (ii) increase the
Commitment or decrease the Facility Fee of any Lender or other amounts due to
any Lender without the prior written consent of such Lender, (iii) limit or
release the guarantee set forth in Article VII, or (iv) amend or modify the
provisions of Section 2.16 or Section 9.04(h), the provisions of this Section or
the definition of the "Required Lenders", without the prior written consent of
each Lender; provided further, however, that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent. Each
Lender shall be bound by any waiver, amendment or modification authorized by
this Section and any consent by any Lender pursuant to this Section shall bind
any assignee of its rights and interests hereunder.
SECTION 9.08. Entire Agreement. This Agreement, the agreements
referenced in Section 2.06(b) and the letter agreement attached as Exhibit F
constitute the entire contract among the parties relative to the subject matter
hereof. Any previous agreement among the parties with respect to the subject
matter hereof is superseded by this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party other than the
parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 9.09. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
<PAGE> 48
44
SECTION 9.12. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or obligations of the Company and any Borrowing Subsidiary
now or hereafter existing under this Agreement held by such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. Each Lender agrees promptly to
notify the Company and the Administrative Agent after such setoff and
application made by such Lender, but the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Lender
under this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (A)
EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
SUBJECT TO THE FOREGOING AND TO PARAGRAPH (B) BELOW, NOTHING IN THIS AGREEMENT
SHALL AFFECT ANY RIGHT THAT ANY PARTY HERETO MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY OTHER PARTY HERETO
IN THE COURTS OF ANY JURISDICTION.
(B) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR THEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY
NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(C) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO
<PAGE> 49
45
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION.
SECTION 9.15. Addition of Borrowing Subsidiaries. Each
Borrowing Subsidiary which shall deliver to the Administrative Agent a Borrowing
Subsidiary Agreement executed by such Subsidiary and the Company shall, upon
such delivery and without further act, become a party hereto and a Borrower
hereunder with the same effect as if it had been an original party to this
Agreement.
SECTION 9.16. Execution. Upon execution by the Lenders, this
Agreement will be executed with Old ITT as "the Company" all as contemplated by
the letter agreement attached as Exhibit F, and upon execution of this Agreement
by the Company, the Company shall succeed to the rights and obligations of Old
ITT as contemplated in this Agreement.
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.
ITT INDUSTRIES, INC., as Borrower,
by /s/ Richard J. M. Hamilton
--------------------------------------------
Name: Richard J. M. Hamilton
Title: Senior Vice President and Controller
CHEMICAL BANK, individually and as
Administrative Agent,
by /s/ Robert K. Gaynor
--------------------------------------------
Name: Robert K. Gaynor
Title: Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH,
by /s/ Frances O'R. Logan
--------------------------------------------
Name: Frances O'R. Logan
Title: Vice President
by /s/ William J. Van Nostrand
--------------------------------------------
Name: William J. Van Nostrand
Title: Vice President
ARAB BANK PLC,
by /s/ Nofal S. Barbar
--------------------------------------------
Name: Nofal S. Barbar
Title: Executive Vice President and Branch
Manager
<PAGE> 50
46
BANCA COMMERCIALE ITALIANA, NEW YORK
BRANCH,
by /s/ Charles Dougherty
----------------------------------------
Name: Charles Dougherty
Title: Vice President
by /s/ M. Welch
----------------------------------------
Name: M. Welch
Title: Assistant Vice President
BANCA DI ROMA - NEW YORK BRANCH,
by /s/ Ralph L. Riehle
----------------------------------------
Name: Ralph L. Riehle
Title: First Vice President
by /s/ Luca Balestra
----------------------------------------
Name: Luca Balestra
Title: Assistant Vice President
BANCA NAZIONALE DEL LAVORO S.P.A., NEW
YORK BRANCH,
by /s/ Giuliano Violetta
----------------------------------------
Name: Giuliano Violetta
Title: First Vice President
by /s/ Giulio Giovine
----------------------------------------
Name: Giulio Giovine
Title: Vice President
BANCA POPOLARE DI MILANO,
by /s/ Anthony Franco
----------------------------------------
Name: Anthony Franco
Title: Executive Vice President/
General Manager
by /s/ Nicholas Cinosi
----------------------------------------
Name: Nicholas Cinosi
Title: Vice President
<PAGE> 51
47
BANK OF AMERICA ILLINOIS,
by /s/ Ambrish D. Thanawais
----------------------------------------
Name: Ambrish D. Thanawais
Title: Vice President
BANK OF HAWAII,
by /s/ John R. Landgraf
----------------------------------------
Name: John R. Landgraf
Title: Officer
THE BANK OF NEW YORK,
by /s/ Mary Anne Zagroba
----------------------------------------
Name: Mary Anne Zagroba
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ J. Alan Edwards
----------------------------------------
Name: J. Alan Edwards
Title: Authorized Signatory
THE BANK OF TOKYO TRUST COMPANY,
by /s/ Amanda S. Ryan
----------------------------------------
Name: Amanda S. Ryan
Title: Vice President
BANKERS TRUST COMPANY,
by /s/ Katherine A. Judge
----------------------------------------
Name: Katherine A. Judge
Title: Vice President
BARCLAYS BANK PLC,
by /s/ John C. Livingston
----------------------------------------
Name: John C. Livingston
Title: Associate Director
<PAGE> 52
48
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH,
by /s/ Wilfried Freudenberger
----------------------------------------
Name: Wilfried Freudenberger
Title: Executive Vice President and
General Manager
by /s/ Peter Oberman
----------------------------------------
Name: Peter Oberman
Title: Senior Vice President
Manager Lending Division
CIBC, INC.,
by /s/ J. Domkowski
----------------------------------------
Name: J. Domkowski
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.,
by /s/ David B. Townsend
----------------------------------------
Name: David B. Townsend
Title: Managing Director
CITIBANK, N.A.,
by /s/ Elizabeth A. Palermo
----------------------------------------
Name: Elizabeth A. Palermo
Title: Attorney-in-Fact
COMERICA BANK,
by /s/ Cheryl W. Ewers
----------------------------------------
Name: Cheryl W. Ewers
Title: Accounting Officer
<PAGE> 53
49
COMMERZBANK AKTIENGESELLSCHAFT, GRAND
CAYMAN BRANCH,
by /s/ Thomas Ausfahl
----------------------------------------
Name: Thomas Ausfahl
Title: Assistant Vice President
by /s/ Robert Donohue
----------------------------------------
Name: Robert Donohue
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
by /s/ Eric Longuet
----------------------------------------
Name: Eric Longuet
Title: Vice President
by /s/ Albert M. Calo
----------------------------------------
Name: Albert M. Calo
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Robert Ivosevich
----------------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE,
by /s/ Robert B. Potter
----------------------------------------
Name: Robert B. Potter
Title: Member of Senior Management
by /s/ Chris T. Horgan
----------------------------------------
Name: Chris T. Horgan
Title: Associate
<PAGE> 54
50
CREDITO ITALIANO, S.P.A.
by /s/ Harmon P. Butler
----------------------------------------
Name: Harmon P. Butler
Title: First Vice President and
Deputy Manager
by /s/ Saiyed A. Abbas
----------------------------------------
Name: Saiyed A. Abbas
Title: Assistant Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by /s/ Timothy White
----------------------------------------
Name: Timothy White
Title: Vice President
DEN DANSKE BANK,
by /s/ Bent V. Christensen
----------------------------------------
Name: Bent V. Christensen
Title: Vice President
by /s/ Mogens Sendergaard
----------------------------------------
Name: Mogens Sendergaard
Title: Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH,
by /s/ Hans-Josef Thiele
----------------------------------------
Name: Hans-Josef Thiele
Title: Vice President
by /s/ Stephen A. Wiedemann
----------------------------------------
Name: Stephen A. Wiedemann
Title: Vice President
<PAGE> 55
51
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
by /s/ Mark K. Connelly
----------------------------------------
Name: Mark K. Connelly
Title: Vice President
by /s/ Karen A. Brinkman
----------------------------------------
Name: Karen A. Brinkman
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH,
by /s/ J. Michael Leffler
----------------------------------------
Name: J. Michael Leffler
Title: Senior Vice President
by /s/ B. Craig Erickson
----------------------------------------
Name: B. Craig Erickson
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA,
by /s/ William J. Baird
----------------------------------------
Name: William J. Baird
Title: Senior Vice President
by /s/ Judy A. Maahs
----------------------------------------
Name: Judy A. Maahs
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON,
by /s/ Kevin F. Malone
----------------------------------------
Name: Kevin F. Malone
Title: Director
<PAGE> 56
THE FIRST NATIONAL BANK OF CHICAGO,
by /s/ Randall L. Faust
----------------------------------------
Name: Randall L. Faust
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by /s/ Mark M. Harden
----------------------------------------
Name: Mark M. Harden
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
by /s/ Gina M. Kearns
----------------------------------------
Name: Gina M. Kearns
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
by /s/ John V. Veltri
----------------------------------------
Name: John V. Veltri
Title: Senior Vice President
ISTITUTO BANCARIO SAN PAOLO DI TORINO SPA,
by /s/ Wendell Jones
----------------------------------------
Name: Wendell Jones
Title: Vice President
by /s/ Ettore Viazzo
----------------------------------------
Name: Ettore Viazzo
Title: Vice President
<PAGE> 57
53
KREDIETBANK N.V.,
by /s/ Armen Karozichian
----------------------------------------
Name: Armen Karozichian
Title: Vice President
by /s/ Robert Snauffer
----------------------------------------
Name: Robert Snauffer
Title: Vice President
LLOYDS BANK PLC,
by /s/ Paul D. Briamonte
----------------------------------------
Name: Paul D. Briamonte
Title: Vice President B374
by /s/ Stephen J. Attree
----------------------------------------
Name: Stephen J. Attree
Title: Assistant Vice President A088
LTCB TRUST COMPANY,
by /s/ Rene O. LeBlanc
----------------------------------------
Name: Rene O. LeBlanc
Title: Senior Vice President
THE MITSUBISHI BANK, LIMITED,
by /s/ Paula Mueller
----------------------------------------
Name: Paula Mueller
Title: Vice Presidnet
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by /s/ Patricia Loret de Mola
----------------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
<PAGE> 58
54
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by /s/ George J. Stapleton
----------------------------------------
Name: George J. Stapleton
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, NASSAU
BRANCH,
by /s/ Anne Marie Torre
----------------------------------------
Name: Anne Marie Torre
Title: Vice President
NATIONSBANK, N.A.,
by /s/ James T. Gilland
----------------------------------------
Name: James T. Gilland
Title: Senior Vice Preident
THE NIPPON CREDIT BANK, LTD.,
by /s/ Peter Capitelli
----------------------------------------
Name: Peter Capitelli
Title: Vice President and Manager
THE NORTHERN TRUST COMPANY,
by /s/ Daryl M. Robicsek
----------------------------------------
Name: Daryl M. Robicsek
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by /s/ Tom Partridge
----------------------------------------
Name: Tom Partridge
Title: Commercial Banking Officer
ROYAL BANK OF CANADA,
by /s/ Rainer R. Kraft
----------------------------------------
Name: Rainer R. Kraft
Title: Manager
<PAGE> 59
55
THE SAKURA BANK, LIMITED, NEW YORK BRANCH,
by /s/ Masahiro Nakajo
----------------------------------------
Name: Masahiro Nakajo
Title: Senior Vice President
THE SANWA BANK LIMITED, NEW YORK BRANCH,
by /s/ Stephen C. Small
----------------------------------------
Name: Stephen C. Small
Title: Vice President and Area Manager
SOCIETE GENERALE,
by /s/ Sedare Cordin
----------------------------------------
Name: Sedare Cordin
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Yoshinori Kawamura
----------------------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
SUNTRUST BANK, ATLANTA,
by /s/ Mary M. Smith
----------------------------------------
Name: Mary M. Smith
Title: Banking Officer
by /s/ Craig W. Farnsworth
----------------------------------------
Name: Craig W. Farnsworth
Title: Vice President
<PAGE> 60
56
SWISS BANK CORPORATION, NEW YORK BRANCH,
by /s/ Susan N. Isquith
----------------------------------------
Name: Susan N. Isquith
Title: Director Credit Risk Management
by /s/ Edward J. McDonnell III
----------------------------------------
Name: Edward J. McDonnell III
Title: Associate Director International
Finance Division
THE TOKAI BANK, LIMITED,
by /s/ Stuart Schulman
----------------------------------------
Name: Stuart Schulman
Title: Senior Vice President
THE TORONTO-DOMINION BANK,
by /s/ Randall Bingham
----------------------------------------
Name: Randall Bingham
Title: Managing Director
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH,
by /s/ Robert W. Casey Jr.
----------------------------------------
Name: Robert W. Casey Jr.
Title: Vice President
by /s/ Daniel R. Strickford
----------------------------------------
Name: Daniel R. Strickford
Title: Assistant Treasurer
<PAGE> 61
57
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW
YORK AND CAYMAN ISLANDS BRANCHES,
by /s/ A. Kumbie
----------------------------------------
Name: A. Kumbie
Title: Managing Director
by /s/ MPM Ransley
----------------------------------------
Name: MPM Ransley
Title: Associate
THE YASUDA TRUST AND BANKING COMPANY,
LIMITED, NEW YORK BRANCH,
by /s/ Rohn M. Laudenschlager
----------------------------------------
Name: Rohn M. Laudenschlager
Title: Senior Vice President
<PAGE> 62
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Chemical Bank, as Administrative Agent
for the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, ___________________ (the "Borrower"), refers
to the 364-Day Competitive Advance and Revolving Credit Facility Agreement dated
as of November 2, 1995 (as it may hereafter be amended, modified, extended or
restated from time to time, the "364-Day Agreement"), among the Borrower, the
Borrowing Subsidiaries parties thereto, the Lenders parties thereto and Chemical
Bank, as Administrative Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the 364-Day
Agreement. The Borrower hereby gives you notice pursuant to Section 2.03(a) of
the 364-Day Agreement that it requests a Competitive Borrowing under the 364-Day
Agreement, and in that connection sets forth below the terms on which such
Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) __________
(B) Principal amount of
Competitive Borrowing(1) __________
(C) Interest rate basis(2) __________
(D) Interest Period and the
last day thereof(3) __________
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in Section
4.01(b) and (c) of the 364-Day Agreement have been satisfied.
Very truly yours,
[NAME OF BORROWER],
by
---------------------------
Name:
Title: [Financial Officer]
- --------
(1) Not less than $10,000,000 (and in integral multiples of $5,000,000) or
greater than the Total Commitment then available.
(2) Eurodollar Competitive Loan or Fixed Rate Loan.
(3) Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE> 63
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
Reference is made to the 364-Day Competitive Advance and
Revolving Credit Facility Agreement dated as of November 2, 1995 (as it may
hereafter be amended, modified, extended or restated from time to time, the
"364-Day Agreement"), among ITT Industries, Inc. [,______________] (the
"Borrower"), the Borrowing Subsidiaries parties thereto, the Lenders parties
thereto and Chemical Bank, as Administrative Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the 364-Day Agreement. The Borrower made a Competitive Bid Request on
_________, 19[ ], pursuant to Section 2.03(a) of the 364-Day Agreement, and in
that connection you are invited to submit a Competitive Bid by
[Date]/[Time].(1) Your Competitive Bid must comply with Section 2.03(b) of the
364-Day Agreement and the terms set forth below on which the Competitive Bid
Request was made:
(A) Date of Competitive Borrowing __________
(B) Principal amount of
Competitive Borrowing __________
(C) Interest rate basis __________
(D) Interest Period and the
last day thereof. __________
(E) Currency __________
Very truly yours,
CHEMICAL BANK,
as Administrative Agent,
by
------------------------
Name:
Title:
- --------
(1) The Competitive Bid must be received by the Administrative Agent (i) in
the case of Eurodollar Competitive Loans, not later than 10:00 a.m., New York
City time, four Business Days before a proposed Competitive Borrowing, and (ii)
in the case of Fixed Rate Loans, not later than 10:00 a.m., New York City time,
one Business Day before a proposed Competitive Borrowing.
<PAGE> 64
<PAGE> 65
EXHIBIT A-3
FORM OF COMPETITIVE BID
Chemical Bank, as Administrative Agent
for the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the 364-Day
Competitive Advance and Revolving Credit Facility Agreement dated as of November
2, 1995 (as it may be amended, modified, extended or restated from time to time,
the "364-Day Agreement"), among ITT Industries, Inc. [,____________] (the
"Borrower"), the Borrowing Subsidiaries parties thereto, the Lenders named
therein and Chemical Bank, as Administrative Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the 364-Day Agreement. The undersigned hereby makes a Competitive Bid
pursuant to Section 2.03(b) of the 364-Day Agreement, in response to the
Competitive Bid Request made by the Borrower on ________, 19[ ], and in that
connection sets forth below the terms on which such Competitive Bid is made:
(A) Principal Amount(1) __________
(B) Competitive Bid Rate(2) __________
(C) Interest Period and last
day thereof __________
(D) Currency __________
The undersigned hereby confirms that it is prepared, subject
to the conditions set forth in the 364-Day Agreement, to extend credit to the
Borrower upon acceptance by the Borrower of this bid in accordance with Section
2.03(d) of the 364-Day Agreement.
Very truly yours,
[NAME OF LENDER],
by
--------------------------
Name:
Title:
- --------
(1) Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the Administrative Agent.
(2) i.e., LIBO Rate + or - __%, in the case of Eurodollar Competitive Loans
or %, in the case of Fixed Rate Loans.
<PAGE> 66
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Chemical Bank, as Administrative Agent
for the Lenders referred to below
270 Park Avenue
New York, N.Y. 10017
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, ________________ (the "Borrower"), refers to
the 364-Day Competitive Advance and Revolving Credit Facility Agreement dated as
of November 2, 1995 (as it may be amended, modified, extended or restated from
time to time, the "364-Day Agreement"), among the Borrower, the Borrowing
Subsidiaries parties thereto, the Lenders parties thereto and Chemical Bank, as
Administrative Agent for the Lenders.
In accordance with Section 2.03(c) of the 364-Day Agreement,
we have received a summary of bids in connection with our Competitive Bid
Request dated ____________, and in accordance with Section 2.03(d) of the
364-Day Agreement, we hereby accept the following bids for maturity on [date]:
<TABLE>
<CAPTION>
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
<S> <C> <C>
$ [%]/[+/-. %]
$
</TABLE>
We hereby reject the following bids:
<TABLE>
<CAPTION>
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
<S> <C> <C>
$ [%]/[+/-. %]
$
</TABLE>
The $________ should be deposited in Chemical Bank account
number [ ] on [date].
Very truly yours,
[NAME OF BORROWER],
by
--------------------------
Name:
Title:
<PAGE> 67
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
Chemical Bank, as Administrative Agent
for the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, _____________ (the "Borrower"), refers to the
364-Day Competitive Advance and Revolving Credit Facility Agreement dated as of
November 2, 1995 (as it may be amended, modified, extended or restated from time
to time, the "364-Day Agreement"), among the Borrower, the Borrowing
Subsidiaries parties thereto, the Lenders parties thereto and Chemical Bank, as
Administrative Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the 364-Day Agreement.
The Borrower hereby gives you notice pursuant to Section 2.04 of the 364-Day
Agreement that it requests a Standby Borrowing under the 364-Day Agreement, and
in that connection sets forth below the terms on which such Standby Borrowing is
requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day) __________
(B) Principal amount of
Standby Borrowing(1) __________
(C) Interest rate basis(2) __________
(D) Interest Period and the
last day thereof(3) __________
Upon acceptance of any or all of the Loans made by the Lenders
in response to this request, the Borrower shall be deemed to have represented
and warranted that the conditions to lending specified in Section 4.01(b) and
(c) of the 364-Day Agreement have been satisfied.
Very truly yours,
[NAME OF BORROWER],
by
--------------------------------
Name:
Title: [Financial Officer]
- --------
(1) Not less than $20,000,000 (and in integral multiples of $5,000,000) or
greater than the Total Commitment then available.
(2) Eurodollar Standby Loan or ABR Loan.
(3) Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE> 68
EXHIBIT B
CHEMICAL BANK
140 East 45th Street
New York, NY 10017-3162
ITT INDUSTRIES, INC.
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via FAX to the
attention of Janet Belden at Chemical Bank as soon as possible.
FAX NUMBER: 212-622-0122
LEGAL NAME TO APPEAR IN DOCUMENTATION:
- --------------------------------------------------------------------------------
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
--------------------------------------------------------------
Street Address:
--------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
--------------------------------------------------------------
Street Address:
--------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
<PAGE> 69
2
CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
---------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
Phone Number:
---------------------------------------------------------------
FAX Number:
---------------------------------------------------------------
Backup Contact:
---------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
---------------------------------------------------------------
FAX Number:
---------------------------------------------------------------
TAX WITHHOLDING:
Non Resident Alien Y* N
----------- -----------
* Form 4224 Enclosed
Tax ID Number
-------------------------
CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.
Contact:
-----------------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
---------------------------------------------------------------
FAX Number:
---------------------------------------------------------------
<PAGE> 70
3
BID LOAN NOTIFICATION:
Contact:
-----------------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
---------------------------------------------------------------
FAX Number:
---------------------------------------------------------------
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
---------------------------------------------------------------------------
Routing Transit/ABA number of Bank where funds are to be transferred:
---------------------------------------------------------------------------
Name of Account, if applicable:
---------------------------------------------------------------------------
Account Number:
----------------------------------------------------------------
Additional Information:
--------------------------------------------------------
--------------------------------------------------------
MAILINGS:
Please specify who should receive financial information:
Name:
--------------------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
It is very important that all of the above information is accurately filled in
and returned promptly. If there is someone other than yourself who should
receive this questionnaire, please notify us of their name and FAX number and we
will FAX them a copy of the questionnaire. If you have any questions, please
call me on 212-622-0011.
<PAGE> 71
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Dated: _________, 19__
Reference is made to the 364-Day Competitive Advance and
Revolving Credit Facility Agreement dated as of November 2, 1995 (the "364-Day
Agreement"), among ITT Industries, Inc. (the "Company"), the Borrowing
Subsidiaries parties thereto, the Lenders parties thereto (the "Lenders") and
Chemical Bank, as Administrative Agent for the Lenders. Terms defined in the
364-Day Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date set forth below, the
interests set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the 364-Day Agreement, including, without limitation, the
interests set forth below in the Commitment of the Assignor on the Effective
Date and the Competitive Loans and Standby Loans owing to the Assignor which are
outstanding on the Effective Date. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 9.04 of the 364-Day Agreement, a copy of which
has been received by each such party. From and after the Effective Date, (i) the
Assignee shall be a party to and be bound by the provisions of the 364-Day
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent of the interests assigned by this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
364-Day Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in Section
2.19(g) of the 364-Day Agreement, duly completed and executed by such Assignee,
(ii) if the Assignee is not already a Lender under the 364-Day Agreement, an
Administrative Questionnaire in the form of Exhibit B to the 364-Day Agreement
and (iii) a processing and recordation fee of $3,000.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
<PAGE> 72
2
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<TABLE>
<CAPTION>
Percentage Assigned of
Facility/Commitment
(set forth, to at least 8
decimals, as a
Principal Amount percentage of the
Assigned (and identifying Facility and the
information as to aggregate Commitments
individual Competitive of all Lenders
Facility Loans) thereunder)
- -------- ------ -----------
<S> <C> <C>
Commitment Assigned:
$ %
------------ -----------
Standby Loans: $ %
------------ -----------
Competitive Loans: $ %
------------ -----------
</TABLE>
The terms set forth and on the reverse side Accepted:
hereof are hereby agreed to:
ITT INDUSTRIES, INC.,
- --------------------------------, as by:
Assignor, --------------------------
Name:
Title:
by:
----------------------------
Name:
Title:
- --------------------------------,
as Assignee,
by:
----------------------------
Name:
Title:
<PAGE> 73
EXHIBIT D
[FORM OF]
OPINION OF COUNSEL FOR
ITT INDUSTRIES, INC.(1)
1. ITT Industries, Inc. (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana,
(ii) has all requisite power and authority to own its property and assets and to
carry on its business as now conducted, (iii) is qualified to do business in
every jurisdiction within the United States where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect on ITT Industries, Inc., and (iv) has all requisite corporate
power and authority to execute, deliver and perform its obligations under the
Agreement and to borrow funds thereunder.
2. The execution, delivery and performance by ITT Industries,
Inc. of the Agreement and the borrowings of ITT Industries, Inc. thereunder
(collectively, the "Transactions") (i) have been duly authorized by all
requisite corporate action and (ii) will not (a) violate (1) any provision of
law, statute, rule or regulation (including without limitation, the Margin
Regulations), or of the certificate of incorporation or other constitutive
documents or by-laws of ITT Industries, Inc., (2) any order of any governmental
authority or (3) any provision of any indenture, agreement or other instrument
to which ITT Industries, Inc. is a party or by which it or its property is or
may be bound, (b) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or (c) result in the creation or
imposition of any lien upon any property or assets of ITT Industries, Inc.
3. The Agreement has been duly executed and delivered by ITT
Industries, Inc. and constitutes a legal, valid and binding obligation of ITT
Industries, Inc. enforceable against ITT Industries, Inc. in accordance with its
terms, subject as to the enforceability of rights and remedies to any applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights from time to time in effect.
4. No action, consent or approval of, registration or filing
with, or any other action by, any government authority is or will be required in
connection with the Transactions, except such as have been made or obtained and
are in full force and effect.
5. Neither ITT Industries, Inc. nor any of its subsidiaries is
(a) except as set forth in the next sentence, an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 (the
"1940 Act") or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
- --------
(1) Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the 364-Day Competitive Advance and Revolving
Credit Facility Agreement (the "Agreement") dated as of October [ ], 1995, among
ITT Industries, Inc., the lenders listed in Schedule 2.01 thereto, and Chemical
Bank, as Administrative Agent.
<PAGE> 74
EXHIBIT E to the
Credit Agreement
BORROWING SUBSIDIARY AGREEMENT dated as of
[ ], [ ], among ITT INDUSTRIES, INC., an
Indiana corporation (the "Company"), [Name of
Subsidiary], a [ ] corporation ("the
Subsidiary"), and CHEMICAL BANK, as administrative
agent (the "Administrative Agent") for the lenders
(the "Lenders") party to the 364-Day Competitive
Advance and Revolving Credit Facility Agreement dated
as of November 2, 1995, as amended (the "Agreement"),
among the Company, the Administrative Agent and the
Lenders.
Under the Agreement, the Lenders have agreed, upon the terms
and subject to the conditions therein set forth, to make competitive advance and
revolving credit loans and to issue Letters of Credit to the Company and to
Subsidiaries (as defined in the Agreement) of the Company which execute and
deliver to the Administrative Agent Borrowing Subsidiary Agreements in the form
of this Borrowing Subsidiary Agreement. The Company represents that the
Subsidiary is a subsidiary (as so defined) of the Company and that the guarantee
of the Company contained in Article VII of the Agreement applies to the
obligations of the Subsidiary. In consideration of being permitted to borrow or
have Letters of Credit issued under the Agreement upon the terms and subject to
the conditions set forth therein, the Subsidiary agrees that from and after the
date of this Borrowing Subsidiary Agreement it will be, and will be liable for
the observance and performance of all the obligations of, a Borrowing Subsidiary
under the Agreement, as the same may be amended from time to time, to the same
extent as if it had been one of the original parties to the Agreement and that
it will furnish to the Administrative Agent and the Lenders copies of its
financial statements on an annual basis.
IN WITNESS WHEREOF, the Company and the Subsidiary have caused
this Borrowing Subsidiary Agreement to be duly executed by their authorized
officers as of the date first appearing above.
ITT INDUSTRIES, INC.
by
-----------------------
Name:
Title:
[NAME OF SUBSIDIARY],
by
-----------------------
Name:
Title:
Accepted as of the date
first appearing above:
CHEMICAL BANK, as Administrative
Agent,
by
----------------------
Name:
Title:
<PAGE> 75
Exhibit F
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
November ___, 1995
Chemical Bank, as Administrative Agent
for the Lenders
270 Park Avenue
New York, NY 10019
Attention: Elisabeth Hughes
Dear Sirs:
Reference is made to the 364-Day Competitive Advance and Revolving
Credit Facility Agreement and the Five-Year Competitive Advance and Revolving
Credit Facility Agreement (collectively, the "Credit Agreements"), each among
ITT Industries, an Indiana corporation ("ITT Industries"), the lenders listed in
Schedules 2.01 thereto (the "Lenders") and Chemical Bank, as administrative
agent for the Lenders (the "Administrative Agent").
1. As contemplated by Section 9.16 of the 364-Day Credit Agreement,
and Section 9.17 of the Five-Year Credit Agreement, ITT Corporation, a Delaware
corporation ("Old ITT"), and the Administrative Agent, acting on behalf of the
Lenders, hereby agree that the Credit Agreements shall be executed on the date
hereof and that, except as otherwise provided herein, Old ITT will have all
rights and obligations of the "Company" referred to therein.
2. Old ITT agrees that upon the completion of the Distribution, it
shall cause ITT Industries to execute, and ITT Industries shall succeed to the
rights and obligations of Old ITT under, the Credit Agreements.
3. Old ITT further agrees that prior to each of (a) the successions
referred to in paragraph 2 above, (b) the termination and cancellation of the
Existing Credit Facilities (as defined in the Credit Agreements), (c) the
completion of the Distribution and (d) the satisfaction of
<PAGE> 76
the other conditions set forth in the Credit Agreements, Old ITT shall not make
any Borrowing or request the issuance of any Letter of Credit under the Credit
Agreements.
This letter agreement shall be deemed to be a part of each of the
Credit Agreements and shall have the same effect as if set forth in full
therein. The failure of the Borrower to comply with the terms of this letter
agreement shall constitute an Event of Default under the Credit Agreements.
Very truly yours,
ITT CORPORATION
by
-------------------------
Name:
Title:
Accepted and agreed to
as of the date first
written above:
CHEMICAL BANK, as Administrative Agent
by
----------------------------
Name:
Title:
<PAGE> 1
================================================================================
FIVE-YEAR COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of November 10, 1995
among
ITT INDUSTRIES, INC.
THE LENDERS NAMED HEREIN
and
CHEMICAL BANK, as Administrative Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C>
I. DEFINITIONS
1.01. Defined Terms .......................................................... 1
1.02. Terms Generally ........................................................ 15
II. THE CREDITS
2.01. Commitments............................................................. 15
2.02. Loans .................................................................. 16
2.03. Competitive Bid Procedure .............................................. 17
2.04. Standby and Local Currency Borrowing Procedure.......................... 19
2.05. Conversion and Continuation of Standby Loans............................ 20
2.06. Fees ................................................................... 21
2.07. Repayment of Loans; Evidence of Debt ................................... 21
2.08. Interest on Loans ...................................................... 22
2.09. Default Interest ....................................................... 22
2.10. Alternate Rate of Interest ............................................. 23
2.11. Termination and Reduction of Commitments................................ 23
2.12. Prepayment ............................................................. 24
2.13. Reserve Requirements; Change in Circumstances........................... 24
2.14. Change in Legality ..................................................... 25
2.15. Indemnity .............................................................. 26
2.16. Pro Rata Treatment ..................................................... 26
2.17. Sharing of Setoffs ..................................................... 27
2.18. Payments ............................................................... 27
2.19. Taxes .................................................................. 28
2.20. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances........................................... 30
2.21. Terms of Local Currency Facilities...................................... 31
2.22. Currency Fluctuations, Etc.............................................. 32
2.23. Letters of Credit....................................................... 34
III. REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers ................................................... 37
3.02. Authorization .......................................................... 37
3.03. Enforceability ......................................................... 37
3.04. Governmental Approvals ................................................. 37
3.05. Financial Statements ................................................... 38
3.06. Litigation; Compliance with Laws........................................ 38
3.07. Federal Reserve Regulations............................................. 38
3.08. Investment Company Act; Public Utility Holding Company Act.............. 39
3.09. Use of Proceeds......................................................... 39
</TABLE>
<PAGE> 3
Contents, p. 2
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C>
3.10. Full Disclosure; No Material Misstatements ............................. 39
3.11. Taxes .................................................................. 39
3.12. Employee Pension Benefit Plans ......................................... 39
3.13. Distribution ........................................................... 39
IV. CONDITIONS OF LENDING
4.01. All Extensions of Credit................................................ 40
4.02. Effective Date.......................................................... 40
4.03. First Borrowing by Each Borrowing Subsidiary............................ 41
V. COVENANTS
5.01. Existence............................................................... 41
5.02. Business and Properties . .............................................. 41
5.03. Financial Statements, Reports, Etc...................................... 42
5.04. Insurance . . . . ..................................................... 42
5.05. Obligations and Taxes .................................................. 42
5.06. Litigation and Other Notices ........................................... 43
5.07. Maintaining Records; Access to Properties and Inspections............... 43
5.08. Use of Proceeds......................................................... 43
5.09. Consolidations, Mergers, and Sales of Assets............................ 43
5.10. Limitations on Liens ................................................... 43
5.11. Limitations on Sale and Leaseback Transactions.......................... 45
5.12. Consolidated EBITDA to Consolidated Interest Expense.................... 46
VI. EVENTS OF DEFAULT.............................................................. 46
VII. GUARANTEE...................................................................... 48
VIII. THE ADMINISTRATIVE AGENT ...................................................... 49
IX. MISCELLANEOUS
9.01. Notices................................................................. 51
9.02. Survival of Agreement .................................................. 52
9.03. Binding Effect ......................................................... 52
9.04. Successors and Assigns ................................................. 52
9.05. Expenses; Indemnity .................................................... 54
9.06. Applicable Law ......................................................... 55
9.07. Waivers; Amendment ..................................................... 55
9.08. Entire Agreement ....................................................... 56
9.09. Severability ........................................................... 56
9.10. Counterparts ........................................................... 56
9.11. Headings ............................................................... 56
9.12. Right of Setoff ........................................................ 56
9.13. Jurisdiction; Consent to Service of Process............................. 56
9.14. Waiver of Jury Trial ................................................... 57
</TABLE>
<PAGE> 4
Contents, p. 3
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C>
9.15. Addition of Borrowing Subsidiaries...................................... 57
9.16. Conversion of Currencies................................................ 57
9.17 Execution............................................................... 58
</TABLE>
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Opinion of Counsel for ITT Industries, Inc.
Exhibit E Form of Borrowing Subsidiary Agreement
Exhibit F Form of Issuing Bank Agreement
Exhibit G Form of Local Currency Addendum
Exhibit H Form of Letter Agreement
Schedule 2.01 Commitments
Schedule 3.13 Assumptions
Schedule 5.10 Existing Liens
<PAGE> 5
<PAGE> 6
FIVE-YEAR COMPETITIVE ADVANCE AND REVOLVING
CREDIT FACILITY AGREEMENT (as it may be amended,
supplemented or otherwise modified, the "Agreement")
dated as of November 10, 1995, among ITT INDUSTRIES,
INC., an Indiana corporation (the "Company"), each
Borrowing Subsidiary party hereto, the lenders listed
in Schedule 2.01 (together with their permitted
assigns, the "Lenders"), Chemical Bank, as issuing
bank (in such capacity, the initial "Issuing Bank")
and CHEMICAL BANK, a New York banking corporation, as
administrative agent for the Lenders (in such
capacity, the "Administrative Agent").
The Lenders have been requested to extend credit to the
Borrowers (such term and each other capitalized term used but not otherwise
defined herein having the meaning assigned to it in Article I) to enable them
to borrow on a standby revolving credit basis on and after the date hereof and
at any time and from time to time prior to the Maturity Date a principal amount
not in excess of $1,500,000,000 at any time outstanding. The Lenders have also
been requested to provide procedures pursuant to which the Borrowers may invite
the Lenders to bid on an uncommitted basis on short-term borrowings by the
Borrowers and issuances of letters of credit for the Borrowers. The proceeds
of such borrowings are to be used for the repurchase or repayment of
indebtedness and certain other payments to be made in connection with the
Distribution, as well as for working capital and other general corporate
purposes. The letters of credit shall support payment obligations incurred in
the ordinary course of business by the Borrowers. The Lenders are willing to
extend credit on the terms and subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Standby Loan .
"ABR Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Administrative Fees" shall have the meaning assigned to such
term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
<PAGE> 7
2
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly or indirectly controls or is controlled by
or is under common control with the person specified.
"Aggregate Credit Exposure" shall mean the aggregate amount of
the Lenders' Credit Exposures.
"Agreement Currency" shall have the meaning assigned to such
term in Section 9.16(b).
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof,
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective. "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as released on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so released for any day which is a Business Day, the arithmetic
average (rounded upwards to the next 1/100th of 1%), as determined by the
Administrative Agent, of the quotations for the day of such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Applicable Percentage" shall mean on any date, with respect
to Eurocurrency Loans or with respect to the Facility Fee, as the case may be,
the applicable percentage set forth below under the caption "Eurocurrency
Spread" or "Facility Fee Percentage", as the case may be, based upon the
Ratings in effect on such date:
<TABLE>
<CAPTION>
Category 1 Eurocurrency Spread Facility Fee Percentage
- ---------- ------------------- -----------------------
<S> <C> <C>
AA- or higher by D&P; .115% .060%
AA- or higher by Fitch;
Aa3 or higher by Moody's;
AA- or higher by S&P
Category 2
- ----------
A+ or A by D&P; .130% .070%
A+ or A by Fitch;
A1 or A2 by Moody's;
A+ or A by S&P
</TABLE>
<PAGE> 8
3
<TABLE>
<CAPTION>
Category 3
- ----------
<S> <C> <C>
A- by D&P; .170% .080%
A- by Fitch;
A3 by Moody's;
A- by S&P
Category 4
- ----------
BBB+ by D&P; .205% .095%
BBB+ by Fitch;
Baa1 by Moody's;
BBB+ by S&P
Category 5
- ----------
BBB by D&P; .225% .125%
BBB by Fitch;
Baa2 by Moody's;
BBB by S&P
Category 6
- ----------
BBB- or lower by D&P; .250% .150%
BBB- or lower by Fitch;
Baa3 or lower by Moody's;
BBB- or lower by S&P
</TABLE>
For purposes of the foregoing; (i) if the Ratings shall fall within different
Categories, then (A) if all the Ratings fall within two adjacent Categories,
the Applicable Percentage will be determined by reference to the superior (or
numerically lower) of such Categories unless one or more of the Ratings shall
fall within Category 6, in which case the Applicable Percentage shall be
determined by reference to Category 6, and (B) if the Ratings fall within more
than two Categories or within two Categories that are not adjacent, then one
Rating from each of the highest Category and the lowest Category in which
Ratings shall fall shall be excluded and the Applicable Percentage shall be
determined by reference to the superior (or numerically lower) of the remaining
Ratings unless one or both of such Ratings shall fall within Category 6, in
which case the Applicable Percentage shall be determined by reference to
Category 6, (ii) if only two Ratings exist, the Applicable Percentage shall be
based upon the lower (numerically higher) of the available Ratings, (iii) if
only one Rating exists, the Applicable Percentage will be based upon the lower
(numerically higher) of Category 5 and the Category corresponding to the
available Rating, (iv) if no Ratings exist, the Applicable Percentage shall be
based upon Category 6, and (v) if any Rating shall be changed (other than as a
result of a change in the rating system of the applicable Rating Agency), such
change shall be effective as of the date on which it is first announced by the
Rating Agency making such change. Each such change in the Applicable
Percentage shall apply to all outstanding Eurocurrency Loans and to L/C
Participation Fees and Facility Fees accruing during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of any Rating
Agency shall change, the parties hereto shall negotiate in good faith to amend
the references to specific ratings in this definition to reflect such changed
rating system.
<PAGE> 9
4
"Applicable Share" of any Lender at any time shall mean the
percentage of the Total Commitment represented by such Lender's Commitment. If
the Commitments shall be terminated pursuant to Article VI, the Applicable
Shares of the Lenders shall, subject only to assignments pursuant to Section
9.04, be based upon the Commitments in effect immediately prior to such
termination.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee in the form of Exhibit C.
"Available Commitment" shall mean, as to any Lender at any
time, an amount equal to such Lender's Commitment at such time minus the
aggregate of all such Lender's Local Currency Loans (Dollar Equivalent)
outstanding at such time.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Board of Directors" shall mean the Board of Directors of a
Borrower or any duly authorized committee thereof.
"Borrower" shall mean the Company or any Borrowing Subsidiary.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on
a single date and as to which a single Interest Period is in effect.
"Borrowing Date" shall mean any date on which a Borrowing is
made hereunder.
"Borrowing Subsidiary" shall mean any Subsidiary which shall
have executed and delivered to the Administrative Agent for distribution to
each Lender a Borrowing Subsidiary Agreement.
"Borrowing Subsidiary Agreement" shall mean an agreement, in
the form of Exhibit E hereto, duly executed by the Company and a Subsidiary.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurocurrency Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in deposits in the applicable
currency in the London interbank market, and, when used in connection with
determining any date on which any amount is to be paid or made available in a
Local Currency, the term "Business Day" shall also exclude any day on which
commercial banks and foreign exchange markets are not open for business in the
principal financial center in the country of such Local Currency.
"Calculation Date" shall mean the last Business Day of each
calendar week.
"Capitalized Lease-Back Obligation" shall mean with respect to
a Principal Property, at any date as of which the same is to be determined, the
total net rental obligations of the Company or a Restricted Subsidiary under a
lease of such Principal Property, entered into as part of an arrangement to
which the provisions of Section 5.11 are applicable (or would have been
applicable had such Restricted Subsidiary been a Restricted Subsidiary at the
time it entered into such lease), discounted to the date of computation at the
rate of interest per annum implicit in the lease (determined in accordance with
GAAP). The amount of the net rental obligation for any calendar year under any
lease shall be
<PAGE> 10
5
the sum of the rental and other payments required to be paid in such calendar
year by the lessee thereunder, not including, however, any amounts required to
be paid by such lessee (whether or not therein designated as rental or
additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges.
A "Change in Control" shall be deemed to have occurred if (a)
any person or group of persons shall have acquired beneficial ownership of more
than 30% of the outstanding Voting Shares of the Company (within the meaning of
Section 13(d) or 14(d) of the Exchange Act and the applicable rules and
regulations thereunder), or (b) during any period of 12 consecutive months,
commencing after the Effective Date, individuals who on the first day of such
period were directors of the Company (together with any replacement or
additional directors who were nominated or elected by a majority of directors
then in office) cease to constitute a majority of the Board of Directors of the
Company.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender hereunder as set forth as of the Effective Date in
Schedule 2.01 under the heading "Commitment" or in an Assignment and Acceptance
delivered by such Lender under Section 9.04 as such Lender's Commitment may be
permanently terminated or reduced from time to time pursuant to Section 2.11 or
pursuant to one or more assignments under Section 9.04. The Commitment of each
Lender shall automatically and permanently terminate on the Maturity Date if
not terminated earlier pursuant to the terms hereof.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by a Borrower pursuant to Section 2.03(d) in the form of
Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid,
(i) in the case of a Eurocurrency Loan, the Margin, and (ii) in the case of a
Fixed Rate Loan, the fixed rate of interest offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.03(a) in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan made pursuant to the
bidding procedure described in Section 2.03. Each Competitive Loan shall be a
Eurocurrency Competitive Loan or a Fixed Rate Loan.
"Competitive Loan Exposure" shall mean, with respect to any
Lender at any time, the sum of the aggregate principal amount of all
outstanding Competitive Loans made by such Lender.
"Consolidated EBITDA" shall mean, for any period, the sum of
(a) Consolidated Net Income, (b) provisions for taxes based on income, (c)
Consolidated Interest Expense, (d) total
<PAGE> 11
6
depreciation expense and (e) total amortization expense, all of the foregoing as
determined on a consolidated basis for the Company and the Subsidiaries in
accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period,
the gross interest expense of the Company and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, net
income or loss of the Company and the Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean the total of all
assets appearing on a consolidated balance sheet of the Company and its
Restricted Subsidiaries, prepared in accordance with GAAP (and as of a date not
more than 90 days prior to the date as of which Consolidated Net Tangible
Assets are to be determined), less the sum of the following items as shown on
said consolidated balance sheet:
(i) the book amount of all segregated intangible assets,
including such items as good will, trademarks, trademark rights, trade
names, trade name rights, copyrights, patents, patent rights and
licenses and unamortized debt discount and expense less unamortized
debt premium;
(ii) all depreciation, valuation and other reserves;
(iii) current liabilities;
(iv) any minority interest in the shares of stock (other than
Preferred Stock) and surplus of Restricted Subsidiaries of the
Company;
(v) the investment of the Company and its Restricted
Subsidiaries in any Unrestricted Subsidiary of the Company;
(vi) the total indebtedness of the Company and its Restricted
Subsidiaries incurred in any manner to finance or recover the cost to
the Company or any Restricted Subsidiary of any physical property,
real or personal, which prior to or simultaneously with the creation
of such indebtedness shall have been leased by the Company or a
Restricted Subsidiary to the United States of America or a department
or agency thereof at an aggregate rental, payable during that portion
of the initial term of such lease (without giving effect to any
options of renewal or extension) which shall be unexpired at the date
of the creation of such indebtedness, sufficient (taken together with
any amounts required to be paid by the lessee to the lessor upon any
termination of such lease) to pay in full at the stated maturity date
or dates thereof the principal of and the interest on such
indebtedness;
(vii) deferred income and deferred liabilities; and
(viii) other items deductible under GAAP.
"Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding Loans
of such Lender, plus the aggregate amount at such time of such Lender's L/C
Exposure.
"D&P" shall mean Duff & Phelps Credit Rating Co. or any of its
successors.
<PAGE> 12
7
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Distribution" shall mean the consummation of the transactions
described in the Proxy Statement.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Dollar Borrowing" shall mean a Borrowing comprised of Dollar
Loans.
"Dollar Equivalent" shall mean, on any date of determination,
with respect to any amount in any Local Currency, the equivalent in Dollars of
such amount, determined by the Administrative Agent using the Exchange Rate
with respect to such Local Currency then in effect as determined pursuant to
Section 2.22(a).
"Dollar Facility Excess" shall have the meaning assigned to
such term in Section 2.22(d).
"Dollar Facility Overage" shall mean an amount equal to the
excess of (a) the Total Commitment over (b) the aggregate amount of all Local
Currency Facility Maximum Borrowing Amounts (determined, if applicable, after
giving effect to any reduction therein made pursuant to Section 2.22(c)).
"Dollar Loan" shall mean any Loan denominated in Dollars.
"Dollar Standby Credit Excess" shall have the meaning assigned
to such term in Section 2.22(c).
"Dollar Standby Credit Overage" shall mean, with respect to
any Lender, an amount equal to the excess, if any, of (a) such Lender's
Commitment over (b) the aggregate Local Currency Lender Maximum Borrowing
Amounts of such Lender with respect to all Local Currency Addenda to which such
Lender or any of its Affiliates is a party.
"Dollar Standby Extensions of Credit" shall mean, with respect
to any Lender at any time, the aggregate principal amount of all Standby Loans
made by such Lender then outstanding.
"Effective Date" shall mean the first date on or after
November 10, 1995, on which the conditions set forth in Section 4.02 are
satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Company, is treated as a single
employer under Section 414(b) or (c) of the Code, or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder, with
respect to a Plan; (b) the adoption of any amendment to a Plan that would
require the provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (c) the existence with respect to any Plan of an
"accumulated funding
<PAGE> 13
8
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Company or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Company or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by the Company or any ERISA Affiliate of any notice
that Withdrawal Liability is being imposed or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; and (h) the occurrence of a
"prohibited transaction" with respect to which the Company or any of its
Subsidiaries is a "disqualified person" (within the meaning of Section 4975) of
the Code, or with respect to which the Company or any such Subsidiary could
otherwise be liable.
"Eurocurrency Borrowing" shall mean a Borrowing comprised of
Eurocurrency Loans.
"Eurocurrency Competitive Loan" shall mean any Competitive
Loan bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurocurrency Loan" shall mean any Eurocurrency Competitive
Loan, Eurocurrency Standby Loan or Eurocurrency Local Currency Loan.
"Eurocurrency Local Currency Loan" shall mean any Local
Currency Loan bearing interest at a rate determined by reference to the LIBO
Rate in accordance with the provisions of Article II.
"Eurocurrency Standby Loan" shall mean any Standby Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term
in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Rate" shall mean, with respect to any Local Currency
on a particular date, the rate at which such Local Currency may be exchanged
into Dollars, as set forth on such date on the Reuters currency page more
particularly described in the Local Currency Addendum for Loans to be made in
such Local Currency. In the event that such rate does not appear on any
Reuters currency page, the Exchange Rate with respect to such Local Currency
shall be determined by reference to such other publicly available service for
displaying exchange rates as may be agreed upon by the Administrative Agent and
the Company or, in the absence of such agreement, such Exchange Rate shall
instead be the Administrative Agent's spot rate of exchange in the London
interbank market where its foreign currency exchange operations in respect of
such Local Currency are then being conducted, at or about 10:00 A.M., local
time, at such date for the purchase of Dollars with such Local Currency, for
delivery two Business Days later; provided, however, that if at the time of any
such determination, for any reason, no such spot rate is being quoted, the
Administrative Agent may use any reasonable method it deems applicable to
determine such rate, and such determination shall be conclusive absent manifest
error.
"Existing Credit Facilities" shall mean the 364-Day
Competitive Advance and Revolving Credit Facility Agreement dated as of
February 24, 1995 and the Five-Year Competitive
<PAGE> 14
9
Advance and Revolving Credit Facility Agreement dated as of February 24,
1995, among Old ITT, certain lenders and Chemical Bank, as Administrative
Agent.
"Facility A Credit Agreement" shall mean the $1,500,000,000
364-Day Competitive Advance and Revolving Credit Facility Agreement dated the
date hereof among the parties hereto, as such agreement may be amended,
supplemented or modified from time to time.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Fair Value", when used with respect to property, shall mean
the fair value as determined in good faith by the board of directors of the
Company.
"Fees" shall mean the Facility Fee, the Administrative Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, associate or
assistant treasurer or director of treasury services of such corporation.
"Fitch" shall mean Fitch Investors Service, Inc. or any of its
successors.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (the "Fixed Rate") (expressed in
the form of a decimal to no more than four decimal places) specified by the
Lender making such Loan in its Competitive Bid.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guaranteed Obligations" shall mean the principal of and
interest on the Loans made to, and all other obligations, monetary or otherwise
(including fee and reimbursement obligations in respect of Letters of Credit)
of, the Borrowing Subsidiaries hereunder or under any Local Currency Addendum.
"Indebtedness" of any person shall mean all indebtedness
representing money borrowed or the deferred purchase price of property (other
than trade accounts payable) or any capitalized lease obligation, which in any
case is created, assumed, incurred or guaranteed in any manner by such
corporation or for which such corporation is responsible or liable (whether by
agreement to purchase indebtedness of, or to supply funds to or invest in,
others or otherwise).
"Interest Payment Date" shall mean (a) with respect to any
Loan, the last day of each Interest Period applicable thereto, (b) with respect
to a Eurocurrency Loan with an Interest Period of more than three months'
duration or a Fixed Rate Loan with an Interest Period of more than 90 days'
duration, each day that would have been an Interest Payment Date for such Loan
had successive Interest Periods of three months' duration or 90 days' duration,
as the case may be, been applicable to such Loan and, in addition, the date of
any prepayment of each Loan or conversion of such Loan to a
<PAGE> 15
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Loan of a different Type and (c) with respect to any Local Currency Loan, such
days as shall be specified in the applicable Local Currency Addendum.
"Interest Period" shall mean (a) as to any Eurocurrency
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, (b) as
to any ABR Borrowing, the period commencing on the date of such Borrowing or on
the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the earliest of (i) the next
succeeding March 31, June 30, September 30 or December 31, (ii) the Maturity
Date, and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.05 or repaid or prepaid in
accordance with Section 2.07 or Section 2.12, (c) as to any Fixed Rate
Borrowing, the period commencing on the date of such Borrowing and ending on
the date specified in the Competitive Bids in which the offers to make the
Fixed Rate Loans comprising such Borrowing were extended, which shall not be
earlier than seven days after the date of such Borrowing or later than 360 days
after the date of such Borrowing and (d) as to any Local Currency Borrowing,
such periods as shall be specified in the applicable Local Currency Addendum;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of Eurocurrency Loans only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall mean Chemical Bank and any other Lender
that may become an Issuing Bank pursuant to Section 2.23(i) or 2.23(j).
"Issuing Bank Agreement" shall mean an agreement in
substantially the form of Exhibit F.
"Issuing Bank Fees" shall have the meaning assigned to such
term in Section 2.06(c).
"Judgment Currency" shall have the meaning assigned to such
term in Section 9.16(b).
"L/C Commitment" shall mean, with respect to any Issuing Bank,
the Commitment of such Issuing Bank to issue Letters of Credit pursuant to
Section 2.23.
"L/C Disbursement" shall mean a payment or disbursement made
by an Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate principal amount of all L/C Disbursements that have not yet
been reimbursed at such time. The L/C Exposure of any Lender at any time shall
mean its Applicable Share of the aggregate L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such
term in Section 2.06(c).
"Letter of Credit" shall mean any letter of credit issued
pursuant to Section 2.23.
<PAGE> 16
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"LIBO Rate" shall mean, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the rate at which dollar
deposits or deposits in the applicable Local Currency approximately equal in
principal amount to (i) in the case of a Standby Borrowing that is a
Eurocurrency Borrowing, the Administrative Agent's portion of such Eurocurrency
Borrowing, (ii) in the case of a Competitive Borrowing, a principal amount that
would have been the Administrative Agent's portion of such Competitive
Borrowing had such Competitive Borrowing been a Standby Borrowing and (iii) in
the case of a Local Currency Borrowing, such Borrowing, and for a maturity
comparable to such Interest Period, are offered to the principal London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"Lien" shall mean, with respect to any property or asset, any
mortgage, deed of trust, lien, pledge, security interest charge or other
encumbrance on, of or in such property or asset.
"Loan" shall mean a Competitive Loan, a Local Currency Loan or
a Standby Loan, whether made as a Eurocurrency Loan, an ABR Loan or a Fixed
Rate Loan, as permitted hereby.
"Loan Documents" shall mean this Agreement, the Letters of
Credit, the Borrowing Subsidiary Agreements, any Issuing Bank Agreements, the
Local Currency Addenda and promissory, if any, issued pursuant to Section
9.04(i).
"Local Currency" shall mean any currency other than Dollars as
to which an Exchange Rate may be calculated.
"Local Currency Addendum" shall mean a local currency addendum
between a Borrower and one or more Local Currency Lenders, substantially in the
form of Exhibit G, and the documentation referred to therein, to the extent not
inconsistent with this Agreement.
"Local Currency Borrowing" shall mean a Borrowing comprised of
Local Currency Loans.
"Local Currency Credit Event" shall mean each Borrowing under a
Local Currency Addendum.
"Local Currency Equivalent" shall mean, on any date of
determination, with respect to any amount in Dollars, the equivalent in the
relevant Local Currency of such amount, determined by the Administrative Agent
using the Exchange Rate with respect to such Local Currency then in effect as
determined pursuant to Section 2.22(a).
"Local Currency Facility Maximum Borrowing Amount" shall have
the meaning assigned to such term in Section 2.21(b).
"Local Currency Lender" shall mean any Lender (or any
Affiliate, branch or agency thereof) party to a Local Currency Addendum. In
the event any agency or Affiliate of a Lender shall be party to a Local
Currency Addendum, such agency, branch or Affiliate shall, to the extent of any
commitment extended and any Loans made by it, have all the rights of such
Lender hereunder; provided, that such Lender shall continue to the exclusion of
such agency or Affiliate to have all the voting and consensual rights vested in
it by the terms hereof.
<PAGE> 17
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"Local Currency Lender Maximum Borrowing Amount" shall have
the meaning assigned to such term in Section 2.21(b).
"Local Currency Loan" shall mean any Loan, denominated in a
currency other than Dollars, made to a Borrower pursuant to Section 2.01(b) and
a Local Currency Addendum.
"Local Currency Loans (Dollar Equivalent)" shall mean the
Dollar Equivalent of the relevant Local Currency Loans.
"Local Currency Standby Borrowing" shall mean any Standby
Borrowing comprised of Local Currency Loans.
"Margin" shall mean, as to any Eurocurrency Competitive Loan,
the margin (expressed as a percentage rate per annum in the form of a decimal
to no more than four decimal places) to be added to or subtracted from the LIBO
Rate in order to determine the interest rate applicable to such Loan, as
specified in the Competitive Bid relating to such Loan.
"Margin Regulations" shall mean Regulations G, T, U and X of
the Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Margin Stock" shall have the meaning given such term under
Regulation U of the Board.
"Material Adverse Effect" shall mean a materially adverse
effect on the business, assets, operations or condition, financial or
otherwise, of the Company and Subsidiaries taken as a whole.
"Maturity Date" shall mean the fifth anniversary of the date
hereof.
"Moody's" shall mean Moody's Investors Service, Inc. or any of
its successors.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Notice of Competitive Bid Request" shall mean a notification
made pursuant to Section 2.03(a) in the form of Exhibit A-2.
"Old ITT" shall mean ITT Corporation, a Delaware corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of
<PAGE> 18
13
ERISA, and in respect of which any Borrower or any ERISA Affiliate is (or, if
such plans were terminated, would under Section 4069 of ERISA be deemed to be)
an "employer" as defined in Section 3(5) of ERISA.
"Preferred Stock" shall mean any capital stock entitled by its
terms to a preference (a) as to dividends or (b) upon a distribution of assets.
"Principal Property" shall mean any single manufacturing or
processing facility owned by the Company or any Restricted Subsidiary having a
gross book value in excess of 2% of Consolidated Net Tangible Assets, except
any such facility or portion thereof which the board of directors of the
Company by resolution declares is not of material importance to the total
business conducted by the Company and its Restricted Subsidiaries as an
entirety.
"Proxy Statement" shall mean the Proxy Statement of Old ITT
dated August 30, 1995 and filed with the SEC under the Exchange Act.
"Rating Agencies" shall mean D&P, Fitch, Moody's and S&P.
"Ratings" shall mean the ratings from time to time established
by the Rating Agencies for senior, unsecured, non-credit-enhanced long-term
debt of the Company.
"Register" shall have the meaning given such term in Section
9.04(d).
"Regulation D" shall mean Regulation D of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Reportable Event" shall mean any reportable event as defined
in Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing at least 66-2/3% of the Total Commitment or, for
purposes of acceleration pursuant to clause (ii) of Article VI, Lenders holding
Loans and L/C Exposures representing at least 66-2/3% of the aggregate
principal amount of the Loans outstanding and L/C Exposures. For purposes of
determining the Required Lenders, any amounts denominated in a Local Currency
shall be translated into Dollars at the Exchange Rates in effect on the first
Reset Date to occur in each calendar month.
"Reset Date" shall have the meaning assigned to such term in
Section 2.22(a).
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other
officer or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"Restricted Subsidiary" shall mean any Subsidiary other than an
Unrestricted Subsidiary.
"S&P" shall mean Standard and Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. or any of its successors.
"SEC" shall mean the Securities and Exchange Commission.
<PAGE> 19
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"Standby Borrowing" shall mean a Borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant
to Section 2.04 in the form of Exhibit A-5.
"Standby Credit Exposure" shall mean, with respect to any
Lender at any time, the sum of the aggregate principal amount at such time of
all outstanding Standby Loans of such Lender and the aggregate Dollar
Equivalent of the principal amount of all outstanding Local Currency Loans of
such Lender (and each agency, branch or Affiliate of such Lender acting as a
Local Currency Lender).
"Standby Loans" shall mean the revolving loans made pursuant
to Section 2.04(a). Each Standby Loan shall be in Dollars and shall be a
Eurocurrency Standby Loan or an ABR Loan.
"subsidiary" shall mean, with respect to any person (the
"parent"), any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean a subsidiary of the Company.
"Total Commitment" shall mean, at any time, the aggregate
amount of Commitments of all the Lenders, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined and the currency in which such Loan or
the Loans comprising such Borrowing are denominated. For purposes hereof,
"Rate" shall include the LIBO Rate, the Alternate Base Rate and the Fixed Rate,
and currency shall include Dollars and any Local Currency permitted hereunder.
"Unrestricted Subsidiary" shall mean (a) any Subsidiary which
has been designated an Unrestricted Subsidiary by resolution of the board of
directors of the Company (which resolution has been communicated in a notice
delivered by the Company to the Administrative Agent for distribution to the
Lenders) as an Unrestricted Subsidiary, other than any such Subsidiary as to
which such a designation has been rescinded by resolution of said board of
directors and not thereafter, or after some subsequent such rescission,
restored by resolution of said board, or (b) any Subsidiary 50% or less of the
Voting Shares of which is owned directly by the Company and/or one or more
Restricted Subsidiaries. A Subsidiary may not be designated as (or otherwise
permitted to become) an Unrestricted Subsidiary unless, immediately after such
Subsidiary becomes an Unrestricted Subsidiary, such Subsidiary would not own
any capital stock of, or hold any indebtedness of, any Restricted Subsidiary.
A designation as an Unrestricted Subsidiary may not be rescinded (or an
Unrestricted Subsidiary otherwise permitted to become a Restricted Subsidiary)
unless such Subsidiary (i) is not a party to any lease which it would have been
prohibited by this Agreement from entering into had it been a Restricted
Subsidiary at the time it entered into such lease, unless (x) such Subsidiary
had not been a Restricted Subsidiary prior to its entering into such lease, or
(y) the property subject to such lease shall be owned by the Company and/or one
or more Subsidiaries, or (z) such Subsidiary would not be prohibited by this
Agreement from entering into such lease immediately after it becomes a
Restricted Subsidiary, and (ii) does not have outstanding upon any of its
property any mortgage, pledge
<PAGE> 20
15
or other lien which it would be prohibited by this Agreement from creating,
suffering to be created, or assuming, immediately after it becomes a Restricted
Subsidiary.
"Voting Shares" shall mean, as to a particular corporation or
other person, outstanding shares of stock or other equity interests of any
class of such person entitled to vote in the election of directors, or
otherwise to participate in the direction of the management and policies, of
such person, excluding shares or interests entitled so to vote or participate
only upon the happening of some contingency.
SECTION 1.02. Terms Generally. The definitions in Section
1.01 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided, however, that for purposes of
determining compliance with any covenant set forth in Article V, such terms
shall be construed in accordance with GAAP as in effect on the date hereof
applied on a basis consistent with the application used in preparing the
Company's audited financial statements referred to in Section 3.05.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly, to make Standby Loans to
the Borrowers, at any time and from time to time on and after the date hereof
and until the earlier of the Maturity Date and the termination of the
Commitment of such Lender.
(b) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein and in the applicable Local
Currency Addendum, each Local Currency Lender agrees, severally and not
jointly, to make Local Currency Loans to the Borrowers at any time and from
time to time on and after the execution of the applicable Local Currency
Addendum and until earlier of the Maturity Date and the termination of the
Commitment (or the commitment under such Local Currency Addendum) of such Local
Currency Lender.
(c) Notwithstanding anything to the contrary contained in
this Agreement, in no event may Standby Loans or Local Currency Loans be
borrowed under this Article II if, after giving effect thereto (and to any
concurrent repayment or prepayment of Loans), (i) the sum of the aggregate
Standby Credit Exposures, the aggregate Competitive Loan Exposures and the
aggregate L/C Exposures would exceed the Total Commitment then in effect, (ii)
the sum of the Standby Credit Exposure and the L/C Exposure of any Lender would
exceed such Lender's Commitment or (iii) the Dollar Equivalent of the aggregate
principal amount of the outstanding Local Currency Loans of any Local Currency
Lender denominated in a specified Local Currency would exceed the applicable
Local Currency Facility Maximum Borrowing Amount or any Local Currency Lender
Maximum Borrowing Amount.
<PAGE> 21
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Within the foregoing limits, the Borrowers may borrow, pay or
prepay and reborrow Standby Loans and Local Currency Loans hereunder, on and
after the Effective Date and prior to the Maturity Date, subject to the terms,
conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as
part of a Borrowing consisting of Standby Loans made by the Lenders ratably in
accordance with their respective Available Commitments; provided, however, that
the failure of any Lender to make any Standby Loan shall not in itself relieve
any other Lender of its obligation to lend hereunder (it being understood,
however, that no Lender shall be responsible for the failure of any other
Lender to make any Loan required to be made by such other Lender). Each Local
Currency Loan shall be made as part of a Borrowing consisting of Local Currency
Loans made by the Local Currency Lenders ratably in accordance with the
applicable Local Currency Lender Maximum Borrowing Amounts, provided, however,
that the failure of any Local Currency Lender to make any Local Currency Loan
shall not in itself relieve any other Local Currency Lender of its obligation
to lend hereunder (it being understood, however, that no Local Currency Lender
shall be responsible for the failure of any other Local Currency Lender to make
any Local Currency Loan required to be made by such other Local Currency
Lender). Each Competitive Loan shall be made in accordance with the procedures
set forth in Section 2.03. The Loans comprising any Borrowing shall be (i) in
the case of Competitive Loans, in an aggregate principal amount which is an
integral multiple of $1,000,000 and not less than $5,000,000, (ii) in the case
of Standby Loans, in an aggregate principal amount which is an integral
multiple of $5,000,000 and not less than $20,000,000 (or an aggregate principal
amount equal to the remaining balance of the Available Commitments) and (iii)
in the case of Local Currency Loans, in an aggregate principal amount which
complies with the requirements set forth in the applicable Local Currency
Addendum. All Standby Loans and Competitive Loans made pursuant to this
Article II shall be denominated in Dollars.
(b) Each Competitive Borrowing shall be comprised entirely of
Eurocurrency Competitive Loans or Fixed Rate Loans, and each Standby Borrowing
shall be comprised entirely of Eurocurrency Standby Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Each
Lender may at its option make any Eurocurrency Loan by causing any domestic or
foreign branch, agency or Affiliate of such Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time. For
purposes of the foregoing, Loans having different Interest Periods, regardless
of whether they commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05 and, in the case of any Local
Currency Loan, to any alternative procedures set forth in the applicable Local
Currency Addendum, each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds to
the Administrative Agent in New York, New York, not later than 12:00 noon, New
York City time, and the Administrative Agent shall by 2:00 p.m., New York City
time, credit the amounts so received to the account or accounts specified from
time to time in one or more notices delivered by the Company to the
Administrative Agent or, if a Borrowing shall not occur on such date because
any condition precedent herein specified shall not have been met, return the
amounts so received to the respective Lenders. Competitive Loans shall be made
by the Lender or Lenders whose Competitive Bids therefor are accepted pursuant
to Section 2.03 in the amounts so accepted. Standby Loans and Local Currency
Loans shall be made by the Lenders and the Local Currency Lenders, as
applicable, pro rata in accordance with Section 2.16. Unless the
Administrative Agent shall have received notice from a Lender prior to the date
(or, in the case of ABR Borrowings, on the date) of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such Lender
has made such
<PAGE> 22
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portion available to the Administrative Agent on the date of such Borrowing in
accordance with this paragraph (c) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount in the required currency. If and to the extent that such
Lender shall not have made such portion available to the Administrative Agent,
such Lender and the Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon in such currency, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, a rate determined by the Administrative Agent to represent
its cost of overnight funds. If such Lender shall repay to the Administrative
Agent such corresponding amount, such amount shall constitute such Lender's Loan
as part of such Borrowing for purposes of this Agreement.
(d) Each Competitive Loan shall be a Eurocurrency
Competitive Loan or a Fixed Rate Loan. Each Standby Loan shall be a
Eurocurrency Standby Loan or an ABR Standby Loan. Each Local Currency Loan
shall be a Eurocurrency Local Currency Loan or shall bear interest at a rate
specified in the applicable Loan Currency Addendum.
(e) If any Issuing Bank shall not have received from a
Borrower the payment required to be made by Section 2.23(e) within two hours
after such Borrower shall have received notice from such Issuing Bank that
payment of a draft presented under any Letter of Credit will be made, or, if
the Borrower shall have received such notice later than 10:00 a.m., New York
City time, on any Business Day, not later than 10:00 a.m., New York City time,
on the immediately following Business Day, as provided in Section 2.23(e), such
Issuing Bank will promptly notify the Administrative Agent of the L/C
Disbursement and the Administrative Agent will promptly notify each Lender of
such L/C Disbursement and its Applicable Share thereof. Each Lender shall pay
by wire transfer of immediately available funds to the Administrative Agent not
later than 2:00 p.m., New York City time, on such date (or, if such Lender
shall have received such notice later than 12:00 (noon), New York City time, on
any day, not later than 10:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Applicable Share of
such L/C Disbursement (it being understood that such amount shall be deemed to
constitute an ABR Loan of such Lender and shall bear interest as provided
herein), and the Administrative Agent will promptly pay to the Issuing Bank any
amounts so received by it from the Lenders. The Administrative Agent will
promptly pay to the Issuing Bank any amounts received by it from the Borrower
pursuant to Section 2.23(e) prior to the time that any Lender makes any payment
pursuant to this paragraph 2.02(e); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the Administrative
Agent to the Lenders that shall have made such payments and to the Issuing
Bank, as their interests may appear. If any Lender shall not have made its
Applicable Share of such L/C Disbursement available to the Administrative Agent
as provided above, such Lender and the Borrowers severally agree to pay
interest on such amount, for each day from and including the date such amount
is required to be paid in accordance with this paragraph to but excluding the
date such amount is paid, to the Administrative Agent at (i) in the case of the
Borrowers, a rate per annum equal to the interest rate applicable to Loans
pursuant to Section 2.08, and (ii) in the case of such Lender, for the first
such day, the Federal Funds Effective Rate, and for each day thereafter, the
Alternate Base Rate.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, a Borrower (the "Applicable Borrower") shall hand
deliver or telecopy to the Administrative Agent a duly completed Competitive
Bid Request in the form of Exhibit A-1 hereto, to be received by the
Administrative Agent (i) in the case of a Eurocurrency Competitive Loan, not
later than 10:00 a.m., New York City time, four Business Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, one
<PAGE> 23
18
Business Day before a proposed Competitive Borrowing. No ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid
Request that does not conform substantially to the format of Exhibit A-1 may be
rejected in the Administrative Agent's sole discretion, and the Administrative
Agent shall promptly notify the Borrower of such rejection by telecopy. Each
Competitive Bid Request shall refer to this Agreement and specify (w) whether
the Borrowing then being requested is to be a Eurocurrency Borrowing or a Fixed
Rate Borrowing, (x) the date of such Borrowing (which shall be a Business Day)
and the aggregate principal amount thereof which shall be in a minimum principal
amount of $10,000,000 and in an integral multiple of $5,000,000 and (y) the
Interest Period with respect thereto (which may not end after the Maturity
Date). Promptly after its receipt of a Competitive Bid Request that is not
rejected as aforesaid, the Administrative Agent shall telecopy to the Lenders a
Notice of Competitive Bid Request inviting the Lenders to bid, on the terms and
conditions of this Agreement, to make Competitive Loans.
(b) Each Lender invited to bid may, in its sole discretion,
make one or more Competitive Bids to the Applicable Borrower responsive to such
Borrower's Competitive Bid Request. Each Competitive Bid by a Lender must be
received by the Administrative Agent by telecopy, in the form of Exhibit A-3
hereto, (i) in the case of a Eurocurrency Competitive Loan, not later than 9:30
a.m., New York City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30
a.m., New York City time, on the day of a proposed Competitive Borrowing. A
Lender may submit multiple bids to the Administrative Agent. Competitive Bids
that do not conform substantially to the format of Exhibit A-3 may be rejected
by the Administrative Agent, and the Administrative Agent shall notify the
Lender making such nonconforming bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and specify (x) the
principal amount (which shall be in a minimum principal amount of $5,000,000
and in an integral multiple of $1,000,000 and which may equal the entire
principal amount of the Competitive Borrowing requested) of the Competitive
Loan or Loans that the Lender is willing to make, (y) the Competitive Bid Rate
or Rates at which the Lender is prepared to make the Competitive Loan or Loans
and (z) the Interest Period and the last day thereof. If any Lender invited to
bid shall elect not to make a Competitive Bid, such Lender shall so notify the
Administrative Agent by telecopy (I) in the case of Eurocurrency Competitive
Loans, not later than 9:30 a.m., New York City time, three Business Days before
a proposed Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not
later than 9:30 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided, however, that failure by any Lender to give such notice
shall not cause such Lender to be obligated to make any Competitive Loan as
part of such Competitive Borrowing. A Competitive Bid submitted by a Lender
pursuant to this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall as promptly as practicable
notify the Borrower, by telecopy, of all the Competitive Bids made, the
Competitive Bid Rate and the principal amount of each Competitive Loan in
respect of which a Competitive Bid was made and the identity of the Lender that
made each bid. The Administrative Agent shall send a copy of all Competitive
Bids to the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.03.
(d) The Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Borrower shall notify
the Administrative Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject any of or all the bids referred to in paragraph (c) above
not more than one hour after it shall have been notified of such bids by the
Administrative Agent pursuant to such paragraph (c); provided, however, that
(i) the failure of the Borrower to give such notice shall be deemed to be a
rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower
shall not accept a bid made at a particular
<PAGE> 24
19
Competitive Bid Rate if it has decided to reject a bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by the Borrower shall not exceed the principal amount specified in the
Competitive Bid Request, (iv) if the Borrower shall accept a bid or bids made at
a particular Competitive Bid Rate but the amount of such bid or bids shall cause
the total amount of bids to be accepted to exceed the amount specified in the
Competitive Bid Request, then the Borrower shall accept a portion of such bid or
bids in an amount equal to the amount specified in the Competitive Bid Request
less the amount of all other Competitive Bids accepted with respect to such
Competitive Bid Request, which acceptance, in the case of multiple bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such bid at such Competitive Bid Rate, and (v) except pursuant to clause
(iv) above, no bid shall be accepted for a Competitive Loan unless such
Competitive Loan is in a minimum principal amount of $5,000,000 and an integral
multiple of $1,000,000; provided further, however, that if a Competitive Loan
must be in an amount less than $5,000,000 because of the provisions of clause
(iv) above, such Competitive Loan may be for a minimum of $1,000,000 or any
integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Competitive Bid Rate
pursuant to clause (iv) the amounts shall be rounded to integral multiples of
$1,000,000 in a manner which shall be in the discretion of the Borrower. A
notice given pursuant to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender whether or not its Competitive Bid has been accepted (and if so,
in what amount and at what Competitive Bid Rate) by telecopy, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) No Competitive Borrowing shall be requested or made
hereunder if after giving effect thereto any of the conditions set forth in
paragraph (c) of Section 2.01 would not be met.
(g) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to the Applicable Borrower one quarter of an hour earlier than the latest time
at which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.03 shall be given
in accordance with Section 9.01.
SECTION 2.04. Standby and Local Currency Borrowing Procedure.
(a) In order to request a Standby Borrowing, a Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Standby Borrowing Request
in the form of Exhibit A-5 (i) in the case of a Eurocurrency Standby Loan, not
later than 10:30 a.m., New York City time (or, if the Standby Borrowing request
is delivered or telecopied to the Administrative Agent in London, 9:30 a.m.,
London time), three Business Days before such Borrowing, and (ii) in the case
of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the day
of such Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a
Standby Borrowing Request. Such notice shall be irrevocable and shall in each
case specify (A) whether the Borrowing then being requested is to be a
Eurocurrency Standby Loan or an ABR Borrowing; (B) the date of such Standby
Borrowing (which shall be a Business Day) and the amount thereof; and (C) if
such Borrowing is to be a Eurocurrency Standby Loan, the Interest Period with
respect thereto, which shall not end after the Maturity Date. If no election
as to the Type of Standby Borrowing is specified in any such notice, then the
requested Standby Borrowing shall be an ABR Borrowing. If no Interest Period
with respect to any Eurocurrency Standby is specified in any such notice, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Notwithstanding any other provision of this
<PAGE> 25
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Agreement to the contrary, no Standby Borrowing shall be requested if the
Interest Period with respect thereto would end after the Maturity Date. The
Administrative Agent shall promptly advise each of the Lenders of any notice
given pursuant to this Section 2.04 and of each Lender's portion of the
requested Borrowing.
(b) In order to request a Local Currency Borrowing, a
Borrower shall give the notice required under the applicable Local Currency
Addendum and shall simultaneously deliver a copy of such notice to the
Administrative Agent.
SECTION 2.05. Conversion and Continuation of Standby Loans.
Each Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (i) not later than 10:30 a.m., New York City time, on
the day of the conversion, to convert all or any part of any Eurocurrency
Standby Loan into an ABR Standby Loan, and (ii) not later than 10:30 a.m., New
York City time, three Business Days prior to conversion or continuation, to
convert any ABR Standby Loan into a Eurocurrency Standby Loan or to continue
any Eurocurrency Standby Loan as a Eurocurrency Standby Loan for an additional
Interest Period, subject in each case to the following:
(a) if less than all the outstanding principal amount of any
Standby Borrowing shall be converted or continued, the aggregate
principal amount of the Standby Borrowing converted or continued shall
be an integral multiple of $5,000,000 and not less than $20,000,000;
(b) accrued interest on a Standby Borrowing (or portion
thereof) being converted shall be paid by the Borrower at the time of
conversion;
(c) if any Eurocurrency Standby Loan is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.15;
(d) any portion of a Standby Borrowing maturing or required to
be repaid in less than one month may not be converted into or
continued as a Eurocurrency Standby Loan;
(e) any portion of a Eurocurrency Standby Loan which cannot be
continued as a Eurocurrency Standby Loan by reason of clause (d) above
shall be automatically converted at the end of the Interest Period in
effect for such Eurocurrency Standby Loan into an ABR Borrowing;
(f) no Interest Period may be selected for any Eurocurrency
Standby Borrowing that would end later than the Maturity Date; and
(g) at any time when there shall have occurred and be
continuing any Default or Event of Default, no Standby Loan may be
converted into or continued as a Eurocurrency Standby Loan.
Each notice pursuant to this Section 2.05 shall be irrevocable
and shall refer to this Agreement and specify (i) the identity and amount of
the Standby Borrowing to be converted or continued, (ii) whether such Standby
Borrowing is to be converted to or continued as a Eurocurrency Standby Loan or
an ABR Standby Loan, (iii) if such notice requests a conversion, the date of
such conversion (which shall be a Business Day) and (iv) if such Standby
Borrowing is to be converted to or continued as a Eurocurrency Standby Loan,
the Interest Period with respect thereto. If no Interest Period is specified
in any such notice with respect to any conversion to or continuation as a
Eurocurrency Standby Loan, the Borrower shall be deemed to have selected an
Interest Period of one
<PAGE> 26
21
month's duration. If no notice shall have been given in accordance with this
Section 2.05 to convert or continue any Standby Borrowing, such Standby
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a new
Interest Period as an ABR Standby Loan.
SECTION 2.06. Fees. (a) The Company agrees to pay to each
Lender, through the Administrative Agent, on each March 31, June 30, September
30 and December 31 (with the first payment being due on December 31, 1995) and
on each date on which the Commitment of such Lender shall be terminated as
provided herein, a facility fee (a "Facility Fee"), at a rate per annum equal
to the Applicable Percentage from time to time in effect on the amount of the
Commitment of such Lender, whether used or unused, during the preceding quarter
(or other period commencing on the Effective Date, or ending with the Maturity
Date or any date on which the Commitment of such Lender shall be terminated).
All Facility Fees shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due
to each Lender shall commence to accrue on the Effective Date, and shall cease
to accrue on the earlier of the Maturity Date and the termination of the
Commitment of such Lender as provided herein.
(b) The Company agrees to pay the Administrative Agent, for
its own account, the administrative and other fees separately agreed to by the
Company and the Administrative Agent (the "Administrative Fees").
(c) The Company agrees to pay (i) to each Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31
and on the date on which the Commitment of such Lender shall be terminated as
provided herein, a fee (an "L/C Participation Fee") calculated on such Lender's
average daily L/C Exposure (excluding the portion thereof attributable to
unreimbursed L/C Disbursements) during the preceding quarter (or shorter period
commencing with the Effective Date or ending with the Maturity Date or the date
on which the Commitment of such Lender shall be terminated) at a rate equal to
the Applicable Percentage from time to time applicable for purposes of
determining the interest rate on Borrowings comprised of Eurocurrency Loans
pursuant to Section 2.08, and (ii) to the Issuing Bank with respect to each
Letter of Credit the fees agreed upon by the Company and such Issuing Bank in
the applicable Issuing Bank Agreement plus, in connection with the issuance,
amendment or transfer of any Letter of Credit or any L/C Disbursement, the
Issuing Bank's customary documentary and processing charges (collectively, the
"Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. Notwithstanding the foregoing, in the case of any Letter of Credit that
will expire later than the first anniversary of the issuance, amendment, renewal
or extension thereof, the L/C Participation Fee and Issuing Bank Fees shall be
increased by an amount to be agreed upon prior to such issuance, amendment,
renewal or extension by the applicable Borrower, the applicable Issuing Bank and
the Required Lenders.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders except that the Issuing Bank Fees shall be paid
directly to the applicable Issuing Bank and the Administrative Fees shall be
paid pursuant to paragraph (b) above. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a)
Each Borrower hereby agrees that the outstanding principal balance of each
Standby Loan or Local Currency Loan shall be payable on the Maturity Date
(unless an earlier date is specified in the Local Currency Addendum relating to
such Local Currency Loan) and that the outstanding principal balance of each
Competitive
<PAGE> 27
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Loan shall be payable on the last day of the Interest Period applicable thereto.
Each Loan shall bear interest on the outstanding principal balance thereof as
set forth in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the currency of each
Loan, the Borrower of each Loan, the Type of each Loan made and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from each Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section 2.07 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein
shall not in any manner affect the obligations of the Borrowers to repay the
Loans in accordance with their terms.
SECTION 2.08. Interest on Loans. (a) Subject to the
provisions of Section 2.09, the Loans comprising each Eurocurrency Borrowing
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to (i) in the case of each
Eurocurrency Standby Loan, the LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Percentage from time to time in effect, (ii)
in the case of each Eurocurrency Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the Margin offered by the
Lender making such Loan and accepted by the Borrower pursuant to Section 2.03
and (iii) in the case of each Eurocurrency Local Currency Loan, the LIBO Rate
for the Interest Period in effect for such Loan plus any spread specified in
the applicable Local Currency Addendum.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, for periods during which the Alternate Base Rate is determined by reference
to the Prime Rate and 360 days for other periods) at a rate per annum equal to
the Alternate Base Rate.
(c) Subject to the provisions of Section 2.09, each Fixed
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(d) Subject to the provisions of Section 2.09, any Local
Currency Loan that is not a Eurocurrency Loan shall bear interest at the rate
or rates per annum set forth in the applicable Local Currency Addendum.
(e) Interest on each Loan shall be payable on each Interest
Payment Date applicable to such Loan except as otherwise provided in this
Agreement or in an applicable Local Currency Addendum. The applicable LIBO
Rate or Alternate Base Rate for each Interest Period or day within an Interest
Period, as the case may be, shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
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SECTION 2.09. Default Interest. If a Borrower shall default
in the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, whether by scheduled maturity, notice of prepayment,
acceleration or otherwise, such Borrower shall on demand from time to time from
the Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed as provided in Section
2.08(b)) equal to the Alternate Base Rate plus 2% (or, in the case of Local
Currency Loans, such other rate as may be specified in the applicable Local
Currency Addendum).
SECTION 2.10. Alternate Rate of Interest. In the event, and
on each occasion, that on the day two Business Days prior to the commencement
of any Interest Period for a Eurocurrency Borrowing, the Administrative Agent
shall have determined (i) that deposits in the currency and principal amounts
of the Eurocurrency Loans comprising such Borrowing are not generally available
in the London market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination to the
Borrower and the Lenders. In the event of any such determination under clause
(i) or (ii) above, until the Administrative Agent shall have advised the
Company and the Lenders that the circumstances giving rise to such notice no
longer exist, (x) any request by a Borrower for a Eurocurrency Competitive Loan
pursuant to Section 2.03 shall be of no force and effect and shall be denied by
the Administrative Agent, (y) any request by a Borrower for a Eurocurrency
Standby Loan pursuant to Section 2.04(a) shall be deemed to be a request for an
ABR Borrowing and (z) any request for a Eurocurrency Local Currency Loan
pursuant to Section 2.04(b) and to a Local Currency Addendum shall be deemed to
be a request for a Local Currency Loan bearing interest by reference to the
rate specified in the applicable Local Currency Addendum (provided that if the
requested Eurocurrency Local Currency Loan was to be made pursuant to a Local
Currency Addendum in which no rate is specified such request shall be of no
force and effect and shall be denied by the Administrative Agent). In the
event the Required Lenders notify the Administrative Agent that the rates at
which Dollar deposits are being offered will not adequately and fairly reflect
the cost to such Lenders of making or maintaining Eurocurrency Loans in Dollars
during such Interest Period, the Administrative Agent shall notify the
applicable Borrower of such notice and until the Required Lenders shall have
advised the Administrative Agent that the circumstances giving rise to such
notice no longer exist, any request by such Borrower for a Eurocurrency Standby
Loan shall be deemed a request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be made in good faith and shall be
conclusive absent manifest error.
SECTION 2.11. Termination and Reduction of Commitments. (a)
The Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
telecopy notice to the Administrative Agent, the Company may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Total Commitment; provided, however, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $10,000,000 and in a
minimum principal amount of $50,000,000 and (ii) no such termination or
reduction shall be made (A) which would reduce the Total Commitment to an
amount less than the sum of the aggregate Standby Credit Exposures, Competitive
Loan Exposures and L/C Exposures or (B) which would reduce any Lender's
Commitment to an amount that is less than the sum of such Lender's Standby
Credit Exposure and L/C Exposure.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Lenders in accordance with their respective Commitments.
The Borrowers shall pay to the Administrative Agent for the account of the
Lenders, on the date of each reduction or termination of
<PAGE> 29
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the Total Commitment, the Facility Fees on the amount of the Commitments
terminated accrued through the date of such termination or reduction.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Standby Borrowing or
Local Currency Borrowing, as the case may be, in whole or in part, upon giving
telecopy notice (or telephone notice promptly confirmed by telecopy) to the
Administrative Agent: (i) before 10:00 a.m., New York City time, three
Business Days prior to prepayment, in the case of Eurocurrency Standby Loans,
and (ii) before 10:00 a.m., New York City time, one Business Day prior to
prepayment, in the case of ABR Standby Loans and (iii) in the case of Local
Currency Loans, by such time as shall be specified in the applicable Local
Currency Addendum; provided, however, that each partial prepayment shall be in
an amount which is (x) in the case of any Standby Borrowing, an integral
multiple of $10,000,000 and not less than $50,000,000, and (ii) in the case of
any Local Currency Borrowing, an amount in which prepayments are permitted to
be made under the applicable Local Currency Addendum. No prepayment may be
made in respect of any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.11, the Borrowers shall pay or prepay so much
of the Standby Borrowings as shall be necessary in order that the sum of the
aggregate Competitive Loan Exposures, Standby Credit Exposures and L/C
Exposures will not exceed the Total Commitment after giving effect to such
termination or reduction.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the applicable Borrower to
prepay such Borrowing (or portion thereof) by the amount stated therein on the
date stated therein. All prepayments under this Section 2.12 shall be subject
to Section 2.15 but otherwise without premium or penalty. All prepayments
under this Section 2.12 shall be accompanied by accrued interest on the
principal amount being prepaid to the date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall result in the imposition, modification or applicability of any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by any Lender or any Issuing
Bank, or shall result in the imposition on any Lender or the London interbank
market of any other condition affecting this Agreement, such Lender's
Commitment or any Eurocurrency Loan or Fixed Rate Loan made by such Lender or
any Letter of Credit, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurocurrency Loan
or Fixed Rate Loan or of issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or such Issuing Bank to be material, then such
additional amount or amounts as will compensate such Lender, or such Issuing
Bank, as the case may be, for such additional costs or reduction will be paid
by the Borrowers to such Lender, or such Issuing Bank, as the case may be, upon
demand. Notwithstanding the foregoing, no Lender or Issuing Bank shall be
entitled to request compensation under this paragraph with respect to any
Competitive Loan or Letter of Credit if the change giving rise to such request
was applicable to such Lender or Issuing Bank at the time of submission of the
Competitive Bid or L/C Competitive Bid pursuant to which such Competitive Loan
or Letter of Credit was made or issued.
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(b) If any Lender or any Issuing Bank shall have determined
that the adoption of any law, rule, regulation or guideline arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and
Capital Standards", or the adoption after the date hereof of any other law,
rule, regulation or guideline regarding capital adequacy, or any change in any
of the foregoing or in the interpretation or administration of any of the
foregoing by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender or Issuing Bank (or any lending office of such Lender or such Issuing
Bank) or any Lender's or Issuing Bank's holding company with 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 such Lender's or Issuing Bank's
capital or on the capital of such Lender's or Issuing Bank's holding company,
if any, as a consequence of this Agreement, such Lender's Commitment or the
Loans made or Letters of Credit issued by such Lender or Issuing Bank pursuant
hereto to a level below that which such Lender or Issuing Bank or such Lender's
or Issuing Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or Issuing Bank's
policies and the policies of such Lender's or Issuing Bank's holding company
with respect to capital adequacy) by an amount deemed by such Lender or Issuing
Bank to be material, then from time to time such additional amount or amounts
as will compensate such Lender or Issuing Bank for such reduction will be paid
by the Borrowers to such Lender or Issuing Bank.
(c) A certificate of any Lender or Issuing Bank setting forth
such amount or amounts as shall be necessary to compensate such Lender or
Issuing Bank or its holding company, as applicable, as specified in paragraph
(a) or (b) above, as the case may be, shall be delivered to the Company and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or Issuing Bank the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.
(d) Failure on the part of any Lender or Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of such Lender's or Issuing Bank's right to demand
compensation with respect to such period or any other period; provided,
however, that no Lender or Issuing Bank shall be entitled to compensation under
this Section 2.13 for any costs incurred or reductions suffered with respect to
any date unless it shall have notified the Company that it will demand
compensation for such costs or reductions under paragraph (c) above not more
than 90 days after the later of (i) such date and (ii) the date on which it
shall have become aware of such costs or reductions. The protection of this
Section shall be available to each Lender and Issuing Bank regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any
other provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
or any of its Affiliates which shall be party to a Local Currency Addendum to
make or maintain any Eurocurrency Loan or Local Currency Loan or to give effect
to its obligations as contemplated hereby with respect to any Eurocurrency Loan
or Local Currency Loan, or shall limit the convertibility into Dollars of any
Local Currency (or make such conversion commercially impracticable), then, by
written notice to the Company and to the Administrative Agent, such Lender may:
(i) declare that Eurocurrency Loans or Loans in any affected
Local Currency will not thereafter be made by such Lender hereunder,
whereupon such Lender shall not submit a
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26
Competitive Bid in response to a request for a Eurocurrency
Competitive Loan, any request for a Eurocurrency Standby Loan shall,
as to such Lender only, be deemed a request for an ABR Loan, and any
request for a Local Currency Borrowing in such Local Currency shall be
disregarded, unless such declaration shall be subsequently withdrawn;
and
(ii) require that all outstanding Eurocurrency Loans in
Dollars made by it be converted to ABR Loans and that all outstanding
Local Currency Loans made by it in the affected Local Currency be
promptly prepaid, in which event all such Eurocurrency Loans in
Dollars shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in paragraph (b) below and
all such Local Currency Loans shall be promptly prepaid.
In the event any Lender shall exercise its rights under (i) or (ii) above with
respect to Eurocurrency Loans in Dollars, all payments and prepayments of
principal which would otherwise have been applied to repay the Eurocurrency
Loans that would have been made by such Lender or the converted Eurocurrency
Loans, of such Lender shall instead be applied to repay the ABR Loans made by
such Lender in lieu of, or resulting from the conversion of, such Eurocurrency
Loans.
(b) For purposes of this Section 2.14, a notice by any Lender
shall be effective as to each Eurocurrency Loan or Local Currency Loan, if
lawful, on the last day of the Interest Period currently applicable to such
Eurocurrency Loan or Local Currency Loan; in all other cases such notice shall
be effective on the date of receipt.
SECTION 2.15. Indemnity. The Borrowers shall indemnify each
Lender against any out-of-pocket loss or expense which such Lender may sustain
or incur as a consequence of (a) any failure to borrow or to refinance, convert
or continue any Loan hereunder after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03,
2.04 or 2.05 or pursuant to any Local Currency Addendum, (b) any payment,
prepayment or conversion, or assignment required under Section 2.20, of a
Eurocurrency Loan required by any other provision of this Agreement or otherwise
made or deemed made on a date other than the last day of the Interest Period, if
any, applicable thereto, (c) any default in payment or prepayment of the
principal amount of any Loan or any part thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, whether by scheduled
maturity, acceleration, irrevocable notice of prepayment or otherwise) or (d)
the occurrence of any Event of Default, including, in each such case, any loss
or reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurocurrency Loan. Such loss or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (i) its cost of obtaining the funds for
the Loan being paid, prepaid, refinanced or not borrowed (assumed to be the LIBO
Rate applicable thereto) for the period from the date of such payment,
prepayment, refinancing or failure to borrow or refinance to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow or
refinance the Interest Period for such Loan which would have commenced on the
date of such failure) over (ii) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid or not borrowed or refinanced for such period or Interest
Period, as the case may be. A certificate of any Lender setting forth any
amount or amounts which such Lender is entitled to receive pursuant to this
Section shall be delivered to such Borrower and shall be conclusive absent
manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under
Sections 2.14 and 2.20, each payment of the Facility Fees and each reduction of
the Commitments shall be allocated pro rata among the Lenders in accordance
with their respective Commitments (or, if such Commitments shall have expired
or been terminated, in accordance with the respective principal amounts of
their
<PAGE> 32
27
outstanding Standby Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Except as required
under Section 2.14, each payment or repayment of principal of any Standby
Borrowing and each refinancing or conversion of any Standby Borrowing shall be
allocated pro rata among the Lenders in such Borrowing in accordance with the
respective principal amounts of their outstanding Standby Loans comprising such
Borrowing, and each payment of interest on any Standby Borrowing shall be
allocated pro rata among the Lenders participating in such a Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Standby Loans comprising such Borrowing. Each payment of principal
of any Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective principal
amounts of their outstanding Competitive Loans comprising such Borrowing. Each
payment of interest on any Competitive Borrowing shall be allocated pro rata
among the Lenders participating in such Borrowing in accordance with the
respective amounts of accrued and unpaid interest on their outstanding
Competitive Loans comprising such Borrowing. For purposes of determining the
Available Commitments of the Lenders at any time, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Lenders
(including those Lenders which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with their respective
Commitments. Each Lender agrees that in computing such Lender's portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole Dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Standby Loan
or Loans as a result of which the unpaid principal portion of its Standby Loans
shall be proportionately less than the unpaid principal portion of the Standby
Loans of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in the Standby Loans of such
other Lender, so that the aggregate unpaid principal amount of the Standby
Loans and participations in the Standby Loans held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Standby
Loans then outstanding as the principal amount of its Standby Loans prior to
such exercise of banker's lien, setoff or counterclaim or other event was to
the principal amount of all Standby Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.17 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Any Lender holding a participation in a Standby Loan deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing to such Lender by reason
thereof as fully as if such Lender had made a Standby Loan in the amount of
such participation.
SECTION 2.18. Payments. (a) The Borrowers shall make each
payment (including principal of or interest on any Borrowing or any L/C
Disbursement and any Fees or other amounts) hereunder from an account in the
United States not later than 12:00 noon, local time at the place of payment, on
the date when due in immediately available funds to the Administrative Agent at
its offices at 270 Park Avenue, New York, New York (or, in the case of Local
Currency Loans, such other time and place as shall be specified in the
applicable Local Currency Addendum). Each such payment (other than principal
of and interest on Local Currency Loans) shall be made in Dollars.
<PAGE> 33
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(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments to the
Lenders hereunder shall be made, in accordance with Section 2.18, free and
clear of and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding (i) income taxes imposed on the income of the Administrative
Agent, any Lender or any Issuing Bank (or any transferee or assignee thereof,
including a participation holder (any such entity a "Transferee")) and (ii)
franchise taxes imposed on the income, assets or net worth of the
Administrative Agent, any Lender or any Issuing Bank (or Transferee), in each
case by the jurisdiction under the laws of which the Administrative Agent, such
Lender or such Issuing Bank (or Transferee) is organized or doing business
(other than as a result of entering into this Agreement, performing any
obligations hereunder, receiving any payments hereunder or enforcing any rights
hereunder), or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities,
collectively or individually, "Taxes"). If any Borrower shall be required to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
(or any Transferee), the Administrative Agent or any Issuing Bank, (i) the sum
payable shall be increased by the amount (an "additional amount") necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) such Lender (or Transferee),
the Administrative Agent or such Issuing Bank (as the case may be) shall
receive an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes").
(c) The Borrowers shall indemnify each Lender (or
Transferee), the Administrative Agent and each Issuing Bank for the full amount
of Taxes and Other Taxes paid by such Lender (or Transferee), the
Administrative Agent or such Issuing Bank, as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by a Lender (or Transferee), Issuing Bank or the
Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date any Lender (or Transferee), an Issuing Bank or
the Administrative Agent, as the case may be, makes written demand therefor,
which written demand shall be made within 60 days of the date such Lender (or
Transferee), such Issuing Bank or the Administrative Agent receives written
demand for payment of such Taxes or Other Taxes from the relevant Governmental
Authority.
(d) If a Lender (or Transferee), an Issuing Bank or the
Administrative Agent shall become aware that it is entitled to claim a refund
from a Governmental Authority in respect of Taxes or Other Taxes as to which it
has been indemnified by the Borrowers, or with respect to which the Borrowers
have paid additional amounts, pursuant to this Section 2.19, it shall promptly
notify the Borrowers of the availability of such refund claim and shall, within
30 days after receipt of a request
<PAGE> 34
29
by the Borrowers, make a claim to such Governmental Authority for such refund at
the Borrowers' expense. If a Lender (or Transferee), an Issuing Bank or the
Administrative Agent receives a refund (including pursuant to a claim for refund
made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes
as to which it has been indemnified by the Borrowers or with respect to which
the Borrowers have paid additional amounts pursuant to this Section 2.19, it
shall within 30 days from the date of such receipt pay over such refund to the
Borrowers (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrowers under this Section 2.19 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
such Lender (or Transferee), such Issuing Bank or the Administrative Agent and
without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); provided, however, that the Borrowers,
upon the request of such Lender (or Transferee), such Issuing Bank or the
Administrative Agent, agree to repay the amount paid over to the Borrowers (plus
penalties, interest or other charges) to such Lender (or Transferee), such
Issuing Bank or the Administrative Agent in the event such Lender (or
Transferee), such Issuing Bank or the Administrative Agent is required to repay
such refund to such Governmental Authority.
(e) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Borrowers to the relevant Governmental Authority,
the Borrowers will deliver to the Administrative Agent, at its address referred
to in Section 9.01, the original or a certified copy of a receipt issued by
such Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of the principal of and interest on all Loans
made hereunder and the expiration or cancellation of all Letters of Credit and
the payment of all L/C Disbursements thereunder.
(g) Each Lender and Issuing Bank (or Transferee) that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver
to the Company and the Administrative Agent two copies of either United States
Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender or Issuing Bank claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender or Issuing Bank delivers a
Form W-8, a certificate representing that such Non-U.S. Lender or Issuing Bank
is not a bank for purposes of Section 881(c) of the Code, is not a 10 percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Company and is not a controlled foreign corporation related to the Company
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender or Issuing Bank claiming complete
exemption from, or reduced rate of, U.S. Federal withholding tax on payments by
the Company under this Agreement. Such forms shall be delivered by each
Non-U.S. Lender or Issuing Bank on or before the date it becomes a party to
this Agreement (or, in the case of a Transferee that is a participation holder,
on or before the date such participation holder becomes a Transferee hereunder)
and on or before the date, if any, such Non-U.S. Lender or Issuing Bank changes
its applicable lending office by designating a different lending office (a "New
Lending Office"). In addition, each Non-U.S. Lender or Issuing Bank shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender or Issuing Bank. Notwithstanding
any other provision of this Section 2.19(g), a Non-U.S. Lender or Issuing Bank
shall not be required to deliver any form pursuant to this Section 2.19(g) that
such Non-U.S. Lender or Issuing Bank is not legally able to deliver.
(h) The Company shall not be required to indemnify any
Non-U.S. Lender or Issuing Bank, or to pay any additional amounts to any
Non-U.S. Lender or Issuing Bank, in respect of United
<PAGE> 35
30
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender or Issuing Bank
became a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a Transferee
hereunder) or, with respect to payments to a New Lending Office, the date such
Non-U.S. Lender or Issuing Bank designated such New Lending Office with respect
to a Loan; provided, however, that this clause (i) shall not apply to any
Transferee or New Lending Office that becomes a Transferee or New Lending Office
as a result of an assignment, participation, transfer or designation made at the
request of the Company; and provided further, however, that this clause (i)
shall not apply to the extent the indemnity payment or additional amounts any
Transferee, or Lender (or Transferee) or Issuing Bank through a New Lending
Office, would be entitled to receive (without regard to this clause (i)) do not
exceed the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) or Issuing Bank making the designation of such New Lending Office,
would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender or Issuing Bank to comply with the provisions of paragraph (g) above.
(i) Any Lender (or Transferee) or Issuing Bank claiming any
indemnity payment or additional amounts payable pursuant to this Section 2.19
shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested in
writing by the Company or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
reduce the amount of any such indemnity payment or additional amounts that may
thereafter accrue and would not, in the sole determination of such Lender (or
Transferee) or Issuing Bank, be otherwise disadvantageous to such Lender (or
Transferee) or Issuing Bank.
(j) Nothing contained in this Section 2.19 shall require any
Lender (or Transferee), any Issuing Bank or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.20. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances. (a) Any Lender (or Transferee) or Issuing Bank
claiming any additional amounts payable pursuant to Section 2.13 or Section
2.19 or exercising its rights under Section 2.14 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Company or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue or avoid the circumstances giving rise to such exercise and
would not, in the sole determination of such Lender (or Transferee) or Issuing
Bank, be otherwise disadvantageous to such Lender (or Transferee) or Issuing
Bank.
(b) In the event that any Lender or Issuing Bank shall have
delivered a notice or certificate pursuant to Section 2.13 or 2.14, or the
Company shall be required to make additional payments to any Lender or Issuing
Bank under Section 2.19, the Company shall have the right, at its own expense,
upon notice to such Lender or Issuing Bank and the Administrative Agent, to
require such Lender or Issuing Bank to transfer and assign without recourse,
representation or warranty (in accordance with and subject to the restrictions
contained in Section 9.04) all interests, rights and obligations contained
hereunder to another financial institution approved by the Administrative Agent
(which approval shall not be unreasonably withheld) which shall assume such
obligations; provided that (i) no such assignment shall conflict with any law,
rule or regulation or order of any Governmental Authority and (ii) the assignee
or the Company, as the case may be, shall pay to the affected Lender or
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Issuing Bank in immediately available funds on the date of such assignment the
principal of and interest accrued to the date of payment on the Loans and L/C
Disbursements made by it hereunder and all other amounts accrued for its account
or owed to it hereunder and shall cause all Letters of Credit issued by it to be
canceled on such date.
SECTION 2.21. Terms of Local Currency Facilities. (a) The
Company may in its discretion from time to time elect to borrow, or elect that
one or more Borrowing Subsidiaries may borrow, Local Currency Loans on a
revolving basis from any one or more Local Currency Lenders, with the consent
of each such Local Currency Lender in its sole discretion, by delivering a
Local Currency Addendum to the Administrative Agent and the Local Currency
Lenders (through the Administrative Agent), executed by the Company, each such
Borrowing Subsidiary and each such Local Currency Lender; provided, however,
that on the effective date of such election, and after giving effect thereto,
(i) an Exchange Rate with respect to each Local Currency covered by such Local
Currency Addendum shall be determinable by reference to the Reuters currency
pages (or comparable publicly available screen), (ii) no Default or Event of
Default shall have occurred and be continuing and (iii) the aggregate amount of
all Local Currency Facility Maximum Borrowing Amounts under all Local Currency
Addenda at the time in effect shall not exceed $500,000,000. Each Borrower
and, by agreeing to any Local Currency Addendum, each relevant Local Currency
Lender, acknowledges and agrees that each reference in this Agreement to any
Lender shall, to the extent applicable, be deemed to be a reference to such
Local Currency Lender, subject to the second sentence of the definition of such
term.
(b) Each Local Currency Addendum shall set forth (i) the
maximum amount (expressed in Dollars and without duplication) available to be
borrowed from all Local Currency Lenders under such Local Currency Addendum (as
the same may be reduced from time to time pursuant to Section 2.22(c) or (d), a
"Local Currency Facility Maximum Borrowing Amount") and (ii) with respect to
each Local Currency Lender party to such Local Currency Addendum, the maximum
amount (expressed in Dollars and without duplication) available to be borrowed
from such Local Currency Lender thereunder (as the same may be reduced from
time to time pursuant to Section 2.22(c) or (d), a "Local Currency Lender
Maximum Borrowing Amount"). In no event shall the aggregate of all Local
Currency Lender Maximum Borrowing Amounts in respect of any Local Currency
Lender at any time exceed such Lender's Commitment. Except as provided in
Section 2.21(c), the making of Local Currency Loans by a Local Currency Lender
under a Local Currency Addendum shall under no circumstances reduce the amount
available to be borrowed from such Lender under any other Local Currency
Addendum to which such Lender is a party.
(c) Except as otherwise required by applicable law, in no
event shall the Local Currency Lenders have the right to accelerate the Local
Currency Loans outstanding under any Local Currency Addendum, or to terminate
their commitments (if any) thereunder to make Local Currency Loans prior to the
stated termination date in respect thereof, except that such Local Currency
Lenders shall, in each case, have such rights upon an acceleration of the Loans
and a termination of the Commitments pursuant to Article VI, respectively. No
Local Currency Loan may be made if (i) an Exchange Rate with respect to such
Local Currency cannot be determined, (ii) a Default or an Event of Default
shall have occurred and be continuing or would result therefrom or (iii) after
giving effect thereto, (A) the sum of the aggregate principal amount of the
Dollar Loans (other than Competitive Loans) and Local Currency Loans (Dollar
Equivalent) of any Lender (and the Affiliates of such Lender that are Local
Currency Lenders) then outstanding and the L/C Exposure of such Lender would
exceed such Lender's Commitment, (B) the Dollar Equivalent of the aggregate
principal amount of outstanding Local Currency Loans denominated in a specified
Local Currency would exceed the applicable Local Currency Facility Maximum
Borrowing Amount or (C) the sum of the aggregate Standby Credit
<PAGE> 37
32
Exposures, the aggregate L/C Exposures and the aggregate Competitive Loan
Exposures would exceed the Total Commitment.
(d) The applicable Borrower and the applicable Local Currency
Lenders, or, if so specified in the relevant Local Currency Addendum, an agent
acting on their behalf, shall furnish to the Administrative Agent, promptly
following the making, payment or prepayment of each Local Currency Loan, and at
any other time at the request of the Administrative Agent, a statement setting
forth the outstanding Local Currency Loans made under such Local Currency
Addendum.
(e) The applicable Borrower shall furnish to the
Administrative Agent copies of any amendment, supplement or other modification
to the terms of any Local Currency Addendum promptly after the effectiveness
thereof.
(f) The Company may terminate any Local Currency Addendum, if
there are not any Loans outstanding thereunder, in its sole discretion (or, if
there are Loans outstanding thereunder, with the consent of each Local Currency
Lender party thereto), by written notice to the Administrative Agent, which
notice shall be executed by the Company, each relevant Borrowing Subsidiary
and, if their consent is required, each such Local Currency Lender. Once
notice of such termination is received by the Administrative Agent, such Local
Currency Addendum and the loans and other obligations outstanding thereunder
shall immediately cease to be subject to the terms of this Agreement.
SECTION 2.22. Currency Fluctuations, etc. (a) Not later than
1:00 p.m., New York City time, on each Calculation Date, the Administrative
Agent shall (i) determine the Exchange Rate as of such Calculation Date with
respect to each Local Currency covered by a Local Currency Addendum and (ii)
give notice thereof to the Lenders, the Company and the relevant Borrowing
Subsidiaries. The Exchange Rates so determined shall become effective on the
first Business Day immediately following the relevant Calculation Date (a
"Reset Date") and shall remain effective until the next succeeding Reset Date.
(b) Not later than 5:00 p.m., New York City time, on each
Reset Date and each Borrowing Date, the Administrative Agent shall (i)
determine the Dollar Equivalent of the Local Currency Loans then outstanding
(after giving effect to any Local Currency Loans to be made or repaid on such
date) and (ii) notify the Lenders, the Company and the relevant Borrowing
Subsidiaries of the results of such determination.
(c) If, on any Reset Date or any Borrowing Date (after giving
effect to (i) any Loans to be made or repaid on such date and (ii) any
amendment, supplement or other modification to any Local Currency Addendum
effective on such date of which the Administrative Agent has received notice),
the aggregate outstanding Dollar Standby Extensions of Credit of any Lender
exceeds the Dollar Standby Credit Overage of such Lender (the amount of such
excess being called the "Dollar Standby Credit Excess"), then such Lender's
Local Currency Lender Maximum Borrowing Amount under each Local Currency
Addendum to which such Lender is a party shall be reduced on such date by an
amount equal to the product of such Dollar Standby Credit Excess times a
fraction the numerator of which shall equal the Local Currency Lender Maximum
Borrowing Amount under such Local Currency Addendum and the denominator of
which shall equal the aggregate of the Local Currency Lender Maximum Borrowing
Amounts of such Lender. After giving effect to any such reduction in Local
Currency Lender Maximum Borrowing Amounts, the Local Currency Facility Maximum
Borrowing Amount with respect to each Local Currency Addendum shall in turn be
reduced to an amount equal to the aggregate of the Local Currency Lender
Maximum Borrowing Amounts of all Lenders party to such Local Currency Addendum.
Reductions in Local Currency Facility Maximum Borrowing Amounts and Local
Currency Lender Maximum Borrowing Amounts pursuant to this
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Section 2.22(c) shall be effective until the amount thereof shall be
recalculated by the Administrative Agent on the next succeeding Reset Date or
Borrowing Date, and shall not be deemed to reduce the stated amount of any
commitment of any Local Currency Lender in respect of any Local Currency
Addendum.
(d) If, on any Reset Date or Borrowing Date (after giving
effect to (i) any Loans to be made or repaid on such date, (ii) any amendment,
supplement or other modification to any Local Currency Addendum effective on
such date of which the Administrative Agent has received notice and (iii) any
reduction in the Local Currency Facility Maximum Borrowing Amounts pursuant to
Section 2.22(c) effective on such date), the sum of (A) the aggregate
outstanding Dollar Standby Extensions of Credit of all the Lenders, (B) the
aggregate L/C Exposures and (C) the aggregate Competitive Loan Exposures exceed
the Dollar Facility Overage (the amount of such excess being called the "Dollar
Facility Excess"), then the Local Currency Facility Maximum Borrowing Amount
under each Local Currency Addendum shall be reduced on such date by an amount
equal to the product of such Dollar Facility Excess times a fraction the
numerator of which shall equal the Local Currency Facility Maximum Borrowing
Amount under such Local Currency Addendum and the denominator of which shall
equal the aggregate of the Local Currency Facility Maximum Borrowing Amounts
with respect to all Local Currency Addenda. Each such reduction in the Local
Currency Facility Maximum Borrowing Amount under a Local Currency Addendum
shall in turn reduce the respective Local Currency Lender Maximum Borrowing
Amounts of each Local Currency Lender party to such Local Currency Addendum,
pro rata on the basis of the respective Local Currency Lender Maximum Borrowing
Amounts of such Local Currency Lenders immediately prior to such reduction.
Reductions in Local Currency Facility Maximum Borrowing Amounts and Local
Currency Lender Maximum Borrowing Amounts pursuant to this Section 2.22(d)
shall be effective until the amount thereof shall be recalculated by the
Administrative Agent on the next succeeding Reset Date or Borrowing Date, and
shall not be deemed to reduce the stated amount of any commitment of any Local
Currency Lender in respect of any Local Currency Addendum.
(e) If, on any Reset Date, the Dollar Equivalent of the Local
Currency Loans outstanding under a Local Currency Addendum exceeds 105% of the
Local Currency Facility Maximum Borrowing Amount with respect thereto (after
giving effect to any reductions therein effected pursuant to Section 2.22(c) or
(d) on such date), then the relevant Borrower shall, within three Business Days
after notice thereof from the Administrative Agent, (i) increase the Local
Currency Facility Maximum Borrowing Amount with respect to such Local Currency
Facility in accordance with Section 2.21(e) and/or (ii) prepay Local Currency
Loans, in either case in an aggregate amount such that, after giving effect
thereto, (x) the Dollar Equivalent of all such Local Currency Loans shall be
equal to or less than such Local Currency Facility Maximum Borrowing Amount and
(y) the Dollar Equivalent of the Local Currency Loans of each relevant Local
Currency Lender shall be equal to or less than such Local Currency Lender's
Local Currency Lender Maximum Borrowing Amount with respect to such Local
Currency Addendum.
(f) If, on any Reset Date, the Standby Credit Exposure of any
Lender exceeds 105% of such Lender's Commitment, then, within three Business
Days after notice thereof from the Administrative Agent, the Company shall
prepay and/or cause the relevant Borrowing Subsidiaries to prepay the Loans in
accordance with this Agreement, in an aggregate amount such that, after giving
effect thereto, the Standby Credit Exposure of such Lender shall be equal to or
less than such Lender's Commitment.
(g) The Administrative Agent shall promptly notify the
relevant Lenders of the amount of any reductions in Local Currency Facility
Maximum Borrowing Amounts or Local Currency Lender Maximum Borrowing Amounts
required pursuant to this Section 2.22.
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SECTION 2.23. Letters of Credit. (a) General. The Borrowers
may request the issuance of Letters of Credit, in a form reasonably acceptable
to the Administrative Agent and the applicable Issuing Bank, appropriately
completed, for the accounts of the Borrowers, at any time and from time to time
while the Commitments remain in effect. All Letters of Credit shall be
denominated in Dollars. This Section shall not be construed to impose an
obligation upon any Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. In order to request the issuance of a Letter of Credit (or
to amend, renew or extend an existing Letter of Credit), the applicable
Borrower shall hand deliver or telecopy to the applicable Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter
of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with paragraph
2.23(c) below), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare such Letter of Credit. Following receipt of such notice and prior to
the issuance of the requested Letter of Credit or the applicable amendment,
renewal or extension, the Administrative Agent shall notify the Borrowers, each
Lender and the applicable Issuing Bank of the amount of the Aggregate Credit
Exposure after giving effect to (i) the issuance, amendment, renewal or
extension of such Letter of Credit, (ii) the issuance or expiration of any
other Letter of Credit that is to be issued or will expire prior to the
requested date of issuance of such Letter of Credit and (iii) the borrowing or
repayment of any Loans that (based upon notices delivered to the Administrative
Agent by the Borrowers) are to be borrowed or repaid prior to the requested
date of issuance of such Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if, and upon issuance, amendment, renewal or
extension of each Letter of Credit, the Borrowers shall be deemed to represent
and warrant that, (i) after giving effect to such issuance, amendment, renewal
or extension (A) the L/C Exposure shall not exceed $500,000,000 and (B) the
Aggregate Credit Exposure shall not exceed the Total Commitment and (ii) in the
case of a Letter of Credit that will expire later than the first anniversary of
such issuance, amendment, renewal or extension, the applicable Borrower, the
applicable Issuing Bank and the Required Lenders shall have reached agreement
on the fees to be applicable thereto as contemplated by the last sentence of
Section 2.06(c).
(c) Expiration Date. Each Letter of Credit shall expire at
the close of business on the earlier of the date five years after the date of
the issuance of such Letter of Credit and the date that is five Business Days
prior to the Maturity Date, unless such Letter of Credit expires by its terms
on an earlier date; provided that a Letter of Credit shall not be issued (nor
shall a Letter of Credit be amended, renewed or extended) that would result in
the Aggregate Credit Exposure exceeding the Total Commitment. Compliance with
the foregoing proviso shall be determined based upon the assumption that (i)
each Letter of Credit remains outstanding and undrawn in accordance with its
terms until its expiration date (taking into account any rights of renewal or
extension that do not require written notice by or consent of the applicable
Issuing Bank, in its sole discretion, in order to effect such renewal or
extension) and (ii) the Commitments will not be reduced voluntarily pursuant to
Section 2.11(b).
(d) Participations. By the issuance of a Letter of Credit and
without any further action on the part of the applicable Issuing Bank or the
Lenders, the applicable Issuing Bank hereby grants to each Lender, and each
such Lender hereby acquires from the applicable Issuing Bank, a participation
in such Letter of Credit equal to such Lender's Applicable Share from time to
time of the aggregate amount available to be drawn under such Letter of Credit,
effective upon the issuance of such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the applicable
Issuing Bank, such Lender's Applicable Share from time to time of each L/C
Disbursement made by such
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35
Issuing Bank and not reimbursed by the Borrower (or, if applicable, another
party pursuant to its obligations under any other Loan Document) forthwith on
the date due as provided in Section 2.02(e). Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the applicable Borrower shall
pay to the Administrative Agent such L/C Disbursement not later than two hours
after the Borrower shall have received notice from such Issuing Bank that
payment of such draft will be made, or, if the Borrower shall have received
such notice later than 10:00 a.m., New York City time, on any Business Day, not
later than 10:00 a.m., New York City time, on the immediately following
Business Day.
(f) Obligations Absolute. The Borrowers' obligations to
reimburse L/C Disbursements as provided in paragraph 2.23(e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrowers, any other party guaranteeing, or otherwise
obligated with, the Borrowers, any Subsidiary or other Affiliate
thereof or any other person may at any time have against the
beneficiary under any Letter of Credit, any Issuing Bank, the
Administrative Agent or any Lender or any other person, whether in
connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the applicable Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
any Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrowers' obligations hereunder.
Without limiting the generality of the foregoing, it is
expressly understood and agreed that the absolute and unconditional obligation
of the Borrowers hereunder to reimburse L/C Disbursements will not be excused
by the gross negligence or wilful misconduct of any Issuing Bank. However, the
foregoing shall not be construed to excuse any Issuing Bank from liability to
the
<PAGE> 41
36
Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by the Borrowers that are caused
by such Issuing Bank's gross negligence or wilful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that each Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) an Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount
of any draft presented under such Letter of Credit, whether or not the amount
due to the beneficiary thereunder equals the amount of such draft and whether
or not any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute wilful misconduct or gross negligence of an Issuing
Bank.
(g) Disbursement Procedures. The applicable Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. Such Issuing Bank
shall as promptly as possible give telephonic notification, confirmed by
telecopy, to the Administrative Agent and the applicable Borrower of such
demand for payment and whether such Issuing Bank has made or will make an L/C
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such L/C Disbursement. The
Administrative Agent shall promptly give each Lender notice thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of
the date of payment or the date on which interest shall commence to accrue
thereon as provided in paragraph 2.02(e) above, at the rate per annum that
would apply to such amount if such amount were an ABR Loan.
(i) Resignation or Removal of an Issuing Bank. An Issuing
Bank may resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrowers, and may be removed at any
time by the Borrowers by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as an Issuing Bank hereunder by a successor Issuing Bank,
such successor shall succeed to and become vested with all the interests, rights
and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall
be discharged from its obligations to issue additional Letters of Credit
hereunder. At the time such removal or resignation shall become effective, the
Borrowers shall pay all accrued and unpaid fees pursuant to Section 2.06(c)(ii).
The acceptance of any appointment as an Issuing Bank hereunder by a successor
Lender shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to the Borrowers and the Administrative Agent, and, from and
after the effective date of such agreement, (i) such successor Lender shall have
all the rights and obligations of the previous Issuing Bank under this Agreement
and the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term "Issuing Bank" shall be deemed to refer to such successor
or to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the resignation or removal of an
Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto
and shall continue to have all the rights and
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obligations of an Issuing Bank under this Agreement and the other Loan Documents
with respect to Letters of Credit issued by it prior to such resignation or
removal, but shall not be required to issue additional Letters of Credit.
(j) Additional Issuing Banks. The Borrowers may, at any time
and from time to time with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld) and such Lender, designate one or
more additional Lenders to act as an issuing bank under the terms of the
Agreement. Any Lender designated as an issuing bank pursuant to this paragraph
2.23(j) shall, upon entering into an Issuing Bank Agreement with the Company,
be deemed to be an "Issuing Bank" (in addition to being a Lender) in respect of
Letters of Credit issued or to be issued by such Lender, and, with respect to
such Letters of Credit, such term shall thereafter apply to the other Issuing
Banks and such Lender.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders
that:
SECTION 3.01. Organization; Powers. Each Borrower and each
of the Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect, and (d) in the case of each Borrower, has the corporate power
and authority to execute, deliver and perform its obligations under the Loan
Documents and to borrow hereunder and thereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by the Borrowers of this Agreement, the Issuing Bank Agreements,
the promissory notes, if any, issued pursuant to Section 9.04(i) and each Local
Currency Addendum (and by the Borrowing Subsidiaries of each Borrowing
Subsidiary Agreement), the Borrowings hereunder and the completion of the
Distribution (collectively, the "Transactions") (a) have been duly authorized
by all requisite corporate action and (b) will not (i) violate (A) any
provision of any law, statute, rule or regulation (including the Margin
Regulations) or of the certificate of incorporation or other constitutive
documents or by-laws of the Borrowers, (B) any order of any Governmental
Authority or (C) any provision of any indenture, agreement or other instrument
to which any Borrower is a party or by which it or any of its property is or
may be bound, (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or (iii) result in the creation or
imposition of any lien upon any property or assets of any Borrower.
SECTION 3.03. Enforceability. This Agreement and each Loan
Document to which a Borrower is a party constitutes a legal, valid and binding
obligation of each Borrower enforceable in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any Governmental
Authority, other than those which have been taken, given or made, as the case
may be, is or will be required with respect to any Borrower in connection with
the Transactions.
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SECTION 3.05. Financial Statements. (a) The Company has
heretofore furnished to the Administrative Agent and the Lenders copies of its
combined balance sheet and statements of income, cash flow and retained
earnings as of and for the year ended December 31, 1994, and the six months
ended June 30, 1995, as included in the Proxy Statement. Such financial
statements present fairly, in all material respects, the consolidated combined
financial condition and the results of operations of the Company and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.
(b) The Company has heretofore furnished to the
Administrative Agent and the Lenders copies of its pro forma combined balance
sheet and statements of income as of June 30, 1995, and for the year and the
six months ended December 31, 1994, and June 30, 1995, respectively, giving
effect to the Distribution and certain related transactions. Such financial
statements present fairly, in all material respects, the consolidated combined
financial condition and the results of operations of the Company and the
Subsidiaries on a pro forma basis as of such dates and for such periods in
accordance with GAAP.
(c) As of the Effective Date, there has been no material
adverse change in the consolidated financial condition of the Company and the
Subsidiaries taken as a whole from the financial condition reported in the
financial statements referenced in paragraph (a) of this Section 3.05.
SECTION 3.06. Litigation; Compliance with Laws. (a) As of
the Effective Date, there are no actions, proceedings or investigations filed
or (to the knowledge of the Borrowers) threatened or affecting any Borrower or
any Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal which question the validity or legality of this Agreement,
the Transactions or any action taken or to be taken pursuant to this Agreement
and no order or judgment has been issued or entered restraining or enjoining
any Borrower or any Subsidiary from the execution, delivery or performance of
this Agreement nor is there any other action, proceeding or investigation filed
or (to the knowledge of any Borrower or any Subsidiary) threatened against any
Borrower or any Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal which would be reasonably likely to result in a
Material Adverse Effect or materially restrict the ability of any Borrower to
comply with its obligations under the Loan Documents.
(b) Neither any Borrower nor any Subsidiary is in violation
of any law, rule or regulation (including any law, rule or regulation relating
to the protection of the environment or to employee health or safety), or in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default would be reasonably
likely to result in a Material Adverse Effect.
(c) No exchange control law or regulation materially
restricts any Borrower from complying with its obligations in respect of any
Loan or Letter of Credit or otherwise under this Agreement or any Local
Currency Addendum.
SECTION 3.07. Federal Reserve Regulations. (a) Neither any
Borrower nor any Subsidiary that will receive proceeds of the Loans hereunder
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry Margin Stock or to refund indebtedness originally incurred
for such purpose, or for any other purpose which entails a violation of, or
which is inconsistent with, the provisions of the Margin Regulations.
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SECTION 3.08. Investment Company Act; Public Utility Holding
Company Act. No Borrower is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 (the "1940
Act") or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 3.09. Use of Proceeds. All proceeds of the Loans and
Letters of Credit shall be used for the purposes referred to in the recitals to
this Agreement.
SECTION 3.10. Full Disclosure; No Material Misstatements.
None of the representations or warranties made by any Borrower in connection
with this Agreement as of the date such representations and warranties are made
or deemed made, and no report, financial statement or other information
furnished by or on behalf of any Borrower to the Administrative Agent or any
Lender pursuant to or in connection with this Agreement or the credit
facilities established hereby, contains or will contain any material
misstatement of fact or omits or will omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were or will be made, not misleading.
SECTION 3.11. Taxes. Each Borrower and each of the material
Subsidiaries have filed or caused to be filed all Federal, state and local tax
returns which are required to be filed by them, and have paid or caused to be
paid all taxes shown to be due and payable on such returns or on any
assessments received by any of them, other than any taxes or assessments the
validity of which is being contested in good faith by appropriate proceedings,
and with respect to which appropriate accounting reserves have to the extent
required by GAAP been set aside.
SECTION 3.12. Employee Pension Benefit Plans. The present
aggregate value of accumulated benefit obligations of all unfunded and
underfunded pension plans of the Company and its Subsidiaries (based on those
assumptions used for disclosure in corporate financial statements in accordance
with GAAP) did not, as of December 31, 1994, exceed by more than $605,000,000
the value of the assets of all such plans. Of such $605,000,000, $540,000,000
is primarily attributable to employee pension plans in countries where the
funding of such obligations is not required or customary and $65,000,000
relates primarily to domestic pension plans where funding is not permitted
under current tax regulations. In these cases the Company has recorded book
reserves to meet the obligations. Trust assets totalling approximately
$45,000,000 have been established to provide for certain of the foregoing
domestic pension benefits, however, because of restrictions relating to
bankruptcy or insolvency, such funds are not included in the funded amount of
plans for purposes of GAAP.
SECTION 3.13. Distribution. At or prior to the Effective
Date, the Distribution will have been duly completed in accordance with
applicable law and as described in the Proxy Statement, and the assets,
liabilities and capitalization of the Company will have been consistent at the
time of and after giving effect to the Distribution in all material respects
with the forecasted capitalization table of the Company set forth in the Proxy
Statement and the pro forma financial statements referred to in Section
3.05(b), except that in the event the Distribution shall occur prior to
December 31, 1995, the transactions set forth in Schedule 3.13 which are
reflected as having occurred in such capitalization table and such pro forma
financial statements might not yet have occurred.
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ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Extensions of Credit. On the date of each
Borrowing and on the date of each issuance of a Letter of Credit:
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 or Section 2.04, as
applicable, or, in the case of the issuance of a Letter of Credit, the
applicable Issuing Bank shall have been selected to issue such Letter
of Credit as contemplated by Section 2.23.
(b) The representations and warranties set forth in Article
III hereof shall be true and correct in all material respects on and
as of the date of such Borrowing or issuance of a Letter of Credit
with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an
earlier date.
(c) At the time of and immediately after such Borrowing or
issuance of a Letter of Credit no Event of Default or Default shall
have occurred and be continuing.
Each Borrowing and issuance of a Letter of Credit shall be deemed to constitute
a representation and warranty by each Borrower on the date of such Borrowing or
issuance of a Letter of Credit as to the matters specified in paragraphs (b)
and (c) of this Section 4.01.
SECTION 4.02. Effective Date. On the Effective Date:
(a) The Administrative Agent shall have received a favorable
written opinion of or Robert Beicke, Esq., dated the Effective Date and
addressed to the Lenders and satisfactory to the Lenders, the Administrative
Agent and Cravath, Swaine & Moore, counsel for the Administrative Agent, to the
effect set forth in Exhibit D hereto.
(b) The Administrative Agent shall have received (i) a copy
of the certificate of incorporation, including all amendments thereto, of the
Company, certified as of a recent date by the Secretary of State of its state
of incorporation, and a certificate as to the good standing of the Company as
of a recent date from such Secretary of State; (ii) a certificate of the
Secretary or an Assistant Secretary of the Company dated the Effective Date and
certifying (A) that attached thereto is a true and complete copy of the by-laws
of the Company as in effect on the Effective Date and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly adopted by the
Board of Directors of the Company authorizing the execution, delivery and
performance of this Agreement and the Borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate of incorporation referred to in clause (i)
above has not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to such clause (i) and
(D) as to the incumbency and specimen signature of each officer executing this
Agreement or any other document delivered in connection herewith on behalf of
the Company; and (iii) a certificate of another officer of the Company as to
the incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above.
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(c) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a Financial Officer of the
Company, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(d) The principal of and accrued and unpaid interest on any
loans outstanding under the Existing Credit Facilities shall have been paid in
full, all other amounts due in respect of the Existing Credit Facilities shall
have been paid in full and the commitments to lend under the Existing Credit
Facilities shall have been permanently terminated.
(e) The Administrative Agent shall have received any Fees or
other amounts due and payable on or prior to the Effective Date.
SECTION 4.03. First Borrowing by Each Borrowing Subsidiary.
On or prior to the first date on which Loans are made to or Letters of Credit
are issued for the benefit of any Borrowing Subsidiary:
(a) The Lenders and any Issuing Banks shall have received the
favorable written opinion of counsel satisfactory to the
Administrative Agent, addressed to the Lenders and satisfactory to the
Lenders, the Administrative Agent and Cravath, Swaine & Moore, counsel
for the Administrative Agent, to the effect set forth in Exhibit D
hereto.
(b) Each Lender and any Issuing Banks shall have received a
copy of the Borrowing Subsidiary Agreement executed by such Borrowing
Subsidiary.
ARTICLE V
COVENANTS
A. Affirmative Covenants. Each Borrower covenants and agrees
with each Lender and the Administrative Agent that so long as this Agreement
shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid or any Letters of Credit
have not been canceled or have not expired or any amounts drawn thereunder have
not been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, it will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, except as expressly permitted under Section
5.09; provided, however, that nothing in this Section shall prevent the
abandonment or termination of the existence, rights or franchises of any
Subsidiary or any rights or franchises of any Borrower if such abandonment or
termination is in the best interests of the Borrowers and is not
disadvantageous in any material respect to the Lenders.
SECTION 5.02. Business and Properties. Comply in all
material respects with all applicable laws, rules, regulations and orders of
any Governmental Authority (including any of the foregoing relating to the
protection of the environment or to employee health and safety), whether now in
effect or hereafter enacted; and at all times maintain and preserve all
property material to the conduct of its business and keep such property in good
repair, working order and condition and from time to time make, or cause to be
made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
<PAGE> 47
42
SECTION 5.03. Financial Statements, Reports, Etc. In the case
of the Company, furnish to the Administrative Agent for distribution to each
Lender:
(a) within 120 days after the end of each fiscal year, its
consolidated balance sheet and the related consolidated statements of
income and cash flows showing its consolidated financial condition as
of the close of such fiscal year and the consolidated results of its
operations during such year, all audited by Arthur Andersen LLP or
other independent certified public accountants of recognized national
standing selected by the Company and accompanied by an opinion of such
accountants to the effect that such consolidated financial statements
fairly present its financial condition and results of operations on a
consolidated basis in accordance with GAAP (it being agreed that the
requirements of this paragraph may be satisfied by the delivery
pursuant to paragraph (d) below of an annual report on Form 10-K
containing the foregoing);
(b) within 90 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet
and related consolidated statements of income, cash flow and
stockholders' equity, showing its consolidated financial condition as
of the close of such fiscal quarter and the consolidated results of
its operations during such fiscal quarter and the then elapsed portion
of the fiscal year, all certified by one of its Financial Officers as
fairly presenting its financial condition and results of operations on
a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments (it being agreed that the requirements of
this paragraph may be satisfied by the delivery pursuant to paragraph
(d) below of a quarterly report on Form 10-Q containing the
foregoing);
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer
certifying that, to the best of such Financial Officer's knowledge, no
Event of Default or Default has occurred or, if such an Event of
Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto;
(d) promptly after the same become publicly available, copies
of all reports on forms 10-K, 10-Q and 8-K filed by it with the SEC,
or any Governmental Authority succeeding to any of or all the
functions of the SEC, or, in the case of the Company, copies of all
reports distributed to its shareholders, as the case may be;
(e) promptly, from time to time, such other information as
any Lender shall reasonably request through the Administrative Agent;
and
(f) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, calculations of the financial test
referred to in Section 5.12.
SECTION 5.04. Insurance. Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers,
and maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar
businesses (it being understood that the Borrowers and their Subsidiaries may
self-insure to the extent customary with companies similarly situated and in
the same or similar businesses).
SECTION 5.05. Obligations and Taxes. Pay and discharge
promptly when due all taxes, assessments and governmental charges imposed upon
it or upon its income or profits or in respect of its property, as well as all
other material liabilities, in each case before the same shall
<PAGE> 48
43
become delinquent or in default and before penalties accrue thereon, unless and
to the extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves with respect thereto shall, to the extent
required by GAAP, have been set aside.
SECTION 5.06. Litigation and Other Notices. Give the
Administrative Agent prompt written notice of the following (which the
Administrative Agent shall promptly provide to the Lenders):
(a) the filing or commencement of, or any written threat or
written notice of intention of any person to file or commence, any
action, suit or proceeding which could reasonably be expected to
result in a Material Adverse Effect;
(b) any Event of Default or Default, specifying the nature
and extent thereof and the action (if any) which is proposed to be
taken with respect thereto; and
(c) any change in any of the Ratings.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain financial records in accordance with GAAP and, upon
reasonable notice, at all reasonable times, permit any authorized
representative designated by the Administrative Agent to visit and inspect the
properties of the Company and of any material Subsidiary and to discuss the
affairs, finances and condition of the Company and any material Subsidiary with
a Financial Officer of the Company and such other officers as the Company shall
deem appropriate.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans
only for the purposes set forth in the recitals to this Agreement.
B. Negative Covenants. Each Borrower covenants and agrees
with each Lender and the Administrative Agent that so long as this Agreement
shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid or any Letters of Credit
have not been canceled or have not expired or any amounts drawn thereunder have
not been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, it will not, and will not cause or permit any of the
Subsidiaries to:
SECTION 5.09. Consolidations, Mergers, and Sales of Assets.
Consolidate or merge with or into any other person or sell, lease or transfer
all or substantially all of its property and assets, or agree to do any of the
foregoing, unless (a) no Default or Event of Default has occurred and is
continuing or would have occurred immediately after giving effect thereto, and
(b) in the case of a consolidation or merger or transfer of assets involving
the Company and in which the Company is not the surviving corporation or sells,
leases or transfers all or substantially all of its property and assets, the
surviving corporation or person purchasing, leasing or receiving such property
and assets is organized in the United States of America or a state thereof and
agrees to be bound by the terms and provisions applicable to the Company
hereunder.
SECTION 5.10. Limitations on Liens. In the case of the
Company, create, suffer to be created, or assume (directly or indirectly) any
mortgage, pledge or other lien upon any Principal Property, or permit any
Restricted Subsidiary to create, suffer to be created, or assume (directly or
indirectly) any mortgage, pledge or other lien upon any Principal Property;
provided, however, that this covenant shall not apply to any of the following:
<PAGE> 49
44
(a) any mortgage, pledge or other lien on any Principal
Property hereafter acquired, constructed or improved by the Company or
any Restricted Subsidiary which is created or assumed to secure or
provide for the payment of any part of the purchase price of such
property or the cost of such construction or improvement, or any
mortgage, pledge or other lien on any Principal Property existing at
the time of acquisition thereof, provided, however, that the mortgage,
pledge or other lien shall not extend to any Principal Property
theretofore owned by the Company or any Restricted Subsidiary;
(b) any mortgage, pledge or other lien on any Principal
Property existing on the date of this Agreement as described in
Schedule 5.10;
(c) any mortgage, pledge or other lien existing upon any
property of a company which is merged with or into or is consolidated
into, or substantially all the assets or shares of capital stock of
which are acquired by, the Company or a Restricted Subsidiary, at the
time of such merger, consolidation or acquisition, provided that such
mortgage, pledge or other lien does not extend to any other Principal
Property, other than improvements to the property subject to such
mortgage, pledge or other lien;
(d) any pledge or deposit to secure payment of workers'
compensation or insurance premiums, or in connection with tenders,
bids, contracts (other than contracts for the payment of money) or
leases;
(e) any pledge of, or other lien upon, any assets as security
for the payment of any tax, assessment or other similar charge by any
Governmental Authority or public body, or as security required by law
or governmental regulation as a condition to the transaction of any
business or the exercise of any privilege or right;
(f) any pledge or lien necessary to secure a stay of any legal
or equitable process in a proceeding to enforce a liability or
obligation contested in good faith by the Company or a Restricted
Subsidiary or required in connection with the institution by the
Company or a Restricted Subsidiary of any legal or equitable
proceeding to enforce a right or to obtain a remedy claimed in good
faith by the Company or a Restricted Subsidiary, or required in
connection with any order or decree in any such proceeding or in
connection with any contest of any tax or other governmental charge;
or the making of any deposit with or the giving of any form of
security to any governmental agency or any body created or approved by
law or governmental regulation in order to entitle the Company or a
Restricted Subsidiary to maintain self-insurance or to participate in
any fund in connection with workers' compensation, unemployment
insurance, old age pensions or other social security or to share in
any provisions or other benefits provided for companies participating
in any such arrangement or for liability on insurance of credits or
other risks;
(g) any mechanics', carriers', workmen's, repairmen's, or
other like liens, if arising in the ordinary course of business, in
respect of obligations which are not overdue or liability for which is
being contested in good faith by appropriate proceedings;
(h) any lien or encumbrance on property in favor of the United
States of America, or of any agency, department or other
instrumentality thereof, to secure partial, progress or advance
payments pursuant to the provisions of any contract;
(i) any mortgage, pledge or other lien securing any
indebtedness incurred in any manner to finance or recover the cost to
the Company or any Restricted Subsidiary of any
<PAGE> 50
45
physical property, real or personal, which prior to or simultaneously
with the creation of such indebtedness shall have been leased by the
Company or a Restricted Subsidiary to the United States of America or
a department or agency thereof at an aggregate rental, payable during
that portion of the initial term of such lease (without giving effect
to any options of renewal or extension) which shall be unexpired at
the date of the creation of such indebtedness, sufficient (taken
together with any amounts required to be paid by the lessee to the
lessor upon any termination of such lease) to pay in full at the
stated maturity date or dates thereof the principal of and the
interest on such indebtedness;
(j) any mortgage, pledge or other lien securing indebtedness
of a Restricted Subsidiary to the Company or a Restricted Subsidiary,
provided that in the case of any sale or other disposition of such
indebtedness by the Company or such Restricted Subsidiary, such sale
or other disposition shall be deemed to constitute the creation of
another mortgage, pledge or other lien not permitted by this clause
(j);
(k) any mortgage, pledge or other lien affecting property of
the Company or any Restricted Subsidiary securing indebtedness of the
United States of America or a State thereof (or any instrumentality or
agency of either thereof) issued in connection with a pollution
control or abatement program required in the opinion of the Company to
meet environmental criteria with respect to manufacturing or
processing operations of the Company or any Restricted Subsidiary and
the proceeds of which indebtedness have financed the cost of
acquisition of such program;
(l) the renewal, extension, replacement or refunding of any
mortgage, pledge, lien, deposit, charge or other encumbrance permitted
by the foregoing provisions of this covenant upon the same property
theretofore subject thereto, or the renewal, extension, replacement or
refunding of the amount secured thereby, provided that in each case
such amount outstanding at that time shall not be increased; or
(m) any other mortgage, pledge or other lien, provided that
immediately after the creation or assumption of such mortgage, pledge
or other lien, the total of (x) the aggregate principal amount of
indebtedness of the Company and all Restricted Subsidiaries secured by
all mortgages, pledges and other liens created or assumed under the
provisions of this clause (m), plus (y) the aggregate amount of
Capitalized Lease-Back Obligations of the Company and Restricted
Subsidiaries under the entire unexpired terms of all leases entered
into in connection with sale and lease-back transactions which would
have been precluded by the provisions of Section 5.11 but for the
satisfaction of the condition set forth in clause (b) thereof, shall
not exceed an amount equal to 5% of Consolidated Net Tangible Assets.
The lease of any property by the Company or a Restricted Subsidiary and rental
obligations with respect thereto (whether or not arising out of a sale and
lease-back of properties and whether or not in accordance with GAAP such
property is carried as an asset and such rental obligations are carried as
indebtedness on the Company's or a Restricted Subsidiary's balance sheet) shall
not in any event be deemed to be the creation of a mortgage, pledge or other
lien.
SECTION 5.11. Limitations on Sale and Leaseback Transactions.
In the case of the Company or any Restricted Subsidiary, enter into any
arrangement with any person providing for the leasing by the Company or any
Restricted Subsidiary of any Principal Property (except for temporary leases
for a term of not more than three years and except for leases between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries), which
property has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such person more than 120 days after the
<PAGE> 51
46
acquisition thereof or the completion of construction and commencement of full
operation thereof, unless either (a) the Company shall apply an amount equal to
the greater of the Fair Value of such property or the net proceeds of such
sale, within 120 days of the effective date of any such arrangement, to the
retirement (other than any mandatory retirement or by way of payment at
maturity) of Indebtedness or to the acquisition, construction, development or
improvement of properties, facilities or equipment used for operating purposes
which are, or upon such acquisition, construction, development or improvement
will be, a Principal Property or a part thereof; or (b) at the time of entering
into such arrangement, such Principal Property could have been subjected to a
mortgage, pledge or other lien securing indebtedness of the Company or a
Restricted Subsidiary in a principal amount equal to the Capitalized Lease-Back
Obligations with respect to such Principal Property under paragraph (m) of
Section 5.10.
SECTION 5.12. Consolidated EBITDA to Consolidated Interest
Expense. Permit the ratio of (a) Consolidated EBITDA to (b) Consolidated
Interest Expense for any period of four fiscal quarters to be less than 3.75 to
1.0.
ARTICLE VI
EVENTS OF DEFAULT
In case of the happening of any of the following events (each
an "Event of Default"):
(a) any representation or warranty made or deemed made in or
in connection with the execution and delivery of this Agreement or any
Local Currency Addenda or the Borrowings or issuances of Letters of
Credit hereunder shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or L/C Disbursement or any Fee or any other amount (other
than an amount referred to in paragraph (b) above) due hereunder, when
and as the same shall become due and payable, and such default shall
continue unremedied for a period of ten days;
(d) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.01,
5.09, 5.10, 5.11 or 5.12 or in any Local Currency Addendum and, in the
case of any default under Section 5.10, such default shall continue
for 30 days;
(e) default shall be made in the due observance or performance
of any covenant, condition or agreement contained herein or in any
other Loan Document (other than those specified in clauses (b), (c) or
(d) above) and such default shall continue unremedied for a period of
30 days after notice thereof from the Administrative Agent or any
Lender to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $20,000,000, beyond
the period of grace, if any, provided in the agreement or instrument
<PAGE> 52
47
under which such Indebtedness was created, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such
Indebtedness, or any other event shall occur or condition shall exist,
beyond the period of grace, if any, provided in such agreement or
instrument, if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice) to cause, such Indebtedness to become due prior to
its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company, or of a
substantial part of the property or assets of the Company or any
Subsidiary with assets having gross book value in excess of
$25,000,000, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or for a substantial
part of the property or assets of the Company or any Subsidiary with
assets having gross book value in excess of $25,000,000 or (iii) the
winding up or liquidation of the Company; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) the Company or any Subsidiary with assets having a gross
book value in excess of $25,000,000 shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any
petition described in (g) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or for a substantial
part of the property or assets of the Company, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more final judgments shall be entered by any court
against the Company or any of the Subsidiaries for the payment of
money in an aggregate amount in excess of $100,000,000 and such
judgment or judgments shall not have been paid, covered by insurance,
discharged or stayed for a period of 60 days, or a warrant of
attachment or execution or similar process shall have been issued or
levied against property of the Company or any of the Subsidiaries to
enforce any such judgment or judgments;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in a Material Adverse
Effect; or
(k) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Company
or any Subsidiary with assets having gross book value in excess of $25,000,000
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Company, take any or all of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments, (ii) declare the Loans then
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48
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrowers accrued hereunder, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived anything contained
herein to the contrary notwithstanding, (iii) require the Borrowers to deposit
with the Administrative Agent cash collateral in an amount equal to the
aggregate L/C Exposures to secure the Borrowers' reimbursement obligations
under Section 2.23; and, in the case of any event with respect to the Company
or any Subsidiary having a gross book value in excess of $25,000,000 described
in paragraph (g) or (h) above, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrowers
accrued hereunder shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived anything contained herein to the contrary
notwithstanding, and the Borrowers shall deposit with the Administrative Agent
cash collateral in an amount equal to the aggregate L/C Exposure to secure the
Borrowers' reimbursement obligations under Section 2.23.
ARTICLE VII
GUARANTEE
The Company unconditionally and irrevocably guarantees the due
and punctual payment and performance, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, of the
Guaranteed Obligations. The Company further agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from it and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Guaranteed Obligations.
The Company waives presentment to, demand of payment from and
protest to the Borrowing Subsidiaries of any of the Guaranteed Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. The obligations of the Company hereunder shall not be affected by
(a) the failure of any Lender to assert any claim or demand or to enforce any
right or remedy against the Borrowing Subsidiaries under the provisions of this
Agreement or otherwise; (b) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement, any guarantee or any other
agreement; or (c) the failure of any Lender to exercise any right or remedy
against any other guarantor of the Guaranteed Obligations.
The Company further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Administrative Agent or any Lender to any
security, if any, held for payment of the Guaranteed Obligations or to any
balance of any deposit account or credit on its books, in favor of the
Borrowing Subsidiaries or any other person.
The obligations of the Company hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of the Company hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement, any guarantee or any other agreement, by any
waiver or modification of any provision
<PAGE> 54
49
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Guaranteed Obligations, or by any other act or omission
which may or might in any manner or to any extent vary the risk of the Company
or otherwise operate as a discharge of the Company as a matter of law or
equity.
To the extent permitted by applicable law, the Company waives
any defense based on or arising out of any defense available to the Borrowing
Subsidiaries, including any defense based on or arising out of any disability
of the Borrowing Subsidiaries, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrowing Subsidiaries, other than final payment in
full of the Guaranteed Obligations. The Administrative Agent and the Lenders
may, at their election, foreclose on any security held by one or more of them
by one or more judicial or non-judicial sales, or exercise any other right or
remedy available to them against the Borrowing Subsidiaries, or any security
without affecting or impairing in any way the liability of the Company
hereunder except to the extent the Guaranteed Obligations have been fully and
finally paid. The Company waives any defense arising out of any such election
even though such election operates to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of the Company against
the Borrowing Subsidiaries or any security.
The Company further agrees that its guarantee shall continue
to be effective or be reinstated, as the case may be, if at any time payment,
or any part thereof, of principal of or interest on any Guaranteed Obligation
is rescinded or must otherwise be restored by any Lender upon the bankruptcy or
reorganization of any Borrowing Subsidiary or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which the Administrative Agent or any Lender may have at law or in
equity against the Company by virtue hereof, upon the failure of any Borrowing
Subsidiary to pay any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Company hereby promises to and will, upon receipt of written
demand by the Administrative Agent or any Lender, forthwith pay or cause to be
paid to the Administrative Agent or such Lender in cash the amount of such
unpaid Guaranteed Obligation.
The Company hereby irrevocably waives and releases any and all
rights of subrogation, indemnification, reimbursement and similar rights which
it may have against or in respect of the Borrowing Subsidiaries at any time
relating to the Guaranteed Obligations, including all rights that would result
in its being deemed a "creditor" of the Borrowing Subsidiaries under the United
States Code as now in effect or hereafter amended, or any comparable provision
of any successor statute.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Administrative Agent on
behalf of the Lenders and the Issuing Banks. Each of the Lenders and the
Issuing Banks hereby irrevocably authorizes the Administrative Agent to take
such actions on behalf of such Lender or Issuing Bank and to exercise such
powers as are specifically delegated to the Administrative Agent by the terms
and provisions hereof, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders and the Issuing Banks, without hereby limiting any implied
authority, (a) to receive on behalf of the Lenders and the Issuing Banks all
payments of principal of and
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50
interest on the Loans and all other amounts due to the Lenders and the Issuing
Banks hereunder, and promptly to distribute to each Lender or Issuing Bank its
proper share of each payment so received; (b) to give notice on behalf of each
of the Lenders to the Borrowers of any Event of Default of which the
Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrowers pursuant to
this Agreement as received by the Administrative Agent.
Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his or her own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrowers of any of the terms, conditions,
covenants or agreements contained in this Agreement. The Administrative Agent
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or other
instruments or agreements. The Administrative Agent may deem and treat the
Lender which makes any Loan as the holder of the indebtedness resulting
therefrom for all purposes hereof until it shall have received notice from such
Lender, given as provided herein, of the transfer thereof. The Administrative
Agent shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Lenders
and, except as otherwise specifically provided herein, such instructions and
any action or inaction pursuant thereto shall be binding on all the Lenders.
The Administrative Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the Borrowers on account
of the failure of or delay in performance or breach by any Lender or Issuing
Bank of any of its obligations hereunder or to any Lender or Issuing Bank on
account of the failure of or delay in performance or breach by any other Lender
or Issuing Bank or the Borrowers of any of their respective obligations
hereunder or in connection herewith. The Administrative Agent may execute any
and all duties hereunder by or through agents or employees and shall be
entitled to rely upon the advice of legal counsel selected by it with respect
to all matters arising hereunder and shall not be liable for any action taken
or suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent
shall be under no duty to take any discretionary action permitted to be taken
by it pursuant to the provisions of this Agreement unless it shall be requested
in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders and the Company. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Administrative
Agent acceptable to the Company. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New
York, New York, having a combined capital and surplus of at least $500,000,000
or an Affiliate of any such bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After the
Administrative Agent's resignation hereunder, the provisions of this Article
and Section 9.05 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
<PAGE> 56
51
With respect to the Loans made by it hereunder, the
Administrative Agent in its individual capacity and not as Administrative Agent
shall have the same rights and powers as any other Lender and may exercise the
same as though it were not the Administrative Agent, and the Administrative
Agent and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrowers or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agent,
on demand, in the amount of its pro rata share (based on its Commitment
hereunder or, if the Commitments shall have been terminated, the amount of its
outstanding Loans and L/C Exposure) of any expenses incurred for the benefit of
the Lenders by the Administrative Agent, including counsel fees and compensation
of agents and employees paid for services rendered on behalf of the Lenders,
which shall not have been reimbursed by the Borrowers and (ii) to indemnify and
hold harmless the Administrative Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as the Administrative Agent in any way relating to or arising out
of this Agreement or any action taken or omitted by it under this Agreement to
the extent the same shall not have been reimbursed by the Borrowers; provided
that no Lender shall be liable to the Administrative Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Administrative Agent or any of its directors, officers,
employees or agents. Each Lender agrees that any allocation made in good faith
by the Administrative Agent of expenses or other amounts referred to in this
paragraph between this Agreement and the Facility A Credit Agreement shall be
conclusive and binding for all purposes.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, as follows:
(a) if to any Borrower, to ITT Industries, Inc., Red Oak
Corporate Park, 4 West Red Oak Lane, Harrison, New York 10604,
Attention of Treasurer (Telecopy No. 914-696-2950);
(b) if to the Administrative Agent, to Chemical Bank Agency
Services Corp., 140 East 45th Street, 29th Floor, New York, New York
10017, Attention of Mr. Chris Moriarty, (Telecopy No. 212-622-0002),
with a copy to Chemical Bank at 270 Park Avenue, New York, New York
10017, Re: ITT Industries, Inc.; and
<PAGE> 57
52
(c) if to a Lender, to it at its address (or telecopy number)
set forth in Schedule 2.01 or in the Assignment and Acceptance
pursuant to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrowers herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the Lenders and the Issuing Banks and shall survive the making by the Lenders
of the Loans and issuance of Letters of Credit regardless of any investigation
made by the Lenders or the Issuing Banks or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any Fee or any other amount payable under this Agreement is
outstanding and unpaid, any Letter of Credit is outstanding or the Commitments
have not been terminated. The provisions of Sections 2.13, 2.15, 2.19 and 9.05
shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the expiration of any
Letter of Credit, the expiration of the Commitments, the invalidity or
unenforceability of any term or provision of this Agreement, or any
investigation made by or on behalf of the Administrative Agent or any Lender.
SECTION 9.03. Binding Effect. This Agreement shall become
effective on the Effective Date and when it shall have been executed by the
Company and the Administrative Agent and when the Administrative Agent shall
have received copies hereof (telecopied or otherwise) which, when taken
together, bear the signature of each Lender, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrowers shall not have the right to
assign any rights hereunder or any interest herein without the prior consent of
all the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any party that are contained in this
Agreement shall bind and inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender, the Company must give its prior written
consent to such assignment (which consent, if required, shall not be
unreasonably withheld in the event an Event of Default has occurred and is
continuing), (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, and a processing and
recordation fee of $3,000 (provided that, in the case of simultaneous
assignment of interests under this Agreement and the Facility A Credit
Agreement, the aggregate fee shall be $3,000), (iii) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire, and (iv) the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 and the amount of the Commitment of
such Lender remaining after such assignment shall not be less than $5,000,000
or shall be zero. Upon acceptance and recording pursuant to paragraph (e) of
this Section, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the
<PAGE> 58
53
execution thereof, (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but shall continue to
be entitled to the benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well as
to any Fees accrued for its account hereunder and not yet paid)).
Notwithstanding the foregoing, any Lender assigning its rights and obligations
under this Agreement may retain any Competitive Loans made by it outstanding at
such time, and in such case shall retain its rights hereunder in respect of any
Loans so retained until such Loans have been repaid in full in accordance with
this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.03 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its
offices in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and the principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrowers, the Administrative Agent, the Issuing Banks
and the Lenders may treat each person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by each party
hereto, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee together with an
Administrative Questionnaire completed in respect of the assignee (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above and the written consent of the Company
to such assignment, the
<PAGE> 59
54
Administrative Agent shall (i) accept such Assignment and Acceptance and (ii)
record the information contained therein in the Register.
(f) Each Lender may sell participations to one or more banks
or other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) each
participating bank or other entity shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.13, 2.15 and 2.19 to the same
extent as if it were the selling Lender (and limited to the amount that could
have been claimed by the selling Lender had it continued to hold the interest
of such participating bank or other entity), except that all claims made
pursuant to such Sections shall be made through such selling Lender, and (iv)
the Borrowers, the Administrative Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such selling Lender in
connection with such Lender's rights and obligations under this Agreement.
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender;
provided that, prior to any such disclosure, each such assignee or participant
or proposed assignee or participant shall execute an agreement for the benefit
of the Company whereby such assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of any such information.
(h) The Borrowers shall not assign or delegate any rights and
duties hereunder without the prior written consent of all Lenders.
(i) Any Lender may at any time pledge all or any portion of
its rights under this Agreement to a Federal Reserve Bank; provided that no
such pledge shall release any Lender from its obligations hereunder or
substitute any such Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, each Borrower shall,
at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to such
Borrower by the assigning Lender hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree
to pay all reasonable out-of-pocket expenses incurred by the Administrative
Agent in connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof, or incurred by
the Administrative Agent or any Lender in connection with the enforcement or
protection of their rights in connection with this Agreement or in connection
with the Loans made or Letters of Credit issued hereunder or under any Local
Currency Addendum, including the fees and disbursements of counsel for the
Administrative Agent or, in the case of enforcement, the Lenders.
(b) The Borrowers agree to indemnify the Administrative
Agent, the Issuing Banks, each Lender, each of their Affiliates and the
directors, officers, employees and agents of the foregoing (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees and expenses, incurred by or asserted against
any Indemnitee arising out of (i) the consummation of the transactions
contemplated by this Agreement, (ii) the use of the proceeds of the Loans or
issuance of Letters of Credit or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related
<PAGE> 60
55
expenses are determined by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of such Indemnitee.
(c) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or
any investigation made by or on behalf of the Administrative Agent, the Issuing
Banks or any Lender. All amounts due under this Section shall be payable on
written demand therefor.
SECTION 9.06. APPLICABLE LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF
NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY
THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.07. Waivers; Amendment. (a) No failure or delay
of the Administrative Agent, the Issuing Banks or any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Banks and the
Lenders hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Borrower or any Subsidiary in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest or fees on any Loan or for reimbursement of any L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the
prior written consent of each Lender affected thereby, (ii) increase the
Commitment or decrease the Facility Fee, L/C Participation Fee of any Lender or
other amounts due to any Lender of any Lender without the prior written consent
of such Lender, (iii) limit or release the guarantee set forth in Article VII,
or (iv) amend or modify the provisions of Section 2.16 or Section 9.04(h), the
provisions of this Section or the definition of the "Required Lenders", without
the prior written consent of each Lender; provided further, however, that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or the Issuing Banks hereunder without the prior
written consent of the Administrative Agent or the Issuing Banks. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section and any consent by any Lender pursuant to this Section shall bind any
assignee of its rights and interests hereunder.
<PAGE> 61
56
SECTION 9.08. Entire Agreement. This Agreement, the
agreements referenced in Section 2.06(b) and the letter agreement attached as
Exhibit H constitute the entire contract among the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect
to the subject matter hereof is superseded by this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party other
than the parties hereto any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 9.09. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall
become effective as provided in Section 9.03.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
SECTION 9.12. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or obligations of the Company and any Borrowing Subsidiary
now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. Each Lender
agrees promptly to notify the Company and the Administrative Agent after such
setoff and application made by such Lender, but the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(A) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT
OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY LOCAL CURRENCY ADDENDA OR ANY LETTER OF
CREDIT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. SUBJECT TO THE
FOREGOING AND TO PARAGRAPH (B) BELOW, NOTHING IN THIS AGREEMENT SHALL AFFECT
ANY RIGHT THAT ANY PARTY HERETO MAY OTHERWISE HAVE TO BRING ANY ACTION OR
<PAGE> 62
57
PROCEEDING RELATING TO THIS AGREEMENT, ANY LOCAL CURRENCY ADDENDUM OR ANY
LETTER OF CREDIT AGAINST ANY OTHER PARTY HERETO IN THE COURTS OF ANY
JURISDICTION.
(B) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR THEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
LOCAL CURRENCY ADDENDUM OR ANY LETTER OF CREDIT IN ANY NEW YORK STATE OR
FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(C) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION.
SECTION 9.15. Addition of Borrowing Subsidiaries. Each
Borrowing Subsidiary which shall deliver to the Administrative Agent a
Borrowing Subsidiary Agreement executed by such Subsidiary and the Company
shall, upon such delivery and without further act, become a party hereto and a
Borrower hereunder with the same effect as if it had been an original party to
this Agreement.
SECTION 9.16. Conversion of Currencies. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
owing hereunder in one currency into another currency, each party hereto
agrees, to the fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures in the relevant jurisdiction the first currency could be purchased
with such other currency on the Business Day immediately preceding the day on
which final judgment is given.
(b) The obligations of the Borrowers in respect of any sum
due to any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent
that, on the Business Day following receipt by the Applicable Creditor of any
sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may
in accordance with normal banking procedures in the relevant jurisdiction
purchase the Agreement Currency with the Judgment Currency; if the amount of
the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the
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58
Agreement Currency, the Borrowers agree, as a separate obligation and
notwithstanding any such judgment, to indemnify the Applicable Creditor against
such loss. The obligations of the Borrowers contained in this Section 9.16
shall survive the termination of this Agreement and the payment of all other
amounts owing hereunder.
SECTION 9.17 Execution. Upon execution by the Lenders, this
Agreement will be executed with Old ITT as "the Company" all as contemplated by
the letter agreement attached as Exhibit H, and upon execution of this
Agreement by the Company, the Company shall succeed to the rights and
obligations of Old ITT as contemplated in such agreement.
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.
ITT INDUSTRIES, INC., as Borrower,
by /s/ Richard J. M. Hamilton
--------------------------------------------
Name: Richard J. M. Hamilton
Title: Senior Vice President and Controller
CHEMICAL BANK, individually and as
Administrative Agent,
by /s/ Robert K. Gaynor
--------------------------------------------
Name: Robert K. Gaynor
Title: Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH,
by /s/ Frances O'R. Logan
--------------------------------------------
Name: Frances O'R. Logan
Title: Vice President
by /s/ William J. Van Nostrand
--------------------------------------------
Name: William J. Van Nostrand
Title: Vice President
<PAGE> 64
59
ARAB BANK PLC,
by /s/ Nofal S. Barbar
--------------------------------------------
Name: Nofal S. Barbar
Title: Executive Vice President and
Branch Manager
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH,
by /s/ Charles Dougherty
--------------------------------------------
Name: Charles Dougherty
Title: Vice President
BANCA DI ROMA - NEW YORK BRANCH,
by /s/ Ralph L. Riehle
--------------------------------------------
Name: Ralph L. Riehle
Title: First Vice President
by /s/ Luca Balestra
--------------------------------------------
Name: Luca Balestra
Title: Associate Vice President
BANCA NAZIONALE DEL LAVORO S.P.A.,
NEW YORK BRANCH,
by /s/ Giuliano Violetta
--------------------------------------------
Name: Giuliano Violetta
Title: First Vice President
by /s/ Giulio Giovine
--------------------------------------------
Name: Giulio Giovine
Title: Vice President
<PAGE> 65
60
BANCA POPOLARE DI MILANO,
by /s/ Anthony Franco
--------------------------------------------
Name: Anthony Franco
Title: Executive vice President/
General Manager
by /s/ Nicholas Cinosi
--------------------------------------------
Name: Nicholas Cinosi
Title: Vice President
BANK OF AMERICA NT & SA.
by /s/ Ambrish D. Thanawala
--------------------------------------------
Name: Ambrish D. Thanawala
Title: Vice President
BANK OF HAWAII,
by /s/ John R. Landgraf
--------------------------------------------
Name: John R. Landgraf
Title: Officer
THE BANK OF NEW YORK,
by /s/ Mary Anne Zagroba
--------------------------------------------
Name: Mary Anne Zagroba
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ J. Alan Edwards
--------------------------------------------
Name: J. Alan Edwards
Title: Authorized Signatory
THE BANK OF TOKYO TRUST COMPANY,
by /s/ Amanda S. Ryan
--------------------------------------------
Name: Amanda S. Ryan
Title: Vice President
<PAGE> 66
61
BANKERS TRUST COMPANY,
by /s/ Katherine A. Judge
--------------------------------------------
Name: Katherine A. Judge
Title: Vice President
BARCLAYS BANK PLC,
by /s/ John C. Livingston
--------------------------------------------
Name: John C. Livingston
Title: Associate Director
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH,
by /s/ Wilfried Freudenberger
--------------------------------------------
Name: Wilfried Freudenberger
Title: Executive Vice President and
General Manager
by /s/ Peter Oberman
--------------------------------------------
Name: Peter Oberman
Title: Senior Vice President
Manager Lending Division
CIBC, INC.,
by /s/ J. Domkowski
--------------------------------------------
Name: J. Domkowski
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.,
by /s/ David B. Townsend
--------------------------------------------
Name: David B. Townsend
Title: Managing Director
CITIBANK, N.A.,
by /s/ Elizabeth A. Palermo
--------------------------------------------
Name: Elizabeth A. Palermo
Title: Attorney-in-Fact
<PAGE> 67
62
COMERICA BANK,
by /s/ Cheryl W. Ewers
--------------------------------------------
Name: Cheryl W. Ewers
Title: Account Officer
COMMERZBANK AKTIENGESELLSCHAFT,
GRAND CAYMAN BRANCH,
by /s/ Thomas Ausfahl
--------------------------------------------
Name: Thomas Ausfahl
Title: Assistant Vice President
by /s/ Robert Donohue
--------------------------------------------
Name: Robert Donohue
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
by /s/ Eric Longuet
--------------------------------------------
Name: Eric Longuet
Title: Vice President
by /s/ Albert M. Calo
--------------------------------------------
Name: Albert M. Calo
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Robert Ivosevich
--------------------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE,
by /s/ Robert B. Potter
--------------------------------------------
Name: Robert B. Potter
Title: Member of Senior Management
by /s/ Chris T. Horgan
--------------------------------------------
Name: Chris T. Horgan
Title: Associate
<PAGE> 68
63
CREDITO ITALIANO, S.P.A.,
by /s/ Harmon P. Butler
--------------------------------------------
Name: Harmon P. Butler
Title: First Vice President and
Deputy Manager
by /s/ Saiyed A. Abbas
--------------------------------------------
Name: Saiyed A. Abbas
Title: Assistant Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by /s/ Timothy White
--------------------------------------------
Name: Timothy White
Title: Vice President
DEN DANSKE BANK, AKTIESELSKAB,
CAYMAN ISLANDS BRANCH,
by /s/ Bent V. Christensen
--------------------------------------------
Name: Bent V. Christensen
Title: Vice President
by /s/ Mogens Sondergaard
--------------------------------------------
Name: Mogens Sondergaard
Title: Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH,
by /s/ Hans-Josef Thiele
--------------------------------------------
Name: Hans-Josef Thiele
Title: Vice President
by /s/ Stephan A. Wiedermann
--------------------------------------------
Name: Stephan A. Wiedermann
Title: Vice President
<PAGE> 69
64
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
by /s/ Mark K. Connelly
--------------------------------------------
Name: Mark K. Connelly
Title: Vice President
by /s/ Karen A. Brinkman
--------------------------------------------
Name: Karen A. Brinkman
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by /s/ J. Michael Leffler
--------------------------------------------
Name: J. Michael Leffler
Title: Senior Vice President
by /s/ Ernest C. Fung
--------------------------------------------
Name: Ernest C. Fung
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA,
by /s/ William J. Baird
--------------------------------------------
Name: William J. Baird
Title: Senior Vice President
by /s/ Judy A. Maahs
--------------------------------------------
Name: Judy A. Maahs
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON,
by /s/ Kevin F. Malone
--------------------------------------------
Name: Kevin F. Malone
Title: Director
THE FIRST NATIONAL BANK OF CHICAGO,
by /s/ Randall L. Faust
--------------------------------------------
Name: Randall L. Faust
Title: Assistant Vice President
<PAGE> 70
65
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by /s/ Mark M. Harden
--------------------------------------------
Name: Mark M. Harden
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Gina M. Kearns
--------------------------------------------
Name: Gina M. Kearns
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
by /s/ John V. Veltri
--------------------------------------------
Name: John V. Veltri
Title: Senior Vice President
ISTITUTO BANCARIO SAN PAOLO DI TORINO
SPA,
by /s/ Wendell Jones
--------------------------------------------
Name: Wendell Jones
Title: Vice President
by /s/ Ettore Viazzo
--------------------------------------------
Name: Ettore Viazzo
Title: Vice President
KREDIETBANK N.V.,
by /s/ Armen Karozichian
--------------------------------------------
Name: Armen Karozichian
Title: Vice President
by /s/ Robert Snauffer
--------------------------------------------
Name: Robert Snauffer
Title: Vice President
<PAGE> 71
66
LLOYDS BANK PLC,
by /s/ Paul D. Briamonte
--------------------------------------------
Name: Paul D. Briamonte
Title: Vice President B374
by /s/ Stephen J. Attree
--------------------------------------------
Name: Stephen J. Attree
Title: Assistant Vice President A088
LTCB TRUST COMPANY,
by /s/ Rene O. LeBlanc
--------------------------------------------
Name: Rene O. LeBlanc
Title: Senior Vice President
THE MITSUBISHI BANK, LIMITED,
by /s/ Paula Mueller
--------------------------------------------
Name: Paula Mueller
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by /s/ Patricia Loret de Mola
--------------------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by /s/ George J. Stapleton
--------------------------------------------
Name: George J. Stapleton
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH,
by /s/ Anne Marie Torre
--------------------------------------------
Name: Anne Marie Torre
Title: Vice President
<PAGE> 72
67
NATIONSBANK, N.A.,
by /s/ James T. Gilland
--------------------------------------------
Name: James T. Gilland
Title: Senior Vice President
THE NIPPON CREDIT BANK LTD.,
by /s/ Peter Capitelli
--------------------------------------------
Name: Peter Capitelli
Title: Vice President and Manager
THE NORTHERN TRUST COMPANY,
by /s/ Daryl M. Robicsek
--------------------------------------------
Name: Daryl M. Robicsek
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by /s/ Tom Partridge
--------------------------------------------
Name: Tom Partridge
Title: Commercial Banking Officer
ROYAL BANK OF CANADA,
by /s/ Rainer R. Kraft
--------------------------------------------
Name: Rainer R. Kraft
Title: Manager
THE SAKURA BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Masahiro Nakajo
--------------------------------------------
Name: Masahiro Nakajo
Title: Senior Vice President and Manager
THE SANWA BANK LIMITED, NEW YORK
BRANCH,
by /s/ Stephen C. Small
--------------------------------------------
Name: Stephen C. Small
Title: Vice President and Area Manager
<PAGE> 73
68
SOCIETE GENERALE,
by /s/ Sedare Coradin
--------------------------------------------
Name: Sedare Coradin
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH,
by /s/ Yoshinori Kawamura
--------------------------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
SUNTRUST BANK, ATLANTA
by /s/ Mary M. Smith
--------------------------------------------
Name: Mary M. Smith
Title: Banking Officer
by /s/ Craig W. Farnsworth
--------------------------------------------
Name: Craig W. Farnsworth
Title: Vice President
SWISS BANK CORPORATION, NEW YORK
BRANCH,
by /s/ Susan N. Isquith
--------------------------------------------
Name: Susan N. Isquith
Title: Director Credit Risk Management
by /s/ Edward J. McDonnell III
--------------------------------------------
Name: Edward J. McDonnell III
Title: Associate Director
International Finance Division
THE TOKAI BANK, LIMITED,
by /s/ Stuart Schulman
--------------------------------------------
Name: Stuart Schulman
Title: Senior Vice President
<PAGE> 74
69
THE TORONTO-DOMINION BANK,
by /s/ Randall Bingham
--------------------------------------------
Name: Randall Bingham
Title: Managing Director
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH,
by /s/ Robert W. Casey Jr.
--------------------------------------------
Name: Robert W. Casey Jr.
Title: Vice President
by /s/ Daniel R. Strickford
--------------------------------------------
Name: Daniel R. Strickford
Title: Assistant Treasurer
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND CAYMAN
ISLANDS BRANCHES,
by /s/ A. Kumbie
--------------------------------------------
Name: A. Kumbie
Title: Managing Director
by /s/ MPM Ransley
--------------------------------------------
Name: MPM Ransley
Title: Associate
THE YASUDA TRUST AND BANKING
COMPANY LIMITED, NEW YORK BRANCH,
by /s/ Rohn M. Laudenschlager
--------------------------------------------
Name: Rohn M. Laudenschlager
Title: Senior Vice President
<PAGE> 75
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Chemical Bank, as Administrative Agent
for the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, ________________ (the "Borrower"), refers to
the Five-Year Competitive Advance and Revolving Credit Facility Agreement dated
as of November 2, 1995 (as it may be amended, modified, extended or restated
from time to time, the "5-Year Agreement"), among the Borrower, the Borrowing
Subsidiaries parties thereto, the Lenders named therein and Chemical Bank, as
Administrative Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the 5-Year Agreement.
The Borrower hereby gives you notice pursuant to Section 2.03(a) of the 5-Year
Agreement that it requests a Competitive Borrowing under the 5-Year Agreement,
and in that connection sets forth below the terms on which such Competitive
Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) __________________
(B) Principal amount of
Competitive Borrowing (1) __________________
(C) Interest rate basis (2) __________________
(D) Interest Period and the
last day thereof (3) __________________
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in Section
4.01(b) and (c) of the 5-Year Agreement have been satisfied.
Very truly yours,
[NAME OF BORROWER],
by
-------------------------
Name:
Title:[Financial Officer]
- -----------
(1) Not less than $10,000,000 (and in integral multiples of $5,000,000) or
greater than the Total Commitment then available.
(2) Eurocurrency Competitive Loan Fixed Rate Loan.
(3) Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE> 76
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
Reference is made to the 5-Year Competitive Advance and
Revolving Credit Facility Agreement dated as of November 2, 1995 (as it may
hereafter be amended, modified, extended or restated from time to time, the
"5-Year Agreement"), among ITT Industries, Inc. [, ________] (the "Borrower"),
the Borrowing Subsidiaries parties thereto, the Lenders parties thereto and
Chemical Bank, as Administrative Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
5-Year Agreement. The Borrower made a Competitive Bid Request on __________,
19[ ], pursuant to Section 2.03(a) of the 5-Year Agreement, and in that
connection you are invited to submit a Competitive Bid by [Date]/[Time]. (1)
Your Competitive Bid must comply with Section 2.03(b) of the 5-Year Agreement
and the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing _________________
(B) Principal amount of
Competitive Borrowing _________________
(C) Interest rate basis _________________
(D) Interest Period and the
last day thereof. _________________
Very truly yours,
CHEMICAL BANK,
as Administrative Agent,
by
----------------------------
Name:
Title:
- ------------
(1) The Competitive Bid must be received by the Administrative Agent (i) in
the case of Eurocurrency Competitive Loans, not later than 10:00 a.m., New York
City time, four Business Days before a proposed Competitive Borrowing, and (ii)
in the case of Fixed Rate Loans, not later than 10:00 a.m., New York City time,
one Business Day before a proposed Competitive Borrowing.
<PAGE> 77
EXHIBIT A-3
FORM OF COMPETITIVE BID
Chemical Bank, as Administrative Agent
for the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Five-Year
Competitive Advance and Revolving Credit Facility Agreement dated as of
November 2, 1995 (as it may be amended, modified, extended or restated from
time to time, the "5-Year Agreement"), among ITT Industries, Inc. [,
___________] (the "Borrower"), the Borrowing Subsidiaries parties thereto, the
Lenders and Chemical Bank, as Administrative Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the 5-Year Agreement. The undersigned hereby makes a Competitive
Bid pursuant to Section 2.03(b) of the 5-Year Agreement, in response to the
Competitive Bid Request made by the Borrower on ___________, 19[ ], and in that
connection sets forth below the terms on which such Competitive Bid is made:
(A) Principal Amount (1) _________________
(B) Competitive Bid Rate (2) _________________
(C) Interest Period and last
day thereof _________________
The undersigned hereby confirms that it is prepared, subject
to the conditions set forth in the 5-Year Agreement, to extend credit to the
Borrower upon acceptance by the Borrower of this bid in accordance with Section
2.03(d) of the 5-Year Agreement.
Very truly yours,
[NAME OF LENDER],
by
-------------------------
Name:
Title:
____________________
(1) Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the Administrative Agent.
(2) i.e., LIBO Rate + or - __%, in the case of Eurocurrency Competitive
Loans or ___%, in the case of Fixed Rate Loans.
<PAGE> 78
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Chemical Bank, as Administrative Agent
for the Lenders referred to below
270 Park Avenue
New York, N.Y. 10017
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, ______________________ (the "Borrower"),
refers to the Five-Year Competitive Advance and Revolving Credit Facility
Agreement dated as of November 2, 1995 (as it may be amended, modified,
extended or restated from time to time, the "5-Year Agreement"), among the
Borrower, the Borrowing Subsidiaries parties thereto, the Lenders parties
thereto and Chemical Bank, as Administrative Agent for the Lenders.
In accordance with Section 2.03(c) of the 5-Year Agreement, we
have received a summary of bids in connection with our Competitive Bid Request
dated _____________, and in accordance with Section 2.03(d) of the 5-Year
Agreement, we hereby accept the following bids for maturity on [date]:
<TABLE>
<CAPTION>
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
<S> <C> <C>
$ (%)/(+/-. %)
$
</TABLE>
We hereby reject the following bids:
<TABLE>
<CAPTION>
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
<S> <C> <C>
$ (%)/(+/-. %)
$
</TABLE>
The $__________ should be deposited in Chemical Bank account
number [ ] on [date].
Very truly yours,
(NAME OF BORROWER),
by
----------------------------
Name:
Title:
<PAGE> 79
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
Chemical Bank, as Administrative Agent
for the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, ____________________________ (the
"Borrower"), refers to the Five-Year Competitive Advance and Revolving Credit
Facility Agreement dated as of November 2, 1995 (as it may be amended,
modified, extended or restated from time to time, the "5-Year Agreement"),
among the Borrower, the Borrowing Subsidiaries parties thereto, the Lenders
named therein and Chemical Bank, as Administrative Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the 5-Year Agreement. The Borrower hereby gives you notice
pursuant to Section 2.04 of the 5-Year Agreement that it requests a Standby
Borrowing under the 5-Year Agreement, and in that connection sets forth below
the terms on which such Standby Borrowing is requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day) __________________
(B) Principal amount of
Standby Borrowing (1) __________________
(C) Interest rate basis (2) __________________
(D) Interest Period and the
last day thereof (3) __________________
Upon acceptance of any or all of the Loans made by the Lenders
in response to this request, the Borrower shall be deemed to have represented
and warranted that the conditions to lending specified in Section 4.01(b) and
(c) of the 5-Year Agreement have been satisfied.
Very truly yours,
[NAME OF BORROWER],
by
--------------------------
Name:
Title: [Financial Officer]
- ---------------
(1) Not less than $20,000,000 (and in integral multiples of $5,000,000) or
greater than the Total Commitment then available.
(2) Eurocurrency Standby Loan or ABR Loan.
(3) Which shall be subject to the definition of Interest Period and end not
later than the Maturity Date.
<PAGE> 80
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Dated: _________, 19__
Reference is made to the Five-Year Competitive Advance and
Revolving Credit Facility Agreement dated as of November 2, 1995 (the "5-Year
Agreement"), among ITT Industries, Inc. (the "Company"), the Borrowing
Subsidiaries parties thereto, the lenders parties thereto (the "Lenders") and
Chemical Bank, as Administrative Agent for the Lenders. Terms defined in the
5-Year Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Effective Date set forth
below, the interests set forth below (the "Assigned Interest") in the
Assignor's rights and obligations under the 5-Year Agreement, including,
without limitation, the interests set forth below in the Commitment of the
Assignor on the Effective Date and the Competitive Loans and Standby Loans
owing to the Assignor which are outstanding on the Effective Date. Each of the
Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 9.04 of the
5-Year Agreement, a copy of which has been received by each such party. From
and after the Effective Date, (i) the Assignee shall be a party to and be bound
by the provisions of the 5-Year Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights and obligations of
a Lender thereunder and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the 5-Year Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 2.19(g) of the 5-Year Agreement, duly completed and executed by such
Assignee, (ii) if the Assignee is not already a Lender under the 5-Year
Agreement, an Administrative Questionnaire in the form of Exhibit B to the
5-Year Agreement and (iii) a processing and recordation fee of $3,000.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
<PAGE> 81
2
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<TABLE>
<CAPTION>
Percentage Assigned of
Facility/Commitment (set forth,
to at least 8 decimals, as a
Principal Amount Assigned (and percentage of the Facility and
identifying information as to the aggregate Commitments of
Facility individual Competitive Loans) all Lenders thereunder)
-------- ----------------------------- -------------------------------
<S> <C> <C>
Commitment Assigned:
$____________ ___________ %
Standby Loans: $____________ ___________ %
Competitive Loans: $____________ ___________ %
</TABLE>
The terms set forth and on the reverse side Accepted:
hereof are hereby agreed to:
ITT INDUSTRIES, INC.,
________________________________, as by: ___________________________
Assignor, Name:
Title:
by: ____________________________
Name:
Title:
________________________________,
as Assignee,
by: ____________________________
Name:
Title:
<PAGE> 82
EXHIBIT D
[FORM OF]
OPINION OF COUNSEL FOR
ITT INDUSTRIES, INC. (1)
1. ITT Industries, Inc. (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana,
(ii) has all requisite power and authority to own its property and assets and
to carry on its business as now conducted, (iii) is qualified to do business in
every jurisdiction within the United States where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect on ITT Industries, Inc., and (iv) has all requisite corporate
power and authority to execute, deliver and perform its obligations under the
Agreement and to borrow funds thereunder.
2. The execution, delivery and performance by ITT Industries,
Inc. of the Agreement and the borrowings of ITT Industries, Inc. thereunder
(collectively, the "Transactions") (i) have been duly authorized by all
requisite corporate action and (ii) will not (a) violate (1) any provision of
law, statute, rule or regulation (including without limitation, the Margin
Regulations), or of the certificate of incorporation or other constitutive
documents or by-laws of ITT Industries, Inc., (2) any order of any governmental
authority or (3) any provision of any indenture, agreement or other instrument
to which ITT Industries, Inc. is a party or by which it or its property is or
may be bound, (b) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or (c) result in the creation or
imposition of any lien upon any property or assets of ITT Industries, Inc.
3. The Agreement has been duly executed and delivered by ITT
Industries, Inc. and constitutes a legal, valid and binding obligation of ITT
Industries, Inc. enforceable against ITT Industries, Inc. in accordance with
its terms, subject as to the enforceability of rights and remedies to any
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors' rights from time to time in effect.
4. No action, consent or approval of, registration or filing
with, or any other action by, any government authority is or will be required
in connection with the Transactions, except such as have been made or obtained
and are in full force and effect.
5. Neither ITT Industries, Inc. nor any of its subsidiaries
is (a) except as set forth in the next sentence, an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
(the "1940 Act") or (b) a "holding company" as defined in, or subject
- ------------
(1) Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the 5-Year Competitive Advance and Revolving
Credit Facility Agreement (the Agreement ) dated as of October [ ], 1995, among
ITT Industries, Inc., the lenders listed in Schedule 2.01 thereto, and Chemical
Bank, as Administrative Agent.
<PAGE> 83
EXHIBIT E to the
Credit Agreement
BORROWING SUBSIDIARY AGREEMENT dated as of [
], [ ], among ITT INDUSTRIES, INC., an Indiana
corporation (the "Company"), [Name of Subsidiary], a
[ ] corporation ("the Subsidiary"), and
CHEMICAL BANK, as administrative agent (the
"Administrative Agent") for the lenders (the
"Lenders") party to the Five-Year Competitive Advance
and Revolving Credit Facility Agreement dated as of
November 2, 1995, as amended (the "Agreement"), among
the Company, the Administrative Agent and the
Lenders.
Under the Agreement, the Lenders have agreed, upon the terms
and subject to the conditions therein set forth, to make competitive advance
and revolving credit loans and to issue Letters of Credit to the Company and to
Subsidiaries (as defined in the Agreement) of the Company which execute and
deliver to the Administrative Agent Borrowing Subsidiary Agreements in the form
of this Borrowing Subsidiary Agreement. The Company represents that the
Subsidiary is a subsidiary (as so defined) of the Company and that the
guarantee of the Company contained in Article VII of the Agreement applies to
the obligations of the Subsidiary. In consideration of being permitted to
borrow or have Letters of Credit issued under the Agreement upon the terms and
subject to the conditions set forth therein, the Subsidiary agrees that from
and after the date of this Borrowing Subsidiary Agreement it will be, and will
be liable for the observance and performance of all the obligations of, a
Borrowing Subsidiary under the Agreement, as the same may be amended from time
to time, to the same extent as if it had been one of the original parties to
the Agreement and that it will furnish to the Administrative Agent and the
Lenders copies of its financial statements on an annual basis.
IN WITNESS WHEREOF, the Company and the Subsidiary have caused
this Borrowing Subsidiary Agreement to be duly executed by their authorized
officers as of the date first appearing above.
ITT INDUSTRIES, INC.
by
-----------------------------------
Name:
Title:
[NAME OF SUBSIDIARY],
by
-----------------------------------
Name:
Title:
Accepted as of the date
first appearing above:
CHEMICAL BANK, as Administrative
Agent,
by
-------------------------------
Name:
Title:
<PAGE> 84
EXHIBIT F to the
Credit Agreement
ISSUING BANK AGREEMENT dated as of [ ],
1995, between ITT INDUSTRIES, INC., an Indiana
corporation ("ITT") and the financial institution
identified on Schedule I hereto as the Issuing Bank
(the "Issuing Bank").
Reference is made to the 5-Year Competitive Advance and
Revolving Credit Facility Agreement dated as of November 2, 1995 (as amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
ITT, the Borrowing Subsidiaries parties thereto, the Lenders named therein and
Chemical Bank, as Administrative Agent. ITT and the Issuing Bank desire to enter
into this Agreement in order to provide for Letters of Credit to be issued by
the Issuing Bank as contemplated by the Credit Agreement. Accordingly, the
parties hereto agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings specified in the
Credit Agreement. The provisions of Section 1.02 of the Credit Agreement shall
apply to this Agreement as though set forth herein.
SECTION 2. Letter of Credit Commitment. The Issuing Bank
hereby agrees to be an "Issuing Bank" under, and, subject to the terms and
conditions hereof and of the Credit Agreement, to issue Letters of Credit under,
the Credit Agreement; provided, however, that Letters of Credit issued by the
Issuing Bank hereunder shall be subject to the limitations, if any, set forth on
Schedule I hereto, in addition to the limitations set forth in the Credit
Agreement.
SECTION 3. Issuance Procedure. In order to request the
issuance of a Letter of Credit hereunder, the Account Party (or ITT on behalf of
the applicable Account Party) shall hand deliver or telecopy a notice
(specifying the information required by Section 2.23(b) of the Credit Agreement)
to the Issuing Bank, at its address or telecopy number specified on Schedule I
hereto (or such other address or telecopy number as the Issuing Bank may specify
by notice to ITT), not later than the time of day (local time at such address)
specified on Schedule I hereto prior to the proposed date of issuance of such
Letter of Credit. A copy of such notice shall be sent, concurrently, by the
applicable Account Party (or ITT on behalf of the applicable Account Party) to
the Administrative Agent in the manner specified for Borrowing Requests under
the Credit Agreement. Upon receipt of such notice, the Issuing Bank shall
consult the Administrative Agent by telephone in order to determine (i) whether
the conditions specified in the last sentence of Section 2.23(b) of the Credit
Agreement will be satisfied in connection with the issuance of such Letter of
Credit and (ii) whether the requested expiration date for such Letter of Credit
complies with the proviso to Section 2.23(c) of the Credit Agreement.
SECTION 4. Issuing Bank Fees, Interest and Payments. The
Issuing Bank Fees payable to the Issuing Bank in respect of Letters of Credit
issued hereunder are specified on Schedule I hereto (and such fees shall be in
addition to the Issuing Bank's customary documentary and processing charges in
connection with the issuance, amendment or transfer of any Letter of Credit
issued hereunder). Each payment of Issuing Bank Fees payable hereunder shall be
made not later than 12:00 (noon), local time at the place of payment, on the
date when due, in immediately available funds, to the account of the Issuing
Bank specified on Schedule I hereto (or to such other account of the Issuing
Bank as it may specify by notice to ITT).
<PAGE> 85
SECTION 5. Credit Agreement Terms. Notwithstanding any
provision hereof which may be construed to the contrary, it is expressly
understood and agreed that (a) this Agreement is supplemental to the Credit
Agreement and is intended to constitute an Issuing Bank Agreement, as defined
therein (and, as such, constitutes an integral part of the Credit Agreement as
though the terms of this Agreement were set forth in the Credit Agreement), (b)
each Letter of Credit issued hereunder and each and every L/C Disbursement made
under any such Letter of Credit shall constitute a "Letter of Credit" and an
"L/C Disbursement", respectively, for all purposes of the Credit Agreement and
the other Loan Documents, (c) the Issuing Bank's commitment to issue Letters of
Credit hereunder and each and every Letter of Credit requested or issued
hereunder shall be subject to the terms and conditions of the Credit Agreement
and entitled to the benefits of the Loan Documents and (d) the terms and
conditions of the Credit Agreement are hereby incorporated herein as though set
forth herein in full and shall supersede any contrary provisions hereof.
SECTION 6. Assignment. The Issuing Bank may not assign its
commitment to issue Letters of Credit hereunder without the consent of ITT and
prior notice to the Administrative Agent. In the event of an assignment by the
Issuing Bank of all its other interests, rights and obligations under the Credit
Agreement, then the Issuing Bank's commitment to issue Letters of Credit
hereunder shall terminate unless the Issuing Bank, ITT and the Administrative
Agent otherwise agree.
SECTION 7. Effectiveness. This Agreement shall not be
effective until counterparts hereof executed on behalf of each of ITT and the
Issuing Bank have been delivered to and accepted by the Administrative Agent.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
ITT INDUSTRIES, INC.,
by
------------------------
Name:
Title:
[ISSUING BANK],
by
------------------------
Name:
Title:
Accepted:
CHEMICAL BANK, as
Administrative Agent,
by
----------------------------
Name:
Title:
<PAGE> 86
SCHEDULE I to
Issuing Bank Agreement
A. Issuing Bank:
B. Issuing Bank's Address and
Telecopy Number for Notices:
C. Time of Day by Which Notices A notice requesting the issuance of a Letter
Must be Received of Credit must be received by the Issuing
Bank by 10:00 a.m. (New York time) not less
than five Business Days prior to the
proposed date of issuance.
D. Special Terms: The aggregate L/C Exposure in respect of
Letters of Credit issued pursuant to this
Agreement shall not exceed $[ ].
E. Issuing Bank Fees: [ ]% per annum on the average daily
undrawn amount of the Scheduled Letters of
Credit, payable on the same dates that L/C
Participation Fees are payable under the
Credit Agreement.
F. Issuing Bank's Account for
Payment of Issuing Bank Fees:
<PAGE> 87
EXHIBIT G
[FORM OF]
LOCAL CURRENCY ADDENDUM
To: Chemical Bank, as Administrative Agent
From: ITT Industries, Inc.
1. This Local Currency Addendum is being delivered to you
pursuant to Section 2.21(b) of the 5-Year Competitive Bid and Revolving Credit
Facility, dated as of November 2, 1995, among ITT Industries, Inc., the
Borrowing Subsidiaries parties thereto, the Lenders parties thereto and Chemical
Bank, as Administrative Agent (as the same may be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
2. The effective date (the "Effective Date") of this Local
Currency Addendum will be [ ].
LOCAL CURRENC(Y)(IES):
LOCAL CURRENCY FACILITY
MAXIMUM BORROWING AMOUNT: $
<TABLE>
<CAPTION>
LOCAL CURRENCY Local Currency Lender
LENDERS: Name of Lender Maximum Borrowing Amount
<S> <C> <C>
$
</TABLE>
LIST OF DOCUMENTATION GOVERNING
LOCAL CURRENCY FACILITY
(THE "DOCUMENTATION"):(1)
3. The Company hereby represents and warrants that (i) as of
the Effective Date, an Exchange Rate with respect to each Local Currency is
determinable by reference to the Reuters currency pages (or comparable publicly
available screen), (ii) the Documentation complies in all respects with the
requirements of Section 2.21 of the Credit Agreement and (iii)___________
- --------
(1) Copies of the Documentation must accompany the Local Currency Addendum,
together with, if applicable, an English translation thereof (provided, that the
Company may instead furnish a summary term sheet in English so long as an
English translation of the Documentation is furnished to the Administrative
Agent or its counsel within 90 days after the date of delivery of the Local
Currency Addendum).
<PAGE> 88
of__________ (2) contains an express acknowledgement that such Local Currency
Loan shall be subject to the provisions of Sections 2.21 and 2.22 of the Credit
Agreement.
ITT INDUSTRIES, INC.
By
-------------------------
Title:
Accepted and Acknowledged:
CHEMICAL BANK, as Administrative Agent
By
----------------------------------
Title:
[LOCAL CURRENCY LENDER]
By
----------------------------------
Title:
- --------
(2) Provide citation to relevant provision from the Documentation.
<PAGE> 89
Exhibit H
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
November ___, 1995
Chemical Bank, as Administrative Agent
for the Lenders
270 Park Avenue
New York, NY 10019
Attention: Elisabeth Hughes
Dear Sirs:
Reference is made to the 364-Day Competitive Advance and Revolving
Credit Facility Agreement and the Five-Year Competitive Advance and Revolving
Credit Facility Agreement (collectively, the "Credit Agreements"), each among
ITT Industries, an Indiana corporation ("ITT Industries"), the lenders listed in
Schedules 2.01 thereto (the "Lenders") and Chemical Bank, as administrative
agent for the Lenders (the "Administrative Agent").
1. As contemplated by Section 9.16 of the 364-Day Credit Agreement,
and Section 9.17 of the Five-Year Credit Agreement, ITT Corporation, a Delaware
corporation ("Old ITT"), and the Administrative Agent, acting on behalf of the
Lenders, hereby agree that the Credit Agreements shall be executed on the date
hereof and that, except as otherwise provided herein, Old ITT will have all
rights and obligations of the "Company" referred to therein.
2. Old ITT agrees that upon the completion of the Distribution, it
shall cause ITT Industries to execute, and ITT Industries shall succeed to the
rights and obligations of Old ITT under, the Credit Agreements.
3. Old ITT further agrees that prior to each of (a) the successions
referred to in paragraph 2 above, (b) the termination and cancellation of the
Existing Credit Facilities (as defined in the Credit Agreements), (c) the
completion of the Distribution and (d) the satisfaction of
<PAGE> 90
the other conditions set forth in the Credit Agreements, Old ITT shall not make
any Borrowing or request the issuance of any Letter of Credit under the Credit
Agreements.
This letter agreement shall be deemed to be a part of each of the
Credit Agreements and shall have the same effect as if set forth in full
therein. The failure of the Borrower to comply with the terms of this letter
agreement shall constitute an Event of Default under the Credit Agreements.
Very truly yours,
ITT CORPORATION
by
-------------------------
Name:
Title:
Accepted and agreed to
as of the date first
written above:
CHEMICAL BANK, as Administrative Agent
by
----------------------------
Name:
Title:
<PAGE> 1
ITT INDUSTRIES, INC.
SENIOR EXECUTIVE SEVERANCE PAY PLAN
===============================================================================
1. PURPOSE
The purpose of this ITT Industries Senior Executive Severance Pay Plan
("Plan") is to assist in occupational transition by providing severance pay for
employees covered by this Plan whose employment is terminated under conditions
set forth in this Plan.
2. COVERED EMPLOYEES
Covered employees under this Plan ("Executives") are full-time, regular
salaried employees of ITT Industries ("Industries") and of any subsidiary
company ("ITT Industries Subsidiary") (collectively or individually as the
context requires "Company") who are United States citizens, or who are employed
in the United States, in salary grade 26 and above at any time within the two
year period immediately preceding the date the Company selects as the
Executive's last day of active employment ("Effective Date").
3. SEVERANCE PAY UPON TERMINATION OF EMPLOYMENT
If the Company terminates an Executive's employment, the Executive shall
be provided severance pay in accordance with the terms of this Plan except
where the Executive:
- is terminated for cause,
- accepts employment or refuses comparable employment with a
purchaser as provided in Section 8, "Divestiture",
- is terminated with an Effective Date on or after the
Executive's Normal Retirement Date as defined herein, or
- terminates employment with the Company prior to the Effective
date.
<PAGE> 2
2
No severance pay will be provided under this Plan where the Executive
terminates employment by:
- voluntarily resigning,
- voluntarily retiring, or
- failing to return from an approved leave of absence (including
a medical leave of absence).
No severance pay will be provided under this Plan upon any termination of
employment as a result of the Executive's death or disability.
"Normal Retirement Date" shall mean the first of the month which coincides
with or follows the Executive's 65th birthday.
4. SCHEDULE OF SEVERANCE PAY
Severance pay will be provided in accordance with the following Schedule
of Severance Pay which sets forth the months of Base Pay which is provided to
an Executive based upon the Executive's Years of Service as of the Effective
Date.
<TABLE>
<CAPTION>
Years of Service Months of Base Pay
---------------- ------------------
<S> <C>
Less than 4 . . . . . . . . . . . . . . . 12
4 . . . . . . . . . . . . . . . 13
5 . . . . . . . . . . . . . . . 14
6 . . . . . . . . . . . . . . . 15
7 . . . . . . . . . . . . . . . 16
8 . . . . . . . . . . . . . . . 17
9 . . . . . . . . . . . . . . . 18
10 . . . . . . . . . . . . . . . 19
11 . . . . . . . . . . . . . . . 20
12 . . . . . . . . . . . . . . . 21
13 . . . . . . . . . . . . . . . 22
14 . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C>
15 or more . . . . . . . . . . . 24
</TABLE>
"Base Pay" shall mean the annual base salary rate payable to the Executive
at the Effective Date divided by twelve (12) months. Such annual base salary
rate shall in no event be less than the highest annual base salary rate paid to
the Executive at any time during the twenty-four month (24) period immediately
preceding the Effective Date.
"Years of Service" shall mean the total number of completed years of
employment since the Executive's Industries system service date to the
Effective Date, rounded to the nearest whole year. The Industries system
service date is the date from which employment in the Industries system is
recognized for purposes of determining eligibility for vesting under the
applicable Company retirement plan covering the Executive on the Effective
Date.
Notwithstanding the above Schedule of Severance Pay, (i) in no event shall
months of Base Pay provided to an Executive exceed the number of months
remaining between the Effective Date and the Executive's Normal Retirement Date
or (ii) shall severance pay exceed the equivalent of twice the Executive's
total annual compensation during the year immediately preceding the Effective
Date.
5. FORM OF PAYMENT OF SEVERANCE PAY
Severance pay shall be paid in the form of periodic payments according to
the regular payroll schedule ("Salary Continuation"), provided that Industries
reserves the right at any time to pay the remaining severance pay in the form
of a discounted lump sum.
Any discounted lump sum paid under this Plan shall be equal to the present
value of the remaining periodic payments of severance pay as determined by
Industries using an interest rate equal to the prime rate at Citibank in effect
on the date Industries notifies the Executive that it is exercising its right
to pay severance in the discounted lump sum.
Salary Continuation will commence or the discounted lump sum will be paid
on the next day following the Effective Date except that where Industries
exercises its right to pay the discounted lump sum after the commencement
<PAGE> 4
4
of Salary Continuation, it will be paid promptly after Industries exercises
such right.
In the event of an Executive's death during the period the Executive is
receiving Salary Continuation, the amount of severance pay remaining shall be
paid in a discounted lump sum to the Executive's spouse or to such other
beneficiary or beneficiaries designated by the Executive in writing, or, if the
Executive is not married and failing such designation, to the estate of the
Executive.
If an Executive is receiving Salary Continuation, the Executive must
continue to be available to render to the Company reasonable assistance,
consistent with the level of the Executive's prior position with the Company,
at times and locations that are mutually acceptable. In requesting such
services, the Company will take into account any other commitments which the
Executive may have. After the Effective Date and normal windup of the
Executive's former duties, the Executive will not be required to perform any
regular services for the Company. In the event the Executive secures other
employment during the period the Executive is receiving Salary Continuation,
the Executive must promptly notify the Company.
Salary Continuation will cease if an Executive is rehired by the Company.
6. BENEFITS DURING SEVERANCE PAY
As long as an Executive is receiving Salary Continuation, except as
provided in this Section, the Executive will continue to be eligible for
participation in Company employee benefit plans, including without limitation,
any non-qualified excess or supplemental benefit plans, in accordance with the
provisions of such plans as in effect on the Effective date. An Executive will
not be eligible to participate in any Company short-term or long-term
disability plans, the Company business travel accident plan or any new employee
benefit plan or any improvement to any existing employee benefit plan adopted
by the Company after the Effective Date.
7. EXCLUDED EXECUTIVE COMPENSATION PLANS, PROGRAMS, ARRANGEMENTS, AND
PERQUISITES
During the period an Executive is receiving Salary Continuation, the
Executive will not be eligible to accrue
<PAGE> 5
5
any vacation or participate in any (i) bonus program, (ii) special termination
programs, (iii) tax or financial advisory services, (iv) new awards under any
stock option or stock related plans for executives (provided that the Executive
will be eligible to exercise any outstanding stock options in accordance with
the terms of any applicable stock option plan), (v) new or revised executive
compensation programs that may be introduced after the Effective Date and (vi)
any other executive compensation program, plan, arrangement, practice, policy
or perquisites unless specifically authorized by Industries in writing. The
period during which an Executive is receiving Salary Continuation does not
count as service for the purpose of any Industries long-term incentive award
program including, but not limited to, the ITT Restricted Stock Award Plan
(1984) and any similar plan, and the Industries Long-Term Performance Plan and
any similar plan.
8. DIVESTITURE
If an Industries Subsidiary or division of Industries or a portion thereof
at which an Executive is employed is sold or divested and if (i) the Executive
accepts employment or continued employment with the purchaser or (ii) refuses
employment or continued employment with the purchaser on terms and conditions
substantially comparable to those in effect immediately preceding the sale or
divestiture, the Executive shall not be provided severance pay under this Plan.
The provisions of this Section 8 apply to divestitures accomplished through
sales of assets or through sales of corporate entities.
9. DISQUALIFYING CONDUCT
If during the period an Executive is receiving Salary Continuation, the
Executive (i) engages in any activity which is inimical to the best interests
of the Company; (ii) disparages the Company; (iii) fails to comply with any
Company Covenant Against Disclosure and Assignment of Rights to Intellectual
Property; (iv) without Industries' prior consent, induces any employees of the
Company to leave their Company employment; (v) without Industries' prior
consent, engages in, becomes affiliated with, or becomes employed by any
business competitive with the Company; or (vi) fails to comply with applicable
provisions of the Industries Code of Conduct or applicable Industries Corporate
Policies or any applicable Industries Subsidiary Code or policies, then the
<PAGE> 6
6
Company will have no further obligation to provide severance pay.
10. RELEASE
No severance pay will be provided under this Plan unless the Executive
executes and delivers to Industries a release, satisfactory to Industries, in
which the Executive discharges and releases the Company and the Company's
directors, officers, employees and employee benefit plans from all claims
(other than for benefits to which Executive is entitled under any Company
employee benefit plan) arising out of Executive's employment or termination of
employment.
11. ADMINISTRATION OF PLAN
This Plan shall be administered by Industries, who shall have the
exclusive right to interpret this Plan, adopt any rules and regulations for
carrying out this Plan as may be appropriate and decide any and all matters
arising under this Plan, including but not limited to the right to determine
appeals. Subject to applicable Federal and state law, all interpretations and
decisions by Industries shall be final, conclusive and binding on all parties
affected thereby.
12. TERMINATION OR AMENDMENT
Industries may terminate or amend this Plan ("Plan Change") at any time
except that no such Plan Change may reduce or adversely affect severance pay
for any Executive whose employment terminates within two years of the effective
date of such Plan Change provided that the Executive was a covered employee
under this Plan on the date of such Plan Change.
13. OFFSET
Any severance pay provided to an Executive under this Plan shall be offset
by reducing such severance pay by any severance pay, salary continuation,
termination pay or similar pay or allowance which Executive receives or is
entitled to receive (i) under any other Company plan, policy practice, program,
arrangement; (ii) pursuant to any employment agreement or other agreement with
the Company; (iii) by virtue of any law, custom or practice. Any severance pay
provided to Executive under this Plan shall also be offset by reducing such
severance pay by any
<PAGE> 7
7
severance pay, salary continuation pay, termination pay or similar pay or
allowance received by the Executive as a result of any prior termination of
employment with the company.
Coordination of severance pay with any pay or benefits provided by any
applicable Industries short-term or long-term disability plan shall be in
accordance with the provisions of those plans.
14. MISCELLANEOUS
Except as provided in this Plan, the Executive shall not be entitled to
any notice of termination or pay in lieu thereof.
In cases where severance pay is provided under this Plan, pay in lieu of
any unused current year vacation entitlement will be paid to the Executive in a
lump sum.
Benefits under this Plan are paid for entirely by the Company from its
general assets.
This Plan is not a contract of employment, does not guarantee the
Executive employment for any specified period and does not limit the right of
the Company to terminate the employment of the Executive at any time.
The section headings contained in this Plan are included solely for
convenience of reference and shall not in any way affect the meaning of any
provision of this Plan.
15. ADOPTION DATE AND AMENDMENTS
This Plan was adopted by ITT on December 12, 1989 ("Adoption Date") and
assumed by ITT Indiana, Inc. (renamed ITT Industries, Inc.) on October 10, 1995
and does not apply to any termination of employment which occurred or which was
communicated to the Executive prior to the Adoption Date. The Plan was amended
effective June 11, 1991.
<PAGE> 1
June 13, 1995
Mr. D. Travis Engen
Dear Travis:
This employment agreement (the "Agreement") is intended to
create mutual obligations, and your voluntary acceptance signifies both ITT
Industries, Inc. ("Industries") and your commitment to carry out its
obligations until its expiration. The Agreement will confirm your employment
with Industries in accordance with the following terms and conditions:
1. EMPLOYMENT AND ASSIGNMENT; DILIGENT AND FAITHFUL PERFORMANCE
OF DUTIES. Industries agrees to employ you as Chairman and Chief Executive
Officer of ITT Industries. In consideration of employment by Industries, you
agree to discharge faithfully, diligently, and to the best of your ability, the
responsibilities of these offices.
2. TERM OF AGREEMENT. This Agreement will become effective on
January 1, 1996 [or Distribution Date] and will terminate on December 31, 1999
unless terminated earlier in accordance with the terms of this Agreement.
3. BASE SALARY, INCENTIVE BONUS AND BENEFITS.
(a) BASE SALARY. Your base salary under
this Agreement will be [ ] per year. Your base
salary will be subject to review by Industries from
time to time for consideration of possible increases
based on your performance and other relevant
circumstances. Periodic increases, once granted,
will not be subject to revocation and your base
salary thereafter will be deemed to include such
increases. Your base salary will be payable in
accordance with the customary payroll practices of
Industries
<PAGE> 2
2
but, in no event, less frequently than monthly.
(b) OTHER COMPENSATION AND BENEFITS.
Subject to review and approval by Industries, you
will be eligible for consideration for possible
awards under Industries' executive incentive bonus
program or any other executive incentive compensation
plan. You will also continue to be entitled to
participate in the benefit programs of Industries or
its subsidiaries for which you are now eligible or
for which you may become eligible in accordance with
their provisions during the term of this Agreement.
Industries shall pay or reimburse you for all
reasonable travel and other expenses incurred in
connection with the performance of your duties and
responsibilities in accordance with such procedures
as Industries may from time to time establish.
4. TERMINATION BY INDUSTRIES FOR CAUSE. Industries shall have
the right to terminate your employment only for cause, which is limited to
action by you involving willfull malfeasance or gross negligence or your
failure to act involving material nonfeasance that would tend to have a
materially adverse effect on Industries. If your employment is terminated for
cause, this Agreement will terminate and Industries will have no further
obligations under this Agreement.
5. DISCONTINUANCE OF THE REQUIREMENT TO PROVIDE FULL TIME
SERVICES.
If Industries notifies you that it no longer requires your full-time
services as Chairman and Chief Executive Officer and you have complied with the
terms and conditions of this Agreement, you will receive the following:
(a) BASE SALARY AND INCENTIVE BONUS.
In lieu of any further compensation, you will receive
in equal monthly installments, (i) for the first
twelve months commencing with the first day of the
month succeeding the month in which you cease to hold
the offices described above (A) an amount equal to
the annual salary as determined in
<PAGE> 3
3
Paragraph 3 hereof ("salary continuation") and (B) an
amount equivalent to 75% of one-third of the
aggregate amount of the bonuses received by you with
respect to each of the three calendar years
immediately preceding such event (it being understood
that for this purpose the bonus with respect to any
year is the bonus presently awarded in the first
quarter of the succeeding year) and (ii) for each
succeeding twelve months remaining in the term of
this Agreement, (A) an amount equivalent to the
annual salary as determined in Paragraph 3 hereof and
(B) an amount equivalent to 50% of one-third of the
aggregate amount of the bonuses received by you with
respect to each of the three calendar years
immediately preceding such event (it being understood
that for this purpose the bonus with respect to any
year is the bonus presently awarded in the first
quarter of the succeeding year). Notwithstanding the
above, payments shall continue until the earlier of
(i) the expiration of this Agreement or (ii) in
accordance with 5(e) below. Upon your acceptance of
other full-time employment, the balance remaining of
such aggregate amount may, at Industries' discretion,
be paid to you in a lump sum.
(b) OTHER COMPENSATION AND BENEFITS. As
long as you are receiving salary continuation, you
will continue to be eligible for ongoing
participation in Industries' employee medical,
dental, and life insurance benefits programs, the ITT
Industries Salaried Retirement Plan, the ITT
Industries Excess Plan, if applicable, the ITT
Industries Investment and Savings Plan and any other
applicable retirement or savings plan as well as the
exercise of outstanding stock options in accordance
with the terms of the applicable stock option plan.
If, for any reason at any time, Industries is unable
to treat you as being or having been a salaried
employee of Industries under any benefits program or
plan specifically enumerated in this Agreement (or
<PAGE> 4
4
any successors to such plans), including the
Industries' employee medical, dental and life
insurance benefit programs, and the ITT Industries
Salaried Retirement Plan, the ITT Industries Excess
Plan, if applicable, and the ITT Industries
Investment and Savings Plan, during the period that
you are receiving salary continuation, and, if, as a
result thereof you receive no benefits or reduced
benefits under such plans, Industries shall provide
such benefits by (i) direct payment to you of the
amounts you would have received from such plans had
you continued to be eligible or (ii) at Industries
option, making available equivalent benefit programs
from other sources.
(c) ITEMS OF COMPENSATION AND BENEFITS
FOR WHICH YOU WILL NOT BE ELIGIBLE DURING SALARY
CONTINUATION. During a period of salary continuation
as described in this Paragraph 5(a), you will not be
entitled to any compensation not specified in this
Agreement, and you will not be eligible to participate
in any (i) bonus program, (ii) Industries long term or
short term disability plans, (iii) insurance plan
primarily covering business travel, (iv) special
programs providing incentive for employees who
voluntarily terminate their employment, (v) tax or
financial advisory services, (vi) new awards under any
stock option or stock related plans for executives,
(vii) new or revised executive compensation programs
that may be introduced by Industries after Industries
has advised you that it no longer requires your
full-time services and (viii) any other benefit or
perquisite not specifically enumerated in this
Agreement.
(d) AVAILABILITY IF INDUSTRIES NO LONGER
REQUIRES YOUR FULL-TIME SERVICES. If Industries has
advised you that it no longer requires your full-time
services pursuant to this Paragraph 5 but you are
continuing to receive salary continuation, you must
continue to be available to render to Industries
reasonable assistance, consistent
<PAGE> 5
5
with the level of your prior position with Industries,
at times and locations that are mutually acceptable.
In requesting such services, Industries shall take
into account any other commitments which you may have.
(e) DISQUALIFYING CONDUCT. If during
the period you are receiving Salary Continuation, you
(i) engage in any activity which is inimical to the
best interests of Industries; (ii) disparage
Industries; (iii) fail to comply with any Industries'
Covenant Against Disclosure and Assignment of Rights
to Intellectual Property; (iv) without Industries'
prior consent, induce any employees of Industries to
leave employment; (v) without Industries' prior
consent, engage in, become affiliated with, or become
employed by any business competitive with Industries;
or (vi) fail to comply with applicable provisions of
the Industries' Code of Conduct or applicable
Industries' Corporate Policies or any applicable
Industries' Subsidiary Code or policies, then
Industries will have no further obligation to provide
salary continuation. Also, for a one year period
after salary continuation is no longer provided under
this Agreement you will not, without Industries'
prior consent, induce any employees of Industries to
leave employment.
(f) TERMINATION ALLOWANCE UNDER A
SEVERANCE PLAN OR POLICY. If you would otherwise
ordinarily receive a termination allowance under an
Industries' severance plan or termination allowance
policy exceeding the amount of base salary remaining
under the Agreement at the time of notice by
Industries of its intent to terminate your full-time
employment, Industries will pay you a termination
allowance in accordance with the terms of the
Industries' severance plan or termination allowance
policy, in lieu of salary continuation under this
Agreement. In no case will both termination
allowance and amounts under this Agreement (whether
lump sum or salary continuation) be paid.
<PAGE> 6
6
6. ASSIGNMENT. This Agreement is not assignable by you and is
not assignable by Industries except to a subsidiary of Industries provided,
notwithstanding such assignment, Industries shall remain liable for the
performance of all obligations hereunder. This Agreement shall be binding on
all successors and assignees of Industries.
7. OTHER AGREEMENTS. Any prior agreement relating to the
Assignment of Inventions and Covenant Against Disclosure, and any written
agreements not in conflict herewith shall remain in full force and effect.
8. NOTICES. Notices to Industries under this Agreement shall be
in writing and delivered to [TITLE - ADDRESS] and notices to you shall be in
writing and delivered in person or by mail to your office or to your home
address on file with Industries.
9. SEVERABILITY. If, for any reason, any one or more of the
provisions or part of a provision contained in this Agreement shall be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of
a provision of this Agreement not held so invalid, illegal or unenforceable,
and each other provision or part of a provision shall to the full extent
consistent with law remain in full force and effect.
10. HEADINGS OF NO EFFECT. The paragraph headings contained in
this Agreement are included solely for convenience of reference and shall not
in any way affect the meaning or interpretation of any of the provisions of
this Agreement.
11. AMENDMENT. This Agreement cannot be amended, modified or
supplemented except by a subsequent written agreement between you and
Industries.
12. ENTIRE AGREEMENT AND CHOICE OF LAW. This Agreement contains
the entire agreement between you and Industries with respect to employment and
services by you and supersedes any and all prior understandings, agreements or
correspondence between you and Industries with respect to employment and
services. This Agreement will be governed by and construed in accordance with
the laws of the State of New York.
<PAGE> 7
7
13. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Please execute and return to me the enclosed copy of this Agreement to
signify your agreement.
Yours very truly,
ITT Industries, Inc.
By
------------------
Agreed to and accepted:
- -----------------------
D. Travis Engen
- -----------------------
DATE
<PAGE> 1
ITT INDUSTRIES
4 West Red Oak Lane
White Plains, NY 10604
U.S. SUBSIDIARIES
Avcron, Inc.
Carbon Industries, Inc.
Bedcor, Inc
Belmont Coal Company
Bradford Coal Company
Carbon Fuel Co.
Carbon Fuel Sales Co.
Crimson Processing Company
Kentucky Carbon Corp.
Kentucky Carbon Processing Co.
Notomine, Inc.
Peter Creek Development Co. & Subsidiaries
Wevaco Processing Company
Winifrede Railroad Co.
Wescar, Inc.
ITT Cannon, Inc.
ITT Defense & Electronics, Inc.
ITT Defense International, Inc.
ITT Defense, Inc.
ITT Federal Services Corporation
Base Services, Inc.
Federal Services International Corp.
Federal Electric Corporation
Felec Services, Inc.
ITT Arctic Services, Inc.,
ITT Antarctic Services, Inc.
ITT Commercial Services, Inc.
ITT Deep Space Services, Inc.
ITT Employment and Training Systems, Inc.
ITT Gilfillan Inc.
ITT Fluid Technology Corporation
ITT Flygt Corp., Inc.
ITT Automotive, Inc.
Alfred Teves Technologies, Inc.
ITT Automotive Electrical Systems, Inc.
ITT Lester Industries, Inc.
ITT Resource Development Corporation
ITT Community Development Corp.
Hammock Dunes Real Estate Co.
<PAGE> 2
2
Matanzas Realty, Inc.
Palm Coast Inc
Palm Coast Utility Corporation
Sunsport Recreation Corp.
Palm Coast Shopping Center, Inc.
Palm Coast Abstract & Title, Inc.
Palm Coast Mortgage Company
Palm Coast Construction Company
Palm Coast Home Realty, Inc.
Palm Coast Realty, Inc.
ITT Power Systems Corp.
ITT Schadow, Inc.
Sealectro International Corporation
<PAGE> 3
3
ITT INDUSTRIES
4 West Red Oak Lane
White Plains, NY 10604
FOREIGN SUBSIDIARIES
Flygt Holdings Pty. Ltd. Australia
ITT Flygt Ltd. Australia
ITT Flygt Gmbh Austria
Cannon Division Belgium
ITT Industries Belgium Belgium
Flygt N.V./S.A. Belgium
ITT Industries Of Canada Ltd Canada
A-C Pump Canada Canada
ITT Aimco Canada
ITT Barton Instruments Canada
ITT Cannon Canada Canada
ITT Commercial Finance Canada
ITT Engineered Valves Canada
ITT Felec Services, Inc. Canada
ITT Fluid Products Canada Canada
ITT Flygt Canada Canada
SWF Auto-Electric Canada
ITT Standard Canada
ITT Flygt A/S Denmark
ITT Barton Division England
ITT Cannon Division U.K. England
ITT Industries Limited & Subsidiaries England
Cannon Electric (Great Britain) Ltd. England
ITT Switches (UK) Ltd. England
ITT Defense U.K. England
ITT Jabsco Ltd. England
ITT Defense Limited England
ITT Marlow Division England
ITT Composants Et Instruments France
ITT Teves Division France
Alfred Teves Metallwarenfabrik G.M.B.H.
& Co. Ohg Germany
ITT Automotive Europe G.M.B.H. Germany
ITT Cannon G.M.B.H. Germany
Deutsche ITT Handels G.M.B.H. Germany
Deutsche ITT Industries G.M.B.H. Germany
ITT Flygt Gmbh Germany
Flygt Pumpen G.M.B.H. Germany
Flygt Werk G.M.B.H. Germany
<PAGE> 4
3
ITT Gesellschaft Fur Beteilgungen G.M.B.H.
& Subsidiaries Germany
ITT Industrie-Beteiligungsgesellschaft Germany
ITT Federal Services G.M.B.H. Germany
R. Schadow G.M.B.H. & Subsidiaries Germany
Reiss International G.M.B.H. Germany
Cannon Electric Italiana S.P.A. Italy
ITT Flygt S.P.A. Italy
ITT Automotive Italy S.P.A. Italy
ITT Flygt Ltd. Japan
ITT Cannon Ltd Japan
ITT Flygt S.V. Netherlands
Koni B.V. Netherlands
Bejerlands Automobiel Bedriff N.V. Netherlands
ITT Flygt (New Zealand) Ltd. New Zealand
ITT Flygt A/S Norway
Maclaren Controls Ltd. Scotland
Macalister Dundas Limited Scotland
ITT Federal Electric International Espana Spain
Swf Auto-Electric S.A. Spain
Alfred Teves S.A. Spain
Sociedad Industrial De Electronnagnetism Sarl Spain
ITT Multi-Komponent Ab Sweden
Grindex Ab Sweden
Mactec Ab Sweden
ITT Flygt Ab Sweden
Ab Fygt Pumpar Sweden
ITT Flygt International Ab Sweden
ITT Industries Belgium
Maclaren Controls Limited
ITT Automotice Enterprises Inc.
